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Week in Review

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08/24/2019

For the week 8/19-8/23

[Posted 11:00 PM ET, Friday]

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Edition 1,063

This was an outrageous week.  When I do errands in the afternoons, I always put on Rush Limbaugh and I enjoy the guy.  He’s one of the two or three greatest entertainers in radio history.  But this week he had to be thinking, ‘Am I really fooling all my listeners?’  I mean his defense of Trump’s statements was beyond the pale.  Rush talked about how the base loves that he breaks ‘all the traditional conventions,’ and I’m thinking, ‘Like diplomacy?  And that is good?’

It isn’t. 

You can’t defend what the president did this week.  Yes, I agree with being tough on China.  I know more about the place in my pinkie than Trump ever will.  Including, as I’ve been telling you for well over a year with the trade dispute, that the average American hasn’t a clue what is coming.  It’s not trade.  It’s going to be violent.  China has been developing and producing massive amounts of weaponry, after stealing all our technology, and we keep very publicly poking them.  This isn’t Canada or Mexico we’re dealing with.  Never was there a time that demanded diplomacy more than today.

But we have a president who is totally out of control...more so than ever.  A president who is picking fights with Denmark, of all people, insulting our friends, and yet as North Korea launches more bottle rockets tonight, as Mr. Trump jets across the pond to Europe for the G-7 summit in Biarritz, the first tweet of his after he would have heard of the mischief from Pyongyang was about freakin’ Diamond and Silk!  And as I go to post, he is tweeting up a storm on poll #s and others’ ratings.

One thing you can be sure of.  This weekend in France could be a total shitshow.  But if you like your presidents breaking conventions, you’ll love it.

In the meantime, today we had the following tweets...and then some...in a truly chaotic day.

“Our Country has lost, stupidly, Trillions of Dollars with China over many years.  They have stolen our Intellectual Property at a rate of Hundreds of Billions of Dollars a year, & they want to continue.  I won’t let that happen!  We don’t need China and, frankly, would be far....

“....better off without them. The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP.  Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing...

“....your companies HOME and making your products in the USA.  I will be responding to China’s Tariffs this afternoon.  This is a GREAT opportunity for the United States. Also, I am ordering all carriers, including Fed Ex, Amazon, UPS and the Post Office, to SEARCH FOR & REFUSE....

“....all deliveries of Fentanyl from China (or anywhere else!).  Fentanyl kills 100,000 Americans a year.  President Xi said this would stop – it didn’t.  Our Economy, because of our gains in the last 2 ½ years, is MUCH larger than that of China.  We will keep it that way!”

“Now the Fed can show their stuff!”

“As usual, the Fed did NOTHING!  It is incredible that they can ‘speak’ without knowing or asking what I am doing, which will be announced shortly.  We have a very strong dollar and a very weak Fed. I will work ‘brilliantly’ with both, and the U.S. will do great...

“...My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?”

Someone didn’t tell President Trump that Jay Powell’s Jackson Hole speech was part of an annual symposium at the resort, where papers on the global economy are presented. It is NOT a Fed policy meeting.

And to put Powell and Xi in the same sentence like that?  Are you kidding me?  Jay Powell against a tyrant who has imprisoned hundreds of thousands of Uighurs?  Jay Powell vs. a man who is looking to steal Hong Kongers’ freedom...who is looking to take Taiwan given the right opportunity?  These are the kinds of conventions we want broken?!

The president told us he would be responding to China’s tariffs this afternoon, so that set the market into a major swoon.  What would Trump do?  And when?

The Dow Jones ended up falling more than 600 points, and shortly after the market closed, the president issued his next series of tweets:

“For many years China (and many other countries) has been taking advantage of the United States on Trade, Intellectual Property Theft, and much more.  Our Country has been losing HUNDREDS OF BILLIONS OF DOLLARS a year to China, with no end in sight....

“....Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer.  As President, I can no longer allow this to happen!  In the spirit of achieving Fair Trade, we must Balance this very...

“...unfair Trading Relationship. China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!).  Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%....

“....Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%.  Thank you for your attention to this matter!”

Prior to the above volley, the president tweeted:

“The Dow is down 573 points perhaps on the news that Representative Seth Moulton, whoever that may be, has dropped out of the 2020 Presidential Race.”

I felt compelled to reply directly to Mr. Trump: “He’s a Marine Corps officer who served four tours of duty in Iraq.”

But the above has to be weighed against Trump’s half-hour, South Lawn media scrum earlier in the week.

Michael Gerson / Washington Post

“With the whir of a helicopter engine in the background, President Trump veered from topic to topic with utter confidence, alarming ignorance, minimal coherence and relentless duplicity.

“Russian President Vladimir Putin, he said, ‘made a living on outsmarting President Obama’ – even though it is Trump who now urges a Russian return to the Group of Seven summit without any concessions on Putin’s part.

“On pursuing the trade war with China, Trump called himself the ‘chosen one.’  This came within hours of tweeting a quote that he is loved like ‘the second coming of God.’  At some point, arrogance is so extreme and delusional that it can only be expressed in blasphemy.

“Trump accused the Danish prime minister of ‘blowing off the United States’ because she scorned his own balmy, offensive musings on the future of Greenland.  ‘We treat countries with respect,’ he said – except, presumably, the ‘shithole’ ones....

“He joked again about being in office 10 or 14 years from now – appealing to people who find overturning the constitutional order a laugh riot.

“ ‘Mental health,’ Trump went on.  ‘Very important.’  Hard to argue with that one....

“Of the wounded and grieving families Trump visited following recent mass shootings: ‘The love for me,’ he boasted, ‘and my love for them was unparalleled.’ And this was demonstrated by ‘hundreds and hundreds of people all over the floor.’  No one draws a bigger crowd in an intensive care unit....

“Seldom in presidential history has more nonsense been expressed with greater concision.  Never would the interests of the United States have been better served by a louder helicopter....

“All narcissists believe they are at the center of the universe. But what happens when a narcissist is actually placed at the center of the universe?  The ‘chosen one’ happens.  Trump is not just arguing for an alternative set of policies; he is asserting an alternative version of reality, in which resistance to his will is disloyalty to the country.

“Second, the president has systemically removed from his circle anyone who finds this appalling.... His counselors are now flunkies. The proof of their loyalty is not found in the honesty of their opinions but in the regurgitation of his insanity.

“Third, the president is increasingly prone to the equation of the national interest with his personal manias.  He is perfectly willing to threaten relations with Denmark – or to force the Israeli government into a difficult choice – if it serves his tweeted whims....

“Trump’s promotion of moral and political chaos puts other members of his party in a difficult position.  Difficult, but not complicated.  It is their public duty to say that foolish things are foolish, that insane things are insane, that bigoted things are bigoted.  On growing evidence, their failure to do so is abetting the country’s decline into farce.”

So the Wall Street Journal first reported that Trump periodically brought up that he wanted to buy Greenland, and on Sunday, both the president and his economic adviser Larry Kudlow confirmed it was indeed something that had been discussed.

And then on Wednesday, in the above-noted rant, some would say after of biblical proportions, Trump gave a nod to a right-wing conspiracy theorist who dubbed him “King of Israel” and declared himself “the chosen one.”

Trump quoted conservative radio host Wayne Allyn Root, who I never heard of because I don’t listen to stations he might be on.

“President Trump is the greatest President for Jews and for Israel in the history of the world, not just America, he is the best President for Israel in the history of the world...and the Jewish people in Israel love him like he’s the King of Israel.  They love him like he is the second coming of God...But American Jews don’t know or like him.  They don’t even know what they’re doing or saying anymore. It makes no sense!”

A day earlier, President Trump commented that American Jews who vote Democratic are either dumb or “disloyal.”  Root’s comments also made zero sense, historically.  But that doesn’t matter to the president.

Nearly 80% of American Jews voted Democratic in the 2018 midterms, according to the Pew Research Center.

Trump World

--President Trump canceled a state visit scheduled for next month after Danish Prime Minister Mette Frederiksen refused to consider selling Greenland to the United States.  Just an amazingly stupid move by Trump, infuriating a great ally that has stood behind America on the battlefield and in the diplomatic arena, and proving, remarkably, that the sole purpose of his trip was to discuss appropriating land from an ally.

Denmark joined NATO as a founding member in 1949 and as the U.S. Embassy website in Denmark says, “Around the world Denmark is a steadfast partner to the United States.”

So Trump abruptly cancels the trip, an act that a member of a center-right party in Denmark described as “an insult from a close friend and ally.”

In recent times, Danish forces served in Bosnia under U.S. command as part of the NATO air campaign against Serbia in 1999, while after 9/11, Denmark contributed troops to the war in Afghanistan, 43 of them dying, while Denmark provides more than $100 million on average annually to build Afghanistan’s security forces, per the Danish Defense Ministry.

After World War II, Harry Truman offered to buy Greenland for $100 million in gold but was rebuffed by Denmark.

But Trump called comments Frederiksen made about his bid to buy Greenland “nasty.”

“I thought the prime minister’s statement that it was an absurd idea was nasty,” Trump told reporters in his outrageous press spray Wednesday, as he left for a day trip to Kentucky where he mused about awarding himself the Medal of Honor. [Another beyond outrageous statement.]

The president said it was “not nice” of Frederiksen to rebuff the idea the way she did.  “She’s not talking to me, she’s talking to the United States of America,” Trump added, again taking particular offense at the prime minister’s use of the word “absurd.”

Trump used Twitter Tuesday night to announce that he would not be making a stop in Denmark when he heads to Poland early next month after Frederiksen ridiculed his flirtation with buying the island, calling it “an absurd discussion.”

“Denmark is a very special country with incredible people, but based on Prime Minister Mett Frederiksen’s comments, that she would have no interest in discussing the purchase of Greenland, I will be postponing our meeting scheduled in two weeks for another time,” Trump wrote.

Carl Bildt (former prime minister of Sweden, and Minister of Foreign Affairs) / Washington Post

“First you get yourself invited to a state visit in a friendly allied country. Not just a visit of the usual sort: a state visit with a banquet by the queen and all the pomp and the ceremony that can be mustered.  Hundreds of people start working on all the elaborate preparations necessary for these grand occasions.  Monarchies take these things seriously.  The palace is properly prepared to receive the dignified guest.  Everyone starts polishing.

“Then you suddenly launch the idea that it might be fun to acquire parts of the territory under that particular monarch.  Just a simple property deal, really.  You don’t actually inquire discreetly whether this idea would ever fly.  Instead, you launch it straight out in public without any warning.  Perhaps that’s the way property deals are done.

“The authorities of the country in question are slightly taken aback.  Losing territory wasn’t really on their agenda, and in these days, it’s not normally part of the concept of friendly state visits. They say in no uncertain terms that the land is not for sale.

“Up until this point, it’s all pretty absurd, as was pointed out.

“But then it goes beyond the absurd.  The self-invited guest suddenly cancels everything and says if he can’t get his property deal and the territory he wants, he sees no purpose for the state visit.  Everything is off.  Tons and tons of preparations are just scrapped.

“One could have thought this was something out of some saga from the Middle Ages.  Whether it actually ever happened in those dark centuries I don’t  know, but it is not entirely inconceivable.  At least in the world of the sagas.

“But it wasn’t a saga from a distant and bizarre past, but the present reality of the president of the United States and the queen of Denmark.

“And in the modern world, I’m rather certain it is unique for one head of state to make an official visit to another head of state conditional on the latter being prepared to hand over some territory.  It wasn’t just absurd – it was beyond the absurd.  Rest assured that people all over the world have been shaking their hands in disbelief.

“Apart from the surreal theater of the entire thing, and the profoundly insulting behavior toward a long-standing and loyal ally, the issues of Greenland and the Arctic are serious indeed.

“But it’s certainly not exchanging territories that is the way forward.  Greenland is not for sale, and neither is Svalbard or Iceland.  Instead, the necessary way forward is developing cooperation between all the stakeholders of this vast and challenging region to address challenges that are common to all of them.  And climate change and its effects are by far the most serious of them.

“When the United States in the form of Secretary of State Mike Pompeo turned up at the ministerial meeting of the Arctic Council in Rovaniemi, Finland, he spent most of his energy attacking China and ended up vetoing the communique that had been agreed upon by everyone else.  The reason?   It mentioned climate change, and that was not acceptable to the Trump administration.  All others had been discussing little but the rising temperatures, which are happening two or three times faster here than anywhere else on Earth.

“All the others issued the paper agreed between them anyhow.  Pompeo flew away, saying he was on his way to Greenland.  He didn’t show up – he canceled the visit.

“Canceling visits now seems to be what remains of Arctic policy for the United States.  Perhaps just as well.  All other countries are keen to try to prevent Greenland from turning green again.  We would all suffer the consequences.”

--Trump tweets:

“The Legendary Henry Ford and Alfred P. Sloan, the Founders of Ford Motor Company and General Motors, are ‘rolling over’ at the weakness of current car company executives willing to spend more money on a car that is not as safe or good, and cost $3,000 more to consumers.  Crazy!

“Henry Ford would be very disappointed if he saw this modern-day descendants wanting to build a much more expensive car, that is far less safe and doesn’t work as well, because execs don’t want to fight California regulators.  Car companies should know....

“....that when this Administration’s alternative is no longer available, California will squeeze them to a point of business ruin.  Only reason California is now talking to them is because the Feds are giving a far better alternative, which is much better for consumers!”

 “The Economy is strong and good, whereas the rest of the world is not doing so well.  Despite this the Fake News Media, together with their Partner, the Democrat Party, are working overtime to convince people that we are in, or will soon be going into, a Recession.  They are....

“...willing to lose their wealth, or a big part of it, just for the possibility of winning the Election.  But it won’t work because I always find a way to win, especially for the people! The greatest political movement in the history of our Country will have another big win in 2020!”

“Just concluded a very good meeting on preventing Mass Shootings. Talks are ongoing w/both Republicans & Democrats.  We are likewise engaging with lawful gun owners, survivors, grieving family members, law enforcement, the NRA, mental health professionals, and school officials...

“...I am hopeful Congress will engage with my Team to pass meaningful legislation that will make a real difference and, most importantly, Save Lives!”

Whatever.

“The Fake News LameStream Media is doing everything possible to ‘create’ a U.S. recession, even though the numbers & facts are working totally in the opposite direction. They would be willing to hurt many people, but that doesn’t matter to them.  Our Economy is sooo strong, sorry!”

“For the record, Denmark is only at 1.35% of GDP for NATO spending.  They are a wealthy country and should be at 2%. We protect Europe and yet, only 8 of the 28 NATO countries are at the 2% mark. The United States is at a much, much higher level than that...

“...Because of me, these countries have agreed to pay ONE HUNDRED BILLION DOLLARS more – but still way short of what they should pay for the incredible military protection provided.  Sorry!”

“The LameStream Media is far beyond Fake News, they are treading in very dangerous territory!”

Meaning what, Mr. President?

“Anthony Scaramucci is a highly unstable ‘nut job’ who was with other candidates in the primary who got shellacked & then unfortunately wheedled his way into my campaign.  I barely knew him until his 11 days of gross incompetence-made a fool of himself, bad on TV. Abused staff...

“...got fired. Wrote a very nice book about me just recently. Now the book is a lie? Said his wife was driving him crazy, ‘something big’ was happening with her. Getting divorced.  He was a mental wreck.  We didn’t want him around.  Now Fake News puts him on like he was my buddy!”

“Wow, Report Just Out!  Google manipulated from 2.6 million to 16 million votes for Hillary Clinton in 2016 Election!  This was put out by a Clinton supporter, not a Trump Supporter!  Google should be sued.  My victory was even bigger than thought! @JudicialWatch”

The above is just a massive pile of merde.

“Juan Williams at @FoxNews is so pathetic, and yet when he met me in the Fox Building lobby, he couldn’t have been nicer as he asked me to take a picture of him and me for his family. Yet he is always nasty and wrong!”

--Anthony Scaramucci / Washington Post

“When I decided to support Trump’s candidacy and later to work in his administration, it wasn’t because I agreed with all of his policies or liked every aspect of his personality. As former New York mayor Ed Koch used to say, ‘If you agree with me on nine out of 12 issues, vote for me.  If you agree with me on 12 out of 12, see a psychiatrist.’

“My public praise of the man was over the top at times, but my private estimation of him was more measured.  I thought Trump, despite his warts, could bring a pragmatic, entrepreneurial approach to the Oval Office. I thought he could be the reset button Washington needed to break through the partisan sclerosis. I thought he would govern in a more inclusive way than his campaign rhetoric might have indicated...

“I thought wrong.  And, yes, many of you told me so....

“I broke from Trump because not only has his behavior become more erratic and his rhetoric more inflammatory, but also because, like all demagogues, he is incapable of handling constructive criticism. As we lie on the bed of nails Trump has made, it’s often difficult to see how much the paradigm of acceptable conduct has shifted.  For the Republican Party, it’s now a question of whether we want to start cleaning up the mess or continue papering over the cracks.

“I challenge my fellow Republicans to summon the nerve to speak out on the record against Trump. Defy the culture of fear he has created, and go public with the concerns you readily express in private.  Hold on to your patriotism, and help save the country from his depredations....

“My personal odyssey took longer than it should have, but I’m not concerned with being on the right side of history – I’m determined to ensure that good people are the ones who end up writing it.”

Wall Street and the Trade War

Trump tweet:

“The Economy is doing really well.  The Federal Reserve can easily make it Record Setting! The question is being asked, why are we paying much more in interest than Germany and certain other countries?  Be early (for a change), not late.  Let America win big, rather than just win!”

Well stocks lost ground for a fourth consecutive week, the S&P now down 4.5% in the month of August, about 6% from its high.

In his Jackson Hole speech, Fed Chair Powell said the central bank would “act as appropriate” to keep the U.S. economy healthy in a deteriorating global economy, but stopped short of committing to rapid-fire rate cuts, which as I noted in the opening resulted in Trump’s ire. The message from both Powell and his second in command, vice chair Richard Clarida, was that while the Fed may be willing to cut to protect the recovery, it made no promises.

In an interview on CNBC after the market closed today, Clarida said, “We take our policy decisions one meeting at a time.”

Powell said in his speech there are “significant” risks to the economy, including the trade dispute, Brexit, tension in Hong Kong and signs of a global slowdown.  But he also said the domestic economy is in a “favorable place” and he stressed limits to the Fed’s ability to respond to the trade issues.

But now it’s all about the Sept. 17-18 Open Market Committee confab.  A quarter-point or a half?  Trump wants a full point.  Someone tell him to pound sand.

I do not note the IHS Markit PMI numbers for the U.S. because I have always relied on the ISM figures for manufacturing and services, leaving Markit for Europe, Asia, and the rest, as I’ll note shortly.

But the Street took note of Markit’s manufacturing index falling to 49.9 from 50.4 on manufacturing, 50.9 from 52.6 for services, per its flash readings for August (50 being the dividing line between growth and contraction).  It was the lowest manufacturing number in almost 10 years and the yield on the 10-year, Thursday, briefly fell below the yield on the two-year, again, in response....another inversion of the yield curve.  As we discussed last week, a potential harbinger of recession, but down the road, say 2020.

We did have some decent housing data, the sector having clearly stabilized on the heels of falling mortgage rates.  July existing home sales were a little better than expected, 5.42 million annualized, with the median existing home price up 4.3% vs. a year ago to $280,800, the 89th straight month of year-over-year gains.

July new-home sales were slightly less than expected, 635,000, but June was revised sharply upward to 728,000.

Separately, employers added a half-million fewer jobs in 2018 and early 2019 than previously reported, the Labor Department said Wednesday.

The revisions, which are preliminary, are part of an annual process to more closely align the survey-based estimates with definitive data from state unemployment insurance records.  The revisions cover the period through March, with final updates, including the rest of 2019, released in February.

While the revisions still paint the picture of a healthy jobs picture, they do mean that hiring probably averaged under 200,000 jobs per month last year, down from the 223,000 initially reported and only modestly better than the 179,000 monthly jobs added in 2017.  The last three months, the average job gain has been 140,000.

And the Congressional Budget Office issued its latest forecast on the deficit, which is now expected to widen to $1 trillion by fiscal year 2020, two years sooner than previously estimated.

The deficit will expand faster than forecast after recent legislation raised spending levels, according to the nonpartisan group’s annual budget outlook released Wednesday.  The only positive is that with lower interest rates, borrowing costs (interest expense) will be reduced.

But it will be the first time the deficit exceeded the $1 trillion mark since 2012.

The CBO forecasts economic growth of 2.3% in the fourth quarter this year, followed by 2.1% next year, up from the agency’s prior estimate of 1.7%. After that, growth will slow to about 1.8% through 2029, though such long-range forecasts are rather absurd.

As a share of GDP, the deficit is forecast to increase to 4.6% next year from 4.5% this year.

Editorial / Wall Street Journal

“President Trump isn’t famous for consistency, but his reversal on a new round of tax cuts may be a record.  On Tuesday he said he was considering a cut in the payroll tax and indexing capital gains for inflation, but on Wednesday he took it all back.

“ ‘I’m not looking at a tax cut now,’ Mr. Trump told reporters.  ‘We don’t need it.  We have a strong economy.’  He added that indexing capital gains might be seen as ‘somewhat elitist’ and would benefit the wealthy, thus aligning himself ideologically (and bizarrely) with his many media opponents who still denounce his 2017 tax reform.

“Mr. Trump is also confused about whether the economy is strong or weak, whether more economic stimulus is needed, and even whether his trade brawls with the rest of the world are weakening the economy.  No wonder business investment is falling amid this climate of policy uncertainty.  Mr. Trump’s payroll-tax cut wouldn’t pass Congress in any case, and indexing capital gains for inflation, while economically useful, would be challenged in court if he implemented it by executive order.

“But if Mr. Trump does want to give the economy a policy boost to prevent a recession, there is something he can do without Congress or a legal challenge: He can cut his trade-uncertainty tax.  This is the pall over business investment that is a major result of his trade policies.

“Mr. Trump and his trade Rasputin, Peter Navarro, claim there’s been no harm from his tariffs.  But his actions belie the claim.  Last week he delayed a new round of tariffs on some imports from China lest they raise consumer prices before Christmas.  He has ladled out $28 billion in subsidies to farmers to offset markets lost to retaliation by China, and other nations, after his various tariffs.

“The evidence of harm is also clear from U.S. economic data.  Manufacturing has slumped as global demand declines amid trade and currency shifts.  U.S. net exports have also declined, and falling private investment shaved a percentage-point from GDP in the second quarter.

“Nearly every CEO with global customers or suppliers mentions trade as a leading concern.  ‘Anytime there’s trade tensions of this kind, it does put a certain amount of conservatism, I think, into all of our plans for capital spending,’ said Caterpillar CEO James Umpleby in April.  ‘So I would expect if, in fact, the trade tensions get resolved, that would be a positive for global economic growth and a positive for us.’

“As Mr. Umpleby suggests, Mr. Trump has the power to assist the economy on his own by ending this trade uncertainty.  He can help Germany avoid recession by publicly withdrawing his threat to impose 25% tariffs on European autos.  He can help American manufacturers and farmers by ending his steel and aluminum tariffs.  U.S. Steel this month said it will lay off up to 200 workers in Michigan amid falling demand due to slower growth....

“Mr. Trump doesn’t need to win his stare down with Xi Jinping in a single negotiation.  He can make progress now, see if China honors its promises, and respond accordingly if he wins a second term.  He’ll get no such chance if there’s a trade-driven recession, and Elizabeth Warren sits in the White House.”

Continuing with the Trade War....as part of his epic rant Wednesday, Trump said:

“Somebody had to do it.  I am the chosen one.  Somebody had to do it,” referring to his tariff-heavy trade dispute.  “I’m taking on China.  I’m taking on China on trade, and you know what: We’re winning.”

No you aren’t.

Trump tweeted: “Doing great with China and other Trade Deals.  The only problem we have is Jay Powell and the Fed.  He’s like a golfer who can’t putt, has no touch.  Big U.S. growth if he does the right thing.  BIG CUT – but don’t count on him!  So far he has called it wrong, and only let us down....

“....We are competing with many countries that have a far lower interest rate, and we should be lower than them.  Yesterday, ‘highest Dollar in U.S. History.’  No inflation. Wake up Federal Reserve.  Such growth potential, almost like never before!”

Today, China announced it was imposing extra tariffs on some $75 billion in U.S. goods, including soybeans, wheat, corn, beef and pork, among other products, as Beijing retaliated against Washington’s moves.  And then you see above how President Trump responded.

The Chinese Communist Party mouthpiece People’s Daily on Monday, in a short commentary, said that events in Hong Kong were the internal affairs of China, and that linking it with trade negotiations was a “dirty” aim.

“Making a fuss about Hong Kong will not be helpful to economic and trade negotiations between China and the U.S.,” the commentary said.  “They would be naïve in thinking China would make concessions if they played the Hong Kong card.”

Chinese foreign ministry spokesman Geng Shuang said the Hong Kong protests showed that “so-called democracy and freedom without rule of law and social order will only lead to anarchy and chaos.”

“Hong Kong affairs are purely China’s domestic affairs,” he said.  “We have noted that President Trump said earlier: ‘Hong Kong is a part of China. They’ll have to deal with that themselves.  They don’t need advice.’  We hope the U.S. will match its words with deeds.”

On the issue of Huawei, though, the Trump administration formally granted another 90-day extension to the telecom giant and handset maker that will allow the company to buy equipment from U.S. companies.  The thing is, a day before, President Trump said his administration was unlikely to grant an extension.

But Huawei still has two other bans against it from the U.S., including one that blocks the federal government and its contractors from conducting business with the company.  The other bars companies from providing services to the government if they do business with the Chinese company.

Europe and Asia

IHS Markit released its flash estimates for manufacturing and services in the eurozone economy for August, with the composite reading at 51.8 vs. 51.5 in July.

Manufacturing was 47.8 vs. 46.9 last month, better than expected, but obviously still contraction, while the services PMI is estimated at 53.4 vs. 53.2.

The flash data also breaks out Germany and France individually; with Germany’s manufacturing PMI at a still sickly 43.6 vs. 43.2, services 54.4 vs. 54.5 in July...France’s manufacturing number 50.4 vs. 49.0, services 53.3 vs. 52.6 the prior month.

Separately, Eurostat released July inflation data for the euro area, 1.0%, down from 1.3% in June, 1.1% ex-food and energy.

Germany 1.1% (ann.), France 1.3%, Italy 0.3%, Netherlands 2.6%, U.K. 2.1%.

Andrew Harker, IHS Markit:

“The dynamics of the eurozone economy were little changed in August, with solid growth in services continuing to hold the wider economy’s head above water despite ongoing manufacturing decline. While the rate of overall expansion ticked up, we’re still looking at GDP only rising by between 0.1% and 0.2%, based on the PMI data for the third quarter so far.

“The lack of a quick rebound from the recent economic slowdown has impacted firms’ confidence, with sentiment the lowest in over six years.  It appears that companies are braced for a sustained period of weakness, and as a result are showing greater reluctance to take on additional staff.”

The European Central Bank’s policymakers are preparing a combination of measures to prop up the eurozone economy, as recent indicators paint an even bleaker picture of the outlook, per the minutes from the July 25 meeting of the ECB released this week.  With growth and inflation slowing for months, ECB President Mario Draghi has all but promised more stimulus as soon as September.  The minutes show the package of support will likely include a combination of rate cuts, asset purchases, changes in the guidance on interest rates and support for banks through partial relief from the ECB’s negative interest rates.

One more...the Bundesbank warned Europe’s largest economy is likely to tip into recession in the third quarter, dragged down by a sharp drop in German exports and a decline in industrial production.

Brexit: British Prime Minister Boris Johnson is coming up against opposition from European leaders, such as French President Emmanuel Macron, to his demand for the backstop to be stripped out of the Brexit Withdrawal Agreement.

Macron told Johnson Thursday that the Withdrawal Agreement and the backstop were “genuine, indispensable guarantees” to preserve the Irish peace process and the EU single market.

And, “Renegotiation of the terms currently proposed by the British is not an option that exists, and that has always been made clear by [EU] President Tusk.”

Johnson’s diplomatic offensive ahead of the G-7 summit in Biarritz yielded little, if zero, progress as he insisted the backstop, which guarantees no hard Border on the island of Ireland, must go or the U.K. will leave without a deal on October 31.

German Chancellor Angela Merkel downplayed comments she made at a joint press conference earlier in Berlin with Johnson that suggested Britain had 30 days to find an alternative to the backstop.

But clearly, Johnson has put Ireland in “the eye of the storm,” as Ireland’s No. 2 politician, Simon Coveney, put it.

Speaking in Denmark, he said: “The British government has said it wants to look at alternative arrangements that can do the same job as the backstop and of course we will listen to that and I think other European countries will do so too because we all want to avoid a no-deal Brexit.

“But I think the messaging is clear, it’s consistent and it’s been firm from the EU that the deals that have been put together through many, many hours and days and weeks and months of negotiation are not going to be brushed aside now in an effort to get a deal.”

I’ve been arguing for the past year that a no-deal Brexit would be totally disastrous and an official British government document leaked to the Sunday Times (of London) shows just that: Shortages of fuel, food and medicine, jammed ports and a hard border in Ireland.

The newspaper said up to 85% of trucks using the main channel crossings “may not be ready” for French customs, meaning disruption at ports would potentially last up to three months before the flow of traffic improves.

The European auto sector would be particularly hard hit with all the supply chain disruptions. 

Italy: The eurozone’s third-largest economy is in political turmoil after its government, riven by months of infighting, imploded this week, forcing prime minister Giuseppe Conte to resign just as he was to begin preparing the 2020 budget.  Conte launched a blistering attack on his own interior minister, Matteo Salvini, accusing him of sinking the coalition and endangering the economy for personal and political gain.

In a shock move on Aug. 8, Salvini, leader of the far-right, anti-immigrant League party, declared that his alliance with the anti-establishment 5-Star Movement was dead and called for elections.

Salvini had repeatedly promised that the 14-month-old government would last a full five-year term and appeared confident his move would trigger early elections, allowing him to cash in on the League’s surging popularity.

So President Sergio Mattarella on Thursday gave the parties five days to clinch a deal to avoid a snap election.  5-Star then sought to gain the initiative as it began formal talks on Friday with the opposition Democratic Party (PD) to try to form a coalition to end Italy’s government crisis.  The two have been historic enemies and this won’t be easy, but the goal is to attempt to form a coalition that pushes the League into the opposition.

5-Star has said talks with the PD will go nowhere unless the PD agrees to cut the number of lawmakers to 600 from 945.  The PD has opposed the reform in parliament and says it will only consider it as part of a broader institutional reform that would be a long, drawn-out process.  5-Star leader Luigi Di Maio, however, said, “The cut in the number of parliamentarians must be done, full stop.  If we don’t get that first point there won’t be anything else,” he told reporters today.

The League’s Agriculture Minister, though, said it might be possible to mend relations with 5-Star.

If an election is called and Salvini emerges victorious, the fear in the financial markets is that he would ramp up spending and put the heavily indebted nation on a collision course with the European Union.

Should a vote be called, it would be this autumn.  A recent opinion poll had the League at 36% support, which is a big number for Italy’s highly-fragmented party system.  In the March 2018 elections, 5-Star received about one in three votes, with the League at 17%.  Since then 5-Star’s support has dropped by half.

The League hopes to gain an outright majority with two smaller allies: the far-right Brothers of Italy (that doesn’t sound too fascist, does it?), and the conservative Forza Italia of former premier Silvio Berlusconi.

Turning to Asia...Japan’s flash composite for August was a decent 51.7 vs. 50.6 in July.  Manufacturing 49.5, services 53.4.

Separately exports fell in July for an eighth consecutive month, down 1.6% year-on-year, according to the Ministry of Finance. This was an improvement from -6.7% in June.  Exports (shipments) to China were down 9.3%, and 6.9% to South Korea.  Imports fell 1.2%.

Meanwhile, the tensions between Japan and South Korea ramped up further this week.  Japan, recall, tightened curbs on exports of high-tech materials needed by South Korea’s chip industry and again this month when Tokyo said it would remove South Korea’s fast-track export status.

Thursday, South Korea said it will scrap an intelligence-sharing pact with Japan, which drew a swift protest from Tokyo, deepening the decades-old dispute over history that has hit trade and undercut security cooperation over North Korea.  The agreement had been due for automatic renewal on Saturday.

The arrangement is designed to share information on the threat posed by North Korea and its missile and nuclear activities – a threat underlined by the North’s recent launch of a series of short-range ballistic missiles that can hit both South Korea and Japan.  [More on North Korea below.]

Street Bytes

--As noted above stocks fell a fourth consecutive week, the Dow Jones losing 1% to 25628, the S&P 1.4%, and Nasdaq 1.8%.  But for the year, they all remain very solidly in the black.  Earnings reports, as noted below, were positive.

--U.S. Treasury Yields

6-mo. 1.86%  2-yr. 1.53%  10-yr. 1.54%  30-yr. 2.03%

Despite a lot of volatility, yields ended up basically unchanged on the week.

Germany sold 30-year debt at a negative yield for the first time, as investors desperate for safe assets bet that further declines in yields will boost the value of the bonds down the road.  Germany borrowed $914 million through the sale Wednesday, but demand wasn’t nearly as high as hoped.

President Trump tweeted: “So Germany is paying Zero interest and is actually being paid to borrow money, while the U.S., a far stronger and more important credit, is paying interest.”

There is approximately $16 trillion of negative-yielding bonds outstanding world-wide, with only about 20% of the bonds actually sold with a negative yield at issue, while the rest have seen yields fall in secondary trading.

But as one German fund manager told the Wall Street Journal, referring to all the German short-term paper already with negative yields, “If [short-dated] yields fall much further into negative territory, investors looking for safe assets will opt for cash in the vault.”  Christian Kopf said, “Yields on 30-year bunds may have further to fall as the market prices in a very long period of negative central bank deposit rates.”

Trump followed with another tweet Thursday: “Germany sells 30 year bonds offering negative yields. Germany competes with the USA.  Our Federal Reserve does not allow us to do what we must do.  They put us at a disadvantage against our competition.  Strong Dollar, No Inflation!  They move like quicksand.  Fight or go home!”

Editorial / Wall Street Journal

“Some $16 trillion in securities around the world are trading at negative yields.  Austria earlier this summer issued a 100-year ultra-low-yield bond. Germany this week sold 30-year bonds that pay no interest; investors lent the country money for three decades for nothing.  Maybe it’s time the U.S. Treasury capitalized on the unusual monetary times to lower its financing costs.

“Treasury posted a note on its website last Friday saying that it will conduct ‘broad outreach to refresh its understanding of market appetite’ for 50- or 100-year bonds.  The Obama Administration noodled over the idea but worried about the reputational risk for U.S. credit if longer-dated securities met weak demand.  That wasn’t long after the debt-limit fight caused a downgrade in the U.S. credit rating, but now investors are piling into Treasurys in a flight to quality....

“Over the years many countries and even some companies have launched small batches of long-dated securities....

“Countries have discontinued long-term bonds when market conditions turn less favorable, and the U.S. could test demand with an issue or two....

“In the 2000s before the recession, the average interest rate on federal debt hovered between 5% and 6.5%.  Monetary policy has significantly eased since then around the world, but interest rates won’t stay low forever.

“The U.S. has debt of $15.7 trillion held by the public – the kind it has to repay on pain of default – and won’t be able to continue ringing up trillion-dollar deficits without investors demanding a heftier premium for the risk.  The Congressional Budget Office forecasts that federal government debt as a share of GDP will grow to 144% by 2049 from 78% today and interest costs will go to 5.7% of GDP from 1.8%.

“Budget prognosticators aren’t clairvoyant, but 50- or 100-year bonds would almost certainly reduce the government’s financing costs over the long term.  The Trump Treasury can do taxpayers a favor by gradually stretching out the average duration of federal debt and reducing the chances of steep future tax increases.”

--Shares of Target soared 20% on Wednesday, hitting an all-time high, after the retailer reported quarterly financial results and an updated outlook that thrilled investors.

Earnings came in at $1.82 per share, 20 cents better than the Street’s expectations, with revenue slightly higher than consensus at $18.4 billion, and same-store sales growth of 3.4%.  The company raised its earnings forecast for the full year.  Analysts were also pleased that gross margins were higher.

CEO Brian Cornell said in a statement: “We’re increasing Target’s relevancy and deepening the relationship between our guests and our brand. Traffic and sales continue to grow while our earnings per share reached an all-time high, driven by the strength of our team’s execution and their focus on delivering for our guests.”

The company has been remaking itself amid competition from Amazon and other online and traditional retailers; remodeling stores, launching new smaller formats, and adding services including drive-up and same-day delivery.

The week before Walmart also reported results that beat the Street while offering reason for optimism about the state of the consumer economy heading into the second half of 2019.

--Home Depot lowered its full-year guidance after reporting second-quarter results that were mixed, with same-store sales coming in weaker than expected while earnings topped consensus.

HD now sees fiscal 2019 sales growing 2.3%, lower than projected in May when they said 3.3%.  It sees 4% comp-store growth, compared with 5% guided previously.

“We are updating our sales guidance to account primarily for continued lumber price deflation, as well as potential impacts to the U.S. consumer arising from recently announced tariffs,” said CEO Craig Menear.

For the quarter ended Aug. 4, Home Depot earned $3.17 per share, beating the Street’s estimate of $3.08.

Net sales rose 1.2% to $30.84 billion, shy of expectations.  Same-store sales rose 3%, also below forecasts. 

Menear emphasized sales growth was impacted by significant declines in lumber prices compared with last year.  And HD said the potential role of tariffs factored into this revised guidance, with Menear saying on a conference call that the company has to weigh the uncertainty around the tariffs and the potential “total impact on the customer.”

--Lowe’s Cos. Inc. beat same-store sales and profit estimates on Wednesday, with the shares surging 10% in response, as the home improvement chain stocked more equipment geared towards pulling high-spending customers.

Like larger rival Home Depot, Lowe’s has been chasing plumbers, builders and carpenters who spend more than its core “do-it-yourself” shoppers, by stocking up on higher-end industrial products like drills and power saws.

The company’s same-store sales rose 2.3% in the quarter ending Aug. 2, above expectations, while net sales rose marginally, in-line with estimates.  Net earnings rose to $1.68 billion, or $2.14 per share, from $1.52 billion, or $1.86 per share, a year earlier.

--Nordstrom shares rose more than 5% after the fashion retailer reported stronger-than-expected earnings for its quarter ending Aug. 3.  Fiscal Q2 sales fell 5.1%, however, to $3.87 billion, trailing analyst consensus of $3.92 billion, but the company raised its guidance for fiscal 2020 EPS, and the stock responded, though then fell heavily today along with the rest of the market.

--Kohl’s Corp. on Tuesday reported its third consecutive decline in quarterly sales, though it said business improved toward the end of the period and it maintained its guidance for the year.  The shares fell nearly 7% on the news, though they recovered somewhat the balance of the week.

Total sales fell 3.1% to $4.4 billion for the quarter ended Aug. 3.  Same-store sales fell 2.9%.

Net income dropped to $247 million from $292 million a year earlier on higher online shipping costs and steeper promotions to clear unsold goods.

But CEO Michelle Gass said business improved in the last six weeks of the quarter, with sales at stores open at least a year rising 1%, with the company getting off to a strong start for the back-to-school season.

--Salesforce.com Inc. raised its full-year revenue outlook after reporting record results in the July quarter, a good sign for enterprise-technology spending.

The business-software provider said Thursday that revenue rose 22% from a year earlier to $4 billion, beating expectations.  Adjusted earnings also beat the Street.

Salesforce raised its revenue guidance for the current year, though it cut its earnings outlook as it digests a series of acquisitions.

--Dick’s Sporting Goods Inc. reported its first positive quarterly same-store sales in about two years and increased its fiscal-year outlook.  The company said comp sales rose a solid 3.2% in the second quarter, the first positive number since the second quarter of fiscal 2017.  The company expects same-store sales growth for the full year, while boosting its earnings guidance.

Dick’s had been hurt by its decision last year to stop selling guns to customers under the age of 21.

Net sales rose 3.8% to $2.26 billion, above forecasts.

--Walmart sued Tesla Inc., claiming it failed to live up to industry standards in the installation of solar panels on top of hundreds of stores, resulting in multiple fires across the U.S.

Walmart said it had leased or licensed roof space on top of more than 240 stores to Tesla’s energy operations unit, formerly known as SolarCity, for the installation and operation of solar systems.  But as of November, fires had broken out at no fewer than seven of the stores, forcing the disconnection of all the solar panel systems.

Walmart’s inspectors found that Tesla “had engaged in widespread, systemic negligence and had failed to abide by prudent industry practices in installing, operating and maintaining its solar systems,” according to a breach-of-contract complaint filed Tuesday in New York state court.

Walmart is looking to source 35% of its electricity from renewable sources by 2020, with 470 on-site solar installations by next year, though the company hasn’t said how many of these will include Tesla systems.

--From Andrew Tangel, Andy Pasztor and Mark Maremont / Wall Street Journal:

“Almost as soon as the wheels of Ethiopian Airlines Flight 302 spun free from the runway March 10, the instruments in front of Capt. Yared Getachew went haywire.

“The digital displays for altitude, airspeed and other basic information showed dramatically different readings from those in front of his co-pilot. The controls in Capt. Getachew’s hands started shaking to warn him the plane was climbing too steeply and was in imminent danger of falling from the sky.

“Soon, a cascade of warning tones and colored lights and mechanical voices filled the cockpit. The pilots spoke in clipped bursts.

“ ‘Command!’ Capt. Getachew called out twice, trying to activate the autopilot. Twice he got a warning horn.

“Another powerful automated flight-control system called MCAS abruptly pushed down the jet’s nose.  A computerized voice blared: ‘Don’t sink! Don’t sink!’

“The pilots wrestled with the controls, desperate to raise the nose of their Boeing 737 MAX.  Three times Capt. Getachew instructed co-pilot Ahmed Nur Mohammed, ‘Pull up!’

“At the same time, a loud clacking warned the preoccupied pilots that the plane was flying too fast.

“Four minutes into the flight, the pilots finally touched on the source of their problems, simultaneously calling out ‘Left alpha vane!’

“Erroneous signals from that malfunctioning sensor tricked the onboard computers into believing the jetliner’s nose was angled too high, causing MCAS to push it down again and again.

“It was too late.  Flight 302 nose-dived at nearly the speed of sound, hitting the ground with such force that an airliner with 157 aboard was largely reduced to fragments no bigger than a man’s arm.

“Five months earlier, Lion Air Flight 610 had plunged into the Java Sea, killing 189 people, under similar circumstances.

“Regulators have focused since the crashes on MCAS, its reliance on a single sensor and Boeing’s decision not to tell pilots about the new system.  At the root of the miscalculations, though, were Boeing’s overly optimistic assumptions about pilot behavior.

“In designing the flight controls for the 737 MAX, Boeing assumed that pilots trained on existing safety procedures should be able to sift through the jumble of contradictory warnings and take the proper action 100% of the time within four seconds.

“That is about the amount of time that it took you to read this sentence.”

--Investigators probing an engine explosion on an Air France A380 in 2017 are studying a possible manufacturing flaw with a key part in a move likely to trigger checks on dozens of Airbus superjumbos worldwide, as reported by Reuters.

The focus of a two-year-old investigation into the mid-air explosion over Greenland, which left the plane carrying more than 500 passengers with the front of one engine missing, is now looking at the salvaged “fan hub,” a titanium part that is the centerpiece of a wide fan on engines built for the world’s largest airline by U.S.-based Engine Alliance, co-owned by General Electric and United Technologies unit Pratt & Whitney.

The fan hub was buried in Greenland’s ice sheet since September 2017 when one of four engines on Air France flight 66 abruptly disintegrated en route from Paris to Los Angeles.  It was pried from the ice in June after a high-tech aerial radar search, which is pretty amazing.  Following further investigation, and a microscopic analysis, it’s thus expected Engine Alliance will carry out checks for any flaws on similar parts in its engines, which power 60 percent of the 237 A380s in service.

Flight 66 ended up landing in Goose Bay, Canada, at a military airbase, with no injuries.

--Cathay Pacific Airways, caught in the crosswinds between authorities in Beijing and the anti-government protesters in Hong Kong, must put an end to “all forms of white terror,” trade unions in the Chinese-ruled city said today.

The carrier has become the biggest corporate casualty of the protests after China demanded it suspend staff involved in, or who support, the demonstrations that have plunged the former British colony into a political crisis.

White terror is a common expression to describe anonymous acts that create a climate of fear. 

The Hong Kong Confederation of Trade Unions called a news conference after the sudden dismissal of Rebecca Sy, the head of Cathay Dragon’s Airlines Flight Attendants’ Association, after a 17-year career.

“All the employees are being frightened, not just cabin crews, but even the management,” Sy said.  “My colleagues are all terrified because of its white terror.”

Last week CEO Rupert Hogg resigned amid the criticism from Beijing.  Cathay pilots and cabin crew have described a campaign of political denunciations, sackings and telephone searches by Chinese aviation officials.

Many Hong Kong firms are opting to tow the Communist Party line to avoid potential repercussions following the experience of Cathay.

Editorial / The Economist

“As the trade war chips away at its allure, China wants to retain the affection of foreign businesses.  It has promised to level the playing field between them and their domestic rivals. This pledge is meant as reassurance that Chinese firms will receive no special favors. But it has taken on a different light over the past  week, in the wake of China’s assault on Cathay Pacific, Hong Kong’s flagship airline.  China is taking a hard line against foreign companies that displease it, lashing out at their bosses and demanding obedience, much as it wields control over domestic enterprises.  Firms in Hong Kong are in the cross-hairs, but it would be a mistake to think China will stop there....

“Cathay is far from alone.  It joins a list of foreign firms that have wound up on the wrong side of politics in Beijing.  Often the remedies are relatively simple, if nauseating.  A series of luxury brands – Versace, Coach and Givenchy – have recently offered profuse apologies for selling t-shirts that appeared to identify Hong Kong as being separate from China.

“As a general rule, the more foreign companies prize China’s market, the more they have to fear. HSBC, Europe’s biggest bank, has come under pressure for sharing information with American authorities that helped them build a fraud case against the chief financial officer of Huawei, a Chinese telecom giant.  With its strategy predicated on growth in China, HSBC cannot afford to become a villain there. This month it ousted both its chief executive and the head of its China unit, though it denied any connection with the Huawei controversy....

“Using state firms as battle spears gives the lie to China’s claim that it is managing them according to market principles. And weaponizing regulators undermines China’s ambitions to play a bigger international role.  The airline supervisor had earned respect in leading the charge to ground the 737 MAX, Boeing’s troubled aeroplane; its Cathay warning makes it look like a political hack.  The party may well get foreign companies to toe its line on Hong Kong.  In the process it is revealing its true nature.”

--Apple Inc. plans to roll out the Apple TV+ movie and TV subscription service by November, part of a drive to reach $50 billion in service sales by 2020.

Apple is bundling a small selection of shows and then expand its catalog more frequently over several months, according to Bloomberg.  A free trial is likely as Apple builds up its library.

The company thus joins a crowded field, led by Netflix and Amazon.com, which will include Disney, AT&T and Comcast’s NBCUniversal in the coming months.

Apple TV+ will be one of five major digital subscription services in Apple’s portfolio, along with Apple Music, the upcoming Apple Arcade gaming service, Apple News+ and iCloud storage subscriptions.  The company also generates recurring revenue from products like AppleCare, Apple Card, Apple Sauce and Apple Cobbler...OK, the last two don’t exist in digital form yet.

Apple hasn’t priced out Apple TV+ as yet.  The company is making a big commitment to video, including $300 million alone to two seasons of “The Morning Show,” which will star Jennifer Aniston, Reese Witherspoon and Steve Carell.

--According to a study from the Texas A&M Transportation Institute, traffic congestion has worsened as the economy has improved, adding roughly 12 minutes a day to the average car commute.  That’s 54 hours a year.

Congestion nationwide robs Americans of about 8.8 billion hours a year.  Sitting in traffic also wastes roughly 3.3 billion gallons of fuel annually.

Drivers in Los Angeles, the country’s most traffic-clogged city, devoted 119 hours a year to traffic in 2017, almost half an hour every workday, on average.

--Large telecom companies and attorneys general from every state unveiled a new pact for combating robocalls.  Under the agreement, the companies are promising to work to prevent illegal robocalls on their networks and to work with state law enforcement investigating the calls’ origins.

But the agreement is voluntary and doesn’t include a deadline.

--Finally, we note the passing of billionaire businessman David Koch, 79, who with brother Charles Koch built a conservative political empire.  David was longtime director and leader of Koch Industries, a family oil, chemical, food and textile conglomerate.  He once ran as a Libertarian Party vice presidential candidate in 1980.

But for New Yorkers, Koch should be best known for his tremendous philanthropy, at institutions like The Metropolitan Museum of Art, Lincoln Center and the Memorial Sloan Kettering Cancer Center.

Foreign Affairs

China and Hong Kong: Protests continued, the international airport targeted for the weekend, while today, protesters held a “Baltic Chain” event where protesters joined hands across different districts in the territory, a la a 1989 protest in three Baltic states against Soviet rule.

Anti-government demonstrators seek to disrupt transport at the airport, but police have vowed to keep the facility open.

Last weekend, hundreds of thousands of protesters rallied peacefully in torrential rain.

Hong Kong leader Carrie Lam said, “I sincerely hope that this was the beginning of society returning to peace and staying away from violence.”

YouTube has shut down more than 200 channels spreading disinformation related to the ongoing protests in Hong Kong, after hundreds of thousands of Twitter and Facebook accounts tied to the Chinese government were also suspended earlier in the week.

Monday, Twitter deactivated accounts it said were “deliberately and specifically attempting to sow political discord in Hong Kong, including undermining the legitimacy and political positions of the protest movement on the ground.” 

The company said 936 of the “most active” accounts were based in China.  A bigger network of 200,000 “more spammy” accounts were also suspended.  Facebook, following a tip from Twitter, then removed a number of its accounts “involved in coordinated inauthentic behavior” focused on Hong Kong.

On the military front, China’s development of a hypersonic ballistic missile – capable of reaching well above the speed of sound and penetrating U.S. missile shields – is a threat to stability in the region, a military analyst has warned.

The South China Morning Post reported that a source from the state-owned China Aerospace Science and Industry Corporation (CASIC) said the DF-17 missile, currently in development, would be capable of hypersonic speeds and delivering a maneuverable re-entry vehicle which could shift targets in flight, making it less vulnerable to interception by other countries’ defense systems.

“And the DF-17 will be capable of delivering both nuclear and conventional payloads,” said the source, who declined to be named due to the sensitivity of the topic.

Related to the above is a report from the University of Sydney’s United States Studies Center titled “Averting Crisis”:

“China’s growing arsenal of accurate long-range missiles poses a major threat to almost all American, allied and partner bases, airstrips, ports and military installations in the Western Pacific.

“As these facilities could be rendered useless by precision strikes in the opening hours of a conflict, the PLA missile threat challenges America’s ability to freely operate its forces from forward locations throughout the region.”

On a different topic, a hot button with President Trump, Chinese state media hit back at claims by U.S. officials that China was failing to crack down on the flow of fentanyl and fentanyl-related substances into the United States, saying that responsibility for opioid abuse lay with users.  The United States was “pushing responsibility” for fentanyl abuse to China and ignoring that Beijing had implemented strict controls on the highly addictive synthetic opioid, as reported by The People’s Daily, published by the Communist Party.

The U.S. says China is the main source of illicit fentanyl and related substances that are trafficked into the United States, much of it through international mail.  Beijing denies this.

“Some people in the United States need to understand, the source of the illness lies within one’s body,” the newspaper said in an article.  “You can’t be rushed to see the doctor, and you can’t just scold others once you’re ill,” it said.

The U.S. Treasury earlier imposed sanctions on three Chinese men accused of illegally trafficking fentanyl.  President Trump has accused Beijing of reneging on pledges to stem a flood of the drug into the United States.

Lastly, Britain said on Tuesday it was “extremely concerned” by reports that a staff member at the consulate in Hong Kong had been detained in mainland China.  Simon Cheng’s family confirmed his disappearance in a Facebook post, saying he traveled from Hong Kong to Shenzhen for a business trip.  It seems that on his way back to Hong Kong, he was detained by customs.

Stephen Roach, former chief economist and chairman of Morgan Stanley Asia and now a senior fellow at Yale University was asked to comment on the worst case...China invading Hong Kong.

“It would be a devastating setback to China – a blow to the role it would play in shaping and driving the world economy.  Hong Kong’s stock market would go down sharply; the property market would crash; and Hong Kong’s role as a financial center would be dealt a devastating blow.  Hong Kong would become much less desirable as a destination to raise capital by Chinese and other Asia companies.”

Remember, we have a key moment coming up, the 70th anniversary of the People’s Republic of China in October, when the Communist Party will look to showcase its strength.  At the same time, pro-independence forces in Taiwan are gaining strength ahead of a January election, posing a challenge to President Xi’s hopes for unification with what Beijing regards as a breakaway province.

North Korea: Foreign Minister Ri Yong Ho said today that Pyongyang is ready for both dialogue and confrontation with the United States, warning Washington that continuing with sanctions would be a miscalculation, according to state media. Ri also accused Secretary of State Mike Pompeo of casting “dark shadows” over U.S.-North Korea talks, claiming that Pompeo was more interested in his own political ambitions than in current U.S. foreign policy.

Pompeo said in an interview this week, “We haven’t gotten back to the table as quickly as we hoped but we’ve been pretty clear all along, we knew there would be bumps along the way.”

Japan upgraded its estimate of North Korea’s nuclear weapons capability in an upcoming annual Defense White Paper, saying it seems Pyongyang has achieved the miniaturization of warheads, the Yomiuri newspaper said in an unsourced report on Wednesday.

This compares with the assessment in last year’s report in which the government said it was possible North Korea had achieved miniaturization.

The report, which requires approval from the Cabinet in mid-September, will maintain the assessment that North Korea’s military activities pose a “serious and imminent threat,” the Yomiuri said.

South Korea’s last Defense White Paper, released in January, reported that Pyongyang’s ability to miniaturize nuclear weapons “appears to have reached a considerable level.”

Tonight, North Korea launched a few more short-range missiles off its east coast.

Russia: ...From the Moscow Times:

“In a previously unreported social media post, a Russian doctor has publicly confirmed that his colleagues were forced to treat radiation victims after a deadly nuclear explosion earlier this month without basic equipment or knowledge of the accident.”

A blast at a military base in northern Russia killed seven (five key scientists) and injured at least six on Aug. 8, but first responders at the Arkhangelsk Regional Clinical Hospital were not warned that they would be dealing with patients exposed to radiation.

On Wednesday, Russian President Putin told journalists after meeting with French President Macron that there was no risk of increased radiation levels after the explosion.

Earlier, Russia told the Vienna-based Comprehensive Nuclear-Test-Ban Treaty Organization, which is set up to verify a ban on nuclear tests, that a military testing accident was none of its business and that handing it radiation data was entirely voluntary.

The CNTBTO said on Monday that two Russian monitoring sites closest to the mysterious explosion went offline days after the blast, soon followed by two more, fueling suspicions that Russia tampered with them.

Norway’s nuclear test-ban monitor said on Friday that the explosion that killed the five scientists during a rocket test was followed by a second blast two hours later, the likely source of a spike in radiation.

Syria: Turkish President Tayyip Erdogan told Russia’s Vladimir Putin today that Syrian army attacks in northwest Syria are causing a humanitarian crisis and threaten Turkey’s national security. This is an issue that has been hanging out there for the past year and now it’s coming to fruition.  Syrian troops have seized a pocket of territory and encircled rebels and a Turkish military post, reclaiming towns they lost early in the war.

Erdogan told Putin, who has supported Syrian President Assad, that the attacks violated a ceasefire in Idlib and damaged efforts for a solution in Syria.

Hundreds of thousands are being displaced in the region, with the potential for millions to stream across the border into Turkey, creating a new refugee and migration crisis both there and in Europe.  Turkey already hosts some 3.6 million Syrian refugees and warns it cannot accept more.

Related to this, President Trump issued a bizarre threat to “release” terrorists into France and Germany, as Trump presses Europe to bring home and put on trial their citizens captured while fighting for ISIS in Iraq and Syria.

Trump said he would order the transport of some 2,000 captured fighters back to their home countries if “Europe doesn’t take them” – something that would almost certainly be legally impossible.

In his out-of-control session with reporters on Wednesday, at one point Trump said: “We’re holding thousands of ISIS fighters right now. And Europe has to take them.  I’ll have no choice but to release them into the countries from which they came. Which is Germany and France and other places.”

Later, in a speech to a veterans group in Kentucky, Trump said that European allies “say to us, ‘Why don’t you hold them in Guantanamo Bay for 50 years and spend billions and billions of dollars holding them.’”

Of course this isn’t true.  European leaders have spent nearly two decades criticizing the United States for perceived human rights abuses at the naval detention facility.

“And I’m saying, ‘No, you gotta take ‘em,’” Trump said.

The United States is not holding the captured fighters.  The U.S.-backed Syrian Democratic Forces, or SDF, is holding them in northeastern Syria, with American security support, as I’ve written regularly.

The issue is the SDF doesn’t have the resources to hold not just these 2,000, but 9,000 ISIS fighters overall indefinitely, and the U.S. is itching to leave the country.

The Kurdish group is also holding around 70,000 ISIS wives and children, around 10,000 of whom are believed to be from places other than Syria and Iraq.

So, yes, the SDF cannot hold the fighters indefinitely.

Separately, Secretary of State Mike Pompeo acknowledged on Tuesday that Islamic State militants are gaining strength in some areas but said the militant group’s capacity to conduct attacks has been greatly diminished.  “It’s complicated.  There are certainly places where ISIS is more powerful today than they were three or four years ago,” Pompeo said in an interview with CBS’ “This Morning.”  

Israel: President Trump said Tuesday that Jews who vote for Democrats “show either total lack of knowledge or great disloyalty.”  Asked by reporters about the eruption this month when Representatives Ilhan Omar and Rashida Tlaib were first welcomed and then told they could not travel to Israel, the president slammed the women for their recent suggestion to cut aid to Israel.

“We give Israel more than $3 billion in aid every year,” Omar said Monday.  “This is predicated on their being an important ally in the region and the only democracy in the Middle East, but denying visits to duly elected members of Congress is not consistent with being an ally.  And denying millions of people freedom of movement or expression or self-determination is not consistent with being a democracy.”

Trump responded by saying that he “would not cut off aid to Israel, and I can’t even believe we are having this conversation....

“Where has the Democratic party gone? Where have they gone where they are defending these two people over the state of Israel?

“I think any Jewish people that vote for a Democrat – I think it shows either total lack of knowledge or great disloyalty.”

The remark drew sharp criticism that Trump had used an anti-Semitic trope that accuses Jews of ‘dual loyalty.’

The Jewish Democratic Council of America said the president was trying to “weaponize and politicize anti-Semitism” for political gain.

Jonathan Greenblatt, the head of the Anti-Defamation League, said “charges of disloyalty have long been used to attack Jews,” while the American Jewish Committee described the remark as “inappropriate, unwelcome and downright dangerous.”

Meanwhile, U.S. officials are none too pleased with Israeli strikes in Iraq against Shiite militias (read Iran), which undermine their relationship with Iraqi Prime Minister Adil Abd al-Mahdi.  If Israel continues, Iraq could turn around and tell the U.S. to withdraw its troops from the country.

Afghanistan: Two U.S. soldiers were killed in Afghanistan on Wednesday as violence has intensified amid peace talks and American casualties have risen with it.  The soldiers were from an Army Special Forces unit carrying out an operation in restive Faryab Province in the north, and died in a firefight.  The deaths bring American military fatalities in the country this year to 14, up from 13 in 2018 and 11 in 2017.  The Afghan military is suffering roughly two dozen fatalities a day.

But as peace talks continue, American airstrikes have intensified in support of Afghan forces trying to deny the Taliban further gains.

In recent weeks, the United States military has appeared to want to maintain some sort of a residual counterterrorism force in the country that can check international groups such as Al Qaeda and the Islamic State.  But the Taliban have repeatedly said that anything less than a schedule for full withdrawal is unacceptable to them.

Liz Cheney / Washington Post

“President Trump knows a bad idea when he sees one. He extricated the United States from President Barack Obama’s disastrous nuclear accord with Iran. He pulled us out of an arms-control agreement with Russia that Vladimir Putin repeatedly violated. But if news reports are accurate, the State Department is about to capitulate to the Taliban, al-Qaeda’s longtime ally, as U.S. forces are withdrawn from Afghanistan. The president should reject this deal....

“Just recently, the Taliban released a video justifying the 9/11 hijackings and other terrorist attacks in the West.  The Taliban bragged the deadliest day of terror in our history was a ‘heavy slap’ on American faces.  Despite all of this and more, special representative Zalmay Khalilzad, who has led the talks, says he is satisfied with the Taliban’s supposed counterterrorism assurances.

“The Taliban harbored Osama bin Laden and his men while they plotted their attacks on the United States.  The Taliban has never publicly disavowed al-Qaeda.  Instead, al-Qaeda’s fighters are helping the Taliban resurrect its authoritarian Islamic Emirate.  As a result, al-Qaeda continues to view Afghanistan as a haven for its leadership.

“Given the Taliban’s sordid history and ongoing violence, it strains credulity to believe it can be a partner for peace.  The American people deserve to see the full text of any agreement the State Department is negotiating, including supposed counterterrorism assurances.  If we are putting our security in the hands of the enemy who harbored al-Qaeda before the 9/11 attacks, the American people deserve to know why....

“The United States has made significant strides against terrorism in Afghanistan.  Our troops have saved American lives, thwarting terror plots and hunting down key terrorist leaders who would do us harm.  Just days before Trump was elected, U.S. forces killed a senior al-Qaeda operative who was plotting against the United States from inside Afghanistan....

“We should not withdraw U.S. forces based on a political timetable that grants concessions to the Taliban and allows the terrorists to maintain safe havens from which they can plan and train for future  attacks in the West.  We cannot accept a deal that places America’s security in the hands of the Taliban.

“Agreeing to such a deal would not be ending a war, it would be losing it – to al-Qaeda, the Taliban and the Islamic State.”

Speaking of ISIS, it claimed responsibility for a suicide attack in Kabul on Saturday on a packed wedding reception.  At first it was reported 63 were killed, 182 wounded, but as the week progressed, the death toll rose to at least 80.

India / Pakistan: Editorial / Washington Post

“Prime Minister Narendra Modi of India spoke in glowing terms of the future of Jammu and Kashmir after the announcement Aug. 5 that seven decades of autonomy for the disputed region with a large Muslim population had vanished overnight.  Mr. Modi, leading the Hindu nationalist Bharatiya Janata Party, having secured a second-term election victory in May, promised to deliver a ‘completely transparent environment with a lot of honesty’ for Kashmir, ‘new hopes’ and ‘new heights’ and ‘renewed vigor.’  Given the way Mr. Modi chose to impose change, these words cannot be accepted at face value.

“Kashmir was partitioned in 1947 at the end of British rule. Pakistan controls one part, India the other. Within India’s control are three areas: Jammu, which is Hindu-majority, population about 6 million; Kashmir, a basin with Srinagar at its center that is home to ethnic Kashmiris, mostly Muslim, population about 8 million; and Ladakh, a desert highlands that has many Buddhists, population about 300,000.  In India, these territories had the status of a state, with some autonomy guaranteed by the Constitution.  Mr. Modi effectively canceled the key provision, Article 370, and dissolved the state, turning it instead into two ‘union territories’ with less autonomy, under direct rule by New Delhi. Also canceled was a provision that barred people outside the state from buying property and displacing Muslims.

“Mr. Modi is playing a dangerous game.   His sunny vows of transparency aside, the stripping of Kashmir’s autonomy was done in darkness and in the most coercive way possible.  As The Post’s Niha Masih reported from Srinagar, streets are no longer crowded with civilians but awash with India’s armed soldiers, and ‘instead of traffic jams at intersections, there are spools of concertina wire.  People remain inside their homes with no telephone, Internet or cable TV service.  No one has seen or heard from local political leaders, hundreds of whom are in detention.  Of the more than 200 newspapers in the region, only five are publishing physical copies. Their websites are stuck at Aug. 5.’...

“Mr. Modi might have fulfilled a dream of Hindu nationalists going back to the 1950s, but he also stained the democracy and most likely stoked anger in Kashmir that will fester long into the future.

“Mr. Modi’s promise of ‘new heights’ might turn out to be a dark day for Kashmir and for India’s democracy. The value of any goal must be doubted if it can be achieved only by these dark, oppressive means.”

Friday, security forces used tear gas against stone-throwing local residents in Srinagar, with Pakistani Prime Minister Imran Kahn tweeting, “The Indian leadership will in all probability attempt a false flag operation to divert attention” from what he called human rights violations in Kashmir.  The day before, a UN official called on the Indian government to “end the crackdown on freedom of expression, access to information and peaceful protests” in Kashmir, saying it would increase regional tensions.

The blackout is beyond outrageous.  152 have been hurt thus far in the protests.

Brazil: Bill McKibben / New York Daily News

“The world is reacting with outrage at the sight of what’s happening in the Amazon.  NASA satellites show huge plumes of smoke drifting up from the burning forest; in Sao Paulo, the biggest city in the western hemisphere, night fell at 2 p.m. earlier this week when the smoke blotted out the sun.

Presiding over this debacle is the South American equivalent of Donald Trump, a blighted man named Jair Bolsonaro who won the presidency last year amidst rampant corruption and nationalism.  He’s encouraged ranchers and loggers to ‘open up’ the Amazon, and the flames are the result, as they burn the forest to create new pasture land for cattle or fields to grow soy.  When challenged, he’s insisted that environmentalists must be setting the fires to make him look bad.

“But of course he must be challenged, and by all of us – the Amazon is one of the most important physical features on the planet, as key to our continued survival as the polar ice caps or the great oceans.  Its vast sea of trees breathes in carbon dioxide and breathes out oxygen, creating as much as a fifth of the planet’s supply.  Read that again – it accounts for every fifth breath you take. If you burn down the forest, you make it impossible to deal with climate change.

“And so it’s good news that around the world (with the obvious exception of the White House) national leaders are demanding action.  They should; what happens in the Amazon travels fast, affecting every place on Earth.”

Bolsonaro has been responding angrily to the criticism, what he calls meddling in Brazil’s sovereignty.  But earlier he said Brazil lacks the resources to control the fires.

Fires in the Amazon have surged 83% so far this year, government figures show.  On Wednesday, Bolsonaro blamed non-governmental organizations (NGOs) for setting the fires, without providing evidence.  But Thursday, he conceded farmers could be behind the fires.

French President Macron took to Twitter to call the Amazon fires an “international crisis” that should be discussed at the G7 summit.  “Our house is burning,” he tweeted.  France and Ireland are now looking to kill a trade deal struck in June between the EU and the Mercosur countries of Brazil, Argentina, Uruguay and Paraguay if Brazil does not honor its environmental commitments.

Today, Bolsonaro said he was mobilizing the army to help combat the blazes.  President Trump tweeted late this afternoon saying he had a phone call with the Brazilian leader and that future trade prospects are very exciting and that the relationship is “perhaps stronger than ever before.”  #Bulls---

Random Musings

--Presidential tracking polls....

Gallup: 41% approval, 54% disapproval of Trump; 88% Republicans, 37% independents approve (Aug. 1-14).
Rasmussen: 50% approval, 48% disapproval.

In a new CNN/SSRS poll, President Trump’s approval rating was 40%, down from 43% in June.  54% disapprove.

A majority (56%) say they expect economic conditions to be good a year from now, 40% say they will be poor.  Back in December, 66% said they expected a good economy in a year.

Trump’s approval on handling foreign affairs stands at 40%, while only 37% approve of his handling of immigration.  Post-El Paso and Dayton, 36% of Americans approve of how Trump is handling gun policy, which is the same as his rating in March of last year, after the shooting in Parkland, Fla.

In a new Monmouth University Poll, Trump’s overall approval rating is also 40%, with 53% disapproving, similar to the 41-50 split in June.  Over the past 12 months, the president’s approval rating has ranged between 40% and 44% in Monmouth’s polling.

Men are divided (49% approve and 43% disapprove), while women are decidedly negative (31% approve and 62% disapprove).  White Americans without a college degree tend to approve of Trump (55% approve and 37% disapprove), while the reverse is true among white college graduates (38% approve and 57% disapprove).

Only 35% of Americans feel that Trump should be impeached, while 59% disagree with this course of action.

Just 17% of Americans approve of the job Congress is doing and 71% disapprove.  Just 28% say the country is headed in the right direction while 62% say things are on the wrong track.

In a Wall Street Journal/NBC News Poll, 43% of registered voters approve of President Trump’s job performance, while 55% disapprove.  The president’s job-approval rating has ranged between 43% and 46% in this survey all year.

--In a Fox News Poll, Joe Biden continued to lead the Democratic nomination race with 31% of Democratic primary voters, followed by Elizabeth Warren at 20%, Bernie Sanders at 10%, and Kamala Harris at 8%.

Cory Booker, Pete Buttigieg and Andrew Yang garnered 3% apiece, and Amy Klobuchar and Beto O’Rourke 2% each.

In possible matchups, President Trump trails Biden by 12 points (50-38 percent), Sanders by 9 (48-39), and Warren by 7 (46-39).

--In a CNN/SSRS survey, Biden has expanded his edge over the Democratic field, with 29% of Democratic and Democratic-leaning registered voters saying they back the former vice president.  That’s up 7 points compared with a late June CNN survey.  No other candidate has made meaningful gains over that time.

Bernie Sanders is at 15% and Elizabeth Warren at 14%.  Kamala Harris, who stood at 17% support in the June poll, now has the backing of just 5% of potential Democratic voters.

If you look at just liberal voters, 23% back Warren and 22% each back Biden and Sanders.

54% of the voters said they most wanted a candidate who could beat Trump.

This particular survey is one of those used by the DNC in order to determine which candidates will qualify for the debate stage in September – and it marked the fourth such qualifying poll in which Julian Castro has hit 2%, so he secured his spot, the 10th to do so.  Tom Steyer needs one more poll to qualify and Rep. Tulsi Gabbard needs two more after landing at 2% in the CNN survey.

Marianne Williamson hit the 130,000-donor threshold (Editor note: I gave Marianne $3 to help her do so, because I get a kick out of her), but she has yet to hit 2% in any qualifying polls.

Washington Gov. Jay Inslee dropped out of the race, as did Rep. Seth Moulton, while former candidate John Hickenlooper announced he was indeed running for the Democratic nomination for senate in Colorado.

--In 2016, President Trump’s anti-immigrant rhetoric and focus on the grievances of white voters helped him win the election.  But an analysis of a Reuters/Ipsos poll of 4,436 U.S. adults in July showed that people who rejected racial stereotypes were more interested in voting in the 2020 general election than those who expressed stronger levels of anti-black or anti-Hispanic biases.  It was the reverse in 2016.

So if you believe these findings, it’s potentially good news for Democrats and bad news for Republicans.

But, there is a silver lining for Trump.  Most white Republicans approve of his performance in office, and over the past four years they have become increasingly supportive of his signature issue: expanding the wall along the U.S.-Mexico border.  Some 82% now support it compared to 75% last year.

--A new Wall Street Journal/NBC News poll found about half of Americans disapprove of President Trump’s response to the deadly mass shootings in Texas and Ohio, and broad majorities support Congress moving to expand background checks for all firearm sales.

68% of respondents expressed worry the U.S. will experience another mass shooting or attack by white nationalists targeting people based on their color or country of origin,, with 55% saying they were “very worried.”  By contrast, 50% express fear of another major terrorist attack.

Overall, the poll found 36% approve of the manner in which Mr. Trump handled the aftermath of the two shootings, with 52% expressing disapproval.

75% of respondents support expanding background checks, and an additional 14% somewhat support the changes.  Only 10% expressed opposition to the checks.

On a different topic, trade, 64% consider free trade with foreign countries to be good for America while 27% said it was bad for the nation.  A poll taken in April 2017, at the start of the Trump presidency, found 57% supported free trade and 37% opposed it.

49% approve of Trump’s handling of the economy, 46% disapprove.  In July 2018, a Journal/NBC poll found 50% approved of the president’s handling of the economy, 34% disapproved.

--NYPD Commissioner James O’Neill had one tough decision in firing Officer Daniel Pantaleo for violating NYPD policy while helping effect the lawful arrest of Eric Garner.  In remarks on Monday, O’Neill said in part:

“Being a police officer is one of the hardest jobs in the world.  That is not a statement to elicit sympathy from those we serve; it is a fact.  Cops have to make choices, sometimes very quickly, every single day.  Some are split-second life-and-death choices.  Oftentimes, they are choices that will be thoroughly, and repeatedly, examined by those with much more time to think about them than the police officer had.  And those decisions are scrutinized and second-guessed, both fairly and unfairly.

“No one believes that Officer Pantaleo got out of bed on July 17, 2014, thinking he would make choices and take actions – during an otherwise routine arrest – that would lead to another person’s death. But an officer’s choices and actions, even made under extreme pressure, matter.

“It is unlikely that Mr. Garner thought he was in such poor health that a brief struggle with police would cause his death.  He should have decided against resisting arrest.  But, a man with a family lost his life – and that is an irreversible tragedy.  And a hardworking police officer with a family, a man who took this job to do good – to make a difference in his home community – has now lost his chosen career.  And that is a different kind of tragedy.

“In this case, the unintended consequence of Mr. Garner’s death must have a consequence of its own.  It is clear that Daniel Pantaleo can no longer effectively serve as a New York City police officer.”

Needless to say, Police Benevolent Association President Patrick Lynch, who is one of the more familiar, interesting figures in Gotham, blasted O’Neill’s decision, accusing the commissioner of choosing “politics and his own self-interest over the police officers he claims to lead.”  Lynch also called for the removal of Mayor de Blasio.

Lynch: “(The rhetoric) has caused the street to disrespect our uniforms and the women and men wearing it, to dump buckets of water over their heads, to throw bricks and concrete from the roof and then to take out their weapons and fire on police.  This mayor needs to be removed. The police commissioner needs to know he’s lost his police department.”

A medical examiner ruled Garner’s death was a homicide, but a Staten Island grand jury declined to indict any of the officers involved.

--Mark R., weather and solar flare expert, sent me a note the other day on how quiet it’s been, re hurricane season, and then later I saw a piece where Colorado State University meteorologist Phil Klotzbach said, indeed, if you think it’s been a particularly quiet season thus far, you’re right:  The last time we went from July 15 through Aug. 19 with no named storms in the Atlantic was 1982.

But as noted in a piece in USA Today, yes, this could be the quiet before the storm, and AccuWeather hurricane expert Dan Kottlowski said conditions in September “are expected to become not only much more conducive for tropical storm formation but may also lead to multiple occasions with more than one named system spinning in the Atlantic Basin at the same time, as well as a late and strong finish to the season,” Kottlowski warned.

And we got some little systems developing right now.

--Cases of severe lung disease linked to vaping rose from 94 to 153 in just five days, according to an update by the Centers for Disease Control and Prevention.

The cases tend to involve gradual breathing difficulties, coughing, fatigue, chest pain, and weight loss, which leads to hospitalization.  I just saw on the nightly news that one has died thus far.  The only commonality appears to be recent use of e-cigarettes.

While there are stories that the illnesses may be related to dubious THC-containing vaping liquid, the CDC cautioned that “no specific product has been identified in all cases, nor has any product been conclusively linked to illnesses.”

--It was reported Supreme Court Justice Ruth Bader Ginsburg was treated for a tumor on her pancreas, but she is fine.  We wish this tough girl the best.

---

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

God bless America.

---

Gold $1536
Oil $53.97

Returns for the week 8/19-8/23

Dow Jones  -1.0%  [25628]
S&P 500 -1.4%  [2847]
S&P MidCap  -2.0%
Russell 2000  -2.3%
Nasdaq  -1.8%  [7751]

Returns for the period 1/1/19-8/23/19

Dow Jones  +9.9%
S&P 500  +13.6%
S&P MidCap  +10.4%
Russell 2000  +8.2%
Nasdaq  +16.8%

Bulls 49.1
Bears 17.9

Have a great week.

Brian Trumbore



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Week in Review

08/24/2019

For the week 8/19-8/23

[Posted 11:00 PM ET, Friday]

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

Edition 1,063

This was an outrageous week.  When I do errands in the afternoons, I always put on Rush Limbaugh and I enjoy the guy.  He’s one of the two or three greatest entertainers in radio history.  But this week he had to be thinking, ‘Am I really fooling all my listeners?’  I mean his defense of Trump’s statements was beyond the pale.  Rush talked about how the base loves that he breaks ‘all the traditional conventions,’ and I’m thinking, ‘Like diplomacy?  And that is good?’

It isn’t. 

You can’t defend what the president did this week.  Yes, I agree with being tough on China.  I know more about the place in my pinkie than Trump ever will.  Including, as I’ve been telling you for well over a year with the trade dispute, that the average American hasn’t a clue what is coming.  It’s not trade.  It’s going to be violent.  China has been developing and producing massive amounts of weaponry, after stealing all our technology, and we keep very publicly poking them.  This isn’t Canada or Mexico we’re dealing with.  Never was there a time that demanded diplomacy more than today.

But we have a president who is totally out of control...more so than ever.  A president who is picking fights with Denmark, of all people, insulting our friends, and yet as North Korea launches more bottle rockets tonight, as Mr. Trump jets across the pond to Europe for the G-7 summit in Biarritz, the first tweet of his after he would have heard of the mischief from Pyongyang was about freakin’ Diamond and Silk!  And as I go to post, he is tweeting up a storm on poll #s and others’ ratings.

One thing you can be sure of.  This weekend in France could be a total shitshow.  But if you like your presidents breaking conventions, you’ll love it.

In the meantime, today we had the following tweets...and then some...in a truly chaotic day.

“Our Country has lost, stupidly, Trillions of Dollars with China over many years.  They have stolen our Intellectual Property at a rate of Hundreds of Billions of Dollars a year, & they want to continue.  I won’t let that happen!  We don’t need China and, frankly, would be far....

“....better off without them. The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP.  Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing...

“....your companies HOME and making your products in the USA.  I will be responding to China’s Tariffs this afternoon.  This is a GREAT opportunity for the United States. Also, I am ordering all carriers, including Fed Ex, Amazon, UPS and the Post Office, to SEARCH FOR & REFUSE....

“....all deliveries of Fentanyl from China (or anywhere else!).  Fentanyl kills 100,000 Americans a year.  President Xi said this would stop – it didn’t.  Our Economy, because of our gains in the last 2 ½ years, is MUCH larger than that of China.  We will keep it that way!”

“Now the Fed can show their stuff!”

“As usual, the Fed did NOTHING!  It is incredible that they can ‘speak’ without knowing or asking what I am doing, which will be announced shortly.  We have a very strong dollar and a very weak Fed. I will work ‘brilliantly’ with both, and the U.S. will do great...

“...My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?”

Someone didn’t tell President Trump that Jay Powell’s Jackson Hole speech was part of an annual symposium at the resort, where papers on the global economy are presented. It is NOT a Fed policy meeting.

And to put Powell and Xi in the same sentence like that?  Are you kidding me?  Jay Powell against a tyrant who has imprisoned hundreds of thousands of Uighurs?  Jay Powell vs. a man who is looking to steal Hong Kongers’ freedom...who is looking to take Taiwan given the right opportunity?  These are the kinds of conventions we want broken?!

The president told us he would be responding to China’s tariffs this afternoon, so that set the market into a major swoon.  What would Trump do?  And when?

The Dow Jones ended up falling more than 600 points, and shortly after the market closed, the president issued his next series of tweets:

“For many years China (and many other countries) has been taking advantage of the United States on Trade, Intellectual Property Theft, and much more.  Our Country has been losing HUNDREDS OF BILLIONS OF DOLLARS a year to China, with no end in sight....

“....Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer.  As President, I can no longer allow this to happen!  In the spirit of achieving Fair Trade, we must Balance this very...

“...unfair Trading Relationship. China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!).  Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%....

“....Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%.  Thank you for your attention to this matter!”

Prior to the above volley, the president tweeted:

“The Dow is down 573 points perhaps on the news that Representative Seth Moulton, whoever that may be, has dropped out of the 2020 Presidential Race.”

I felt compelled to reply directly to Mr. Trump: “He’s a Marine Corps officer who served four tours of duty in Iraq.”

But the above has to be weighed against Trump’s half-hour, South Lawn media scrum earlier in the week.

Michael Gerson / Washington Post

“With the whir of a helicopter engine in the background, President Trump veered from topic to topic with utter confidence, alarming ignorance, minimal coherence and relentless duplicity.

“Russian President Vladimir Putin, he said, ‘made a living on outsmarting President Obama’ – even though it is Trump who now urges a Russian return to the Group of Seven summit without any concessions on Putin’s part.

“On pursuing the trade war with China, Trump called himself the ‘chosen one.’  This came within hours of tweeting a quote that he is loved like ‘the second coming of God.’  At some point, arrogance is so extreme and delusional that it can only be expressed in blasphemy.

“Trump accused the Danish prime minister of ‘blowing off the United States’ because she scorned his own balmy, offensive musings on the future of Greenland.  ‘We treat countries with respect,’ he said – except, presumably, the ‘shithole’ ones....

“He joked again about being in office 10 or 14 years from now – appealing to people who find overturning the constitutional order a laugh riot.

“ ‘Mental health,’ Trump went on.  ‘Very important.’  Hard to argue with that one....

“Of the wounded and grieving families Trump visited following recent mass shootings: ‘The love for me,’ he boasted, ‘and my love for them was unparalleled.’ And this was demonstrated by ‘hundreds and hundreds of people all over the floor.’  No one draws a bigger crowd in an intensive care unit....

“Seldom in presidential history has more nonsense been expressed with greater concision.  Never would the interests of the United States have been better served by a louder helicopter....

“All narcissists believe they are at the center of the universe. But what happens when a narcissist is actually placed at the center of the universe?  The ‘chosen one’ happens.  Trump is not just arguing for an alternative set of policies; he is asserting an alternative version of reality, in which resistance to his will is disloyalty to the country.

“Second, the president has systemically removed from his circle anyone who finds this appalling.... His counselors are now flunkies. The proof of their loyalty is not found in the honesty of their opinions but in the regurgitation of his insanity.

“Third, the president is increasingly prone to the equation of the national interest with his personal manias.  He is perfectly willing to threaten relations with Denmark – or to force the Israeli government into a difficult choice – if it serves his tweeted whims....

“Trump’s promotion of moral and political chaos puts other members of his party in a difficult position.  Difficult, but not complicated.  It is their public duty to say that foolish things are foolish, that insane things are insane, that bigoted things are bigoted.  On growing evidence, their failure to do so is abetting the country’s decline into farce.”

So the Wall Street Journal first reported that Trump periodically brought up that he wanted to buy Greenland, and on Sunday, both the president and his economic adviser Larry Kudlow confirmed it was indeed something that had been discussed.

And then on Wednesday, in the above-noted rant, some would say after of biblical proportions, Trump gave a nod to a right-wing conspiracy theorist who dubbed him “King of Israel” and declared himself “the chosen one.”

Trump quoted conservative radio host Wayne Allyn Root, who I never heard of because I don’t listen to stations he might be on.

“President Trump is the greatest President for Jews and for Israel in the history of the world, not just America, he is the best President for Israel in the history of the world...and the Jewish people in Israel love him like he’s the King of Israel.  They love him like he is the second coming of God...But American Jews don’t know or like him.  They don’t even know what they’re doing or saying anymore. It makes no sense!”

A day earlier, President Trump commented that American Jews who vote Democratic are either dumb or “disloyal.”  Root’s comments also made zero sense, historically.  But that doesn’t matter to the president.

Nearly 80% of American Jews voted Democratic in the 2018 midterms, according to the Pew Research Center.

Trump World

--President Trump canceled a state visit scheduled for next month after Danish Prime Minister Mette Frederiksen refused to consider selling Greenland to the United States.  Just an amazingly stupid move by Trump, infuriating a great ally that has stood behind America on the battlefield and in the diplomatic arena, and proving, remarkably, that the sole purpose of his trip was to discuss appropriating land from an ally.

Denmark joined NATO as a founding member in 1949 and as the U.S. Embassy website in Denmark says, “Around the world Denmark is a steadfast partner to the United States.”

So Trump abruptly cancels the trip, an act that a member of a center-right party in Denmark described as “an insult from a close friend and ally.”

In recent times, Danish forces served in Bosnia under U.S. command as part of the NATO air campaign against Serbia in 1999, while after 9/11, Denmark contributed troops to the war in Afghanistan, 43 of them dying, while Denmark provides more than $100 million on average annually to build Afghanistan’s security forces, per the Danish Defense Ministry.

After World War II, Harry Truman offered to buy Greenland for $100 million in gold but was rebuffed by Denmark.

But Trump called comments Frederiksen made about his bid to buy Greenland “nasty.”

“I thought the prime minister’s statement that it was an absurd idea was nasty,” Trump told reporters in his outrageous press spray Wednesday, as he left for a day trip to Kentucky where he mused about awarding himself the Medal of Honor. [Another beyond outrageous statement.]

The president said it was “not nice” of Frederiksen to rebuff the idea the way she did.  “She’s not talking to me, she’s talking to the United States of America,” Trump added, again taking particular offense at the prime minister’s use of the word “absurd.”

Trump used Twitter Tuesday night to announce that he would not be making a stop in Denmark when he heads to Poland early next month after Frederiksen ridiculed his flirtation with buying the island, calling it “an absurd discussion.”

“Denmark is a very special country with incredible people, but based on Prime Minister Mett Frederiksen’s comments, that she would have no interest in discussing the purchase of Greenland, I will be postponing our meeting scheduled in two weeks for another time,” Trump wrote.

Carl Bildt (former prime minister of Sweden, and Minister of Foreign Affairs) / Washington Post

“First you get yourself invited to a state visit in a friendly allied country. Not just a visit of the usual sort: a state visit with a banquet by the queen and all the pomp and the ceremony that can be mustered.  Hundreds of people start working on all the elaborate preparations necessary for these grand occasions.  Monarchies take these things seriously.  The palace is properly prepared to receive the dignified guest.  Everyone starts polishing.

“Then you suddenly launch the idea that it might be fun to acquire parts of the territory under that particular monarch.  Just a simple property deal, really.  You don’t actually inquire discreetly whether this idea would ever fly.  Instead, you launch it straight out in public without any warning.  Perhaps that’s the way property deals are done.

“The authorities of the country in question are slightly taken aback.  Losing territory wasn’t really on their agenda, and in these days, it’s not normally part of the concept of friendly state visits. They say in no uncertain terms that the land is not for sale.

“Up until this point, it’s all pretty absurd, as was pointed out.

“But then it goes beyond the absurd.  The self-invited guest suddenly cancels everything and says if he can’t get his property deal and the territory he wants, he sees no purpose for the state visit.  Everything is off.  Tons and tons of preparations are just scrapped.

“One could have thought this was something out of some saga from the Middle Ages.  Whether it actually ever happened in those dark centuries I don’t  know, but it is not entirely inconceivable.  At least in the world of the sagas.

“But it wasn’t a saga from a distant and bizarre past, but the present reality of the president of the United States and the queen of Denmark.

“And in the modern world, I’m rather certain it is unique for one head of state to make an official visit to another head of state conditional on the latter being prepared to hand over some territory.  It wasn’t just absurd – it was beyond the absurd.  Rest assured that people all over the world have been shaking their hands in disbelief.

“Apart from the surreal theater of the entire thing, and the profoundly insulting behavior toward a long-standing and loyal ally, the issues of Greenland and the Arctic are serious indeed.

“But it’s certainly not exchanging territories that is the way forward.  Greenland is not for sale, and neither is Svalbard or Iceland.  Instead, the necessary way forward is developing cooperation between all the stakeholders of this vast and challenging region to address challenges that are common to all of them.  And climate change and its effects are by far the most serious of them.

“When the United States in the form of Secretary of State Mike Pompeo turned up at the ministerial meeting of the Arctic Council in Rovaniemi, Finland, he spent most of his energy attacking China and ended up vetoing the communique that had been agreed upon by everyone else.  The reason?   It mentioned climate change, and that was not acceptable to the Trump administration.  All others had been discussing little but the rising temperatures, which are happening two or three times faster here than anywhere else on Earth.

“All the others issued the paper agreed between them anyhow.  Pompeo flew away, saying he was on his way to Greenland.  He didn’t show up – he canceled the visit.

“Canceling visits now seems to be what remains of Arctic policy for the United States.  Perhaps just as well.  All other countries are keen to try to prevent Greenland from turning green again.  We would all suffer the consequences.”

--Trump tweets:

“The Legendary Henry Ford and Alfred P. Sloan, the Founders of Ford Motor Company and General Motors, are ‘rolling over’ at the weakness of current car company executives willing to spend more money on a car that is not as safe or good, and cost $3,000 more to consumers.  Crazy!

“Henry Ford would be very disappointed if he saw this modern-day descendants wanting to build a much more expensive car, that is far less safe and doesn’t work as well, because execs don’t want to fight California regulators.  Car companies should know....

“....that when this Administration’s alternative is no longer available, California will squeeze them to a point of business ruin.  Only reason California is now talking to them is because the Feds are giving a far better alternative, which is much better for consumers!”

 “The Economy is strong and good, whereas the rest of the world is not doing so well.  Despite this the Fake News Media, together with their Partner, the Democrat Party, are working overtime to convince people that we are in, or will soon be going into, a Recession.  They are....

“...willing to lose their wealth, or a big part of it, just for the possibility of winning the Election.  But it won’t work because I always find a way to win, especially for the people! The greatest political movement in the history of our Country will have another big win in 2020!”

“Just concluded a very good meeting on preventing Mass Shootings. Talks are ongoing w/both Republicans & Democrats.  We are likewise engaging with lawful gun owners, survivors, grieving family members, law enforcement, the NRA, mental health professionals, and school officials...

“...I am hopeful Congress will engage with my Team to pass meaningful legislation that will make a real difference and, most importantly, Save Lives!”

Whatever.

“The Fake News LameStream Media is doing everything possible to ‘create’ a U.S. recession, even though the numbers & facts are working totally in the opposite direction. They would be willing to hurt many people, but that doesn’t matter to them.  Our Economy is sooo strong, sorry!”

“For the record, Denmark is only at 1.35% of GDP for NATO spending.  They are a wealthy country and should be at 2%. We protect Europe and yet, only 8 of the 28 NATO countries are at the 2% mark. The United States is at a much, much higher level than that...

“...Because of me, these countries have agreed to pay ONE HUNDRED BILLION DOLLARS more – but still way short of what they should pay for the incredible military protection provided.  Sorry!”

“The LameStream Media is far beyond Fake News, they are treading in very dangerous territory!”

Meaning what, Mr. President?

“Anthony Scaramucci is a highly unstable ‘nut job’ who was with other candidates in the primary who got shellacked & then unfortunately wheedled his way into my campaign.  I barely knew him until his 11 days of gross incompetence-made a fool of himself, bad on TV. Abused staff...

“...got fired. Wrote a very nice book about me just recently. Now the book is a lie? Said his wife was driving him crazy, ‘something big’ was happening with her. Getting divorced.  He was a mental wreck.  We didn’t want him around.  Now Fake News puts him on like he was my buddy!”

“Wow, Report Just Out!  Google manipulated from 2.6 million to 16 million votes for Hillary Clinton in 2016 Election!  This was put out by a Clinton supporter, not a Trump Supporter!  Google should be sued.  My victory was even bigger than thought! @JudicialWatch”

The above is just a massive pile of merde.

“Juan Williams at @FoxNews is so pathetic, and yet when he met me in the Fox Building lobby, he couldn’t have been nicer as he asked me to take a picture of him and me for his family. Yet he is always nasty and wrong!”

--Anthony Scaramucci / Washington Post

“When I decided to support Trump’s candidacy and later to work in his administration, it wasn’t because I agreed with all of his policies or liked every aspect of his personality. As former New York mayor Ed Koch used to say, ‘If you agree with me on nine out of 12 issues, vote for me.  If you agree with me on 12 out of 12, see a psychiatrist.’

“My public praise of the man was over the top at times, but my private estimation of him was more measured.  I thought Trump, despite his warts, could bring a pragmatic, entrepreneurial approach to the Oval Office. I thought he could be the reset button Washington needed to break through the partisan sclerosis. I thought he would govern in a more inclusive way than his campaign rhetoric might have indicated...

“I thought wrong.  And, yes, many of you told me so....

“I broke from Trump because not only has his behavior become more erratic and his rhetoric more inflammatory, but also because, like all demagogues, he is incapable of handling constructive criticism. As we lie on the bed of nails Trump has made, it’s often difficult to see how much the paradigm of acceptable conduct has shifted.  For the Republican Party, it’s now a question of whether we want to start cleaning up the mess or continue papering over the cracks.

“I challenge my fellow Republicans to summon the nerve to speak out on the record against Trump. Defy the culture of fear he has created, and go public with the concerns you readily express in private.  Hold on to your patriotism, and help save the country from his depredations....

“My personal odyssey took longer than it should have, but I’m not concerned with being on the right side of history – I’m determined to ensure that good people are the ones who end up writing it.”

Wall Street and the Trade War

Trump tweet:

“The Economy is doing really well.  The Federal Reserve can easily make it Record Setting! The question is being asked, why are we paying much more in interest than Germany and certain other countries?  Be early (for a change), not late.  Let America win big, rather than just win!”

Well stocks lost ground for a fourth consecutive week, the S&P now down 4.5% in the month of August, about 6% from its high.

In his Jackson Hole speech, Fed Chair Powell said the central bank would “act as appropriate” to keep the U.S. economy healthy in a deteriorating global economy, but stopped short of committing to rapid-fire rate cuts, which as I noted in the opening resulted in Trump’s ire. The message from both Powell and his second in command, vice chair Richard Clarida, was that while the Fed may be willing to cut to protect the recovery, it made no promises.

In an interview on CNBC after the market closed today, Clarida said, “We take our policy decisions one meeting at a time.”

Powell said in his speech there are “significant” risks to the economy, including the trade dispute, Brexit, tension in Hong Kong and signs of a global slowdown.  But he also said the domestic economy is in a “favorable place” and he stressed limits to the Fed’s ability to respond to the trade issues.

But now it’s all about the Sept. 17-18 Open Market Committee confab.  A quarter-point or a half?  Trump wants a full point.  Someone tell him to pound sand.

I do not note the IHS Markit PMI numbers for the U.S. because I have always relied on the ISM figures for manufacturing and services, leaving Markit for Europe, Asia, and the rest, as I’ll note shortly.

But the Street took note of Markit’s manufacturing index falling to 49.9 from 50.4 on manufacturing, 50.9 from 52.6 for services, per its flash readings for August (50 being the dividing line between growth and contraction).  It was the lowest manufacturing number in almost 10 years and the yield on the 10-year, Thursday, briefly fell below the yield on the two-year, again, in response....another inversion of the yield curve.  As we discussed last week, a potential harbinger of recession, but down the road, say 2020.

We did have some decent housing data, the sector having clearly stabilized on the heels of falling mortgage rates.  July existing home sales were a little better than expected, 5.42 million annualized, with the median existing home price up 4.3% vs. a year ago to $280,800, the 89th straight month of year-over-year gains.

July new-home sales were slightly less than expected, 635,000, but June was revised sharply upward to 728,000.

Separately, employers added a half-million fewer jobs in 2018 and early 2019 than previously reported, the Labor Department said Wednesday.

The revisions, which are preliminary, are part of an annual process to more closely align the survey-based estimates with definitive data from state unemployment insurance records.  The revisions cover the period through March, with final updates, including the rest of 2019, released in February.

While the revisions still paint the picture of a healthy jobs picture, they do mean that hiring probably averaged under 200,000 jobs per month last year, down from the 223,000 initially reported and only modestly better than the 179,000 monthly jobs added in 2017.  The last three months, the average job gain has been 140,000.

And the Congressional Budget Office issued its latest forecast on the deficit, which is now expected to widen to $1 trillion by fiscal year 2020, two years sooner than previously estimated.

The deficit will expand faster than forecast after recent legislation raised spending levels, according to the nonpartisan group’s annual budget outlook released Wednesday.  The only positive is that with lower interest rates, borrowing costs (interest expense) will be reduced.

But it will be the first time the deficit exceeded the $1 trillion mark since 2012.

The CBO forecasts economic growth of 2.3% in the fourth quarter this year, followed by 2.1% next year, up from the agency’s prior estimate of 1.7%. After that, growth will slow to about 1.8% through 2029, though such long-range forecasts are rather absurd.

As a share of GDP, the deficit is forecast to increase to 4.6% next year from 4.5% this year.

Editorial / Wall Street Journal

“President Trump isn’t famous for consistency, but his reversal on a new round of tax cuts may be a record.  On Tuesday he said he was considering a cut in the payroll tax and indexing capital gains for inflation, but on Wednesday he took it all back.

“ ‘I’m not looking at a tax cut now,’ Mr. Trump told reporters.  ‘We don’t need it.  We have a strong economy.’  He added that indexing capital gains might be seen as ‘somewhat elitist’ and would benefit the wealthy, thus aligning himself ideologically (and bizarrely) with his many media opponents who still denounce his 2017 tax reform.

“Mr. Trump is also confused about whether the economy is strong or weak, whether more economic stimulus is needed, and even whether his trade brawls with the rest of the world are weakening the economy.  No wonder business investment is falling amid this climate of policy uncertainty.  Mr. Trump’s payroll-tax cut wouldn’t pass Congress in any case, and indexing capital gains for inflation, while economically useful, would be challenged in court if he implemented it by executive order.

“But if Mr. Trump does want to give the economy a policy boost to prevent a recession, there is something he can do without Congress or a legal challenge: He can cut his trade-uncertainty tax.  This is the pall over business investment that is a major result of his trade policies.

“Mr. Trump and his trade Rasputin, Peter Navarro, claim there’s been no harm from his tariffs.  But his actions belie the claim.  Last week he delayed a new round of tariffs on some imports from China lest they raise consumer prices before Christmas.  He has ladled out $28 billion in subsidies to farmers to offset markets lost to retaliation by China, and other nations, after his various tariffs.

“The evidence of harm is also clear from U.S. economic data.  Manufacturing has slumped as global demand declines amid trade and currency shifts.  U.S. net exports have also declined, and falling private investment shaved a percentage-point from GDP in the second quarter.

“Nearly every CEO with global customers or suppliers mentions trade as a leading concern.  ‘Anytime there’s trade tensions of this kind, it does put a certain amount of conservatism, I think, into all of our plans for capital spending,’ said Caterpillar CEO James Umpleby in April.  ‘So I would expect if, in fact, the trade tensions get resolved, that would be a positive for global economic growth and a positive for us.’

“As Mr. Umpleby suggests, Mr. Trump has the power to assist the economy on his own by ending this trade uncertainty.  He can help Germany avoid recession by publicly withdrawing his threat to impose 25% tariffs on European autos.  He can help American manufacturers and farmers by ending his steel and aluminum tariffs.  U.S. Steel this month said it will lay off up to 200 workers in Michigan amid falling demand due to slower growth....

“Mr. Trump doesn’t need to win his stare down with Xi Jinping in a single negotiation.  He can make progress now, see if China honors its promises, and respond accordingly if he wins a second term.  He’ll get no such chance if there’s a trade-driven recession, and Elizabeth Warren sits in the White House.”

Continuing with the Trade War....as part of his epic rant Wednesday, Trump said:

“Somebody had to do it.  I am the chosen one.  Somebody had to do it,” referring to his tariff-heavy trade dispute.  “I’m taking on China.  I’m taking on China on trade, and you know what: We’re winning.”

No you aren’t.

Trump tweeted: “Doing great with China and other Trade Deals.  The only problem we have is Jay Powell and the Fed.  He’s like a golfer who can’t putt, has no touch.  Big U.S. growth if he does the right thing.  BIG CUT – but don’t count on him!  So far he has called it wrong, and only let us down....

“....We are competing with many countries that have a far lower interest rate, and we should be lower than them.  Yesterday, ‘highest Dollar in U.S. History.’  No inflation. Wake up Federal Reserve.  Such growth potential, almost like never before!”

Today, China announced it was imposing extra tariffs on some $75 billion in U.S. goods, including soybeans, wheat, corn, beef and pork, among other products, as Beijing retaliated against Washington’s moves.  And then you see above how President Trump responded.

The Chinese Communist Party mouthpiece People’s Daily on Monday, in a short commentary, said that events in Hong Kong were the internal affairs of China, and that linking it with trade negotiations was a “dirty” aim.

“Making a fuss about Hong Kong will not be helpful to economic and trade negotiations between China and the U.S.,” the commentary said.  “They would be naïve in thinking China would make concessions if they played the Hong Kong card.”

Chinese foreign ministry spokesman Geng Shuang said the Hong Kong protests showed that “so-called democracy and freedom without rule of law and social order will only lead to anarchy and chaos.”

“Hong Kong affairs are purely China’s domestic affairs,” he said.  “We have noted that President Trump said earlier: ‘Hong Kong is a part of China. They’ll have to deal with that themselves.  They don’t need advice.’  We hope the U.S. will match its words with deeds.”

On the issue of Huawei, though, the Trump administration formally granted another 90-day extension to the telecom giant and handset maker that will allow the company to buy equipment from U.S. companies.  The thing is, a day before, President Trump said his administration was unlikely to grant an extension.

But Huawei still has two other bans against it from the U.S., including one that blocks the federal government and its contractors from conducting business with the company.  The other bars companies from providing services to the government if they do business with the Chinese company.

Europe and Asia

IHS Markit released its flash estimates for manufacturing and services in the eurozone economy for August, with the composite reading at 51.8 vs. 51.5 in July.

Manufacturing was 47.8 vs. 46.9 last month, better than expected, but obviously still contraction, while the services PMI is estimated at 53.4 vs. 53.2.

The flash data also breaks out Germany and France individually; with Germany’s manufacturing PMI at a still sickly 43.6 vs. 43.2, services 54.4 vs. 54.5 in July...France’s manufacturing number 50.4 vs. 49.0, services 53.3 vs. 52.6 the prior month.

Separately, Eurostat released July inflation data for the euro area, 1.0%, down from 1.3% in June, 1.1% ex-food and energy.

Germany 1.1% (ann.), France 1.3%, Italy 0.3%, Netherlands 2.6%, U.K. 2.1%.

Andrew Harker, IHS Markit:

“The dynamics of the eurozone economy were little changed in August, with solid growth in services continuing to hold the wider economy’s head above water despite ongoing manufacturing decline. While the rate of overall expansion ticked up, we’re still looking at GDP only rising by between 0.1% and 0.2%, based on the PMI data for the third quarter so far.

“The lack of a quick rebound from the recent economic slowdown has impacted firms’ confidence, with sentiment the lowest in over six years.  It appears that companies are braced for a sustained period of weakness, and as a result are showing greater reluctance to take on additional staff.”

The European Central Bank’s policymakers are preparing a combination of measures to prop up the eurozone economy, as recent indicators paint an even bleaker picture of the outlook, per the minutes from the July 25 meeting of the ECB released this week.  With growth and inflation slowing for months, ECB President Mario Draghi has all but promised more stimulus as soon as September.  The minutes show the package of support will likely include a combination of rate cuts, asset purchases, changes in the guidance on interest rates and support for banks through partial relief from the ECB’s negative interest rates.

One more...the Bundesbank warned Europe’s largest economy is likely to tip into recession in the third quarter, dragged down by a sharp drop in German exports and a decline in industrial production.

Brexit: British Prime Minister Boris Johnson is coming up against opposition from European leaders, such as French President Emmanuel Macron, to his demand for the backstop to be stripped out of the Brexit Withdrawal Agreement.

Macron told Johnson Thursday that the Withdrawal Agreement and the backstop were “genuine, indispensable guarantees” to preserve the Irish peace process and the EU single market.

And, “Renegotiation of the terms currently proposed by the British is not an option that exists, and that has always been made clear by [EU] President Tusk.”

Johnson’s diplomatic offensive ahead of the G-7 summit in Biarritz yielded little, if zero, progress as he insisted the backstop, which guarantees no hard Border on the island of Ireland, must go or the U.K. will leave without a deal on October 31.

German Chancellor Angela Merkel downplayed comments she made at a joint press conference earlier in Berlin with Johnson that suggested Britain had 30 days to find an alternative to the backstop.

But clearly, Johnson has put Ireland in “the eye of the storm,” as Ireland’s No. 2 politician, Simon Coveney, put it.

Speaking in Denmark, he said: “The British government has said it wants to look at alternative arrangements that can do the same job as the backstop and of course we will listen to that and I think other European countries will do so too because we all want to avoid a no-deal Brexit.

“But I think the messaging is clear, it’s consistent and it’s been firm from the EU that the deals that have been put together through many, many hours and days and weeks and months of negotiation are not going to be brushed aside now in an effort to get a deal.”

I’ve been arguing for the past year that a no-deal Brexit would be totally disastrous and an official British government document leaked to the Sunday Times (of London) shows just that: Shortages of fuel, food and medicine, jammed ports and a hard border in Ireland.

The newspaper said up to 85% of trucks using the main channel crossings “may not be ready” for French customs, meaning disruption at ports would potentially last up to three months before the flow of traffic improves.

The European auto sector would be particularly hard hit with all the supply chain disruptions. 

Italy: The eurozone’s third-largest economy is in political turmoil after its government, riven by months of infighting, imploded this week, forcing prime minister Giuseppe Conte to resign just as he was to begin preparing the 2020 budget.  Conte launched a blistering attack on his own interior minister, Matteo Salvini, accusing him of sinking the coalition and endangering the economy for personal and political gain.

In a shock move on Aug. 8, Salvini, leader of the far-right, anti-immigrant League party, declared that his alliance with the anti-establishment 5-Star Movement was dead and called for elections.

Salvini had repeatedly promised that the 14-month-old government would last a full five-year term and appeared confident his move would trigger early elections, allowing him to cash in on the League’s surging popularity.

So President Sergio Mattarella on Thursday gave the parties five days to clinch a deal to avoid a snap election.  5-Star then sought to gain the initiative as it began formal talks on Friday with the opposition Democratic Party (PD) to try to form a coalition to end Italy’s government crisis.  The two have been historic enemies and this won’t be easy, but the goal is to attempt to form a coalition that pushes the League into the opposition.

5-Star has said talks with the PD will go nowhere unless the PD agrees to cut the number of lawmakers to 600 from 945.  The PD has opposed the reform in parliament and says it will only consider it as part of a broader institutional reform that would be a long, drawn-out process.  5-Star leader Luigi Di Maio, however, said, “The cut in the number of parliamentarians must be done, full stop.  If we don’t get that first point there won’t be anything else,” he told reporters today.

The League’s Agriculture Minister, though, said it might be possible to mend relations with 5-Star.

If an election is called and Salvini emerges victorious, the fear in the financial markets is that he would ramp up spending and put the heavily indebted nation on a collision course with the European Union.

Should a vote be called, it would be this autumn.  A recent opinion poll had the League at 36% support, which is a big number for Italy’s highly-fragmented party system.  In the March 2018 elections, 5-Star received about one in three votes, with the League at 17%.  Since then 5-Star’s support has dropped by half.

The League hopes to gain an outright majority with two smaller allies: the far-right Brothers of Italy (that doesn’t sound too fascist, does it?), and the conservative Forza Italia of former premier Silvio Berlusconi.

Turning to Asia...Japan’s flash composite for August was a decent 51.7 vs. 50.6 in July.  Manufacturing 49.5, services 53.4.

Separately exports fell in July for an eighth consecutive month, down 1.6% year-on-year, according to the Ministry of Finance. This was an improvement from -6.7% in June.  Exports (shipments) to China were down 9.3%, and 6.9% to South Korea.  Imports fell 1.2%.

Meanwhile, the tensions between Japan and South Korea ramped up further this week.  Japan, recall, tightened curbs on exports of high-tech materials needed by South Korea’s chip industry and again this month when Tokyo said it would remove South Korea’s fast-track export status.

Thursday, South Korea said it will scrap an intelligence-sharing pact with Japan, which drew a swift protest from Tokyo, deepening the decades-old dispute over history that has hit trade and undercut security cooperation over North Korea.  The agreement had been due for automatic renewal on Saturday.

The arrangement is designed to share information on the threat posed by North Korea and its missile and nuclear activities – a threat underlined by the North’s recent launch of a series of short-range ballistic missiles that can hit both South Korea and Japan.  [More on North Korea below.]

Street Bytes

--As noted above stocks fell a fourth consecutive week, the Dow Jones losing 1% to 25628, the S&P 1.4%, and Nasdaq 1.8%.  But for the year, they all remain very solidly in the black.  Earnings reports, as noted below, were positive.

--U.S. Treasury Yields

6-mo. 1.86%  2-yr. 1.53%  10-yr. 1.54%  30-yr. 2.03%

Despite a lot of volatility, yields ended up basically unchanged on the week.

Germany sold 30-year debt at a negative yield for the first time, as investors desperate for safe assets bet that further declines in yields will boost the value of the bonds down the road.  Germany borrowed $914 million through the sale Wednesday, but demand wasn’t nearly as high as hoped.

President Trump tweeted: “So Germany is paying Zero interest and is actually being paid to borrow money, while the U.S., a far stronger and more important credit, is paying interest.”

There is approximately $16 trillion of negative-yielding bonds outstanding world-wide, with only about 20% of the bonds actually sold with a negative yield at issue, while the rest have seen yields fall in secondary trading.

But as one German fund manager told the Wall Street Journal, referring to all the German short-term paper already with negative yields, “If [short-dated] yields fall much further into negative territory, investors looking for safe assets will opt for cash in the vault.”  Christian Kopf said, “Yields on 30-year bunds may have further to fall as the market prices in a very long period of negative central bank deposit rates.”

Trump followed with another tweet Thursday: “Germany sells 30 year bonds offering negative yields. Germany competes with the USA.  Our Federal Reserve does not allow us to do what we must do.  They put us at a disadvantage against our competition.  Strong Dollar, No Inflation!  They move like quicksand.  Fight or go home!”

Editorial / Wall Street Journal

“Some $16 trillion in securities around the world are trading at negative yields.  Austria earlier this summer issued a 100-year ultra-low-yield bond. Germany this week sold 30-year bonds that pay no interest; investors lent the country money for three decades for nothing.  Maybe it’s time the U.S. Treasury capitalized on the unusual monetary times to lower its financing costs.

“Treasury posted a note on its website last Friday saying that it will conduct ‘broad outreach to refresh its understanding of market appetite’ for 50- or 100-year bonds.  The Obama Administration noodled over the idea but worried about the reputational risk for U.S. credit if longer-dated securities met weak demand.  That wasn’t long after the debt-limit fight caused a downgrade in the U.S. credit rating, but now investors are piling into Treasurys in a flight to quality....

“Over the years many countries and even some companies have launched small batches of long-dated securities....

“Countries have discontinued long-term bonds when market conditions turn less favorable, and the U.S. could test demand with an issue or two....

“In the 2000s before the recession, the average interest rate on federal debt hovered between 5% and 6.5%.  Monetary policy has significantly eased since then around the world, but interest rates won’t stay low forever.

“The U.S. has debt of $15.7 trillion held by the public – the kind it has to repay on pain of default – and won’t be able to continue ringing up trillion-dollar deficits without investors demanding a heftier premium for the risk.  The Congressional Budget Office forecasts that federal government debt as a share of GDP will grow to 144% by 2049 from 78% today and interest costs will go to 5.7% of GDP from 1.8%.

“Budget prognosticators aren’t clairvoyant, but 50- or 100-year bonds would almost certainly reduce the government’s financing costs over the long term.  The Trump Treasury can do taxpayers a favor by gradually stretching out the average duration of federal debt and reducing the chances of steep future tax increases.”

--Shares of Target soared 20% on Wednesday, hitting an all-time high, after the retailer reported quarterly financial results and an updated outlook that thrilled investors.

Earnings came in at $1.82 per share, 20 cents better than the Street’s expectations, with revenue slightly higher than consensus at $18.4 billion, and same-store sales growth of 3.4%.  The company raised its earnings forecast for the full year.  Analysts were also pleased that gross margins were higher.

CEO Brian Cornell said in a statement: “We’re increasing Target’s relevancy and deepening the relationship between our guests and our brand. Traffic and sales continue to grow while our earnings per share reached an all-time high, driven by the strength of our team’s execution and their focus on delivering for our guests.”

The company has been remaking itself amid competition from Amazon and other online and traditional retailers; remodeling stores, launching new smaller formats, and adding services including drive-up and same-day delivery.

The week before Walmart also reported results that beat the Street while offering reason for optimism about the state of the consumer economy heading into the second half of 2019.

--Home Depot lowered its full-year guidance after reporting second-quarter results that were mixed, with same-store sales coming in weaker than expected while earnings topped consensus.

HD now sees fiscal 2019 sales growing 2.3%, lower than projected in May when they said 3.3%.  It sees 4% comp-store growth, compared with 5% guided previously.

“We are updating our sales guidance to account primarily for continued lumber price deflation, as well as potential impacts to the U.S. consumer arising from recently announced tariffs,” said CEO Craig Menear.

For the quarter ended Aug. 4, Home Depot earned $3.17 per share, beating the Street’s estimate of $3.08.

Net sales rose 1.2% to $30.84 billion, shy of expectations.  Same-store sales rose 3%, also below forecasts. 

Menear emphasized sales growth was impacted by significant declines in lumber prices compared with last year.  And HD said the potential role of tariffs factored into this revised guidance, with Menear saying on a conference call that the company has to weigh the uncertainty around the tariffs and the potential “total impact on the customer.”

--Lowe’s Cos. Inc. beat same-store sales and profit estimates on Wednesday, with the shares surging 10% in response, as the home improvement chain stocked more equipment geared towards pulling high-spending customers.

Like larger rival Home Depot, Lowe’s has been chasing plumbers, builders and carpenters who spend more than its core “do-it-yourself” shoppers, by stocking up on higher-end industrial products like drills and power saws.

The company’s same-store sales rose 2.3% in the quarter ending Aug. 2, above expectations, while net sales rose marginally, in-line with estimates.  Net earnings rose to $1.68 billion, or $2.14 per share, from $1.52 billion, or $1.86 per share, a year earlier.

--Nordstrom shares rose more than 5% after the fashion retailer reported stronger-than-expected earnings for its quarter ending Aug. 3.  Fiscal Q2 sales fell 5.1%, however, to $3.87 billion, trailing analyst consensus of $3.92 billion, but the company raised its guidance for fiscal 2020 EPS, and the stock responded, though then fell heavily today along with the rest of the market.

--Kohl’s Corp. on Tuesday reported its third consecutive decline in quarterly sales, though it said business improved toward the end of the period and it maintained its guidance for the year.  The shares fell nearly 7% on the news, though they recovered somewhat the balance of the week.

Total sales fell 3.1% to $4.4 billion for the quarter ended Aug. 3.  Same-store sales fell 2.9%.

Net income dropped to $247 million from $292 million a year earlier on higher online shipping costs and steeper promotions to clear unsold goods.

But CEO Michelle Gass said business improved in the last six weeks of the quarter, with sales at stores open at least a year rising 1%, with the company getting off to a strong start for the back-to-school season.

--Salesforce.com Inc. raised its full-year revenue outlook after reporting record results in the July quarter, a good sign for enterprise-technology spending.

The business-software provider said Thursday that revenue rose 22% from a year earlier to $4 billion, beating expectations.  Adjusted earnings also beat the Street.

Salesforce raised its revenue guidance for the current year, though it cut its earnings outlook as it digests a series of acquisitions.

--Dick’s Sporting Goods Inc. reported its first positive quarterly same-store sales in about two years and increased its fiscal-year outlook.  The company said comp sales rose a solid 3.2% in the second quarter, the first positive number since the second quarter of fiscal 2017.  The company expects same-store sales growth for the full year, while boosting its earnings guidance.

Dick’s had been hurt by its decision last year to stop selling guns to customers under the age of 21.

Net sales rose 3.8% to $2.26 billion, above forecasts.

--Walmart sued Tesla Inc., claiming it failed to live up to industry standards in the installation of solar panels on top of hundreds of stores, resulting in multiple fires across the U.S.

Walmart said it had leased or licensed roof space on top of more than 240 stores to Tesla’s energy operations unit, formerly known as SolarCity, for the installation and operation of solar systems.  But as of November, fires had broken out at no fewer than seven of the stores, forcing the disconnection of all the solar panel systems.

Walmart’s inspectors found that Tesla “had engaged in widespread, systemic negligence and had failed to abide by prudent industry practices in installing, operating and maintaining its solar systems,” according to a breach-of-contract complaint filed Tuesday in New York state court.

Walmart is looking to source 35% of its electricity from renewable sources by 2020, with 470 on-site solar installations by next year, though the company hasn’t said how many of these will include Tesla systems.

--From Andrew Tangel, Andy Pasztor and Mark Maremont / Wall Street Journal:

“Almost as soon as the wheels of Ethiopian Airlines Flight 302 spun free from the runway March 10, the instruments in front of Capt. Yared Getachew went haywire.

“The digital displays for altitude, airspeed and other basic information showed dramatically different readings from those in front of his co-pilot. The controls in Capt. Getachew’s hands started shaking to warn him the plane was climbing too steeply and was in imminent danger of falling from the sky.

“Soon, a cascade of warning tones and colored lights and mechanical voices filled the cockpit. The pilots spoke in clipped bursts.

“ ‘Command!’ Capt. Getachew called out twice, trying to activate the autopilot. Twice he got a warning horn.

“Another powerful automated flight-control system called MCAS abruptly pushed down the jet’s nose.  A computerized voice blared: ‘Don’t sink! Don’t sink!’

“The pilots wrestled with the controls, desperate to raise the nose of their Boeing 737 MAX.  Three times Capt. Getachew instructed co-pilot Ahmed Nur Mohammed, ‘Pull up!’

“At the same time, a loud clacking warned the preoccupied pilots that the plane was flying too fast.

“Four minutes into the flight, the pilots finally touched on the source of their problems, simultaneously calling out ‘Left alpha vane!’

“Erroneous signals from that malfunctioning sensor tricked the onboard computers into believing the jetliner’s nose was angled too high, causing MCAS to push it down again and again.

“It was too late.  Flight 302 nose-dived at nearly the speed of sound, hitting the ground with such force that an airliner with 157 aboard was largely reduced to fragments no bigger than a man’s arm.

“Five months earlier, Lion Air Flight 610 had plunged into the Java Sea, killing 189 people, under similar circumstances.

“Regulators have focused since the crashes on MCAS, its reliance on a single sensor and Boeing’s decision not to tell pilots about the new system.  At the root of the miscalculations, though, were Boeing’s overly optimistic assumptions about pilot behavior.

“In designing the flight controls for the 737 MAX, Boeing assumed that pilots trained on existing safety procedures should be able to sift through the jumble of contradictory warnings and take the proper action 100% of the time within four seconds.

“That is about the amount of time that it took you to read this sentence.”

--Investigators probing an engine explosion on an Air France A380 in 2017 are studying a possible manufacturing flaw with a key part in a move likely to trigger checks on dozens of Airbus superjumbos worldwide, as reported by Reuters.

The focus of a two-year-old investigation into the mid-air explosion over Greenland, which left the plane carrying more than 500 passengers with the front of one engine missing, is now looking at the salvaged “fan hub,” a titanium part that is the centerpiece of a wide fan on engines built for the world’s largest airline by U.S.-based Engine Alliance, co-owned by General Electric and United Technologies unit Pratt & Whitney.

The fan hub was buried in Greenland’s ice sheet since September 2017 when one of four engines on Air France flight 66 abruptly disintegrated en route from Paris to Los Angeles.  It was pried from the ice in June after a high-tech aerial radar search, which is pretty amazing.  Following further investigation, and a microscopic analysis, it’s thus expected Engine Alliance will carry out checks for any flaws on similar parts in its engines, which power 60 percent of the 237 A380s in service.

Flight 66 ended up landing in Goose Bay, Canada, at a military airbase, with no injuries.

--Cathay Pacific Airways, caught in the crosswinds between authorities in Beijing and the anti-government protesters in Hong Kong, must put an end to “all forms of white terror,” trade unions in the Chinese-ruled city said today.

The carrier has become the biggest corporate casualty of the protests after China demanded it suspend staff involved in, or who support, the demonstrations that have plunged the former British colony into a political crisis.

White terror is a common expression to describe anonymous acts that create a climate of fear. 

The Hong Kong Confederation of Trade Unions called a news conference after the sudden dismissal of Rebecca Sy, the head of Cathay Dragon’s Airlines Flight Attendants’ Association, after a 17-year career.

“All the employees are being frightened, not just cabin crews, but even the management,” Sy said.  “My colleagues are all terrified because of its white terror.”

Last week CEO Rupert Hogg resigned amid the criticism from Beijing.  Cathay pilots and cabin crew have described a campaign of political denunciations, sackings and telephone searches by Chinese aviation officials.

Many Hong Kong firms are opting to tow the Communist Party line to avoid potential repercussions following the experience of Cathay.

Editorial / The Economist

“As the trade war chips away at its allure, China wants to retain the affection of foreign businesses.  It has promised to level the playing field between them and their domestic rivals. This pledge is meant as reassurance that Chinese firms will receive no special favors. But it has taken on a different light over the past  week, in the wake of China’s assault on Cathay Pacific, Hong Kong’s flagship airline.  China is taking a hard line against foreign companies that displease it, lashing out at their bosses and demanding obedience, much as it wields control over domestic enterprises.  Firms in Hong Kong are in the cross-hairs, but it would be a mistake to think China will stop there....

“Cathay is far from alone.  It joins a list of foreign firms that have wound up on the wrong side of politics in Beijing.  Often the remedies are relatively simple, if nauseating.  A series of luxury brands – Versace, Coach and Givenchy – have recently offered profuse apologies for selling t-shirts that appeared to identify Hong Kong as being separate from China.

“As a general rule, the more foreign companies prize China’s market, the more they have to fear. HSBC, Europe’s biggest bank, has come under pressure for sharing information with American authorities that helped them build a fraud case against the chief financial officer of Huawei, a Chinese telecom giant.  With its strategy predicated on growth in China, HSBC cannot afford to become a villain there. This month it ousted both its chief executive and the head of its China unit, though it denied any connection with the Huawei controversy....

“Using state firms as battle spears gives the lie to China’s claim that it is managing them according to market principles. And weaponizing regulators undermines China’s ambitions to play a bigger international role.  The airline supervisor had earned respect in leading the charge to ground the 737 MAX, Boeing’s troubled aeroplane; its Cathay warning makes it look like a political hack.  The party may well get foreign companies to toe its line on Hong Kong.  In the process it is revealing its true nature.”

--Apple Inc. plans to roll out the Apple TV+ movie and TV subscription service by November, part of a drive to reach $50 billion in service sales by 2020.

Apple is bundling a small selection of shows and then expand its catalog more frequently over several months, according to Bloomberg.  A free trial is likely as Apple builds up its library.

The company thus joins a crowded field, led by Netflix and Amazon.com, which will include Disney, AT&T and Comcast’s NBCUniversal in the coming months.

Apple TV+ will be one of five major digital subscription services in Apple’s portfolio, along with Apple Music, the upcoming Apple Arcade gaming service, Apple News+ and iCloud storage subscriptions.  The company also generates recurring revenue from products like AppleCare, Apple Card, Apple Sauce and Apple Cobbler...OK, the last two don’t exist in digital form yet.

Apple hasn’t priced out Apple TV+ as yet.  The company is making a big commitment to video, including $300 million alone to two seasons of “The Morning Show,” which will star Jennifer Aniston, Reese Witherspoon and Steve Carell.

--According to a study from the Texas A&M Transportation Institute, traffic congestion has worsened as the economy has improved, adding roughly 12 minutes a day to the average car commute.  That’s 54 hours a year.

Congestion nationwide robs Americans of about 8.8 billion hours a year.  Sitting in traffic also wastes roughly 3.3 billion gallons of fuel annually.

Drivers in Los Angeles, the country’s most traffic-clogged city, devoted 119 hours a year to traffic in 2017, almost half an hour every workday, on average.

--Large telecom companies and attorneys general from every state unveiled a new pact for combating robocalls.  Under the agreement, the companies are promising to work to prevent illegal robocalls on their networks and to work with state law enforcement investigating the calls’ origins.

But the agreement is voluntary and doesn’t include a deadline.

--Finally, we note the passing of billionaire businessman David Koch, 79, who with brother Charles Koch built a conservative political empire.  David was longtime director and leader of Koch Industries, a family oil, chemical, food and textile conglomerate.  He once ran as a Libertarian Party vice presidential candidate in 1980.

But for New Yorkers, Koch should be best known for his tremendous philanthropy, at institutions like The Metropolitan Museum of Art, Lincoln Center and the Memorial Sloan Kettering Cancer Center.

Foreign Affairs

China and Hong Kong: Protests continued, the international airport targeted for the weekend, while today, protesters held a “Baltic Chain” event where protesters joined hands across different districts in the territory, a la a 1989 protest in three Baltic states against Soviet rule.

Anti-government demonstrators seek to disrupt transport at the airport, but police have vowed to keep the facility open.

Last weekend, hundreds of thousands of protesters rallied peacefully in torrential rain.

Hong Kong leader Carrie Lam said, “I sincerely hope that this was the beginning of society returning to peace and staying away from violence.”

YouTube has shut down more than 200 channels spreading disinformation related to the ongoing protests in Hong Kong, after hundreds of thousands of Twitter and Facebook accounts tied to the Chinese government were also suspended earlier in the week.

Monday, Twitter deactivated accounts it said were “deliberately and specifically attempting to sow political discord in Hong Kong, including undermining the legitimacy and political positions of the protest movement on the ground.” 

The company said 936 of the “most active” accounts were based in China.  A bigger network of 200,000 “more spammy” accounts were also suspended.  Facebook, following a tip from Twitter, then removed a number of its accounts “involved in coordinated inauthentic behavior” focused on Hong Kong.

On the military front, China’s development of a hypersonic ballistic missile – capable of reaching well above the speed of sound and penetrating U.S. missile shields – is a threat to stability in the region, a military analyst has warned.

The South China Morning Post reported that a source from the state-owned China Aerospace Science and Industry Corporation (CASIC) said the DF-17 missile, currently in development, would be capable of hypersonic speeds and delivering a maneuverable re-entry vehicle which could shift targets in flight, making it less vulnerable to interception by other countries’ defense systems.

“And the DF-17 will be capable of delivering both nuclear and conventional payloads,” said the source, who declined to be named due to the sensitivity of the topic.

Related to the above is a report from the University of Sydney’s United States Studies Center titled “Averting Crisis”:

“China’s growing arsenal of accurate long-range missiles poses a major threat to almost all American, allied and partner bases, airstrips, ports and military installations in the Western Pacific.

“As these facilities could be rendered useless by precision strikes in the opening hours of a conflict, the PLA missile threat challenges America’s ability to freely operate its forces from forward locations throughout the region.”

On a different topic, a hot button with President Trump, Chinese state media hit back at claims by U.S. officials that China was failing to crack down on the flow of fentanyl and fentanyl-related substances into the United States, saying that responsibility for opioid abuse lay with users.  The United States was “pushing responsibility” for fentanyl abuse to China and ignoring that Beijing had implemented strict controls on the highly addictive synthetic opioid, as reported by The People’s Daily, published by the Communist Party.

The U.S. says China is the main source of illicit fentanyl and related substances that are trafficked into the United States, much of it through international mail.  Beijing denies this.

“Some people in the United States need to understand, the source of the illness lies within one’s body,” the newspaper said in an article.  “You can’t be rushed to see the doctor, and you can’t just scold others once you’re ill,” it said.

The U.S. Treasury earlier imposed sanctions on three Chinese men accused of illegally trafficking fentanyl.  President Trump has accused Beijing of reneging on pledges to stem a flood of the drug into the United States.

Lastly, Britain said on Tuesday it was “extremely concerned” by reports that a staff member at the consulate in Hong Kong had been detained in mainland China.  Simon Cheng’s family confirmed his disappearance in a Facebook post, saying he traveled from Hong Kong to Shenzhen for a business trip.  It seems that on his way back to Hong Kong, he was detained by customs.

Stephen Roach, former chief economist and chairman of Morgan Stanley Asia and now a senior fellow at Yale University was asked to comment on the worst case...China invading Hong Kong.

“It would be a devastating setback to China – a blow to the role it would play in shaping and driving the world economy.  Hong Kong’s stock market would go down sharply; the property market would crash; and Hong Kong’s role as a financial center would be dealt a devastating blow.  Hong Kong would become much less desirable as a destination to raise capital by Chinese and other Asia companies.”

Remember, we have a key moment coming up, the 70th anniversary of the People’s Republic of China in October, when the Communist Party will look to showcase its strength.  At the same time, pro-independence forces in Taiwan are gaining strength ahead of a January election, posing a challenge to President Xi’s hopes for unification with what Beijing regards as a breakaway province.

North Korea: Foreign Minister Ri Yong Ho said today that Pyongyang is ready for both dialogue and confrontation with the United States, warning Washington that continuing with sanctions would be a miscalculation, according to state media. Ri also accused Secretary of State Mike Pompeo of casting “dark shadows” over U.S.-North Korea talks, claiming that Pompeo was more interested in his own political ambitions than in current U.S. foreign policy.

Pompeo said in an interview this week, “We haven’t gotten back to the table as quickly as we hoped but we’ve been pretty clear all along, we knew there would be bumps along the way.”

Japan upgraded its estimate of North Korea’s nuclear weapons capability in an upcoming annual Defense White Paper, saying it seems Pyongyang has achieved the miniaturization of warheads, the Yomiuri newspaper said in an unsourced report on Wednesday.

This compares with the assessment in last year’s report in which the government said it was possible North Korea had achieved miniaturization.

The report, which requires approval from the Cabinet in mid-September, will maintain the assessment that North Korea’s military activities pose a “serious and imminent threat,” the Yomiuri said.

South Korea’s last Defense White Paper, released in January, reported that Pyongyang’s ability to miniaturize nuclear weapons “appears to have reached a considerable level.”

Tonight, North Korea launched a few more short-range missiles off its east coast.

Russia: ...From the Moscow Times:

“In a previously unreported social media post, a Russian doctor has publicly confirmed that his colleagues were forced to treat radiation victims after a deadly nuclear explosion earlier this month without basic equipment or knowledge of the accident.”

A blast at a military base in northern Russia killed seven (five key scientists) and injured at least six on Aug. 8, but first responders at the Arkhangelsk Regional Clinical Hospital were not warned that they would be dealing with patients exposed to radiation.

On Wednesday, Russian President Putin told journalists after meeting with French President Macron that there was no risk of increased radiation levels after the explosion.

Earlier, Russia told the Vienna-based Comprehensive Nuclear-Test-Ban Treaty Organization, which is set up to verify a ban on nuclear tests, that a military testing accident was none of its business and that handing it radiation data was entirely voluntary.

The CNTBTO said on Monday that two Russian monitoring sites closest to the mysterious explosion went offline days after the blast, soon followed by two more, fueling suspicions that Russia tampered with them.

Norway’s nuclear test-ban monitor said on Friday that the explosion that killed the five scientists during a rocket test was followed by a second blast two hours later, the likely source of a spike in radiation.

Syria: Turkish President Tayyip Erdogan told Russia’s Vladimir Putin today that Syrian army attacks in northwest Syria are causing a humanitarian crisis and threaten Turkey’s national security. This is an issue that has been hanging out there for the past year and now it’s coming to fruition.  Syrian troops have seized a pocket of territory and encircled rebels and a Turkish military post, reclaiming towns they lost early in the war.

Erdogan told Putin, who has supported Syrian President Assad, that the attacks violated a ceasefire in Idlib and damaged efforts for a solution in Syria.

Hundreds of thousands are being displaced in the region, with the potential for millions to stream across the border into Turkey, creating a new refugee and migration crisis both there and in Europe.  Turkey already hosts some 3.6 million Syrian refugees and warns it cannot accept more.

Related to this, President Trump issued a bizarre threat to “release” terrorists into France and Germany, as Trump presses Europe to bring home and put on trial their citizens captured while fighting for ISIS in Iraq and Syria.

Trump said he would order the transport of some 2,000 captured fighters back to their home countries if “Europe doesn’t take them” – something that would almost certainly be legally impossible.

In his out-of-control session with reporters on Wednesday, at one point Trump said: “We’re holding thousands of ISIS fighters right now. And Europe has to take them.  I’ll have no choice but to release them into the countries from which they came. Which is Germany and France and other places.”

Later, in a speech to a veterans group in Kentucky, Trump said that European allies “say to us, ‘Why don’t you hold them in Guantanamo Bay for 50 years and spend billions and billions of dollars holding them.’”

Of course this isn’t true.  European leaders have spent nearly two decades criticizing the United States for perceived human rights abuses at the naval detention facility.

“And I’m saying, ‘No, you gotta take ‘em,’” Trump said.

The United States is not holding the captured fighters.  The U.S.-backed Syrian Democratic Forces, or SDF, is holding them in northeastern Syria, with American security support, as I’ve written regularly.

The issue is the SDF doesn’t have the resources to hold not just these 2,000, but 9,000 ISIS fighters overall indefinitely, and the U.S. is itching to leave the country.

The Kurdish group is also holding around 70,000 ISIS wives and children, around 10,000 of whom are believed to be from places other than Syria and Iraq.

So, yes, the SDF cannot hold the fighters indefinitely.

Separately, Secretary of State Mike Pompeo acknowledged on Tuesday that Islamic State militants are gaining strength in some areas but said the militant group’s capacity to conduct attacks has been greatly diminished.  “It’s complicated.  There are certainly places where ISIS is more powerful today than they were three or four years ago,” Pompeo said in an interview with CBS’ “This Morning.”  

Israel: President Trump said Tuesday that Jews who vote for Democrats “show either total lack of knowledge or great disloyalty.”  Asked by reporters about the eruption this month when Representatives Ilhan Omar and Rashida Tlaib were first welcomed and then told they could not travel to Israel, the president slammed the women for their recent suggestion to cut aid to Israel.

“We give Israel more than $3 billion in aid every year,” Omar said Monday.  “This is predicated on their being an important ally in the region and the only democracy in the Middle East, but denying visits to duly elected members of Congress is not consistent with being an ally.  And denying millions of people freedom of movement or expression or self-determination is not consistent with being a democracy.”

Trump responded by saying that he “would not cut off aid to Israel, and I can’t even believe we are having this conversation....

“Where has the Democratic party gone? Where have they gone where they are defending these two people over the state of Israel?

“I think any Jewish people that vote for a Democrat – I think it shows either total lack of knowledge or great disloyalty.”

The remark drew sharp criticism that Trump had used an anti-Semitic trope that accuses Jews of ‘dual loyalty.’

The Jewish Democratic Council of America said the president was trying to “weaponize and politicize anti-Semitism” for political gain.

Jonathan Greenblatt, the head of the Anti-Defamation League, said “charges of disloyalty have long been used to attack Jews,” while the American Jewish Committee described the remark as “inappropriate, unwelcome and downright dangerous.”

Meanwhile, U.S. officials are none too pleased with Israeli strikes in Iraq against Shiite militias (read Iran), which undermine their relationship with Iraqi Prime Minister Adil Abd al-Mahdi.  If Israel continues, Iraq could turn around and tell the U.S. to withdraw its troops from the country.

Afghanistan: Two U.S. soldiers were killed in Afghanistan on Wednesday as violence has intensified amid peace talks and American casualties have risen with it.  The soldiers were from an Army Special Forces unit carrying out an operation in restive Faryab Province in the north, and died in a firefight.  The deaths bring American military fatalities in the country this year to 14, up from 13 in 2018 and 11 in 2017.  The Afghan military is suffering roughly two dozen fatalities a day.

But as peace talks continue, American airstrikes have intensified in support of Afghan forces trying to deny the Taliban further gains.

In recent weeks, the United States military has appeared to want to maintain some sort of a residual counterterrorism force in the country that can check international groups such as Al Qaeda and the Islamic State.  But the Taliban have repeatedly said that anything less than a schedule for full withdrawal is unacceptable to them.

Liz Cheney / Washington Post

“President Trump knows a bad idea when he sees one. He extricated the United States from President Barack Obama’s disastrous nuclear accord with Iran. He pulled us out of an arms-control agreement with Russia that Vladimir Putin repeatedly violated. But if news reports are accurate, the State Department is about to capitulate to the Taliban, al-Qaeda’s longtime ally, as U.S. forces are withdrawn from Afghanistan. The president should reject this deal....

“Just recently, the Taliban released a video justifying the 9/11 hijackings and other terrorist attacks in the West.  The Taliban bragged the deadliest day of terror in our history was a ‘heavy slap’ on American faces.  Despite all of this and more, special representative Zalmay Khalilzad, who has led the talks, says he is satisfied with the Taliban’s supposed counterterrorism assurances.

“The Taliban harbored Osama bin Laden and his men while they plotted their attacks on the United States.  The Taliban has never publicly disavowed al-Qaeda.  Instead, al-Qaeda’s fighters are helping the Taliban resurrect its authoritarian Islamic Emirate.  As a result, al-Qaeda continues to view Afghanistan as a haven for its leadership.

“Given the Taliban’s sordid history and ongoing violence, it strains credulity to believe it can be a partner for peace.  The American people deserve to see the full text of any agreement the State Department is negotiating, including supposed counterterrorism assurances.  If we are putting our security in the hands of the enemy who harbored al-Qaeda before the 9/11 attacks, the American people deserve to know why....

“The United States has made significant strides against terrorism in Afghanistan.  Our troops have saved American lives, thwarting terror plots and hunting down key terrorist leaders who would do us harm.  Just days before Trump was elected, U.S. forces killed a senior al-Qaeda operative who was plotting against the United States from inside Afghanistan....

“We should not withdraw U.S. forces based on a political timetable that grants concessions to the Taliban and allows the terrorists to maintain safe havens from which they can plan and train for future  attacks in the West.  We cannot accept a deal that places America’s security in the hands of the Taliban.

“Agreeing to such a deal would not be ending a war, it would be losing it – to al-Qaeda, the Taliban and the Islamic State.”

Speaking of ISIS, it claimed responsibility for a suicide attack in Kabul on Saturday on a packed wedding reception.  At first it was reported 63 were killed, 182 wounded, but as the week progressed, the death toll rose to at least 80.

India / Pakistan: Editorial / Washington Post

“Prime Minister Narendra Modi of India spoke in glowing terms of the future of Jammu and Kashmir after the announcement Aug. 5 that seven decades of autonomy for the disputed region with a large Muslim population had vanished overnight.  Mr. Modi, leading the Hindu nationalist Bharatiya Janata Party, having secured a second-term election victory in May, promised to deliver a ‘completely transparent environment with a lot of honesty’ for Kashmir, ‘new hopes’ and ‘new heights’ and ‘renewed vigor.’  Given the way Mr. Modi chose to impose change, these words cannot be accepted at face value.

“Kashmir was partitioned in 1947 at the end of British rule. Pakistan controls one part, India the other. Within India’s control are three areas: Jammu, which is Hindu-majority, population about 6 million; Kashmir, a basin with Srinagar at its center that is home to ethnic Kashmiris, mostly Muslim, population about 8 million; and Ladakh, a desert highlands that has many Buddhists, population about 300,000.  In India, these territories had the status of a state, with some autonomy guaranteed by the Constitution.  Mr. Modi effectively canceled the key provision, Article 370, and dissolved the state, turning it instead into two ‘union territories’ with less autonomy, under direct rule by New Delhi. Also canceled was a provision that barred people outside the state from buying property and displacing Muslims.

“Mr. Modi is playing a dangerous game.   His sunny vows of transparency aside, the stripping of Kashmir’s autonomy was done in darkness and in the most coercive way possible.  As The Post’s Niha Masih reported from Srinagar, streets are no longer crowded with civilians but awash with India’s armed soldiers, and ‘instead of traffic jams at intersections, there are spools of concertina wire.  People remain inside their homes with no telephone, Internet or cable TV service.  No one has seen or heard from local political leaders, hundreds of whom are in detention.  Of the more than 200 newspapers in the region, only five are publishing physical copies. Their websites are stuck at Aug. 5.’...

“Mr. Modi might have fulfilled a dream of Hindu nationalists going back to the 1950s, but he also stained the democracy and most likely stoked anger in Kashmir that will fester long into the future.

“Mr. Modi’s promise of ‘new heights’ might turn out to be a dark day for Kashmir and for India’s democracy. The value of any goal must be doubted if it can be achieved only by these dark, oppressive means.”

Friday, security forces used tear gas against stone-throwing local residents in Srinagar, with Pakistani Prime Minister Imran Kahn tweeting, “The Indian leadership will in all probability attempt a false flag operation to divert attention” from what he called human rights violations in Kashmir.  The day before, a UN official called on the Indian government to “end the crackdown on freedom of expression, access to information and peaceful protests” in Kashmir, saying it would increase regional tensions.

The blackout is beyond outrageous.  152 have been hurt thus far in the protests.

Brazil: Bill McKibben / New York Daily News

“The world is reacting with outrage at the sight of what’s happening in the Amazon.  NASA satellites show huge plumes of smoke drifting up from the burning forest; in Sao Paulo, the biggest city in the western hemisphere, night fell at 2 p.m. earlier this week when the smoke blotted out the sun.

Presiding over this debacle is the South American equivalent of Donald Trump, a blighted man named Jair Bolsonaro who won the presidency last year amidst rampant corruption and nationalism.  He’s encouraged ranchers and loggers to ‘open up’ the Amazon, and the flames are the result, as they burn the forest to create new pasture land for cattle or fields to grow soy.  When challenged, he’s insisted that environmentalists must be setting the fires to make him look bad.

“But of course he must be challenged, and by all of us – the Amazon is one of the most important physical features on the planet, as key to our continued survival as the polar ice caps or the great oceans.  Its vast sea of trees breathes in carbon dioxide and breathes out oxygen, creating as much as a fifth of the planet’s supply.  Read that again – it accounts for every fifth breath you take. If you burn down the forest, you make it impossible to deal with climate change.

“And so it’s good news that around the world (with the obvious exception of the White House) national leaders are demanding action.  They should; what happens in the Amazon travels fast, affecting every place on Earth.”

Bolsonaro has been responding angrily to the criticism, what he calls meddling in Brazil’s sovereignty.  But earlier he said Brazil lacks the resources to control the fires.

Fires in the Amazon have surged 83% so far this year, government figures show.  On Wednesday, Bolsonaro blamed non-governmental organizations (NGOs) for setting the fires, without providing evidence.  But Thursday, he conceded farmers could be behind the fires.

French President Macron took to Twitter to call the Amazon fires an “international crisis” that should be discussed at the G7 summit.  “Our house is burning,” he tweeted.  France and Ireland are now looking to kill a trade deal struck in June between the EU and the Mercosur countries of Brazil, Argentina, Uruguay and Paraguay if Brazil does not honor its environmental commitments.

Today, Bolsonaro said he was mobilizing the army to help combat the blazes.  President Trump tweeted late this afternoon saying he had a phone call with the Brazilian leader and that future trade prospects are very exciting and that the relationship is “perhaps stronger than ever before.”  #Bulls---

Random Musings

--Presidential tracking polls....

Gallup: 41% approval, 54% disapproval of Trump; 88% Republicans, 37% independents approve (Aug. 1-14).
Rasmussen: 50% approval, 48% disapproval.

In a new CNN/SSRS poll, President Trump’s approval rating was 40%, down from 43% in June.  54% disapprove.

A majority (56%) say they expect economic conditions to be good a year from now, 40% say they will be poor.  Back in December, 66% said they expected a good economy in a year.

Trump’s approval on handling foreign affairs stands at 40%, while only 37% approve of his handling of immigration.  Post-El Paso and Dayton, 36% of Americans approve of how Trump is handling gun policy, which is the same as his rating in March of last year, after the shooting in Parkland, Fla.

In a new Monmouth University Poll, Trump’s overall approval rating is also 40%, with 53% disapproving, similar to the 41-50 split in June.  Over the past 12 months, the president’s approval rating has ranged between 40% and 44% in Monmouth’s polling.

Men are divided (49% approve and 43% disapprove), while women are decidedly negative (31% approve and 62% disapprove).  White Americans without a college degree tend to approve of Trump (55% approve and 37% disapprove), while the reverse is true among white college graduates (38% approve and 57% disapprove).

Only 35% of Americans feel that Trump should be impeached, while 59% disagree with this course of action.

Just 17% of Americans approve of the job Congress is doing and 71% disapprove.  Just 28% say the country is headed in the right direction while 62% say things are on the wrong track.

In a Wall Street Journal/NBC News Poll, 43% of registered voters approve of President Trump’s job performance, while 55% disapprove.  The president’s job-approval rating has ranged between 43% and 46% in this survey all year.

--In a Fox News Poll, Joe Biden continued to lead the Democratic nomination race with 31% of Democratic primary voters, followed by Elizabeth Warren at 20%, Bernie Sanders at 10%, and Kamala Harris at 8%.

Cory Booker, Pete Buttigieg and Andrew Yang garnered 3% apiece, and Amy Klobuchar and Beto O’Rourke 2% each.

In possible matchups, President Trump trails Biden by 12 points (50-38 percent), Sanders by 9 (48-39), and Warren by 7 (46-39).

--In a CNN/SSRS survey, Biden has expanded his edge over the Democratic field, with 29% of Democratic and Democratic-leaning registered voters saying they back the former vice president.  That’s up 7 points compared with a late June CNN survey.  No other candidate has made meaningful gains over that time.

Bernie Sanders is at 15% and Elizabeth Warren at 14%.  Kamala Harris, who stood at 17% support in the June poll, now has the backing of just 5% of potential Democratic voters.

If you look at just liberal voters, 23% back Warren and 22% each back Biden and Sanders.

54% of the voters said they most wanted a candidate who could beat Trump.

This particular survey is one of those used by the DNC in order to determine which candidates will qualify for the debate stage in September – and it marked the fourth such qualifying poll in which Julian Castro has hit 2%, so he secured his spot, the 10th to do so.  Tom Steyer needs one more poll to qualify and Rep. Tulsi Gabbard needs two more after landing at 2% in the CNN survey.

Marianne Williamson hit the 130,000-donor threshold (Editor note: I gave Marianne $3 to help her do so, because I get a kick out of her), but she has yet to hit 2% in any qualifying polls.

Washington Gov. Jay Inslee dropped out of the race, as did Rep. Seth Moulton, while former candidate John Hickenlooper announced he was indeed running for the Democratic nomination for senate in Colorado.

--In 2016, President Trump’s anti-immigrant rhetoric and focus on the grievances of white voters helped him win the election.  But an analysis of a Reuters/Ipsos poll of 4,436 U.S. adults in July showed that people who rejected racial stereotypes were more interested in voting in the 2020 general election than those who expressed stronger levels of anti-black or anti-Hispanic biases.  It was the reverse in 2016.

So if you believe these findings, it’s potentially good news for Democrats and bad news for Republicans.

But, there is a silver lining for Trump.  Most white Republicans approve of his performance in office, and over the past four years they have become increasingly supportive of his signature issue: expanding the wall along the U.S.-Mexico border.  Some 82% now support it compared to 75% last year.

--A new Wall Street Journal/NBC News poll found about half of Americans disapprove of President Trump’s response to the deadly mass shootings in Texas and Ohio, and broad majorities support Congress moving to expand background checks for all firearm sales.

68% of respondents expressed worry the U.S. will experience another mass shooting or attack by white nationalists targeting people based on their color or country of origin,, with 55% saying they were “very worried.”  By contrast, 50% express fear of another major terrorist attack.

Overall, the poll found 36% approve of the manner in which Mr. Trump handled the aftermath of the two shootings, with 52% expressing disapproval.

75% of respondents support expanding background checks, and an additional 14% somewhat support the changes.  Only 10% expressed opposition to the checks.

On a different topic, trade, 64% consider free trade with foreign countries to be good for America while 27% said it was bad for the nation.  A poll taken in April 2017, at the start of the Trump presidency, found 57% supported free trade and 37% opposed it.

49% approve of Trump’s handling of the economy, 46% disapprove.  In July 2018, a Journal/NBC poll found 50% approved of the president’s handling of the economy, 34% disapproved.

--NYPD Commissioner James O’Neill had one tough decision in firing Officer Daniel Pantaleo for violating NYPD policy while helping effect the lawful arrest of Eric Garner.  In remarks on Monday, O’Neill said in part:

“Being a police officer is one of the hardest jobs in the world.  That is not a statement to elicit sympathy from those we serve; it is a fact.  Cops have to make choices, sometimes very quickly, every single day.  Some are split-second life-and-death choices.  Oftentimes, they are choices that will be thoroughly, and repeatedly, examined by those with much more time to think about them than the police officer had.  And those decisions are scrutinized and second-guessed, both fairly and unfairly.

“No one believes that Officer Pantaleo got out of bed on July 17, 2014, thinking he would make choices and take actions – during an otherwise routine arrest – that would lead to another person’s death. But an officer’s choices and actions, even made under extreme pressure, matter.

“It is unlikely that Mr. Garner thought he was in such poor health that a brief struggle with police would cause his death.  He should have decided against resisting arrest.  But, a man with a family lost his life – and that is an irreversible tragedy.  And a hardworking police officer with a family, a man who took this job to do good – to make a difference in his home community – has now lost his chosen career.  And that is a different kind of tragedy.

“In this case, the unintended consequence of Mr. Garner’s death must have a consequence of its own.  It is clear that Daniel Pantaleo can no longer effectively serve as a New York City police officer.”

Needless to say, Police Benevolent Association President Patrick Lynch, who is one of the more familiar, interesting figures in Gotham, blasted O’Neill’s decision, accusing the commissioner of choosing “politics and his own self-interest over the police officers he claims to lead.”  Lynch also called for the removal of Mayor de Blasio.

Lynch: “(The rhetoric) has caused the street to disrespect our uniforms and the women and men wearing it, to dump buckets of water over their heads, to throw bricks and concrete from the roof and then to take out their weapons and fire on police.  This mayor needs to be removed. The police commissioner needs to know he’s lost his police department.”

A medical examiner ruled Garner’s death was a homicide, but a Staten Island grand jury declined to indict any of the officers involved.

--Mark R., weather and solar flare expert, sent me a note the other day on how quiet it’s been, re hurricane season, and then later I saw a piece where Colorado State University meteorologist Phil Klotzbach said, indeed, if you think it’s been a particularly quiet season thus far, you’re right:  The last time we went from July 15 through Aug. 19 with no named storms in the Atlantic was 1982.

But as noted in a piece in USA Today, yes, this could be the quiet before the storm, and AccuWeather hurricane expert Dan Kottlowski said conditions in September “are expected to become not only much more conducive for tropical storm formation but may also lead to multiple occasions with more than one named system spinning in the Atlantic Basin at the same time, as well as a late and strong finish to the season,” Kottlowski warned.

And we got some little systems developing right now.

--Cases of severe lung disease linked to vaping rose from 94 to 153 in just five days, according to an update by the Centers for Disease Control and Prevention.

The cases tend to involve gradual breathing difficulties, coughing, fatigue, chest pain, and weight loss, which leads to hospitalization.  I just saw on the nightly news that one has died thus far.  The only commonality appears to be recent use of e-cigarettes.

While there are stories that the illnesses may be related to dubious THC-containing vaping liquid, the CDC cautioned that “no specific product has been identified in all cases, nor has any product been conclusively linked to illnesses.”

--It was reported Supreme Court Justice Ruth Bader Ginsburg was treated for a tumor on her pancreas, but she is fine.  We wish this tough girl the best.

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

God bless America.

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Gold $1536
Oil $53.97

Returns for the week 8/19-8/23

Dow Jones  -1.0%  [25628]
S&P 500 -1.4%  [2847]
S&P MidCap  -2.0%
Russell 2000  -2.3%
Nasdaq  -1.8%  [7751]

Returns for the period 1/1/19-8/23/19

Dow Jones  +9.9%
S&P 500  +13.6%
S&P MidCap  +10.4%
Russell 2000  +8.2%
Nasdaq  +16.8%

Bulls 49.1
Bears 17.9

Have a great week.

Brian Trumbore