Stocks and News
Home | Week in Review Process | Terms of Use | About UsContact Us
   Articles Go Fund Me All-Species List Hot Spots Go Fund Me
Week in Review   |  Bar Chat    |  Hot Spots    |   Dr. Bortrum    |   Wall St. History
Week-in-Review
  Search Our Archives: 
 

 

Week in Review

http://www.gofundme.com/s3h2w8

AddThis Feed Button

   

05/04/2013

For the week 4/29-5/3

[Posted 12:00 AM ET]

The U.S. and European Economies

It was another historic week in the markets with the Dow Jones and S&P 500 closing at new highs; in the case of the Dow hitting the 15000 level before finishing Friday at 14973, while the S&P 500 crossed 1600 for the first time and stayed there, closing the week at 1614.

The impetus came from the labor market. On Thursday, the weekly jobless claims number came in at 324,000, the fewest since January 2008, and on Friday, the April employment data showed a better than expected increase of 165,000 jobs (176,000 in the private sector), while there were large revisions to February and March, up to 332,000 and 138,000, respectively. In the case of February’s number, the best single month since November 2005 (if you exclude a May 2010 number boosted by Census workers), while the March revision was 50,000 higher than the initial putrid reading of 88,000.

The official unemployment rate ticked down to 7.5%, the lowest since December 2008.

But the average workweek dropped, the number of part-time workers rose, and the sickly labor participation rate was unchanged.

Take the last two months’ average of about 150,000 and couple it with the other recent data and you have a 2% growth economy. Better than Europe, that’s for sure, and the kind of growth that will keep the free money spigot on at full force, which is good if you’ve been in equities (which of course is the point of the Fed’s easy money policy...keep you invested), but just understand the markets are no longer cheap.

I reiterate, I am not a bear, and have not been one of those talking incessantly about a “correction.” I have specifically avoided the word.

Maybe Friday’s employment data was the beginning of the end of the spring swoon just about all the other data points to. Just understand the rest of the developed world, save Japan, is slowing...that’s a fact.

So we know the markets aren’t trading on the fundamentals. It’s the central banks’ hooch that’s the elixir and this week the Federal Reserve said it is willing to increase, as well as reduce, its $85 billion-a-month Quantitative Easing 3 program of buying mortgage-backed securities and Treasuries to keep interest rates low and “to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes.”

Earlier this week we had a reading on April manufacturing, the Chicago Purchasing Managers’ report, PMI, that came in at 49.0, the worst for this data point since Sept. 2009 and far off the expectation of 52.8. Then the national ISM reading for the month was at 51.0, lower than March’s 51.3 and barely above the 50 growth/contraction line. March factory orders fell hard, down 4.0%. And corporate earnings for the first quarter continued to tell the same old story.

About 70% of the companies in the S&P 500 beat on the bottom line, earnings, while only 42-44% are beating on the top line, revenues, and by most estimates, when everyone has reported, revenues for the first quarter will have increased 1-2%. As that great NBA ballplayer Derrick Coleman used to say, “Whoopty-damn-do.”

And not to beat a dead horse, but my point in discussing Europe as much as I have since their crisis started three years ago (and I defy you to find anyone who has written more on a consistent basis than yours truly) is because U.S. multinationals derive a large share of their profits from the troubled continent.

Look at G.E.’s recent earnings report. Industrial revenues in Europe were down 17%. Air Products (industrial gases) said this week, “Europe sunk deeper into recession” in discussing why its sales there were down 5%. Dow Chemical’s sales to Western Europe were off 12%.

These are not small figures. According to Deutsche Bank, 17% of the profit and revenues from companies in the S&P 500 comes from Europe...that’s why Europe matters, Charlie Brown.

But before I go across the pond...two other items.

The S&P/Case-Shiller data on housing for February was very good. The 20-city metro index rose 9.3%, year over year, the best pace since May 2006. The Atlanta market is up 16%, Vegas up 17.6%, Los Angeles 14%, Phoenix 23%...but New York only up 1.9%. Every market, however, saw an increase for both January and February.

And then there was the announcement the U.S. Treasury expects to pay down debt in the second quarter of 2013, compared with a February estimate it would have to borrow $103 billion.

The Treasury said, “The decrease in borrowing relates primarily to higher receipts, lower outlays, and changes in cash balance assumptions.”

This is good.  Still, understand the Treasury expects to borrow a net $223 billion in the third quarter and the budget deficit for fiscal 2013 (which began October 1) will still come in anywhere from $775 billion to $845 billion, down from the $1 trillion plus the prior four years but awful nonetheless.

I have written gobs on this topic. This is the danger point. Yes, the deficit is headed down. If you go with the latest Congressional Budget Office estimates, down to $430 billion for fiscal 2015. 

But by 2022, unless Congress and the White House do something, today, on entitlements (as Alan Simpson and Erskine Bowles continually warn us), the budget deficit goes right back to $957 billion in 2022 and soars from there.

Point two...you also know by now from reading my work that the net interest expense for this current year will come in around $220 billion. But assuming a normalized interest rate environment, specifically for the 2019-2022 period, 5% on the 10-year and 4% on 3-month T-bills, the net interest expense soars to $800 billion by 2022.

$800 billion! Wasted freakin’ money! Again, you think the sequester is tough today? You think the scare mongering we are force fed is bad? Wait until the debates nine years from now on drastic reductions in your favorite government programs, including the military. Wait until your taxes soar to heights not seen since pre-Reagan.

It’s why action must be taken now...this year...before the next election cycle kills any chance of true entitlement reform.

It’s why every single one of you should be depressed if you understand our future. I saw Erskine Bowles on CNBC this week and despite his boilerplate optimism a grand bargain can somehow be reached because it is has to be, he could not have looked more down. 

Not to ruin your weekend...treat yourself to a mint julep while watching the Derby. And I’ll hold off on ObamaCare for one week.

Europe

The European Central Bank cut its benchmark interest rate to 0.50% from 0.75%, addressing, as Markit’s Chris Williamson put it, the absurd situation where the “fastest contracting region in the world” has the highest rates among peers.

The ECB then said it would also keep open its special liquidity facilities until at least the middle of 2014, extending the existing policy by one year.

A stream of awful economic news made the ECB’s decision an easy one after ten months of being on hold.

Euro-area unemployment reached a record 12.1% in March, up from 11.0% in March 2012. [The EU27’s rate is 10.9%.]

Greece’s unemployment rate hit 27.2% (January...its data lags), with a youth rate of 59.1%. Spain is at 26.7% (the government calls it 27%). Portugal, 17.5%.

France is at a new high, 11.0%. Italy is at 11.5%, a near 20-year high, with a 36% youth unemployment rate. Italy’s economy is expected to contract 1.5% this year.

Eurozone manufacturing for the month of April came in at 46.7, down from March’s 46.8, the 21st straight month of contraction for manufacturing. Germany’s figure, as measured by Markit, was 48.1, down from March’s 49.0.

There are increasing calls to roll back austerity, such as with Italy’s new government of Prime Minister Enrico Letta, while at the same time Greece and Portugal enacted new austerity measures in order to ensure they continued to receive their bailout funds. In the case of Greece, it will fire 15,000 more civil service workers.

The problem for the ECB continues to be that even a rate cut will have zero impact on the real economy, especially in the periphery, where the so-called transmission effect, by which record-low interest rates are translated into real world borrowing costs for small- and medium-sized businesses and households in the likes of Italy and Spain, is currently non-existent.

ECB President Mario Draghi even brought up the idea of cutting the deposit rate for banks to below zero, negative interest rates on eurozone deposits, an unprecedented step designed to impose a fee on banks for parking excess cash at the ECB and thus forcing them to lend.

But while negative rates could force some banks to lend, it will undoubtedly hurt the profitability of other financial institutions, which further hampers credit supply to companies and households.

Draghi urged governments to step up economic reforms to improve competitiveness and “not to unravel” efforts to reduce their budget deficits. He also emphasized that “swift implementation” of elements of banking union – including a single supervisory mechanism and centralized resolution mechanism for winding up weak banks – were “crucial” to bringing down borrowing rates for the periphery.

Draghi added that while inflation is at a three-year low, the risks on that front were “broadly balanced” rather than worrisome, as in deflation.

For her part, German Chancellor Angela Merkel is seeking to combat the image of her nation being the deficit scold of Europe. Asked at a forum in Berlin whether the “screw of austerity” had been turned too tight, Merkel complained that what used to be “called saving or consolidation or balanced budgets” is “now called austerity,” adding that this “really sounds like something completely evil.”

Merkel is catching major heat from French President Francois Hollande...and now Italian Prime Minister Letta. Both are calling for growth policies, not austerity. In the case of Hollande, he faces a revolt within his own Socialist Party as the president’s poll numbers hit 25% after just one year in office and with local elections slated for next year. Letta is only prime minister because he agreed to head a three-party coalition that is seeking to roll back tax hikes enacted by former Prime Minister Mario Monti, but Letta didn’t say nary a word about where his government would find the 6 billion euro in lost revenues. In his first speech to parliament, he also said little about cuts in public spending.

Hollande is willing to meet Merkel half way on creating the long-awaited banking union, but Merkel doesn’t want to touch the topic until after the September German elections. Merkel needs to maintain the deficit hawk image that Germany knows best until after the vote. Only then can she become more flexible. [Merkel’s poll numbers have been slipping a bit recently, which will only harden her fiscal positions.]

It doesn’t help that public confidence in the European Union has slumped to record lows, according to survey data compiled by Eurobarometer, the union’s polling arm. 72% of those polled in Spain said they “tended not to trust” the group, compared with 23% in 2007, the year before Europe got swept up in a global financial crisis. Distrust has soared in Germany, rising to 59% from 36%.

Of course Wednesday was May Day, a holiday for much of Europe, and this year a time of protest. In Greece, a 24-hour general strike was called, severely disrupting public services. More than 20 general strikes over the past year or so have failed to halt the austerity cuts, emboldening the government.

There were protests in Portugal, where the government announced it would be slashing government spending 6 billion euro, which, as in the case of Greece, will meet fierce resistance from opposition parties and the unions. Portugal is expected to contract another 2.3% this year, with unemployment reaching 18.5% in 2014.

As for Cyprus, it’s parliament narrowly approved the multi-billion bailout agreement it requires to stay afloat, 29-27, with frustration over the harsh terms lingering. The European Commission projects the economy will contract a depressing 8.5% this year.

Tony Barber / Financial Times

“A collective howl of protest and despair will resound through Europe’s streets and squares on Wednesday at the annual May 1 rallies, which, in happier times, celebrate the dignity of human labor.

“It is difficult to be festive when 26 million Europeans are jobless and economic recession blights the continent. For the first time in generations, numerous parents fear that the future living standards of their children will be lower than their own. Their sense of powerlessness is all the greater because, in or out of government, Europe’s center-left parties – once the formidable political voice of the organized working classes – no longer appear capable of fulfilling their historical mission as protectors of jobs, welfare and social cohesion.

“Five years of financial crisis, fuelled by the excesses of reckless capitalism, might have crippled the electoral fortunes and ideological credibility of conservative, laissez-faire parties on the European right. Instead, the left comes armed with solutions that voters mistrust as impractical, expensive or out of step with the times.”

Finally, Mario Draghi was asked about a comment posted on Twitter Thursday by Pope Francis.

“I think of how many, and not just young people, are unemployed, many times due to a purely economic conception of society, which seeks selfish profit, beyond the parameters of social justice. I wish to extend an invitation to solidarity to everyone, and I would like to encourage those in public office to make every effort to give new impetus to employment.”

“We are – we use the word frustrated – yes certainly,” Draghi responded, before justifying the focus on markets. “Financial markets are the only, the necessary channel through which monetary policy is transmitted.”

Bottom line, the credit crunch, and all its ill effects, continues.

Reinhart-Rogoff, Part Deux

Editorial / Wall Street Journal

“Perhaps you’ve read that America’s debt burden is no longer a problem. Former White House economist Larry Summers says the U.S. should borrow even more money today because interest rates are low, and his Keynesian brethren are busy trying to discredit economists Kenneth Rogoff and Carmen Reinhart for their famous claim that a country’s economic growth begins to fall when debt hits 90% of GDP. Time for Stimulus 5.0!

“The Reinhart-Rogoff duo have admitted a math error while defending their core argument, though we’ve never considered their 90% figure to be dogma. Their main contribution was to remind politicians amid the post-crisis Keynesian spending blowout that public debt isn’t a free lunch. It has to be repaid, which means a country must either spend less, tax more, grow faster, repudiate the debt or inflate it away.

“The Keynesians are attacking Reinhart-Rogoff with such vitriol now precisely so they can rev up the spending engines once again. In their economic model, more government spending equals more GDP. So governments must keep spending more no matter what they spend it on....

“Where we agree with at least some Keynesians is that the main policy goal now should be faster economic growth rather than rapid debt reduction. Where we disagree is how to promote that growth. The Keynesians are now using a false choice between ‘austerity’ and growth to justify more of the government spending they think drives economic prosperity. The brawl over Reinhart-Rogoff is thus less a serious economic debate than it is a political exercise to turn more of the private economy over to government hands.

“After five years of trying, we should know this doesn’t work. The real way to promote a stronger economy is more austerity and reform in government, and fewer restraints on private investment and risk taking.”

Holman W. Jenkins, Jr. / Wall Street Journal

“Pundits inflating the importance of pundits is about the only fun aspect of this controversy. When Greeks and Spaniards and Irish were unable to roll over their debts, it was not because investors read Reinhart and Rogoff.

“When Germany insisted, in return for bailouts, that these countries enact tax hikes and spending cuts, it wasn’t because German pols were in thrall to Rogoff and Reinhart.

“In inflicting serial fiscal cliffs on itself, Washington wasn’t studying Rogoff and Reinhart but the irreconcilable demands of voters who want no spending cuts, no tax hikes and no deficits.

“In the sequestration accident that followed, the culprit wasn’t Rogoff and Reinhart but the understandable desire of politicians to put off spending discipline until tomorrow – and then, dammit, tomorrow arrived.

“Don’t be misled because politicians are promiscuous citers of authorities they haven’t consulted and papers they haven’t read for what politicians would do anyway. As much as some try to invent a fierce debate between ‘austerians’ and advocates of stimulus, the policy consensus, in fact, has been strikingly solid. Michael Kinsley nicely demonstrates in a Los Angeles Times column that even Paul Krugman and his bête noire, deficit hawk Pete Peterson, have been saying the same thing: NO to immediate fiscal stringency, YES to long-term reform.

“Now if various blowhards who campaign against austerity and say they are in favor of long-run reform actually supported long-run reform, we might get somewhere.”

Kenneth Rogoff and Carmen Reinhart / Financial Times

“The recent debate about the global economy has taken a distressingly simplistic turn. Some now argue that just because one cannot definitely prove very high debt is bad for growth (though the weight of the results still say it is), then high debt is not a problem. Looking beyond the recent public debate about the literature on debt – we have already discussed our results on debt and growth in that context – the debate needs to be reconnected to the facts.

“Let us start with one: the ratios of debt to gross domestic product are at historically high levels in many countries, many rising above previous wartime peaks. This is before adding in concerns over contingent liabilities on private sector balance sheets and underfunded old-age security and pension programs. In the case of Germany, there is also the likely need to further cushion the debt loads of eurozone partners. Some say not to worry, pointing to bursts of growth after the world wars. But today’s debts will not be dealt with by boosts to supply from postwar demobilization and to demand from the lifting of wartime controls.

“To be clear, no one should be arguing to stabilize debt, much less bring it down, until growth is more solidly entrenched – if there remains a choice, that is. Faced with, at best, haphazard access to international capital markets and high borrowing costs, periphery countries in Europe face more limited alternatives.

“Nevertheless, given current debt levels, enhanced stimulus should only be taken selectively and with due caution. A higher borrowing trajectory is warranted, given weak demand and low interest rates, where governments can identify high-return infrastructure projects. Borrowing to finance productive infrastructure raises long-run potential growth, ultimately pulling debt ratios lower. We have argued this consistently since the outset of the crisis.

“Ultra-Keynesians would go further and abandon any pretense of concern about longer-term debt reduction. This position has been in the rhetorical ascendancy in recent months, with new signs of weaker growth. It throws caution to the wind on debt and, to quote Star Trek, pushes governments to ‘go where no man has gone before.’ The basic rationale is that low interest rates make borrowing a free lunch....

“Economists simply have little idea how long it will be until rates begin to rise. If one accepts that maybe, just maybe, a significant rise in interest rates in the next decade might be a possibility, then plans for an unlimited open-ended surge in debt should give one pause....

“There is a scholarly debate about the risks of high debt. We remain confident in the prevailing view in this field that high debt is associated with lower growth. Certainly, let’s not fall into the trap of concluding that today’s high debts are a non-issue. Keynes was not dismissive of debt. Why should we be?”

This is the last I’ll write of this debate in any detail for a long time, I imagine. Rogoff and Reinhart are right. I showed that last week. Whether debt at 90% of GDP is positive or negative for growth isn’t what’s important. There is conclusive evidence growth will be lower than if, say, debt was 60% or 70%. Period. Case closed.

And as the two allude to above, the net interest expense will explode when interest rates inevitably rise. That’s why my main number isn’t 90%, but rather $800 billion in 2022.

By the way...Italy’s debt to GDP is going to hit 131% this year and a projected 134% in 2014. The yield on its 10-year bond has declined from about 6.75% to 3.80% since last summer. That’s great.

But watch what happens during the next crisis in Europe to Italy’s crapola.

Street Bytes

--The Dow Jones finished the week up 1.8%, while the S&P 500 added 2% and Nasdaq 3%. In the case of the S&P, it took 13 years to go from 1500 to 1600. All three are now up 12-14% for the year. As Ronald Reagan would have said...not bad, not bad at all.

--U.S. Treasury Yields

6-mo. 0.08% 2-yr. 0.22% 10-yr. 1.74% 30-yr. 2.96%

The long end of the curve backed up a bit on Friday’s better than expected employment data. Not a big deal. 

--China’s National Statistics Office released the data on April manufacturing and it came in at 50.6, down from March’s 50.9 reading. A reading on the service economy was 54.5, down from 55.6 the prior month. The trends aren’t good. Industrial profits slowed rapidly in the month of March. And housing prices continue to rise, despite the government’s ongoing efforts to bring them down.

At the same time, the death toll from the H7N9 bird flu virus has risen to at least 25, with over 120 people having been diagnosed with the virus since it was first reported in late March.

H7N9 has the potential to become a huge economic story, far beyond its immediate impact on companies like Yum Brands, which receives over 50% of its revenue from its KFC operations in China.

The World Health Organization has warned the influenza virus was “one of the most lethal” ever seen, and while the WHO said there is still no evidence of human-to-human transmission, the possibility exists it might acquire the ability to do so.

Colin Butte, an expert in avian viruses at Britain’s Pirbright Institute, told the South China Morning Post, “The longer the virus is unchecked in circulation, the higher the probability that this virus will start transmitting from person to person.”

Meanwhile, idiot Chinese researchers decided it would be fun to swap a single gene of the H5N1 bird flu virus with one from H1N1 human flu and found this makes it transmissible between guinea pigs, representing a jump from bird to mammals.

This is so freakin’ reckless. It’s a potential horror show of incalculable proportions should this new creation get out of the lab.

You can’t do this! One co-author of a paper on the work said he did not know where the viruses were stored or how they were guarded. I kid you not.

--The Bank of Japan hiked its GDP forecast for the nation to 2.9%, March over March. This is good. But now that the Chinese are close to launching a pandemic, it really doesn’t matter.

--Sales of cars and trucks in the United States soared in April, with Chrysler sales up 11%, Ford’s up 18% and GM’s up 23%. 

Toyota’s were down 1%, however, and Volkswagen’s declined 10%.

--General Motors narrowed its loss in Europe in the first quarter to $175 million, compared with $294 million a year earlier, even as the region’s slump continued to roil sales. GM’s cost-cutting moves there are bearing fruit, vs. Ford’s growing losses of $462 million in Europe last quarter, with a still-projected $2 billion for all of 2013.

GM’s overall earnings, $1.18 billion, exceeded expectations but were down from $1.32 billion a year earlier.

One item in GM’s report that caught my eye, though, was the comment from the president of GM South America, Jaime Ardila, regarding Venezuela, where “we almost had no production or sales in the first quarter.”

Further confirmation Venezuela’s economy is in total free fall. New President Nicolas Maduro will be taken out in a coup within the year...at least that is my educated guess.

--Back to Ford, it did announce some positive news this week as the automaker will be adding 2,000 workers at an F-150 truck factory in Claycomo, Missouri amid surging demand for the F-Series pickup line as a result of the rebounding housing and energy sectors. The F-Series has led the U.S. truck segment for 36 years running.

--Staying in the auto sector, BMW saw profits fall in the first quarter due to still slumping sales in Europe, with the CEO saying, “We don’t expect to receive a great deal of impetus from most European markets over the next few months.”

--The price of crude oil fell $3.00 on Wednesday with the announcement that U.S. inventories reached an 82-year high amid signs of economic slowdown in the U.S. and China.

According to the Energy Information Administration, stockpiles jumped to 395.3 million barrels in the seven days to April 26, the most since the government began gathering weekly data in 1982. According to monthly data, they were last at this level in 1931.

Total fuel consumption dropped 1.4% in the four weeks ended April 26. Gasoline demand declined 1.8% from a year earlier, a rather telling factoid on the state of the U.S. economy.

But by week’s end, crude had rallied back $5 to $95.50, with commodities overall soaring on Friday’s labor report, which was really stupid.

--The International Air Transport Association says air passenger travel grew by 5.9% in March vs. a year earlier.

--Boeing Co.’s 787 Dreamliner jet resumed flights after more than a three-month hiatus, the redesigned battery system having gained approval from the FAA.

--Facebook Inc.’s first-quarter sales topped estimates, rising 38% to $1.46 billion. Mobile made up about 30% of advertising revenue, expanding from 23% during the fourth quarter.

The number of monthly active users on Fracebook rose 23% to 1.11 billion from a year earlier (665 million are considered active ‘daily’ users), with mobile users growing 54% to 751 million.

Facebook’s acquisition of Instagram appears to be bearing fruit, with the number of users jumping to 100 million, from less than 10 million a year ago.

--Shares of LinkedIn fell more than 10% ($26) after the company issued a weaker-than-expected forecast for the current quarter. LinkedIn did, however, make a profit of $22.6 million in the first quarter vs. $5 million during the same period a year earlier; it’s just that expectations had gotten a bit out of hand with the shares soaring 80% in the past 12 months to nosebleed level. The company is also having a little difficulty transitioning to mobile for its advertising revenue.

--Intel finally promoted a 30-year veteran, Brian Krzanich, to the role of CEO, replacing Paul Otellini, who had announced he was stepping down last November. Intel’s processors are in four out of every five PCs sold, but that business is collapsing as tablets and smartphones take over. Intel’s efforts to enter that industry have lost out to the UK’s Arm. Intel shares have been dead in the water for years.

--China has overtaken the U.S. as the world’s largest market for PCs, according to IHS. PC shipments to the country rose to 69 million in units in 2012, vs. U.S. orders for 66 million units.

--Related to the above, global tablet shipments rose 142% year-on-year in the first quarter, according to IDC. Apple’s market share of the tablet market is down to 39.6% compared to 58.1% in the first quarter of 2012 as devices based on Google’s Android operating system are on the rise, accounting for 56.5% of tablet sales.

--Meanwhile, Apple floated the world’s largest corporate debt offering, $17 billion as it looks to return $100 billion cash to shareholders over the coming few years.

Apple, which had no debt before Tuesday’s sale, has $145 billion in cash but only $45 billion of that is held in the U.S.

Among the instruments in the six-part offering, Apple’s new 10-year bond was sold at a yield of 2.41%, 75 basis points over the then 10-year Treasury, and 3.88% for the 30-year paper, 100 bps over.

--An index of manufacturing in Australia, similar to our ISM factory readings, plunged to 36.7 last month, a four-year low, as the strength of the Aussie dollar is bankrupting manufacturers unable to compete with cheap imports.

--The feds are crawling all over JPMorgan Chase for a myriad of issues, the latest being an accusation the bank is misrepresenting prices of electricity contracts with California and Michigan that resulted in overpayments, and that management lied under oath.

I love it. Nail ‘em. [See below.]

--Gold has been on an incredibly volatile ride, with physical demand continuing to soar, and with demand from mints in the U.S. to Australia to the U.K. surging. Ditto Dubai to Istanbul. The recent price decline didn’t hurt.

--Taiwan’s economy expanded at just a 1.5% clip in the first quarter compared with a year earlier, after increasing 3.7% in the fourth quarter. Export orders and industrial output unexpectedly fell.

--In remarks given April 17 that were first published (at least that I saw) last weekend, Columbia University professor Jeffrey Sachs told a distinguished gathering of bankers and professionals at the Philadelphia Federal Reserve building that corruption, insider trading and criminal behavior are rampant on Wall Street today, with financiers and Washington playing the same games they did five years ago.

Sachs has long been one of the most cited economists in the world and as the New York Post’s John Aidan Byrne described it, his comments were a “bombshell.”

Sachs blames “a docile president, a docile White House and a docile regulatory system that absolutely can’t find its voice.”

“What has been revealed in my view, is prima facie criminal behavior....It’s financial fraud on a very large extent. There’s also a tremendous amount of insider trading – you can even watch when you are living in New York how that works.”

Sachs described an environment of Wall Street buying off politicians with their huge campaign contributions. In the 2012 election cycle, “political contributions by the securities and investment sector totaled some $271.5 million, compared with $176 million in 2008, according to the Center for Responsive Politics.”

“I meet a lot of these people on Wall Street on a regular basis right now,” Sachs told the conference. “I am going to put it very bluntly: I regard the moral environment as pathological. And I am talking about the human interactions...I’ve not seen anything like this, not felt it so palpably....

“They have no responsibility to pay taxes; they have no responsibility to their clients; they have no responsibility to people, to counterparties in transactions. They are tough, greedy, aggressive and feel absolutely out of control in a quite literal sense, and they have gamed the system to a remarkable extent.”

Sachs went after hedge fund titan John Paulson:

“He worked together with Goldman Sachs to defraud, massively, many European banks which bought the toxic mortgages that Paulson put together....The chair of Goldman, of course, continued in his position and continued at White House state dinners, and Paulson wasn’t even mentioned once in any of the proceedings, and he took home a $1 billion dollar paycheck the next year, even as Goldman was paying a roughly $700 million fine, if I remember correctly, for the abuse that Paulson was part of.”

It makes you sick.

--Embattled Herbalife reported solid first-quarter earnings, topping the Street’s expectations, and raised guidance for all of 2013.

--Sales of hummus are surging in the U.S. as consumers look for more healthful snacks, up 11% in 2012 from a year earlier. This is also a 25% jump over 2010.

The trends make PepsiCo’s 2008 purchase of a 50% stake in Sabra look good, while Kraft Foods profits from its Athenos brand.

So with growing demand for hummus, the Wall Street Journal reported that many farmers are considering moving into chickpeas, which heretofore have been harvested mostly in the states of Washington and Idaho. Chickpeas are a very tiny crop compared to wheat and corn, but the harvest of it last year did total a record 332 million pounds, up 51%.

Farmers in Virginia are increasingly turning to the crop option, but the state’s humidity and heat make it more susceptible to a certain kind of fungus. The fungus among us.

--Ad revenue for CBS Corp. rose 8% in the first quarter to $2.46 billion. Television advertising revenue grew 14% from the year-earlier period, though the figure is juiced by the impact of the Super Bowl.

--The New York Times took over the No. 2 slot in newspaper circulation, ahead of USA TODAY, with the addition of more than 300,000 digital subscriptions. The Times now has print and digital subs of 1.9 million. The Wall Street Journal remains in first place with 2.4 million in print and digital.

--According to a Pew Research Center report, the wealthiest 7% of Americans – the group most likely to own stocks – saw their net worth rise 28% in 2009-2011, while the lower 93% experienced a 4% decline. Stocks were rising during this period, while housing was stagnant. Housing values are of course now rising again since 2011.

--The controversy over the admission policy for the Metropolitan Museum of Art in New York continues. The New York Post has studied documents related to the museum going back over 100 years to determine if there was ever a permanent policy of soliciting fees and none exists. [There is one that allowed for patrons to be charged, for six months only, back in like 1970, but even that document  is a stretch.]

So, again, remember...you do NOT have to pay the “suggested” admission fee of $25...which I stupidly have over the years. Next time I’m giving them $5.

Two $multimillion lawsuits against the City and the Met continue to wind their way through the courts.

Foreign Affairs

Syria: In a week when Syrian government forces stepped up their offensive, while two car bombs struck the center of Damascus, one a failed attempt to kill Syria’s prime minister, and with Hizbullah’s Sheikh Nasrallah saying his forces were prepared to intervene directly on the side of Assad (which they are already doing in an unannounced fashion), Defense Secretary Chuck Hagel became the first top U.S. official to publicly acknowledge that the Obama administration is rethinking its opposition to arming the rebels, but Hagel added, “It doesn’t mean that the president has decided on anything.”

Earlier in the week, President Obama voiced caution in responding to what he has called the ‘red line’ on chemical weapons use.

The French and British have been calling for arming the rebels for months now and in a few weeks, a European Union arms embargo on Syria expires, after which it is either renewed, it is lifted so the likes of Britain and France can ship the arms, or the two will just ignore any renewed embargo and do it anyway.

Thursday, Turkish Prime Minister Tayyip Erdogan became the latest to claim Syrian President Bashar al-Assad had used chemical weapons. Erdogan is coming to Washington later this month and the prime minister said he would be discussing Assad’s use of WMD during his meeting with Obama.

Some opinion...

George Will / Washington Post

“People who talk incessantly often talk imprecisely, and Barack Obama, who is as loquacious as he is impressed with his verbal dexterity, has talked himself into a corner concerning Syria and chemical weapons. This is condign [ed. ‘deserved, appropriate’] punishment for his rhetorical carelessness, but the nation’s credibility, not just his, will suffer. His policy is better than the description of it, and his description is convoluted because he lacks the courage of his sensible conviction that entanglement in Syria would be unwise.

“Nine months ago, Obama said: ‘We have been very clear to the Assad regime...that a red line for us is we start seeing a whole bunch of chemical weapons moving around or being utilized. That would change my calculus.’ This is less a policy than a large loophole masquerading as a policy.

“ ‘Moving around or being utilized’ (emphasis added) suggested that moving the weapons would cross the red line. Now, however, the argument is entirely about whether they have been used. How much is ‘a whole bunch’? Can less than this be utilized without changing Obama’s ‘calculus’? What, if anything, might a changed calculus mean in terms of U.S. actions?

“By last week, the ‘red line’ had been demoted to just ‘another line’: ‘To use potential weapons of mass destruction on civilian populations crosses another line with respect to international norms and international law...That is going to be a game changer.’ Well....

“Obama, who supposedly speaks so well, is behaving better than he is speaking....

“In December, Obama said: ‘The use of chemical weapons is and would be totally unacceptable.’ Not partially but totally, so...

“Remember Colin Powell’s U.N. speech detailing Iraq’s weapons of mass destruction, a speech the accusations in which Powell meticulously vetted during days he spent at CIA headquarters? Obama is muddled about his own red lines but he is rightly cautious about what it is possible to know about the Assad regime’s behavior.

“Then-Secretary of State Hillary Clinton said ‘it is in our DNA’ to believe ‘there are no limits on what is possible or what can be achieved.’ Obama seems to know better. Certainly his confused – or perhaps calculatedly confusing – words about red lines serve his policy of sensible caution.”

Editorial / Washington Post

“The muddle that is President Obama’s policy on Syria has grown still muddier. On Tuesday the president backed away from a ‘red line’ he had drawn on the use of chemical weapons by the regime of Bashar al-Assad, setting the threshold for proof of a violation in such a way as to virtually exclude the possibility that one could ever be confirmed. Yet that same day his aides leaked to The Post and other news organizations the news that the president might soon reverse his long-standing opposition to providing Syrian rebels with arms. And the administration readied yet another effort to persuade Russia to abandon its support of the Assad regime in favor of a negotiated political transition.

“Can any coherence be found in this? A charitable interpretation might be that Mr. Obama wishes to avoid immediate U.S. intervention but wants to pressure Moscow into changing its position by letting it be known that the alternative is greater U.S. support for the rebels. If so, Mr. Obama is being too clever. His weak and legalistic words about the need to verify a ‘chain of custody’ on any chemical-weapons use and his declaration that even a hard confirmation would lead only to a ‘rethink [of] the range of options’ simply invite further chemical attacks.

“As Free Syrian Army commander Salim Idriss – the man the administration is counting on to unify the moderate opposition – put it in a letter to the president: ‘Assad is not taking your carefully phrased condemnations as warnings, but as loopholes, which justify his continued use of chemical weapons on a small, strategic scale.’

“As for Russia, ruler Vladimir Putin has offered no public hint that he has any inclination to reverse his support for Mr. Assad. It’s not just that the Kremlin has interests to protect in Syria; Mr. Putin’s priority is to prevent what he views as another U.S.-sponsored regime change....

“What’s needed is what the opposition has repeatedly requested: a no-fly zone in parts of Syria, or other measures – such as attacks with missiles and stealth bombers – to ground the Syrian air force. Yes, such measures would have to be taken without a United Nations resolution, and they would upset Mr. Putin. But if Mr. Obama continues to pursue a policy of awaiting U.N. consensus and deferring to Russia, the result will be more crossings of his red line – and grave damage to U.S. interests.”

Ralph Peters / New York Post

“To borrow the climactic line from ‘Easy Rider,’ ‘We blew it.’ Or, to be fully accurate, President Obama blew an unprecedented chance to aid Syria’s then-moderate opposition back in 2011.

“We could have helped end the monstrous Assad regime, gaining good will and practical advantage in a hopeful new state.

“Now it’s too late. And Obama may be ready to act at last. The result could be disastrous.

“Strategy isn’t only about doing the right thing, but about doing the right thing at the right time. Doing what appears to be the ‘right thing’ too late often makes things worse....

“(A) homespun revolution to overthrow a dictatorship hardened into a sectarian bloodbath. Unwilling to aid genuine freedom fighters seeking inclusive government, Obama handed off the mission to the Saudis and Gulf Arabs.

“But the Gulf Arabs and Saudis don’t want a rule-of-law democracy in Syria that might give their own people ideas. They need Syria to be another Islamist state without women’s rights, press freedom or anything resembling tolerance.

“So these repressive states we claim as allies armed hardline jihadi factions, while wealthy individuals sponsored involvement by terrorist outsiders (including al-Qaeda), giving their governments deniability.

“The result? A brave freedom struggle morphed into a vicious pan-Arab and Iranian struggle over Syria’s future. This is now a regional war fought by proxies.....

“Now we’re reduced to choosing between devils: Do we aid an insurgency increasingly dominated by extremists and outright terrorists, or do we accept the continued rule of Baathist fascists buttressed by Shia fanatics?

“Maybe it’s time to come to our senses and see that this isn’t our fight. The human suffering in Syria is appalling, but Arabs are doing this to each other....

“In the brutal light of Realpolitik, is it a bad thing to have the last Baathists, Hizbullah, and Salafist fanatics killing each other?....

“Has Obama backed himself into a corner with his red-line braggadocio? He suddenly seems to see 50 shades of red; let’s hope that caution continues: We must be wary of letting chemical-weapons use lure us into abetting the rise of a terrorist state in Syria.

“If Arabs will not help their brothers and sisters, why should we? The Syria crisis is an Arab failure. Let’s not make it America’s failure, too.”

As for Israel’s response to all the above, Prime Minister Netanyahu had ordered his ministers to stay silent, so as not to encourage speculation of a rift between the U.S. and its key ally in the region.

But then it seems he released various officials to speak their minds, such as Amir Peretz, Environment Minister, who said, “We expect that whoever defines red lines will also do what is needed. First and foremost, the U.S. and of course the entire international community.”

Netanyahu laid out the intelligence on Syria’s use of chemical weapons in his direct talks with President Obama when the latter was in Israel recently and explained should such weapons fall into the hands of jihadists it would represent an existential threat to Israel.

Regarding both Syria and Iran, the Wall Street Journal’s Bret Stephens notes that Obama isn’t the only bluffer these days...Israeli Prime Minister Netanyahu is another.

I wrote months ago that while Netanyahu is easily the brightest man on the planet (at least among world leaders), he does have a character flaw...to some. The inability to pull the trigger, to act decisively.

Bret Stephens:

“(Israel) faces an Iran that, according to former military intelligence chief Amos Yadlin, has already crossed the nuclear red line Israeli Prime Minister Netanyahu drew at the U.N.’s General Assembly last September. Did Mr. Netanyahu draw that line as a means of warning Iran, or of goading the U.S. to act?

“If it was the latter, it was a bad bet. Mr. Obama will treat evidence of Iran’s impending nuclearization the way he has looked at Syria’s use of chemical weapons, demanding a standard of proof that will be impossible to meet until it is too late to do much about it. And as in Syria, the longer he searches for proof, the tougher the military options will become.

“If it was the former, however, then Israel had better be prepared to act. Soon. A threat that cannot be executed should never be issued. It invites contempt from friend and foe alike. If Mr. Netanyahu really has been bluffing all along, he’ll go down as the man who made Ehud Olmert look good.

“Israel’s military planners have now had more than a decade to plan an attack on Iran. Let’s assume their capabilities are better than advertised. (Can a country that can come up with Iron Dome be incapable of producing the required bunker busters?) Let’s assume also there’s a known-unknown in this plan, an element of surprise that will take even the most hardened war-gamers by surprise.

“It had better work. Because Israel cannot live with a nuclear Iran. Because Iran should know by now that this American administration will not be coming to its rescue. Because the purpose of a Jewish state is never having to rely for survival on the kindness of others, even ones so charming and solicitous as Barack Obama.”

Iran: The U.S. Energy Information Administration said global sanctions cut Iran’s crude oil exports by 39% in 2012 to 1.5 million barrels a day. Iran’s oil exports are estimated to make up 80% of its total export earnings and 50% to 60% of government revenue, the EIA said.

Pakistan: A leading prosecutor, the one responsible for the investigation into the assassination of former prime minister Benazir Bhutto, Chaudhry Zulfikar, was himself gunned down while driving to a court in Islamabad when gunmen fired at him from a taxi. Zulfikar, hit in the head, then lost control of his car and killed a woman passer-by, while his guard returned fire.

Zulfikar’s investigation also involved former ruler Pervez Musharraf and his murder thus throws that case into disarray, Musharraf currently being under house arrest, with the military not happy about the treatment of their former leader. Prosecutors have accused Musharraf of being involved in Bhutto’s assassination by purposefully not providing enough security for her.

No one has ever been convicted in the Bhutto case.

[Zulfikar was also pursuing seven suspected militants over the 2008 Mumbai attacks.]

Separately, India is furious over the death in prison of an Indian man on death row in Pakistan for espionage who died after being attacked by fellow inmates. The victim had been in prison since 1990 after being convicted of espionage in connection with bombings in two Pakistani cities.

What upset India was that the man was in a coma for at least five days following the attack and the Indian government said he should have been repatriated to India for emergency treatment. Pakistan claims he was given the best care possible.

Afghanistan: President Hamid Karzai admitted the CIA has been dropping off bags of cash at his office for the past decade, acknowledging the money was used for “various purposes.”

Karzai described the payments as a “small amount,” but various reports say it is about $300,000 a month, or well in excess of $30 million over the decade. Karzai uses the slush fund to pay off warlords, lawmakers and others whose support he depends upon.

As U.S. Republican Congressman Jason Chaffetz put it, “We’ve all suspected (the payments). But for President Karzai to admit it out loud brings us into a bizarro world.”

Meanwhile, the Taliban announced it was starting its spring offensive. Days later, three British soldiers were killed by an IED. More than 400 Brits have been killed in Afghanistan.

China: In a wide-ranging, new food-safety scandal, the Ministry of Public Security announced that police had arrested up to 900 people over the past few months for their involvement in a ring that bought rat, fox and mink flesh and sold it as lamb; the latest in a growing list of disgusting issues in the Chinese food chain, going back to the scandals concerning tainted milk from years ago. Some of the 900 were charged with “selling meat injected with water and meat from animals dead from disease, as well as passing off relatively cheap types of meat as relatively expensive beef and mutton,” according to a ministry statement.

The fraud sometimes had deadly results, such as a person dying from eating barbecued meat that was heavily laced with pesticides.

Some 20,000 tons of fake meat has been seized in the last three months.

The Communist Party is under growing pressure over the food safety issue, let alone the myriad of pollution problems, from air to water, that severely impact the quality of life in the country. And while the government has been more open in addressing the situation, little actual change has resulted.

Separately, a high-ranking People’s Liberation Army representative has called on China to counter increasing Western influence, especially among young people.

General Zhu Heping wrote an article in the Guangming Daily:

“Western cultural infiltration techniques are very clever in their deception and hidden nature. This ‘cultural colonialism’ is like slowly boiling a frog: the young generation can easily lose its will to resist without knowing,” referring to the proverb in which a frog will not escape if placed in water as it boils.

“Western hostile forces seize every opportunity to sneak attacks against us, and they are pressing harder and harder.”

As Patrick Boehler of the South China Morning Post wrote, “These comments could be directed more at domestic attempts to rein in the military under Xi Jinping’s leadership, rather than foreign ‘cultural aggression.’” Yup.

North Korea: A new Pentagon report to Congress on Thursday claims Pyongyang’s new Taepodong-2 missile might ultimately be able to reach the United States carrying a nuclear payload, citing the North’s December launch of a multi-stage rocket that delivered a satellite into orbit as an advance that “contributes heavily” to the country’s development of a long-range ballistic missile capability.

Couple this with the nuclear test in February, as the report says, and North Korea moves closer to its “stated objective of being able to strike the U.S. homeland.”

Meanwhile, North Korea sentenced a U.S. citizen, Pae Jun-ho, known in the U.S. as Kenneth Bae, to 15 years of hard labor for being a spy and allegedly attempting to overthrow the government.

South Korean activists say Bae may have been arrested for taking photos of starving children.

The U.S. State Department said, “We call on the DPRK [North Korea] to release Kenneth Bae immediately on humanitarian grounds.”

Clearly, Pyongyang seeks to use Bae as leverage and would love for a high-profile figure such as Jimmy Carter to be forced to go begging for his release.

Bangladesh: The death toll from the collapse of an eight-story factory building near the capital of Dhaka passed 500, with scores still unaccounted for. At least three engineers associated with the building, as well as the building owner and his cohorts are also under arrest.

The most recent engineer arrested, however, Abdur Razzak Khan, had actually warned that the complex was unsafe and had told the owners to evacuate the building the day before the collapse. But he was a consultant to the owner, who is suspected of illegally adding more floors to the building. We also learned, Friday, that there were four huge generators on the roof that clearly contributed to the catastrophe.

Somalia: The UN food agency reported that during the famine that hit Somalia from 2010 to 2012, nearly 260,000 died; half of them children under the age of five. This figure is higher than the estimated 220,000 that died during the 1992 famine.

Random Musings

--Two college friends of Dzhokhar Tsarnaev were accused of trying to cover up his involvement in the Boston Marathon bombing by removing evidence from his room, while a third was charged with lying to the FBI.

The first two are Kazakhs accused of removing a laptop and a backpack containing fireworks from Tsarnaev’s dorm room and throwing them in a dumpster.

The three were not accused of actual involvement in the attack.

Meanwhile, we now know the mother of the men who bombed the marathon and killed the MIT police officer, Zubeidat Tsarnaev, was on a U.S. terror watch list 18 months before the attack, along with dead son, Tamerlan.

And a law enforcement official revealed that Tamerlan and Dzhokhar originally planned to set off their bombs during Boston’s July 4 celebrations, but accelerated their plans because they had completed building the bombs more quickly than they anticipated.

--Thomas L. Friedman / New York Times

“As police investigators peel away the layers of the Boston Marathon bombing, there are two aspects of this unfolding story to which I want to react: the mind-set of the alleged bombers and the role of the Internet in shaping it. Important news about both was contained in a single Washington Post article on Tuesday.

“ ‘The 19-year-old suspect...has told interrogators that the American wars in Iraq and Afghanistan motivated him and his brother to carry out the attack, according to U.S. officials familiar with the interviews,’ The Post reported. The officials said, ‘(the two) do not appear to have been directed by a foreign terrorist organization. Rather, the officials said, the evidence so far suggests they were ‘self-radicalized’ through Internet sites and U.S. actions in the Muslim world. Dzhokhar Tsarnaev has specifically cited the U.S. war in Iraq, which ended in December 2011 with the removal of the last American forces, and the war in Afghanistan.’

“This is a popular meme among radical Muslim groups, and, to be sure, some Muslim youths were deeply angered by the U.S. interventions in the Middle East....

“But what in God’s name does that have to do with planting a bomb at the Boston Marathon and blowing up innocent people? It is amazing to me how we’ve come to accept this non sequitur and how easily we’ve allowed radical Muslim groups and their apologists to get away with it....

“It’s a double non sequitur when it comes from Muslim youths who lived and studied in America, where, if you’re upset about something, you have many ways to express your opposition and have an impact – from organizing demonstrations to publishing articles to running for office....

“Moreover, some 70,000 people, most of them Muslims, have been killed by other Muslims in the Syrian civil war, which the U.S. had nothing to do with – although many Muslims are now begging us to intervene to stop it....

“(We) must ask a question only Muslims can answer: What is going on in your community that a critical number of your youth believes that every American military action in the Middle East is intolerable and justifies a violent response, and everything Muslim extremists do to other Muslims is ignorable and calls for mostly silence?”

--Diane Barnes / Global Security Newswire:

“A U.S. nuclear arms site in Tennessee could be working its guard dogs to exhaustion during vehicle checks and skipping steps in their training, raising the risk that intruders or explosives could slip into the facility unnoticed, the Energy Department inspector general said in a report...

“ ‘We found that half of the canine teams we observed failed explosive detection tests, many canines failed to respond to at least one of the handler’s commands, and that canines did not receive all required training,’ says the assessment by Energy Department auditors. The department backed calls in the report to settle on and implement ‘acceptable’ work requirements for the dogs.”

The Y-12 National Security Complex has faced a number of security failures over the past year, including a July break-in in which three peace activists reached the site’s bomb-grade uranium storage area and allegations of cheating on exams by contract security personnel.

We are so overrated as a nation....it just needs to be said. This sure as heck is not the dogs’ fault.

The canines are supposed to be given rest time if they perform more than 25 vehicle checks in one hour, yet the IG report noted a dog team last May had completed 60 checks in one hour and 42 the following one.

--And then you have the FBI arresting the wrong man in the ricin investigation. At first agents ransacked innocent Kevin Curtis’ home, with Curtis’ lawyer, Christi McCoy, saying, “I have seen a lot of post search residences but this one is quite disturbing. The agents removed art from the walls, broke the frames and tore the artwork. Mr. Curtis offered his keys but agents chose to break the lock. Mr. Curtis’ garbage was scheduled to be picked up Thursday, the day after he was snatched from his life. A week later, the garbage remains in his home, along with millions of insects it attracted.”

McCoy does say she believes the FBI acted on the best information available at the time, but it’s time to make her client whole.

Damn right.

--A University of New Hampshire poll last week had Hillary Clinton receiving 61% to Joe Biden’s 7% should the two face-off in that state in 2016.

A Quinnipiac University nationwide survey has Clinton receiving 65% of the vote vs. just 13% for Biden.

--According to a new poll by Fairleigh Dickinson University, 44% of registered Republican voters indicated that they believed armed rebellion would soon be a reality in the U.S.; just 18% of Democrats agreed. As for Independent voters, 27% indicated that guns would soon be used to settle the country’s political problems.

So, not surprisingly given the above, on the issue of gun control, 24% of Republicans said new laws were needed, while 73% of Democrats favored it.

Said one of the professors at Fairleigh Dickinson involved in the survey, “If there was a bipartisan moment after Sandy Hook to pass gun control legislation, it’s past.” [David Knowles / New York Daily News]

--But in a CBS News/New York Times poll, nearly 9 in 10 surveyed said they favored background checks on all gun buyers, and 6 in 10 said they were disappointed or angry with the recent defeat of a bipartisan measure in the Senate that would have expanded background checks for gun buyers.

If you’re a little confused, only 41% of those surveyed, both parties, approve of Obama’s handling of gun policy. One Republican from Dallas, Pa., told the pollsters, “I was really ticked off that the law didn’t pass. But I thought it was wrong of President Obama to get in front of the public and use people who had been damaged by gun violence as props.”

On immigration, 83% of respondents said they supported a path to citizenship for the 11 million immigrants already in the country illegally.

--Charles Krauthammer / Washington Post

“For Obama, gun control was a political disaster. He invested capital. He went on a multi-city tour. He paraded grieving relatives. And got nothing. An assault-weapons ban – a similar measure had passed the Congress 20 years ago – lost 60 to 40 in a Senate where Democrats control 55 seats. Obama failed even to get mere background checks.

“All this while appearing passive, if not helpless, on the world stage. On Syria, Obama is nervously trying to erase the WMD red line he had so publicly established. On Benghazi, he stonewalled accusations that State Department officials wishing to testify are being blocked.

“He is even taking heat for the Boston bombings. Every day brings another revelation of signals missed beforehand. And his post-bombing pledge to hunt down those responsible was mocked by the scandalous Mirandizing of Dzhokhar Tsarnaev, gratuitously shutting down information from the one person who knows more than anyone about possible still-existent explosives, associates, trainers, future plans, etc.

“Now, the screw will undoubtedly turn again. If immigration reform passes, Obama will be hailed as the comeback kid, and a new ‘Obama rising’ narrative proclaimed.

“This will overlook the fact that immigration reform has little to do with Obama and everything to do with GOP panic about the Hispanic vote. In fact, Obama has been asked by congressional negotiators to stay away, so polarizing a figure has he become.

“Nonetheless, whatever happens, the screw will surely turn again, if only because of media boredom. But that’s the one constant of Washington political life: There are no straight-line graphs. We live from inflection point to inflection point.

“And we’ve just experienced one. From king of the world to dead in the water in six months. Quite a ride.”

--Peggy Noonan / Wall Street Journal

“I think we’re all agreed the president is fading – failing to lead, to break through, to show he’s not at the mercy of events but, to some degree at least, in command of them. He couldn’t get a win on gun control with 90% public support. When he speaks on immigration reform you get the sense he’s setting it back. He’s floundering on Syria. The looming crisis on implementation of ObamaCare has begun to fill the news. Even his allies are using the term ‘train wreck.’ ObamaCare is not only the most slovenly written major law in modern American history, it is full of sneaked-in surprises people are just discovering. The Democrats of Washington took advantage of the country’s now-habitual distractedness: The country, now seeing what’s coming in terms of taxes and fees, will not be amused. Mr. Obama’s brilliant sequester strategy – scare the American public into supporting me – flopped. Congress is about to hold hearings on Boston and how the brothers Tsarnaev slipped through our huge law-enforcement and immigration systems. Benghazi and what appear to be its cover-ups drags on and will not go away; press secretary Jay Carney was reduced to saying it happened ‘a long time ago.’ It happened in September. The economy is stuck in low-growth, employment in no-growth. The president has about a month to gather himself together on the budget, tax reform and an immigration deal before Congress goes into recess. What are the odds?”

--According to the Centers for Disease Control and Prevention, the number of suicides in a year rose 31% to 38,364 in 2010 from 29,181 in 1999. For adults aged 35 to 64, the group most responsible for the increase, suicide is now the fourth most common cause of death behind cancer, heart disease and unintentional injury such as drowning. That is up from the eighth spot in 1999. Something about the economy and all.

--Forget the May Day snowstorm in parts of the West and Midwest, April was the snowiest on record for many cities, from Colorado to Minnesota. The official reason was a “blocking” area of high pressure over Greenland, eastern Canada and the North Atlantic Ocean, which favors a cold northwest flow of air over the central and eastern USA, according to AccuWeather.

One thing is for sure...golf courses in these areas are suffering major financial losses.

--So I wrote last time how New Jersey officials are frustrated that some residents, with homes directly on the beach, aren’t willing to sign off on easements that would allow for dune building after Hurricane Sandy because they don’t want to lose their views.

So the other day, Gov. Chris Christie was doing a town hall meeting on Long Beach and he told the kids “cover your ears.”

Christie called those refusing to give the federal government access to their property “knuckleheads” and then said, “Let me use an indelicate word. Bullshit. That’s what that is...That’s the excuse they use. Here’s why they’re really concerned: They don’t want their view blocked.”

“We are building these dunes, okay?” Christie said. “We are building these dunes whether you consent or not.”

--I’m going with Orb in the Kentucky Derby, assuming the horses don’t all float away in the deluge that is forecast.

--Finally, I watched George Jones’ funeral at the Grand Ole Opry on Thursday and what a touching, moving celebration of his life. Former First Lady Laura Bush was at the side of Jones’ widow, Nancy, who was amazing for allowing such a public gathering...the Opry House seating 4,400.

Country music royalty was there in full force as Laura quoted from her husband, a huge George Jones fan:

“We can only imagine how beautiful the heavens now sound.”

As one of the emcees at the service said, “Jones had his faults, made his mistakes...but, you know, he always owned them.”

Gov. Mike Huckabee said that up above, Jones would be met with six simple words:

“Well done, good and faithful servant.”

Needless to say, the Possum goes down as the greatest country singer of all time. There will never be another like him. Encourage your children to learn about his music. Pick up his Greatest Hits yourself, if it isn’t already in your collection.

---

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

God bless America.
---

Gold closed at $1469
Oil, $95.50

Returns for the week 4/29-5/3

Dow Jones +1.8% [14973]
S&P 500 +2.0% [1614]
S&P MidCap +2.1%
Russell 2000 +2.0%
Nasdaq +3.0% [3378]

Returns for the period 1/1/13-5/3/13

Dow Jones +14.3%
S&P 500 +13.2%
S&P MidCap +14.2%
Russell 2000 +12.4%
Nasdaq +11.9%

Bulls 47.9
Bears 18.8 [Source: Investors Intelligence]

Dr. Bortrum posted a new column. Check it out.

Nightly Review video schedule, Mon. – Thurs., posted around 5:30 PM ET.

Have a great week. I appreciate your support.

Brian Trumbore



AddThis Feed Button

-05/04/2013-      
Web Epoch NJ Web Design  |  (c) Copyright 2016 StocksandNews.com, LLC.

Week in Review

05/04/2013

For the week 4/29-5/3

[Posted 12:00 AM ET]

The U.S. and European Economies

It was another historic week in the markets with the Dow Jones and S&P 500 closing at new highs; in the case of the Dow hitting the 15000 level before finishing Friday at 14973, while the S&P 500 crossed 1600 for the first time and stayed there, closing the week at 1614.

The impetus came from the labor market. On Thursday, the weekly jobless claims number came in at 324,000, the fewest since January 2008, and on Friday, the April employment data showed a better than expected increase of 165,000 jobs (176,000 in the private sector), while there were large revisions to February and March, up to 332,000 and 138,000, respectively. In the case of February’s number, the best single month since November 2005 (if you exclude a May 2010 number boosted by Census workers), while the March revision was 50,000 higher than the initial putrid reading of 88,000.

The official unemployment rate ticked down to 7.5%, the lowest since December 2008.

But the average workweek dropped, the number of part-time workers rose, and the sickly labor participation rate was unchanged.

Take the last two months’ average of about 150,000 and couple it with the other recent data and you have a 2% growth economy. Better than Europe, that’s for sure, and the kind of growth that will keep the free money spigot on at full force, which is good if you’ve been in equities (which of course is the point of the Fed’s easy money policy...keep you invested), but just understand the markets are no longer cheap.

I reiterate, I am not a bear, and have not been one of those talking incessantly about a “correction.” I have specifically avoided the word.

Maybe Friday’s employment data was the beginning of the end of the spring swoon just about all the other data points to. Just understand the rest of the developed world, save Japan, is slowing...that’s a fact.

So we know the markets aren’t trading on the fundamentals. It’s the central banks’ hooch that’s the elixir and this week the Federal Reserve said it is willing to increase, as well as reduce, its $85 billion-a-month Quantitative Easing 3 program of buying mortgage-backed securities and Treasuries to keep interest rates low and “to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes.”

Earlier this week we had a reading on April manufacturing, the Chicago Purchasing Managers’ report, PMI, that came in at 49.0, the worst for this data point since Sept. 2009 and far off the expectation of 52.8. Then the national ISM reading for the month was at 51.0, lower than March’s 51.3 and barely above the 50 growth/contraction line. March factory orders fell hard, down 4.0%. And corporate earnings for the first quarter continued to tell the same old story.

About 70% of the companies in the S&P 500 beat on the bottom line, earnings, while only 42-44% are beating on the top line, revenues, and by most estimates, when everyone has reported, revenues for the first quarter will have increased 1-2%. As that great NBA ballplayer Derrick Coleman used to say, “Whoopty-damn-do.”

And not to beat a dead horse, but my point in discussing Europe as much as I have since their crisis started three years ago (and I defy you to find anyone who has written more on a consistent basis than yours truly) is because U.S. multinationals derive a large share of their profits from the troubled continent.

Look at G.E.’s recent earnings report. Industrial revenues in Europe were down 17%. Air Products (industrial gases) said this week, “Europe sunk deeper into recession” in discussing why its sales there were down 5%. Dow Chemical’s sales to Western Europe were off 12%.

These are not small figures. According to Deutsche Bank, 17% of the profit and revenues from companies in the S&P 500 comes from Europe...that’s why Europe matters, Charlie Brown.

But before I go across the pond...two other items.

The S&P/Case-Shiller data on housing for February was very good. The 20-city metro index rose 9.3%, year over year, the best pace since May 2006. The Atlanta market is up 16%, Vegas up 17.6%, Los Angeles 14%, Phoenix 23%...but New York only up 1.9%. Every market, however, saw an increase for both January and February.

And then there was the announcement the U.S. Treasury expects to pay down debt in the second quarter of 2013, compared with a February estimate it would have to borrow $103 billion.

The Treasury said, “The decrease in borrowing relates primarily to higher receipts, lower outlays, and changes in cash balance assumptions.”

This is good.  Still, understand the Treasury expects to borrow a net $223 billion in the third quarter and the budget deficit for fiscal 2013 (which began October 1) will still come in anywhere from $775 billion to $845 billion, down from the $1 trillion plus the prior four years but awful nonetheless.

I have written gobs on this topic. This is the danger point. Yes, the deficit is headed down. If you go with the latest Congressional Budget Office estimates, down to $430 billion for fiscal 2015. 

But by 2022, unless Congress and the White House do something, today, on entitlements (as Alan Simpson and Erskine Bowles continually warn us), the budget deficit goes right back to $957 billion in 2022 and soars from there.

Point two...you also know by now from reading my work that the net interest expense for this current year will come in around $220 billion. But assuming a normalized interest rate environment, specifically for the 2019-2022 period, 5% on the 10-year and 4% on 3-month T-bills, the net interest expense soars to $800 billion by 2022.

$800 billion! Wasted freakin’ money! Again, you think the sequester is tough today? You think the scare mongering we are force fed is bad? Wait until the debates nine years from now on drastic reductions in your favorite government programs, including the military. Wait until your taxes soar to heights not seen since pre-Reagan.

It’s why action must be taken now...this year...before the next election cycle kills any chance of true entitlement reform.

It’s why every single one of you should be depressed if you understand our future. I saw Erskine Bowles on CNBC this week and despite his boilerplate optimism a grand bargain can somehow be reached because it is has to be, he could not have looked more down. 

Not to ruin your weekend...treat yourself to a mint julep while watching the Derby. And I’ll hold off on ObamaCare for one week.

Europe

The European Central Bank cut its benchmark interest rate to 0.50% from 0.75%, addressing, as Markit’s Chris Williamson put it, the absurd situation where the “fastest contracting region in the world” has the highest rates among peers.

The ECB then said it would also keep open its special liquidity facilities until at least the middle of 2014, extending the existing policy by one year.

A stream of awful economic news made the ECB’s decision an easy one after ten months of being on hold.

Euro-area unemployment reached a record 12.1% in March, up from 11.0% in March 2012. [The EU27’s rate is 10.9%.]

Greece’s unemployment rate hit 27.2% (January...its data lags), with a youth rate of 59.1%. Spain is at 26.7% (the government calls it 27%). Portugal, 17.5%.

France is at a new high, 11.0%. Italy is at 11.5%, a near 20-year high, with a 36% youth unemployment rate. Italy’s economy is expected to contract 1.5% this year.

Eurozone manufacturing for the month of April came in at 46.7, down from March’s 46.8, the 21st straight month of contraction for manufacturing. Germany’s figure, as measured by Markit, was 48.1, down from March’s 49.0.

There are increasing calls to roll back austerity, such as with Italy’s new government of Prime Minister Enrico Letta, while at the same time Greece and Portugal enacted new austerity measures in order to ensure they continued to receive their bailout funds. In the case of Greece, it will fire 15,000 more civil service workers.

The problem for the ECB continues to be that even a rate cut will have zero impact on the real economy, especially in the periphery, where the so-called transmission effect, by which record-low interest rates are translated into real world borrowing costs for small- and medium-sized businesses and households in the likes of Italy and Spain, is currently non-existent.

ECB President Mario Draghi even brought up the idea of cutting the deposit rate for banks to below zero, negative interest rates on eurozone deposits, an unprecedented step designed to impose a fee on banks for parking excess cash at the ECB and thus forcing them to lend.

But while negative rates could force some banks to lend, it will undoubtedly hurt the profitability of other financial institutions, which further hampers credit supply to companies and households.

Draghi urged governments to step up economic reforms to improve competitiveness and “not to unravel” efforts to reduce their budget deficits. He also emphasized that “swift implementation” of elements of banking union – including a single supervisory mechanism and centralized resolution mechanism for winding up weak banks – were “crucial” to bringing down borrowing rates for the periphery.

Draghi added that while inflation is at a three-year low, the risks on that front were “broadly balanced” rather than worrisome, as in deflation.

For her part, German Chancellor Angela Merkel is seeking to combat the image of her nation being the deficit scold of Europe. Asked at a forum in Berlin whether the “screw of austerity” had been turned too tight, Merkel complained that what used to be “called saving or consolidation or balanced budgets” is “now called austerity,” adding that this “really sounds like something completely evil.”

Merkel is catching major heat from French President Francois Hollande...and now Italian Prime Minister Letta. Both are calling for growth policies, not austerity. In the case of Hollande, he faces a revolt within his own Socialist Party as the president’s poll numbers hit 25% after just one year in office and with local elections slated for next year. Letta is only prime minister because he agreed to head a three-party coalition that is seeking to roll back tax hikes enacted by former Prime Minister Mario Monti, but Letta didn’t say nary a word about where his government would find the 6 billion euro in lost revenues. In his first speech to parliament, he also said little about cuts in public spending.

Hollande is willing to meet Merkel half way on creating the long-awaited banking union, but Merkel doesn’t want to touch the topic until after the September German elections. Merkel needs to maintain the deficit hawk image that Germany knows best until after the vote. Only then can she become more flexible. [Merkel’s poll numbers have been slipping a bit recently, which will only harden her fiscal positions.]

It doesn’t help that public confidence in the European Union has slumped to record lows, according to survey data compiled by Eurobarometer, the union’s polling arm. 72% of those polled in Spain said they “tended not to trust” the group, compared with 23% in 2007, the year before Europe got swept up in a global financial crisis. Distrust has soared in Germany, rising to 59% from 36%.

Of course Wednesday was May Day, a holiday for much of Europe, and this year a time of protest. In Greece, a 24-hour general strike was called, severely disrupting public services. More than 20 general strikes over the past year or so have failed to halt the austerity cuts, emboldening the government.

There were protests in Portugal, where the government announced it would be slashing government spending 6 billion euro, which, as in the case of Greece, will meet fierce resistance from opposition parties and the unions. Portugal is expected to contract another 2.3% this year, with unemployment reaching 18.5% in 2014.

As for Cyprus, it’s parliament narrowly approved the multi-billion bailout agreement it requires to stay afloat, 29-27, with frustration over the harsh terms lingering. The European Commission projects the economy will contract a depressing 8.5% this year.

Tony Barber / Financial Times

“A collective howl of protest and despair will resound through Europe’s streets and squares on Wednesday at the annual May 1 rallies, which, in happier times, celebrate the dignity of human labor.

“It is difficult to be festive when 26 million Europeans are jobless and economic recession blights the continent. For the first time in generations, numerous parents fear that the future living standards of their children will be lower than their own. Their sense of powerlessness is all the greater because, in or out of government, Europe’s center-left parties – once the formidable political voice of the organized working classes – no longer appear capable of fulfilling their historical mission as protectors of jobs, welfare and social cohesion.

“Five years of financial crisis, fuelled by the excesses of reckless capitalism, might have crippled the electoral fortunes and ideological credibility of conservative, laissez-faire parties on the European right. Instead, the left comes armed with solutions that voters mistrust as impractical, expensive or out of step with the times.”

Finally, Mario Draghi was asked about a comment posted on Twitter Thursday by Pope Francis.

“I think of how many, and not just young people, are unemployed, many times due to a purely economic conception of society, which seeks selfish profit, beyond the parameters of social justice. I wish to extend an invitation to solidarity to everyone, and I would like to encourage those in public office to make every effort to give new impetus to employment.”

“We are – we use the word frustrated – yes certainly,” Draghi responded, before justifying the focus on markets. “Financial markets are the only, the necessary channel through which monetary policy is transmitted.”

Bottom line, the credit crunch, and all its ill effects, continues.

Reinhart-Rogoff, Part Deux

Editorial / Wall Street Journal

“Perhaps you’ve read that America’s debt burden is no longer a problem. Former White House economist Larry Summers says the U.S. should borrow even more money today because interest rates are low, and his Keynesian brethren are busy trying to discredit economists Kenneth Rogoff and Carmen Reinhart for their famous claim that a country’s economic growth begins to fall when debt hits 90% of GDP. Time for Stimulus 5.0!

“The Reinhart-Rogoff duo have admitted a math error while defending their core argument, though we’ve never considered their 90% figure to be dogma. Their main contribution was to remind politicians amid the post-crisis Keynesian spending blowout that public debt isn’t a free lunch. It has to be repaid, which means a country must either spend less, tax more, grow faster, repudiate the debt or inflate it away.

“The Keynesians are attacking Reinhart-Rogoff with such vitriol now precisely so they can rev up the spending engines once again. In their economic model, more government spending equals more GDP. So governments must keep spending more no matter what they spend it on....

“Where we agree with at least some Keynesians is that the main policy goal now should be faster economic growth rather than rapid debt reduction. Where we disagree is how to promote that growth. The Keynesians are now using a false choice between ‘austerity’ and growth to justify more of the government spending they think drives economic prosperity. The brawl over Reinhart-Rogoff is thus less a serious economic debate than it is a political exercise to turn more of the private economy over to government hands.

“After five years of trying, we should know this doesn’t work. The real way to promote a stronger economy is more austerity and reform in government, and fewer restraints on private investment and risk taking.”

Holman W. Jenkins, Jr. / Wall Street Journal

“Pundits inflating the importance of pundits is about the only fun aspect of this controversy. When Greeks and Spaniards and Irish were unable to roll over their debts, it was not because investors read Reinhart and Rogoff.

“When Germany insisted, in return for bailouts, that these countries enact tax hikes and spending cuts, it wasn’t because German pols were in thrall to Rogoff and Reinhart.

“In inflicting serial fiscal cliffs on itself, Washington wasn’t studying Rogoff and Reinhart but the irreconcilable demands of voters who want no spending cuts, no tax hikes and no deficits.

“In the sequestration accident that followed, the culprit wasn’t Rogoff and Reinhart but the understandable desire of politicians to put off spending discipline until tomorrow – and then, dammit, tomorrow arrived.

“Don’t be misled because politicians are promiscuous citers of authorities they haven’t consulted and papers they haven’t read for what politicians would do anyway. As much as some try to invent a fierce debate between ‘austerians’ and advocates of stimulus, the policy consensus, in fact, has been strikingly solid. Michael Kinsley nicely demonstrates in a Los Angeles Times column that even Paul Krugman and his bête noire, deficit hawk Pete Peterson, have been saying the same thing: NO to immediate fiscal stringency, YES to long-term reform.

“Now if various blowhards who campaign against austerity and say they are in favor of long-run reform actually supported long-run reform, we might get somewhere.”

Kenneth Rogoff and Carmen Reinhart / Financial Times

“The recent debate about the global economy has taken a distressingly simplistic turn. Some now argue that just because one cannot definitely prove very high debt is bad for growth (though the weight of the results still say it is), then high debt is not a problem. Looking beyond the recent public debate about the literature on debt – we have already discussed our results on debt and growth in that context – the debate needs to be reconnected to the facts.

“Let us start with one: the ratios of debt to gross domestic product are at historically high levels in many countries, many rising above previous wartime peaks. This is before adding in concerns over contingent liabilities on private sector balance sheets and underfunded old-age security and pension programs. In the case of Germany, there is also the likely need to further cushion the debt loads of eurozone partners. Some say not to worry, pointing to bursts of growth after the world wars. But today’s debts will not be dealt with by boosts to supply from postwar demobilization and to demand from the lifting of wartime controls.

“To be clear, no one should be arguing to stabilize debt, much less bring it down, until growth is more solidly entrenched – if there remains a choice, that is. Faced with, at best, haphazard access to international capital markets and high borrowing costs, periphery countries in Europe face more limited alternatives.

“Nevertheless, given current debt levels, enhanced stimulus should only be taken selectively and with due caution. A higher borrowing trajectory is warranted, given weak demand and low interest rates, where governments can identify high-return infrastructure projects. Borrowing to finance productive infrastructure raises long-run potential growth, ultimately pulling debt ratios lower. We have argued this consistently since the outset of the crisis.

“Ultra-Keynesians would go further and abandon any pretense of concern about longer-term debt reduction. This position has been in the rhetorical ascendancy in recent months, with new signs of weaker growth. It throws caution to the wind on debt and, to quote Star Trek, pushes governments to ‘go where no man has gone before.’ The basic rationale is that low interest rates make borrowing a free lunch....

“Economists simply have little idea how long it will be until rates begin to rise. If one accepts that maybe, just maybe, a significant rise in interest rates in the next decade might be a possibility, then plans for an unlimited open-ended surge in debt should give one pause....

“There is a scholarly debate about the risks of high debt. We remain confident in the prevailing view in this field that high debt is associated with lower growth. Certainly, let’s not fall into the trap of concluding that today’s high debts are a non-issue. Keynes was not dismissive of debt. Why should we be?”

This is the last I’ll write of this debate in any detail for a long time, I imagine. Rogoff and Reinhart are right. I showed that last week. Whether debt at 90% of GDP is positive or negative for growth isn’t what’s important. There is conclusive evidence growth will be lower than if, say, debt was 60% or 70%. Period. Case closed.

And as the two allude to above, the net interest expense will explode when interest rates inevitably rise. That’s why my main number isn’t 90%, but rather $800 billion in 2022.

By the way...Italy’s debt to GDP is going to hit 131% this year and a projected 134% in 2014. The yield on its 10-year bond has declined from about 6.75% to 3.80% since last summer. That’s great.

But watch what happens during the next crisis in Europe to Italy’s crapola.

Street Bytes

--The Dow Jones finished the week up 1.8%, while the S&P 500 added 2% and Nasdaq 3%. In the case of the S&P, it took 13 years to go from 1500 to 1600. All three are now up 12-14% for the year. As Ronald Reagan would have said...not bad, not bad at all.

--U.S. Treasury Yields

6-mo. 0.08% 2-yr. 0.22% 10-yr. 1.74% 30-yr. 2.96%

The long end of the curve backed up a bit on Friday’s better than expected employment data. Not a big deal. 

--China’s National Statistics Office released the data on April manufacturing and it came in at 50.6, down from March’s 50.9 reading. A reading on the service economy was 54.5, down from 55.6 the prior month. The trends aren’t good. Industrial profits slowed rapidly in the month of March. And housing prices continue to rise, despite the government’s ongoing efforts to bring them down.

At the same time, the death toll from the H7N9 bird flu virus has risen to at least 25, with over 120 people having been diagnosed with the virus since it was first reported in late March.

H7N9 has the potential to become a huge economic story, far beyond its immediate impact on companies like Yum Brands, which receives over 50% of its revenue from its KFC operations in China.

The World Health Organization has warned the influenza virus was “one of the most lethal” ever seen, and while the WHO said there is still no evidence of human-to-human transmission, the possibility exists it might acquire the ability to do so.

Colin Butte, an expert in avian viruses at Britain’s Pirbright Institute, told the South China Morning Post, “The longer the virus is unchecked in circulation, the higher the probability that this virus will start transmitting from person to person.”

Meanwhile, idiot Chinese researchers decided it would be fun to swap a single gene of the H5N1 bird flu virus with one from H1N1 human flu and found this makes it transmissible between guinea pigs, representing a jump from bird to mammals.

This is so freakin’ reckless. It’s a potential horror show of incalculable proportions should this new creation get out of the lab.

You can’t do this! One co-author of a paper on the work said he did not know where the viruses were stored or how they were guarded. I kid you not.

--The Bank of Japan hiked its GDP forecast for the nation to 2.9%, March over March. This is good. But now that the Chinese are close to launching a pandemic, it really doesn’t matter.

--Sales of cars and trucks in the United States soared in April, with Chrysler sales up 11%, Ford’s up 18% and GM’s up 23%. 

Toyota’s were down 1%, however, and Volkswagen’s declined 10%.

--General Motors narrowed its loss in Europe in the first quarter to $175 million, compared with $294 million a year earlier, even as the region’s slump continued to roil sales. GM’s cost-cutting moves there are bearing fruit, vs. Ford’s growing losses of $462 million in Europe last quarter, with a still-projected $2 billion for all of 2013.

GM’s overall earnings, $1.18 billion, exceeded expectations but were down from $1.32 billion a year earlier.

One item in GM’s report that caught my eye, though, was the comment from the president of GM South America, Jaime Ardila, regarding Venezuela, where “we almost had no production or sales in the first quarter.”

Further confirmation Venezuela’s economy is in total free fall. New President Nicolas Maduro will be taken out in a coup within the year...at least that is my educated guess.

--Back to Ford, it did announce some positive news this week as the automaker will be adding 2,000 workers at an F-150 truck factory in Claycomo, Missouri amid surging demand for the F-Series pickup line as a result of the rebounding housing and energy sectors. The F-Series has led the U.S. truck segment for 36 years running.

--Staying in the auto sector, BMW saw profits fall in the first quarter due to still slumping sales in Europe, with the CEO saying, “We don’t expect to receive a great deal of impetus from most European markets over the next few months.”

--The price of crude oil fell $3.00 on Wednesday with the announcement that U.S. inventories reached an 82-year high amid signs of economic slowdown in the U.S. and China.

According to the Energy Information Administration, stockpiles jumped to 395.3 million barrels in the seven days to April 26, the most since the government began gathering weekly data in 1982. According to monthly data, they were last at this level in 1931.

Total fuel consumption dropped 1.4% in the four weeks ended April 26. Gasoline demand declined 1.8% from a year earlier, a rather telling factoid on the state of the U.S. economy.

But by week’s end, crude had rallied back $5 to $95.50, with commodities overall soaring on Friday’s labor report, which was really stupid.

--The International Air Transport Association says air passenger travel grew by 5.9% in March vs. a year earlier.

--Boeing Co.’s 787 Dreamliner jet resumed flights after more than a three-month hiatus, the redesigned battery system having gained approval from the FAA.

--Facebook Inc.’s first-quarter sales topped estimates, rising 38% to $1.46 billion. Mobile made up about 30% of advertising revenue, expanding from 23% during the fourth quarter.

The number of monthly active users on Fracebook rose 23% to 1.11 billion from a year earlier (665 million are considered active ‘daily’ users), with mobile users growing 54% to 751 million.

Facebook’s acquisition of Instagram appears to be bearing fruit, with the number of users jumping to 100 million, from less than 10 million a year ago.

--Shares of LinkedIn fell more than 10% ($26) after the company issued a weaker-than-expected forecast for the current quarter. LinkedIn did, however, make a profit of $22.6 million in the first quarter vs. $5 million during the same period a year earlier; it’s just that expectations had gotten a bit out of hand with the shares soaring 80% in the past 12 months to nosebleed level. The company is also having a little difficulty transitioning to mobile for its advertising revenue.

--Intel finally promoted a 30-year veteran, Brian Krzanich, to the role of CEO, replacing Paul Otellini, who had announced he was stepping down last November. Intel’s processors are in four out of every five PCs sold, but that business is collapsing as tablets and smartphones take over. Intel’s efforts to enter that industry have lost out to the UK’s Arm. Intel shares have been dead in the water for years.

--China has overtaken the U.S. as the world’s largest market for PCs, according to IHS. PC shipments to the country rose to 69 million in units in 2012, vs. U.S. orders for 66 million units.

--Related to the above, global tablet shipments rose 142% year-on-year in the first quarter, according to IDC. Apple’s market share of the tablet market is down to 39.6% compared to 58.1% in the first quarter of 2012 as devices based on Google’s Android operating system are on the rise, accounting for 56.5% of tablet sales.

--Meanwhile, Apple floated the world’s largest corporate debt offering, $17 billion as it looks to return $100 billion cash to shareholders over the coming few years.

Apple, which had no debt before Tuesday’s sale, has $145 billion in cash but only $45 billion of that is held in the U.S.

Among the instruments in the six-part offering, Apple’s new 10-year bond was sold at a yield of 2.41%, 75 basis points over the then 10-year Treasury, and 3.88% for the 30-year paper, 100 bps over.

--An index of manufacturing in Australia, similar to our ISM factory readings, plunged to 36.7 last month, a four-year low, as the strength of the Aussie dollar is bankrupting manufacturers unable to compete with cheap imports.

--The feds are crawling all over JPMorgan Chase for a myriad of issues, the latest being an accusation the bank is misrepresenting prices of electricity contracts with California and Michigan that resulted in overpayments, and that management lied under oath.

I love it. Nail ‘em. [See below.]

--Gold has been on an incredibly volatile ride, with physical demand continuing to soar, and with demand from mints in the U.S. to Australia to the U.K. surging. Ditto Dubai to Istanbul. The recent price decline didn’t hurt.

--Taiwan’s economy expanded at just a 1.5% clip in the first quarter compared with a year earlier, after increasing 3.7% in the fourth quarter. Export orders and industrial output unexpectedly fell.

--In remarks given April 17 that were first published (at least that I saw) last weekend, Columbia University professor Jeffrey Sachs told a distinguished gathering of bankers and professionals at the Philadelphia Federal Reserve building that corruption, insider trading and criminal behavior are rampant on Wall Street today, with financiers and Washington playing the same games they did five years ago.

Sachs has long been one of the most cited economists in the world and as the New York Post’s John Aidan Byrne described it, his comments were a “bombshell.”

Sachs blames “a docile president, a docile White House and a docile regulatory system that absolutely can’t find its voice.”

“What has been revealed in my view, is prima facie criminal behavior....It’s financial fraud on a very large extent. There’s also a tremendous amount of insider trading – you can even watch when you are living in New York how that works.”

Sachs described an environment of Wall Street buying off politicians with their huge campaign contributions. In the 2012 election cycle, “political contributions by the securities and investment sector totaled some $271.5 million, compared with $176 million in 2008, according to the Center for Responsive Politics.”

“I meet a lot of these people on Wall Street on a regular basis right now,” Sachs told the conference. “I am going to put it very bluntly: I regard the moral environment as pathological. And I am talking about the human interactions...I’ve not seen anything like this, not felt it so palpably....

“They have no responsibility to pay taxes; they have no responsibility to their clients; they have no responsibility to people, to counterparties in transactions. They are tough, greedy, aggressive and feel absolutely out of control in a quite literal sense, and they have gamed the system to a remarkable extent.”

Sachs went after hedge fund titan John Paulson:

“He worked together with Goldman Sachs to defraud, massively, many European banks which bought the toxic mortgages that Paulson put together....The chair of Goldman, of course, continued in his position and continued at White House state dinners, and Paulson wasn’t even mentioned once in any of the proceedings, and he took home a $1 billion dollar paycheck the next year, even as Goldman was paying a roughly $700 million fine, if I remember correctly, for the abuse that Paulson was part of.”

It makes you sick.

--Embattled Herbalife reported solid first-quarter earnings, topping the Street’s expectations, and raised guidance for all of 2013.

--Sales of hummus are surging in the U.S. as consumers look for more healthful snacks, up 11% in 2012 from a year earlier. This is also a 25% jump over 2010.

The trends make PepsiCo’s 2008 purchase of a 50% stake in Sabra look good, while Kraft Foods profits from its Athenos brand.

So with growing demand for hummus, the Wall Street Journal reported that many farmers are considering moving into chickpeas, which heretofore have been harvested mostly in the states of Washington and Idaho. Chickpeas are a very tiny crop compared to wheat and corn, but the harvest of it last year did total a record 332 million pounds, up 51%.

Farmers in Virginia are increasingly turning to the crop option, but the state’s humidity and heat make it more susceptible to a certain kind of fungus. The fungus among us.

--Ad revenue for CBS Corp. rose 8% in the first quarter to $2.46 billion. Television advertising revenue grew 14% from the year-earlier period, though the figure is juiced by the impact of the Super Bowl.

--The New York Times took over the No. 2 slot in newspaper circulation, ahead of USA TODAY, with the addition of more than 300,000 digital subscriptions. The Times now has print and digital subs of 1.9 million. The Wall Street Journal remains in first place with 2.4 million in print and digital.

--According to a Pew Research Center report, the wealthiest 7% of Americans – the group most likely to own stocks – saw their net worth rise 28% in 2009-2011, while the lower 93% experienced a 4% decline. Stocks were rising during this period, while housing was stagnant. Housing values are of course now rising again since 2011.

--The controversy over the admission policy for the Metropolitan Museum of Art in New York continues. The New York Post has studied documents related to the museum going back over 100 years to determine if there was ever a permanent policy of soliciting fees and none exists. [There is one that allowed for patrons to be charged, for six months only, back in like 1970, but even that document  is a stretch.]

So, again, remember...you do NOT have to pay the “suggested” admission fee of $25...which I stupidly have over the years. Next time I’m giving them $5.

Two $multimillion lawsuits against the City and the Met continue to wind their way through the courts.

Foreign Affairs

Syria: In a week when Syrian government forces stepped up their offensive, while two car bombs struck the center of Damascus, one a failed attempt to kill Syria’s prime minister, and with Hizbullah’s Sheikh Nasrallah saying his forces were prepared to intervene directly on the side of Assad (which they are already doing in an unannounced fashion), Defense Secretary Chuck Hagel became the first top U.S. official to publicly acknowledge that the Obama administration is rethinking its opposition to arming the rebels, but Hagel added, “It doesn’t mean that the president has decided on anything.”

Earlier in the week, President Obama voiced caution in responding to what he has called the ‘red line’ on chemical weapons use.

The French and British have been calling for arming the rebels for months now and in a few weeks, a European Union arms embargo on Syria expires, after which it is either renewed, it is lifted so the likes of Britain and France can ship the arms, or the two will just ignore any renewed embargo and do it anyway.

Thursday, Turkish Prime Minister Tayyip Erdogan became the latest to claim Syrian President Bashar al-Assad had used chemical weapons. Erdogan is coming to Washington later this month and the prime minister said he would be discussing Assad’s use of WMD during his meeting with Obama.

Some opinion...

George Will / Washington Post

“People who talk incessantly often talk imprecisely, and Barack Obama, who is as loquacious as he is impressed with his verbal dexterity, has talked himself into a corner concerning Syria and chemical weapons. This is condign [ed. ‘deserved, appropriate’] punishment for his rhetorical carelessness, but the nation’s credibility, not just his, will suffer. His policy is better than the description of it, and his description is convoluted because he lacks the courage of his sensible conviction that entanglement in Syria would be unwise.

“Nine months ago, Obama said: ‘We have been very clear to the Assad regime...that a red line for us is we start seeing a whole bunch of chemical weapons moving around or being utilized. That would change my calculus.’ This is less a policy than a large loophole masquerading as a policy.

“ ‘Moving around or being utilized’ (emphasis added) suggested that moving the weapons would cross the red line. Now, however, the argument is entirely about whether they have been used. How much is ‘a whole bunch’? Can less than this be utilized without changing Obama’s ‘calculus’? What, if anything, might a changed calculus mean in terms of U.S. actions?

“By last week, the ‘red line’ had been demoted to just ‘another line’: ‘To use potential weapons of mass destruction on civilian populations crosses another line with respect to international norms and international law...That is going to be a game changer.’ Well....

“Obama, who supposedly speaks so well, is behaving better than he is speaking....

“In December, Obama said: ‘The use of chemical weapons is and would be totally unacceptable.’ Not partially but totally, so...

“Remember Colin Powell’s U.N. speech detailing Iraq’s weapons of mass destruction, a speech the accusations in which Powell meticulously vetted during days he spent at CIA headquarters? Obama is muddled about his own red lines but he is rightly cautious about what it is possible to know about the Assad regime’s behavior.

“Then-Secretary of State Hillary Clinton said ‘it is in our DNA’ to believe ‘there are no limits on what is possible or what can be achieved.’ Obama seems to know better. Certainly his confused – or perhaps calculatedly confusing – words about red lines serve his policy of sensible caution.”

Editorial / Washington Post

“The muddle that is President Obama’s policy on Syria has grown still muddier. On Tuesday the president backed away from a ‘red line’ he had drawn on the use of chemical weapons by the regime of Bashar al-Assad, setting the threshold for proof of a violation in such a way as to virtually exclude the possibility that one could ever be confirmed. Yet that same day his aides leaked to The Post and other news organizations the news that the president might soon reverse his long-standing opposition to providing Syrian rebels with arms. And the administration readied yet another effort to persuade Russia to abandon its support of the Assad regime in favor of a negotiated political transition.

“Can any coherence be found in this? A charitable interpretation might be that Mr. Obama wishes to avoid immediate U.S. intervention but wants to pressure Moscow into changing its position by letting it be known that the alternative is greater U.S. support for the rebels. If so, Mr. Obama is being too clever. His weak and legalistic words about the need to verify a ‘chain of custody’ on any chemical-weapons use and his declaration that even a hard confirmation would lead only to a ‘rethink [of] the range of options’ simply invite further chemical attacks.

“As Free Syrian Army commander Salim Idriss – the man the administration is counting on to unify the moderate opposition – put it in a letter to the president: ‘Assad is not taking your carefully phrased condemnations as warnings, but as loopholes, which justify his continued use of chemical weapons on a small, strategic scale.’

“As for Russia, ruler Vladimir Putin has offered no public hint that he has any inclination to reverse his support for Mr. Assad. It’s not just that the Kremlin has interests to protect in Syria; Mr. Putin’s priority is to prevent what he views as another U.S.-sponsored regime change....

“What’s needed is what the opposition has repeatedly requested: a no-fly zone in parts of Syria, or other measures – such as attacks with missiles and stealth bombers – to ground the Syrian air force. Yes, such measures would have to be taken without a United Nations resolution, and they would upset Mr. Putin. But if Mr. Obama continues to pursue a policy of awaiting U.N. consensus and deferring to Russia, the result will be more crossings of his red line – and grave damage to U.S. interests.”

Ralph Peters / New York Post

“To borrow the climactic line from ‘Easy Rider,’ ‘We blew it.’ Or, to be fully accurate, President Obama blew an unprecedented chance to aid Syria’s then-moderate opposition back in 2011.

“We could have helped end the monstrous Assad regime, gaining good will and practical advantage in a hopeful new state.

“Now it’s too late. And Obama may be ready to act at last. The result could be disastrous.

“Strategy isn’t only about doing the right thing, but about doing the right thing at the right time. Doing what appears to be the ‘right thing’ too late often makes things worse....

“(A) homespun revolution to overthrow a dictatorship hardened into a sectarian bloodbath. Unwilling to aid genuine freedom fighters seeking inclusive government, Obama handed off the mission to the Saudis and Gulf Arabs.

“But the Gulf Arabs and Saudis don’t want a rule-of-law democracy in Syria that might give their own people ideas. They need Syria to be another Islamist state without women’s rights, press freedom or anything resembling tolerance.

“So these repressive states we claim as allies armed hardline jihadi factions, while wealthy individuals sponsored involvement by terrorist outsiders (including al-Qaeda), giving their governments deniability.

“The result? A brave freedom struggle morphed into a vicious pan-Arab and Iranian struggle over Syria’s future. This is now a regional war fought by proxies.....

“Now we’re reduced to choosing between devils: Do we aid an insurgency increasingly dominated by extremists and outright terrorists, or do we accept the continued rule of Baathist fascists buttressed by Shia fanatics?

“Maybe it’s time to come to our senses and see that this isn’t our fight. The human suffering in Syria is appalling, but Arabs are doing this to each other....

“In the brutal light of Realpolitik, is it a bad thing to have the last Baathists, Hizbullah, and Salafist fanatics killing each other?....

“Has Obama backed himself into a corner with his red-line braggadocio? He suddenly seems to see 50 shades of red; let’s hope that caution continues: We must be wary of letting chemical-weapons use lure us into abetting the rise of a terrorist state in Syria.

“If Arabs will not help their brothers and sisters, why should we? The Syria crisis is an Arab failure. Let’s not make it America’s failure, too.”

As for Israel’s response to all the above, Prime Minister Netanyahu had ordered his ministers to stay silent, so as not to encourage speculation of a rift between the U.S. and its key ally in the region.

But then it seems he released various officials to speak their minds, such as Amir Peretz, Environment Minister, who said, “We expect that whoever defines red lines will also do what is needed. First and foremost, the U.S. and of course the entire international community.”

Netanyahu laid out the intelligence on Syria’s use of chemical weapons in his direct talks with President Obama when the latter was in Israel recently and explained should such weapons fall into the hands of jihadists it would represent an existential threat to Israel.

Regarding both Syria and Iran, the Wall Street Journal’s Bret Stephens notes that Obama isn’t the only bluffer these days...Israeli Prime Minister Netanyahu is another.

I wrote months ago that while Netanyahu is easily the brightest man on the planet (at least among world leaders), he does have a character flaw...to some. The inability to pull the trigger, to act decisively.

Bret Stephens:

“(Israel) faces an Iran that, according to former military intelligence chief Amos Yadlin, has already crossed the nuclear red line Israeli Prime Minister Netanyahu drew at the U.N.’s General Assembly last September. Did Mr. Netanyahu draw that line as a means of warning Iran, or of goading the U.S. to act?

“If it was the latter, it was a bad bet. Mr. Obama will treat evidence of Iran’s impending nuclearization the way he has looked at Syria’s use of chemical weapons, demanding a standard of proof that will be impossible to meet until it is too late to do much about it. And as in Syria, the longer he searches for proof, the tougher the military options will become.

“If it was the former, however, then Israel had better be prepared to act. Soon. A threat that cannot be executed should never be issued. It invites contempt from friend and foe alike. If Mr. Netanyahu really has been bluffing all along, he’ll go down as the man who made Ehud Olmert look good.

“Israel’s military planners have now had more than a decade to plan an attack on Iran. Let’s assume their capabilities are better than advertised. (Can a country that can come up with Iron Dome be incapable of producing the required bunker busters?) Let’s assume also there’s a known-unknown in this plan, an element of surprise that will take even the most hardened war-gamers by surprise.

“It had better work. Because Israel cannot live with a nuclear Iran. Because Iran should know by now that this American administration will not be coming to its rescue. Because the purpose of a Jewish state is never having to rely for survival on the kindness of others, even ones so charming and solicitous as Barack Obama.”

Iran: The U.S. Energy Information Administration said global sanctions cut Iran’s crude oil exports by 39% in 2012 to 1.5 million barrels a day. Iran’s oil exports are estimated to make up 80% of its total export earnings and 50% to 60% of government revenue, the EIA said.

Pakistan: A leading prosecutor, the one responsible for the investigation into the assassination of former prime minister Benazir Bhutto, Chaudhry Zulfikar, was himself gunned down while driving to a court in Islamabad when gunmen fired at him from a taxi. Zulfikar, hit in the head, then lost control of his car and killed a woman passer-by, while his guard returned fire.

Zulfikar’s investigation also involved former ruler Pervez Musharraf and his murder thus throws that case into disarray, Musharraf currently being under house arrest, with the military not happy about the treatment of their former leader. Prosecutors have accused Musharraf of being involved in Bhutto’s assassination by purposefully not providing enough security for her.

No one has ever been convicted in the Bhutto case.

[Zulfikar was also pursuing seven suspected militants over the 2008 Mumbai attacks.]

Separately, India is furious over the death in prison of an Indian man on death row in Pakistan for espionage who died after being attacked by fellow inmates. The victim had been in prison since 1990 after being convicted of espionage in connection with bombings in two Pakistani cities.

What upset India was that the man was in a coma for at least five days following the attack and the Indian government said he should have been repatriated to India for emergency treatment. Pakistan claims he was given the best care possible.

Afghanistan: President Hamid Karzai admitted the CIA has been dropping off bags of cash at his office for the past decade, acknowledging the money was used for “various purposes.”

Karzai described the payments as a “small amount,” but various reports say it is about $300,000 a month, or well in excess of $30 million over the decade. Karzai uses the slush fund to pay off warlords, lawmakers and others whose support he depends upon.

As U.S. Republican Congressman Jason Chaffetz put it, “We’ve all suspected (the payments). But for President Karzai to admit it out loud brings us into a bizarro world.”

Meanwhile, the Taliban announced it was starting its spring offensive. Days later, three British soldiers were killed by an IED. More than 400 Brits have been killed in Afghanistan.

China: In a wide-ranging, new food-safety scandal, the Ministry of Public Security announced that police had arrested up to 900 people over the past few months for their involvement in a ring that bought rat, fox and mink flesh and sold it as lamb; the latest in a growing list of disgusting issues in the Chinese food chain, going back to the scandals concerning tainted milk from years ago. Some of the 900 were charged with “selling meat injected with water and meat from animals dead from disease, as well as passing off relatively cheap types of meat as relatively expensive beef and mutton,” according to a ministry statement.

The fraud sometimes had deadly results, such as a person dying from eating barbecued meat that was heavily laced with pesticides.

Some 20,000 tons of fake meat has been seized in the last three months.

The Communist Party is under growing pressure over the food safety issue, let alone the myriad of pollution problems, from air to water, that severely impact the quality of life in the country. And while the government has been more open in addressing the situation, little actual change has resulted.

Separately, a high-ranking People’s Liberation Army representative has called on China to counter increasing Western influence, especially among young people.

General Zhu Heping wrote an article in the Guangming Daily:

“Western cultural infiltration techniques are very clever in their deception and hidden nature. This ‘cultural colonialism’ is like slowly boiling a frog: the young generation can easily lose its will to resist without knowing,” referring to the proverb in which a frog will not escape if placed in water as it boils.

“Western hostile forces seize every opportunity to sneak attacks against us, and they are pressing harder and harder.”

As Patrick Boehler of the South China Morning Post wrote, “These comments could be directed more at domestic attempts to rein in the military under Xi Jinping’s leadership, rather than foreign ‘cultural aggression.’” Yup.

North Korea: A new Pentagon report to Congress on Thursday claims Pyongyang’s new Taepodong-2 missile might ultimately be able to reach the United States carrying a nuclear payload, citing the North’s December launch of a multi-stage rocket that delivered a satellite into orbit as an advance that “contributes heavily” to the country’s development of a long-range ballistic missile capability.

Couple this with the nuclear test in February, as the report says, and North Korea moves closer to its “stated objective of being able to strike the U.S. homeland.”

Meanwhile, North Korea sentenced a U.S. citizen, Pae Jun-ho, known in the U.S. as Kenneth Bae, to 15 years of hard labor for being a spy and allegedly attempting to overthrow the government.

South Korean activists say Bae may have been arrested for taking photos of starving children.

The U.S. State Department said, “We call on the DPRK [North Korea] to release Kenneth Bae immediately on humanitarian grounds.”

Clearly, Pyongyang seeks to use Bae as leverage and would love for a high-profile figure such as Jimmy Carter to be forced to go begging for his release.

Bangladesh: The death toll from the collapse of an eight-story factory building near the capital of Dhaka passed 500, with scores still unaccounted for. At least three engineers associated with the building, as well as the building owner and his cohorts are also under arrest.

The most recent engineer arrested, however, Abdur Razzak Khan, had actually warned that the complex was unsafe and had told the owners to evacuate the building the day before the collapse. But he was a consultant to the owner, who is suspected of illegally adding more floors to the building. We also learned, Friday, that there were four huge generators on the roof that clearly contributed to the catastrophe.

Somalia: The UN food agency reported that during the famine that hit Somalia from 2010 to 2012, nearly 260,000 died; half of them children under the age of five. This figure is higher than the estimated 220,000 that died during the 1992 famine.

Random Musings

--Two college friends of Dzhokhar Tsarnaev were accused of trying to cover up his involvement in the Boston Marathon bombing by removing evidence from his room, while a third was charged with lying to the FBI.

The first two are Kazakhs accused of removing a laptop and a backpack containing fireworks from Tsarnaev’s dorm room and throwing them in a dumpster.

The three were not accused of actual involvement in the attack.

Meanwhile, we now know the mother of the men who bombed the marathon and killed the MIT police officer, Zubeidat Tsarnaev, was on a U.S. terror watch list 18 months before the attack, along with dead son, Tamerlan.

And a law enforcement official revealed that Tamerlan and Dzhokhar originally planned to set off their bombs during Boston’s July 4 celebrations, but accelerated their plans because they had completed building the bombs more quickly than they anticipated.

--Thomas L. Friedman / New York Times

“As police investigators peel away the layers of the Boston Marathon bombing, there are two aspects of this unfolding story to which I want to react: the mind-set of the alleged bombers and the role of the Internet in shaping it. Important news about both was contained in a single Washington Post article on Tuesday.

“ ‘The 19-year-old suspect...has told interrogators that the American wars in Iraq and Afghanistan motivated him and his brother to carry out the attack, according to U.S. officials familiar with the interviews,’ The Post reported. The officials said, ‘(the two) do not appear to have been directed by a foreign terrorist organization. Rather, the officials said, the evidence so far suggests they were ‘self-radicalized’ through Internet sites and U.S. actions in the Muslim world. Dzhokhar Tsarnaev has specifically cited the U.S. war in Iraq, which ended in December 2011 with the removal of the last American forces, and the war in Afghanistan.’

“This is a popular meme among radical Muslim groups, and, to be sure, some Muslim youths were deeply angered by the U.S. interventions in the Middle East....

“But what in God’s name does that have to do with planting a bomb at the Boston Marathon and blowing up innocent people? It is amazing to me how we’ve come to accept this non sequitur and how easily we’ve allowed radical Muslim groups and their apologists to get away with it....

“It’s a double non sequitur when it comes from Muslim youths who lived and studied in America, where, if you’re upset about something, you have many ways to express your opposition and have an impact – from organizing demonstrations to publishing articles to running for office....

“Moreover, some 70,000 people, most of them Muslims, have been killed by other Muslims in the Syrian civil war, which the U.S. had nothing to do with – although many Muslims are now begging us to intervene to stop it....

“(We) must ask a question only Muslims can answer: What is going on in your community that a critical number of your youth believes that every American military action in the Middle East is intolerable and justifies a violent response, and everything Muslim extremists do to other Muslims is ignorable and calls for mostly silence?”

--Diane Barnes / Global Security Newswire:

“A U.S. nuclear arms site in Tennessee could be working its guard dogs to exhaustion during vehicle checks and skipping steps in their training, raising the risk that intruders or explosives could slip into the facility unnoticed, the Energy Department inspector general said in a report...

“ ‘We found that half of the canine teams we observed failed explosive detection tests, many canines failed to respond to at least one of the handler’s commands, and that canines did not receive all required training,’ says the assessment by Energy Department auditors. The department backed calls in the report to settle on and implement ‘acceptable’ work requirements for the dogs.”

The Y-12 National Security Complex has faced a number of security failures over the past year, including a July break-in in which three peace activists reached the site’s bomb-grade uranium storage area and allegations of cheating on exams by contract security personnel.

We are so overrated as a nation....it just needs to be said. This sure as heck is not the dogs’ fault.

The canines are supposed to be given rest time if they perform more than 25 vehicle checks in one hour, yet the IG report noted a dog team last May had completed 60 checks in one hour and 42 the following one.

--And then you have the FBI arresting the wrong man in the ricin investigation. At first agents ransacked innocent Kevin Curtis’ home, with Curtis’ lawyer, Christi McCoy, saying, “I have seen a lot of post search residences but this one is quite disturbing. The agents removed art from the walls, broke the frames and tore the artwork. Mr. Curtis offered his keys but agents chose to break the lock. Mr. Curtis’ garbage was scheduled to be picked up Thursday, the day after he was snatched from his life. A week later, the garbage remains in his home, along with millions of insects it attracted.”

McCoy does say she believes the FBI acted on the best information available at the time, but it’s time to make her client whole.

Damn right.

--A University of New Hampshire poll last week had Hillary Clinton receiving 61% to Joe Biden’s 7% should the two face-off in that state in 2016.

A Quinnipiac University nationwide survey has Clinton receiving 65% of the vote vs. just 13% for Biden.

--According to a new poll by Fairleigh Dickinson University, 44% of registered Republican voters indicated that they believed armed rebellion would soon be a reality in the U.S.; just 18% of Democrats agreed. As for Independent voters, 27% indicated that guns would soon be used to settle the country’s political problems.

So, not surprisingly given the above, on the issue of gun control, 24% of Republicans said new laws were needed, while 73% of Democrats favored it.

Said one of the professors at Fairleigh Dickinson involved in the survey, “If there was a bipartisan moment after Sandy Hook to pass gun control legislation, it’s past.” [David Knowles / New York Daily News]

--But in a CBS News/New York Times poll, nearly 9 in 10 surveyed said they favored background checks on all gun buyers, and 6 in 10 said they were disappointed or angry with the recent defeat of a bipartisan measure in the Senate that would have expanded background checks for gun buyers.

If you’re a little confused, only 41% of those surveyed, both parties, approve of Obama’s handling of gun policy. One Republican from Dallas, Pa., told the pollsters, “I was really ticked off that the law didn’t pass. But I thought it was wrong of President Obama to get in front of the public and use people who had been damaged by gun violence as props.”

On immigration, 83% of respondents said they supported a path to citizenship for the 11 million immigrants already in the country illegally.

--Charles Krauthammer / Washington Post

“For Obama, gun control was a political disaster. He invested capital. He went on a multi-city tour. He paraded grieving relatives. And got nothing. An assault-weapons ban – a similar measure had passed the Congress 20 years ago – lost 60 to 40 in a Senate where Democrats control 55 seats. Obama failed even to get mere background checks.

“All this while appearing passive, if not helpless, on the world stage. On Syria, Obama is nervously trying to erase the WMD red line he had so publicly established. On Benghazi, he stonewalled accusations that State Department officials wishing to testify are being blocked.

“He is even taking heat for the Boston bombings. Every day brings another revelation of signals missed beforehand. And his post-bombing pledge to hunt down those responsible was mocked by the scandalous Mirandizing of Dzhokhar Tsarnaev, gratuitously shutting down information from the one person who knows more than anyone about possible still-existent explosives, associates, trainers, future plans, etc.

“Now, the screw will undoubtedly turn again. If immigration reform passes, Obama will be hailed as the comeback kid, and a new ‘Obama rising’ narrative proclaimed.

“This will overlook the fact that immigration reform has little to do with Obama and everything to do with GOP panic about the Hispanic vote. In fact, Obama has been asked by congressional negotiators to stay away, so polarizing a figure has he become.

“Nonetheless, whatever happens, the screw will surely turn again, if only because of media boredom. But that’s the one constant of Washington political life: There are no straight-line graphs. We live from inflection point to inflection point.

“And we’ve just experienced one. From king of the world to dead in the water in six months. Quite a ride.”

--Peggy Noonan / Wall Street Journal

“I think we’re all agreed the president is fading – failing to lead, to break through, to show he’s not at the mercy of events but, to some degree at least, in command of them. He couldn’t get a win on gun control with 90% public support. When he speaks on immigration reform you get the sense he’s setting it back. He’s floundering on Syria. The looming crisis on implementation of ObamaCare has begun to fill the news. Even his allies are using the term ‘train wreck.’ ObamaCare is not only the most slovenly written major law in modern American history, it is full of sneaked-in surprises people are just discovering. The Democrats of Washington took advantage of the country’s now-habitual distractedness: The country, now seeing what’s coming in terms of taxes and fees, will not be amused. Mr. Obama’s brilliant sequester strategy – scare the American public into supporting me – flopped. Congress is about to hold hearings on Boston and how the brothers Tsarnaev slipped through our huge law-enforcement and immigration systems. Benghazi and what appear to be its cover-ups drags on and will not go away; press secretary Jay Carney was reduced to saying it happened ‘a long time ago.’ It happened in September. The economy is stuck in low-growth, employment in no-growth. The president has about a month to gather himself together on the budget, tax reform and an immigration deal before Congress goes into recess. What are the odds?”

--According to the Centers for Disease Control and Prevention, the number of suicides in a year rose 31% to 38,364 in 2010 from 29,181 in 1999. For adults aged 35 to 64, the group most responsible for the increase, suicide is now the fourth most common cause of death behind cancer, heart disease and unintentional injury such as drowning. That is up from the eighth spot in 1999. Something about the economy and all.

--Forget the May Day snowstorm in parts of the West and Midwest, April was the snowiest on record for many cities, from Colorado to Minnesota. The official reason was a “blocking” area of high pressure over Greenland, eastern Canada and the North Atlantic Ocean, which favors a cold northwest flow of air over the central and eastern USA, according to AccuWeather.

One thing is for sure...golf courses in these areas are suffering major financial losses.

--So I wrote last time how New Jersey officials are frustrated that some residents, with homes directly on the beach, aren’t willing to sign off on easements that would allow for dune building after Hurricane Sandy because they don’t want to lose their views.

So the other day, Gov. Chris Christie was doing a town hall meeting on Long Beach and he told the kids “cover your ears.”

Christie called those refusing to give the federal government access to their property “knuckleheads” and then said, “Let me use an indelicate word. Bullshit. That’s what that is...That’s the excuse they use. Here’s why they’re really concerned: They don’t want their view blocked.”

“We are building these dunes, okay?” Christie said. “We are building these dunes whether you consent or not.”

--I’m going with Orb in the Kentucky Derby, assuming the horses don’t all float away in the deluge that is forecast.

--Finally, I watched George Jones’ funeral at the Grand Ole Opry on Thursday and what a touching, moving celebration of his life. Former First Lady Laura Bush was at the side of Jones’ widow, Nancy, who was amazing for allowing such a public gathering...the Opry House seating 4,400.

Country music royalty was there in full force as Laura quoted from her husband, a huge George Jones fan:

“We can only imagine how beautiful the heavens now sound.”

As one of the emcees at the service said, “Jones had his faults, made his mistakes...but, you know, he always owned them.”

Gov. Mike Huckabee said that up above, Jones would be met with six simple words:

“Well done, good and faithful servant.”

Needless to say, the Possum goes down as the greatest country singer of all time. There will never be another like him. Encourage your children to learn about his music. Pick up his Greatest Hits yourself, if it isn’t already in your collection.

---

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

God bless America.
---

Gold closed at $1469
Oil, $95.50

Returns for the week 4/29-5/3

Dow Jones +1.8% [14973]
S&P 500 +2.0% [1614]
S&P MidCap +2.1%
Russell 2000 +2.0%
Nasdaq +3.0% [3378]

Returns for the period 1/1/13-5/3/13

Dow Jones +14.3%
S&P 500 +13.2%
S&P MidCap +14.2%
Russell 2000 +12.4%
Nasdaq +11.9%

Bulls 47.9
Bears 18.8 [Source: Investors Intelligence]

Dr. Bortrum posted a new column. Check it out.

Nightly Review video schedule, Mon. – Thurs., posted around 5:30 PM ET.

Have a great week. I appreciate your support.

Brian Trumbore