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Week in Review

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02/23/2019

For the week 2/18-2/22

[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.

Special thanks to Jeanette N. for her support.

Edition 1,037

Just another chaotic week, but the next one could be even more so, with President Trump’s summit in Hanoi with Kim Jong Un, Trump no doubt feeling he needs a win; Michael Cohen testifying before a House committee; further discussions this weekend between the U.S. and China on their trade war; and Trump’s buddy, Robert Kraft, facing major legal jeopardy for issues the president is either promoting as a campaign topic, or has been involved in himself.

And there is the Mueller investigation, with the special counsel apparently not dropping his report while the president is overseas, engaged in diplomacy, as is the right thing to do, but still potentially close to doing so.

In other words, it’s a good week for another surprise.  Let’s hope it’s more of the Oscar “Best Picture” variety and nothing more than that.

Trump World

Thanks to Congress being out on recess this week, it’s kind of been lost in the conversation that the president had declared a national emergency prior to the holiday break.

But now the Democratic House of Representatives (elections have consequences, Mr. President) is prepared to vote Tuesday on a resolution aimed at stopping Trump’s declaration of an emergency to build a wall on the border with Mexico, Speaker Nancy Pelosi saying today, Congress’ first step challenging Trump’s assertion that he could take money it had appropriated for other activities and use it to build the wall.

After passage in the House, the measure moves to the Senate, where the future is less clear, but in any case, Trump vowed today to veto it if it passed both chambers and Congress doesn’t have the two-thirds majority necessary to override the veto.

What will be interesting is to see what happens with Republicans in the Senate.

Marc A. Thiessen / Washington Post

“If the goal is to build a border wall, then President Trump has made the wrong decision at every turn. In early 2018, Trump had the opportunity to secure $25 billion in funding for his border wall in exchange for legal status for Deferred Action for Childhood Arrivals recipients.  Instead of taking the deal, he blew up the negotiations with his ‘s---hole’ countries remark and by demanding changes to legal immigration policy.

“Then in June, the Senate Appropriations Committee approved $1.6 billion for 65 miles of fencing by an overwhelming bipartisan 26-to-5 vote.  This could easily have passed the House and Senate.  Instead, Trump later shut down the government over wall funding and demanded $5.7 billion.  Result?  After a disastrous 35-day shutdown, he got less - $1.38 billion – than he would have if he had just gone along with the bipartisan deal six months earlier.

“Now, the smart move for Trump would have been to pocket that $1.38 billion and bolster it with an additional $3.1 billion he could arguably use without a declaration of a national emergency – by reprogramming $600 million from the Treasury Department’s drug forfeiture fund and $2.5 billion from the Defense Department’s drug interdiction program.  That would have given him $4.48 billion in wall funding – nearly the full amount he was demanding from Congress.  Then, in December, he could demand more money with leverage over Democrats when an automatic sequester kicks in, forcing $55 billion in across-the-board cuts to domestic discretionary spending unless Trump agrees to raise spending caps.

“Instead, Trump has made the wrong move once again – declaring a national emergency, despite warnings from Senate Majority Leader Mitch McConnell (Ky.) and other Republicans that it could provoke a backlash from within his own party.

“His order will face an immediate court challenge, which means he won’t be able to spend the emergency funds anytime soon, if at all.  And if he prevails in court, it will be a disaster for the cause of limited government.  If Trump can declare a national emergency to build a border wall Congress refused to fund, then the power of the president to override Congress’ power of the purse will be virtually unlimited.  As Rep. Cathy McMorris Rodgers (R-Wash.) pointed out, a future liberal president could declare climate change a national emergency and ‘force the Green New Deal on the American people.’  Or, as House Speaker Nancy Pelosi (D-Calif.) suggested, a Democratic president could one day declare the ‘epidemic of gun violence in America’ a national emergency thanks to Trump’s action....

“More than a dozen Senate Republicans have spoken out against his emergency declaration... If their votes comport with their words, that is more than enough to pass a resolution of disapproval.

“In fact, every Republican in Congress should vote for such a resolution.  Stopping executive overreach and restoring Congress’ Article I powers was a key plank in Republicans’ 2016 Better Way agenda.... A disapproval resolution would make clear that not only is Trump ignoring the will of Congress, but also Congress has further expressly disapproved of his actions.

“Trump’s defenders will argue that Republicans should not deliver such a rebuke to their president.  In fact, the opposite is true: It is Trump who should not be forcing Republicans to choose between fidelity to their president and fidelity to the Constitution.  And if forced to choose, they must choose the Constitution.”

--A majority of Americans disapprove of President Trump’s national emergency declaration to build the wall along the U.S.-Mexico border, according to a new poll from PBS NewsHour, NPR and Marist.

61% said they do not approve of the president’s national emergency, while 36% say they support it.  [85% of Republicans approve, 6% of Democrats, 33% of Independents.]

When asked whether there was currently a national emergency along the border, a majority of Americans – 58% - said they disagreed, based on what they have heard and read.  57% said the president misused his power when he declared a national emergency to build the wall.

39% said they thought there was an emergency at the border, and the same number said Trump was within his presidential authority to make that declaration.

The 39% mirrors the last look at Trump’s job approval rating in a January PBS/NPR/Marist survey.

16 states joined a lawsuit against Trump’s emergency declaration to fund the border wall, the suit, filed in Federal District Court in San Francisco, claiming the president does not have power to divert funds because Congress controls spending, according to the California attorney general’s office.

The states that signed on are all controlled by Democrats.

Trumpets

--Federal Judge Amy Berman Jackson on Thursday dramatically restricted Roger Stone’s ability to speak publicly about his case after he published an Instagram post that had the crosshairs of a gun drawn behind her head.

So Jackson slapped the jerk with a gag order, Stone no longer able to speak publicly about the investigation or the case or any participants in the case.

That’s no statements on the radio, no press releases, no media interviews, no social media postings, nor can statements be made on his behalf, Jackson said.

“This is not baseball,” she added.  “There will not be a third chance.”

Stone apologized repeatedly before her ruling, saying “This is just a stupid lack of judgment...I regret it,” the self-described “dirty trickster” added.

“Thank you, but the apology rings quite hollow,” the judge replied.  “No, Mr. Stone, I’m not giving you another chance.”

Stone’s caption on the picture called special counsel Robert Mueller a “Deep State hitman,” saying his case was a “show trial” and implied that Jackson was biased as an Obama appointee and “incarcerated Paul Manafort.”

Stone was charged by the Justice Department in late January for lying to congressional investigators about his efforts to communicate with WikiLeaks as he sought to help the Trump campaign in 2016.

--Former Trump lawyer Michael Cohen is testifying in a public hearing before a House committee next Wednesday, according to Oversight and Reform Committee chair Elijah Cummings.  This had been originally scheduled for Feb. 7 but was delayed after Cohen complained of threats against his family from President Trump.

In a memo released Wednesday, Rep. Cummings said Cohen’s testimony would focus on the hush-money payments he arranged to women during the 2016 campaign who alleged sexual encounters with Mr. Trump, as well as the president's compliance with tax laws, his “potential and actual conflicts of interest,” his business practices and “the accuracy of the President’s public statements,” among other matters.

Cohen won’t answer questions that touch on Robert Mueller’s investigation into whether Trump associates colluded with Russia’s interference in the election.

There is a new story from the New York Times tonight that Cohen offered information about possible irregularities within the Trump family business and about a donor to the inaugural committee, but I see no real news on this as yet.

That said the Southern District of New York is where various aspects of the Mueller investigation are expected to live on once the special counsel has wrapped up his work.

--In a “60 Minutes” interview, Andrew McCabe, former deputy director of the FBI who is promoting a new book – “The Threat: How the FBI Protects America in the Age of Terror and Trump” – said he was present when Deputy Attorney General Rod Rosenstein commented about invoking the U.S. Constitution’s 25th Amendment, which allows for the vice president and “the principal officers of the executive departments or of such other body as Congress may by law provide” to remove a president who is “unable to discharge the powers and duties of his office.”

But McCabe also told CBS’ Scott Pelley that Trump believed Vladimir Putin’s assessment on North Korea’s nuclear program over that of U.S. intelligence agencies.

“And, essentially, the president said he did not believe that the North Koreans had the capability to hit us here with ballistic missiles in the United States.  And he did not believe that because President Putin had told him they did not.   President Putin told him that the North Koreans don’t actually have those missiles,” McCabe said.

Pelley asked what U.S. intelligence had said to Trump.  McCabe answered that U.S. officials told Trump that Putin’s assessment “was not consistent with any of the intelligence our government possesses.”

“To which the president replied, ‘I don’t care.  I believe Putin,’” McCabe recalled, having learned of the conversation from an FBI official who had just returned from a meeting at the White House.

Editorial / Wall Street Journal

“Mr. McCabe was fired last year for lying to FBI investigators, so it’s hard to know how much to believe.  He’s also tried to qualify the (‘60 Minutes’) interview after excerpts were disclosed, with a spokesperson saying that while Mr. McCabe ‘participated in a discussion that included a comment by Deputy Attorney General Rosenstein regarding the 25th Amendment,’ he did not participate in any ‘extended discussions’ about removing Mr. Trump.

“Mr. Rosenstein says he wasn’t in a ‘position to consider invoking the 25th Amendment’ but doesn’t deny the accusation.

“This is extraordinary, and as far as we know unprecedented.  A President exercises his constitutional prerogatives to fire the FBI director, and Mr. Comey’s associates immediately talked about deposing him in what would amount to a coup?....

“Mr. McCabe’s account also fits with what else we know about the FBI during the Comey era.  Mr. Comey saw fit to start a counterintelligence probe into the Trump campaign based on thin evidence of Russian contacts.  His agents then used an opposition-research document financed by the Clinton campaign to justify a warrant to spy on a Trump advisor.

“In July 2016 Mr. Comey violated Justice rules to exonerate Hillary Clinton on his own authority in the email probe. Then to protect himself against second-guessing from Congress after the election, he intervened again in violation of department rules to reopen the Clinton probe 11 days before Election Day. This intervention may have done more to elect Mr. Trump than anything else in the final weeks of the campaign, as Nate Silver and other analysts have argued.

“After his firing, Mr. Comey arranged a media leak that prompted Mr. Rosenstein to appoint Robert Mueller as a special counsel to investigate Trump-Russia campaign ties. Twenty-one months later we are still waiting for evidence of collusion, as the Mueller probe rolls on seemingly without end.  Mr. Trump’s enemies still claim he is a Russian agent while millions of his supporters think there is a ‘deep-state’ conspiracy against him.  This is all corrosive to public trust in American democracy.

“The Senate last week confirmed William Barr as Attorney General, and he has no more urgent task than restoring some of that public trust.  He could start by explaining to the public, in a major speech, where the FBI went so badly wrong and what he will do to make sure it never happens again.”

--At the Annual Munich Security Conference last weekend, Vice President Mike Pence opened a speech with the following:

“...it’s my great honor to speak to you today, on behalf of a champion of freedom and a champion of a strong national defense, the 45th President of the United States of America, President Donald Trump. (Applause).”

The problem was, as happened on another occasion over the weekend, Pence was met by silence.  The above text with the added ‘applause’ is from the White House.

Relations between the U.S. and our European allies are at a major low.

Trump tweets:

“As I predicted, 16 cities, led mostly by Open Border Democrats and the Radical Left, have filed a lawsuit in, of course, the 9th Circuit! California, the state that has wasted billions of dollars on their out of control Fast Train, with no hope of completion, seems in charge!”

“Had the opposition party (no, not the Media) won the election, the Stock Market would be down at least 10,000 points by now.  We are heading up, up, up!”

“Remember this, Andrew McCabe didn’t go to the bathroom without the approval of Leakin’ James Comey!”

“I never said anything bad about Andrew McCabe’s wife other than she (they) should not have taken large amounts of campaign money from a Crooked Hillary source when Clinton was under investigation by the FBI.  I never called his wife a loser to him (another McCabe made up lie)!”

“Important meetings and calls on China Trade Deal, and more, today with my staff.  Big progress being made on soooo many different fronts!  Our Country has such fantastic potential for future growth and greatness on an even higher level!”

“The Washington Post is a Fact Checker only for the Democrats. For the Republicans, and for your all time favorite President, it is a Fake Fact Checker!”

“The New York Times reporting is false. They are a true ENEMY OF THE PEOPLE!”

“The Press has never been more dishonest than it is today. Stories are written that have absolutely no basis in fact. The writers don’t even call asking for verification. They are totally out of control. Sadly, I kept many of them in business.  In six years, they all go BUST!”

“Nothing funny about tired Saturday Night Live on Fake News NBC!  Question is, how do the Networks get away with these total Republican hit jobs without retribution?  Likewise for many other shows?  Very unfair and should be looked into.  This is the real Collusion!”

Wall Street and Trade Talks

The impact of the 35-day government shutdown is still being felt in terms of the delays in releasing key economic data, but next week it finally all comes to a head with release of the first look at fourth-quarter GDP, originally scheduled for Jan. 30, now Feb. 28.  [Friday, March 1, is another key date with reports on personal income and consumption for December and January, though outlays will not be included in January’s numbers, last I saw.  December factory orders are being released on Feb. 27.]

This week, though, we had a disappointing report on December durable goods, up a less than expected 1.2%, with a core reading on capital goods orders down 0.7%.

And January existing home sales came in at an annualized pace of 4.94 million, also less than forecast, and the lowest level since November 2015, this despite the fact mortgage rates are at one-year lows, thus making housing more affordable.  The median home price, $247,500, was up 2.8% year-on-year, the smallest increase since Feb. 2012.

The Atlanta Fed’s GDPNow barometer for the fourth quarter ticked down to just 1.4%.  As I noted last week, when the reading suddenly plummeted from 2.7% to 1.5% on the awful December retail sales figure, this is kind of shocking.  Everyone is expecting a Q4 reading next week of well above 2%.  Recall, the numbers for Q2 and Q3 2018 were 4.2% and 3.4%, respectively.  How will our president massage a number of, say, 2.2%, let alone something below 2.0%?

The Federal Reserve released the minutes from their January meeting and officials indicated that they plan later this year to stop paring back a key stimulus program put in place in the wake of the Great Recession, that is, reducing its balance sheet, which at one point totaled $4.5 trillion, as a result of the Fed’s purchase of trillions of dollars of Treasury bonds and mortgage-backed securities from 2008 to 2014.  Those purchases helped push down mortgage and long-term interest rates to encourage spending and investment.

But with economic growth slowing and the Fed saying last month it planned to be “patient” on future rate hikes, the balance sheet became a key topic of discussion.

“Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve’s asset holdings later this year,” the minutes said.  “Such an announcement would provide more certainty about the process for completing the normalization of the size of the Federal Reserve’s balance sheet.”

At the January meeting, the Fed downgraded their view of economic growth from “strong” to “solid,” pointing to “various risks and uncertainties,” including the trade war with China.

And today, the Fed released its semi-annual monetary policy report to Congress, ahead of congressional testimony by Chairman Jerome Powell to the Senate and House next week.

The Fed said that while the US. economy maintained “solid” growth through the second half of 2018, likely expanding “just under” 3 percent for the year, consumer and business spending had begun to weaken.  The Fed cited a “deteriorating” appetite for risk among investors, as well as a slowdown in China, in saying the outlook for policy is “more uncertain than earlier,” noting “softer global and economic conditions.”

The Fed also said the 35-day partial shutdown of the U.S. government “likely held down GDP growth in the first quarter of this year.”

The market liked such talk, even if it is a downer, because it is further proof the Fed won’t be raising interest rates further, and that we can expect Chairman Powell to once again use the word “patience” in his testimony Tuesday and Wednesday.

So the rally on Wall Street continued, details below.

But on the trade front...Talks between the U.S. and China in Washington have been extended another two days, President Trump saying today he was inclined to also extend the March 1 deadline for hiking tariffs on $200bn of Chinese imports from 10% to 25%.

Chinese Vice-Premier Liu He is leading Beijing’s delegation, Liu with the authority to negotiate on behalf of Xi Jinping, though President Trump said he would meet with Xi “soon” for what is presumed to be the signing of a deal.

But there are zero surprises in terms of how this is going down.  I have been dead on in terms of the process.  For example, Tuesday, Trump tweeted “We’re doing spectacular things on trade.”

And there is no doubt Trump wants a deal.  His trade representative, however, hard-ass Robert Lighthizer, knows it won’t be a good deal for the U.S.  Lighthizer gets it.  But his boss needs to ‘win,’ and as I’ve been saying for months, Trump will probably convince a slim majority of Americans that whatever deal he ends up with will be a big win for America, especially America’s farmers, of this you can be sure.

It will all be bulls---. I mean tonight, Agriculture Secretary Sonny Perdue is touting an agreement that China will be buying tons of soybeans, which Trump will be talking about on the campaign trail for sure, but remember what I’ve been telling you.

In December 2017, America exported $2.6 billion worth of soybeans to China.

In December 2018, the figure was all of $68.6 million.

My whole point has been that, if we’re lucky, we may get back to the old figures after the deal is cut.  But the majority of Americans won’t get this.  It’s sad.

And regardless of what comes out of the Trump-Xi presumed Mara-Lago photo op, the sad part is that China will continue to rip off American technology.  China’s hacking of our tech companies continues at a feverish pace.

Yes, President Trump is right on one thing.  Past presidents didn’t do enough to confront China. 

But this relationship is only now going to get worse.

The other day the South China Morning Post held its annual China Conference in Hong Kong and Xie Maosong, assistant to the secretary general of the China Institute for Innovation and Development Strategy, said he expected a trade agreement within the next three months based on agreements reached in Washington this week.

Xie said he was also optimistic Huawei CFO Meng Wanzhou would be released in the coming weeks, essentially as part of any trade deal, though Canada is involved in this aspect, only it acted to arrest Meng on the Trump administration’s wishes.

But Xie also said, regardless of the positives, relations between the United States and China will never be the same again.  And this is dangerous.  Deadly so.  And no surprise to me.

Xi Jingping is not doing well at home.  There is dissension in the ranks as the economy crumbles.  And that too is very dangerous.  Xi may need to play the nationalism card in a big way....against Taiwan.

The Trump administration has been pressing Beijing to make changes to its economic policies, which it says unfairly favors domestic companies through subsidies and other support, while the U.S. also accuses China of intellectual property / technology theft as part of its broader development strategy.  And it wants China to buy more U.S. goods to bring down the trade deficit between the two.

But there is a sense in China that the U.S. is using the trade war to contain China’s rise, as the two battle over global leadership, with Beijing basically just proposing to buy more goods, including semiconductors and soybeans. There is no way China is altering its basic business model.

And it’s why China’s government on Monday accused the United States of trying to block the country’s industrial development with its attacks on the likes of Huawei, the Chinese telecom giant, with the administration pressuring allies to shun its products, thus threatening the company’s access to markets for next-generation wireless gear.  [More on this topic below.]

One more on trade...the United States and the EU still have to conduct talks on their relationship and the reduction of tariffs, the talks now slated to be held prior to the EU’s May elections, against the wishes of France, which wanted to wait until after the big vote.

The negotiations, which are aimed at slashing tariffs on trade in industrial goods, are seen as a way to ease tensions stoked by President Trump’s threats to hammer U.S. imports of European cars with additional duties.

The EU has warned that any move by Washington to hit the auto sector would lead to an immediate breakdown in talks as well as retaliation against U.S. products.  There was a story today that this would mean retaliation against the likes of Caterpillar and Xerox, among others, EU Trade Commissioner Cecelia Malmstrom telling reporters that the EU has commenced making a “list of re-balancing measures” should U.S. tariffs be imposed.

Europe and Asia

IHS Markit released its flash readings on the Euro Area (EA19) for February, with the composite coming in at 51.0 (50 being the dividing line between growth and contraction); 49.2 on manufacturing, a 68-mo. low and down from 50.5 in January, ergo contraction, while services was at 52.3.

The flash readings break down Germany and France, individually, with Germany’s manufacturing figure at 47.6, a 74-month low, services 55.1 (5-mo. high); France’s manufacturing PMI at 51.4 (5-mo. high), services 49.8.

Chris Williamson, chief economist, IHS Markit:

“The Eurozone economy remained close to stagnation in February.  The flash PMI lifted only slightly higher during the month, continuing to indicate one of the weakest rates of expansion since 2014. The survey data suggest that GDP may struggle to rise by much more than 0.1% in the first quarter.

“Germany is on course to grow by 0.2%, buoyed by its service sector, but France looks set to stagnate or even contract very slightly. The rest of the region is suffering its worst spell since late-2013, with growth having slipped closer to stalling in February.

“Some uplift was also seen as companies stepped up preparations ahead of Brexit and disruptions from the ‘yellow vest’ protests in France eased.  However, the general picture remained one of a more subdued business environment than seen throughout much of last year....

“Price pressures have meanwhile continued to ease alongside the more subdued demand environment.”

Speaking of which, euro area annual inflation came in at a 1.4% rate in January, down from 1.5% in December, per Eurostat.  A year earlier it was 1.3%.  Inflation had been running at as high as 2.3% last October, but then we had a big decline in the price of crude, plus a slowing eurozone overall.

Inflation was 1.7% in Germany, 1.4% in France and 0.9% in Italy for the month.

Brexit: British Prime Minister Theresa May faces another rebellion within her Conservative party as the March 29 deadline for Brexit nears.  Dozens of normally loyal MPS are threatening to abandon May to prevent a “no-deal” Brexit, and back alternatives if Mrs. May’s reworked deal, whatever that may be, cannot command a Commons majority.

The government has said, however, that it has held productive talks with Brussels this week.  Yet the prime minister has repeatedly refused to rule out the possibility of the UK leaving without a formal deal, in the event that she cannot get MPs to approve whatever she has negotiated with Brussels in time.

Brexit is five weeks away, and now the Irish government is scrambling to put together a wide range of emergency measures to support businesses and protect jobs and essential services if the UK leaves without a deal.  For starters, anyone with half a brain knows this scenario would lead to chaos at the ports.

But next Wednesday MPs will debate the topic anew, and, if the UK and EU haven’t reached a new deal, parliament will vote on future options, including a potential delay, but this would be going against the prime minister, who has said come hell or high water, Britain is out of the EU on March 29.

Of course, yes, it’s all about the Irish backstop, the “insurance policy” to prevent the return of customs checks on the Irish border.

Reminder: The backstop as currently constituted would mean that Northern Ireland, but not the rest of the UK, would still follow some EU rules on things such as food products, but many MPs don’t like that the UK would not be able to end the backstop without the EU’s permission and so EU rules could remain in place for good.  Others say Northern Ireland should not be treated separately from the rest of the UK.

The backstop is supposed to last about two years after the ‘transition period,’ which assuming there is a formal Brexit, would go from March 29, 2019 through Dec. 31, 2020, during which time Britain is to have negotiated a final agreement on trade with the EU.  Mrs. May is looking for a separate legal statement from the EU that would again stress the temporary nature of the backstop.

So the prime minister has until Tuesday evening to secure a deal she can then get through parliament.

Jean-Claude Juncker, the European Commission’s president, the EC the executive arm of the EU, said on Thursday that he was pessimistic about the chances of Britain leaving the EU with a deal and warned the failure to agree to an orderly divorce would be economically devastating.  “If no deal were to happen, and I cannot exclude this, this would have terrible economic and social consequences in Britain and on the continent.  But I am not very optimistic when it comes to this issue.”

One example of early turmoil in the British economy was Honda’s announcement this week that it will close its plant in Swindon, England, which employs 3,500 workers, by 2021, moving its production of Civic cars back to Japan. 

Last month, Ford said it was cutting thousands of jobs across Europe, while General Motors previously pulled out of Europe in 2017 after persistent losses in the region.

Nissan said in early February that it would be producing the next generation of its X-Trail SUV in Japan, rather than at its factory in Sunderland, England, though this plant will continue to manufacture other models.

Both Nissan and Honda stand to benefit from a new trade deal between the European Union and Japan, making it easier to produce cars in Japan for export to the bloc. 

If you are a manufacturer with operations in Britain, the continued Brexit stalemate obviously makes it more difficult to plan operations past March 29.

France: President Emmanuel Macron has announced new measures to tackle growing anti-Semitism, following a series of attacks.  Parliament is also to vote on a new law to tackle hatred on the internet.

Addressing an annual meeting of Jewish organizations on Wednesday, Macron said anti-Semitism in France and other Western countries had reached its worst levels since World War II.

Last weekend there was a torrent of hate speech directed at a distinguished philosopher, Alain Finkielkraut, during a march of “yellow vest” protesters as he accompanied his mother-in-law to her Left Bank home in Paris.  A band of men raged at Finkielkraut, saying, “Go back to Tel Aviv,” “Zionist,” and “France is our land,” as captured on video.

Anti-Semitic incidents in France soared last year, in what Interior Minister Christophe Castaner called a “poison” spreading “like a venom” and “rotting minds.”

Euro Parliament: With less than 100 days to go until the elections in May, the first official projections from the European Parliament show that 153 seats will be won by existing Eurosceptic groups, that include Poland’s Law and Justice Party, and Matteo Salvini’s League party in Italy, as well as his coalition partner, Italy’s Five Star Movement and France’s Rassemblement National (formerly National Front).

Salvini’s League is expected to dominate Italy’s vote, winning 27 seats in total, according to the poll, which would make it the second biggest political party in the EU.

There are growing fears the anti-EU forces across Europe could coalesce in the parliament to disrupt functioning of the union.  The projections also don’t include parties with no current pan-EU family such as Germany’s far-right Alternative for Germany, and Hungary’s Fidesz, led by Viktor Orban. Ergo, the Eurosceptic vote will actually be larger than 153.

The European People’s Party – the parliament’s dominant group – is due to slip from 217 seats to 183 seats, while the Social Democrats will decline from 186 to 135. [Financial Times]

Turning to Asia, a flash reading on Japan’s manufacturing PMI for February came in at 48.5, down from January’s 50.3 and the first time the figure has reflected contraction in 2 ½ years.

Separately, January core inflation (ex-energy) rose just 0.8%, 0.4% ex-food and energy, both still well below the Bank of Japan’s 2% target.

And Japan’s key machinery orders index posted its first monthly decline in December in three months, with manufacturers expecting orders to fall further this quarter as trade frictions weigh on global demand.  Orders from overseas tumbled 21.9% from the previous month.

Machinery orders are considered a leading indicator of capital spending.

Lastly, in keeping with the above, Japan’s business sentiment worsened in February to levels last seen in late 2016, per the Reuters Tankan survey, this also having to do with weakening demand both at home and abroad.

In China, a reading on new home prices for the 70-city index showed a rise of 0.6% in January over the prior month, the 45th straight month of price increases, though on an annual basis, average home prices in China accelerated to 10% from 9.7% in December, as put out by the National Bureau of Statistics.  So at least one positive sign for the economy here.

Street Bytes

--As alluded to above, the big rally motored on, the Dow Jones up a ninth consecutive week, 0.6%, to 26031, the winning streak the longest since a 10-week run between March and May 1995.  The S&P 500 rose 0.6%, and Nasdaq 0.7%, the tech bellwether also up nine weeks in a row now, tying a run from 2009.

Optimism over the China trade talks was the main reason, earnings season largely over, save for the retail sector next week.  I called this, and I also said it kind of cracks me up.  It’s not rational, but markets seldom are.  We’ll finish the year right around the levels of today.

--U.S. Treasury Yields

6-mo. 2.50%  2-yr. 2.49%  10-yr. 2.65%  30-yr. 3.02%

Zero movement in Treasuries this week.

--Oil hit a high for the year this week of $57.55 before settling at $57.07, bolstered by OPEC-led supply cuts and U.S. sanctions on Venezuela and Iran.  But rising U.S. production, and inventories are limiting the increase in prices.  The Energy Information Administration announced Thursday that U.S. crude oil stockpiles rose for a fifth straight week to the highest in more than a year.

--Walmart Inc. on Tuesday reported sales in its holiday quarter that beat the Street’s forecasts, with comparable/same-store sales growing for the 18th consecutive quarter, up a solid 4.2%, ex-fuel, for the three months ending Jan. 31, with analysts expecting 3%.

Earnings per share of $1.41 beat expectations of $1.33.

Online sales grew 43% in the quarter, in line with the previous quarter’s rise, as Walmart is now the third-largest e-commerce retailer, behind eBay and Amazon, according to research firm eMarketer.  Walmart is benefiting from shoppers increasingly buying groceries online.  They can pick up items they ordered online at more than 2,100 stores or have them delivered from almost 800 locations.  The retailer says 37,000 personal shoppers help to fill the baskets.

CEO Doug McMillon said that customers who shop both online and in-store spend twice as much, and that “Part of our strategy is to build on our existing strengths.  Our stores and clubs are becoming more digital, and we’re using technology to change how we work.”

Walmart also made gains in toys in the wake of Toys R Us shutting its doors in June.

The report offers a glimpse into the health of the American consumer, with Walmart CFO Brett Biggs saying, “We still feel pretty good about the consumer. We haven’t seen much of a change,” this coming after U.S. retail sales recorded their biggest drop in more than nine years in December, as reported last week.

--The fallout continues from Amazon’s pulling out of its second headquarters in Long Island City.

New York Mayor Bill de Blasio, op-ed / New York Times

“The first word I had that Amazon was about to scrap an agreement to bring 25,000 new jobs to New York City came an hour before it broke in the news on Thursday (2/14).

“The call was brief and there was little explanation for the company’s reversal.

“Just days before, I had counseled a senior Amazon executive about how they could win over some of their critics.  Meet with organized labor. Start hiring public housing residents.  Invest in infrastructure and other community needs.  Show you care about fairness and creating opportunity for the working people of Long Island City.

“There was a clear path forward.  Put simply: If you don’t like a small but vocal group of New Yorkers questioning your company’s intentions or integrity, prove them wrong.

“Instead, Amazon proved them right.  Just two hours after a meeting with residents and community leaders to move the project forward, the company abruptly canceled it all.

“I am a lifelong progressive who sees the problem of growing income and wealth inequality. The agreement we struck with Amazon back in November was a solid foundation.  It would have created: at least 25,000 new jobs, including for unionized construction and service workers; partnerships with public colleges; and $27 billion in new tax revenue to fuel priorities from transit to affordable housing – a ninefold return on the taxes the city and state were prepared to forgo to win the headquarters....

“The lesson here is that corporations can’t ignore rising anger over economic inequality anymore. We see that anger roiling Silicon Valley in the rocks hurled at buses carrying tech workers from San Francisco and Oakland to office parks in the suburbs. We see it in the protests that erupted at Davos last month over the growing monopoly of corporate power.

“Amazon’s capricious decision to take its ball and go home, in the face of protest, won’t diminish that anger.

“The city and state were holding up our end.  And more important, a sizable majority of New Yorkers were on board. Support for the new headquarters was strongest in communities of color and among working people who too often haven’t gotten the economic opportunity they deserved.  A project that could’ve opened a path to the middle class for thousands of families was scuttled by a few very powerful people sitting in a boardroom in Seattle....

“As the mayor of the nation’s largest city, a place that’s both a progressive beacon and the very symbol of capitalism, I share the frustration about corporate America.  So do many of my fellow mayors across the country. We know the game is rigged. But we still find ourselves fighting one another in the race to secure opportunity for our residents as corporations force us into all-against-all competitions.

“Amazon’s HQ2 bidding war exemplified that injustice.  It’s time to end that economic warfare with a national solution that prevents corporations from pitting cities against one another.  Some companies get it. Salesforce founder and chief executive Marc Benioff threw his weight behind a new corporate tax in San Francisco to fund services for the homeless.  In January, Microsoft pledged $500 million to combat the affordable housing crisis in Seattle.

“Amazon’s path in New York would have been far smoother had it recognized our residents’ fears of economic insecurity and displacement – and spoken to them directly.

“We just witnessed another example of what the concentration of power in the hands of huge corporations leaves in its wake.  Let’s change the rules before the next corporation tries to divide and conquer.”

Kyle Smith / New York Post

“Congratulations, Alexandria Ocasio-Cortez!  You just killed 25,000 jobs for urban Democrats in one of the most racially and ethnically diverse areas in the entire world!

“Congresswoman AOC, the thought leader of the Democratic party, was the loudest and feistiest political opponent when Amazon announced it would build (half of) its second headquarters in Long Island City, Queens, promising to create 25,000 jobs and generate some $27.5 billion in tax revenue over the next 25 years.  Amazon employs a range of people from unskilled workers to tech geniuses and would have pumped large amounts of money into the city economy.  It estimated the average salary of its New York City workforce would have been $150,000.  Real-estate prices in Long Island City jumped 15 percent since Amazon’s announcement last November.

“But after Amazon walked away in an anti-Valentine to the city on Feb. 14, AOC bragged on Twitter that ‘everyday New Yorkers & their neighbors defeated Amazon’s corporate greed, its worker exploitation, and the power of the richest man in the world.’

“Huh?  A Siena poll this week showed that New York City residents approved of the deal by 56 to 33 percent.  Fellow Democrats Gov. Andrew Cuomo and Mayor Bill de Blasio were pushing hard for the deal. Oh, and it need hardly be stated that Amazon is a company staffed by Democrats. Some 87 percent of its employee donations went to the Dems in the latest elections.  As for ‘richest man in the world,’ Bezos started Amazon in his garage. He got rich building one of the most beloved companies on earth.

“Ocasio-Cortez had previously opposed the deal by enlisting her peeps to ‘effectively organize against creeping overreach of one of the world’s biggest corporations.’  As a matter of principle, I agree that New York taxpayers should not be subsidizing special tax breaks for corporations, especially a behemoth that is run by the richest man on earth. Amazon doesn’t need a tax break and New York City is, as Michael Bloomberg aptly put it, a ‘luxury good’ that simply costs more to be a part of than Dayton or Oklahoma City.

“But AOC didn’t even understand the basics of the subsidies.  She said, ‘If we were willing to give away $3 billion for this deal, we could invest $3 billion in our district ourselves if we want to.  We could hire more teachers,’ etc.  But it’s not like New York was going to write Amazon a $3 billion check.  Most of that money amounted to giving Amazon discounts on its future tax bills, with $505 million set aside as cash grants that would be given only if Amazon met certain benchmarks on job creation and capital investment.

“Then Ocasio-Cortez went waaaay beyond the subsidies.  She claimed the neighborhoods she represents near the proposed HQ2 were in a state of ‘outrage.’  She said Amazon shouldn’t receive tax breaks ‘at a time when our subway is crumbling and our communities need MORE investment, not less.’  Yet if funding the subways is your goal, Amazon would have delivered a lot of long-term tax revenue once it was up and running.  And Ocasio-Cortez seemed to think that Amazon’s jobs didn’t count for anything unless they came from ‘the existing community’ and were unionized.

“Both of those ideas are absurd. Amazon no doubt would have brought in some new New Yorkers, but is AOC suggesting we build a wall around the city to keep out filthy outsiders?  A huge part of the city’s energy comes from all the outsiders we keep attracting like, for instance, Ocasio-Cortez’s Puerto Rico-born mother....

“(AOC) also charged Amazon’s plan with ‘displacement,’ saying, ‘Shuffling working class people out of a community does not improve their quality of life.’  Yeah, who wants to sell their apartment for triple what they paid and move to Fort Lauderdale?  A HarrisX (sic) poll showed 80 percent of Queens residents and 77 percent of the residents of the state senate district where HQ2 would have been built approved of Amazon’s bid.  AOC is pretending to stand with the people while actually destroying opportunity for Democrats.”

--The founder of Huawei has said there is “no way the U.S. can crush” the company, Ren Zhengfei giving an interview to the BBC.  Ren described the arrest of his daughter Meng Wanzhou, the company’s CFO, as politically motivated.

Ren was speaking in his first international broadcast interview since Ms. Meng was arrested – and dismissed the pressure from the U.S.

“There’s no way the U.S. can crush us,” he said.  “The world cannot leave us because we are more advanced. Even if they persuade more countries not to use us temporarily, we can always scale things down a bit.”

But Ren acknowledged that potential loss of access could have a significant impact.

Last week, Secretary of State Mike Pompeo warned allies against using Huawei technology, saying it would make it more difficult for Washington to “partner alongside them.”

Australia, New Zealand, and the U.S. have banned or blocked Huawei from supplying equipment for their future 5G mobile broadband networks, while Canada is reviewing whether the company’s products present a serious security threat.

Ren warned: “If the lights go out in the West, the East will still shine. And if the North goes dark, there is still the South.  America doesn’t represent the world.  America only represents a portion of the world.”

The UK’s National Cyber Security Centre has decided that any risk posed by using Huawei technology in UK telecom projects can be managed; Vodafone, EE and Three, UK mobile companies, currently working with Huawei to develop their 5G networks.  The government is issuing a report in March or April, that will decide whether they can use Huawei.

As for the U.S. and its claims Huawei hid business links to Iran, which is subject to U.S. trade sanctions, while charging the company with attempted theft of trade secrets, Ren said:

“Firstly, I object to what the U.S. has done. This kind of politically motivated act is not acceptable.

“The U.S. likes to sanction others, whenever there’s an issue, they’ll use such combative methods.  We object to this. But now that we’ve gone down this path, we’ll let the courts settle it.”

On the issue of spying, Ren said that is not a risk he would take, yet under Chinese law, firms are compelled to “support, cooperate with and collaborate in national intelligence work.”

Ren told the BBC: “The Chinese government has already clearly said that it won’t install any backdoors. And we won’t install backdoors either.  We’re not going to risk the disgust of our country and of our customers all over the world, because of something like this.

“Our company will never undertake any spying activities. If we have any such actions, then I’ll shut the company down.”

Meanwhile, President Trump tweeted:

“I want 5G, and even 6G, technology in the United States as soon as possible. It is far more powerful, faster, and smarter than the current standard. American companies must step up their efforts, or get left behind. There is no reason that we should be lagging behind on....

“....something that is so obviously the future. I want the United States to win through competition, not by blocking out currently more advanced technologies. We must always be the leader in everything we do, especially when it comes to the very exciting world of technology!”

Some were left scratching their heads as to where this came from. 

--Shares in Southwest Airlines Co. fell more than 5 percent on Wednesday after the carrier said it was investigating whether a conflict with its mechanics union was leading to a spike in flight cancellations.

The escalating labor dispute, one of the biggest to hit a top –four U.S. airline in more than a decade, comes as Southwest was forced to delay its planned Hawaii launch due to the recent U.S. government shutdown and on Wednesday cut its first-quarter revenue growth forecast.

Monday, the Federal Aviation Administration initiated a probe against the carrier regarding weight and balance performance data.

Weather and unscheduled maintenance issues have put an unprecedented number of aircraft out of service, Southwest saying there was no common theme among them, as the company negotiates with the Aircraft Mechanics Fraternal Association, a union representing about 2,400 Southwest mechanics who have been in contract talks with management since 2012.

Last week the company declared an operational “emergency” and demanded all mechanics turn up for work.

The AMFA’s national director told Reuters that Southwest has the lowest mechanic-to-aircraft ratio of any major character and that “Negotiations and the degradation of safety culture are two entirely different items.”

American Airlines Group Inc. is also in contract talks with its mechanics unions and asked for a federal mediator to facilitate negotiations last September, with American’s mechanic contracts not having been updated since it merged with US Airways in 2013.

--Johnson & Johnson said in a securities filing that the Justice Department and the Securities and Exchange Commission are investigating the company over concerns about possible asbestos contamination of its popular baby powder and other talc-based products, the company said Wednesday.  J&J said it was “cooperating with these government inquiries and will be producing documents in response” to subpoenas it had received.

The company faces around 13,000 lawsuits in which its body powders are blamed for causing ovarian cancer or mesothelioma, with Johnson & Johnson reiterating Wednesday that “decades of independent tests by regulators and the world’s leading labs prove Johnson & Johnson’s baby powder is safe and asbestos-free, and does not cause cancer.”

A major supplier of talc used by J&J, Imerys Talc America, filed for Chapter 11 bankruptcy last week, saying although the suits challenging talc’s safety were “entirely without merit,” it did not want to “litigate these claims in perpetuity and incur millions of dollars in projected legal costs to defend these cases.”  [Tiffany Hsu / New York Times]

--The fate of California’s high-speed rail project was cast into further doubt Tuesday when the federal government announced plans to cancel $929 million in grant funds, a move administration officials linked to violations of the grant agreement, an escalation in the battle between California Gov. Gavin Newsom and President Trump, Newsom last week saying that the project lacked a path to complete a statewide system and vowed to scale back the $77-billion mega-project.

The Transportation Department also said it was “actively exploring every legal option” to get back an additional $2.5-billion grant that is being used to finance the construction of 119 miles of rail line in the Central Valley.  The two federal grants represent about one-fourth of all the funding of the project to date and should they be lost, the state would no doubt have to further curtail the project.

Newsom said on Tuesday, “It’s no coincidence that the Administration’s threat comes 24 hours after California led 16 states in challenging the President’s farcical ‘national emergency.’  The President even tied the two issues together in a tweet this morning. This is clear political retribution by President Trump, and we won’t sit idly by.  This is also California’s money, and we are going to fight for it.”

Trump had tweeted: “The failed Fast Train project in California, where the cost overruns are becoming world record setting, is hundreds of times more expensive than the desperately needed Wall!”

Well, once again, the president needs to understand the rail project is estimated at $77 billion, and his full wall project, as the administration first stated, would be about $25 billion, so around three times more expensive.

Ronald Batory, chief of the Federal Railroad Administration, the agency that made the grants in 2009 and 2010, argued this week why the state was out of compliance with the grant agreement, alleging the state had failed to spend required matching funds, falling short by $100 million as of December.  Batory also argued the state will fail to complete the Central Valley construction that Newsom cited in his State of the State speech last week (between Merced and Bakersfield) in the allotted time period.

Separately, the White House announced Thursday that it would no longer negotiate with California air pollution regulators on reshaping the rules originally set by the Obama administration. It will forge ahead on its own with a plan to ease fuel-efficiency mandates for auto makers, challenging California’s legal authority to set its own, more stringent rules.

California leaders responded with a pledge to defend their authority, raising the possibility this is headed towards the Supreme Court, after what would be a yearslong legal battle.

Car makers have pushed the Trump administration to relax Obama-era fuel-economy standards, arguing the future rules will be too tough to meet as low gas prices boost sales of less-efficient trucks and SUVs.

--A British House of Commons committee has concluded Facebook needs far stricter regulation, with tough and urgent action needed to end the spread of disinformation on its platform.  The committee also noted that founder Mark Zuckerberg failed to show “leadership or personal responsibility” over fake news.

Untrue stories from foreign powers were risking the UK’s democracy, they said.

Facebook welcomed the digital select committee’s report and said it would be open to “meaningful regulation.”

MPs said that what was needed to deal with the proliferation of disinformation online and the misuse of personal data was a “radical shift in the balance of power between social media platforms and the people.”

The report from the House of Commons concluded: “Democracy is at risk from the malicious and relentless targeting of citizens with disinformation and personalized ‘dark adverts’ from unidentifiable sources, delivered through the major social media platforms we use every day.

“The big tech companies are failing in the duty of care they owe to their users to act against harmful content, and to respect their data privacy rights.”

In actuality, though, the MPs have little real power in effecting change at Facebook, other than to shame the company and Zuckerberg, MPs particularly angry he did not come to the UK to answer questions in person.

--Uber Technologies Inc. reported fourth-quarter revenue rose 25% from a year earlier to $3.02 billion.  But while this looks good, it is a rapid deceleration from prior quarters, such as 38% in the third quarter and 70% in the first.

Uber has been disclosing detailed financial results for the past two years as it prepares for an initial public offering later this year.

Uber’s net loss narrowed in the latest period to $865 million from $1.07 billion in the third quarter.

The company is looking for a valuation of as much as $120 billion for its IPO, as CEO Dara Khosrowshahi has been attempting to shore up the balance sheet by selling off unprofitable units, while completing fundraising from the likes of SoftBank Group Corp. and Toyota Motor Corp.

But it’s been difficult controlling costs, such as in incentive pay for drivers to keep them on the road longer and away from rivals like Lyft Inc., which is also planning an IPO, supposedly next month.  Lyft is only in the U.S. and Canada, versus Uber’s global reach.

Uber’s last private valuation was $76 billion vs. Lyft’s $15 billion.

--Consumer Reports on Thursday pulled a recommendation for Tesla Inc.’s Model 3, citing reliability problems, and the influential U.S. magazine turned up the pressure on other automakers to include crash-avoiding automatic braking as standard equipment.

The magazine’s decision to withdraw the endorsement for the Model 3 less than nine months after recommending the electric sedan highlighted questions about quality that Tesla has faced since the vehicle’s difficult launch.  Tesla shares fell 3 percent in after-market trading and finished the week at $294, down from its high of $387.

Low scores for the Model 3 hurt the brand’s overall standing, knocking it down 11 spots to No. 19 out of 33 brands in CR’s 2019 annual rankings.

--A Nike sneaker worn by Duke basketball star Zion Williamson, who is expected to be the top pick in the upcoming NBA draft, exploded (ripped open) on him during the Blue Devils’ big game against North Carolina on Wednesday, Williamson suffering a “mild knee sprain,” status day-to-day, as the shares fell a little over 1% in response (though rebounded today).

“We are obviously concerned and want to wish Zion a speedy recovery,” Nike said in a statement. “The quality and performance of our products are of utmost importance. While this is an isolated occurrence, we are working to identify the issue.”

Thank god Zion wasn’t hurt seriously, but the incident heightens far bigger issues involving amateurism and high-profile college athletes who aren’t getting paid...material best suited for my “Bar Chat” column.

This is, however, the fourth Nike product worn by an NBA player since 2016 to fall apart.  And we’ll see if Zion signs a sponsor deal with the company once he’s drafted.

--Kraft Heinz saw its shares plunge 27% today to a new low since the Kraft Heinz merger in 2015 after the company cut its dividend and disclosed that it received a subpoena from the Securities and Exchange Commission in October.

The company also said it was lowering its dividend as it seeks to accelerate the “deleveraging process to provide greater balance sheet flexibility.”

But Kraft said the subpoena was part of an investigation into the company’s procurement accounting policies.

Kraft Heinz said it launched an internal investigation into the matter after receiving the subpoena.  Following its investigation, Kraft Heinz said it posted a $25 million increase to the cost of products sold after determining it was “immaterial to the fourth quarter of 2018 and its previously reported 2018 and 2017 interim and year to date periods.”

The company said the development will not be material to financial statements for this period or previous ones ($25 million compares with $11 billion in total procurement annually), but this is troubling, boys and girls.

The company ended up writing down the value of its Kraft and Oscar Mayer brands by $15.4 billion.  CEO Bernardo Hees said on a conference call with investors after the close of trading on Thursday, “We were overly optimistic on delivering savings that did not materialize.”

The firm said its brands like Oscar Mayer hot dogs and Kraft Mac & Cheese returned to sales growth after several years of declines. But profit margins suffered as a result, making the brands less valuable.

This is only part of the story, however, as Kraft Heinz is run by Brazilian investment firm 3G, which burst on the scene a decade ago, spending $billions to buy up America’s old-school food companies and brands, including Heinz and Burger King, Bud Light and Restaurant Brands International.

And a major investor in Kraft Heinz, because of 3G’s supposed acumen, is one Warren Buffett, who is holding his annual shareholder shindig this weekend in Omaha and he’s going to be facing some major questions.

Buffett backed 3G’s takeover of Heinz in 2013, and then the merger two years later into Kraft.  Buffett’s Berkshire Hathaway owns about 27% of Kraft Heinz...matching the stock’s loss today.

--Domino’s Pizza missed fourth-quarter earnings and revenue estimates and the shares declined 9% in response on Thursday (though recovered 3% today).

Total revenue of $1.08 billion was up from $891.5 million in the same period a year ago but was below the Street’s forecast of 1.09bn. Same-store sales rose 2.4% for the quarter.

The company reaffirmed its three to five-year outlook expecting global retail sales growth in the range of 8% to 12%.

--Payless ShoeSource, the discount footwear retailer, confirmed last weekend that it was closing its 2,100 stores in the U.S. and Puerto Rico and has already started liquidation sales. The company is also shuttering its e-commerce operations.

Gee, I’ll have to try and find one in my area, the stores supposedly staying open until at least the end of March.

The thing is, the Topeka, Kansas-based company filed for bankruptcy protection in 2017, when it closed 673 stores.

--According to data compiled by Bloomberg, billionaire investor Ken Griffin pocketed $870 million in 2018, in case you were wondering how he could afford to spend $360 million thus far in 2019 on two homes, including one on Central Park South purchased for $238 million, a record for a home in the U.S.  The other purchase was for a 20,000-square-foot London townhouse...$122 million.

Griffin, head of Citadel, the hedge fund outfit, is reportedly worth $10 billion.

Citadel’s flagship Wellington Fund gained 9.1 percent in 2018, putting it near the top of the pack in a year when most hedge funds and the stock market lost money.

But topping the top-earning hedgies list for 2018 was James Simons, the mathematician behind secretive hedge fund Renaissance Technologies, with $1.6 billion in 2018 income as the firm’s Institutional Equities fund gained 8.5 percent. 

Bridgewater’s Ray Dalio nabbed second place with income of $1.3 billion as his firm’s flagship fund gained 14.6 percent.

--We note the passing of Karl Lagerfeld, the most prolific designer of the 20th and 21st centuries, operating as creative director of Chanel since 1983 and Fendi since 1965.  He was 85.

Anna Wintour, editor of American Vogue, said of Lagerfeld when presenting him with the Outstanding Achievement Award at the British Fashion Awards in 2015: “More than anyone I know, he represents the soul of fashion: restless, forward-looking and voraciously attentive to our changing culture.”

Foreign Affairs

North Korea: On to Hanoi.  So little real progress has been made since Kim Jong Un and President Trump met in Singapore last June, but the White House is hoping that next week’s second summit will at least result in a road map for denuclearization.  As the New York Times’ Mark Landler reports, however, Trump “appears more tantalized, at least for now, by declaring an end to seven decades of war on the Korean Peninsula.”

The combination of the two goals could thus produce “historic headlines but (do) little to advance the core American objective of eliminating North Korea’s nuclear arsenal.”

President Trump has been saying recently that he was in no hurry to force North Korea to give up all its weapons.

“As long as there’s no testing, I’m in no rush,” Trump told reporters while discussing his latest phone call with South Korean President Moon Jae-in.  “If there’s testing, that’s another deal.”

[Moon told Trump he hopes the summit “will provide a ‘critical turning point’ to accomplish complete denuclearization, a peace regime on the peninsula and development of NK-US relations,” according to a statement from Moon’s office.]

Ending the war is a long-running goal of Pyongyang because it would reduce their isolation and put pressure on those with sanctions against the regime.  But would this then also lead to a withdrawal of U.S. forces in South Korea?

And how much does Trump want a Nobel Peace Prize?  He certainly talks about it a lot, recently saying Japanese Prime Minister Shinzo Abe had nominated him for it, which Abe hasn’t commented on...but for which Trump has indeed already been nominated, by two Norwegian lawmakers.

Just remember as the summit progresses, that North Korea has yet to provide the United States an inventory of its nuclear facilities, a prerequisite for any disarmament plan.  It is doubtful Kim will produce such a list in Hanoi.

Meanwhile, according to the Wall Street Journal’s Andrew Jeong and Timothy W. Martin:

“North Korean leader Kim Jong Un has exiled, imprisoned or executed suspected opponents of his diplomatic outreach to the U.S. and South Korea, while also targeting his country’s moneyed elite with asset seizures, according to a new report that details a purge of some 50 to 70 individuals....

“The purge takes aim at officials who have used their powerful positions to amass wealth illicitly – albeit on a North Korean scale, according to analysts and the report from the North Korea Strategy Center, a Seoul-based think tank founded by a North Korean defector.  The report’s findings are based on interviews with 20 current and former high-ranking members of the Kim regime.”

Kim, in a speech Jan. 1, publicly declared a war on corruption.

According to the authors of the report, Kim is thought to have purged around 400 individuals since taking over from his father in 2011, half of the number coming from a campaign against his influential uncle in 2013.

Lastly, the highest-ranking North Korean official to defect in recent years, Thae Yong Ho, said the U.S. should press Pyongyang to rejoin the Nuclear Nonproliferation Treaty as a step toward denuclearization and warned that Kim would try to deceive Trump by offering hollow concessions.

Thae told a news conference: “There are 390 nuclear facilities [inside the Yongbyon complex.]  Even if there is an agreement, the act of inspecting, dismantling, then verifying the facilities’ closure won’t be completed within President Trump’s term.”

North Korea could keep its arsenal while gaining sanctions relief, so that’s why they’ll dangle Yongbyon, Thae notes.

Thae was North Korea’s deputy ambassador to London when he defected with his family to South Korea.

China: Chinese State Councillor and Foreign Minister Wang Yi called on the United States to respect China’s right to development, adding that economic and trade ties could stabilize relations between the two countries.

In a meeting in Beijing on Tuesday with a delegation led by U.S. Chamber of Commerce executive vice-president Myron Brilliant, Wang said the U.S. should see China’s development as beneficial to its own interests.

“Considering China’s development as an opportunity for the U.S. should be conducive to solving some problems, including trade, between the two countries,” Wang was quoted by state news agency Xinhua as saying.

Lingling Wei and Bob Davis / Wall Street Journal

“Despite their sharp differences in style, background and policies, Chinese leader Xi Jinping and President Trump share a common problem: growing concerns on the home front that they are going to cave in to the other side.

“Shortly before President Xi’s special envoy jetted to Washington on Tuesday to continue trade talks, an influential Communist Party journal published a speech by Mr. Xi in which he vowed not to give ground on the kind of political and legal reform needed to protect foreign intellectual property in China, a key U.S. demand.

“The timing of the publication wasn’t coincidental, according to party insiders.  Mr. Xi made the speech in August, but his comments – in which he ruled out the adoption of the Western concept of judicial independence – were aimed at disarming those who say China is giving in to U.S. pressure.

“ ‘There is a growing call for a harder-line approach [toward the U.S.] in the Chinese society,’ said Mei Xinyu, an analyst at a think tank affiliated with China’s Commerce Ministry.  ‘The U.S. side should take such sentiment into account and shouldn’t be too greedy.’

“Mr. Trump risks a similar backlash from those who fear he is tiring of the trade dispute and is poised to cut a deal that won’t lead to fundamental changes by China, including reducing the power of its state-owned enterprises and slashing subsidies for companies it considers national champions.”

Separately, the New York Times’ Nicole Perlroth reported:

“Businesses and government agencies in the United States have been targeted in aggressive attacks by Iranian and Chinese hackers who security experts believe have been energized by President Trump’s withdrawal from the Iran nuclear deal last year and his trade conflicts with China.

“Recent Iranian attacks on American banks, businesses and government agencies have been more extensive than previously reported. Dozens of corporations and multiple United States institutions have been hit, according to seven people briefed on the episodes who were not authorized to discuss them publicly....

“The Iranian attacks coincide with a renewed Chinese offensive geared toward stealing trade and military secrets from American military contractors and technology companies, according to nine intelligence officials, private security researchers and lawyers familiar with the attacks who discussed them on the condition of anonymity because of confidentiality agreements.”

A priority for the hackers is supporting Beijing’s five-year economic plan, which is meant to make China a leader in artificial intelligence and other cutting-edge technologies.

Russia: Against a backdrop of falling poll numbers, Russian President Vladimir Putin delivered his annual address to the Federal Assembly on Wednesday with an emphasis on domestic issues.

“Resolving demographic issues, increasing life expectancy and lowering the death rate are directly linked to overcoming poverty...there are too many poor people...we, of course, should focus our attention on this and on fighting this phenomenon....

“Poverty always weighs a person down. The state has to help people escape difficult situations.  One of the ways of providing this support will be a social contract.”

But he switched gears to a discussion of Russia’s new missile program in light of the U.S. withdrawal from the INF Treaty (Intermediate-range Nuclear Forces Treaty).

“The U.S. directly and crudely violated the rules of the [INF] agreement, it will exacerbate the international situation and create a genuine danger for Russia, as there will be missiles with a 10-12 minute flight time to Moscow....

“Russia will be forced to create and deploy weapons that can both be used on the territories from which the direct threat to us originates, as well as the territories where the centers of decision-making are located....

“We are ready for disarmament talks, but we are no longer going to knock on a closed door.”

Earlier this month, Russia said it would suspend its obligations under the INF Treaty essentially sealing the fate of the pact the U.S. recently said it plans to abandon in six months if Moscow doesn’t destroy the missile systems Washington claims are a breach of the pact.

On the new weaponry, Putin said, “Let them count the speed and the range of the weapons systems we are developing.”

“The tests of Poseidon, an unmanned submarine with unlimited range, are going well... This hasn’t previously been said, but today I can say that by the spring of this year the first atomic submarine will have been launched into the water.”  [Moscow Times]

The U.S. State Department dismissed Putin’s warnings as propaganda, saying it was designed to divert attention from what Washington alleges are Moscow’s violations of the INF Treaty.

In a separate session with Russian media later Wednesday, Putin said that Russia is militarily ready for a Cuban Missile-style crisis if the United States is foolish enough to want one and that his country currently has the edge when it comes to a first nuclear strike.

The Cuban Missile Crisis erupted in 1962 after Moscow responded to a U.S. missile deployment in Turkey by sending ballistic missiles to Cuba.

Putin said Russia could deploy hypersonic missiles on ships and submarines which could lurk outside U.S. territorial waters if Washington moved to deploy intermediate-range nukes in Europe. 

“[We’re talking about] naval delivery vehicles: submarines or surface ships.  And we can put them, given the speed and range [of our missiles]...in neutral waters.  Plus they are not stationary, they move and they will have to find them,” Putin said, according to a Kremlin transcript.

“You work it out.  Mach nine [the speed of the missiles] and over 1,000 km [their range].” [Andrew Osborn / Reuters]

On a different topic....

Patrick Tucker / Defense News

“Nineteen minutes. That’s how long the average victim of a Russian state-sponsored hacking group has to react before the initial penetration of a network becomes wider access, theft, and destruction, according to data published today by computer security company CrowdStrike.

“For comparison, the second-fastest groups were North Koreans, who needed an average of two hours to jump from the first compromised computer to the second; Chinese groups needed an average of four hours.

“Dubbed ‘breakout time,’ the statistic refers to the amount of time it takes the attacker to jump between network nodes once on the network. It also ‘shows how much time defenders have on average to detect an initial intrusion, investigate it and eject the attacker from the network, before sensitive data can be stolen or destroyed,’ CrowdStrike analysts wrote in a post last year introducing the concept.”

While the power of the Russian networks was long known, the speed is eye-opening.

India / Pakistan: Tensions continued to escalate in the aftermath of a suicide attack in Kashmir, with nine people killed in a gun battle that broke out as Indian soldiers searched for those responsible.  India is still promising a “jaw-breaking response.”

Pakistan has warned India against linking it to the attack without an investigation, with Pakistani Prime Minister Imran Khan saying in a televised address that Pakistan would retaliate if India takes military action against it in the aftermath of last week’s suicide attack on Indian forces in Indian-administered Kashmir that killed 44 Indian soldiers.

Editorial / Washington Post

“A bloody suicide bombing in Kashmir last week has confronted the Indian government with a dilemma that both it and the United States have repeatedly faced: what to do about the sponsorship of Islamist terrorists groups by Pakistan, a nuclear-armed state. Diplomacy, sanctions and targeted military strikes haven’t worked; full-scale war is unthinkable. Yet the failure to impose accountability or establish deterrence only encourages the Pakistani military and its intelligence service to continue a policy of backing extremists in both India and Afghanistan.

“The attack on an Indian military convoy, which killed 40 (44), was carried out by a bomber native to Kashmir, reflecting the growth of homegrown militants fighting Indian rule.  Responsibility for the attack was quickly claimed by Jaish-e-Mohammed, a Pakistan-based organization that, while officially banned, has long had the support of military and intelligence officials.  Its leader, Masood Azhar, is reported by Indian media to be in a Pakistani military hospital.  Indian authorities said the planner of the bomb attack, who was killed Monday in a shootout, was a Pakistani national and known associate of Mr. Azhar.

“While the Indian government is saying it has ‘incontrovertible evidence’ that Pakistan had a ‘direct hand’ in the attack, Islamabad is responding with familiar dodges.  Prime Minister Imran Khan denied responsibility without explicitly condemning the bombing, and pledged to take action if India provided proof of Pakistani involvement.  If the record of past terrorist attacks in India is any indication, Pakistan will not act even if evidence is provided.  The same has been true of its response to terrorist attacks in Afghanistan, such as assaults on the U.S. Embassy and other Western targets by a Taliban faction known as the Haqqani network, which Pakistan is also believed to support.

“Pakistan has long sought to use terrorists to gain leverage over India, with which it disputes control of Kashmir, and the United States, which it would like to force to accept rule by the Taliban in Afghanistan.  It is making headway on the latter goal with the Trump administration, which has been negotiating with the Taliban about withdrawing U.S. troops. That increases the complications for Indian Prime Minister Narendra Modi, who faces a national election in the coming months.

“Mr. Modi has vowed ‘a befitting reply’ to the attack....

“(But) short of a military operation with unpredictable consequences, however, India’s options are limited.  One is to seek, again, United Nations designation of Mr. Azhar as a global terrorist – but Pakistan’s ally China has blocked that action in the past. Mr. Modi’s best course, however unsatisfactory, may be to avoid overreaction – including against the Muslim population of Kashmir and those in India who speak out on its behalf.”

Syria / Iran: The White House announced Thursday that a small contingent of U.S. troops will remain in Syria, about 200*, following President Trump’s order for a “full” withdrawal from the country.  The 200 will stay in the country “for a period of time,” per a statement from press secretary Sarah Sanders.

*Today the figure seems to have moved to 400.

The 200-400 will be divided between At-Tanf, an area near the Iraq-Jordan border, and northeast Syria, according to a U.S. official.  The troops in those areas currently advise the Syrian Democratic Forces (SDF).  The idea would be that the U.S. forces would be able to provide unique high-end capabilities – such as logistics, intelligence, surveillance, reconnaissance and calling in airstrikes – that would help encourage coalition partners like France and the UK to also keep their troops in Syria to help ensure a safe zone with a force of some 1,500 international troops, a request reportedly made by the commander of the U.S.-backed and Kurdish-led SDF.

But allies have “unanimously” told the United States that they “won’t stay if you pull out,” a senior administration official told the Washington Post; France and Britain being the only other countries with troops on the ground there.

French Foreign Minister Jean-Yves Le Drian said last week that he was mystified by Trump’s policy. On Tuesday, British Foreign Secretary Jeremy Hunt said that “there is no prospect of British forces replacing the Americans” in Syria.

Turkish President Erdogan has said that his military, massed at the border, is prepared to move into northeast Syria once the Americans leave.

Currently, the U.S. still has 2,000 troops in Syria, but officials have told CNN the beginning of the troop withdrawal is imminent.

As for the 800 or so Islamic State detainees in northern Syria, Kurdish-led authorities said that while they would not free the foreign detainees, their countries must take responsibility for them, after President Trump said jihadists would be freed unless Europe takes them back.  The prisoners have been described as a “time bomb,” the fighters being able to escape if the Kurdish-led autonomous area were attacked, say by Turkey, after the U.S. withdraws.

Separately, addressing the Munich Security Conference last weekend, Iranian Foreign Minister Mohammed Javad Zarif accused Israel of looking for war and warned that its behavior and that of the United States was increasing the chances of a clash in the region.

“Certainly, some people are looking for war...Israel,” Zarif told attendees.

Accusing Israel of violating international law after bombing campaigns in Syria, Zarif also criticized European powers for not calling out Israel and the U.S. for their behavior in the region.

“The risk (of war) is great. The risk will be even greater if you continue to turn a blind eye to severe violations of international law.

“Israeli behavior is putting international law on the shelf, U.S. behavior is putting international law on the shelf....

“Look at the map, the U.S. military has travelled 10,000 kilometers to dot all our borders with its bases. There is a joke that it is Iran that put itself in the middle of U.S. bases.”

Zarif said Iran was still committed to the 2015 nuclear deal with world powers for now, but he accused France, Britain and Germany of not doing enough to ensure Tehran received the economic benefits of that accord.

Addressing his cabinet on Sunday, Israeli Prime Minister Benjamin Netanyahu said Iranian belligerence was the main destabilizing factor in the entire Middle East. 

“We must deny Iran nuclear weaponry and block its military entrenchment in Syria. We will continue taking constant action to ensure Israel’s security,” he said.

Saudi Arabia: A report released by House Democrats claims top Trump administration officials advocated for a plan to build dozens of nuclear power plants in Saudi Arabia despite warnings that the move could pose ethical concerns and violate federal law.

The report, compiled by the House Committee on Oversight and Reform, chaired by Democrat Rep. Elijah Cummings, is part of a probe of the plan to examine who within the White House was involved and the financial interests of those individuals.

Democrats have raised concerns that the administration was aiding an effort that would allow the Saudi regime access to “sensitive U.S. nuclear technology” that could in turn “allow Saudi Arabia to produce nuclear weapons that contribute to the proliferation of nuclear arms throughout an already unstable Middle East.”

Meanwhile, Crown Prince Mohammed bin Salman on Sunday said Saudi Arabia has signed investment agreements worth $20 billion during his high-profile visit to Pakistan.

Kicking off his tour of South Asia and China with a far higher Pakistan investment than expected the crown prince said the $20 billion figure represents only the start of an economic tie-up that would bring the historic Muslim allies even closer.

And that has been a long-running concern for many of us, because it was long felt the Saudis could just acquire one of Pakistan’s nuclear weapons any time they wanted.

As the guardians of most holy sites in the birthplace of Islam, the Saudi royal family carries vast religious clout in Pakistan, a staunchly conservative and mainly Muslim nation of 208 million.

I hope U.S. intelligence is up to the task of tracking Pakistan’s weapons.

Venezuela: President Nicolas Maduro ordered the closure of the border with Brazil amid the row over foreign humanitarian aid.  Maduro also went on TV to say he was considering shutting the border with Colombia to stop the opposition from bringing in relief.

The nut-job continues to deny any crisis and calls the aid delivery plans a U.S.-orchestrated show.

But opposition leader Juan Guaido, the recognized interim president by much of the West, is leading a convoy from Caracas to the Colombian border, with the two sides slated to hold dueling events at the border late today...and there are reports of gunfire and at least one dead as I go to post.

Random Musings

--Presidential tracking polls....

Gallup: 44% approval of Trump’s job performance, 52% disapproval; 89% of Republicans approve, 38% Independents (Feb. 15)...reminder, Gallup is now once a month, but I will keep noting their last survey results for consistency.
Rasmussen: 49% approve, 49% disapprove (Feb. 22).

--Bernie Sanders announced he was running for president on Tuesday, the self-styled democratic socialist whose calls for “Medicare for all,” a $15 minimum wage and tuition-free public colleges were once original, though now pillars of the party’s left wing.  He must have done a good job tending his old 2016 campaign donor list, because while I don’t think he has a chance of getting through New Hampshire once this race begins to truly take shape around the time of the Iowa State Fair in August, he did immediately raise a ton of money.

I just believe Bernie is too 2016.  I’m certainly not alone in that sentiment.  He had his shot, he’s 77, and it’s time for a new generation.

So I’m sticking to what I said last time.  Amy Klobuchar, Kamala Harris, Cory Booker, and Sherrod Brown will survive Iowa and New Hampshire*, and Joe Biden, assuming he declares as it seems he will now do.  Sanders, Elizabeth Warren, Kirsten Gillibrand will not be standing come South Carolina.

*But this was a bad week for Harris and Booker because of their mishandling of the Smollett case, where they both look like fools today, and for Amy Klobuchar, the subject of a rather negative piece in the New York Times on her behavior towards her staff.

--Alexandria Ocasio-Cortez went on a Twitter tear accusing people of undermining her intelligence over statements she made about Amazon’s failed move to the Big Apple.

“Frankly, the knee-jerk reaction assuming that I ‘don’t understand’ how tax giveaways to corps work is disappointing,” the progressive darling wrote Tuesday.

AOC came under fire when she argued last week that the close to $3 billion in tax breaks and subsidies that Amazon was in line for if they went through with their project in Long Island City, New York, could have been better spent on hiring teachers or fixing the subways.

Ocasio-Cortez lashed out at people who pointed out that $2.5 billion of the $3 billion represented future tax breaks – not a large pile of cash that could now he spent elsewhere.

“No, it’s not possible that I could come to a different conclusion. The debate ‘must’ be over my intelligence & understanding, instead of the merits of the deal,” she wrote.

“Folks handling the failed deal treated community w/condescension+disdain for their legitimate concerns.  I warned early to any & all that surging NYC costs+failing subways are creating major political forces to be reckoned with. But I don’t know what I’m talking about, right?” she railed in another tweet.

Just keep talking, AOC.

--North Carolina election officials on Thursday unanimously ordered a new contest in the 9th Congressional District, after a months-long investigation into allegations of widespread ballot-tampering that could refocus the national debate about election fraud.

The board voted 5-0 to throw out the November results between Republican Mark Harris and Democrat Dan McCready after Harris, an evangelical minister from Charlotte, admitted under oath that he was mistaken in his testimony earlier in the day.

Harris had been under scrutiny for hiring a shady political operative, Leslie McCrae Dowless, who allegedly assembled a crew of election workers to illegally collect, fill out and forge mail-in ballots in two rural counties in the 9th District.

--Max Boot / Washington Post

“Is the study of history becoming, well, history?

“According to Benjamin Schmidt of Northeastern University, the number of bachelor’s degrees granted in history declined from 34,642 in 2008 to 24,266 in 2017 even as other majors, such as computer science and engineering, have seen rising enrollments.  Today, fewer than 2 percent of male undergraduates and fewer than 1 percent of females major in history, compared with more than 6 percent and nearly 5 percent, respectively, in the late 1960s.  History departments are cutting courses and curtailing hires because of falling enrollments. The University of Wisconsin at Stevens Point may even abolish its entire history department.  History education in schools is so poor that students often enter college ignorant of the past – and leave just as unenlightened.

“A survey by the American Council of Trustees and Alumni found that ‘more Americans could identify Michael Jackson as the composer of ‘Beat It’ and ‘Billie Jean’ than could identify the Bill of Rights as a body of amendments to the U.S. Constitution,’ ‘more than a third did not know the century in which the American Revolution took place,’ and ‘half of the respondents believed the Civil War, the Emancipation Proclamation or the War of 1812 were before the American Revolution.’  Oh, and ‘more than 50 percent of respondents attributed the quote, ‘From each according to his ability to each according to his needs’ to either Thomas Paine, George Washington or Barack Obama.’....

“This abysmal ignorance fills me with sadness – even despair....

“You simply can’t understand the present if you don’t understand the past....

“The fact that so many Americans know so little about the past means that we as a society are vulnerable to demagogues.  ‘Don’t know much about history’ is a catchy song lyric but a dangerous motto for a democracy.  Historians may not want to admit it, but they bear some blame for the increasing irrelevance of their discipline.  As historians Hal Brands and Francis Gavin argue in War on the Rocks, since the 1960s, history professors have retreated from public debate into their own esoteric pursuits.  The push to emphasize ‘cultural, social and gender history,’ and to pay ‘greater attention to the experiences of underrepresented and oppressed groups,’ they write, has been a welcome corrective to an older historiography that focused almost entirely on powerful white men.  But like many revolutions, this one has gone too far, leading to the neglect of political, diplomatic and military history – subjects that students need to study and, as enrollment figures indicate, students want to study but that universities perversely neglect.  Historian Jill Lepore notes that we have ditched an outdated national narrative without creating a new one to take its place, leaving a vacuum to be filled by tribalists.

“Historians need to speak to a larger public that will never pick up their academic journals – and students need to grasp the importance of studying history, not only for their own future but for the country’s, too.  Don’t worry, it’s not a bad investment: History majors’ median earnings are higher than other college graduates’.”

So tonight, as I go to post, this story crossed CNN.com: “Vandals in Dunn, North Carolina, last week doused the marble statue of Gen. Lee with a flammable liquid and set it on fire.

“But if they think they targeted Confederate Gen. Robert E. Lee, they got the wrong Lee.”

As in the statue stands outside the Maj. Gen. William C. Lee Airborne Museum, as in Dunn is the birthplace of the World War II hero, commanding officer of the legendary 101st Airborne Division that came to prominence in the Big One.

Mr. Boot, you need to add this story to your op-ed.  And the kids, or adults, who perpetrated this act are going in the December file, along with New England Patriots owner Robert Kraft, for “Idiot of the Year”!

Yes, Kraft deserves due process, but as we begin to hear of the other high-profile figures captured in the sting operation in Florida, let’s just say Kraft is likely deserving of a year-long suspension from the NFL.

I have already received as many emails from Patriots haters tonight as just about anything I can remember. Go Jets!

--At the opening of an unprecedented four-day summit at the Vatican attended by the heads of all national bishops’ conferences from more than 130 countries, Pope Francis said the world expects “concrete measures” to tackle child sexual abuse by priests and not only “simple and obvious condemnations.”

The Pope said “the cry of the little ones seeking justice” had to be heard.

The pontiff, 82, is under major pressure to provide leadership and generate workable solutions to what is the most pressing issue facing the modern Church.

As part of his opening statement, the Pope said: “I ask the Holy Spirit to support us in these days and to help us to transform this evil into an opportunity for awareness and purification.  May the Virgin Mary enlighten us to try to cure the serious wounds that the scandal of paedophilia has caused both in children and in believers.”

Martin Bashir, the BBC’s religion editor, wrote:

“Pope Francis must confront the assumptions, attitudes and practices that have allowed a culture of abuse to flourish.  The extent of this challenge may prove overwhelming.

“This is only the beginning of an attempt to address a sickness that has been poisoning the Church since at least the 1980s, leaving its moral authority in tatters.

“The focus is now firmly fixed on Pope Francis, who leads an organization with more than 1.2 billion adherents, present in virtually every country on Earth.

“His pontificate began with widespread enthusiasm for a man who chose pastoral appeal over pomp and ceremony, humility and compassion over the trappings of status. But how it ends is likely to depend on the action he takes, and the protocols he implements, to deal with the scourge of abuse.”

Meanwhile, two prominent cardinals have urged an end to what they call “the plague of the homosexual agenda,” telling bishops to break their complicity over cases of sexual abuse.

In an open letter, Cardinals Raymond Burke (U.S.) and Walter Brandmuller (Germany) say the Church has wrongly blamed the abuse of power by clergy as the main cause of the scandals.

Instead, they say the cases involve priests who have “gone away from the truth of the Gospel.”  Burke and Brandmuller belong to the traditionalist wing of the Church.

But the cardinals also accuse the Pope of failing to answer questions related to whether the Church should allow divorced and remarried Catholics to receive Holy Communion – they are currently barred.  These questions were posed to Francis in 2016 by four cardinals, including Burke and Brandmuller.

And of course I have to note that former Cardinal Theodore McCarrick became the most senior Catholic figure to be dismissed from the priesthood in modern times, McCarrick “defrocked” by Pope Francis, with the Pope adding there would be no further appeals against the decision.

U.S. church officials said allegations he had sexually assaulted a teenager five decades ago were credible.  McCarrick, 88, had previously resigned (the first cardinal to do so since 1927) but said he had “no recollection” of the alleged abuse.

But the Vatican found him guilty of soliciting sex while hearing confession and sexual crimes against minors and adults, the Holy See said Saturday.

Defrocking means McCarrick won’t be allowed to celebrate Mass or other sacraments.

I still can’t believe this man that I knew, whose elevation to cardinal in Rome I attended in Feb. 2001, former GE CEO Jack Welch sitting directly in front of me, is the highest-ranking figure to be dismissed.

But the Washington Post notes, McCarrick may have always been honest about one thing: He always called himself a sinner.  In a 2008 essay, he wrote, “There is a hell. I hope there aren’t too many people going there...There are evil spirits in the world, but we have to hope that there’ll always be – for everybody, even the worst of us – a moment when the Lord will say, ‘Tell me, do you really not love me?’  And the answer will be, ‘I love you, and I am sorry.’”

Disturbing.

--The family of the Kentucky teen who was involved in an encounter with a Native American advocate at the Lincoln Memorial last month filed a defamation lawsuit against the Washington Post on Tuesday, seeking $250 million in damages for its coverage of the incident.

The suit alleges that The Post “targeted and bullied” 16-year-old Nicholas Sandmann in order to embarrass President Trump.

“In a span of three days in January of this year commencing on January 19, the Post engaged in a modern-day form of McCarthyism by competing with CNN and NBC, among others, to claim leadership of a mainstream and social media mob of bullies which attacked, vilified, and threatened Nicholas Sandmann, an innocent secondary school child,” reads the complaint.

It added, “The Post ignored basic journalist standards because it wanted to advance its well-known and easily documented, biased agenda against President Donald J. Trump by impugning individuals perceived to be supporters of the President.”

The suit was filed by Sandmann’s parents, Ted and Julie, on Nicholas’ behalf in U.S. District Court in Covington.  It seeks $250 million because Amazon chief executive Jeff Bezos paid that amount for the paper when he bought it in 2013. 

The Sandmann’s lead attorney is L. Lin Wood, who represented Richard Jewell, the security guard falsely accused in the bombing of Centennial Olympic Park in Atlanta in 1996.

The Sandmanns’ also accused The Post of ignoring online videos that showed a fuller picture of the incident and of using “unreliable and biased sources,” thus acting with “knowledge of falsity or a reckless disregard for the truth.”  [Paul Farhi / Washington Post]

--U.S. authorities arrested a U.S. Coast Guard lieutenant who described himself as a white nationalist and amassed a cache of weapons to “murder innocent civilians on a scale rarely seen in the country,” according to court documents.

Christopher Paul Hasson, who is assigned to Coast Guard Headquarters in Washington, D.C., had drawn up a list of possible targets, including House Speaker Nancy Pelosi and various media targets, such as MSNBC host Joe Scarborough.

Hasson was arrested last Friday, with prosecutors making it public Thursday, calling him a “domestic terrorist.”

Thank god this guy slipped up along the way because he was lying in the shadows, agents finding 15 firearms and more than 1,000 rounds of ammunition in his Silver Spring, Maryland, residence.  He was studying a manifesto by Norwegian far-right extremist Anders Behring Breivik, who in July 2011 killed eight people in downtown Oslo with a car bomb and then shot dead 69 others, many of them teenagers, at a Labour Party camp.

--We note the passing of political pollster Patrick Caddell, 68.  Caddell helped send peanut farmer Jimmy Carter to the White House, but later became disillusioned with fellow Democrats and then veered to advise supporters of Donald Trump, becoming a frequent contributor on Fox News as a result.

But as Sam Roberts writes in an obituary for the New York Times, “While Mr. Caddell was considered instrumental in Mr. Carter’s victory, he also shared the blame for limiting him to a single term.  He helped persuade the president to deliver a speech that was intended to inspirit the nation during an energy crisis and economic slump, but instead tarred Mr. Carter as a weakling who was unable to lift the country out of its malaise.”

So America chose Ronald Reagan and his rosier vision.

--And there is the case of Jussie Smollett.  Once again, I’m proud I held off on any comment whatsoever until we learned the facts.  That’s what we do at StocksandNews.

But Thursday, Chicago Police Superintendent Eddie Johnson blasted Smollett and said the “Empire” actor staged the Jan. 29 attack because he was not satisfied with his salary; Smollett claiming his attackers called him racist and homophobic slurs and looped a noose around his neck.

“This announcement today recognized ‘Empire’ actor Jussie Smollett took advantage of the pain and anger and racism to promote his career,” Johnson said at a news conference.  Earlier in the morning, Smollett was arrested and charged with filing a false police report – a felony – the culmination of an increasingly unraveling story that gripped the nation.

“I’m left hanging my head and asking why?  Why would anyone, especially an African-American man, use the symbolism of a noose to make false accusations?  How could someone look at the hatred and suffering associated with that symbol and see an opportunity to manipulate that symbol to further his own public profile?”

Johnson went on to say that Smollett paid $3,500 to two brothers, Olabinjo and Abimbola Osundairo, to stage the attack “and drag Chicago’s reputation through the mud in the process.”

The superintendent confirmed earlier reports that Smollett concocted the alleged attack when a threatening letter he received at “Empire” studios a week prior didn’t garner enough attention.

Johnson described that letter as “false.”

“I love the city of Chicago...but this publicity stunt was a scar that Chicago didn’t earn and certainly didn’t deserve,” he added.

Smollett’s lawyers maintained their client has “impeccable character and integrity” and was “betrayed” by the legal system, despite mounting evidence from authorities that the actor staged a hate attack on himself.

“Today we witnessed an organized law enforcement spectacle that has no place in the American legal system,” Smollett’s lawyers said.

“The presumption of innocence, a bedrock, in the search for justice, was trampled upon at the expense of Mr. Smollett and notably on the eve of a mayoral election.”

The statement adds the actor “fiercely and solemnly maintains his innocence and feels betrayed by a system that apparently wants to skip due process and proceed directly to sentencing.”

Smollett was released on $100,000 bond Thursday, after which he immediately returned to the set of “Empire,” begging cast members to trust his version.

Andrea Peyser / New York Post

“The twisted case of Jussie Smollett is depressing, infuriating – and should end with the maximum prison sentence.  But I predict he’ll skate.

“The reprehensible alleged actions of the gay, black fabulist who cried ‘MAGA’ will be forgiven, excused and ultimately encouraged by sympathetic progressives – deemed justifiable Trumpicide.

“And it will happen again.  And again....

“(The) fact that the assault seems not to have happened, at least not technically, is an insignificant detail to lefty Democratic presidential hopefuls, celebs and assorted fans, who tucked into the delicious outrage initially as if it were a three-course vegan meal.

“Because Smollett has already set himself up with an alibi.  He’s a marginalized person, a real-life victim of psychological assault in Donald Trump’s America.

“Consider the initial reaction from the echo chamber. Both Sens. Cory Booker and Kamala Harris hysterically, and almost in unison, termed the fake drubbing of the 36-year-old ‘Empire’ actor an ‘attempted modern-day lynching.’

“NAACP president Derrick Johnson tweeted, ‘The rise in hate crimes is directly linked to President Donald J. Trump’s racist and xenophobic rhetoric.’ Sen. Bernie Sanders. Ex-Vice President Joe Biden. Hillary Clinton.  House Speaker Nancy Pelosi....Everyone with an agenda and a microphone should be embarrassed for saying they were shocked! shocked! that such intolerance could flourish in present-day America.

“But to date, not one of these illustrious characters, and many more, who virtually jumped for joy at the chance to tar President Trump with the bashing-that-wasn’t has apologized publicly to the commander-in-chief.

“Almost from the start, Smollett’s version of events seemed more like an episode of ‘Law & Order: SUV’ than a genuine crime. But leftist pols and like-minded members of the news media, blinded to reality by this fellow hater, convinced themselves to ignore numerous red flags.

“Trump foes couldn’t get enough of it because it confirmed everything they wanted to believe: that the president is somehow responsible for all prejudice and intolerance.  Smollett might not have been speaking the precise truth, but it was close enough.  He gave us truthiness.

“Jussie Smollett tried his best to deepen the racial divide in this nation with false and reckless claims. But I believe he’ll end up with court-ordered counseling, perhaps pay a fine. He should not get away with it.  But I think he will.”

Today, executive producers of “Empire” announced they were scrubbing Smollett’s character from the final two episodes this season.

In a statement, several of the producers said in part: “While these allegations are very disturbing, we are placing our trust in the legal system as the process plays out. We are also aware of the effects of this process on the cast and crew members who work on our show and to avoid further disruption on set, we have decided to remove the role of ‘Jamal’ from the final two episodes of the season.”

--Finally, on a positive note, a Japanese spacecraft has touched down on an asteroid in an attempt to collect a sample of rock from the surface, after a three-and-a-half year journey from Earth.

The Hayabusa-2 probe was trying to grab the sample from a pre-chosen site on the asteroid Ryugu, and the spacecraft is expected to return to Earth with the rocky material in 2020.

And an Israeli spacecraft aboard a SpaceX rocket launched from Cape Canaveral in Florida Thursday, beginning a two-month journey to land on the Moon.  If successful, Israel will join Russia, the U.S. and China as the only countries to have made a controlled landing on our dear neighbor, which was phenomenally bright the other night...hope you saw that...very cool.

Funding for the Israeli mission came almost entirely from donations, the project being the first privately backed lunar lander mission.

It’s the size of a washing machine, but it’s kind of on spin cycle, as instead of taking the standard three days that crewed lunar trips took, the lander will speed in ever-widening elliptical orbits around the Earth until it intercepts the moon’s gravitation pull in several weeks.  Its creators have estimated it will land on April 11.

Actually, the landers legs have already successfully deployed.  Hopefully, the lander, named Beresheet, the Hebrew word for Genesis, isn’t wearing Nikes.

---

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

God bless America.

---

Gold $1330
Oil $57.01

Returns for the week 2/18-2/22

Dow Jones  +0.6%  [26031]
S&P 500  +0.6%  [2792]
S&P MidCap  +1.0%
Russell 2000  +1.3%
Nasdaq  +0.7%  [7527]

Returns for the period 1/1/19-2/22/19

Dow Jones  +11.6%
S&P 500  +11.4%
S&P MidCap  +16.3%
Russell 2000  +17.9%
Nasdaq  +13.5%

Bulls 51.9
Bears 20.7

Have a great week.  Could be an action-packed one, sports fans.

Brian Trumbore



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Week in Review

02/23/2019

For the week 2/18-2/22

[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.

Special thanks to Jeanette N. for her support.

Edition 1,037

Just another chaotic week, but the next one could be even more so, with President Trump’s summit in Hanoi with Kim Jong Un, Trump no doubt feeling he needs a win; Michael Cohen testifying before a House committee; further discussions this weekend between the U.S. and China on their trade war; and Trump’s buddy, Robert Kraft, facing major legal jeopardy for issues the president is either promoting as a campaign topic, or has been involved in himself.

And there is the Mueller investigation, with the special counsel apparently not dropping his report while the president is overseas, engaged in diplomacy, as is the right thing to do, but still potentially close to doing so.

In other words, it’s a good week for another surprise.  Let’s hope it’s more of the Oscar “Best Picture” variety and nothing more than that.

Trump World

Thanks to Congress being out on recess this week, it’s kind of been lost in the conversation that the president had declared a national emergency prior to the holiday break.

But now the Democratic House of Representatives (elections have consequences, Mr. President) is prepared to vote Tuesday on a resolution aimed at stopping Trump’s declaration of an emergency to build a wall on the border with Mexico, Speaker Nancy Pelosi saying today, Congress’ first step challenging Trump’s assertion that he could take money it had appropriated for other activities and use it to build the wall.

After passage in the House, the measure moves to the Senate, where the future is less clear, but in any case, Trump vowed today to veto it if it passed both chambers and Congress doesn’t have the two-thirds majority necessary to override the veto.

What will be interesting is to see what happens with Republicans in the Senate.

Marc A. Thiessen / Washington Post

“If the goal is to build a border wall, then President Trump has made the wrong decision at every turn. In early 2018, Trump had the opportunity to secure $25 billion in funding for his border wall in exchange for legal status for Deferred Action for Childhood Arrivals recipients.  Instead of taking the deal, he blew up the negotiations with his ‘s---hole’ countries remark and by demanding changes to legal immigration policy.

“Then in June, the Senate Appropriations Committee approved $1.6 billion for 65 miles of fencing by an overwhelming bipartisan 26-to-5 vote.  This could easily have passed the House and Senate.  Instead, Trump later shut down the government over wall funding and demanded $5.7 billion.  Result?  After a disastrous 35-day shutdown, he got less - $1.38 billion – than he would have if he had just gone along with the bipartisan deal six months earlier.

“Now, the smart move for Trump would have been to pocket that $1.38 billion and bolster it with an additional $3.1 billion he could arguably use without a declaration of a national emergency – by reprogramming $600 million from the Treasury Department’s drug forfeiture fund and $2.5 billion from the Defense Department’s drug interdiction program.  That would have given him $4.48 billion in wall funding – nearly the full amount he was demanding from Congress.  Then, in December, he could demand more money with leverage over Democrats when an automatic sequester kicks in, forcing $55 billion in across-the-board cuts to domestic discretionary spending unless Trump agrees to raise spending caps.

“Instead, Trump has made the wrong move once again – declaring a national emergency, despite warnings from Senate Majority Leader Mitch McConnell (Ky.) and other Republicans that it could provoke a backlash from within his own party.

“His order will face an immediate court challenge, which means he won’t be able to spend the emergency funds anytime soon, if at all.  And if he prevails in court, it will be a disaster for the cause of limited government.  If Trump can declare a national emergency to build a border wall Congress refused to fund, then the power of the president to override Congress’ power of the purse will be virtually unlimited.  As Rep. Cathy McMorris Rodgers (R-Wash.) pointed out, a future liberal president could declare climate change a national emergency and ‘force the Green New Deal on the American people.’  Or, as House Speaker Nancy Pelosi (D-Calif.) suggested, a Democratic president could one day declare the ‘epidemic of gun violence in America’ a national emergency thanks to Trump’s action....

“More than a dozen Senate Republicans have spoken out against his emergency declaration... If their votes comport with their words, that is more than enough to pass a resolution of disapproval.

“In fact, every Republican in Congress should vote for such a resolution.  Stopping executive overreach and restoring Congress’ Article I powers was a key plank in Republicans’ 2016 Better Way agenda.... A disapproval resolution would make clear that not only is Trump ignoring the will of Congress, but also Congress has further expressly disapproved of his actions.

“Trump’s defenders will argue that Republicans should not deliver such a rebuke to their president.  In fact, the opposite is true: It is Trump who should not be forcing Republicans to choose between fidelity to their president and fidelity to the Constitution.  And if forced to choose, they must choose the Constitution.”

--A majority of Americans disapprove of President Trump’s national emergency declaration to build the wall along the U.S.-Mexico border, according to a new poll from PBS NewsHour, NPR and Marist.

61% said they do not approve of the president’s national emergency, while 36% say they support it.  [85% of Republicans approve, 6% of Democrats, 33% of Independents.]

When asked whether there was currently a national emergency along the border, a majority of Americans – 58% - said they disagreed, based on what they have heard and read.  57% said the president misused his power when he declared a national emergency to build the wall.

39% said they thought there was an emergency at the border, and the same number said Trump was within his presidential authority to make that declaration.

The 39% mirrors the last look at Trump’s job approval rating in a January PBS/NPR/Marist survey.

16 states joined a lawsuit against Trump’s emergency declaration to fund the border wall, the suit, filed in Federal District Court in San Francisco, claiming the president does not have power to divert funds because Congress controls spending, according to the California attorney general’s office.

The states that signed on are all controlled by Democrats.

Trumpets

--Federal Judge Amy Berman Jackson on Thursday dramatically restricted Roger Stone’s ability to speak publicly about his case after he published an Instagram post that had the crosshairs of a gun drawn behind her head.

So Jackson slapped the jerk with a gag order, Stone no longer able to speak publicly about the investigation or the case or any participants in the case.

That’s no statements on the radio, no press releases, no media interviews, no social media postings, nor can statements be made on his behalf, Jackson said.

“This is not baseball,” she added.  “There will not be a third chance.”

Stone apologized repeatedly before her ruling, saying “This is just a stupid lack of judgment...I regret it,” the self-described “dirty trickster” added.

“Thank you, but the apology rings quite hollow,” the judge replied.  “No, Mr. Stone, I’m not giving you another chance.”

Stone’s caption on the picture called special counsel Robert Mueller a “Deep State hitman,” saying his case was a “show trial” and implied that Jackson was biased as an Obama appointee and “incarcerated Paul Manafort.”

Stone was charged by the Justice Department in late January for lying to congressional investigators about his efforts to communicate with WikiLeaks as he sought to help the Trump campaign in 2016.

--Former Trump lawyer Michael Cohen is testifying in a public hearing before a House committee next Wednesday, according to Oversight and Reform Committee chair Elijah Cummings.  This had been originally scheduled for Feb. 7 but was delayed after Cohen complained of threats against his family from President Trump.

In a memo released Wednesday, Rep. Cummings said Cohen’s testimony would focus on the hush-money payments he arranged to women during the 2016 campaign who alleged sexual encounters with Mr. Trump, as well as the president's compliance with tax laws, his “potential and actual conflicts of interest,” his business practices and “the accuracy of the President’s public statements,” among other matters.

Cohen won’t answer questions that touch on Robert Mueller’s investigation into whether Trump associates colluded with Russia’s interference in the election.

There is a new story from the New York Times tonight that Cohen offered information about possible irregularities within the Trump family business and about a donor to the inaugural committee, but I see no real news on this as yet.

That said the Southern District of New York is where various aspects of the Mueller investigation are expected to live on once the special counsel has wrapped up his work.

--In a “60 Minutes” interview, Andrew McCabe, former deputy director of the FBI who is promoting a new book – “The Threat: How the FBI Protects America in the Age of Terror and Trump” – said he was present when Deputy Attorney General Rod Rosenstein commented about invoking the U.S. Constitution’s 25th Amendment, which allows for the vice president and “the principal officers of the executive departments or of such other body as Congress may by law provide” to remove a president who is “unable to discharge the powers and duties of his office.”

But McCabe also told CBS’ Scott Pelley that Trump believed Vladimir Putin’s assessment on North Korea’s nuclear program over that of U.S. intelligence agencies.

“And, essentially, the president said he did not believe that the North Koreans had the capability to hit us here with ballistic missiles in the United States.  And he did not believe that because President Putin had told him they did not.   President Putin told him that the North Koreans don’t actually have those missiles,” McCabe said.

Pelley asked what U.S. intelligence had said to Trump.  McCabe answered that U.S. officials told Trump that Putin’s assessment “was not consistent with any of the intelligence our government possesses.”

“To which the president replied, ‘I don’t care.  I believe Putin,’” McCabe recalled, having learned of the conversation from an FBI official who had just returned from a meeting at the White House.

Editorial / Wall Street Journal

“Mr. McCabe was fired last year for lying to FBI investigators, so it’s hard to know how much to believe.  He’s also tried to qualify the (‘60 Minutes’) interview after excerpts were disclosed, with a spokesperson saying that while Mr. McCabe ‘participated in a discussion that included a comment by Deputy Attorney General Rosenstein regarding the 25th Amendment,’ he did not participate in any ‘extended discussions’ about removing Mr. Trump.

“Mr. Rosenstein says he wasn’t in a ‘position to consider invoking the 25th Amendment’ but doesn’t deny the accusation.

“This is extraordinary, and as far as we know unprecedented.  A President exercises his constitutional prerogatives to fire the FBI director, and Mr. Comey’s associates immediately talked about deposing him in what would amount to a coup?....

“Mr. McCabe’s account also fits with what else we know about the FBI during the Comey era.  Mr. Comey saw fit to start a counterintelligence probe into the Trump campaign based on thin evidence of Russian contacts.  His agents then used an opposition-research document financed by the Clinton campaign to justify a warrant to spy on a Trump advisor.

“In July 2016 Mr. Comey violated Justice rules to exonerate Hillary Clinton on his own authority in the email probe. Then to protect himself against second-guessing from Congress after the election, he intervened again in violation of department rules to reopen the Clinton probe 11 days before Election Day. This intervention may have done more to elect Mr. Trump than anything else in the final weeks of the campaign, as Nate Silver and other analysts have argued.

“After his firing, Mr. Comey arranged a media leak that prompted Mr. Rosenstein to appoint Robert Mueller as a special counsel to investigate Trump-Russia campaign ties. Twenty-one months later we are still waiting for evidence of collusion, as the Mueller probe rolls on seemingly without end.  Mr. Trump’s enemies still claim he is a Russian agent while millions of his supporters think there is a ‘deep-state’ conspiracy against him.  This is all corrosive to public trust in American democracy.

“The Senate last week confirmed William Barr as Attorney General, and he has no more urgent task than restoring some of that public trust.  He could start by explaining to the public, in a major speech, where the FBI went so badly wrong and what he will do to make sure it never happens again.”

--At the Annual Munich Security Conference last weekend, Vice President Mike Pence opened a speech with the following:

“...it’s my great honor to speak to you today, on behalf of a champion of freedom and a champion of a strong national defense, the 45th President of the United States of America, President Donald Trump. (Applause).”

The problem was, as happened on another occasion over the weekend, Pence was met by silence.  The above text with the added ‘applause’ is from the White House.

Relations between the U.S. and our European allies are at a major low.

Trump tweets:

“As I predicted, 16 cities, led mostly by Open Border Democrats and the Radical Left, have filed a lawsuit in, of course, the 9th Circuit! California, the state that has wasted billions of dollars on their out of control Fast Train, with no hope of completion, seems in charge!”

“Had the opposition party (no, not the Media) won the election, the Stock Market would be down at least 10,000 points by now.  We are heading up, up, up!”

“Remember this, Andrew McCabe didn’t go to the bathroom without the approval of Leakin’ James Comey!”

“I never said anything bad about Andrew McCabe’s wife other than she (they) should not have taken large amounts of campaign money from a Crooked Hillary source when Clinton was under investigation by the FBI.  I never called his wife a loser to him (another McCabe made up lie)!”

“Important meetings and calls on China Trade Deal, and more, today with my staff.  Big progress being made on soooo many different fronts!  Our Country has such fantastic potential for future growth and greatness on an even higher level!”

“The Washington Post is a Fact Checker only for the Democrats. For the Republicans, and for your all time favorite President, it is a Fake Fact Checker!”

“The New York Times reporting is false. They are a true ENEMY OF THE PEOPLE!”

“The Press has never been more dishonest than it is today. Stories are written that have absolutely no basis in fact. The writers don’t even call asking for verification. They are totally out of control. Sadly, I kept many of them in business.  In six years, they all go BUST!”

“Nothing funny about tired Saturday Night Live on Fake News NBC!  Question is, how do the Networks get away with these total Republican hit jobs without retribution?  Likewise for many other shows?  Very unfair and should be looked into.  This is the real Collusion!”

Wall Street and Trade Talks

The impact of the 35-day government shutdown is still being felt in terms of the delays in releasing key economic data, but next week it finally all comes to a head with release of the first look at fourth-quarter GDP, originally scheduled for Jan. 30, now Feb. 28.  [Friday, March 1, is another key date with reports on personal income and consumption for December and January, though outlays will not be included in January’s numbers, last I saw.  December factory orders are being released on Feb. 27.]

This week, though, we had a disappointing report on December durable goods, up a less than expected 1.2%, with a core reading on capital goods orders down 0.7%.

And January existing home sales came in at an annualized pace of 4.94 million, also less than forecast, and the lowest level since November 2015, this despite the fact mortgage rates are at one-year lows, thus making housing more affordable.  The median home price, $247,500, was up 2.8% year-on-year, the smallest increase since Feb. 2012.

The Atlanta Fed’s GDPNow barometer for the fourth quarter ticked down to just 1.4%.  As I noted last week, when the reading suddenly plummeted from 2.7% to 1.5% on the awful December retail sales figure, this is kind of shocking.  Everyone is expecting a Q4 reading next week of well above 2%.  Recall, the numbers for Q2 and Q3 2018 were 4.2% and 3.4%, respectively.  How will our president massage a number of, say, 2.2%, let alone something below 2.0%?

The Federal Reserve released the minutes from their January meeting and officials indicated that they plan later this year to stop paring back a key stimulus program put in place in the wake of the Great Recession, that is, reducing its balance sheet, which at one point totaled $4.5 trillion, as a result of the Fed’s purchase of trillions of dollars of Treasury bonds and mortgage-backed securities from 2008 to 2014.  Those purchases helped push down mortgage and long-term interest rates to encourage spending and investment.

But with economic growth slowing and the Fed saying last month it planned to be “patient” on future rate hikes, the balance sheet became a key topic of discussion.

“Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve’s asset holdings later this year,” the minutes said.  “Such an announcement would provide more certainty about the process for completing the normalization of the size of the Federal Reserve’s balance sheet.”

At the January meeting, the Fed downgraded their view of economic growth from “strong” to “solid,” pointing to “various risks and uncertainties,” including the trade war with China.

And today, the Fed released its semi-annual monetary policy report to Congress, ahead of congressional testimony by Chairman Jerome Powell to the Senate and House next week.

The Fed said that while the US. economy maintained “solid” growth through the second half of 2018, likely expanding “just under” 3 percent for the year, consumer and business spending had begun to weaken.  The Fed cited a “deteriorating” appetite for risk among investors, as well as a slowdown in China, in saying the outlook for policy is “more uncertain than earlier,” noting “softer global and economic conditions.”

The Fed also said the 35-day partial shutdown of the U.S. government “likely held down GDP growth in the first quarter of this year.”

The market liked such talk, even if it is a downer, because it is further proof the Fed won’t be raising interest rates further, and that we can expect Chairman Powell to once again use the word “patience” in his testimony Tuesday and Wednesday.

So the rally on Wall Street continued, details below.

But on the trade front...Talks between the U.S. and China in Washington have been extended another two days, President Trump saying today he was inclined to also extend the March 1 deadline for hiking tariffs on $200bn of Chinese imports from 10% to 25%.

Chinese Vice-Premier Liu He is leading Beijing’s delegation, Liu with the authority to negotiate on behalf of Xi Jinping, though President Trump said he would meet with Xi “soon” for what is presumed to be the signing of a deal.

But there are zero surprises in terms of how this is going down.  I have been dead on in terms of the process.  For example, Tuesday, Trump tweeted “We’re doing spectacular things on trade.”

And there is no doubt Trump wants a deal.  His trade representative, however, hard-ass Robert Lighthizer, knows it won’t be a good deal for the U.S.  Lighthizer gets it.  But his boss needs to ‘win,’ and as I’ve been saying for months, Trump will probably convince a slim majority of Americans that whatever deal he ends up with will be a big win for America, especially America’s farmers, of this you can be sure.

It will all be bulls---. I mean tonight, Agriculture Secretary Sonny Perdue is touting an agreement that China will be buying tons of soybeans, which Trump will be talking about on the campaign trail for sure, but remember what I’ve been telling you.

In December 2017, America exported $2.6 billion worth of soybeans to China.

In December 2018, the figure was all of $68.6 million.

My whole point has been that, if we’re lucky, we may get back to the old figures after the deal is cut.  But the majority of Americans won’t get this.  It’s sad.

And regardless of what comes out of the Trump-Xi presumed Mara-Lago photo op, the sad part is that China will continue to rip off American technology.  China’s hacking of our tech companies continues at a feverish pace.

Yes, President Trump is right on one thing.  Past presidents didn’t do enough to confront China. 

But this relationship is only now going to get worse.

The other day the South China Morning Post held its annual China Conference in Hong Kong and Xie Maosong, assistant to the secretary general of the China Institute for Innovation and Development Strategy, said he expected a trade agreement within the next three months based on agreements reached in Washington this week.

Xie said he was also optimistic Huawei CFO Meng Wanzhou would be released in the coming weeks, essentially as part of any trade deal, though Canada is involved in this aspect, only it acted to arrest Meng on the Trump administration’s wishes.

But Xie also said, regardless of the positives, relations between the United States and China will never be the same again.  And this is dangerous.  Deadly so.  And no surprise to me.

Xi Jingping is not doing well at home.  There is dissension in the ranks as the economy crumbles.  And that too is very dangerous.  Xi may need to play the nationalism card in a big way....against Taiwan.

The Trump administration has been pressing Beijing to make changes to its economic policies, which it says unfairly favors domestic companies through subsidies and other support, while the U.S. also accuses China of intellectual property / technology theft as part of its broader development strategy.  And it wants China to buy more U.S. goods to bring down the trade deficit between the two.

But there is a sense in China that the U.S. is using the trade war to contain China’s rise, as the two battle over global leadership, with Beijing basically just proposing to buy more goods, including semiconductors and soybeans. There is no way China is altering its basic business model.

And it’s why China’s government on Monday accused the United States of trying to block the country’s industrial development with its attacks on the likes of Huawei, the Chinese telecom giant, with the administration pressuring allies to shun its products, thus threatening the company’s access to markets for next-generation wireless gear.  [More on this topic below.]

One more on trade...the United States and the EU still have to conduct talks on their relationship and the reduction of tariffs, the talks now slated to be held prior to the EU’s May elections, against the wishes of France, which wanted to wait until after the big vote.

The negotiations, which are aimed at slashing tariffs on trade in industrial goods, are seen as a way to ease tensions stoked by President Trump’s threats to hammer U.S. imports of European cars with additional duties.

The EU has warned that any move by Washington to hit the auto sector would lead to an immediate breakdown in talks as well as retaliation against U.S. products.  There was a story today that this would mean retaliation against the likes of Caterpillar and Xerox, among others, EU Trade Commissioner Cecelia Malmstrom telling reporters that the EU has commenced making a “list of re-balancing measures” should U.S. tariffs be imposed.

Europe and Asia

IHS Markit released its flash readings on the Euro Area (EA19) for February, with the composite coming in at 51.0 (50 being the dividing line between growth and contraction); 49.2 on manufacturing, a 68-mo. low and down from 50.5 in January, ergo contraction, while services was at 52.3.

The flash readings break down Germany and France, individually, with Germany’s manufacturing figure at 47.6, a 74-month low, services 55.1 (5-mo. high); France’s manufacturing PMI at 51.4 (5-mo. high), services 49.8.

Chris Williamson, chief economist, IHS Markit:

“The Eurozone economy remained close to stagnation in February.  The flash PMI lifted only slightly higher during the month, continuing to indicate one of the weakest rates of expansion since 2014. The survey data suggest that GDP may struggle to rise by much more than 0.1% in the first quarter.

“Germany is on course to grow by 0.2%, buoyed by its service sector, but France looks set to stagnate or even contract very slightly. The rest of the region is suffering its worst spell since late-2013, with growth having slipped closer to stalling in February.

“Some uplift was also seen as companies stepped up preparations ahead of Brexit and disruptions from the ‘yellow vest’ protests in France eased.  However, the general picture remained one of a more subdued business environment than seen throughout much of last year....

“Price pressures have meanwhile continued to ease alongside the more subdued demand environment.”

Speaking of which, euro area annual inflation came in at a 1.4% rate in January, down from 1.5% in December, per Eurostat.  A year earlier it was 1.3%.  Inflation had been running at as high as 2.3% last October, but then we had a big decline in the price of crude, plus a slowing eurozone overall.

Inflation was 1.7% in Germany, 1.4% in France and 0.9% in Italy for the month.

Brexit: British Prime Minister Theresa May faces another rebellion within her Conservative party as the March 29 deadline for Brexit nears.  Dozens of normally loyal MPS are threatening to abandon May to prevent a “no-deal” Brexit, and back alternatives if Mrs. May’s reworked deal, whatever that may be, cannot command a Commons majority.

The government has said, however, that it has held productive talks with Brussels this week.  Yet the prime minister has repeatedly refused to rule out the possibility of the UK leaving without a formal deal, in the event that she cannot get MPs to approve whatever she has negotiated with Brussels in time.

Brexit is five weeks away, and now the Irish government is scrambling to put together a wide range of emergency measures to support businesses and protect jobs and essential services if the UK leaves without a deal.  For starters, anyone with half a brain knows this scenario would lead to chaos at the ports.

But next Wednesday MPs will debate the topic anew, and, if the UK and EU haven’t reached a new deal, parliament will vote on future options, including a potential delay, but this would be going against the prime minister, who has said come hell or high water, Britain is out of the EU on March 29.

Of course, yes, it’s all about the Irish backstop, the “insurance policy” to prevent the return of customs checks on the Irish border.

Reminder: The backstop as currently constituted would mean that Northern Ireland, but not the rest of the UK, would still follow some EU rules on things such as food products, but many MPs don’t like that the UK would not be able to end the backstop without the EU’s permission and so EU rules could remain in place for good.  Others say Northern Ireland should not be treated separately from the rest of the UK.

The backstop is supposed to last about two years after the ‘transition period,’ which assuming there is a formal Brexit, would go from March 29, 2019 through Dec. 31, 2020, during which time Britain is to have negotiated a final agreement on trade with the EU.  Mrs. May is looking for a separate legal statement from the EU that would again stress the temporary nature of the backstop.

So the prime minister has until Tuesday evening to secure a deal she can then get through parliament.

Jean-Claude Juncker, the European Commission’s president, the EC the executive arm of the EU, said on Thursday that he was pessimistic about the chances of Britain leaving the EU with a deal and warned the failure to agree to an orderly divorce would be economically devastating.  “If no deal were to happen, and I cannot exclude this, this would have terrible economic and social consequences in Britain and on the continent.  But I am not very optimistic when it comes to this issue.”

One example of early turmoil in the British economy was Honda’s announcement this week that it will close its plant in Swindon, England, which employs 3,500 workers, by 2021, moving its production of Civic cars back to Japan. 

Last month, Ford said it was cutting thousands of jobs across Europe, while General Motors previously pulled out of Europe in 2017 after persistent losses in the region.

Nissan said in early February that it would be producing the next generation of its X-Trail SUV in Japan, rather than at its factory in Sunderland, England, though this plant will continue to manufacture other models.

Both Nissan and Honda stand to benefit from a new trade deal between the European Union and Japan, making it easier to produce cars in Japan for export to the bloc. 

If you are a manufacturer with operations in Britain, the continued Brexit stalemate obviously makes it more difficult to plan operations past March 29.

France: President Emmanuel Macron has announced new measures to tackle growing anti-Semitism, following a series of attacks.  Parliament is also to vote on a new law to tackle hatred on the internet.

Addressing an annual meeting of Jewish organizations on Wednesday, Macron said anti-Semitism in France and other Western countries had reached its worst levels since World War II.

Last weekend there was a torrent of hate speech directed at a distinguished philosopher, Alain Finkielkraut, during a march of “yellow vest” protesters as he accompanied his mother-in-law to her Left Bank home in Paris.  A band of men raged at Finkielkraut, saying, “Go back to Tel Aviv,” “Zionist,” and “France is our land,” as captured on video.

Anti-Semitic incidents in France soared last year, in what Interior Minister Christophe Castaner called a “poison” spreading “like a venom” and “rotting minds.”

Euro Parliament: With less than 100 days to go until the elections in May, the first official projections from the European Parliament show that 153 seats will be won by existing Eurosceptic groups, that include Poland’s Law and Justice Party, and Matteo Salvini’s League party in Italy, as well as his coalition partner, Italy’s Five Star Movement and France’s Rassemblement National (formerly National Front).

Salvini’s League is expected to dominate Italy’s vote, winning 27 seats in total, according to the poll, which would make it the second biggest political party in the EU.

There are growing fears the anti-EU forces across Europe could coalesce in the parliament to disrupt functioning of the union.  The projections also don’t include parties with no current pan-EU family such as Germany’s far-right Alternative for Germany, and Hungary’s Fidesz, led by Viktor Orban. Ergo, the Eurosceptic vote will actually be larger than 153.

The European People’s Party – the parliament’s dominant group – is due to slip from 217 seats to 183 seats, while the Social Democrats will decline from 186 to 135. [Financial Times]

Turning to Asia, a flash reading on Japan’s manufacturing PMI for February came in at 48.5, down from January’s 50.3 and the first time the figure has reflected contraction in 2 ½ years.

Separately, January core inflation (ex-energy) rose just 0.8%, 0.4% ex-food and energy, both still well below the Bank of Japan’s 2% target.

And Japan’s key machinery orders index posted its first monthly decline in December in three months, with manufacturers expecting orders to fall further this quarter as trade frictions weigh on global demand.  Orders from overseas tumbled 21.9% from the previous month.

Machinery orders are considered a leading indicator of capital spending.

Lastly, in keeping with the above, Japan’s business sentiment worsened in February to levels last seen in late 2016, per the Reuters Tankan survey, this also having to do with weakening demand both at home and abroad.

In China, a reading on new home prices for the 70-city index showed a rise of 0.6% in January over the prior month, the 45th straight month of price increases, though on an annual basis, average home prices in China accelerated to 10% from 9.7% in December, as put out by the National Bureau of Statistics.  So at least one positive sign for the economy here.

Street Bytes

--As alluded to above, the big rally motored on, the Dow Jones up a ninth consecutive week, 0.6%, to 26031, the winning streak the longest since a 10-week run between March and May 1995.  The S&P 500 rose 0.6%, and Nasdaq 0.7%, the tech bellwether also up nine weeks in a row now, tying a run from 2009.

Optimism over the China trade talks was the main reason, earnings season largely over, save for the retail sector next week.  I called this, and I also said it kind of cracks me up.  It’s not rational, but markets seldom are.  We’ll finish the year right around the levels of today.

--U.S. Treasury Yields

6-mo. 2.50%  2-yr. 2.49%  10-yr. 2.65%  30-yr. 3.02%

Zero movement in Treasuries this week.

--Oil hit a high for the year this week of $57.55 before settling at $57.07, bolstered by OPEC-led supply cuts and U.S. sanctions on Venezuela and Iran.  But rising U.S. production, and inventories are limiting the increase in prices.  The Energy Information Administration announced Thursday that U.S. crude oil stockpiles rose for a fifth straight week to the highest in more than a year.

--Walmart Inc. on Tuesday reported sales in its holiday quarter that beat the Street’s forecasts, with comparable/same-store sales growing for the 18th consecutive quarter, up a solid 4.2%, ex-fuel, for the three months ending Jan. 31, with analysts expecting 3%.

Earnings per share of $1.41 beat expectations of $1.33.

Online sales grew 43% in the quarter, in line with the previous quarter’s rise, as Walmart is now the third-largest e-commerce retailer, behind eBay and Amazon, according to research firm eMarketer.  Walmart is benefiting from shoppers increasingly buying groceries online.  They can pick up items they ordered online at more than 2,100 stores or have them delivered from almost 800 locations.  The retailer says 37,000 personal shoppers help to fill the baskets.

CEO Doug McMillon said that customers who shop both online and in-store spend twice as much, and that “Part of our strategy is to build on our existing strengths.  Our stores and clubs are becoming more digital, and we’re using technology to change how we work.”

Walmart also made gains in toys in the wake of Toys R Us shutting its doors in June.

The report offers a glimpse into the health of the American consumer, with Walmart CFO Brett Biggs saying, “We still feel pretty good about the consumer. We haven’t seen much of a change,” this coming after U.S. retail sales recorded their biggest drop in more than nine years in December, as reported last week.

--The fallout continues from Amazon’s pulling out of its second headquarters in Long Island City.

New York Mayor Bill de Blasio, op-ed / New York Times

“The first word I had that Amazon was about to scrap an agreement to bring 25,000 new jobs to New York City came an hour before it broke in the news on Thursday (2/14).

“The call was brief and there was little explanation for the company’s reversal.

“Just days before, I had counseled a senior Amazon executive about how they could win over some of their critics.  Meet with organized labor. Start hiring public housing residents.  Invest in infrastructure and other community needs.  Show you care about fairness and creating opportunity for the working people of Long Island City.

“There was a clear path forward.  Put simply: If you don’t like a small but vocal group of New Yorkers questioning your company’s intentions or integrity, prove them wrong.

“Instead, Amazon proved them right.  Just two hours after a meeting with residents and community leaders to move the project forward, the company abruptly canceled it all.

“I am a lifelong progressive who sees the problem of growing income and wealth inequality. The agreement we struck with Amazon back in November was a solid foundation.  It would have created: at least 25,000 new jobs, including for unionized construction and service workers; partnerships with public colleges; and $27 billion in new tax revenue to fuel priorities from transit to affordable housing – a ninefold return on the taxes the city and state were prepared to forgo to win the headquarters....

“The lesson here is that corporations can’t ignore rising anger over economic inequality anymore. We see that anger roiling Silicon Valley in the rocks hurled at buses carrying tech workers from San Francisco and Oakland to office parks in the suburbs. We see it in the protests that erupted at Davos last month over the growing monopoly of corporate power.

“Amazon’s capricious decision to take its ball and go home, in the face of protest, won’t diminish that anger.

“The city and state were holding up our end.  And more important, a sizable majority of New Yorkers were on board. Support for the new headquarters was strongest in communities of color and among working people who too often haven’t gotten the economic opportunity they deserved.  A project that could’ve opened a path to the middle class for thousands of families was scuttled by a few very powerful people sitting in a boardroom in Seattle....

“As the mayor of the nation’s largest city, a place that’s both a progressive beacon and the very symbol of capitalism, I share the frustration about corporate America.  So do many of my fellow mayors across the country. We know the game is rigged. But we still find ourselves fighting one another in the race to secure opportunity for our residents as corporations force us into all-against-all competitions.

“Amazon’s HQ2 bidding war exemplified that injustice.  It’s time to end that economic warfare with a national solution that prevents corporations from pitting cities against one another.  Some companies get it. Salesforce founder and chief executive Marc Benioff threw his weight behind a new corporate tax in San Francisco to fund services for the homeless.  In January, Microsoft pledged $500 million to combat the affordable housing crisis in Seattle.

“Amazon’s path in New York would have been far smoother had it recognized our residents’ fears of economic insecurity and displacement – and spoken to them directly.

“We just witnessed another example of what the concentration of power in the hands of huge corporations leaves in its wake.  Let’s change the rules before the next corporation tries to divide and conquer.”

Kyle Smith / New York Post

“Congratulations, Alexandria Ocasio-Cortez!  You just killed 25,000 jobs for urban Democrats in one of the most racially and ethnically diverse areas in the entire world!

“Congresswoman AOC, the thought leader of the Democratic party, was the loudest and feistiest political opponent when Amazon announced it would build (half of) its second headquarters in Long Island City, Queens, promising to create 25,000 jobs and generate some $27.5 billion in tax revenue over the next 25 years.  Amazon employs a range of people from unskilled workers to tech geniuses and would have pumped large amounts of money into the city economy.  It estimated the average salary of its New York City workforce would have been $150,000.  Real-estate prices in Long Island City jumped 15 percent since Amazon’s announcement last November.

“But after Amazon walked away in an anti-Valentine to the city on Feb. 14, AOC bragged on Twitter that ‘everyday New Yorkers & their neighbors defeated Amazon’s corporate greed, its worker exploitation, and the power of the richest man in the world.’

“Huh?  A Siena poll this week showed that New York City residents approved of the deal by 56 to 33 percent.  Fellow Democrats Gov. Andrew Cuomo and Mayor Bill de Blasio were pushing hard for the deal. Oh, and it need hardly be stated that Amazon is a company staffed by Democrats. Some 87 percent of its employee donations went to the Dems in the latest elections.  As for ‘richest man in the world,’ Bezos started Amazon in his garage. He got rich building one of the most beloved companies on earth.

“Ocasio-Cortez had previously opposed the deal by enlisting her peeps to ‘effectively organize against creeping overreach of one of the world’s biggest corporations.’  As a matter of principle, I agree that New York taxpayers should not be subsidizing special tax breaks for corporations, especially a behemoth that is run by the richest man on earth. Amazon doesn’t need a tax break and New York City is, as Michael Bloomberg aptly put it, a ‘luxury good’ that simply costs more to be a part of than Dayton or Oklahoma City.

“But AOC didn’t even understand the basics of the subsidies.  She said, ‘If we were willing to give away $3 billion for this deal, we could invest $3 billion in our district ourselves if we want to.  We could hire more teachers,’ etc.  But it’s not like New York was going to write Amazon a $3 billion check.  Most of that money amounted to giving Amazon discounts on its future tax bills, with $505 million set aside as cash grants that would be given only if Amazon met certain benchmarks on job creation and capital investment.

“Then Ocasio-Cortez went waaaay beyond the subsidies.  She claimed the neighborhoods she represents near the proposed HQ2 were in a state of ‘outrage.’  She said Amazon shouldn’t receive tax breaks ‘at a time when our subway is crumbling and our communities need MORE investment, not less.’  Yet if funding the subways is your goal, Amazon would have delivered a lot of long-term tax revenue once it was up and running.  And Ocasio-Cortez seemed to think that Amazon’s jobs didn’t count for anything unless they came from ‘the existing community’ and were unionized.

“Both of those ideas are absurd. Amazon no doubt would have brought in some new New Yorkers, but is AOC suggesting we build a wall around the city to keep out filthy outsiders?  A huge part of the city’s energy comes from all the outsiders we keep attracting like, for instance, Ocasio-Cortez’s Puerto Rico-born mother....

“(AOC) also charged Amazon’s plan with ‘displacement,’ saying, ‘Shuffling working class people out of a community does not improve their quality of life.’  Yeah, who wants to sell their apartment for triple what they paid and move to Fort Lauderdale?  A HarrisX (sic) poll showed 80 percent of Queens residents and 77 percent of the residents of the state senate district where HQ2 would have been built approved of Amazon’s bid.  AOC is pretending to stand with the people while actually destroying opportunity for Democrats.”

--The founder of Huawei has said there is “no way the U.S. can crush” the company, Ren Zhengfei giving an interview to the BBC.  Ren described the arrest of his daughter Meng Wanzhou, the company’s CFO, as politically motivated.

Ren was speaking in his first international broadcast interview since Ms. Meng was arrested – and dismissed the pressure from the U.S.

“There’s no way the U.S. can crush us,” he said.  “The world cannot leave us because we are more advanced. Even if they persuade more countries not to use us temporarily, we can always scale things down a bit.”

But Ren acknowledged that potential loss of access could have a significant impact.

Last week, Secretary of State Mike Pompeo warned allies against using Huawei technology, saying it would make it more difficult for Washington to “partner alongside them.”

Australia, New Zealand, and the U.S. have banned or blocked Huawei from supplying equipment for their future 5G mobile broadband networks, while Canada is reviewing whether the company’s products present a serious security threat.

Ren warned: “If the lights go out in the West, the East will still shine. And if the North goes dark, there is still the South.  America doesn’t represent the world.  America only represents a portion of the world.”

The UK’s National Cyber Security Centre has decided that any risk posed by using Huawei technology in UK telecom projects can be managed; Vodafone, EE and Three, UK mobile companies, currently working with Huawei to develop their 5G networks.  The government is issuing a report in March or April, that will decide whether they can use Huawei.

As for the U.S. and its claims Huawei hid business links to Iran, which is subject to U.S. trade sanctions, while charging the company with attempted theft of trade secrets, Ren said:

“Firstly, I object to what the U.S. has done. This kind of politically motivated act is not acceptable.

“The U.S. likes to sanction others, whenever there’s an issue, they’ll use such combative methods.  We object to this. But now that we’ve gone down this path, we’ll let the courts settle it.”

On the issue of spying, Ren said that is not a risk he would take, yet under Chinese law, firms are compelled to “support, cooperate with and collaborate in national intelligence work.”

Ren told the BBC: “The Chinese government has already clearly said that it won’t install any backdoors. And we won’t install backdoors either.  We’re not going to risk the disgust of our country and of our customers all over the world, because of something like this.

“Our company will never undertake any spying activities. If we have any such actions, then I’ll shut the company down.”

Meanwhile, President Trump tweeted:

“I want 5G, and even 6G, technology in the United States as soon as possible. It is far more powerful, faster, and smarter than the current standard. American companies must step up their efforts, or get left behind. There is no reason that we should be lagging behind on....

“....something that is so obviously the future. I want the United States to win through competition, not by blocking out currently more advanced technologies. We must always be the leader in everything we do, especially when it comes to the very exciting world of technology!”

Some were left scratching their heads as to where this came from. 

--Shares in Southwest Airlines Co. fell more than 5 percent on Wednesday after the carrier said it was investigating whether a conflict with its mechanics union was leading to a spike in flight cancellations.

The escalating labor dispute, one of the biggest to hit a top –four U.S. airline in more than a decade, comes as Southwest was forced to delay its planned Hawaii launch due to the recent U.S. government shutdown and on Wednesday cut its first-quarter revenue growth forecast.

Monday, the Federal Aviation Administration initiated a probe against the carrier regarding weight and balance performance data.

Weather and unscheduled maintenance issues have put an unprecedented number of aircraft out of service, Southwest saying there was no common theme among them, as the company negotiates with the Aircraft Mechanics Fraternal Association, a union representing about 2,400 Southwest mechanics who have been in contract talks with management since 2012.

Last week the company declared an operational “emergency” and demanded all mechanics turn up for work.

The AMFA’s national director told Reuters that Southwest has the lowest mechanic-to-aircraft ratio of any major character and that “Negotiations and the degradation of safety culture are two entirely different items.”

American Airlines Group Inc. is also in contract talks with its mechanics unions and asked for a federal mediator to facilitate negotiations last September, with American’s mechanic contracts not having been updated since it merged with US Airways in 2013.

--Johnson & Johnson said in a securities filing that the Justice Department and the Securities and Exchange Commission are investigating the company over concerns about possible asbestos contamination of its popular baby powder and other talc-based products, the company said Wednesday.  J&J said it was “cooperating with these government inquiries and will be producing documents in response” to subpoenas it had received.

The company faces around 13,000 lawsuits in which its body powders are blamed for causing ovarian cancer or mesothelioma, with Johnson & Johnson reiterating Wednesday that “decades of independent tests by regulators and the world’s leading labs prove Johnson & Johnson’s baby powder is safe and asbestos-free, and does not cause cancer.”

A major supplier of talc used by J&J, Imerys Talc America, filed for Chapter 11 bankruptcy last week, saying although the suits challenging talc’s safety were “entirely without merit,” it did not want to “litigate these claims in perpetuity and incur millions of dollars in projected legal costs to defend these cases.”  [Tiffany Hsu / New York Times]

--The fate of California’s high-speed rail project was cast into further doubt Tuesday when the federal government announced plans to cancel $929 million in grant funds, a move administration officials linked to violations of the grant agreement, an escalation in the battle between California Gov. Gavin Newsom and President Trump, Newsom last week saying that the project lacked a path to complete a statewide system and vowed to scale back the $77-billion mega-project.

The Transportation Department also said it was “actively exploring every legal option” to get back an additional $2.5-billion grant that is being used to finance the construction of 119 miles of rail line in the Central Valley.  The two federal grants represent about one-fourth of all the funding of the project to date and should they be lost, the state would no doubt have to further curtail the project.

Newsom said on Tuesday, “It’s no coincidence that the Administration’s threat comes 24 hours after California led 16 states in challenging the President’s farcical ‘national emergency.’  The President even tied the two issues together in a tweet this morning. This is clear political retribution by President Trump, and we won’t sit idly by.  This is also California’s money, and we are going to fight for it.”

Trump had tweeted: “The failed Fast Train project in California, where the cost overruns are becoming world record setting, is hundreds of times more expensive than the desperately needed Wall!”

Well, once again, the president needs to understand the rail project is estimated at $77 billion, and his full wall project, as the administration first stated, would be about $25 billion, so around three times more expensive.

Ronald Batory, chief of the Federal Railroad Administration, the agency that made the grants in 2009 and 2010, argued this week why the state was out of compliance with the grant agreement, alleging the state had failed to spend required matching funds, falling short by $100 million as of December.  Batory also argued the state will fail to complete the Central Valley construction that Newsom cited in his State of the State speech last week (between Merced and Bakersfield) in the allotted time period.

Separately, the White House announced Thursday that it would no longer negotiate with California air pollution regulators on reshaping the rules originally set by the Obama administration. It will forge ahead on its own with a plan to ease fuel-efficiency mandates for auto makers, challenging California’s legal authority to set its own, more stringent rules.

California leaders responded with a pledge to defend their authority, raising the possibility this is headed towards the Supreme Court, after what would be a yearslong legal battle.

Car makers have pushed the Trump administration to relax Obama-era fuel-economy standards, arguing the future rules will be too tough to meet as low gas prices boost sales of less-efficient trucks and SUVs.

--A British House of Commons committee has concluded Facebook needs far stricter regulation, with tough and urgent action needed to end the spread of disinformation on its platform.  The committee also noted that founder Mark Zuckerberg failed to show “leadership or personal responsibility” over fake news.

Untrue stories from foreign powers were risking the UK’s democracy, they said.

Facebook welcomed the digital select committee’s report and said it would be open to “meaningful regulation.”

MPs said that what was needed to deal with the proliferation of disinformation online and the misuse of personal data was a “radical shift in the balance of power between social media platforms and the people.”

The report from the House of Commons concluded: “Democracy is at risk from the malicious and relentless targeting of citizens with disinformation and personalized ‘dark adverts’ from unidentifiable sources, delivered through the major social media platforms we use every day.

“The big tech companies are failing in the duty of care they owe to their users to act against harmful content, and to respect their data privacy rights.”

In actuality, though, the MPs have little real power in effecting change at Facebook, other than to shame the company and Zuckerberg, MPs particularly angry he did not come to the UK to answer questions in person.

--Uber Technologies Inc. reported fourth-quarter revenue rose 25% from a year earlier to $3.02 billion.  But while this looks good, it is a rapid deceleration from prior quarters, such as 38% in the third quarter and 70% in the first.

Uber has been disclosing detailed financial results for the past two years as it prepares for an initial public offering later this year.

Uber’s net loss narrowed in the latest period to $865 million from $1.07 billion in the third quarter.

The company is looking for a valuation of as much as $120 billion for its IPO, as CEO Dara Khosrowshahi has been attempting to shore up the balance sheet by selling off unprofitable units, while completing fundraising from the likes of SoftBank Group Corp. and Toyota Motor Corp.

But it’s been difficult controlling costs, such as in incentive pay for drivers to keep them on the road longer and away from rivals like Lyft Inc., which is also planning an IPO, supposedly next month.  Lyft is only in the U.S. and Canada, versus Uber’s global reach.

Uber’s last private valuation was $76 billion vs. Lyft’s $15 billion.

--Consumer Reports on Thursday pulled a recommendation for Tesla Inc.’s Model 3, citing reliability problems, and the influential U.S. magazine turned up the pressure on other automakers to include crash-avoiding automatic braking as standard equipment.

The magazine’s decision to withdraw the endorsement for the Model 3 less than nine months after recommending the electric sedan highlighted questions about quality that Tesla has faced since the vehicle’s difficult launch.  Tesla shares fell 3 percent in after-market trading and finished the week at $294, down from its high of $387.

Low scores for the Model 3 hurt the brand’s overall standing, knocking it down 11 spots to No. 19 out of 33 brands in CR’s 2019 annual rankings.

--A Nike sneaker worn by Duke basketball star Zion Williamson, who is expected to be the top pick in the upcoming NBA draft, exploded (ripped open) on him during the Blue Devils’ big game against North Carolina on Wednesday, Williamson suffering a “mild knee sprain,” status day-to-day, as the shares fell a little over 1% in response (though rebounded today).

“We are obviously concerned and want to wish Zion a speedy recovery,” Nike said in a statement. “The quality and performance of our products are of utmost importance. While this is an isolated occurrence, we are working to identify the issue.”

Thank god Zion wasn’t hurt seriously, but the incident heightens far bigger issues involving amateurism and high-profile college athletes who aren’t getting paid...material best suited for my “Bar Chat” column.

This is, however, the fourth Nike product worn by an NBA player since 2016 to fall apart.  And we’ll see if Zion signs a sponsor deal with the company once he’s drafted.

--Kraft Heinz saw its shares plunge 27% today to a new low since the Kraft Heinz merger in 2015 after the company cut its dividend and disclosed that it received a subpoena from the Securities and Exchange Commission in October.

The company also said it was lowering its dividend as it seeks to accelerate the “deleveraging process to provide greater balance sheet flexibility.”

But Kraft said the subpoena was part of an investigation into the company’s procurement accounting policies.

Kraft Heinz said it launched an internal investigation into the matter after receiving the subpoena.  Following its investigation, Kraft Heinz said it posted a $25 million increase to the cost of products sold after determining it was “immaterial to the fourth quarter of 2018 and its previously reported 2018 and 2017 interim and year to date periods.”

The company said the development will not be material to financial statements for this period or previous ones ($25 million compares with $11 billion in total procurement annually), but this is troubling, boys and girls.

The company ended up writing down the value of its Kraft and Oscar Mayer brands by $15.4 billion.  CEO Bernardo Hees said on a conference call with investors after the close of trading on Thursday, “We were overly optimistic on delivering savings that did not materialize.”

The firm said its brands like Oscar Mayer hot dogs and Kraft Mac & Cheese returned to sales growth after several years of declines. But profit margins suffered as a result, making the brands less valuable.

This is only part of the story, however, as Kraft Heinz is run by Brazilian investment firm 3G, which burst on the scene a decade ago, spending $billions to buy up America’s old-school food companies and brands, including Heinz and Burger King, Bud Light and Restaurant Brands International.

And a major investor in Kraft Heinz, because of 3G’s supposed acumen, is one Warren Buffett, who is holding his annual shareholder shindig this weekend in Omaha and he’s going to be facing some major questions.

Buffett backed 3G’s takeover of Heinz in 2013, and then the merger two years later into Kraft.  Buffett’s Berkshire Hathaway owns about 27% of Kraft Heinz...matching the stock’s loss today.

--Domino’s Pizza missed fourth-quarter earnings and revenue estimates and the shares declined 9% in response on Thursday (though recovered 3% today).

Total revenue of $1.08 billion was up from $891.5 million in the same period a year ago but was below the Street’s forecast of 1.09bn. Same-store sales rose 2.4% for the quarter.

The company reaffirmed its three to five-year outlook expecting global retail sales growth in the range of 8% to 12%.

--Payless ShoeSource, the discount footwear retailer, confirmed last weekend that it was closing its 2,100 stores in the U.S. and Puerto Rico and has already started liquidation sales. The company is also shuttering its e-commerce operations.

Gee, I’ll have to try and find one in my area, the stores supposedly staying open until at least the end of March.

The thing is, the Topeka, Kansas-based company filed for bankruptcy protection in 2017, when it closed 673 stores.

--According to data compiled by Bloomberg, billionaire investor Ken Griffin pocketed $870 million in 2018, in case you were wondering how he could afford to spend $360 million thus far in 2019 on two homes, including one on Central Park South purchased for $238 million, a record for a home in the U.S.  The other purchase was for a 20,000-square-foot London townhouse...$122 million.

Griffin, head of Citadel, the hedge fund outfit, is reportedly worth $10 billion.

Citadel’s flagship Wellington Fund gained 9.1 percent in 2018, putting it near the top of the pack in a year when most hedge funds and the stock market lost money.

But topping the top-earning hedgies list for 2018 was James Simons, the mathematician behind secretive hedge fund Renaissance Technologies, with $1.6 billion in 2018 income as the firm’s Institutional Equities fund gained 8.5 percent. 

Bridgewater’s Ray Dalio nabbed second place with income of $1.3 billion as his firm’s flagship fund gained 14.6 percent.

--We note the passing of Karl Lagerfeld, the most prolific designer of the 20th and 21st centuries, operating as creative director of Chanel since 1983 and Fendi since 1965.  He was 85.

Anna Wintour, editor of American Vogue, said of Lagerfeld when presenting him with the Outstanding Achievement Award at the British Fashion Awards in 2015: “More than anyone I know, he represents the soul of fashion: restless, forward-looking and voraciously attentive to our changing culture.”

Foreign Affairs

North Korea: On to Hanoi.  So little real progress has been made since Kim Jong Un and President Trump met in Singapore last June, but the White House is hoping that next week’s second summit will at least result in a road map for denuclearization.  As the New York Times’ Mark Landler reports, however, Trump “appears more tantalized, at least for now, by declaring an end to seven decades of war on the Korean Peninsula.”

The combination of the two goals could thus produce “historic headlines but (do) little to advance the core American objective of eliminating North Korea’s nuclear arsenal.”

President Trump has been saying recently that he was in no hurry to force North Korea to give up all its weapons.

“As long as there’s no testing, I’m in no rush,” Trump told reporters while discussing his latest phone call with South Korean President Moon Jae-in.  “If there’s testing, that’s another deal.”

[Moon told Trump he hopes the summit “will provide a ‘critical turning point’ to accomplish complete denuclearization, a peace regime on the peninsula and development of NK-US relations,” according to a statement from Moon’s office.]

Ending the war is a long-running goal of Pyongyang because it would reduce their isolation and put pressure on those with sanctions against the regime.  But would this then also lead to a withdrawal of U.S. forces in South Korea?

And how much does Trump want a Nobel Peace Prize?  He certainly talks about it a lot, recently saying Japanese Prime Minister Shinzo Abe had nominated him for it, which Abe hasn’t commented on...but for which Trump has indeed already been nominated, by two Norwegian lawmakers.

Just remember as the summit progresses, that North Korea has yet to provide the United States an inventory of its nuclear facilities, a prerequisite for any disarmament plan.  It is doubtful Kim will produce such a list in Hanoi.

Meanwhile, according to the Wall Street Journal’s Andrew Jeong and Timothy W. Martin:

“North Korean leader Kim Jong Un has exiled, imprisoned or executed suspected opponents of his diplomatic outreach to the U.S. and South Korea, while also targeting his country’s moneyed elite with asset seizures, according to a new report that details a purge of some 50 to 70 individuals....

“The purge takes aim at officials who have used their powerful positions to amass wealth illicitly – albeit on a North Korean scale, according to analysts and the report from the North Korea Strategy Center, a Seoul-based think tank founded by a North Korean defector.  The report’s findings are based on interviews with 20 current and former high-ranking members of the Kim regime.”

Kim, in a speech Jan. 1, publicly declared a war on corruption.

According to the authors of the report, Kim is thought to have purged around 400 individuals since taking over from his father in 2011, half of the number coming from a campaign against his influential uncle in 2013.

Lastly, the highest-ranking North Korean official to defect in recent years, Thae Yong Ho, said the U.S. should press Pyongyang to rejoin the Nuclear Nonproliferation Treaty as a step toward denuclearization and warned that Kim would try to deceive Trump by offering hollow concessions.

Thae told a news conference: “There are 390 nuclear facilities [inside the Yongbyon complex.]  Even if there is an agreement, the act of inspecting, dismantling, then verifying the facilities’ closure won’t be completed within President Trump’s term.”

North Korea could keep its arsenal while gaining sanctions relief, so that’s why they’ll dangle Yongbyon, Thae notes.

Thae was North Korea’s deputy ambassador to London when he defected with his family to South Korea.

China: Chinese State Councillor and Foreign Minister Wang Yi called on the United States to respect China’s right to development, adding that economic and trade ties could stabilize relations between the two countries.

In a meeting in Beijing on Tuesday with a delegation led by U.S. Chamber of Commerce executive vice-president Myron Brilliant, Wang said the U.S. should see China’s development as beneficial to its own interests.

“Considering China’s development as an opportunity for the U.S. should be conducive to solving some problems, including trade, between the two countries,” Wang was quoted by state news agency Xinhua as saying.

Lingling Wei and Bob Davis / Wall Street Journal

“Despite their sharp differences in style, background and policies, Chinese leader Xi Jinping and President Trump share a common problem: growing concerns on the home front that they are going to cave in to the other side.

“Shortly before President Xi’s special envoy jetted to Washington on Tuesday to continue trade talks, an influential Communist Party journal published a speech by Mr. Xi in which he vowed not to give ground on the kind of political and legal reform needed to protect foreign intellectual property in China, a key U.S. demand.

“The timing of the publication wasn’t coincidental, according to party insiders.  Mr. Xi made the speech in August, but his comments – in which he ruled out the adoption of the Western concept of judicial independence – were aimed at disarming those who say China is giving in to U.S. pressure.

“ ‘There is a growing call for a harder-line approach [toward the U.S.] in the Chinese society,’ said Mei Xinyu, an analyst at a think tank affiliated with China’s Commerce Ministry.  ‘The U.S. side should take such sentiment into account and shouldn’t be too greedy.’

“Mr. Trump risks a similar backlash from those who fear he is tiring of the trade dispute and is poised to cut a deal that won’t lead to fundamental changes by China, including reducing the power of its state-owned enterprises and slashing subsidies for companies it considers national champions.”

Separately, the New York Times’ Nicole Perlroth reported:

“Businesses and government agencies in the United States have been targeted in aggressive attacks by Iranian and Chinese hackers who security experts believe have been energized by President Trump’s withdrawal from the Iran nuclear deal last year and his trade conflicts with China.

“Recent Iranian attacks on American banks, businesses and government agencies have been more extensive than previously reported. Dozens of corporations and multiple United States institutions have been hit, according to seven people briefed on the episodes who were not authorized to discuss them publicly....

“The Iranian attacks coincide with a renewed Chinese offensive geared toward stealing trade and military secrets from American military contractors and technology companies, according to nine intelligence officials, private security researchers and lawyers familiar with the attacks who discussed them on the condition of anonymity because of confidentiality agreements.”

A priority for the hackers is supporting Beijing’s five-year economic plan, which is meant to make China a leader in artificial intelligence and other cutting-edge technologies.

Russia: Against a backdrop of falling poll numbers, Russian President Vladimir Putin delivered his annual address to the Federal Assembly on Wednesday with an emphasis on domestic issues.

“Resolving demographic issues, increasing life expectancy and lowering the death rate are directly linked to overcoming poverty...there are too many poor people...we, of course, should focus our attention on this and on fighting this phenomenon....

“Poverty always weighs a person down. The state has to help people escape difficult situations.  One of the ways of providing this support will be a social contract.”

But he switched gears to a discussion of Russia’s new missile program in light of the U.S. withdrawal from the INF Treaty (Intermediate-range Nuclear Forces Treaty).

“The U.S. directly and crudely violated the rules of the [INF] agreement, it will exacerbate the international situation and create a genuine danger for Russia, as there will be missiles with a 10-12 minute flight time to Moscow....

“Russia will be forced to create and deploy weapons that can both be used on the territories from which the direct threat to us originates, as well as the territories where the centers of decision-making are located....

“We are ready for disarmament talks, but we are no longer going to knock on a closed door.”

Earlier this month, Russia said it would suspend its obligations under the INF Treaty essentially sealing the fate of the pact the U.S. recently said it plans to abandon in six months if Moscow doesn’t destroy the missile systems Washington claims are a breach of the pact.

On the new weaponry, Putin said, “Let them count the speed and the range of the weapons systems we are developing.”

“The tests of Poseidon, an unmanned submarine with unlimited range, are going well... This hasn’t previously been said, but today I can say that by the spring of this year the first atomic submarine will have been launched into the water.”  [Moscow Times]

The U.S. State Department dismissed Putin’s warnings as propaganda, saying it was designed to divert attention from what Washington alleges are Moscow’s violations of the INF Treaty.

In a separate session with Russian media later Wednesday, Putin said that Russia is militarily ready for a Cuban Missile-style crisis if the United States is foolish enough to want one and that his country currently has the edge when it comes to a first nuclear strike.

The Cuban Missile Crisis erupted in 1962 after Moscow responded to a U.S. missile deployment in Turkey by sending ballistic missiles to Cuba.

Putin said Russia could deploy hypersonic missiles on ships and submarines which could lurk outside U.S. territorial waters if Washington moved to deploy intermediate-range nukes in Europe. 

“[We’re talking about] naval delivery vehicles: submarines or surface ships.  And we can put them, given the speed and range [of our missiles]...in neutral waters.  Plus they are not stationary, they move and they will have to find them,” Putin said, according to a Kremlin transcript.

“You work it out.  Mach nine [the speed of the missiles] and over 1,000 km [their range].” [Andrew Osborn / Reuters]

On a different topic....

Patrick Tucker / Defense News

“Nineteen minutes. That’s how long the average victim of a Russian state-sponsored hacking group has to react before the initial penetration of a network becomes wider access, theft, and destruction, according to data published today by computer security company CrowdStrike.

“For comparison, the second-fastest groups were North Koreans, who needed an average of two hours to jump from the first compromised computer to the second; Chinese groups needed an average of four hours.

“Dubbed ‘breakout time,’ the statistic refers to the amount of time it takes the attacker to jump between network nodes once on the network. It also ‘shows how much time defenders have on average to detect an initial intrusion, investigate it and eject the attacker from the network, before sensitive data can be stolen or destroyed,’ CrowdStrike analysts wrote in a post last year introducing the concept.”

While the power of the Russian networks was long known, the speed is eye-opening.

India / Pakistan: Tensions continued to escalate in the aftermath of a suicide attack in Kashmir, with nine people killed in a gun battle that broke out as Indian soldiers searched for those responsible.  India is still promising a “jaw-breaking response.”

Pakistan has warned India against linking it to the attack without an investigation, with Pakistani Prime Minister Imran Khan saying in a televised address that Pakistan would retaliate if India takes military action against it in the aftermath of last week’s suicide attack on Indian forces in Indian-administered Kashmir that killed 44 Indian soldiers.

Editorial / Washington Post

“A bloody suicide bombing in Kashmir last week has confronted the Indian government with a dilemma that both it and the United States have repeatedly faced: what to do about the sponsorship of Islamist terrorists groups by Pakistan, a nuclear-armed state. Diplomacy, sanctions and targeted military strikes haven’t worked; full-scale war is unthinkable. Yet the failure to impose accountability or establish deterrence only encourages the Pakistani military and its intelligence service to continue a policy of backing extremists in both India and Afghanistan.

“The attack on an Indian military convoy, which killed 40 (44), was carried out by a bomber native to Kashmir, reflecting the growth of homegrown militants fighting Indian rule.  Responsibility for the attack was quickly claimed by Jaish-e-Mohammed, a Pakistan-based organization that, while officially banned, has long had the support of military and intelligence officials.  Its leader, Masood Azhar, is reported by Indian media to be in a Pakistani military hospital.  Indian authorities said the planner of the bomb attack, who was killed Monday in a shootout, was a Pakistani national and known associate of Mr. Azhar.

“While the Indian government is saying it has ‘incontrovertible evidence’ that Pakistan had a ‘direct hand’ in the attack, Islamabad is responding with familiar dodges.  Prime Minister Imran Khan denied responsibility without explicitly condemning the bombing, and pledged to take action if India provided proof of Pakistani involvement.  If the record of past terrorist attacks in India is any indication, Pakistan will not act even if evidence is provided.  The same has been true of its response to terrorist attacks in Afghanistan, such as assaults on the U.S. Embassy and other Western targets by a Taliban faction known as the Haqqani network, which Pakistan is also believed to support.

“Pakistan has long sought to use terrorists to gain leverage over India, with which it disputes control of Kashmir, and the United States, which it would like to force to accept rule by the Taliban in Afghanistan.  It is making headway on the latter goal with the Trump administration, which has been negotiating with the Taliban about withdrawing U.S. troops. That increases the complications for Indian Prime Minister Narendra Modi, who faces a national election in the coming months.

“Mr. Modi has vowed ‘a befitting reply’ to the attack....

“(But) short of a military operation with unpredictable consequences, however, India’s options are limited.  One is to seek, again, United Nations designation of Mr. Azhar as a global terrorist – but Pakistan’s ally China has blocked that action in the past. Mr. Modi’s best course, however unsatisfactory, may be to avoid overreaction – including against the Muslim population of Kashmir and those in India who speak out on its behalf.”

Syria / Iran: The White House announced Thursday that a small contingent of U.S. troops will remain in Syria, about 200*, following President Trump’s order for a “full” withdrawal from the country.  The 200 will stay in the country “for a period of time,” per a statement from press secretary Sarah Sanders.

*Today the figure seems to have moved to 400.

The 200-400 will be divided between At-Tanf, an area near the Iraq-Jordan border, and northeast Syria, according to a U.S. official.  The troops in those areas currently advise the Syrian Democratic Forces (SDF).  The idea would be that the U.S. forces would be able to provide unique high-end capabilities – such as logistics, intelligence, surveillance, reconnaissance and calling in airstrikes – that would help encourage coalition partners like France and the UK to also keep their troops in Syria to help ensure a safe zone with a force of some 1,500 international troops, a request reportedly made by the commander of the U.S.-backed and Kurdish-led SDF.

But allies have “unanimously” told the United States that they “won’t stay if you pull out,” a senior administration official told the Washington Post; France and Britain being the only other countries with troops on the ground there.

French Foreign Minister Jean-Yves Le Drian said last week that he was mystified by Trump’s policy. On Tuesday, British Foreign Secretary Jeremy Hunt said that “there is no prospect of British forces replacing the Americans” in Syria.

Turkish President Erdogan has said that his military, massed at the border, is prepared to move into northeast Syria once the Americans leave.

Currently, the U.S. still has 2,000 troops in Syria, but officials have told CNN the beginning of the troop withdrawal is imminent.

As for the 800 or so Islamic State detainees in northern Syria, Kurdish-led authorities said that while they would not free the foreign detainees, their countries must take responsibility for them, after President Trump said jihadists would be freed unless Europe takes them back.  The prisoners have been described as a “time bomb,” the fighters being able to escape if the Kurdish-led autonomous area were attacked, say by Turkey, after the U.S. withdraws.

Separately, addressing the Munich Security Conference last weekend, Iranian Foreign Minister Mohammed Javad Zarif accused Israel of looking for war and warned that its behavior and that of the United States was increasing the chances of a clash in the region.

“Certainly, some people are looking for war...Israel,” Zarif told attendees.

Accusing Israel of violating international law after bombing campaigns in Syria, Zarif also criticized European powers for not calling out Israel and the U.S. for their behavior in the region.

“The risk (of war) is great. The risk will be even greater if you continue to turn a blind eye to severe violations of international law.

“Israeli behavior is putting international law on the shelf, U.S. behavior is putting international law on the shelf....

“Look at the map, the U.S. military has travelled 10,000 kilometers to dot all our borders with its bases. There is a joke that it is Iran that put itself in the middle of U.S. bases.”

Zarif said Iran was still committed to the 2015 nuclear deal with world powers for now, but he accused France, Britain and Germany of not doing enough to ensure Tehran received the economic benefits of that accord.

Addressing his cabinet on Sunday, Israeli Prime Minister Benjamin Netanyahu said Iranian belligerence was the main destabilizing factor in the entire Middle East. 

“We must deny Iran nuclear weaponry and block its military entrenchment in Syria. We will continue taking constant action to ensure Israel’s security,” he said.

Saudi Arabia: A report released by House Democrats claims top Trump administration officials advocated for a plan to build dozens of nuclear power plants in Saudi Arabia despite warnings that the move could pose ethical concerns and violate federal law.

The report, compiled by the House Committee on Oversight and Reform, chaired by Democrat Rep. Elijah Cummings, is part of a probe of the plan to examine who within the White House was involved and the financial interests of those individuals.

Democrats have raised concerns that the administration was aiding an effort that would allow the Saudi regime access to “sensitive U.S. nuclear technology” that could in turn “allow Saudi Arabia to produce nuclear weapons that contribute to the proliferation of nuclear arms throughout an already unstable Middle East.”

Meanwhile, Crown Prince Mohammed bin Salman on Sunday said Saudi Arabia has signed investment agreements worth $20 billion during his high-profile visit to Pakistan.

Kicking off his tour of South Asia and China with a far higher Pakistan investment than expected the crown prince said the $20 billion figure represents only the start of an economic tie-up that would bring the historic Muslim allies even closer.

And that has been a long-running concern for many of us, because it was long felt the Saudis could just acquire one of Pakistan’s nuclear weapons any time they wanted.

As the guardians of most holy sites in the birthplace of Islam, the Saudi royal family carries vast religious clout in Pakistan, a staunchly conservative and mainly Muslim nation of 208 million.

I hope U.S. intelligence is up to the task of tracking Pakistan’s weapons.

Venezuela: President Nicolas Maduro ordered the closure of the border with Brazil amid the row over foreign humanitarian aid.  Maduro also went on TV to say he was considering shutting the border with Colombia to stop the opposition from bringing in relief.

The nut-job continues to deny any crisis and calls the aid delivery plans a U.S.-orchestrated show.

But opposition leader Juan Guaido, the recognized interim president by much of the West, is leading a convoy from Caracas to the Colombian border, with the two sides slated to hold dueling events at the border late today...and there are reports of gunfire and at least one dead as I go to post.

Random Musings

--Presidential tracking polls....

Gallup: 44% approval of Trump’s job performance, 52% disapproval; 89% of Republicans approve, 38% Independents (Feb. 15)...reminder, Gallup is now once a month, but I will keep noting their last survey results for consistency.
Rasmussen: 49% approve, 49% disapprove (Feb. 22).

--Bernie Sanders announced he was running for president on Tuesday, the self-styled democratic socialist whose calls for “Medicare for all,” a $15 minimum wage and tuition-free public colleges were once original, though now pillars of the party’s left wing.  He must have done a good job tending his old 2016 campaign donor list, because while I don’t think he has a chance of getting through New Hampshire once this race begins to truly take shape around the time of the Iowa State Fair in August, he did immediately raise a ton of money.

I just believe Bernie is too 2016.  I’m certainly not alone in that sentiment.  He had his shot, he’s 77, and it’s time for a new generation.

So I’m sticking to what I said last time.  Amy Klobuchar, Kamala Harris, Cory Booker, and Sherrod Brown will survive Iowa and New Hampshire*, and Joe Biden, assuming he declares as it seems he will now do.  Sanders, Elizabeth Warren, Kirsten Gillibrand will not be standing come South Carolina.

*But this was a bad week for Harris and Booker because of their mishandling of the Smollett case, where they both look like fools today, and for Amy Klobuchar, the subject of a rather negative piece in the New York Times on her behavior towards her staff.

--Alexandria Ocasio-Cortez went on a Twitter tear accusing people of undermining her intelligence over statements she made about Amazon’s failed move to the Big Apple.

“Frankly, the knee-jerk reaction assuming that I ‘don’t understand’ how tax giveaways to corps work is disappointing,” the progressive darling wrote Tuesday.

AOC came under fire when she argued last week that the close to $3 billion in tax breaks and subsidies that Amazon was in line for if they went through with their project in Long Island City, New York, could have been better spent on hiring teachers or fixing the subways.

Ocasio-Cortez lashed out at people who pointed out that $2.5 billion of the $3 billion represented future tax breaks – not a large pile of cash that could now he spent elsewhere.

“No, it’s not possible that I could come to a different conclusion. The debate ‘must’ be over my intelligence & understanding, instead of the merits of the deal,” she wrote.

“Folks handling the failed deal treated community w/condescension+disdain for their legitimate concerns.  I warned early to any & all that surging NYC costs+failing subways are creating major political forces to be reckoned with. But I don’t know what I’m talking about, right?” she railed in another tweet.

Just keep talking, AOC.

--North Carolina election officials on Thursday unanimously ordered a new contest in the 9th Congressional District, after a months-long investigation into allegations of widespread ballot-tampering that could refocus the national debate about election fraud.

The board voted 5-0 to throw out the November results between Republican Mark Harris and Democrat Dan McCready after Harris, an evangelical minister from Charlotte, admitted under oath that he was mistaken in his testimony earlier in the day.

Harris had been under scrutiny for hiring a shady political operative, Leslie McCrae Dowless, who allegedly assembled a crew of election workers to illegally collect, fill out and forge mail-in ballots in two rural counties in the 9th District.

--Max Boot / Washington Post

“Is the study of history becoming, well, history?

“According to Benjamin Schmidt of Northeastern University, the number of bachelor’s degrees granted in history declined from 34,642 in 2008 to 24,266 in 2017 even as other majors, such as computer science and engineering, have seen rising enrollments.  Today, fewer than 2 percent of male undergraduates and fewer than 1 percent of females major in history, compared with more than 6 percent and nearly 5 percent, respectively, in the late 1960s.  History departments are cutting courses and curtailing hires because of falling enrollments. The University of Wisconsin at Stevens Point may even abolish its entire history department.  History education in schools is so poor that students often enter college ignorant of the past – and leave just as unenlightened.

“A survey by the American Council of Trustees and Alumni found that ‘more Americans could identify Michael Jackson as the composer of ‘Beat It’ and ‘Billie Jean’ than could identify the Bill of Rights as a body of amendments to the U.S. Constitution,’ ‘more than a third did not know the century in which the American Revolution took place,’ and ‘half of the respondents believed the Civil War, the Emancipation Proclamation or the War of 1812 were before the American Revolution.’  Oh, and ‘more than 50 percent of respondents attributed the quote, ‘From each according to his ability to each according to his needs’ to either Thomas Paine, George Washington or Barack Obama.’....

“This abysmal ignorance fills me with sadness – even despair....

“You simply can’t understand the present if you don’t understand the past....

“The fact that so many Americans know so little about the past means that we as a society are vulnerable to demagogues.  ‘Don’t know much about history’ is a catchy song lyric but a dangerous motto for a democracy.  Historians may not want to admit it, but they bear some blame for the increasing irrelevance of their discipline.  As historians Hal Brands and Francis Gavin argue in War on the Rocks, since the 1960s, history professors have retreated from public debate into their own esoteric pursuits.  The push to emphasize ‘cultural, social and gender history,’ and to pay ‘greater attention to the experiences of underrepresented and oppressed groups,’ they write, has been a welcome corrective to an older historiography that focused almost entirely on powerful white men.  But like many revolutions, this one has gone too far, leading to the neglect of political, diplomatic and military history – subjects that students need to study and, as enrollment figures indicate, students want to study but that universities perversely neglect.  Historian Jill Lepore notes that we have ditched an outdated national narrative without creating a new one to take its place, leaving a vacuum to be filled by tribalists.

“Historians need to speak to a larger public that will never pick up their academic journals – and students need to grasp the importance of studying history, not only for their own future but for the country’s, too.  Don’t worry, it’s not a bad investment: History majors’ median earnings are higher than other college graduates’.”

So tonight, as I go to post, this story crossed CNN.com: “Vandals in Dunn, North Carolina, last week doused the marble statue of Gen. Lee with a flammable liquid and set it on fire.

“But if they think they targeted Confederate Gen. Robert E. Lee, they got the wrong Lee.”

As in the statue stands outside the Maj. Gen. William C. Lee Airborne Museum, as in Dunn is the birthplace of the World War II hero, commanding officer of the legendary 101st Airborne Division that came to prominence in the Big One.

Mr. Boot, you need to add this story to your op-ed.  And the kids, or adults, who perpetrated this act are going in the December file, along with New England Patriots owner Robert Kraft, for “Idiot of the Year”!

Yes, Kraft deserves due process, but as we begin to hear of the other high-profile figures captured in the sting operation in Florida, let’s just say Kraft is likely deserving of a year-long suspension from the NFL.

I have already received as many emails from Patriots haters tonight as just about anything I can remember. Go Jets!

--At the opening of an unprecedented four-day summit at the Vatican attended by the heads of all national bishops’ conferences from more than 130 countries, Pope Francis said the world expects “concrete measures” to tackle child sexual abuse by priests and not only “simple and obvious condemnations.”

The Pope said “the cry of the little ones seeking justice” had to be heard.

The pontiff, 82, is under major pressure to provide leadership and generate workable solutions to what is the most pressing issue facing the modern Church.

As part of his opening statement, the Pope said: “I ask the Holy Spirit to support us in these days and to help us to transform this evil into an opportunity for awareness and purification.  May the Virgin Mary enlighten us to try to cure the serious wounds that the scandal of paedophilia has caused both in children and in believers.”

Martin Bashir, the BBC’s religion editor, wrote:

“Pope Francis must confront the assumptions, attitudes and practices that have allowed a culture of abuse to flourish.  The extent of this challenge may prove overwhelming.

“This is only the beginning of an attempt to address a sickness that has been poisoning the Church since at least the 1980s, leaving its moral authority in tatters.

“The focus is now firmly fixed on Pope Francis, who leads an organization with more than 1.2 billion adherents, present in virtually every country on Earth.

“His pontificate began with widespread enthusiasm for a man who chose pastoral appeal over pomp and ceremony, humility and compassion over the trappings of status. But how it ends is likely to depend on the action he takes, and the protocols he implements, to deal with the scourge of abuse.”

Meanwhile, two prominent cardinals have urged an end to what they call “the plague of the homosexual agenda,” telling bishops to break their complicity over cases of sexual abuse.

In an open letter, Cardinals Raymond Burke (U.S.) and Walter Brandmuller (Germany) say the Church has wrongly blamed the abuse of power by clergy as the main cause of the scandals.

Instead, they say the cases involve priests who have “gone away from the truth of the Gospel.”  Burke and Brandmuller belong to the traditionalist wing of the Church.

But the cardinals also accuse the Pope of failing to answer questions related to whether the Church should allow divorced and remarried Catholics to receive Holy Communion – they are currently barred.  These questions were posed to Francis in 2016 by four cardinals, including Burke and Brandmuller.

And of course I have to note that former Cardinal Theodore McCarrick became the most senior Catholic figure to be dismissed from the priesthood in modern times, McCarrick “defrocked” by Pope Francis, with the Pope adding there would be no further appeals against the decision.

U.S. church officials said allegations he had sexually assaulted a teenager five decades ago were credible.  McCarrick, 88, had previously resigned (the first cardinal to do so since 1927) but said he had “no recollection” of the alleged abuse.

But the Vatican found him guilty of soliciting sex while hearing confession and sexual crimes against minors and adults, the Holy See said Saturday.

Defrocking means McCarrick won’t be allowed to celebrate Mass or other sacraments.

I still can’t believe this man that I knew, whose elevation to cardinal in Rome I attended in Feb. 2001, former GE CEO Jack Welch sitting directly in front of me, is the highest-ranking figure to be dismissed.

But the Washington Post notes, McCarrick may have always been honest about one thing: He always called himself a sinner.  In a 2008 essay, he wrote, “There is a hell. I hope there aren’t too many people going there...There are evil spirits in the world, but we have to hope that there’ll always be – for everybody, even the worst of us – a moment when the Lord will say, ‘Tell me, do you really not love me?’  And the answer will be, ‘I love you, and I am sorry.’”

Disturbing.

--The family of the Kentucky teen who was involved in an encounter with a Native American advocate at the Lincoln Memorial last month filed a defamation lawsuit against the Washington Post on Tuesday, seeking $250 million in damages for its coverage of the incident.

The suit alleges that The Post “targeted and bullied” 16-year-old Nicholas Sandmann in order to embarrass President Trump.

“In a span of three days in January of this year commencing on January 19, the Post engaged in a modern-day form of McCarthyism by competing with CNN and NBC, among others, to claim leadership of a mainstream and social media mob of bullies which attacked, vilified, and threatened Nicholas Sandmann, an innocent secondary school child,” reads the complaint.

It added, “The Post ignored basic journalist standards because it wanted to advance its well-known and easily documented, biased agenda against President Donald J. Trump by impugning individuals perceived to be supporters of the President.”

The suit was filed by Sandmann’s parents, Ted and Julie, on Nicholas’ behalf in U.S. District Court in Covington.  It seeks $250 million because Amazon chief executive Jeff Bezos paid that amount for the paper when he bought it in 2013. 

The Sandmann’s lead attorney is L. Lin Wood, who represented Richard Jewell, the security guard falsely accused in the bombing of Centennial Olympic Park in Atlanta in 1996.

The Sandmanns’ also accused The Post of ignoring online videos that showed a fuller picture of the incident and of using “unreliable and biased sources,” thus acting with “knowledge of falsity or a reckless disregard for the truth.”  [Paul Farhi / Washington Post]

--U.S. authorities arrested a U.S. Coast Guard lieutenant who described himself as a white nationalist and amassed a cache of weapons to “murder innocent civilians on a scale rarely seen in the country,” according to court documents.

Christopher Paul Hasson, who is assigned to Coast Guard Headquarters in Washington, D.C., had drawn up a list of possible targets, including House Speaker Nancy Pelosi and various media targets, such as MSNBC host Joe Scarborough.

Hasson was arrested last Friday, with prosecutors making it public Thursday, calling him a “domestic terrorist.”

Thank god this guy slipped up along the way because he was lying in the shadows, agents finding 15 firearms and more than 1,000 rounds of ammunition in his Silver Spring, Maryland, residence.  He was studying a manifesto by Norwegian far-right extremist Anders Behring Breivik, who in July 2011 killed eight people in downtown Oslo with a car bomb and then shot dead 69 others, many of them teenagers, at a Labour Party camp.

--We note the passing of political pollster Patrick Caddell, 68.  Caddell helped send peanut farmer Jimmy Carter to the White House, but later became disillusioned with fellow Democrats and then veered to advise supporters of Donald Trump, becoming a frequent contributor on Fox News as a result.

But as Sam Roberts writes in an obituary for the New York Times, “While Mr. Caddell was considered instrumental in Mr. Carter’s victory, he also shared the blame for limiting him to a single term.  He helped persuade the president to deliver a speech that was intended to inspirit the nation during an energy crisis and economic slump, but instead tarred Mr. Carter as a weakling who was unable to lift the country out of its malaise.”

So America chose Ronald Reagan and his rosier vision.

--And there is the case of Jussie Smollett.  Once again, I’m proud I held off on any comment whatsoever until we learned the facts.  That’s what we do at StocksandNews.

But Thursday, Chicago Police Superintendent Eddie Johnson blasted Smollett and said the “Empire” actor staged the Jan. 29 attack because he was not satisfied with his salary; Smollett claiming his attackers called him racist and homophobic slurs and looped a noose around his neck.

“This announcement today recognized ‘Empire’ actor Jussie Smollett took advantage of the pain and anger and racism to promote his career,” Johnson said at a news conference.  Earlier in the morning, Smollett was arrested and charged with filing a false police report – a felony – the culmination of an increasingly unraveling story that gripped the nation.

“I’m left hanging my head and asking why?  Why would anyone, especially an African-American man, use the symbolism of a noose to make false accusations?  How could someone look at the hatred and suffering associated with that symbol and see an opportunity to manipulate that symbol to further his own public profile?”

Johnson went on to say that Smollett paid $3,500 to two brothers, Olabinjo and Abimbola Osundairo, to stage the attack “and drag Chicago’s reputation through the mud in the process.”

The superintendent confirmed earlier reports that Smollett concocted the alleged attack when a threatening letter he received at “Empire” studios a week prior didn’t garner enough attention.

Johnson described that letter as “false.”

“I love the city of Chicago...but this publicity stunt was a scar that Chicago didn’t earn and certainly didn’t deserve,” he added.

Smollett’s lawyers maintained their client has “impeccable character and integrity” and was “betrayed” by the legal system, despite mounting evidence from authorities that the actor staged a hate attack on himself.

“Today we witnessed an organized law enforcement spectacle that has no place in the American legal system,” Smollett’s lawyers said.

“The presumption of innocence, a bedrock, in the search for justice, was trampled upon at the expense of Mr. Smollett and notably on the eve of a mayoral election.”

The statement adds the actor “fiercely and solemnly maintains his innocence and feels betrayed by a system that apparently wants to skip due process and proceed directly to sentencing.”

Smollett was released on $100,000 bond Thursday, after which he immediately returned to the set of “Empire,” begging cast members to trust his version.

Andrea Peyser / New York Post

“The twisted case of Jussie Smollett is depressing, infuriating – and should end with the maximum prison sentence.  But I predict he’ll skate.

“The reprehensible alleged actions of the gay, black fabulist who cried ‘MAGA’ will be forgiven, excused and ultimately encouraged by sympathetic progressives – deemed justifiable Trumpicide.

“And it will happen again.  And again....

“(The) fact that the assault seems not to have happened, at least not technically, is an insignificant detail to lefty Democratic presidential hopefuls, celebs and assorted fans, who tucked into the delicious outrage initially as if it were a three-course vegan meal.

“Because Smollett has already set himself up with an alibi.  He’s a marginalized person, a real-life victim of psychological assault in Donald Trump’s America.

“Consider the initial reaction from the echo chamber. Both Sens. Cory Booker and Kamala Harris hysterically, and almost in unison, termed the fake drubbing of the 36-year-old ‘Empire’ actor an ‘attempted modern-day lynching.’

“NAACP president Derrick Johnson tweeted, ‘The rise in hate crimes is directly linked to President Donald J. Trump’s racist and xenophobic rhetoric.’ Sen. Bernie Sanders. Ex-Vice President Joe Biden. Hillary Clinton.  House Speaker Nancy Pelosi....Everyone with an agenda and a microphone should be embarrassed for saying they were shocked! shocked! that such intolerance could flourish in present-day America.

“But to date, not one of these illustrious characters, and many more, who virtually jumped for joy at the chance to tar President Trump with the bashing-that-wasn’t has apologized publicly to the commander-in-chief.

“Almost from the start, Smollett’s version of events seemed more like an episode of ‘Law & Order: SUV’ than a genuine crime. But leftist pols and like-minded members of the news media, blinded to reality by this fellow hater, convinced themselves to ignore numerous red flags.

“Trump foes couldn’t get enough of it because it confirmed everything they wanted to believe: that the president is somehow responsible for all prejudice and intolerance.  Smollett might not have been speaking the precise truth, but it was close enough.  He gave us truthiness.

“Jussie Smollett tried his best to deepen the racial divide in this nation with false and reckless claims. But I believe he’ll end up with court-ordered counseling, perhaps pay a fine. He should not get away with it.  But I think he will.”

Today, executive producers of “Empire” announced they were scrubbing Smollett’s character from the final two episodes this season.

In a statement, several of the producers said in part: “While these allegations are very disturbing, we are placing our trust in the legal system as the process plays out. We are also aware of the effects of this process on the cast and crew members who work on our show and to avoid further disruption on set, we have decided to remove the role of ‘Jamal’ from the final two episodes of the season.”

--Finally, on a positive note, a Japanese spacecraft has touched down on an asteroid in an attempt to collect a sample of rock from the surface, after a three-and-a-half year journey from Earth.

The Hayabusa-2 probe was trying to grab the sample from a pre-chosen site on the asteroid Ryugu, and the spacecraft is expected to return to Earth with the rocky material in 2020.

And an Israeli spacecraft aboard a SpaceX rocket launched from Cape Canaveral in Florida Thursday, beginning a two-month journey to land on the Moon.  If successful, Israel will join Russia, the U.S. and China as the only countries to have made a controlled landing on our dear neighbor, which was phenomenally bright the other night...hope you saw that...very cool.

Funding for the Israeli mission came almost entirely from donations, the project being the first privately backed lunar lander mission.

It’s the size of a washing machine, but it’s kind of on spin cycle, as instead of taking the standard three days that crewed lunar trips took, the lander will speed in ever-widening elliptical orbits around the Earth until it intercepts the moon’s gravitation pull in several weeks.  Its creators have estimated it will land on April 11.

Actually, the landers legs have already successfully deployed.  Hopefully, the lander, named Beresheet, the Hebrew word for Genesis, isn’t wearing Nikes.

---

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

God bless America.

---

Gold $1330
Oil $57.01

Returns for the week 2/18-2/22

Dow Jones  +0.6%  [26031]
S&P 500  +0.6%  [2792]
S&P MidCap  +1.0%
Russell 2000  +1.3%
Nasdaq  +0.7%  [7527]

Returns for the period 1/1/19-2/22/19

Dow Jones  +11.6%
S&P 500  +11.4%
S&P MidCap  +16.3%
Russell 2000  +17.9%
Nasdaq  +13.5%

Bulls 51.9
Bears 20.7

Have a great week.  Could be an action-packed one, sports fans.

Brian Trumbore