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07/27/2013

For the week 7/22-7/26

[Posted 12:00 AM ET]

Washington and Wall Street

This was a week for earnings reports and housing data, but this coming week brings us a two-day Fed meeting, a first look at second-quarter GDP, and a key labor report on Friday, as well as more on the earnings front.

In a Bloomberg survey of economists, 50% expect the Federal Reserve to start tapering its $85 billion-a-month bond-buying program in September so the Street will be looking for clues in next week’s Open Market Committee statement as to whether this will indeed be the case, though a key for the Fed and any action it may take in the fall will be the jobs reports for both July and August.

Meanwhile, looking ahead to Congress’ return in the fall following its coming recess, both sides are lining up for what promises to be a contentious budget debate tied to the debt-ceiling. Republicans will be demanding further spending cuts, while President Obama has made it clear he will not sign into law Republican spending bills that slash domestic programs even more deeply than sequestration has. The initial key deadline is end of September, just two months away, when Congress must authorize a new measure to fund the government for the fiscal year beginning October 1.

The White House is looking to roll back the sequester, and some Republicans themselves want to see the cuts to defense eliminated. That said, the outlook for a long-term budget deal is not good.

This week the president hit the road for a series of speeches on the economy and his proposals and as House Speaker John Boehner said, “The president wants to raise taxes so he can do more stimulus spending. And the fact is, it’s his sequester, and if we’re going to get rid of his sequester, we’re going to have to look for smarter spending cuts in order to do that.”

The two sides are about $80 billion apart in their overall spending proposals.

As for the debt ceiling, it seems a decision on this will need to be reached by end of October, so it’s possible there will be another interim spending deal until the debt ceiling deadline.

Lawmakers break next week and don’t return until Sept. 9.

Regarding the economic news of the past five days, existing home sales in June came in less than expected, but the median home price was up 13.5% from June 2012, while new home sales for the month rose 38.1% over year ago levels to their best pace since May 2008. 

But the news from some homebuilders was not that good, even as the average rate on a 30-year fixed fell to 4.31% on the week, down from the two-year high of 4.51% set two weeks ago. With the gain in yield for the 10-year this past week, however, mortgage rates should inch back up.

The headline figure on durable goods (big-ticket items) for June was a strong 4.2%, but ex-transportation was unchanged.

On to earnings...the good and the bad.

McDonald’s fell short on the top line (revenues) and bottom line (earnings). Global comp sales rose just 1%.

DuPont fell short on the top, beat on the bottom. Overall revenues were down 1%, down 8% in Asia.

Apple beat on the top and bottom. More below.

AT&T fell short on the bottom, beat expectations on the top, though overall revenue was up just 1.6%.

Netflix beat on earnings, matched on revenues.
Travelers handily beat on both the top and bottom.

PepsiCo handily beat on eps, but just met expectations on the top line with revenues up only 2% overall from year ago levels.

Ford smashed on both the top and bottom line...more below.

Ditto GM.

Boeing beat handily on the top and bottom.

Caterpillar fell way short on both the top and bottom, and lowered guidance as CAT continues to suffer from the slowdown in China.

Dow Chemical beat on the top and bottom, but overall revenues were up a paltry 0.4% year over year. As market watcher Derrick Coleman would have said, whoopty-damn-do.

3M matched expectations, with overall revenues up just 2.9%.

Amazon fell woefully short on the bottom line, fell short of expectations on the top, yet the stock hit another all-time high. Absurd. More below.

Eli Lilly handily beat on the top and bottom, with overall revenues up 6%.

Norfolk Southern missed badly and revenues fell a whopping 17% from a year ago.

Qualcomm beat on the top line and was bullish with its guidance.

Visa handily beat on top and bottom.

And Facebook far exceeded all expectations as the shares soared in response. More below.

Bottom line, I’d give this week’s reports a better grade than last week’s, but you still have some very high-profile multi-nationals with meager, or zero growth in revenues and that obviously impacts future hiring. Any future improvement in tone in Europe, for example, could easily be offset by the slowdown in China.

I also will continue to emphasize the abysmal Obama foreign policy, best exhibited by a Middle East in flames. There isn’t one positive the administration can point to. Since the president has taken office, the region has only gotten decidedly worse.

I understand why the Street ignores what is transpiring in this critical part of the world most days, unless oil is soaring. But Obama’s failures in this theater will eventually force us all to take notice even if we prefer to spend our time looking at royal baby photos.

As Karl Rove summed up in a Wall Street Journal op-ed:

“It’s impossible to know how much worse things might get between now and the end of Mr. Obama’s presidency. It’s fair to say that it will take many years to clear away the foreign policy rubble accumulated during his years in the Oval Office.”

Europe

Investors took heart in the release of a flash estimate on manufacturing in the eurozone for July, 50.1, a 24-month high and above the 50 dividing line between growth and contraction. OK, a 0.1 fraction above. But, hey, it is better than the 48.8 final reading for June, as put out by Markit.

The eurozone has contracted for six consecutive quarters so much was made of the figure, with the reading on services rising to 49.6 from 48.3, and a composite reading on the two hitting 50.4 from 48.7, the best since Jan. 2012.

And, yes, Germany’s PMI rose to 50.3 from 48.6 (services 52.5 from 50.4), while France hit a 17-month high on the manufacturing front, 49.8, up from 48.4 in June (services 48.3 from 47.2).

There also continues to be good news from the U.K., with one reading on exports at its best level since the financial crisis, while an initial reading on second-quarter GDP rose 0.6% over Q1 (2.4% annualized). Not bad, not bad at all.

So what to make of all this? I’ve been touting Britain’s recovery for some time now and most feel the place is six to nine months ahead of the eurozone in its recovery. I don’t disagree with this.

But some were almost giddy with the eurozone’s PMI figures and I just have to pour cold water on these folks. Of course, at some point, and maybe that is now, Europe bottoms.

But we are far from the point where you can give the all-clear signal. Overall, you still have rising unemployment in the region, a credit squeeze (loans to the private sector have contracted for 14 months), sky-high government debt levels, future bailout fears, major political uncertainty and the continued failure to put together a true banking union.

More specifically, while Portugal’s Prime Minister Coelho said he is determined to keep his nation’s 78 billion-euro bailout program on track, and while Portugal’s president gave the coalition government until 2015 to fulfill its mission, with no snap election as feared just a week earlier, no one believes the Portuguese government survives and GDP is still supposed to fall another 2.3% this year.

In Greece, owing to Germany’s September 22 election, Athens won release of another 2.5 billion-euro loan installment just to get it through the German vote; with the other Euro nations not wishing to rock the boat. Germany may do just that after.

Spain did report that unemployment had declined from 27.2% to 26.3% in the second quarter, and some of its banks reported better results, but this is smoke and mirrors. Bad debt on the banks’ books continues to rise at a rapid pace, while the government has been raiding state pension funds to meet bonus payments and tax refunds. Just remember, Spain’s housing crash still has yet to be fully accounted for.

Italy’s debt hit 130% of GDP, while eurozone debt overall is at 92.2%. These figures keep rising and 1.2% growth, the current outlook for the region in 2014, is hardly the kind that begins to put a dent in government debt levels.

But it’s time for Europe to go on vacation. I could use one myself. 

China and Japan

HSBC issued its flash report on manufacturing in China for the month of July and it wasn’t good, 47.7, down from June’s reading of 48.2 and the weakest since last August. The government’s official news organizations reported that 7% is now the bottom line for growth; that Premier Li Keqiang, ultimately responsible for the economy, won’t let it go below that level.

So the government unveiled a series of small steps, including tax breaks for small businesses, reduced fees for exporters and opening up of railway construction, with perhaps a broader set of reforms on the agenda for an October Communist Party meeting. A bank deposit-insurance scheme could be on the table then.

And here’s an interesting tidbit regarding China from Deutsche Bank’s David Bianco (and Bloomberg). China accounts directly for some 5% of S&P 500 earnings, which might not seem like a lot but it’s a bigger chunk than the 2% that comes from housing in the U.S. [Let alone China’s massive impact on the commodities front. Just ask Australia.]

But a few weeks ago I was talking of how President Xi Jinping was exhibiting disturbing Mao-like tendencies and the other day the Washington Post editorialized:

“China’s new president, Xi Jinping, appears to have concentrated his power with remarkable swiftness in recent months. ‘Xi has outmaneuvered his rivals, his colleagues, and even his mentors,’ reports the European Council on Foreign Relations. But to what end? The early hopes that Mr. Xi would be a political reformer are vanishing. Instead, he seems determined to impose more Communist Party control on both state and society while still pursuing economic modernization. It’s a familiar recipe and profoundly misguided.

“On July 16, police detained one of China’s most prominent human rights activists, Xu Zhiyong, who has been at the forefront of a movement to defend citizens’ rights based on the constitution and the rule of law. Mr. Xu, a legal scholar, is among those who believe that the best way to battle the system is to demand that it follow its own rules – and not the whims of the party. He has also been outspoken against corruption and the widespread practice of Communist officials enriching themselves with bribes and accumulating hidden wealth. The New York Times reported that he was detained in reprisal for this campaign.

“The strange thing is that Mr. Xu’s positions are not far from those articulated by his new president. In December, Mr. Xi gave a speech on China’s constitution. He declared, ‘We must firmly establish, throughout society, the authority of the constitution and the law and allow the overwhelming masses to fully believe in the law.’ These words heartened some reformers who thought they might signal that Mr. Xi would put less emphasis on the party and more on the rule of law.

“But it has not happened....

“Moreover, in recent weeks Mr. Xi has been promoting still more power and prominence for the party in the nation’s affairs. He has called on party members to toe a ‘mass line’ against excess and extravagance, words that harken back to the revolutionary era of Mao. Mr. Xi seems to want to pursue economic modernization without giving an inch to its political equivalent. China’s leaders like this formula, but it has always carried risk, which now may deepen. The people taste economic good times...(and) they may feel empowered and entitled to a political voice. It won’t happen all at once, but such aspirations can’t be easily extinguished by just slamming a fist on the table, arresting more dissidents and invoking the words of Mao.”

Turning to Japan, Prime Minister Shinzo Abe got his desired victory in the upper house elections, with his Liberal Democratic Party taking 65 of the 121 seats up for re-election, thus securing a comfortable majority. The LDP now controls both houses which paves the way for three years of stable government, barring the ever-so-common Japanese corruption scandal or in-party fighting that has brought down many a government in the past.

So the feeling is Abe will be able to break through the legislative gridlock that has characterized Japanese politics and that he’ll push through needed, though highly controversial, economic reforms. Recall, while growth due to aggressive monetary policy and infrastructure projects is slated to be in the 2% range this year, the economy is only forecast to grow 1.2% in 2014.

And you have the issue of many of the successful candidates in Abe’s LDP having strong ties to protectionist lobbies that seek to block change, which is the history of the LDP.

Last time, I also told you that Abe seeks to change the pacifist constitution, which has unsettled Japan’s neighbors, but Abe doesn’t have the two-thirds majority needed to effect changes on that front. [I just read the latest issue of The Economist and it says Abe can cobble together a 2/3s majority. Time to bone up on my Japanese politics.]

On Thursday, though, Tokyo expressed its displeasure over Chinese military and maritime activity near the disputed Senkaku islands in the East China Sea (called Diaoyu by China). Japan scrambled its fighter jets to follow a Chinese early warning plane flying between Okinawa and the disputed area, while at the same time, four Chinese coast guard vessels were spotted near the Senkakus. The Chinese Defense Ministry said it had a right to be operating in the area.

Meanwhile, regarding the Japanese economy, exports were up 7.4% in June from a year earlier, up 8.6% to the European Union, the first such jump in 21 months, so the weaker yen continues to be a huge help.

But then the Japanese stock market tanked 3% on Friday. Data released that day showed Japan’s inflation goal of “two percent in two years” looked to be on track as consumer prices rose in June, up 0.4% from a year ago on core (ex-food prices), the first positive reading in 14 months and the highest since November 2008. But this bolstered the yen, which hurts exporters.

And further, if you took higher energy bills out of the inflation equation, prices were down, not good at all.

The much-needed consumer demand in Japan has yet to emerge.

One other item of a positive nature, staying in the region. South Korea’s GDP for the second quarter was a better than expected rise of 1.1% over Q1.

Street Bytes

--Stocks finished the week little changed, with the Dow Jones advancing 0.1% to 15558, extending its winning streak to five, but the S&P 500 declined a fraction of a point, while Nasdaq gained 0.7%. We could see fireworks this coming week.

--U.S. Treasury Yields

6-mo. 0.06% 2-yr. 0.31% 10-yr. 2.56% 30-yr. 3.62%

--A number of U.S. Senate Democrats are circulating a letter supporting Janet Yellen to be the next chair of the Federal Reserve; not good news for the other frontrunner to replace Ben Bernanke, Lawrence Summers. But the White House said it wouldn’t be making a selection until the fall.

Separately, Robin Harding of the Financial Times pointed out that Summers “made dismissive remarks about the effectiveness of quantitative easing at a conference in April, raising the possibility of a big shift in U.S. monetary policy if he becomes chairman of the Federal Reserve.”

“ ‘QE in my view is less efficacious for the real economy than most people suppose,’ said Mr. Summers according to an official summary of his remarks at a conference organized in Santa Monica by Drobny Global, obtained by the Financial Times.”

However, in these same remarks, Summers said that while QE does little good it does little harm. “If QE won’t have a large effect on demand, it will not have a large effect on inflation either.”

--SAC Capital Advisors LP, one of the nation’s largest hedge-funds, was indicted and accused of acting as a criminal enterprise on a “scale without known precedent.” Prosecutors said the firm encouraged the use of illegal tips and was a “magnet for market cheaters,” according to U.S. Attorney Preet Bharara. But prosecutors didn’t have enough evidence to personally charge founder Steven A. Cohen, a mega-billionaire.

An SAC spokesman said the firm, with assets of $14 billion, much of which is Cohen’s own money, “never encouraged, promoted or tolerated insider trading and takes its compliance and management obligations seriously.”

Bharara said the U.S. isn’t freezing any assets, but sources say the government could be looking for up to $10 billion in a settlement, which contrasts with the hundreds of millions allegedly made in insider trading. It would wipe out Cohen’s wealth.

The government went after Cohen’s reputation, saying he failed to supervise analysts and portfolio managers, nor ask questions about some of the information they were obtaining.

No major financial firm has survived a criminal indictment. SAC’s clients have been looking to withdraw billions from the firm, especially after SAC agreed to a record $616 million civil settlement with the SEC over insider-trading charges just a few months ago.

Reportedly, five former SAC employees are cooperating with investigators. Eight have been charged criminally with insider trading. The company has some 1,000 workers who are obviously now scrambling for new jobs. SAC is also one of the largest commission generators for Wall Street.

So, do the banks continue to support SAC’s stock and derivatives trades? As of today, yes.

Aaron Elstein / Crain’s New York Business

“Look for a major public-relations campaign from Mr. Cohen. When junk-bond king Michael Milken was facing a host of securities-law violations a generation ago, his PR people pulled out all the stops demonstrating what a generous man he was, and Mr. Milken still speaks regularly today about cancer research and education reform. For his part, Mr. Cohen sits on the board of the Robin Hood Foundation, a poverty-fighting organization that boasts a veritable all-star team of directors, including Geoffrey Canada of the Harlem Children’s Zone and Marion Wright Edelman of the Children’s Defense Fund. Directing the board from the business world, there is General Electric CEO Jeffrey Immelt, CNN President Jeff Zucker and a slew of Wall Street luminaries, including former JPMorgan investment banking chief Jes Staley and hedge fund superstar David Tepper. Expect some of these luminaries to come forward and explain that Mr. Cohen does a lot of good that most people don’t know about.”

And as the Wall Street Journal opined:

“(Why) hasn’t the government indicted Mr. Cohen? Can a criminal enterprise be run by someone who isn’t himself a criminal? The Journal reported recently that prosecutors lacked the evidence to indict Mr. Cohen before a statute of limitations runs out this month.

“And in contrast to recent successful insider-trading prosecutions, this case appears to feature little wiretap evidence and few cooperating witnesses. The simple fact is that people commit crimes. Buildings don’t.”

--Apple reported it sold 31.2 million iPhones last quarter, far better than expected, and the company’s shares, beaten down since hitting its all-time high of $705 last September, rallied some on the news to $440.

Apple topped earnings and revenue expectations overall. Sales of the iPad, though, missed forecasts and at 14.6 million, were far short of last year’s 17 million, and overall revenue of $35.3 billion was nearly flat with last year’s $35 billion. Net income came in at $6.9 billion compared to $8.82 billion a year ago.

And in a further sign of China’s slowing economy, Apple’s revenues there were down 14% from year-ago levels, down 43% from the first quarter.

--According to Strategy Analytics, Samsung has become the most profitable mobile phone company in the world, overtaking Apple. Samsung’s handset division had an estimated operating profit of $5.2 billion in the second quarter*, with Apple’s iPhone operating profit estimated at $4.6 billion.

Total mobile phone shipments were 386 million in the April-to-June period, up 4% over last year’s pace.

But global smartphone shipments hit 230 million in the quarter, 47% higher than in the same period of 2012. Of those, 33.1% were manufactured by Samsung, 14% by Apple, the latter’s smallest percentage for three years. [BBC News]

*Overall, Samsung earned a record $7 billion in the quarter.

--Shares in Facebook soared 28% following release of its better-than-expected second-quarter results, up $7.50 to $34.00, as it reported a big increase in mobile advertising revenue.

Following its IPO last year, the stock slid precipitously largely because of its lack of a mobile presence, but in the latest quarter, it accounted for 41% of Facebook’s ad sales.

Mobile ad spending in the U.S. is expected to jump 75% this year to $7.7 billion, out of total U.S. online ad spending of $41.9 billion, according to eMarketer and the Wall Street Journal.

According to comScore, American consumers spent 225.4 billion minutes on Facebook’s mobile app and Web pages, double the year ago level.

--Amazon posted an unexpected loss and reported revenues below expectations, thus fueling further questions about the company’s future profitability.

Overall sales growth was 22%, 30% in North America, but Amazon continues to invest heavily in new warehouses and data centers.

Nonetheless, Amazon shares finished the week at $312, an all-time high, even though it trades at a multiple 100 times estimated 2014 earnings. 

As I’ve always said, as ridiculous as the valuation looks for Amazon, those attempting to ‘short’ it have perpetually had their faces ripped off.

--McDonald’s, in reporting the aforementioned tepid results for the second quarter, said it expected global same-restaurant sales in July to be flat. Sales in the U.S. increased just 1%, slightly below expectations, as the company loses out to rivals Wendy’s and Burger King.

--Starbucks reported super results for its fiscal third quarter, net income of $417.8 million, 55 cents a share, exceeding analysts’ expectations. The company’s push into food has been a big driver. Sales at stores open at least 13 months gained 9% in the Americas, also well ahead of analysts’ estimates. Global same-store sales increased 8%. Not exactly McDonald’s-like.

--GlaxoSmithKline admitted senior executives in its China office appear to have broken the law amid a bribery scandal, allegedly involving cash to doctors to prescribe the firm’s drugs. Chinese authorities have been very public in their investigation into the pharmaceutical giant. Four Chinese executives at GSK have been taken into custody.

--The Federal Housing Finance Authority announced a settlement with UBS in the amount of $885 million over claims the Swiss banking giant violated securities laws in its sales of mortgage-backed securities to Fannie Mae and Freddie Mac.

--For the first time in two decades, a car built by Detroit’s Big 3 beat out Japan and Europe’s best to win the top spot among all sedans as ranked by Consumer Reports....the 2013 Chevy Impala, which scored so well it is on equal footing with luxury models like Lexus. The only two models with scores higher than Impala’s 95 are for the BMW 135i and the all-electric Tesla Model S, which earlier won raves from CR as the best model it has tested in years.

--General Motors posted a profit of $1.2 billion in the second quarter, down from $1.5 billion in the same period a year earlier, with revenues up 4%. GM’s losses in Europe slowed to $110 million from $394 million, but CEO Dan Akerson cautioned a turnaround across the pond “isn’t in sight yet.”

Meanwhile, Ford Motor Co. also reported second-quarter profit of $1.2 billion, with revenue rising 14.4%. Its North American unit has earned $2 billion or more in five of the past six quarters. Ford, like GM, also narrowed its losses in Europe, though in its case, the head of European operations said the automaker plans to break even in Europe by 2015.

--The Energy Information Administration estimated world-wide use of energy will surge 56% by 2040 compared with 2010 levels, with the growth driven by China and India, which will account for half the growth.

But long-range projections are largely useless. As energy analyst Fadel Gheit told the Journal, “Nobody had predicted five years ago that the U.S. would be self-sufficient in natural gas. Now we have gas that we don’t know what to do with.”

--The International Energy Agency forecast Europe’s annual demand for oil would contract by 1.7% to 13.5 million barrels per day this year, after slumping 3.9% in 2012; a further indication of Europe’s ongoing economic problems.

--Halliburton has admitted to destroying evidence in the Deepwater Horizon oil spill disaster in the Gulf of Mexico and will plead guilty to a criminal charge under a plea agreement with the Justice Department, assuming court approval. Further criminal charges against Halliburton or its subsidiaries will not be pursued in exchange for its cooperation in the ongoing investigation.

--According to the Investment Company Institute, investors withdrew an estimated $43 billion from taxable bond mutual funds last month, the largest-ever monthly outflow, but most of this went into money-market funds, not equities. Of course it can still find its way into stocks.

--Ireland’s national statistics office said on Tuesday that residential property prices rose for their first annual increase in more than five years, up 1.2% for the 12 months back to June 2012, the first annual increase since January 2008.

One factor contributing to the stability in prices is the lack of supply. In 2006, 93,419 new homes were built in Ireland. In the first six months of this year, only 3,700 were.

Apartment prices in Dublin are up 4.2% from year ago levels, but they had collapsed 58% from the March 2007 peak.

--According to the U.S. attorney for the District of New Jersey, a gang of four Russian nationals and a Ukrainian stole and sold 160 million credit card numbers from more than a dozen companies, causing hundreds of millions of dollars in losses. The victims included J.C. Penney, 7-Eleven, JetBlue and French retailer Carrefour. Separately, the individuals were also indicted for computer attacks on Citibank, PNC Bank and the Nasdaq stock exchange. Two of the five are in custody, the other three are at large.

The defendants sold American credit card numbers for $10 and European ones for $50.

--Michael Dell increased the offer for taking the company he founded private by 10 cents, from $13.65 to $13.75, thus angering the PC maker’s special committee advising on the buyout. After a second postponement, the next scheduled shareholder vote is Aug. 2.

--Netflix now has 28.6 million paid domestic customers, slightly behind Time Warner Inc.’s HBO, which had 28.8 million as of March 31, according to SNL Kagan. Netflix, like Amazon, has a ridiculous valuation of about 145 times estimated earnings over the next 12 months.

--One company I always hope does well is Sirius XM Radio Inc.    They reported record revenue for the second quarter, up 12% to $940 million from the same quarter last year. Sirius earned $125.5 million as it picked up 715,700 subscribers in the April-June period, the largest gain since the end of 2007. Sirius now has a record 25.1 million subscribers, up 9% from a year ago.

--About half of Detroit’s $19 billion in overall debt - $9.2 billion – represents pension and health benefits promised retirees. Detroit emergency manager Kevyn Orr has promised retired city workers, police and firefighters won’t see their benefits reduced for at least six months, but they will have to be reduced down the road. Needless to say, this is unsettling to retirees.

--Ground was broken on what is to be the world’s tallest building, in the central Chinese province of Hunan, but then work immediately stopped when authorities ruled the developer “did not complete the required procedures for seeking approval to start construction,” according to a local newspaper.

The building was already controversial because the company behind it, Broad Group, said construction would take just four months once the foundations were laid, which had many talking of safety concerns and whether the land surrounding the site could support the tremendous weight.

Last year, Broad Group attracted worldwide attention when it built a 30-story tower in just 15 days, using prefabricated units stacked one on top of another. The same technique was to be used for the new Sky City.

[Burj Khalifa in Dubai, the current world’s tallest building, took 47 months to build.]

The official paper of China’s ruling elite, the People’s Daily, has criticized the project.

Within five years, China could have as many as four times the number of skyscrapers as exist in the United States.

--This is gross... “An incident of poisoning in Beijing has been traced to yangrou chuanr, the ubiquitous lamb skewers sold on streets, in what could be more proof that rat, dog and cat meat are being widely used among street hawkers.” [South China Morning Post]

A 20-year-old tourist was found to have ingested rat poison while eating “lamb” skewers.

--But wait...there’s more! An investigation by China’s national television found that ice cubes served in soft drinks can be dirtier than toilet water. The nation’s largest fast-food chain KFC apologized for serving them at a Beijing branch with a bacterial count 13 times higher than toilet water and 18 times higher than the national standard. [South China Morning Post]

--According to a Labor Department study, on average, men log 8.46 hours a day versus 7.87 hours worked by women.

--Among the all-important “viewers 18 to 49,” Jay Leno is beating David Letterman by 43 percent and Jimmy Kimmel by 75 percent. Among “total viewers,” Leno delivers 3.3 million compared with Letterman’s 2.6 million and Kimmel’s 2 million.

No matter, Leno is history in February. 

--A state judge ruled that the Borgota Hotel Casino & Spa in Atlantic City can control how much weight that its cocktail servers gain. Twenty-two servers, known as “Borgota Babes,” objected to the policy.

Foreign Affairs

Egypt: Clashes between supporters and opponents of Egypt’s ousted president claimed at least 12 lives on Monday and Tuesday. Then the army threatened to turn its guns on those who use violence in the starkest warning yet of what both sides expect will be a bloody showdown in the streets. The military issued an ultimatum to the Muslim Brotherhood to sign up to a plan for political reconciliation by Saturday or face the consequences. The Brotherhood has accused the army of pushing the nation toward civil war and committing a crime worse than destroying Islam’s holiest site.

The army issued a statement on a Facebook page that it will not “turn its guns against its people, but it will turn them against black violence and terrorism which has no religion or nation.”

Army chief General Abdel-Fattah al-Sisi called on Egyptians to take to the streets and give him a “mandate” to take action against the violence convulsing Egypt since he ousted Morsi.

On Friday, it was announced Morsi is being held over allegations of links with Hamas and plotting attacks on jails in the 2011 uprising. A judicial order said Morsi would be questioned for an initial 15-day period.

Signaling its displeasure, the U.S. has delayed delivery of four F-16 fighter jets to Cairo. Washington has yet to decide what to do with $1.5 billion in aid it sends Egypt annually, $1.3 billion of which is earmarked for the military.

[As I go to post, renewed violence in Alexandria, Cairo and elsewhere has claimed at least another nine lives on Friday.]

Syria: U.N. Secretary-General Ban Ki-moon said on Thursday that the Syrian war had killed more than 100,000 people, a figure previously released by human rights groups. President Obama and his national security team still have yet to say what weapons they’ll provide the Syrian opposition, let alone when they’ll deliver them, five weeks after announcing they would; which was two years too late as I’ve pointed out ad nauseam.

Meanwhile, the U.S. and Russia are working on setting up a peace conference in Geneva. But, as has been the case all along, the opposition refuses to participate unless the conference is about Bashar al-Assad’s departure.

Separately, U.S. Gen. Martin Dempsey, chairman of the joint chiefs of staff, warned of “unintended consequences” from any greater U.S. involvement in Syria outside of recently announced light weapons aid for selected opposition forces.

Dempsey, in a letter to Senate Armed Services Committee members John McCain and Carl Levin, said, “We have learnt from the past 10 years that it is not enough to simply alter the balance of military power without careful consideration of what is necessary in order to preserve a functioning state. Should the regime’s institutions collapse in the absence of a viable opposition, we could inadvertently empower extremists or unleash the very chemical weapons we seek to control.”

Dempsey said McCain’s preferred establishment of a “no-fly zone” over Syria would cost $1 billion a month and would risk the loss of U.S. aircraft.

Dempsey also downplayed prospects for setting up buffer zones within the country near the Turkish and Jordanian borders.

[A report late Friday had Islamist extremist elements of the insurgency killing 150 Syrian soldiers in a battle for control of an Aleppo suburb this week, including 51 who were executed after they had surrendered, according to a leading human rights group that has been documenting the carnage on both sides.]

Iraq: Over 700 have been killed this month in car bombings and attacks, including 65 in Baghdad on Saturday night alone. July is on track to be the deadliest month in five years. The escalating violence is a direct result of the Syrian civil war as “the battlefields are merging,” according to the outgoing U.N. mission chief in Iraq.

Martin Kobler said, “Iraq is the fault line between the Shia and the Sunni world and everything which happens in Syria, of course, has repercussions on the political landscape in Iraq.”

The linkage between Syria and Iraq was also never more clear on Tuesday, as al-Qaeda’s affiliate in Iraq claimed responsibility for an audacious jailbreak from the infamous Abu Ghraib prison that unleashed somewhere between 500 and 600 militants, boosting al-Qaeda’s fortunes in both countries. Fighters stormed both Abu Ghraib and another top security prison on the outskirts of Baghdad, Taji. Both housed the country’s most senior al-Qaeda detainees. At least 26 members of the Iraqi security forces and more than a dozen prisoners were killed.

Just a disaster. Remember when we were told al-Qaeda was a spent force?

Iran: Hasan Rohani takes over as Iran’s new president on Aug. 3 and the Obama administration is seeking to improve relations immediately and restart talks over Tehran’s nuclear program. But with the White House looking to ease some sanctions related to humanitarian aid, Congress is split on whether sanctions should instead be tightened.

Last Sunday, in a meeting with departing President Ahmadinejad, Supreme Leader Ayatollah Khamenei said he did not believe direct talks with the United States would bear fruit.

“The Americans are unreliable and illogical, and are not honest in their approach,” Khamenei warned.

Rohani is slated to meet with Russian President Putin in Tehran on Aug. 12.

Israel: Efforts to restart Mideast peace talks between Israel and the Palestinians appear to have hit a roadblock. Israeli Prime Minister Benjamin Netanyahu said resuming negotiations with the Palestinian Authority was in Israel’s vital strategic interests, “And it is important in light of the challenges we face, especially from Iran and Syria.” Earlier, Israel said it would release a number of Palestinian prisoners.

But Palestinian officials said on Sunday that their key demand for resumption of talks remains: Netanyahu must accept Israel’s pre-1967 frontier as the starting point for redrawing the border of a future Palestinian state. They say Secretary of State John Kerry’s endorsement of that frontier is not enough and they need to hear it from Netanyahu himself. Palestinian President Mahmoud Abbas is skeptical of Netanyahu’s willingness to negotiate in good faith.

Israel and the Palestinians last held direct talks in 2010, but they were halted over the issue of settlement-building.

Jennifer Rubin / Washington Post

“The ascendency of Iran and its Hizbullah allies naturally make the Israelis far more nervous about its long term security. With no sign the United States intends to challenge the Iran-Syria-Hizbullah-Russia alliance, the Israeli government has little motivation to take on additional security risks.

“With Egypt convulsed and Jordan teetering under the weight of refugees, Israel’s more stable allies are not so stable. In particular without a fully functioning Egyptian government the potential for new security threats from Sinai are significant.

“The danger in talks, of course, is that Palestinian expectations rise and then are dashed, leading to violence (we’ve seen this pattern before). A former U.S. official tells me: ‘The risk now is of a quick breakdown that could even lead to violence in the West Bank.’....

“Moreover, this is a foolish misuse of American attention and stature, confirming both to our Sunni allies and the Iranian alliance that we are fundamentally unserious about the real threats to the region....

“In sum, Kerry’s efforts suggest the administration has learned nothing from its first term. The Palestinian-Israeli conflict is not, as Kerry insists, the center of the Middle East’s troubles. Pretending it is invites failure, American humiliation and aggression by the powers that should command our attention. In the meantime, the prospects for an improved life for the Palestinians and a less confrontational relationship with the Jewish state remain remote.”

Lebanon: Hizbullah said the European Union decision to blacklist the party’s military wing would have repercussions. Ammar Musawi, Hizbullah’s official in charge of international relations, said, “I won’t predict [what these repercussions will be], this has to do with our leadership. No one can condemn me and extend a hand to me simultaneously,” Musawi added, referring to Europe’s call that it can still engage in dialogue with the party.

Earlier, the EU’s 28 member states decided unanimously to blacklist Hizbullah’s military wing following Bulgaria’s formal accusation the Lebanese group was involved in a 2012 Burgas bombing that killed five Israeli tourists and a Bulgarian driver.

Musawi said, “Hizbullah is one body, with one command; military personnel are politicians and politicians are military personnel.”

Tunisia: The United States condemned the assassination of a leading opponent of Tunisia’s ruling Islamists. Tunisian MP Mohamed Brahmi was shot outside his home Thursday, the second such slaying this year. No need to investigate. The government did it.

Violent demonstrations ensued with casualties as I go to post.

Afghanistan: Three Americans were killed this week, at least 70 thus far this year.

North Korea: Kim Jong-un expressed his support for reconvening six-nation talks on ending Pyongyang’s nuclear weapons program. Beijing sent Vice President Li Yuanchao to attend ceremonies on Thursday marking the 60th anniversary of the end of the Korean War. Li reiterated Beijing’s call for the “denuclearization” and “peace and stability” of the Korean Peninsula and “dialogue.” But in official North Korean reports of the meeting, there was no talk of denuclearization.

Meanwhile, talks between Pyongyang and Seoul over the jointly-run Kaesong industrial zone collapsed, with the North accusing the South of “delaying tactics” by demanding that Pyongyang compensate for financial losses suffered by South Korean businesses when the North shut Kaesong down in April. The two sides actually got into a shoving match during negotiations.

China: Disgraced former Chongqing party chief Bo Xilai was indicted on charges of bribery, corruption and abuse of power. Bo could stand trial as early as next month. It is also thought an agreement with Bo may have already been reached.

Russia: For a brief moment, it appeared Edward Snowden would be granted temporary asylum in Russia until he can find a permanent home, such as in Venezuela, but then Snowden’s attempt to clear passport control inside Moscow’s Sheremetyevo International Airport were blocked by “bureaucratic difficulties.” Snowden has been in limbo there since June 23. The U.S. continues to demand that the Kremlin hand Snowden over.

And in the race for mayor of Moscow, Alexey Navalny, free while he appeals a five-year prison sentence for embezzlement, has vowed to mount a challenge to Putin’s former chief of staff, Sergei Sobyanin, whom Putin appointed as Moscow mayor in 2010 to end the 14-year rule of Yury Luzhkov.

But opinion polls show Navalny getting his butt kicked. In one survey conducted by the VTsIOM research center, Sobyanin would win 54%, with Navalny a distant second at 9%.

There is a good reason why Navalny was suddenly released from prison after his conviction. Putin can make him look bad, and discredit Navalny’s supporters, should Sobyanin win the Sept. 8 vote going away. Putin can also then lock up Navalny after the election.

Bulgaria: Police ended a blockade of Parliament that had trapped about a hundred lawmakers inside as protesters railed against rampant corruption. Thousands have been demonstrating over the past 40 days, but only this week did the protests turn violent. 60% of the people disapprove of the way Prime Minister Oresharski is running the country after inconclusive elections in May. The European Union has offered support for the protesters, a rare move for that body.

Spain: What a depressing week here with the horrific high-speed train derailment that claimed 80 lives in the northwestern part of the country. Excessive speed was clearly the cause, with reports saying the train took a curve at more than twice the speed limit, 190km/h (118mph) when the limit for that section of track is 80km/h.

Random Musings

--In a new Wall Street Journal/NBC News poll, President Obama’s job-approval rating fell to 45%, its lowest level since late 2011, while overall disapproval for Congress was at 83%, the highest ever for Journal polling.

[Just 32% of independents said they approved of the president’s job performance.]

Only 29% of Americans believe the country is on the right track, a 19-month low. The figure was 41% at the end of last year.

Obama’s approval rating matches that of George W. Bush at this stage in his second term, while Bill Clinton’s stood at 56%.

Only 32% believe their own congressional representatives deserve re-election. That said, the nonpartisan Cook Political Report lists just nine of the 435 House seats as “tossups” for next year.

And just 34% consider ObamaCare to be a good thing.

--It took a major lobbying effort by the Obama administration and Republican leaders in the House to narrowly defeat an amendment that would have curtailed the National Security Agency’s bulk collection of U.S. phone calling records as revealed by Edward Snowden.

But the amendment lost by just 217-205, showing still broad concern among the public. Backers of the measure were a mixture of conservative tea party members and the most liberal of the Democrats. A majority of Democrats bucked the president.

--President Obama, in his first address focusing on the economy in quite a while, said:

“With an endless parade of distractions, political posturing and phony scandals, Washington has taken its eye off the ball. I am here to say this needs to stop.”

Phony scandals? The IRS scandal is real, I am very uneasy over the NSA programs from the standpoint of their being easy to abuse, and I’m sickened that in the Benghazi tragedy, my real question may never be answered to satisfaction...why weren’t U.S. forces on standby in the region, particularly at Aviano, Italy, on the anniversary of 9/11?

--Peggy Noonan / Wall Street Journal

“In all the day-to-day of the IRS scandals I don’t think it’s been fully noticed that the overall reputation of the agency has suffered a collapse, the kind from which it can take a generation to recover fully. In the long term this will prove damaging to the national morale – what happens to a great nation when its people come to lack even rudimentary confidence in the decisions made by the revenue-gathering arm of its federal government? It will also diminish the hope for faith in government, which whatever your politics is not a good thing. We need government, as we all know. Americans have a right to assume that while theirs may be deeply imperfect, it is not deeply corrupt. What harms trust in governmental institutions now will have reverberations in future administrations.”

--Democratic Congressman Charlie Rangel said of the latest revelations involving Anthony Weiner, his acknowledgement that he engaged in a months-long sexting affair with a woman – a year after  he resigned from Congress in disgrace, “Knowing New Yorkers as I do...this is not going to be a story by the time we get to September the 10th,” and the Democratic primary for mayor. Fellow Democratic Congressman Jerrold Nadler said of his one-time colleague, Weiner “should not be running,” calling him a “serial liar” and a “morally bad person.” And other Democrats among New York’s congressional delegation uttered similar pronouncements.

Chief rival Christine Quinn stopped short of calling on Weiner to quit, but said, “This city deserves a mayor with the maturity and judgment to lead. The circus that Weiner has brought to the mayor’s race these last two months has been a disservice to New Yorkers.” [New York Post]

For his part, Weiner said he went back to sexting because his relationship with his wife, Huma Abedin, hit a rocky patch last summer, a year after resigning from Congress in disgrace. At a press conference, Weiner said:

“I think that a lot of people see the resignation was the end of the challenges my wife and I, my family faced, and it wasn’t. It was part of something that needed to get resolved and frankly it hadn’t been.

“It took some work to get to that place. It wasn’t a function that a certain moment in time came and went. It was a continuum. These things are behind me now.”

Oh brother. Carlos Danger and Sydney Leathers.

Weiner: “This campaign isn’t about me. It’s about a great city.”

Just stop, please.

Maureen Callahan / New York Post

“It’s also time to declare a moratorium on the line that Huma Abedin is the smartest, shrewdest, most level-headed and glamorous asset the Democratic Party has, and if she’s OK with Anthony, we should be, too. Clearly, there is something very wrong with Abedin – whether it’s simply that she shares her husband’s vaulting ambition or that she has a pathological need to be publicly humiliated, something’s up. When the New York Times is calling for you to take your sad assemblage of sexual compulsions out the door, you should consider that a wake-up call....

“Abedin took the good-wife act one step further at Tuesday’s press conference, admitting her collusion in this new lie: ‘We discussed all of this before Anthony decided to run for mayor,’ she said. So clearly, as Abedin sat for these joint interviews in which Weiner claimed to be a changed man, she knew that wasn’t the truth, and was happy to lie to a public that had been nothing but sympathetic toward poor, brilliant Huma, saddled with such a dud. Perhaps they’re a better match than we knew.

“ ‘So what I really want to say,’ Abedin continued, ‘is I love him, I have forgiven him, I believe in him, and as we have said from the beginning, we are moving forward.’

“How telling that Abedin didn’t acknowledge another harsh truth: It’s the New York electorate that decides how far – not her, not Anthony, and certainly not Carlos Danger.”

Editorial / New York Post

“In another day, Weiner would be a punch line instead of a leading candidate for mayor. Which is as revealing of New York politics as it is of Anthony Weiner.”

Editorial / Wall Street Journal

“Lewd tweets aside – there’s a line we never thought we’d write – Anthony Weiner ought to drop out of the New York City mayor’s race simply because of what he’s forced his wife to endure. Watching the elegant Huma Abedin stand next to her man Tuesday as he explained his latest sexually charged online exchanges was painful for a normal human being to watch. Mr. Weiner is not a normal human being....

“Along with Eliot Spitzer, another narcissist attempting a New York political comeback after humiliating his wife, Mr. Weiner has certainly enlivened an otherwise dull political year. The two men claim to have been chastened and redeemed by their falls from power, though it’s clear in both cases they only regret having been caught.

“The good news in Mr. Weiner’s case is that he has exposed his caldron of inner demons during the campaign. Mr. Spitzer may not unleash his furies again until he’s back in power. If New York voters won’t spare themselves, won’t they at least defeat these two to spare their wives?”

In a new Marist/NBC 4/Wall Street Journal poll released on Thursday, following the latest revelation, Weiner’s numbers were flaccid, with Christine Quinn vaulting into the lead at 25%, while Weiner had drooped to 16%; this after a previous poll had Weiner surging ahead of Quinn, 25-20.

And the above numbers were prior to Weiner’s additional revelation he sent explicit texts to as many as 10 women, including three after he left Congress.

[47% in the Marist/NBC/WSJ poll said Weiner should forge ahead, believing he deserves a second (third, fourth) chance, while 45% disagree.]

As for the comptroller’s race, a Quinnipiac poll has Eliot Spitzer and Scott Stringer in a dead heat. But the Marist poll gives Spitzer a 17-point lead, 49-32. Yes, a bit of a disparity.

And the New York Post reported that Silda Spitzer “is privately telling friends she plans to divorce her hooker-loving husband.” Long-suffering Silda is not joining Eliot on the campaign trail.

--According to a new Quinnipiac poll of Iowa voters, Gov. Chris Christie would tie with former Secretary of State Hillary Clinton if the 2016 presidential race were held today, each earning 41%. They split the independent vote, 36-37. Interesting.

In a matchup with Vice President Biden, Christie wins 49-32.

--In the coming Republican senate tussle between incumbent Wyoming Sen. Mike Enzi and Liz Cheney, a poll carried out by Conservative Intelligence Brief among likely Republican voters had Enzi defeating Cheney handily, 55-22. At the same time, though, 48% say Enzi has done enough to deserve re-election, while 28% favor giving the job to someone new.

--Former U.S. ambassadors to Japan include heavyweights Walter Mondale, former House Speaker Tom Foley and former Senate Majority Leaders Mike Mansfield and Howard Baker.

But now President Obama announced he is nominating Caroline Kennedy to replace another non-political heavyweight, John Roos (a top Obama fundraiser). 

This is not the time to be screwing around with this post. But I hope for our country’s sake, Caroline Kennedy proves me wrong.

--Former New York City and Los Angeles police commissioner William Bratton summed it up best this week, in describing the security surrounding Pope Francis’ visit to Brazil. It is “extraordinarily frightening.” Not just the Pope’s chaotic arrival when his driver apparently took a wrong turn, causing the motorcade to totally stop in a number of spots, but also in the way the police have been handling anti-government demonstrations.

You would have to be nuts to consider attending the 2014 World Cup and the 2016 Summer Olympics here. Clearly, despite solid economic growth the past decade that has masked very serious underlying problems until now, Brazil is not ready for prime time.

As for the Pope and his message, I love that he slammed drug traffickers as “merchants of death,” adding, “a reduction in the spread and influence of drug addiction will not be achieved by a liberalization of drug laws. Rather, it is necessary to confront the problems underlying the use of these drugs, by promoting greater justice, educating young people...accompanying those in difficulty and giving them hope for the future.” 

But back to the security issue, whether it is in Brazil or back in Rome, many of us are uncomfortable with Francis’ total lack of fear in being among the people. 

--In the above-mentioned WSJ/NBC survey, conducted just days after the George Zimmerman verdict, 54% of blacks polled said they “strongly disagreed” with the idea that America judges people on the content of their character, not the color of their skin. Just 30% of blacks felt that way in the month Mr. Obama took office as the first African-American president.

The figure is 79% when you include the 25% who “somewhat disagreed.” 

Just under one-third of all Americans, and 24% of whites, said the trial had decreased their confidence in the legal system, compared with 71% of blacks who felt that way.

Back in January 2009, 79% of whites and 64% of blacks described race relations as good.

Today, 52% of whites and only 38% of blacks feel that way.

In a Washington Post/ABC News poll conducted after the trial, 86% of blacks say they disapproved of the verdict – with almost all of them saying they strongly disapprove – and 87% saying the shooting was unjustified.

In contrast, 51% of whites say they approve of the verdict while just 31% disapprove. Further, 70% of white Republicans but only 30% of white Democrats approve of the verdict.

In the Post/ABC survey, 86% of African Americans say blacks and other minorities do not get equal treatment under the law. The number of whites saying so came in at 41%. 54% of whites say there is equal treatment for minority groups.

So last Friday, President Obama made his first extensive remarks on the Zimmerman verdict, saying he understood that young black males are sometimes followed as they shop in department stores or hear the locks of car doors click as they walk down a street. “It’s inescapable for people to bring those experiences to bear,” he said.

Obama added: “The African American community is also knowledgeable that there is a history of racial disparities in the application of our criminal laws - everything from the death penalty to enforcement of our drug laws. And that ends up having an impact in terms of how people interpret the case.”

And he concluded: “(Let) me just leave you with a final thought, that as difficult and challenging as this whole episode has been for a lot of people, I don’t want us to lose sight that things are getting better. Each successive generation seems to be making progress in changing attitudes when it comes to race.

“It doesn’t mean that we’re in a post-racial society. It doesn’t mean that racism is eliminated. But you know, when I talk to [his daughters] Malia and Sasha and I listen to their friends and I see them interact, they’re better than we are. They’re better than we were on these issues. And that’s true in every community that I’ve visited all across the country.”

What a total bunch of malarkey, Mr. President. Once again, you treat us like chumps.

“We should also have confidence that kids these days I think have more sense than we did back then, and certainly more than our parents did or our grandparents did, and that along this long, difficult journey, you know, we’re becoming a more perfect union – not a perfect union, but a more perfect union.”

Mr. President, I’m sure you’ve heard about all the hate on the Internet and how today’s social media only exacerbates race issues, not make things better.

Jennifer Rubin / Washington Post

“President Obama’s extensive remarks in the White House Briefing Room this afternoon were as surprising as they were gratuitous.    He had already made one statement asking citizens to respect the George Zimmerman verdict...

“In fact, Obama undid some of the closure he provided in his earlier written statement by intoning: ‘If a white male teen was involved in the same kind of scenario, that, from top to bottom, both the outcome and the aftermath might have been different.’ So the jury was biased? The trial unfair? I can’t fathom why the president of the United States would stoke that sort of second-guessing.

“The media seems fixated on ‘how personal’ the speech was. I am baffled by that response. He is the president of the United States, the only elected leader there to represent us all and to provide cohesion, but here he was channeling Oprah Winfrey. He cheered for emotionalism and for the perspective that insists it is always about race....

“The jury system is all about rising above past grievances, grudges and suspicions. The Zimmerman jury put down its historical baggage, but the president asks that we sympathize with and encourage those who won’t.

“Perhaps he is laying the groundwork for the obvious: After stirring emotion, the president can’t deliver a civil rights prosecution of Zimmerman because the facts aren’t there....And of course his own FBI found no evidence of racism. Odd that he didn’t mention that....

“The presidency is not a parochial office, yet Obama fosters a view of America that says African Americans can’t help but see the country in terms of race. That is a sad and depressing view of our country. It suggests that African Americans can’t judge their fellow citizen individually, by the content of their character....

“The president at the very end argued that ‘those of us in authority should be doing everything we can to encourage the better angels of our nature, as opposed to using these episodes to heighten divisions.’ Too bad he doesn’t follow his own advice.”

Christopher Caldwell / Financial Times

“(One) thing is clear: not a shred of evidence emerged at trial to indicate that Mr. Zimmerman’s shooting of Martin was motivated by racism. His mixed neighborhood was a fifth black. Before he did anything else about Martin he called the police. His head was bloodied and his clothing torn when they arrived, consistent with his story of self-defense. He does not fit the stereotype of a segregationist southern white. Of Peruvian descent, he is, according to contemporary taxonomy, a ‘person of color’ himself. Race did not come up during deliberations, according to one juror who gave a post-verdict interview to CNN.

“Young American men of modest means murder each other frequently without drawing media attention. What attracted activists and the press to this case was its appearance of racism, its (ultimately illusory) conformity to Jim Crow archetypes. It has mystified legal experts that prosecutors sought a conviction for second-degree murder, which in Florida requires that the perpetrator evince ‘a depraved mind regardless of human life.’ But prosecutors were trapped in a circular logic. No one disputed Mr. Zimmerman killed Martin. The dispute was over whether Mr. Zimmerman acted out of racism. Anyone who assumed he did would think him depraved by definition. The prosecutor Angela Corey, criticized for seeking a murder rap, replied: ‘We truly believe the mindset of George Zimmerman and the reason he was doing what he did fit the bill for second-degree murder.’ She was wrong, but of course she believed this. It was her job to.

“The Zimmerman case is settled, but not over. Civil rights law, if not used carefully, can degenerate into a way to expose to double jeopardy those local defendants the federal government thinks ill of. The Florida trial shows the evidence for a federal civil rights case to be weak and it is not clear on what grounds such a case could proceed. But that does not mean no case will be brought.”

I told you I followed the trial closely. In the immediate aftermath I watched various supporters of a conviction come on Fox News and not one acknowledged the facts of the case, instead flat out lying, or refusing to understand the truth.

This was a terrible tragedy. But as Michael Goodwin wrote in the New York Post:

“If Obama felt the need to say something, duty required him to emphasize the facts instead of endorsing racial manipulation. Sadly, though, his remarks follow a recent pattern where he and (Rev. Al) Sharpton sing from the same page. Both distorted the case to paint a broad picture of blacks as victims of white racism and ignored Zimmerman’s half-Latino family.”

--New York Police Commissioner Ray Kelly, in an op-ed for the Wall Street Journal:

“Since 2002, the New York Police Department has taken tens of thousands of weapons off the street through proactive policing strategies. The effect this has had on the murder rate is staggering. In the 11 years before Mayor Michael Bloomberg took office, there were 13,212 murders in New York City. During the 11 years of his administration, there have been 5,849. That’s 7,383 lives saved – and if history is a guide, they are largely the lives of young men of color.

“So far this year, murders are down 29% from the 50-year low achieved in 2012, and we’ve seen the fewest shootings in two decades.

“To critics, none of this seems to much matter. Sidestepping the fact that these policies work, they continue to allege that massive numbers of minorities are stopped and questioned by police for no reason other than their race.

“Never mind that in each of the city’s 76 police precincts, the race of those stopped highly correlates to descriptions provided by victims or witnesses to crimes. Or that in a city of 8.5 million people, protected by 19,600 officers on patrol (out of a total uniformed staff of 35,000), the average number of stops we conduct is less than one per officer per week.

“Racial profiling is a disingenuous charge at best and an incendiary one at worst, particularly in the wake of the tragic death of Trayvon Martin. The effect is to obscure the rock-solid legal and constitutional foundation underpinning the police department’s tactics and the painstaking analysis that determines how we employ them.

“In 2003, when the NYPD recognized that 96% of the individuals who were shot and 90% of those murdered were black and Hispanic, we concentrated our officers in those minority neighborhoods that had experienced spikes in crime....

“It’s understandable that someone who has done nothing wrong will be angry if he is stopped....

“In a similar vein, our detractors contend that the NYPD engages in widespread, unwarranted spying on Muslim New Yorkers. Again, this is a sensational charge belied by the facts....

“The NYPD has too urgent a mission and too few officers for us to waste time and resources on broad, unfocused surveillance. We have a responsibility to protect New Yorkers from violent crime or another terrorist attack – and we uphold the law in doing so.

“As a city, we have to face the reality that New York’s minority communities experience a disproportionate share of violent crime. To ignore that fact, as our critics would have us do, would be a form of discrimination in itself.”

[By the way, the Bronx is on schedule to have fewer than 100 murders this year, “for the first time since 1966, when Mickey Mantle was in centerfield at Yankee Stadium,” said Mayor Michael Bloomberg the other day. The Bronx has about the same number of people as Philadelphia, but had 36 murders in the first half of the year, compared with 116 in the City of Brotherly Love. Brooklyn, with 71 homicides, roughly has the same population as Chicago, which had 188.]

People forget just how awful New York was before the 20 years of Rudy Giuliani and Bloomberg.

Kyle Smith wrote the following conclusion as part of an extensive look at Gotham, July 1993, for an op-ed in the New York Post:

“In his forthcoming memoir, (former Mayor David) Dinkins blames ‘racism, pure and simple,’ not residents fed up by a city out of control, for his narrow 1993 defeat by Rudy Giuliani.

“Now it seems likely that we’re going to elect another conventional liberal mayor, for the first time in two decades. As Dinkins did during his successful 1989 campaign, most of the rival Democratic candidates are playing for votes by trying to turn citizens against the police (though a recent poll found that Commissioner Ray Kelly...enjoys an approval rating of 75%, including more than 60% among blacks).

“The 20 years of the Giuliani-Bloomberg era have been a pleasant vacation from the decades-long decline that preceded it. Today we joke about soda bans instead of how to react to armed robbers. But soon New York may be back doing what it does best: Being Crazytown, USA.”

--The other week I told you of the latest Ground Based Interceptor test failure in the U.S. missile defense system and that of 16 tests staged since October 1999, the GBI scorecard is not good; 8 hits and 8 misses.

So now Gen. Robert Kehler, who heads U.S. Strategic Command, said regarding the 26 Ground Based Interceptors fielded today in Alaska and the four additional ones in California, “Whatever it takes to prosecute the intercept is what we would do.”

As Elaine M. Grossman writes in Global Security Newswire, “Translation: If an adversary tries to nuke the United States, the Pentagon may have to fire off a number of the troubled GBI darts in the hopes that at least one would hit its bull’s eye.”

Defense officials recently announced a move to add 14 more interceptors, citing the heightened risk from North Korea.

Yet another reason why I always recommend you sleep with one eye open.

--In a highly publicized case in New Jersey, an 18-year-old boy was sentenced to five years in prison for causing a collision that killed a 61-year-old mother when the 18-year-old’s car crossed a double yellow line and crashed head-on.   The boy had been drinking, but also texting on his cellphone.

The judge, “in a loud and emotional outburst from the bench,” as described by Star-ledger reporter Bill Wichert, “warned about the dangers of texting while driving.

“ ‘Eleven of you will die in this country every day because of texting and driving!” said Superior Court Judge Robert Reed. “For God’s sake, stop it.”

--Jonah Goldberg / Los Angeles Times

“(It) was no surprise that the encomiums poured forth in response to the news (of the death of reporter Helen Thomas). From President Obama, the Gridiron Club, the White House Correspondents Assn., Hamas.

“Hamas was less interested in Thomas’ role as a path-breaking feminist icon than the fact that, at a 2010 White House Jewish heritage event, she growled into a camera that the Jews should ‘get the hell out’ of Israel (or Palestine, in her telling) and go back to Poland, Germany and America. That statement, cheered by Hizbullah at the time, was too much for Hearst, which quickly ushered her off to retirement, where she cultivated her status as a truth-teller martyred by the Zionists who control everything in America.

“In most obituaries this incident comes out of the blue, often chalked up to the fact her parents were Lebanese immigrants (an odd slap at Lebanese Americans). There’s no mention that her hatred of Israel, and supporters of Israel, was a constant for most of her career....

“The New York Times identified one scoop: Thomas’ reports of her phone conversations with Martha Mitchell, the emotionally disturbed wife of Watergate-era Atty. Gen. John Mitchell. Mrs. Mitchell had a habit – owing in part to her reported alcoholism – of telephoning whoever would listen to her rants. Most reporters stopped exploiting Mitchell once it became clear how ill the woman was. Not Thomas. She happily transcribed the calls, even reporting how Mitchell’s young daughter was begging her mother to get off the phone with Thomas: ‘Don’t talk to her, she’s no friend.’

“Still, as time went by, the awards poured in as she became a Washington institution... But the ‘odd thing about her awards and citations,’ (writer Jonathan) Chait noted, ‘is that they almost never mention any specific contributions she has made to journalism save for being female and, well, old.’

“Or as journalist Andrew Ferguson once put it, ‘Everybody admires Helen, though nobody can tell you why.’

“The best answer I can come up with: She had a long tradition of existence here in Washington.”

--Every now and then, with I imagine half my readership turning over every few months (hopefully not that great a percentage), I feel compelled to tell you why I insist on spelling Hezbollah, “Hizbullah.”

It goes back years. Two newspapers of note, the Jerusalem Post and Lebanon’s Daily Star, both spelled it Hizbullah, while everyone else spelled it Hezbollah.

When you listen to Israeli Prime Minister Benjamin Netanyahu, who I’ve called the smartest man on the planet, pronounce the terror group’s name, it’s “Hiz-bullah.”

But a while back for some reason, both the Post and Daily Star changed their spelling to Hezbollah.

I refuse to change it because it screws up the archives. Recall in the days of Yassir Arafat, it was also Yasser and Yasr. Us writers hate this stuff. Just sayin’.

--Ireland’s recent country-wide 16-day dry spell was its longest since 1995. Noteworthy, because historically, July and August can be miserable. [May and September are consistently better, I can tell you from personal experience.]

--San Francisco television station KTVU fired three producers responsible for being duped and reporting the fake names of the flight crew of Asiana Airlines flight 214, including “Sum Ting Wong.”

--I have no problem with the attention paid to the birth of the royal baby, George Alexander Louis. And as opposed to Kim Kardashian, who hasn’t been seen in public since the birth of her baby because, as Us Weekly reported, she won’t leave the house until she’s ready to “debut her post-baby body,” obviously Kate had no problem displaying her ‘mommy tummy.’

May the future King George, and his parents, have long and happy lives.

---

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

God bless America.
---

Gold closed at $1321
Oil, $104.70

Returns for the week 7/22-7/26

Dow Jones +0.1% [15558]
S&P 500 -0.0% [1691]
S&P MidCap -0.5%
Russell 2000 -0.2%
Nasdaq +0.7% [3613]

Returns for the period 1/1/13-7/26/13

Dow Jones +18.7%
S&P 500 +18.6%
S&P MidCap +20.4%
Russell 2000 +23.4%
Nasdaq +19.7%

Bulls 51.5
Bears 19.6 [Source: Investors Intelligence]

*Reminder for new readers...I do have an iPad app.

Have a great week. I appreciate your support.

Brian Trumbore



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-07/27/2013-      
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Week in Review

07/27/2013

For the week 7/22-7/26

[Posted 12:00 AM ET]

Washington and Wall Street

This was a week for earnings reports and housing data, but this coming week brings us a two-day Fed meeting, a first look at second-quarter GDP, and a key labor report on Friday, as well as more on the earnings front.

In a Bloomberg survey of economists, 50% expect the Federal Reserve to start tapering its $85 billion-a-month bond-buying program in September so the Street will be looking for clues in next week’s Open Market Committee statement as to whether this will indeed be the case, though a key for the Fed and any action it may take in the fall will be the jobs reports for both July and August.

Meanwhile, looking ahead to Congress’ return in the fall following its coming recess, both sides are lining up for what promises to be a contentious budget debate tied to the debt-ceiling. Republicans will be demanding further spending cuts, while President Obama has made it clear he will not sign into law Republican spending bills that slash domestic programs even more deeply than sequestration has. The initial key deadline is end of September, just two months away, when Congress must authorize a new measure to fund the government for the fiscal year beginning October 1.

The White House is looking to roll back the sequester, and some Republicans themselves want to see the cuts to defense eliminated. That said, the outlook for a long-term budget deal is not good.

This week the president hit the road for a series of speeches on the economy and his proposals and as House Speaker John Boehner said, “The president wants to raise taxes so he can do more stimulus spending. And the fact is, it’s his sequester, and if we’re going to get rid of his sequester, we’re going to have to look for smarter spending cuts in order to do that.”

The two sides are about $80 billion apart in their overall spending proposals.

As for the debt ceiling, it seems a decision on this will need to be reached by end of October, so it’s possible there will be another interim spending deal until the debt ceiling deadline.

Lawmakers break next week and don’t return until Sept. 9.

Regarding the economic news of the past five days, existing home sales in June came in less than expected, but the median home price was up 13.5% from June 2012, while new home sales for the month rose 38.1% over year ago levels to their best pace since May 2008. 

But the news from some homebuilders was not that good, even as the average rate on a 30-year fixed fell to 4.31% on the week, down from the two-year high of 4.51% set two weeks ago. With the gain in yield for the 10-year this past week, however, mortgage rates should inch back up.

The headline figure on durable goods (big-ticket items) for June was a strong 4.2%, but ex-transportation was unchanged.

On to earnings...the good and the bad.

McDonald’s fell short on the top line (revenues) and bottom line (earnings). Global comp sales rose just 1%.

DuPont fell short on the top, beat on the bottom. Overall revenues were down 1%, down 8% in Asia.

Apple beat on the top and bottom. More below.

AT&T fell short on the bottom, beat expectations on the top, though overall revenue was up just 1.6%.

Netflix beat on earnings, matched on revenues.
Travelers handily beat on both the top and bottom.

PepsiCo handily beat on eps, but just met expectations on the top line with revenues up only 2% overall from year ago levels.

Ford smashed on both the top and bottom line...more below.

Ditto GM.

Boeing beat handily on the top and bottom.

Caterpillar fell way short on both the top and bottom, and lowered guidance as CAT continues to suffer from the slowdown in China.

Dow Chemical beat on the top and bottom, but overall revenues were up a paltry 0.4% year over year. As market watcher Derrick Coleman would have said, whoopty-damn-do.

3M matched expectations, with overall revenues up just 2.9%.

Amazon fell woefully short on the bottom line, fell short of expectations on the top, yet the stock hit another all-time high. Absurd. More below.

Eli Lilly handily beat on the top and bottom, with overall revenues up 6%.

Norfolk Southern missed badly and revenues fell a whopping 17% from a year ago.

Qualcomm beat on the top line and was bullish with its guidance.

Visa handily beat on top and bottom.

And Facebook far exceeded all expectations as the shares soared in response. More below.

Bottom line, I’d give this week’s reports a better grade than last week’s, but you still have some very high-profile multi-nationals with meager, or zero growth in revenues and that obviously impacts future hiring. Any future improvement in tone in Europe, for example, could easily be offset by the slowdown in China.

I also will continue to emphasize the abysmal Obama foreign policy, best exhibited by a Middle East in flames. There isn’t one positive the administration can point to. Since the president has taken office, the region has only gotten decidedly worse.

I understand why the Street ignores what is transpiring in this critical part of the world most days, unless oil is soaring. But Obama’s failures in this theater will eventually force us all to take notice even if we prefer to spend our time looking at royal baby photos.

As Karl Rove summed up in a Wall Street Journal op-ed:

“It’s impossible to know how much worse things might get between now and the end of Mr. Obama’s presidency. It’s fair to say that it will take many years to clear away the foreign policy rubble accumulated during his years in the Oval Office.”

Europe

Investors took heart in the release of a flash estimate on manufacturing in the eurozone for July, 50.1, a 24-month high and above the 50 dividing line between growth and contraction. OK, a 0.1 fraction above. But, hey, it is better than the 48.8 final reading for June, as put out by Markit.

The eurozone has contracted for six consecutive quarters so much was made of the figure, with the reading on services rising to 49.6 from 48.3, and a composite reading on the two hitting 50.4 from 48.7, the best since Jan. 2012.

And, yes, Germany’s PMI rose to 50.3 from 48.6 (services 52.5 from 50.4), while France hit a 17-month high on the manufacturing front, 49.8, up from 48.4 in June (services 48.3 from 47.2).

There also continues to be good news from the U.K., with one reading on exports at its best level since the financial crisis, while an initial reading on second-quarter GDP rose 0.6% over Q1 (2.4% annualized). Not bad, not bad at all.

So what to make of all this? I’ve been touting Britain’s recovery for some time now and most feel the place is six to nine months ahead of the eurozone in its recovery. I don’t disagree with this.

But some were almost giddy with the eurozone’s PMI figures and I just have to pour cold water on these folks. Of course, at some point, and maybe that is now, Europe bottoms.

But we are far from the point where you can give the all-clear signal. Overall, you still have rising unemployment in the region, a credit squeeze (loans to the private sector have contracted for 14 months), sky-high government debt levels, future bailout fears, major political uncertainty and the continued failure to put together a true banking union.

More specifically, while Portugal’s Prime Minister Coelho said he is determined to keep his nation’s 78 billion-euro bailout program on track, and while Portugal’s president gave the coalition government until 2015 to fulfill its mission, with no snap election as feared just a week earlier, no one believes the Portuguese government survives and GDP is still supposed to fall another 2.3% this year.

In Greece, owing to Germany’s September 22 election, Athens won release of another 2.5 billion-euro loan installment just to get it through the German vote; with the other Euro nations not wishing to rock the boat. Germany may do just that after.

Spain did report that unemployment had declined from 27.2% to 26.3% in the second quarter, and some of its banks reported better results, but this is smoke and mirrors. Bad debt on the banks’ books continues to rise at a rapid pace, while the government has been raiding state pension funds to meet bonus payments and tax refunds. Just remember, Spain’s housing crash still has yet to be fully accounted for.

Italy’s debt hit 130% of GDP, while eurozone debt overall is at 92.2%. These figures keep rising and 1.2% growth, the current outlook for the region in 2014, is hardly the kind that begins to put a dent in government debt levels.

But it’s time for Europe to go on vacation. I could use one myself. 

China and Japan

HSBC issued its flash report on manufacturing in China for the month of July and it wasn’t good, 47.7, down from June’s reading of 48.2 and the weakest since last August. The government’s official news organizations reported that 7% is now the bottom line for growth; that Premier Li Keqiang, ultimately responsible for the economy, won’t let it go below that level.

So the government unveiled a series of small steps, including tax breaks for small businesses, reduced fees for exporters and opening up of railway construction, with perhaps a broader set of reforms on the agenda for an October Communist Party meeting. A bank deposit-insurance scheme could be on the table then.

And here’s an interesting tidbit regarding China from Deutsche Bank’s David Bianco (and Bloomberg). China accounts directly for some 5% of S&P 500 earnings, which might not seem like a lot but it’s a bigger chunk than the 2% that comes from housing in the U.S. [Let alone China’s massive impact on the commodities front. Just ask Australia.]

But a few weeks ago I was talking of how President Xi Jinping was exhibiting disturbing Mao-like tendencies and the other day the Washington Post editorialized:

“China’s new president, Xi Jinping, appears to have concentrated his power with remarkable swiftness in recent months. ‘Xi has outmaneuvered his rivals, his colleagues, and even his mentors,’ reports the European Council on Foreign Relations. But to what end? The early hopes that Mr. Xi would be a political reformer are vanishing. Instead, he seems determined to impose more Communist Party control on both state and society while still pursuing economic modernization. It’s a familiar recipe and profoundly misguided.

“On July 16, police detained one of China’s most prominent human rights activists, Xu Zhiyong, who has been at the forefront of a movement to defend citizens’ rights based on the constitution and the rule of law. Mr. Xu, a legal scholar, is among those who believe that the best way to battle the system is to demand that it follow its own rules – and not the whims of the party. He has also been outspoken against corruption and the widespread practice of Communist officials enriching themselves with bribes and accumulating hidden wealth. The New York Times reported that he was detained in reprisal for this campaign.

“The strange thing is that Mr. Xu’s positions are not far from those articulated by his new president. In December, Mr. Xi gave a speech on China’s constitution. He declared, ‘We must firmly establish, throughout society, the authority of the constitution and the law and allow the overwhelming masses to fully believe in the law.’ These words heartened some reformers who thought they might signal that Mr. Xi would put less emphasis on the party and more on the rule of law.

“But it has not happened....

“Moreover, in recent weeks Mr. Xi has been promoting still more power and prominence for the party in the nation’s affairs. He has called on party members to toe a ‘mass line’ against excess and extravagance, words that harken back to the revolutionary era of Mao. Mr. Xi seems to want to pursue economic modernization without giving an inch to its political equivalent. China’s leaders like this formula, but it has always carried risk, which now may deepen. The people taste economic good times...(and) they may feel empowered and entitled to a political voice. It won’t happen all at once, but such aspirations can’t be easily extinguished by just slamming a fist on the table, arresting more dissidents and invoking the words of Mao.”

Turning to Japan, Prime Minister Shinzo Abe got his desired victory in the upper house elections, with his Liberal Democratic Party taking 65 of the 121 seats up for re-election, thus securing a comfortable majority. The LDP now controls both houses which paves the way for three years of stable government, barring the ever-so-common Japanese corruption scandal or in-party fighting that has brought down many a government in the past.

So the feeling is Abe will be able to break through the legislative gridlock that has characterized Japanese politics and that he’ll push through needed, though highly controversial, economic reforms. Recall, while growth due to aggressive monetary policy and infrastructure projects is slated to be in the 2% range this year, the economy is only forecast to grow 1.2% in 2014.

And you have the issue of many of the successful candidates in Abe’s LDP having strong ties to protectionist lobbies that seek to block change, which is the history of the LDP.

Last time, I also told you that Abe seeks to change the pacifist constitution, which has unsettled Japan’s neighbors, but Abe doesn’t have the two-thirds majority needed to effect changes on that front. [I just read the latest issue of The Economist and it says Abe can cobble together a 2/3s majority. Time to bone up on my Japanese politics.]

On Thursday, though, Tokyo expressed its displeasure over Chinese military and maritime activity near the disputed Senkaku islands in the East China Sea (called Diaoyu by China). Japan scrambled its fighter jets to follow a Chinese early warning plane flying between Okinawa and the disputed area, while at the same time, four Chinese coast guard vessels were spotted near the Senkakus. The Chinese Defense Ministry said it had a right to be operating in the area.

Meanwhile, regarding the Japanese economy, exports were up 7.4% in June from a year earlier, up 8.6% to the European Union, the first such jump in 21 months, so the weaker yen continues to be a huge help.

But then the Japanese stock market tanked 3% on Friday. Data released that day showed Japan’s inflation goal of “two percent in two years” looked to be on track as consumer prices rose in June, up 0.4% from a year ago on core (ex-food prices), the first positive reading in 14 months and the highest since November 2008. But this bolstered the yen, which hurts exporters.

And further, if you took higher energy bills out of the inflation equation, prices were down, not good at all.

The much-needed consumer demand in Japan has yet to emerge.

One other item of a positive nature, staying in the region. South Korea’s GDP for the second quarter was a better than expected rise of 1.1% over Q1.

Street Bytes

--Stocks finished the week little changed, with the Dow Jones advancing 0.1% to 15558, extending its winning streak to five, but the S&P 500 declined a fraction of a point, while Nasdaq gained 0.7%. We could see fireworks this coming week.

--U.S. Treasury Yields

6-mo. 0.06% 2-yr. 0.31% 10-yr. 2.56% 30-yr. 3.62%

--A number of U.S. Senate Democrats are circulating a letter supporting Janet Yellen to be the next chair of the Federal Reserve; not good news for the other frontrunner to replace Ben Bernanke, Lawrence Summers. But the White House said it wouldn’t be making a selection until the fall.

Separately, Robin Harding of the Financial Times pointed out that Summers “made dismissive remarks about the effectiveness of quantitative easing at a conference in April, raising the possibility of a big shift in U.S. monetary policy if he becomes chairman of the Federal Reserve.”

“ ‘QE in my view is less efficacious for the real economy than most people suppose,’ said Mr. Summers according to an official summary of his remarks at a conference organized in Santa Monica by Drobny Global, obtained by the Financial Times.”

However, in these same remarks, Summers said that while QE does little good it does little harm. “If QE won’t have a large effect on demand, it will not have a large effect on inflation either.”

--SAC Capital Advisors LP, one of the nation’s largest hedge-funds, was indicted and accused of acting as a criminal enterprise on a “scale without known precedent.” Prosecutors said the firm encouraged the use of illegal tips and was a “magnet for market cheaters,” according to U.S. Attorney Preet Bharara. But prosecutors didn’t have enough evidence to personally charge founder Steven A. Cohen, a mega-billionaire.

An SAC spokesman said the firm, with assets of $14 billion, much of which is Cohen’s own money, “never encouraged, promoted or tolerated insider trading and takes its compliance and management obligations seriously.”

Bharara said the U.S. isn’t freezing any assets, but sources say the government could be looking for up to $10 billion in a settlement, which contrasts with the hundreds of millions allegedly made in insider trading. It would wipe out Cohen’s wealth.

The government went after Cohen’s reputation, saying he failed to supervise analysts and portfolio managers, nor ask questions about some of the information they were obtaining.

No major financial firm has survived a criminal indictment. SAC’s clients have been looking to withdraw billions from the firm, especially after SAC agreed to a record $616 million civil settlement with the SEC over insider-trading charges just a few months ago.

Reportedly, five former SAC employees are cooperating with investigators. Eight have been charged criminally with insider trading. The company has some 1,000 workers who are obviously now scrambling for new jobs. SAC is also one of the largest commission generators for Wall Street.

So, do the banks continue to support SAC’s stock and derivatives trades? As of today, yes.

Aaron Elstein / Crain’s New York Business

“Look for a major public-relations campaign from Mr. Cohen. When junk-bond king Michael Milken was facing a host of securities-law violations a generation ago, his PR people pulled out all the stops demonstrating what a generous man he was, and Mr. Milken still speaks regularly today about cancer research and education reform. For his part, Mr. Cohen sits on the board of the Robin Hood Foundation, a poverty-fighting organization that boasts a veritable all-star team of directors, including Geoffrey Canada of the Harlem Children’s Zone and Marion Wright Edelman of the Children’s Defense Fund. Directing the board from the business world, there is General Electric CEO Jeffrey Immelt, CNN President Jeff Zucker and a slew of Wall Street luminaries, including former JPMorgan investment banking chief Jes Staley and hedge fund superstar David Tepper. Expect some of these luminaries to come forward and explain that Mr. Cohen does a lot of good that most people don’t know about.”

And as the Wall Street Journal opined:

“(Why) hasn’t the government indicted Mr. Cohen? Can a criminal enterprise be run by someone who isn’t himself a criminal? The Journal reported recently that prosecutors lacked the evidence to indict Mr. Cohen before a statute of limitations runs out this month.

“And in contrast to recent successful insider-trading prosecutions, this case appears to feature little wiretap evidence and few cooperating witnesses. The simple fact is that people commit crimes. Buildings don’t.”

--Apple reported it sold 31.2 million iPhones last quarter, far better than expected, and the company’s shares, beaten down since hitting its all-time high of $705 last September, rallied some on the news to $440.

Apple topped earnings and revenue expectations overall. Sales of the iPad, though, missed forecasts and at 14.6 million, were far short of last year’s 17 million, and overall revenue of $35.3 billion was nearly flat with last year’s $35 billion. Net income came in at $6.9 billion compared to $8.82 billion a year ago.

And in a further sign of China’s slowing economy, Apple’s revenues there were down 14% from year-ago levels, down 43% from the first quarter.

--According to Strategy Analytics, Samsung has become the most profitable mobile phone company in the world, overtaking Apple. Samsung’s handset division had an estimated operating profit of $5.2 billion in the second quarter*, with Apple’s iPhone operating profit estimated at $4.6 billion.

Total mobile phone shipments were 386 million in the April-to-June period, up 4% over last year’s pace.

But global smartphone shipments hit 230 million in the quarter, 47% higher than in the same period of 2012. Of those, 33.1% were manufactured by Samsung, 14% by Apple, the latter’s smallest percentage for three years. [BBC News]

*Overall, Samsung earned a record $7 billion in the quarter.

--Shares in Facebook soared 28% following release of its better-than-expected second-quarter results, up $7.50 to $34.00, as it reported a big increase in mobile advertising revenue.

Following its IPO last year, the stock slid precipitously largely because of its lack of a mobile presence, but in the latest quarter, it accounted for 41% of Facebook’s ad sales.

Mobile ad spending in the U.S. is expected to jump 75% this year to $7.7 billion, out of total U.S. online ad spending of $41.9 billion, according to eMarketer and the Wall Street Journal.

According to comScore, American consumers spent 225.4 billion minutes on Facebook’s mobile app and Web pages, double the year ago level.

--Amazon posted an unexpected loss and reported revenues below expectations, thus fueling further questions about the company’s future profitability.

Overall sales growth was 22%, 30% in North America, but Amazon continues to invest heavily in new warehouses and data centers.

Nonetheless, Amazon shares finished the week at $312, an all-time high, even though it trades at a multiple 100 times estimated 2014 earnings. 

As I’ve always said, as ridiculous as the valuation looks for Amazon, those attempting to ‘short’ it have perpetually had their faces ripped off.

--McDonald’s, in reporting the aforementioned tepid results for the second quarter, said it expected global same-restaurant sales in July to be flat. Sales in the U.S. increased just 1%, slightly below expectations, as the company loses out to rivals Wendy’s and Burger King.

--Starbucks reported super results for its fiscal third quarter, net income of $417.8 million, 55 cents a share, exceeding analysts’ expectations. The company’s push into food has been a big driver. Sales at stores open at least 13 months gained 9% in the Americas, also well ahead of analysts’ estimates. Global same-store sales increased 8%. Not exactly McDonald’s-like.

--GlaxoSmithKline admitted senior executives in its China office appear to have broken the law amid a bribery scandal, allegedly involving cash to doctors to prescribe the firm’s drugs. Chinese authorities have been very public in their investigation into the pharmaceutical giant. Four Chinese executives at GSK have been taken into custody.

--The Federal Housing Finance Authority announced a settlement with UBS in the amount of $885 million over claims the Swiss banking giant violated securities laws in its sales of mortgage-backed securities to Fannie Mae and Freddie Mac.

--For the first time in two decades, a car built by Detroit’s Big 3 beat out Japan and Europe’s best to win the top spot among all sedans as ranked by Consumer Reports....the 2013 Chevy Impala, which scored so well it is on equal footing with luxury models like Lexus. The only two models with scores higher than Impala’s 95 are for the BMW 135i and the all-electric Tesla Model S, which earlier won raves from CR as the best model it has tested in years.

--General Motors posted a profit of $1.2 billion in the second quarter, down from $1.5 billion in the same period a year earlier, with revenues up 4%. GM’s losses in Europe slowed to $110 million from $394 million, but CEO Dan Akerson cautioned a turnaround across the pond “isn’t in sight yet.”

Meanwhile, Ford Motor Co. also reported second-quarter profit of $1.2 billion, with revenue rising 14.4%. Its North American unit has earned $2 billion or more in five of the past six quarters. Ford, like GM, also narrowed its losses in Europe, though in its case, the head of European operations said the automaker plans to break even in Europe by 2015.

--The Energy Information Administration estimated world-wide use of energy will surge 56% by 2040 compared with 2010 levels, with the growth driven by China and India, which will account for half the growth.

But long-range projections are largely useless. As energy analyst Fadel Gheit told the Journal, “Nobody had predicted five years ago that the U.S. would be self-sufficient in natural gas. Now we have gas that we don’t know what to do with.”

--The International Energy Agency forecast Europe’s annual demand for oil would contract by 1.7% to 13.5 million barrels per day this year, after slumping 3.9% in 2012; a further indication of Europe’s ongoing economic problems.

--Halliburton has admitted to destroying evidence in the Deepwater Horizon oil spill disaster in the Gulf of Mexico and will plead guilty to a criminal charge under a plea agreement with the Justice Department, assuming court approval. Further criminal charges against Halliburton or its subsidiaries will not be pursued in exchange for its cooperation in the ongoing investigation.

--According to the Investment Company Institute, investors withdrew an estimated $43 billion from taxable bond mutual funds last month, the largest-ever monthly outflow, but most of this went into money-market funds, not equities. Of course it can still find its way into stocks.

--Ireland’s national statistics office said on Tuesday that residential property prices rose for their first annual increase in more than five years, up 1.2% for the 12 months back to June 2012, the first annual increase since January 2008.

One factor contributing to the stability in prices is the lack of supply. In 2006, 93,419 new homes were built in Ireland. In the first six months of this year, only 3,700 were.

Apartment prices in Dublin are up 4.2% from year ago levels, but they had collapsed 58% from the March 2007 peak.

--According to the U.S. attorney for the District of New Jersey, a gang of four Russian nationals and a Ukrainian stole and sold 160 million credit card numbers from more than a dozen companies, causing hundreds of millions of dollars in losses. The victims included J.C. Penney, 7-Eleven, JetBlue and French retailer Carrefour. Separately, the individuals were also indicted for computer attacks on Citibank, PNC Bank and the Nasdaq stock exchange. Two of the five are in custody, the other three are at large.

The defendants sold American credit card numbers for $10 and European ones for $50.

--Michael Dell increased the offer for taking the company he founded private by 10 cents, from $13.65 to $13.75, thus angering the PC maker’s special committee advising on the buyout. After a second postponement, the next scheduled shareholder vote is Aug. 2.

--Netflix now has 28.6 million paid domestic customers, slightly behind Time Warner Inc.’s HBO, which had 28.8 million as of March 31, according to SNL Kagan. Netflix, like Amazon, has a ridiculous valuation of about 145 times estimated earnings over the next 12 months.

--One company I always hope does well is Sirius XM Radio Inc.    They reported record revenue for the second quarter, up 12% to $940 million from the same quarter last year. Sirius earned $125.5 million as it picked up 715,700 subscribers in the April-June period, the largest gain since the end of 2007. Sirius now has a record 25.1 million subscribers, up 9% from a year ago.

--About half of Detroit’s $19 billion in overall debt - $9.2 billion – represents pension and health benefits promised retirees. Detroit emergency manager Kevyn Orr has promised retired city workers, police and firefighters won’t see their benefits reduced for at least six months, but they will have to be reduced down the road. Needless to say, this is unsettling to retirees.

--Ground was broken on what is to be the world’s tallest building, in the central Chinese province of Hunan, but then work immediately stopped when authorities ruled the developer “did not complete the required procedures for seeking approval to start construction,” according to a local newspaper.

The building was already controversial because the company behind it, Broad Group, said construction would take just four months once the foundations were laid, which had many talking of safety concerns and whether the land surrounding the site could support the tremendous weight.

Last year, Broad Group attracted worldwide attention when it built a 30-story tower in just 15 days, using prefabricated units stacked one on top of another. The same technique was to be used for the new Sky City.

[Burj Khalifa in Dubai, the current world’s tallest building, took 47 months to build.]

The official paper of China’s ruling elite, the People’s Daily, has criticized the project.

Within five years, China could have as many as four times the number of skyscrapers as exist in the United States.

--This is gross... “An incident of poisoning in Beijing has been traced to yangrou chuanr, the ubiquitous lamb skewers sold on streets, in what could be more proof that rat, dog and cat meat are being widely used among street hawkers.” [South China Morning Post]

A 20-year-old tourist was found to have ingested rat poison while eating “lamb” skewers.

--But wait...there’s more! An investigation by China’s national television found that ice cubes served in soft drinks can be dirtier than toilet water. The nation’s largest fast-food chain KFC apologized for serving them at a Beijing branch with a bacterial count 13 times higher than toilet water and 18 times higher than the national standard. [South China Morning Post]

--According to a Labor Department study, on average, men log 8.46 hours a day versus 7.87 hours worked by women.

--Among the all-important “viewers 18 to 49,” Jay Leno is beating David Letterman by 43 percent and Jimmy Kimmel by 75 percent. Among “total viewers,” Leno delivers 3.3 million compared with Letterman’s 2.6 million and Kimmel’s 2 million.

No matter, Leno is history in February. 

--A state judge ruled that the Borgota Hotel Casino & Spa in Atlantic City can control how much weight that its cocktail servers gain. Twenty-two servers, known as “Borgota Babes,” objected to the policy.

Foreign Affairs

Egypt: Clashes between supporters and opponents of Egypt’s ousted president claimed at least 12 lives on Monday and Tuesday. Then the army threatened to turn its guns on those who use violence in the starkest warning yet of what both sides expect will be a bloody showdown in the streets. The military issued an ultimatum to the Muslim Brotherhood to sign up to a plan for political reconciliation by Saturday or face the consequences. The Brotherhood has accused the army of pushing the nation toward civil war and committing a crime worse than destroying Islam’s holiest site.

The army issued a statement on a Facebook page that it will not “turn its guns against its people, but it will turn them against black violence and terrorism which has no religion or nation.”

Army chief General Abdel-Fattah al-Sisi called on Egyptians to take to the streets and give him a “mandate” to take action against the violence convulsing Egypt since he ousted Morsi.

On Friday, it was announced Morsi is being held over allegations of links with Hamas and plotting attacks on jails in the 2011 uprising. A judicial order said Morsi would be questioned for an initial 15-day period.

Signaling its displeasure, the U.S. has delayed delivery of four F-16 fighter jets to Cairo. Washington has yet to decide what to do with $1.5 billion in aid it sends Egypt annually, $1.3 billion of which is earmarked for the military.

[As I go to post, renewed violence in Alexandria, Cairo and elsewhere has claimed at least another nine lives on Friday.]

Syria: U.N. Secretary-General Ban Ki-moon said on Thursday that the Syrian war had killed more than 100,000 people, a figure previously released by human rights groups. President Obama and his national security team still have yet to say what weapons they’ll provide the Syrian opposition, let alone when they’ll deliver them, five weeks after announcing they would; which was two years too late as I’ve pointed out ad nauseam.

Meanwhile, the U.S. and Russia are working on setting up a peace conference in Geneva. But, as has been the case all along, the opposition refuses to participate unless the conference is about Bashar al-Assad’s departure.

Separately, U.S. Gen. Martin Dempsey, chairman of the joint chiefs of staff, warned of “unintended consequences” from any greater U.S. involvement in Syria outside of recently announced light weapons aid for selected opposition forces.

Dempsey, in a letter to Senate Armed Services Committee members John McCain and Carl Levin, said, “We have learnt from the past 10 years that it is not enough to simply alter the balance of military power without careful consideration of what is necessary in order to preserve a functioning state. Should the regime’s institutions collapse in the absence of a viable opposition, we could inadvertently empower extremists or unleash the very chemical weapons we seek to control.”

Dempsey said McCain’s preferred establishment of a “no-fly zone” over Syria would cost $1 billion a month and would risk the loss of U.S. aircraft.

Dempsey also downplayed prospects for setting up buffer zones within the country near the Turkish and Jordanian borders.

[A report late Friday had Islamist extremist elements of the insurgency killing 150 Syrian soldiers in a battle for control of an Aleppo suburb this week, including 51 who were executed after they had surrendered, according to a leading human rights group that has been documenting the carnage on both sides.]

Iraq: Over 700 have been killed this month in car bombings and attacks, including 65 in Baghdad on Saturday night alone. July is on track to be the deadliest month in five years. The escalating violence is a direct result of the Syrian civil war as “the battlefields are merging,” according to the outgoing U.N. mission chief in Iraq.

Martin Kobler said, “Iraq is the fault line between the Shia and the Sunni world and everything which happens in Syria, of course, has repercussions on the political landscape in Iraq.”

The linkage between Syria and Iraq was also never more clear on Tuesday, as al-Qaeda’s affiliate in Iraq claimed responsibility for an audacious jailbreak from the infamous Abu Ghraib prison that unleashed somewhere between 500 and 600 militants, boosting al-Qaeda’s fortunes in both countries. Fighters stormed both Abu Ghraib and another top security prison on the outskirts of Baghdad, Taji. Both housed the country’s most senior al-Qaeda detainees. At least 26 members of the Iraqi security forces and more than a dozen prisoners were killed.

Just a disaster. Remember when we were told al-Qaeda was a spent force?

Iran: Hasan Rohani takes over as Iran’s new president on Aug. 3 and the Obama administration is seeking to improve relations immediately and restart talks over Tehran’s nuclear program. But with the White House looking to ease some sanctions related to humanitarian aid, Congress is split on whether sanctions should instead be tightened.

Last Sunday, in a meeting with departing President Ahmadinejad, Supreme Leader Ayatollah Khamenei said he did not believe direct talks with the United States would bear fruit.

“The Americans are unreliable and illogical, and are not honest in their approach,” Khamenei warned.

Rohani is slated to meet with Russian President Putin in Tehran on Aug. 12.

Israel: Efforts to restart Mideast peace talks between Israel and the Palestinians appear to have hit a roadblock. Israeli Prime Minister Benjamin Netanyahu said resuming negotiations with the Palestinian Authority was in Israel’s vital strategic interests, “And it is important in light of the challenges we face, especially from Iran and Syria.” Earlier, Israel said it would release a number of Palestinian prisoners.

But Palestinian officials said on Sunday that their key demand for resumption of talks remains: Netanyahu must accept Israel’s pre-1967 frontier as the starting point for redrawing the border of a future Palestinian state. They say Secretary of State John Kerry’s endorsement of that frontier is not enough and they need to hear it from Netanyahu himself. Palestinian President Mahmoud Abbas is skeptical of Netanyahu’s willingness to negotiate in good faith.

Israel and the Palestinians last held direct talks in 2010, but they were halted over the issue of settlement-building.

Jennifer Rubin / Washington Post

“The ascendency of Iran and its Hizbullah allies naturally make the Israelis far more nervous about its long term security. With no sign the United States intends to challenge the Iran-Syria-Hizbullah-Russia alliance, the Israeli government has little motivation to take on additional security risks.

“With Egypt convulsed and Jordan teetering under the weight of refugees, Israel’s more stable allies are not so stable. In particular without a fully functioning Egyptian government the potential for new security threats from Sinai are significant.

“The danger in talks, of course, is that Palestinian expectations rise and then are dashed, leading to violence (we’ve seen this pattern before). A former U.S. official tells me: ‘The risk now is of a quick breakdown that could even lead to violence in the West Bank.’....

“Moreover, this is a foolish misuse of American attention and stature, confirming both to our Sunni allies and the Iranian alliance that we are fundamentally unserious about the real threats to the region....

“In sum, Kerry’s efforts suggest the administration has learned nothing from its first term. The Palestinian-Israeli conflict is not, as Kerry insists, the center of the Middle East’s troubles. Pretending it is invites failure, American humiliation and aggression by the powers that should command our attention. In the meantime, the prospects for an improved life for the Palestinians and a less confrontational relationship with the Jewish state remain remote.”

Lebanon: Hizbullah said the European Union decision to blacklist the party’s military wing would have repercussions. Ammar Musawi, Hizbullah’s official in charge of international relations, said, “I won’t predict [what these repercussions will be], this has to do with our leadership. No one can condemn me and extend a hand to me simultaneously,” Musawi added, referring to Europe’s call that it can still engage in dialogue with the party.

Earlier, the EU’s 28 member states decided unanimously to blacklist Hizbullah’s military wing following Bulgaria’s formal accusation the Lebanese group was involved in a 2012 Burgas bombing that killed five Israeli tourists and a Bulgarian driver.

Musawi said, “Hizbullah is one body, with one command; military personnel are politicians and politicians are military personnel.”

Tunisia: The United States condemned the assassination of a leading opponent of Tunisia’s ruling Islamists. Tunisian MP Mohamed Brahmi was shot outside his home Thursday, the second such slaying this year. No need to investigate. The government did it.

Violent demonstrations ensued with casualties as I go to post.

Afghanistan: Three Americans were killed this week, at least 70 thus far this year.

North Korea: Kim Jong-un expressed his support for reconvening six-nation talks on ending Pyongyang’s nuclear weapons program. Beijing sent Vice President Li Yuanchao to attend ceremonies on Thursday marking the 60th anniversary of the end of the Korean War. Li reiterated Beijing’s call for the “denuclearization” and “peace and stability” of the Korean Peninsula and “dialogue.” But in official North Korean reports of the meeting, there was no talk of denuclearization.

Meanwhile, talks between Pyongyang and Seoul over the jointly-run Kaesong industrial zone collapsed, with the North accusing the South of “delaying tactics” by demanding that Pyongyang compensate for financial losses suffered by South Korean businesses when the North shut Kaesong down in April. The two sides actually got into a shoving match during negotiations.

China: Disgraced former Chongqing party chief Bo Xilai was indicted on charges of bribery, corruption and abuse of power. Bo could stand trial as early as next month. It is also thought an agreement with Bo may have already been reached.

Russia: For a brief moment, it appeared Edward Snowden would be granted temporary asylum in Russia until he can find a permanent home, such as in Venezuela, but then Snowden’s attempt to clear passport control inside Moscow’s Sheremetyevo International Airport were blocked by “bureaucratic difficulties.” Snowden has been in limbo there since June 23. The U.S. continues to demand that the Kremlin hand Snowden over.

And in the race for mayor of Moscow, Alexey Navalny, free while he appeals a five-year prison sentence for embezzlement, has vowed to mount a challenge to Putin’s former chief of staff, Sergei Sobyanin, whom Putin appointed as Moscow mayor in 2010 to end the 14-year rule of Yury Luzhkov.

But opinion polls show Navalny getting his butt kicked. In one survey conducted by the VTsIOM research center, Sobyanin would win 54%, with Navalny a distant second at 9%.

There is a good reason why Navalny was suddenly released from prison after his conviction. Putin can make him look bad, and discredit Navalny’s supporters, should Sobyanin win the Sept. 8 vote going away. Putin can also then lock up Navalny after the election.

Bulgaria: Police ended a blockade of Parliament that had trapped about a hundred lawmakers inside as protesters railed against rampant corruption. Thousands have been demonstrating over the past 40 days, but only this week did the protests turn violent. 60% of the people disapprove of the way Prime Minister Oresharski is running the country after inconclusive elections in May. The European Union has offered support for the protesters, a rare move for that body.

Spain: What a depressing week here with the horrific high-speed train derailment that claimed 80 lives in the northwestern part of the country. Excessive speed was clearly the cause, with reports saying the train took a curve at more than twice the speed limit, 190km/h (118mph) when the limit for that section of track is 80km/h.

Random Musings

--In a new Wall Street Journal/NBC News poll, President Obama’s job-approval rating fell to 45%, its lowest level since late 2011, while overall disapproval for Congress was at 83%, the highest ever for Journal polling.

[Just 32% of independents said they approved of the president’s job performance.]

Only 29% of Americans believe the country is on the right track, a 19-month low. The figure was 41% at the end of last year.

Obama’s approval rating matches that of George W. Bush at this stage in his second term, while Bill Clinton’s stood at 56%.

Only 32% believe their own congressional representatives deserve re-election. That said, the nonpartisan Cook Political Report lists just nine of the 435 House seats as “tossups” for next year.

And just 34% consider ObamaCare to be a good thing.

--It took a major lobbying effort by the Obama administration and Republican leaders in the House to narrowly defeat an amendment that would have curtailed the National Security Agency’s bulk collection of U.S. phone calling records as revealed by Edward Snowden.

But the amendment lost by just 217-205, showing still broad concern among the public. Backers of the measure were a mixture of conservative tea party members and the most liberal of the Democrats. A majority of Democrats bucked the president.

--President Obama, in his first address focusing on the economy in quite a while, said:

“With an endless parade of distractions, political posturing and phony scandals, Washington has taken its eye off the ball. I am here to say this needs to stop.”

Phony scandals? The IRS scandal is real, I am very uneasy over the NSA programs from the standpoint of their being easy to abuse, and I’m sickened that in the Benghazi tragedy, my real question may never be answered to satisfaction...why weren’t U.S. forces on standby in the region, particularly at Aviano, Italy, on the anniversary of 9/11?

--Peggy Noonan / Wall Street Journal

“In all the day-to-day of the IRS scandals I don’t think it’s been fully noticed that the overall reputation of the agency has suffered a collapse, the kind from which it can take a generation to recover fully. In the long term this will prove damaging to the national morale – what happens to a great nation when its people come to lack even rudimentary confidence in the decisions made by the revenue-gathering arm of its federal government? It will also diminish the hope for faith in government, which whatever your politics is not a good thing. We need government, as we all know. Americans have a right to assume that while theirs may be deeply imperfect, it is not deeply corrupt. What harms trust in governmental institutions now will have reverberations in future administrations.”

--Democratic Congressman Charlie Rangel said of the latest revelations involving Anthony Weiner, his acknowledgement that he engaged in a months-long sexting affair with a woman – a year after  he resigned from Congress in disgrace, “Knowing New Yorkers as I do...this is not going to be a story by the time we get to September the 10th,” and the Democratic primary for mayor. Fellow Democratic Congressman Jerrold Nadler said of his one-time colleague, Weiner “should not be running,” calling him a “serial liar” and a “morally bad person.” And other Democrats among New York’s congressional delegation uttered similar pronouncements.

Chief rival Christine Quinn stopped short of calling on Weiner to quit, but said, “This city deserves a mayor with the maturity and judgment to lead. The circus that Weiner has brought to the mayor’s race these last two months has been a disservice to New Yorkers.” [New York Post]

For his part, Weiner said he went back to sexting because his relationship with his wife, Huma Abedin, hit a rocky patch last summer, a year after resigning from Congress in disgrace. At a press conference, Weiner said:

“I think that a lot of people see the resignation was the end of the challenges my wife and I, my family faced, and it wasn’t. It was part of something that needed to get resolved and frankly it hadn’t been.

“It took some work to get to that place. It wasn’t a function that a certain moment in time came and went. It was a continuum. These things are behind me now.”

Oh brother. Carlos Danger and Sydney Leathers.

Weiner: “This campaign isn’t about me. It’s about a great city.”

Just stop, please.

Maureen Callahan / New York Post

“It’s also time to declare a moratorium on the line that Huma Abedin is the smartest, shrewdest, most level-headed and glamorous asset the Democratic Party has, and if she’s OK with Anthony, we should be, too. Clearly, there is something very wrong with Abedin – whether it’s simply that she shares her husband’s vaulting ambition or that she has a pathological need to be publicly humiliated, something’s up. When the New York Times is calling for you to take your sad assemblage of sexual compulsions out the door, you should consider that a wake-up call....

“Abedin took the good-wife act one step further at Tuesday’s press conference, admitting her collusion in this new lie: ‘We discussed all of this before Anthony decided to run for mayor,’ she said. So clearly, as Abedin sat for these joint interviews in which Weiner claimed to be a changed man, she knew that wasn’t the truth, and was happy to lie to a public that had been nothing but sympathetic toward poor, brilliant Huma, saddled with such a dud. Perhaps they’re a better match than we knew.

“ ‘So what I really want to say,’ Abedin continued, ‘is I love him, I have forgiven him, I believe in him, and as we have said from the beginning, we are moving forward.’

“How telling that Abedin didn’t acknowledge another harsh truth: It’s the New York electorate that decides how far – not her, not Anthony, and certainly not Carlos Danger.”

Editorial / New York Post

“In another day, Weiner would be a punch line instead of a leading candidate for mayor. Which is as revealing of New York politics as it is of Anthony Weiner.”

Editorial / Wall Street Journal

“Lewd tweets aside – there’s a line we never thought we’d write – Anthony Weiner ought to drop out of the New York City mayor’s race simply because of what he’s forced his wife to endure. Watching the elegant Huma Abedin stand next to her man Tuesday as he explained his latest sexually charged online exchanges was painful for a normal human being to watch. Mr. Weiner is not a normal human being....

“Along with Eliot Spitzer, another narcissist attempting a New York political comeback after humiliating his wife, Mr. Weiner has certainly enlivened an otherwise dull political year. The two men claim to have been chastened and redeemed by their falls from power, though it’s clear in both cases they only regret having been caught.

“The good news in Mr. Weiner’s case is that he has exposed his caldron of inner demons during the campaign. Mr. Spitzer may not unleash his furies again until he’s back in power. If New York voters won’t spare themselves, won’t they at least defeat these two to spare their wives?”

In a new Marist/NBC 4/Wall Street Journal poll released on Thursday, following the latest revelation, Weiner’s numbers were flaccid, with Christine Quinn vaulting into the lead at 25%, while Weiner had drooped to 16%; this after a previous poll had Weiner surging ahead of Quinn, 25-20.

And the above numbers were prior to Weiner’s additional revelation he sent explicit texts to as many as 10 women, including three after he left Congress.

[47% in the Marist/NBC/WSJ poll said Weiner should forge ahead, believing he deserves a second (third, fourth) chance, while 45% disagree.]

As for the comptroller’s race, a Quinnipiac poll has Eliot Spitzer and Scott Stringer in a dead heat. But the Marist poll gives Spitzer a 17-point lead, 49-32. Yes, a bit of a disparity.

And the New York Post reported that Silda Spitzer “is privately telling friends she plans to divorce her hooker-loving husband.” Long-suffering Silda is not joining Eliot on the campaign trail.

--According to a new Quinnipiac poll of Iowa voters, Gov. Chris Christie would tie with former Secretary of State Hillary Clinton if the 2016 presidential race were held today, each earning 41%. They split the independent vote, 36-37. Interesting.

In a matchup with Vice President Biden, Christie wins 49-32.

--In the coming Republican senate tussle between incumbent Wyoming Sen. Mike Enzi and Liz Cheney, a poll carried out by Conservative Intelligence Brief among likely Republican voters had Enzi defeating Cheney handily, 55-22. At the same time, though, 48% say Enzi has done enough to deserve re-election, while 28% favor giving the job to someone new.

--Former U.S. ambassadors to Japan include heavyweights Walter Mondale, former House Speaker Tom Foley and former Senate Majority Leaders Mike Mansfield and Howard Baker.

But now President Obama announced he is nominating Caroline Kennedy to replace another non-political heavyweight, John Roos (a top Obama fundraiser). 

This is not the time to be screwing around with this post. But I hope for our country’s sake, Caroline Kennedy proves me wrong.

--Former New York City and Los Angeles police commissioner William Bratton summed it up best this week, in describing the security surrounding Pope Francis’ visit to Brazil. It is “extraordinarily frightening.” Not just the Pope’s chaotic arrival when his driver apparently took a wrong turn, causing the motorcade to totally stop in a number of spots, but also in the way the police have been handling anti-government demonstrations.

You would have to be nuts to consider attending the 2014 World Cup and the 2016 Summer Olympics here. Clearly, despite solid economic growth the past decade that has masked very serious underlying problems until now, Brazil is not ready for prime time.

As for the Pope and his message, I love that he slammed drug traffickers as “merchants of death,” adding, “a reduction in the spread and influence of drug addiction will not be achieved by a liberalization of drug laws. Rather, it is necessary to confront the problems underlying the use of these drugs, by promoting greater justice, educating young people...accompanying those in difficulty and giving them hope for the future.” 

But back to the security issue, whether it is in Brazil or back in Rome, many of us are uncomfortable with Francis’ total lack of fear in being among the people. 

--In the above-mentioned WSJ/NBC survey, conducted just days after the George Zimmerman verdict, 54% of blacks polled said they “strongly disagreed” with the idea that America judges people on the content of their character, not the color of their skin. Just 30% of blacks felt that way in the month Mr. Obama took office as the first African-American president.

The figure is 79% when you include the 25% who “somewhat disagreed.” 

Just under one-third of all Americans, and 24% of whites, said the trial had decreased their confidence in the legal system, compared with 71% of blacks who felt that way.

Back in January 2009, 79% of whites and 64% of blacks described race relations as good.

Today, 52% of whites and only 38% of blacks feel that way.

In a Washington Post/ABC News poll conducted after the trial, 86% of blacks say they disapproved of the verdict – with almost all of them saying they strongly disapprove – and 87% saying the shooting was unjustified.

In contrast, 51% of whites say they approve of the verdict while just 31% disapprove. Further, 70% of white Republicans but only 30% of white Democrats approve of the verdict.

In the Post/ABC survey, 86% of African Americans say blacks and other minorities do not get equal treatment under the law. The number of whites saying so came in at 41%. 54% of whites say there is equal treatment for minority groups.

So last Friday, President Obama made his first extensive remarks on the Zimmerman verdict, saying he understood that young black males are sometimes followed as they shop in department stores or hear the locks of car doors click as they walk down a street. “It’s inescapable for people to bring those experiences to bear,” he said.

Obama added: “The African American community is also knowledgeable that there is a history of racial disparities in the application of our criminal laws - everything from the death penalty to enforcement of our drug laws. And that ends up having an impact in terms of how people interpret the case.”

And he concluded: “(Let) me just leave you with a final thought, that as difficult and challenging as this whole episode has been for a lot of people, I don’t want us to lose sight that things are getting better. Each successive generation seems to be making progress in changing attitudes when it comes to race.

“It doesn’t mean that we’re in a post-racial society. It doesn’t mean that racism is eliminated. But you know, when I talk to [his daughters] Malia and Sasha and I listen to their friends and I see them interact, they’re better than we are. They’re better than we were on these issues. And that’s true in every community that I’ve visited all across the country.”

What a total bunch of malarkey, Mr. President. Once again, you treat us like chumps.

“We should also have confidence that kids these days I think have more sense than we did back then, and certainly more than our parents did or our grandparents did, and that along this long, difficult journey, you know, we’re becoming a more perfect union – not a perfect union, but a more perfect union.”

Mr. President, I’m sure you’ve heard about all the hate on the Internet and how today’s social media only exacerbates race issues, not make things better.

Jennifer Rubin / Washington Post

“President Obama’s extensive remarks in the White House Briefing Room this afternoon were as surprising as they were gratuitous.    He had already made one statement asking citizens to respect the George Zimmerman verdict...

“In fact, Obama undid some of the closure he provided in his earlier written statement by intoning: ‘If a white male teen was involved in the same kind of scenario, that, from top to bottom, both the outcome and the aftermath might have been different.’ So the jury was biased? The trial unfair? I can’t fathom why the president of the United States would stoke that sort of second-guessing.

“The media seems fixated on ‘how personal’ the speech was. I am baffled by that response. He is the president of the United States, the only elected leader there to represent us all and to provide cohesion, but here he was channeling Oprah Winfrey. He cheered for emotionalism and for the perspective that insists it is always about race....

“The jury system is all about rising above past grievances, grudges and suspicions. The Zimmerman jury put down its historical baggage, but the president asks that we sympathize with and encourage those who won’t.

“Perhaps he is laying the groundwork for the obvious: After stirring emotion, the president can’t deliver a civil rights prosecution of Zimmerman because the facts aren’t there....And of course his own FBI found no evidence of racism. Odd that he didn’t mention that....

“The presidency is not a parochial office, yet Obama fosters a view of America that says African Americans can’t help but see the country in terms of race. That is a sad and depressing view of our country. It suggests that African Americans can’t judge their fellow citizen individually, by the content of their character....

“The president at the very end argued that ‘those of us in authority should be doing everything we can to encourage the better angels of our nature, as opposed to using these episodes to heighten divisions.’ Too bad he doesn’t follow his own advice.”

Christopher Caldwell / Financial Times

“(One) thing is clear: not a shred of evidence emerged at trial to indicate that Mr. Zimmerman’s shooting of Martin was motivated by racism. His mixed neighborhood was a fifth black. Before he did anything else about Martin he called the police. His head was bloodied and his clothing torn when they arrived, consistent with his story of self-defense. He does not fit the stereotype of a segregationist southern white. Of Peruvian descent, he is, according to contemporary taxonomy, a ‘person of color’ himself. Race did not come up during deliberations, according to one juror who gave a post-verdict interview to CNN.

“Young American men of modest means murder each other frequently without drawing media attention. What attracted activists and the press to this case was its appearance of racism, its (ultimately illusory) conformity to Jim Crow archetypes. It has mystified legal experts that prosecutors sought a conviction for second-degree murder, which in Florida requires that the perpetrator evince ‘a depraved mind regardless of human life.’ But prosecutors were trapped in a circular logic. No one disputed Mr. Zimmerman killed Martin. The dispute was over whether Mr. Zimmerman acted out of racism. Anyone who assumed he did would think him depraved by definition. The prosecutor Angela Corey, criticized for seeking a murder rap, replied: ‘We truly believe the mindset of George Zimmerman and the reason he was doing what he did fit the bill for second-degree murder.’ She was wrong, but of course she believed this. It was her job to.

“The Zimmerman case is settled, but not over. Civil rights law, if not used carefully, can degenerate into a way to expose to double jeopardy those local defendants the federal government thinks ill of. The Florida trial shows the evidence for a federal civil rights case to be weak and it is not clear on what grounds such a case could proceed. But that does not mean no case will be brought.”

I told you I followed the trial closely. In the immediate aftermath I watched various supporters of a conviction come on Fox News and not one acknowledged the facts of the case, instead flat out lying, or refusing to understand the truth.

This was a terrible tragedy. But as Michael Goodwin wrote in the New York Post:

“If Obama felt the need to say something, duty required him to emphasize the facts instead of endorsing racial manipulation. Sadly, though, his remarks follow a recent pattern where he and (Rev. Al) Sharpton sing from the same page. Both distorted the case to paint a broad picture of blacks as victims of white racism and ignored Zimmerman’s half-Latino family.”

--New York Police Commissioner Ray Kelly, in an op-ed for the Wall Street Journal:

“Since 2002, the New York Police Department has taken tens of thousands of weapons off the street through proactive policing strategies. The effect this has had on the murder rate is staggering. In the 11 years before Mayor Michael Bloomberg took office, there were 13,212 murders in New York City. During the 11 years of his administration, there have been 5,849. That’s 7,383 lives saved – and if history is a guide, they are largely the lives of young men of color.

“So far this year, murders are down 29% from the 50-year low achieved in 2012, and we’ve seen the fewest shootings in two decades.

“To critics, none of this seems to much matter. Sidestepping the fact that these policies work, they continue to allege that massive numbers of minorities are stopped and questioned by police for no reason other than their race.

“Never mind that in each of the city’s 76 police precincts, the race of those stopped highly correlates to descriptions provided by victims or witnesses to crimes. Or that in a city of 8.5 million people, protected by 19,600 officers on patrol (out of a total uniformed staff of 35,000), the average number of stops we conduct is less than one per officer per week.

“Racial profiling is a disingenuous charge at best and an incendiary one at worst, particularly in the wake of the tragic death of Trayvon Martin. The effect is to obscure the rock-solid legal and constitutional foundation underpinning the police department’s tactics and the painstaking analysis that determines how we employ them.

“In 2003, when the NYPD recognized that 96% of the individuals who were shot and 90% of those murdered were black and Hispanic, we concentrated our officers in those minority neighborhoods that had experienced spikes in crime....

“It’s understandable that someone who has done nothing wrong will be angry if he is stopped....

“In a similar vein, our detractors contend that the NYPD engages in widespread, unwarranted spying on Muslim New Yorkers. Again, this is a sensational charge belied by the facts....

“The NYPD has too urgent a mission and too few officers for us to waste time and resources on broad, unfocused surveillance. We have a responsibility to protect New Yorkers from violent crime or another terrorist attack – and we uphold the law in doing so.

“As a city, we have to face the reality that New York’s minority communities experience a disproportionate share of violent crime. To ignore that fact, as our critics would have us do, would be a form of discrimination in itself.”

[By the way, the Bronx is on schedule to have fewer than 100 murders this year, “for the first time since 1966, when Mickey Mantle was in centerfield at Yankee Stadium,” said Mayor Michael Bloomberg the other day. The Bronx has about the same number of people as Philadelphia, but had 36 murders in the first half of the year, compared with 116 in the City of Brotherly Love. Brooklyn, with 71 homicides, roughly has the same population as Chicago, which had 188.]

People forget just how awful New York was before the 20 years of Rudy Giuliani and Bloomberg.

Kyle Smith wrote the following conclusion as part of an extensive look at Gotham, July 1993, for an op-ed in the New York Post:

“In his forthcoming memoir, (former Mayor David) Dinkins blames ‘racism, pure and simple,’ not residents fed up by a city out of control, for his narrow 1993 defeat by Rudy Giuliani.

“Now it seems likely that we’re going to elect another conventional liberal mayor, for the first time in two decades. As Dinkins did during his successful 1989 campaign, most of the rival Democratic candidates are playing for votes by trying to turn citizens against the police (though a recent poll found that Commissioner Ray Kelly...enjoys an approval rating of 75%, including more than 60% among blacks).

“The 20 years of the Giuliani-Bloomberg era have been a pleasant vacation from the decades-long decline that preceded it. Today we joke about soda bans instead of how to react to armed robbers. But soon New York may be back doing what it does best: Being Crazytown, USA.”

--The other week I told you of the latest Ground Based Interceptor test failure in the U.S. missile defense system and that of 16 tests staged since October 1999, the GBI scorecard is not good; 8 hits and 8 misses.

So now Gen. Robert Kehler, who heads U.S. Strategic Command, said regarding the 26 Ground Based Interceptors fielded today in Alaska and the four additional ones in California, “Whatever it takes to prosecute the intercept is what we would do.”

As Elaine M. Grossman writes in Global Security Newswire, “Translation: If an adversary tries to nuke the United States, the Pentagon may have to fire off a number of the troubled GBI darts in the hopes that at least one would hit its bull’s eye.”

Defense officials recently announced a move to add 14 more interceptors, citing the heightened risk from North Korea.

Yet another reason why I always recommend you sleep with one eye open.

--In a highly publicized case in New Jersey, an 18-year-old boy was sentenced to five years in prison for causing a collision that killed a 61-year-old mother when the 18-year-old’s car crossed a double yellow line and crashed head-on.   The boy had been drinking, but also texting on his cellphone.

The judge, “in a loud and emotional outburst from the bench,” as described by Star-ledger reporter Bill Wichert, “warned about the dangers of texting while driving.

“ ‘Eleven of you will die in this country every day because of texting and driving!” said Superior Court Judge Robert Reed. “For God’s sake, stop it.”

--Jonah Goldberg / Los Angeles Times

“(It) was no surprise that the encomiums poured forth in response to the news (of the death of reporter Helen Thomas). From President Obama, the Gridiron Club, the White House Correspondents Assn., Hamas.

“Hamas was less interested in Thomas’ role as a path-breaking feminist icon than the fact that, at a 2010 White House Jewish heritage event, she growled into a camera that the Jews should ‘get the hell out’ of Israel (or Palestine, in her telling) and go back to Poland, Germany and America. That statement, cheered by Hizbullah at the time, was too much for Hearst, which quickly ushered her off to retirement, where she cultivated her status as a truth-teller martyred by the Zionists who control everything in America.

“In most obituaries this incident comes out of the blue, often chalked up to the fact her parents were Lebanese immigrants (an odd slap at Lebanese Americans). There’s no mention that her hatred of Israel, and supporters of Israel, was a constant for most of her career....

“The New York Times identified one scoop: Thomas’ reports of her phone conversations with Martha Mitchell, the emotionally disturbed wife of Watergate-era Atty. Gen. John Mitchell. Mrs. Mitchell had a habit – owing in part to her reported alcoholism – of telephoning whoever would listen to her rants. Most reporters stopped exploiting Mitchell once it became clear how ill the woman was. Not Thomas. She happily transcribed the calls, even reporting how Mitchell’s young daughter was begging her mother to get off the phone with Thomas: ‘Don’t talk to her, she’s no friend.’

“Still, as time went by, the awards poured in as she became a Washington institution... But the ‘odd thing about her awards and citations,’ (writer Jonathan) Chait noted, ‘is that they almost never mention any specific contributions she has made to journalism save for being female and, well, old.’

“Or as journalist Andrew Ferguson once put it, ‘Everybody admires Helen, though nobody can tell you why.’

“The best answer I can come up with: She had a long tradition of existence here in Washington.”

--Every now and then, with I imagine half my readership turning over every few months (hopefully not that great a percentage), I feel compelled to tell you why I insist on spelling Hezbollah, “Hizbullah.”

It goes back years. Two newspapers of note, the Jerusalem Post and Lebanon’s Daily Star, both spelled it Hizbullah, while everyone else spelled it Hezbollah.

When you listen to Israeli Prime Minister Benjamin Netanyahu, who I’ve called the smartest man on the planet, pronounce the terror group’s name, it’s “Hiz-bullah.”

But a while back for some reason, both the Post and Daily Star changed their spelling to Hezbollah.

I refuse to change it because it screws up the archives. Recall in the days of Yassir Arafat, it was also Yasser and Yasr. Us writers hate this stuff. Just sayin’.

--Ireland’s recent country-wide 16-day dry spell was its longest since 1995. Noteworthy, because historically, July and August can be miserable. [May and September are consistently better, I can tell you from personal experience.]

--San Francisco television station KTVU fired three producers responsible for being duped and reporting the fake names of the flight crew of Asiana Airlines flight 214, including “Sum Ting Wong.”

--I have no problem with the attention paid to the birth of the royal baby, George Alexander Louis. And as opposed to Kim Kardashian, who hasn’t been seen in public since the birth of her baby because, as Us Weekly reported, she won’t leave the house until she’s ready to “debut her post-baby body,” obviously Kate had no problem displaying her ‘mommy tummy.’

May the future King George, and his parents, have long and happy lives.

---

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

God bless America.
---

Gold closed at $1321
Oil, $104.70

Returns for the week 7/22-7/26

Dow Jones +0.1% [15558]
S&P 500 -0.0% [1691]
S&P MidCap -0.5%
Russell 2000 -0.2%
Nasdaq +0.7% [3613]

Returns for the period 1/1/13-7/26/13

Dow Jones +18.7%
S&P 500 +18.6%
S&P MidCap +20.4%
Russell 2000 +23.4%
Nasdaq +19.7%

Bulls 51.5
Bears 19.6 [Source: Investors Intelligence]

*Reminder for new readers...I do have an iPad app.

Have a great week. I appreciate your support.

Brian Trumbore