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05/10/2014

For the week 5/5-5/9

[Posted 12:00 AM ET]

Edition 787

Washington and Wall Street

It was an extremely light week on the economic front with just an April reading on the service sector, 55.2 vs. 53.1 in March worth mentioning; though a further sign of a snapback from the harsh winter’s impact on the economy.

Federal Reserve Chair Janet Yellen made her first appearance before Congress’ Joint Economic Committee and reaffirmed that the Fed believes the economy is on the mend but that the central bank is prepared to act further if necessary.

“A high degree of monetary accommodation remains warranted,” she said in prepared remarks.

Yellen did depart from past statements in noting turmoil in emerging markets and the ongoing crisis in Ukraine could be impactful.

“One prominent risk is that adverse developments abroad, such as heightened geopolitical tensions or an intensification of financial stresses in emerging market economies, could undermine confidence in the global economic recovery.”

And right there, sports fans, is exactly why I’ve focused on geopolitics such as I have for lo these many years. To try to never lose sight of the events that can influence behavior. [Including clashes in the South China Sea this past week that could be the precursor to something much larger.]

Separately, Yellen also added another concern, weakness in the housing market. On that score, noted bond investor Jeffrey Gundlach of DoubleLine told an investment conference in New York that the notion of a housing recovery was “over-believed” and home-building activity would never return to pre-crisis levels.

“I will make the bold prediction that for the rest of my career, we will never see a year of 1.5 million housing starts again,” he told his audience, adding “People, young people in particular, were shocked and scarred by the housing collapse and they don’t think that mortgage rates of 4 or 5 percent are low; they don’t know of any other world.”

Similarly, Realogy Holdings Corp., a global leader in residential real estate franchising and provider of brokerage services, was downbeat in issuing its first quarter earnings report.

CEO Richard A. Smith said in part: “We saw two opposing trends in the first quarter that caused an overall shift in Realogy’s mix of business resulting in a higher average sale price and reduced transaction sides. Demand at the higher price points in markets served by our franchisees and company-owned brokerages was strong, while difficult credit standards and rapid home price appreciation, primarily caused by low inventory levels, constrained activity at the entry level of the housing market.”

Smith also noted “a pause in the rate of growth in the housing recovery we are seeing this year could make for challenging near-term comparisons, although current industry forecasts for 2015 are more favorable.”

Meanwhile, the Organization for Economic Cooperation and Development (OECD) forecast global growth would come in at 3.4% in 2014, down from an earlier forecast of 3.6% last November, with the U.S. at 2.6%, down from 2.9%.

And it appears that earnings on the S&P 500 are tracking around 4.5% for the first quarter, with revenues up 2.5%. The first figure is relatively OK, expectations having plummeted as we approached the reporting period. The second figure remains putrid, but I look for it to improve the balance of 2014, barring a confidence-wrenching event.

Europe and Asia

As expected, the European Central Bank held the line again on interest rates at its monthly meeting, but ECB President Mario Draghi made it clear he was prepared to act come the next gathering, June 5.

“The governing council is comfortable with acting next time,” he said, at which point if Draghi is to save face he will lower the main lending rate from 0.25% to zero, and perhaps move other instruments below zero (I’ll get into this more as we get closer to the date).

Inflation is too low, 0.7%, though the ECB wanted to wait for one more round of data points before setting a new policy. Draghi offered the 24-member ECB council was “dissatisfied about the projected path of inflation” and is “not resigned to have too low inflation for too long a time.”

Draghi has been a man of words, not actions, but his declarations such as his July 2012 pledge to do “whatever it takes” to save the euro have worked. In June, however, he will have to take real steps as well as continue to use moral suasion. 

There was some data this week. Markit’s final eurozone composite of manufacturing and the service-sector came in at 54.0 for April, same as the earlier flash report, vs. 53.1 in March. Markit’s economist sees second-quarter GDP coming in at 0.5%.

An ‘output measurement’ for the Irish economy was 60.8, a 94-month high, while for Spain it was 56.3, an 85-month high. Germany was 56.1, Italy 52.6, but France just 50.6 as it continues to lag.

A March reading of retail sales for the eurozone rose 0.3% over February, but German factory orders for March unexpectedly fell 2.8% over the prior month.

Meanwhile, the European Commission raised its growth outlook for the eurozone for 2014 to 1.6%, predicting unemployment for the EA18 will fall to 11.4% from its current 11.8%. “The recovery has taken hold,” said the EC.

The EC has Germany growing at 1.8%, Italy 0.6%, Spain 1.1% and France 1.0%. Inflation is estimated at just 0.8%.

The above-mentioned OECD upped its eurozone GDP forecast to 1.2% from 1.0%, though it has the U.K. growing 3.2%, which would be better than the U.S.

And after all my warnings on the European bond market, particularly with regards to the likes of Italy and Spain, whose 10-year bonds are around 3.00%, Jose Vinals, director of the IMF’s monetary and capital markets department, told the Financial Times that when it comes to such yields, “We are seeing a lot of what I would call ‘pricing to perfection’ in financial markets, by which I mean pricing outcomes which are really quite good. There is a danger that if outcomes are not perfect, there is room for disappointment.”

Lots of room, I’d add, though in the immediate short term, bonds can rally a little further with the ECB’s pending looser monetary policy.

Turning to European politics, last time I wrote about my experience in Paris with the National Front party of Marine Le Pen and addressed the far-right movement in general across Europe ahead of the May 22-25 European Parliament elections.

So this week there were a slew of articles on the topic, including a couple on the U.K.’s Independence Party, UKIP (some list it as Ukip, because that is how it’s pronounced, but it’s UKIP on the official website).

British Prime Minister David Cameron has called UKIP a bunch of “clowns” but the clowns, led by Nigel Farage, are polling ahead of Cameron’s Conservatives in the Euro vote, and could even make a run at first, ahead of Labour. Actually, a YouGov poll last weekend put Cameron’s Tories in third place with 19%, behind UKIP’s 31% and Labour’s 28%. Farage, as I’ve noted before, has a simple message, say ‘no’ to immigration, and ‘no’ to the European Union (or Brussels).

UKIP’s stark campaign poster highlights its policy in showing an escalator running from the English Channel up the White Cliffs of Dover with the slogan: “No Border. No Control. The EU has opened our borders to 4,000 people a week.”

But Farage has also said he admired Vladimir Putin as a statesman, which frees Cameron to say things like: “The choice is clear: if you want a serious party with a credible long-term plan and a party that’s delivering on that plan, then you only have one choice: you have got to vote Conservative.”

The message the British establishment wants to get across when it comes to UKIP is that it’s racist.

But back to Putin and the support he receives from some in Europe’s far right, Philip Stephens said some of the following recently in the Financial Times:

“The parties of the xenophobic right who hope to prosper in (the) European elections are more shameless still in their backing for Moscow. They share Mr. Putin’s authoritarian instincts and cultural conservatism. He can count on the support of the neo-Nazi Jobbik in Hungary and Golden Dawn in Greece. Nigel Farage...has been positively gushing about the Russian president. Marine Le Pen...accuses the EU of hypocrisy over Crimea....

“Left-leaning academics cite the invasions of Iraq and Afghanistan in order to draw a phony moral equivalence between Russia and the U.S. The logic is at very best twisted. If U.S. military adventurism was so heinous, how can it be acceptable for Russian troops to trample over Ukraine? Am I missing something? Or does liberal postmodernism now inhabit a perverse world where if it is anti-American it must be right?

“Ultimately, the west’s democratic diversity is its strength. Its cities are full of Russians. Mr. Putin’s apologists would not dream of running off to live in Moscow. Nor can Moscow’s effort to destroy Ukraine hide the simple fact that Tsar Vladimir is leading Russia into precipitate decline. But Europeans need to learn to speak up again for their values. The continent’s freedom, peace and security have long been taken for granted. Mr. Putin has thrown them into serious question.”

Lastly, regarding Le Pen, in a poll published last Sunday, the National Front is running neck and neck with the mainstream center right UMP for the Euro Parliament election, with Francois Hollande’s Socialists well behind in third. Hollande’s approval ratings remain below 20%, though his new prime minister, Manuel Valls, is at 64%. It’s Valls who is urging the French to “fight the extremes.”

---

A few notes on China. HSBC’s purchasing managers index for April came in at just 48.1 vs. 48.0 in March, the fourth month in a row of contraction. The official government reading was 50.4. Remember, HSBC looks primarily at the private sector, the government’s Statistics Bureau is focused mostly on large government-owned companies.

China did receive better than expected news on the export front, up 0.9% from a year earlier in April after being down two straight months. Imports rose 0.8% after being down 11.3% in March.

And inflation rose only 1.8% in April from a year earlier, though producer prices fell for a 26th straight month, down 2%, as overcapacity in areas such as steel and cement hits hard.

Food prices rose just 2.3% and this is good.  So you put all the inflation data together and the government definitely has room to loosen policy. Speaking at the World Economic Forum in Nigeria, Premier Li Keqiang said he was still confident China could hit its targets this year, call it 7.3% to 7.5% on GDP, with the OECD having lowered its China outlook from an earlier forecasted 8.2% to 7.4%.

Street Bytes

--Stocks finished mixed, with the Dow Jones tacking on 0.4%, 71 points, to close the week at an all-time high of 16583. For the year it is now up 0.04%. But the S&P 500 lost 3 points (0.1%) and Nasdaq fell 1.3% to remain down 2.5% for 2014.

Shares of Apple hit $600 for the first time since October 2012, but finished the week at $585.

--U.S. Treasury Yields

6-mo. 0.05% 2-yr. 0.38% 10-yr. 2.62%  30-yr. 3.46%

The 10-year hit the low end of its trading range, 2.57%-2.58%, but didn’t crack.

--Hedge fund manager David Einhorn recently had a dinner conversation with former Fed chief Ben Bernanke and Einhorn told Bloomberg’s Katherine Burton that some of Bernanke’s answers to his questions were “frightening.”

Einhorn, for example, has been critical of the Fed’s maintaining interest rates at zero for five years, arguing the benefits of low rates have diminishing returns over time, and that the Fed’s stimulus has led to income inequality. Bernanke responded “you are wrong.”

On the issue of inflation, Bernanke said he was 100% certain there would be no hyperinflation, to which Einhorn told Bloomberg, “Not that I think there will be hyperinflation, but how do you get to 100% certainty about anything? Why can’t you be 99% certain?”

I agree with Mr. Einhorn on both topics.

--J.P. Morgan Chase & Co. said its trading revenues would continue to slump in the second quarter to the tune of 20% vs. the first quarter’s drop of 17%. This doesn’t bode well for the others.

--Chinese Internet giant Alibaba filed for its IPO in the U.S., with the company hoping to raise $15 billion or thereabouts. Alibaba is the largest online retailer in China and through its filing we learned it had revenue of $6.5 billion in the nine months to the end of December 2013 (up 57% over the same period a year earlier), making a net profit of $2.9 billion. 11.3 billion orders were placed on its various platforms.

Yahoo owns 22.6% of Alibaba, while Japan’s Softbank owns 34%. Yahoo will be selling about 40% of its stake in the IPO, generating an estimated $10 billion, while Softbank will maintain its stake at 30%.

--Shares in Twitter collapsed following the end of restrictions on insider sales following its November IPO. On Tuesday, the stock fell $6.90 to close at $31.85, finishing the week at $32.05, which is down from its Dec. 26 high of $74.70. Many of the insiders had a cost basis in the $2.00 to $2.50 range. Others around $10. So why not take the profit?

--Two of the biggest advertising firms in the world, Publicis and Omnicom, scrapped their merger plans. The $35 billion combination would have created the world’s biggest such operation but the two said there were challenges that “remained to be overcome” and the slow pace of progress created uncertainty that was detrimental to both of them. There was no break-up fee.

Some had warned the merger would have created conflicts of interest between clients of the two companies – as they represented rival firms in many sectors.

--Barclays will have cut 19,000 jobs by 2016, with 14,000 of those job losses occurring this year. 7,000 will be in the investment banking division, which employs around 26,000.

Half of the 14,000 lost this year will be in the U.K. The 14,000 figure is higher than the 10,000 to 12,000 estimate the bank first estimated earlier in the year.

CEO Antony Jenkins said, “We will be a focused international bank, operating only in areas where we have capability, scale and competitive advantage.”

--Apple is in talks to acquire Beats Electronics, the headphone maker and music streaming operator founded by music producer Jimmy Iovine and hip-hop mogul Dr Dre. The reported price tag, $3.2 billion, would be Apple’s largest acquisition and a departure from past strategy, as well as an admission Apple needed help staying in the lead in the music industry as iTunes has waned in popularity.

--Tesla Motors Inc. reported it lost $49.8 million in the first quarter compared to a small profit in the same period a year earlier, but ex-adjustments earned $17 million. Revenue rose to $620.5 million for the electric car company compared with $561.8 million in the prior period.

But the shares were rocked as it announced sales of its Model X sport utility vehicle will be delayed until next year. Seeing as this is the company’s second model, it’s important to get something new into the showroom.

Tesla is manufacturing about 700 vehicles per week of its Model S, up 15% from the rate at the end of the fourth quarter and on its way to 1,000 per week by year end.

Tesla’s big immediate issue is tight battery cell supply, which it says will improve in the third quarter. But as for plans for the “gigafactory,” or large-scale battery plant needed to turn out enough power units for a mass-market vehicle, the company is still targeting 2017, but some analysts are growing leery.

So Tesla shares cratered to $182.25....down from a Feb. 26 all-time high of $265.

--Jena McGregor / Washington Post...on the “silver tsunami,” the pending wave of retirements in the postal service.

“In a report released Monday, the postal inspector general’s office said that 35% of postal executives were eligible for retirement as of 2012, and it expects 49% will be eligible by 2015. Making matters worse: About 30% of the people currently being groomed to succeed them are in a position to retire, too. That number will balloon to 73% in the next seven years.”

Uh oh.

--Barry Rosenstein, founder of hedge fund Jana Partners LLC, purchased an 18-acre beachfront property in East Hampton, New York for $147 million, breaking the U.S. single-family price record of $120 million set last month for a Greenwich, Conn., waterfront property.

According to DataQuick, home purchases of $2 million or more jumped 33% in January and February from a year earlier.

--The proposed takeover of Britain’s AstraZeneca by U.S. rival Pfizer for $106 billion (which Pfizer will have to raise further) has become a major political issue in the U.K., with Prime Minister David Cameron vowing his government would “back British jobs, British research and development and British science,” but Labour leader Ed Miliband said Cameron should intervene directly in the deal, even as the government has very limited ability in the realm of protecting jobs or investment in research and development.

Many officials who have dealt with Pfizer in the past on foreign acquisitions claim it’s about profitability and cost cutting, rather than increasing R&D.

In the case of Pfizer-AstraZeneca, specifically, it’s being driven in no small part by tax concerns. AstraZeneca has 6,700 employees in the U.K., Pfizer has 2,500.

--Merck & Co. sold its consumer unit that includes Claritin allergy medicines and Coppertone sunscreens to Bayer AG for $14.2 billion. Merck said it would use some of the proceeds to fund the development of its MK-3475 experimental cancer drug, which analysts are high on, assuming it eventually reaches market.

--The French government said it would oppose General Electric’s $13.5 billion takeover bid for Alstom’s energy business, with French industry minister Arnaud Montebourg telling GE it wanted a “balanced partnership” rather than a takeover.

Montebourg had earlier said “French companies are not prey,” though clearly he prefers a rival offer from Germany’s Siemens. GE said it was open to continuing dialogue.

--Target Corp. CEO Gregg Steinhafel was forced out, following the Christmas-season massive cyberattack that exposed millions of its customers to potential fraud. Steinhafel, who had been at the helm for six years, was also in charge of a disastrous expansion into Canada and a poor e-commerce strategy, as well as a fresh food initiative that sputtered. No word on who is replacing him.

Steinhafel, by the way, could receive parting gifts totaling $55 million, including pension benefits, deferred comp, and restricted stock that would vest immediately.

--For the first time in a decade, Wal-Mart’s Web sales grew faster than Amazon’s, up 30% to $10 billion during the year ended Jan. 31, vs. Amazon’s 20% growth over the same period, according to data from trade publication Internet Retailer. [Wall Street Journal]

--Walt Disney Co. reported profit for the first quarter that exceeded Wall Street’s expectations, boosted by continued strength from its animated film “Frozen.” Net income increased to $1.9 billion from $1.5 billion a year earlier.

“Frozen” had worldwide ticket sales of $1.2 billion. The company’s ESPN unit continues to rake it in as well. And higher average ticket prices helped lift operating income at Disney’s theme parks by 19% to $457 million.

--CBS reported first-quarter earnings rose 6%, thanks in no small part to its Showtime division, but overall revenue fell 5% from last year, below expectations, and the stock was hit hard.

--Toyota made a net profit of $17.8 billion in the year to March 31, almost double the prior year though below its initial forecast. Japan’s firms, like Toyota, have benefited from the weakness in the yen which helps lift their profits when they repatriate the cash.

--I missed April auto sales when I was posting from Paris last weekend so for the archives, sales in the U.S. hit their highest monthly level since the mid-2000s and suggest sales for the year of 16.5 million, up about 10% over last year if the trends persist.

General Motors reported sales were up 7% over the same period last year, Chrysler’s April sales were up 14%, Toyota’s rose 13.3%, Nissan’s 18.5% (an April record) and Hyundai’s rose 4.4%.

But Ford’s fell 1% from a year ago and Volkswagen’s declined 8.4%.

--Hedge funds have recorded two consecutive losing months for the first time since April and May of 2012, according to researcher HFR Inc. The average decline was 0.17% in April after a 0.33% decline in March. 

Those funds heavily weighted to the tech sector and momentum plays were hit hard. [Wall Street Journal]

--FedEx Corp. is changing the way it ships bulky packages, charging by size rather than weight, which means big price increases for those delivering items such as toilet paper or diapers on a regular basis. Web shoppers using someone like Zappos.com for shoes will be impacted in a major way. No word yet on whether UPS will follow suit. The new policy goes into effect in January.

As reported by the Wall Street Journal, “Under the new rate system the price of shipping an eight-pound, 32-pack of toilet paper between 601 and 1,000 miles would increase 37% to $13.81.”

--Franco-American network-equipment company Alcatel-Lucent SA continued its comeback in narrowing its loss in the first quarter, though the company also continued to burn through cash. Revenue fell 3.3%, largely on the rise of the euro against the dollar as well as allowing unprofitable contracts to run off. The company’s Internet-routing division saw an 11% rise in revenue, thanks to growth in Asia.

The shares have risen 180% in the past year.

--Shares in Whole Foods dropped nearly 19% on Wednesday, their worst one-day performance in five years, after the upmarket grocer warned of increased competition in natural and organic foods. Same-store sales growth in its second quarter slowed from 6.9% to 4.5%.

CEO John Mackey said on a conference call: “For a long time, Whole Foods market was this small niche... It’s just gotten to be a very big niche and in some ways it’s gone mainstream. There’s a lot more competition, (including) conventional supermarkets copying and imitating a lot of what we’re doing.”

The company reduced its forecast for the full year.

--McDonald’s said same-store sales rose 1.2% in April, with strong results in China offsetting flat sales in the U.S.

I went to McDonald’s this week to get the 2-for-1 Big Mac special and when the girl at the counter rang it up she charged full price for each one. So I said, “No, I want the 2-for-1,” to which she replied, “Oh, you want that.”

I still like the food.

--Turmoil in Ukraine is having a major impact on wheat prices, which hit a 13-month high this week. Not only is Ukraine a major wheat exporter, but much of it is shipped through Odessa, which has seen major clashes.

--Coca-Cola announced it was removing a controversial ingredient, BVO, brominated vegetable oil, from its fruit and sports drinks such as Fanta and Powerade. This comes after concerns that an element of the additive is also found in flame retardants. Earlier this year, Pepsi removed it from its Gatorade sports drink.

--Speaking of Coke, at Berkshire Hathaway’s annual shareholder meeting, Warren Buffett said of his abstention from the shareholder vote on Coca-Cola’s equity compensation plan for executives:

“We made a very clear statement about the excessiveness of the plan and, at the same time, we in no way went to war with Coca-Cola. I don’t think going to war is a very good idea in most situations.”

Buffett said he has had conversations with Coke CEO Muhtar Kent, telling him he thought the plan was excessive.

--Office Depot said it would close at least 400 U.S. stores amid sliding sales. Rival office-supplies retailer Staples previously announced it was closing as many as 225 of its stores by the end of the year.

--Canada’s unemployment rate for April remained steady at 6.9%, as since August 2013, the Canadian economy has seen little overall job growth.

--Good news out of Ireland...car sales continue to improve and are now forecast to soar to 100,000 next year, up 15,000 to 20,000, which would be an increase of 25% over 2013. Every extra 1,000 new car sales generates 130 jobs, according to economists. [Irish Independent]

--The property market in Ireland also continues to improve and, importantly, not just in Dublin, which accounts for a third of the country’s overall sales.

As for prices, they are up 7.8% nationally, and up 13.4% in Dublin compared to a year ago (using March data).

--The U.N. issued a report that says nearly 3 billion people will have access to the Internet by the end of 2014, which still means 60% of the world’s population – about 4.2 billion – will remain unconnected.

78% of those in developed countries will have access, but only 32% of the population in developing nations will. [Salvador Rodriguez / Los Angeles Times]

--According to a report from the Agriculture Department, as part of its 2012 Census of Agriculture data just released, “22% of all farmers were beginning farmers in 2012....Young, beginning principal operators who reported their primary occupation as farming increased from 36,396 to 40,499 between 2007 and 2012. That’s an 11.3% increase in the number of young people getting into agriculture as a full-time job.”

--NBCUniversal, which already owned the U.S. media rights to the Olympics through 2020, paid another $7.75 billion to provide coverage through 2022-2032, or an average of $1.275 billion for each Games, 16% higher than the average for the 2014-2020 Games.

A key for NBC is that the price will not be adjusted for inflation.

I just really wonder if there will be an Olympic Games by 2032. We’ll know by around 2025 when the rights to 2032 would be issued.

--Claude Monet’s “Water Lilies” fell short of expectations when it sold for $24 million, ex-fees, at a Christie’s auction this week, part of a total haul of $285.9 million worth of Impressionist and modern art. The unidentified buyer was from China. A Picasso work sold for $22.6 million.

[I attempted to sell my Lew Alcindor rookie card for $6.25 million but was rebuffed.]

--Demand for salmon has been rising rapidly, 6% to 7% for 2012-13, with the value of Norwegian salmon exports last year rising 35% over 2012. But prices are also rising rapidly, affected by production challenges to meet the demand, and so salmon could lose its mass market status, as producers and investors put it at this week’s Seafood Expo in Brussels. That would be fun to attend. “Hey, which one of you guys is mislabeling the stuff?” [Emiko Terazono / Financial Times]

Prices, by the way, could fall back owing to warmer sea temperatures this year that lead to better fish growth.

--A World Health Organization study of the world’s most polluted cities found New Delhi to be number one in terms of dirtiest air. India had 13 of the 20 dirtiest cities, while Beijing placed 77th, however, Beijing submitted data from 2010 and didn’t begin reporting accurate data on small particulates until 2012. It’s probably really top five.

Three of the cleaner cities were Canadian, including Vancouver. Plus Canada has the best beer. Or, as I like to say, “That’s Canada, the nation with the premium domestic.”

Foreign Affairs

Ukraine: Pro-Russian separatists in eastern Ukraine vowed to press ahead with a referendum on independence, Sunday, defying Russian President Vladimir Putin’s call to postpone the vote. As a spokesman for the self-proclaimed Donetsk People’s Republic said at a news conference on Thursday in Donetsk, “Civil war has already begun. The referendum can put a stop to it and start a political process.”

On Wednesday, Putin claimed some of the estimated 40,000 troops on the border with Ukraine had been pulled back, but the United States and NATO saw zero evidence of this.

Putin said, “We believe that the most important thing is to create direct, full-fledged dialogue between the Kiev authorities and representatives of southeast Ukraine.”

Putin also said Ukraine’s presidential election on May 25 is a step “in the right direction.” But then he said the vote would decide nothing unless the rights of “all citizens” were protected.

But who is going to participate in this sham? And can it possibly be fair and clean? Of course not. It’s as much illegitimate as Putin likes to say the upcoming Ukrainian presidential election will be.

Meanwhile, Putin oversaw a massive Russian military exercise that included the firing of intercontinental ballistic missiles from submarines and cruise missiles from a Tupelov bomber; Vlad the Impaler saying this demonstrated the readiness of his “strategic offensive and defensive forces.”

And then on Friday, Russia staged its largest Victory Day celebration in 20 years as tanks rumbled across Red Square and fighter jets screamed overhead.

Putin used Crimea to whip up patriotism (with the big-time help of state media), and then some, with Russia’s accusations of neo-fascists on the rise in Ukraine, while praising the Soviet Union for defeating same in World War II.

“The iron will of the Soviet people, their fearlessness and stamina saved Europe from slavery,” Putin said. “It was our country which chased the Nazis to their lair, achieved their full and final destruction, won at the cost of millions of victims and terrible hardships.

“We will always guard this sacred and unfading truth and will not allow the betrayal and obliteration of heroes, of all who, not caring about themselves, preserved peace on the planet.”

Putin then traveled to Crimea for his first visit since Russia annexed the peninsula. The State Department called the trip “provocative and unnecessary.” The Kiev government called it a “gross violation of Ukraine’s sovereignty.”

During his visit, Putin said Crimea had shown loyalty to a “historical truth” in choosing to be part of Russia. The BBC said Putin was treated as a conquering hero as he walked through the main square of Sevastopol.

It was a bloody week, overall, including 20 dead in the city of Mariupol on Friday, though frankly it’s impossible to keep up with the casualties as both sides are giving different figures. 

In other developments, it seems the fire at the trade union building in Odessa last weekend that killed 40 was not caused by pro-Ukraine nationalists, but rather pro-Russian protesters who had taken cover in the building and then accidentally dropped their Molotov cocktails when they took to the roof. 

At least the seven OSCE inspectors being held hostage by pro-Russia separatists were freed. One inspector said he “will never forgive” his captors.

Prime Minister Yatseniuk, when asked by the Financial Times how he was holding up under the pressure, said the job is “worse” than anticipated. “We face the Russian military, Russian-backed terrorism, the economy is insolvent, our own military has been dismantled, the police are disorientated. The last government stole everything they could.”

Russia can easily dismember a country that doesn’t seem legitimate.

In a Pew Research Center poll conducted last month, following the annexation of Crimea, Vladimir Putin had an 80% approval rating back home, while two-thirds of Ukrainians said Russia is a bad influence on their country (and this was before the most recent violence). In 2009, only a quarter considered its impact as a negative.

Only 23% of Russians now have a favorable opinion of the United States, down from 51% last year. As for the European Union, 39% of Russians have a favorable opinion, down from 63% in 2013.

But in a poll conducted by Moscow-based Levada Center and published Tuesday, Russians who supported the potential accession of other Ukrainian regions to Russia (outside of Crimea) fell to 58% in April, from 79% a month earlier. That’s telling.

And in a further sign of how things are changing rapidly on the European continent, non-NATO members Sweden and Finland are looking at a new defense alliance, with a focus on 2016 and beyond. Finland shares an 830-mile border with Russia – more than the other 27 EU members combined – and fought two wars against the Soviet Union during World War II. Russia is also Finland’s biggest trade partner, including receiving 100% of its natural gas from its neighbor.

Both nations concede their armies are currently inadequate to defend more than a small portion of their countries for a short period of time.

Iran / Israel: Talks on Iran’s nuclear program resume next week and Russia’s envoy, Sergei Ryabkov, said he expects the outlines for a long-term deal to emerge at that time. The interim agreement reached last November technically expires July 20, with Reuters reporting some experts are optimistic, but the biggest remaining obstacle is rather important; the scope of any uranium-enrichment program that Iran is allowed to keep.

By all accounts the United States is prepared to allow Iran to continue with some level of nuclear work, as long as it’s not technically capable of producing a nuclear weapon. But as Michael Wilner of the Jerusalem Post reports:

“That standard requires constant checks on multiple fronts: research and development would have to be invasively monitored, centrifuges would have to be dismantled, and remaining enrichment sites would require constant oversight. And the international community would have to rely on the International Atomic Energy Agency to successfully police the deal on a daily basis, possibly for decades.

“Israel’s fears are in these details. Iran’s retention of active research teams will be hard to police; they have finely honed the efficiency of Iran’s centrifuges, enabling Iran to break out from low levels of uranium enrichment at a quicker pace.”

Israel is not going to be happy at whatever the P5+1 agrees to with Tehran. It seems the bottom line will be Iran’s ability to enrich enough high-grade uranium for a weapon will only be extended a few months.

Speaking to the Washington Institute for Near East Policy, former Israeli Prime Minister Ehud Barak charged that President Obama had changed the goal posts when it came to Iran and its nuclear program.

“The American administration changed its objective from no nuclear military Iran to no nuclear military Iran during the term of this administration,” adding that the U.S. “is perceived to have been weakened” over the last several years.

At the same time, Barak said a U.S. attack on Iran’s nuclear facilities would take a “fraction of one night” to complete if Obama chose to order one. “It’s a simpler operation to get rid of the [Iranian] arsenal” than it would have been to attack Bashar Assad’s chemical weapons infrastructure.

But on a broader issue, Barak had an interesting observation on today’s geopolitical environment; that international crisis management had become a “gestalt, where everything depends on everything else.”

Handling China and disputes in the South China Sea, for example, complicate the situation in Iran, which has had an impact on Ukraine, which leaves “no room for real cooperation on Syria.” [Michael Wilner / Jerusalem Post]

As for Prime Minister Netanyahu, he met with National Security Adviser Susan Rice and Netanyahu told her of his opposition to the trajectory of the negotiations with Tehran.

“Why do they need thousands of centrifuges?” the Times of Israel quoted him as saying. “Why do they need tons of enriched uranium? Only for the production of nuclear weapons.”

Separately, in a monthly Peace Index poll of Israeli Jews, 68% believe the decision by the security cabinet to suspend negotiations with the Palestinians, after Fatah and Hamas signed a unity deal, was appropriate, while 27% disagree with the move.

When questioned on President Obama’s assessment that neither Israeli nor Palestinian leaders showed the political will to make difficult decisions, only 39% of Israeli Jews said they agreed that both sides were equally responsible. 56% disagreed with Obama.

58% said the Hamas-Fatah reconciliation agreement was dangerous. [Jerusalem Post]

Syria: I’m on record as saying the United States blew it in this theater back in 2012 and it’s essentially been over ever since so I don’t necessarily agree with all of the following, but it’s a different take.

John Bolton / New York Post

“(An) effective U.S. Middle East policy must recognize that, tragic though it’s been, the conflict in Syria is a strategic sideshow. The real threats to the United States come not from those directly engaged in that fighting, but from their patrons and larger incarnations.

“Thus, the Assad regime, loathsome as it is, couldn’t survive without substantial Iranian assistance. And it is Iran, through its pursuit of nuclear weapons and its decades-long role as international terrorism’s central banker, which poses the central danger.

“Instead of focusing on overthrowing Assad or aiding his enemies, we should be vigorously pursuing regime change in Iran. As Alexander Haig once put it, ‘go to the source.’

“Obama, by contrast, is doing very nearly the opposite. By negotiating with Iran, he has not only allowed it a path to legitimize its nuclear-weapons program, but objectively facilitated the deadly global menace in Tehran.

“Some will concede that a victory by Syria’s rebels is likely to replace Assad with terrorists, but nonetheless worry that al-Qaeda is capitalizing on U.S. inaction, using Syria to recruit new adherents. Yet Washington’s ability to affect the outcome in Syria is decidedly limited; aiding the rebels mainly increases the chances of an al-Qaeda regime in Damascus – hardly preferable to the current bloodshed.

“Instead, America’s proper policy is to redouble our efforts to destroy al-Qaeda worldwide. The administration’s own reports show al-Qaeda is rapidly rejuvenating itself.

“In short, Washington must focus on the real threats, neither minimizing nor dismissing them, and not be distracted by Syria’s conflict. We can only hope, contrary to the available evidence, that the collapse of the Syrian ‘peace’ negotiations, Russia’s continuing perfidy in Ukraine and elsewhere and Iran’s unrelenting pursuit of nuclear weapons may yet awaken our president from dreamland.”

Egypt: In yet another example of a mass trial without little or no access to due process, 102 alleged supporters of the Muslim Brotherhood were sentenced to 10 years in prison. At the same time, three reporters for Al Jazeera have now been jailed for more than four months.

Abdel Fattah Sisi, the man who would be president, said in his first televised Q&A that it will not be possible for the Brotherhood to reenter political life, which flies in the face of what the White House and much of the West wants, an all-inclusive political system.

The vote for president is set for May 26-27. Sisi will roll, especially as backers of the Brotherhood will boycott the election.

Iraq: Preliminary results in Iraq’s recent election are slated for May 15. Final results May 25. Nothing to say until then, except in the case of the man I long wanted to be Iraq’s leader, Iyad Allawi, who has said if Nouri al-Maliki remains prime minister (as expected), Allawi will abandon politics. “Either Iraq can remake itself, rebuild and move ahead, or it will be destroyed; I believe we are approaching the final stage.” [The Economist]

China: China demanded Vietnam withdraw its ships from a part of the disputed South China Sea where a Chinese oil company, CNOOC, is putting up an oil rig. A senior Foreign Ministry official in Beijing said China was “shocked” at the “provocations of Vietnam,” accusing it of ramming Chinese ships in the area...but it was the other way around! The same official warned Washington not to interfere, referring to remarks by U.S. officials about “dangerous conduct and intimidation by vessels” in the area.

Beijing announced the drilling off Triton Island, known as Zhongjian Island in China, on Saturday, with Hanoi saying the drilling was illegal, whereupon Vietnam sent its patrol vessels. On Wednesday, Hanoi said Chinese vessels had used water cannon to attack the Vietnamese ships. The Chinese foreign ministry representative said using water cannon was the “most restrained measure” that could be taken.

At the same time, tensions between China and the Philippines have ratcheted up with Philippine police seizing a Chinese boat near disputed “Half Moon Shoal” in the South China Sea after it was found to have hauled in 500 turtles.

Editorial / Wall Street Journal

“Less than a week after President Obama’s Asian Reassurance Tour, Beijing offered its rejoinder, sending a flotilla of 80 military and civilian ships to install China’s first oil rig in disputed South China Sea waters, well within Vietnam’s 200-mile exclusive economic zone. When some 30 Vietnamese naval vessels demanded the rig’s withdrawal on Sunday, China’s ships responded by ramming several of the Vietnamese boats and injuring six sailors....

“China claims sovereignty over some 90% of the 1.35-million-square-mile South China Sea, and it is staking that claim by flexing its muscle around the sea’s outer reaches....

“As Chinese-Vietnamese relations have worsened, Hanoi has procured new military hardware – including Kilo-class submarines, guided-missile frigates, land-based antiship cruise missiles and jet fighters – and sought closer ties with India, Japan and the U.S....

“So it goes across Asia – Chinese territorial revanchism is spurring arms purchases and defense cooperation among China’s neighbors and with Washington. These are welcome developments, yet China continues on its aggressive course.

“ ‘It’s fair to say both Vietnam and China have rights to claim sovereignty over the Paracels,’ said America’s top Asia hand, Assistant Secretary of State Danny Russel, in Hanoi Thursday. ‘It is not for the U.S. to say which position is stronger. It’s within the rights of the United States and the international community to call all parties to address the dispute in a peaceful way.’ China has heard such U.S. rhetoric many times, including as it grabbed Scarborough Shoal from Manila over three months in 2012. Beijing says it plans to drill for oil at least until Aug. 15.”

Separately, China suffered its third mass knife attack on a transportation hub as men with knives slashed and injured at least six people at the main train station in Guangzhou on Tuesday, the third such incident since March.

Lastly, here’s a crazy story, from the Guardian:

“China is considering plans to build a high-speed railway line to the U.S., the country’s official media has reported.

“The proposed line would begin in north-east China and run up through Siberia, pass through a tunnel underneath the Pacific Ocean then cut through Alaska and Canada to reach the continental U.S. ....

“Crossing the Bering Strait in between Russia and Alaska would require about 125 miles of undersea tunnel,” according to the Beijing Times.

The entire trip would take two days, with the train averaging 220mph.

No word on whether Washington has been apprised of this plan.

North Korea: Meanwhile, with everything else that is going on in the world these days, North Korea is lying in the weeds, a threat of unknown levels. What we should know is we better be taking it seriously.

On Thursday, the White House was forced to condemn a racist screed against President Obama, calling the rhetoric from Pyongyang “particularly ugly and disrespectful.”

The published lengthy rant called Obama a “clown,” a “dirty fellow” and somebody who “does not even have the basic appearances of a human being.”

There was also the declaration: “It would be perfect for Obama to live with a group of monkeys in the world’s largest African natural zoo and lick the breadcrumbs thrown by spectators.”

Unbelievable.

On a more critical front, there have been conflicting reports on whether Pyongyang is about to hold its fourth nuclear test. Some intelligence suggests it’s imminent, other reports say it isn’t. 

At the same time, The Telegraph had a report that Beijing is increasingly worried on the impact from a collapse of Kim Jong-un’s regime.

Nigeria: I got a kick out of how ‘suddenly’ Boko Haram hit the headlines and all the networks rushed to cover a terror group I have been talking about since 2010. In fact, while the vast majority of folks seemed to just learn this week of the abduction of hundreds of girls, I wrote back on April 19 in this space:

“Islamist militant group Boko Haram was responsible for a bus station bombing in Abuja, the capital, that killed at least 75 in the largest such attack on the city, and then on Wednesday, the terrorists are believed to have been responsible for the kidnapping of as many as 100 girls from a school with the belief at week’s end that they were taken hostage to become sex slaves.

“Boko Haram was also responsible for attacks elsewhere in Nigeria last weekend that killed 217 in Borno State, the same region as the school kidnapping.”

So that was two weeks before we (read the White House) got all concerned, and only then because some women’s groups picked up the cause of the girls.

It was too late! Just like by the fall of 2012, it was too late in Syria! 

I know, as the State Department would say, that Nigerian President Goodluck Jonathan didn’t request our help, but you had to know by April 21-23, let’s say, the girls had long been scattered, let alone freakin’ May 4-7.

So now Mr. Jonathan said this was “the beginning of the end” of terrorism in his country. Right. This is the same Nigerian government that, according to Amnesty International on Friday, had more than four hours’ warning of the raid by Boko Haram and the Nigerian military did nothing. [The army denies this was the case...but it’s clear they were scared to engage the usually more heavily armed militants.]

Jonathan also said at a meeting of the World Economic Forum in Abuja, that extremism was a relatively new and “strange phenomenon” in his country. Hardly. I have written for years how Nigeria is divided, north and south, Muslim and Christian, and what a joke it is to talk of Nigeria’s economic success.

So the White House announced on Tuesday it was sending a team to help assist the government in its search, though this will not include any SEAL type operations, as yet. Eventually, the U.S. will do what it can to take out the command of Boko Haram, but can’t until the fate of at least some of the girls is known.

Ayaan Hirsi Ali / Wall Street Journal

“Since the kidnapping of 276 schoolgirls in Nigeria last month, the meaning of Boko Haram – the name used by the terrorist group that seized the girls – has become more widely known. The translation from the Hausa language is usually given in English-language media as ‘Western Education is Forbidden,’ though ‘Non-Muslim Teaching Is Forbidden’ might be more accurate.

“But little attention has been paid to the group’s formal Arabic name: Jam’at Ahl as-Sunnah lid-da’wa wal-Jihad. That roughly translates as ‘The Fellowship of the People of the Tradition for Preaching and Holy War.’ That’s a lot less catchy than Boko Haram but significantly more revealing about the group and its mission. Far from being an aberration among Islamist terror groups, as some observers suggest, Boko Haram in its goals and methods is in fact all too representative.

“The kidnapping of the schoolgirls throws into bold relief a central part of what the jihadists are about: the oppression of women. Boko Haram sincerely believes that girls are better off enslaved than educated....

“Where are the Muslim college-student organizations denouncing Boko Haram? Where is the outrage during Friday prayers? These girls’ lives deserve more than a Twitter hashtag protest....

“Where governments are weak, corrupt or nonexistent, the message of Boko Haram and its counterparts is especially compelling. Not implausibly, they can blame poverty on official corruption and offer as an antidote the pure principles of the Prophet. And in these countries, women are more vulnerable and their options are fewer....

“It is...time for Western liberals to wake up. If they choose to regard Boko Haram as an aberration, they do so at their peril. The kidnapping of these schoolgirls is not an isolated tragedy; their fate reflects a new wave of jihadism that extends far beyond Nigeria and poses a mortal threat to the rights of women and girls. If my pointing this out offends some people more than the odious acts of Boko Haram, then so be it.”

Ayaan Hirsi Ali should be a hero to all women around the world.

On Wednesday, Boko Haram killed another 300 in a town in Borno state. Since the start of the year, the Islamists have killed over 1,500.

Lastly, this is yet another issue that provides fodder for presidential debates in 2016. The State Department under Hillary Clinton, after all, failed to designate Boko Haram a terrorist group. They weren’t until fall of last year. All manner of officials are now coming forward to say they urged the State Department to make this move and at the time State said it would cause more harm than good by enhancing the group’s standing. Pitiful.

Russia: Vladimir Putin’s crackdown on free speech and the Internet continued, with the signing of a law requiring larger, more popular online voices to register with the government. Any site with more than 3,000 visitors daily will fall under this new guideline. Bloggers can also no longer remain anonymous, which is fine with me, wrote the transparent editor.

It was back on Feb. 1 that a law went into effect in Russia, giving the Kremlin the power to block websites, which it then used against critics such as Alexei Navalny.

Putin also strengthened laws against rioting and large demonstrations, envisaging prison terms of 8 to 15 years for organizing “mass riots accompanied by violence, pogroms, arson, destruction of property, use of weapons, explosive devices, explosive and poisonous substances.”

Nicholas Eberstadt / Wall Street Journal

“History is full of instances where a rising power, aggrieved and dissatisfied, acts aggressively to obtain new borders or other international concessions. In Russia today we see a much more unusual case: This increasingly menacing and ambitious political actor is a state in decline....

“Let’s start with the ‘good’ demographic news for Moscow: Russia’s post-Soviet population decline has halted. Thanks to immigration chiefly from the ‘near abroad’ of former Soviet states, a rebound in births from their 1999 nadir and a drift downward of the death rate, Russia’s total population today is officially estimated to be nearly a million higher than five years ago. For the first time in the post-Soviet era, Russia saw more births than deaths last year.

“Yet even this seemingly bright news isn’t as promising as it seems. First: Russia’s present modest surfeit of births over deaths comes entirely from historically Muslim areas like Chechnya and Dagestan, and from heavily tribal regions like the Tuva Republic. Take the North Caucasus Federal District out of the picture – Chechnya, Dagestan, etc. – and the rest of Russia today remains a net-mortality society.

“Second: Despite its baby surge, which takes Russia’s fertility level from below the average to just above the average for the rest of Europe, the 1.7 births per Russian woman in 2012 was still 20% below replacement level. According to the most recent official Russian calculations, on current trajectories the country’s population, absent immigration, is still set to shrink by almost 20% from one generation to the next.

“But while Russia’s childbearing patterns today look entirely European, its mortality patterns look Third World – and in some ways worse. According to estimates by the World Health Organization, life expectancy in 2012 for a 15-year-old male was three years lower in Russia than in Haiti. By WHO’s reckoning, a 15-year-old youth has worse survival chances today in Russia than in 33 of the 48 places the United Nations designates as ‘least developed countries,’ including such impoverished locales as Mali, Yemen and even Afghanistan. Though health levels are distinctly better for women than men in Russia, even the life expectancy of 61 years for a 15-year-old Russian female in 2012 was an estimated three years lower than for her counterpart in Cambodia, another of the U.N.’s least-developed countries....

“If all this were not bad enough for Moscow, Russia’s geopolitical potential is being squeezed further by the rapid world-wide growth of skilled manpower pools. According to the International Institute of Applied Systems Analysis in Austria, in 1990 Russia accounted for nearly 9% of the world’s working-age college graduates; that share is declining and by 2030 will have dropped to 3%. On this front, as on many others, Russia is simply being left behind by the rest of the world.

“Despite Vladimir Putin’s posturing, he is leading a country in serious decline. If his dangerous new brinkmanship is a response to that bad news, then we should expect more of it in the future, possibly much more.”

Thailand: Prime Minister Yingluck was ousted after the Constitutional Court ruled she abused her position in transferring the secretary-general of the National Security Council. With an election slated for July 20, needless to say there is a current power vacuum. Yingluck’s power base is in rural areas. Civil war remains a possibility.

South Africa: In this country’s fifth all-race elections, the African National Congress scored another win, though with a few votes left to tally, the ANC will fall short of its goal of 2/3s, sitting at 62% at last word. Despite being highly unpopular, and lacking in brain power, President Jacob Zuma will remain in control for a second term, the ANC having received 66% of the vote in 2009.

Zuma is a far cry from the ANC’s first elected leader, Nelson Mandela, who won the initial democratic election in 1994.

Britain: With just 12 months left until the U.K.’s general election (differentiate this from the European Parliament vote end of the month), Labour, led by Ed Miliband, has a lead of one point, 32% to 31%, over David Cameron’s Conservatives (Tories). The Liberals are at 15% and UKIP is at 13%.

Northern Ireland: Sinn Fein leader Gerry Adams was released without charge after being detained and questioned for four days about a 1972 murder he has long claimed he had no part of. His file has been sent to the prosecution office and he could still be charged.

Some have called Adams’ arrest, just weeks before major elections in Northern Ireland and the Republic of Ireland, politically motivated as Sinn Fein’s candidates are doing surprisingly well in the polls leading up to the vote.

Random Musings

--Various poll #s: A CNN/ORC International poll has President Obama with a 43% job approval rating. Among registered voters, 46% say they will vote Republican for Congress, 45% Democrat.

In a USA TODAY/Pew Research Center survey, regarding this last one, 47% say they will vote Republican, 43% Democrat. Obama’s job approval was 44%

In the USA TODAY/Pew poll, a record 55% disapprove of the Affordable Care Act, with only 41% approving of it.

And by more than 2-1, 65%-30%, Americans say they want the president elected in 2016 to pursue different policies and programs than the Obama administration, rather than similar ones. This might be as telling as any single poll number of recent memory. 

--North Carolina Republican House Speaker Thom Tillis won the party’s nomination for U.S. Senate in a primary, turning back tea party challengers who might have hindered efforts to take down incumbent Democratic Sen. Kay Hagan, a key to retaking the Senate for Republicans.

Later in the month, the Republican establishment faces similar primary tests in Kentucky and Georgia; the former where Senate Minority Leader Mitch McConnell faces a stiff tea party challenger.

[While the Democrats hold a 55-45 majority in the Senate (including two independents who caucus with the party), Dems are defending 21 of the 36 seats in play, with many of these in red states.]

--Speaking in Manila the other day on his Asian swing, President Obama said he was frustrated how his critics didn’t understand his foreign policy.

“You hit singles, you hit doubles; every once in a while we may be able to hit a home run. But we steadily advance the interests of the American people and our partnership with folks around the world.”

David Ignatius / Washington Post

“It’s painful watching the YouTube video of President Obama in Manila last week, talking about hitting singles and doubles in foreign policy. Everything he says is measured, and most of it is correct. But he acts as if he’s talking to a rational world, as opposed to one inhabited by leaders such as Russia’s Vladimir Putin....

“Under Obama, the United States has suffered some real reputational damage. I say that as someone who sympathizes with many of Obama’s foreign policy goals. This damage, unfortunately, has largely been self-inflicted by an administration that focuses too much on short-term messaging. At key turning points – in Egypt and Libya during the Arab Spring, in Syria, in Ukraine and, yes, in Benghazi – the administration was driven by messaging priorities rather than sound, interests-based policy....

“How can Obama repair the damage? One obvious answer is to be careful: The perception of weakness can goad a president into taking rash and counterproductive actions to show he’s strong. The deeper you slide into a perceived reputational hole, the worse this dilemma....

“The key for Obama is to base policy on the fundamentals, where U.S. strength is overwhelming and the weakness of Russia (or any other potential adversary) is palpable....

“Russia...is a mess and getting worse....

“Ukraine, in contrast to foundering Russia, has a new $17 billion IMF loan, with plans for stabilizing its financial system, reducing corruption and ending dependence on Russian energy.

“Stay the course, in other words. With sanctions, diplomatic pressure, NATO resolve....

“The counter to Putin is strong, sustainable U.S. policy. To a battered Obama, three words: Suck it up.”

--Peggy Noonan / Wall Street Journal...comparing Iran-Contra to Benghazi.

“(Iran-Contra) broke in a Mideast newspaper. The administration denied it – all of it. Reporters began to dig.

“It was a big enough scandal on its own, but then came word that profits from the arms sales had been illegally funneled to the Nicaraguan Contras, who were fighting the communist Sandinista government.

“The attorney general, Ed Meese, launched a review of the affair. It was a real investigation, and he went public with his findings. The national security adviser who oversaw the operation had left, but his replacement resigned and his deputy was fired.

“The president delivered a national address. Two congressional committees launched investigations. Networks covered the hearings live. Ben Bradlee of the Washington Post said it was the most fun he’d had since Watergate.

“Reagan waived executive privilege so his aides would testify. He announced a special commission to investigate everything. There was a full housecleaning. Colin Powell was brought in to run the National Security Council, and (Sec. of State George) Shultz given full authority for all dealings with Iran. Ultimately Reagan dumped his chief of staff.

“The Iran-Contra affair did not spring from low motives. There was no hope of partisan gain, it wasn’t a political play.

“All involved were trying – sometimes stupidly, almost childishly – to save lives, and perhaps establish a new opening with Iran. They had good reasons, but the actions were bad, and everyone involved paid a price.

“Compare that with how the Obama White House has handled Benghazi. It’s all been spin, close ranks, point fingers, obfuscate, withhold documents, accuse your accusers of base motives. Nobody in the administration has paid a price.

“The reporter Bob Timberg, who along with the late Michael Kelly toughly covered Iran-Contra for the Baltimore Sun, suggests the press had its own biases. ‘At a certain point, though, I realized that the comparison to Watergate...didn’t hold up when looked at in light of the motives,’ he writes in his new memoir, ‘Blue-Eyed Boy.’

“No, Benghazi was no Iran-Contra, in terms of the nature of the crime or the handling of it.

“Dude, that was, like, almost 30 years ago. You can look it up.

“Dude, that’s how patriots, not punks, deal with scandals.”

--Maureen Dowd / New York Times

“Monica Lewinsky says she would meet me for a drink. I’m game.

“In her new meditation in Vanity Fair...(Monica says) she want to ‘burn the beret and bury the blue dress’ and get unstuck from ‘the horrible image’ of an intern who messed around with the president in the pantry off the Oval Office, spilled the details to the wrong girlfriend and sparked a crazy impeachment scandal.

“I wish her luck. Though she’s striking yet another come-hither pose in the magazine, there’s something poignant about a 40-year-old frozen like a fly in amber for something reckless she did in her 20s, while the unbreakable Clintons bulldoze ahead. Besides, with the Clinton restoration barreling toward us and stretching as far as the eye can see to President Chelsea, we could all use a drink.”

Ruth Marcus / Washington Post

“Monica Lewinsky may not have intended it this way, but she just did Hillary Clinton a big favor.

“Lewinsky could be forgiven, of course, if she did not mean to join Team Hillary. She is the forgotten, tragic roadkill of the affair.

“Bill Clinton paid the price of public humiliation and House impeachment, but he moved on, concluding what is remembered as a successful (if tarnished) presidency and a post-presidency at least as successful.

“Hillary Clinton, humiliated in her own way, emerged seemingly stronger. Her marriage endured; she became senator and secretary of state. Having put cracks in the glass ceiling, she is poised to break it, should she choose, in 2016.

“And then there is Lewinsky, who alone among the protagonists in the national soap opera saw her life irreparably shattered. Bill and Hillary made millions on the speaking circuit. Lewinsky, she writes for the June issue of Vanity Fair, ‘turned down offers that would have earned me more than $10 million, because they didn’t feel like the right thing to do.’....

“Lewinsky says it’s time to stop ‘tiptoeing around my past – and other people’s futures.’ Other people? Hmmm, wonder who that might be. Here, though, is why her going public is good for Clinton 2016:

“The Lewinsky affair never really came up in 2008; the subject was too raw and too fraught, and Clinton did not make it to the ugliness of a general election campaign. It’s clear, though, that the subject will not be taboo in 2016. Sen. Rand Paul (R-Ky.) has already raised the question of whether Democrats in general, and Hillary Clinton in particular, should consort with a ‘sexual predator’ like Bill Clinton.

“Lewinsky’s account makes clear that her affair with the president was between two consenting adults...

“So her piece defuses Paul’s line of attack. And it does so before any presidential announcement.

“If and when a Clinton presidential announcement comes, Lewinsky will be old news. ‘It’s time to burn the beret and bury the blue dress,’ Lewinsky writes. That would be good news for both women.”

--I’ve been saying for over a year that New Jersey Gov. Chris Christie’s performance was overrated and that my state just wasn’t doing that well under his watch, so I can’t help but note a front-page story in last Sunday’s Star-Ledger by Salvador Rizzo that starts out:

“It’s not the bridge, Governor: It’s the economy.

“Gov. Chris Christie has been bombarded with new revelations that many experts say could be a major roadblock to a bid for the White House – and they have nothing to do with the George Washington Bridge scandal that has plagued him all year long.

“With each day last week, the news about New Jersey’s troubled fiscal condition grew worse.

“A gaping $807 million hole in the state budget. Warnings that the state may not be able to make its promised pension payments. The threat of slashing property-tax rebates or school funding. And yet another downgrade of New Jersey’s already-low credit rating – the fifth one under the Republican governor’s watch.

“At the heart of these budget problems is a sputtering New Jersey economy, which has brought in billions less in tax revenue than Christie has forecast over the past three years....

“What it means is that if Christie chooses to run for president, fiscally conservative Republicans in a GOP primary would have plenty of fodder to tear into his record, as would Hillary Clinton or another Democrat in the general election.”

By the way, the federal government has allocated $1.8 billion in Hurricane Sandy disaster relief aid for New Jersey, but less than a quarter has been distributed, according to a new state report. [Erin O’Neill / Star-Ledger]

Granted, much of this is in the pipeline or headed out the door, but still....

--Yet another New York City politician was indicted, this one City Council member Ruben Wills, a Democrat from Queens, who was charged with a dozen crimes, including scheming to defraud, grand larceny and falsifying business records.

“I’m telling you...that I’m innocent,” he told reporters. “This is America, people. You are presumed innocent until you are proved guilty.”

You just have to laugh. New York Attorney General Eric Schneiderman said that Wills’ actions “constituted a stunning violation of the faith that he asked voters to place in him.”

Wills took funds from a nonprofit he founded, including a $33,000 state grant. He was nabbed as part of the ongoing probe of State Senator Shirley Huntley, a powerbroker in the Democratic party in Queens who decided to cooperate with the feds and secretly recorded conversations with the likes of Wills.

But he’s innocent until proven guilty...cough cough...cough...

--In yet another 5-4 ruling, the Supreme Court ruled that the Constitution allows town boards to start their sessions with sectarian prayers. Writing for the majority, Justice Anthony Kennedy said the prayers, as used in a town in upstate New York, were ceremonial and added nothing more than to the solemnity of the occasion. The prayers were “meant to lend gravity to the occasion and reflect values long part of the nation’s heritage.”

In a dissenting opinion, Justice Elena Kagan said the town’s practices could not be reconciled “with the First Amendment’s promise that every citizen, irrespective of her religion, owns an equal share in her government.”

Kagan wasn’t proposing to ban prayer, rather she said officials needed to assure all faiths were represented. Almost all of those giving prayers for the town in question were Christian.

--According to the 2013 National Assessment of Educational Progress, 12th-graders showed no improvement in math or reading test scores since the last federal testing in 2009. A majority of students received marks of below basic or basic for both subjects in both years. As Cornelia Orr, executive director of the National Assessment Governing Board said, “Too few students are achieving at a level to make our country competitive at an international level.”

As I noted the other week, graduation rates are going up, to 81% in the 2011-12 school year, up from 74% in 1991-92, but, as Orr adds: “Students have a low bar to graduate from high school but it’s not a high enough bar to really pursue a career actively when they leave.” [Caroline Porter / Wall Street Journal]

--The White House released the government’s new assessment on climate change and global warming and, basically, you are advised to sleep with one eye open the rest of your lives because, for starters, water levels are going to rise inexorably until the entire east coast of the United States is underwater....or something like that. President Obama met with television meteorologists, who were summoned from pliable networks to help get the message across. Personally, I have decided to flee another 50 miles inland.

You’ve known my take on all this since day one of the column. The entire global warming debate is mislabeled. It’s about global pollution. It’s very simple. If it looks like s--- in the air, or in our nation’s waterways, it’s not good. Clean air and water are our birthright.    It’s why I believe the Chinese people are closer than anyone thinks to outright revolution over this idea.

I am much more of an environmentalist than many of my readers understand. But I’m also a realist. 

Editorial / Wall Street Journal

“(As) a marketing exercise, the report has the feel of that infomercial footage of the people who can’t crack an egg or perform routine household tasks until they acquire this or that as-seen-on-TV product. The cautious findings of serious empirical climate literature are so obviously exaggerated and colored that the document is best understood as a political tract with a few scientific footnotes.

“For instance, the report’s ‘overview’ summary asserts that ‘extreme weather events with links to climate change have become more frequent and/or intense,’ climate change is already ‘disrupting people’s lives,’ and ‘this evidence tells an unambiguous story.’ Good thing we’ve been building that ark in the backyard.

“But the fine print that few will ever read acknowledges the real uncertainties of something as complex as the planet’s atmosphere. ‘There has been no universal trend in the overall extent of drought across the continental U.S. since 1900,’ the authors observe. We also learn that ‘trends in severe storms, including the intensity and frequency of tornadoes, hail, and damaging thunderstorm winds, are uncertain and are being studied intensively.’ And so on....

“Inherent scientific uncertainty and the possibility that the models are wrong means that the best insurance policy is economic progress. Floods have been happening since the Old Testament and natural disasters are not unknown in the American experience. California has gone through droughts before and will again. But a more affluent society is better placed to adapt to whatever nature and such byproducts of modernity as fossil fuels oblige humans to confront.

“The irony is that to the extent Mr. Obama’s agenda damages economic growth, he is leaving the country less prepared for climate change. Gallup recently reported that only a third of Americans worry about global warming and that the share that thinks the threat is exaggerated rose 15 percentage points to 42% over the last two decades. If liberals are wondering why the public is skeptical, one reason is because politicians are abusing science.”

--The World Health Organization declared the spread of polio is an international public health emergency. Outbreaks in Asia, Africa and the Middle East are an “extraordinary event” needing a coordinated response, says the WHO.

Specifically, Pakistan, Cameroon, and Syria “pose the greatest risk of further wild poliovirus exportations in 2014.”

Tragically, attacks on vaccination campaigns in Pakistan have allowed the virus to spread beyond the borders.

Syria, which was polio-free for 14 years, was re-infected with the virus from Pakistan, and with Syrian refugees poring across the borders, it is impossible to check those vaccinated.

--Here’s an unpleasant thought...the UN issued a report through the World Health Organization that says one billion people worldwide still practice “open defecation,” which leads to the spread of fatal diseases. Bruce Gordon, acting coordinator for sanitation and health at the WHO said “this is the root cause of so many diseases,” putting those societies that practice it at risk from cholera, diarrhea, dysentery, hepatitis A and typhoid.

Some countries, such as Vietnam and Bangladesh, have made great progress in tackling this.

--So last week I wrote of a Chinese tourist behaving badly while I was in Paris.  If you thought this was harsh on my part, I saw the following headline in the South China Morning Post two days later, Monday.

“Beijing park staff bemoan bad behavior of holiday visitors”

“Some of the people enjoying the Labor Day holiday [Ed. May Day] in Beijing’s parks plucked flowers from beds, trampled over lawns, spat and allowed their children to urinate in public, but nobody was punished for anti-social behavior, a mainland newspaper reported. [Ed. The Beijing Morning Post]

“Staff at the capital’s administration center of parks said the bad behavior also included people camping on lawns at the city’s botanical gardens.

“Security guards tried to reason with campers and persuade them to leave, but many pretended not to hear, the report said....

“At a tulip show in Zhongshan Park, 2,000 plants were trampled underfoot, the report said. Visitors often stepped into flower beds to take photos.

“Instead of educating children, some parents encouraged them to pick flowers and step in to take photos.

“Parents also allowed their children to urinate in public, even though there were public toilets meters away.”

--German art hoarder Cornelius Gurlitt died. He was 81. It was in February 2012 that investigators found more than 1,400 Nazi-looted works in his small Munich apartment – though they only revealed this late last year. The collection is estimated to be worth $1.35 billion.

Since the discovery, Gurlitt had cooperated with German authorities in attempting to establish the paintings’ provenance, and returning them to their rightful owners. He wasn’t obligated to return any since he was protected by a statute of limitations, so the fact he was willing to do so before his death gained him some praise.

But now with his passing there is no word on what will happen to the collection that contains works from Renoir, Matisse and Picasso.

--Finally, it’s clear President Obama must immediately relieve Gen. Eric Shinseki of his duties at the Dept. of Veterans Affairs. But you just know the president and his advisers are trying to figure out how this issue impacts the mid-term elections and not, first and foremost, what is best for our veterans. It’s sad.

---

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

God bless America.
---

Gold closed at $1287
Oil $99.99

Returns for the week 5/5-5/9

Dow Jones +0.4% [16583]
S&P 500 -0.1% [1878]
S&P MidCap -0.6%
Russell 2000 -1.9%
Nasdaq -1.3% [4071]

Returns for the period 1/1/14-5/9/14

Dow Jones +0.04%
S&P 500 +1.6%
S&P MidCap +0.8%
Russell 2000 -4.9%
Nasdaq -2.5%

Bulls 55.8
Bears 19.7 [Source: Investors Intelligence]

Dr. Bortrum has a new column posted.

Catch me on Twitter @stocksandnews

Happy Mother’s Day!

Brian Trumbore



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-05/10/2014-      
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Week in Review

05/10/2014

For the week 5/5-5/9

[Posted 12:00 AM ET]

Edition 787

Washington and Wall Street

It was an extremely light week on the economic front with just an April reading on the service sector, 55.2 vs. 53.1 in March worth mentioning; though a further sign of a snapback from the harsh winter’s impact on the economy.

Federal Reserve Chair Janet Yellen made her first appearance before Congress’ Joint Economic Committee and reaffirmed that the Fed believes the economy is on the mend but that the central bank is prepared to act further if necessary.

“A high degree of monetary accommodation remains warranted,” she said in prepared remarks.

Yellen did depart from past statements in noting turmoil in emerging markets and the ongoing crisis in Ukraine could be impactful.

“One prominent risk is that adverse developments abroad, such as heightened geopolitical tensions or an intensification of financial stresses in emerging market economies, could undermine confidence in the global economic recovery.”

And right there, sports fans, is exactly why I’ve focused on geopolitics such as I have for lo these many years. To try to never lose sight of the events that can influence behavior. [Including clashes in the South China Sea this past week that could be the precursor to something much larger.]

Separately, Yellen also added another concern, weakness in the housing market. On that score, noted bond investor Jeffrey Gundlach of DoubleLine told an investment conference in New York that the notion of a housing recovery was “over-believed” and home-building activity would never return to pre-crisis levels.

“I will make the bold prediction that for the rest of my career, we will never see a year of 1.5 million housing starts again,” he told his audience, adding “People, young people in particular, were shocked and scarred by the housing collapse and they don’t think that mortgage rates of 4 or 5 percent are low; they don’t know of any other world.”

Similarly, Realogy Holdings Corp., a global leader in residential real estate franchising and provider of brokerage services, was downbeat in issuing its first quarter earnings report.

CEO Richard A. Smith said in part: “We saw two opposing trends in the first quarter that caused an overall shift in Realogy’s mix of business resulting in a higher average sale price and reduced transaction sides. Demand at the higher price points in markets served by our franchisees and company-owned brokerages was strong, while difficult credit standards and rapid home price appreciation, primarily caused by low inventory levels, constrained activity at the entry level of the housing market.”

Smith also noted “a pause in the rate of growth in the housing recovery we are seeing this year could make for challenging near-term comparisons, although current industry forecasts for 2015 are more favorable.”

Meanwhile, the Organization for Economic Cooperation and Development (OECD) forecast global growth would come in at 3.4% in 2014, down from an earlier forecast of 3.6% last November, with the U.S. at 2.6%, down from 2.9%.

And it appears that earnings on the S&P 500 are tracking around 4.5% for the first quarter, with revenues up 2.5%. The first figure is relatively OK, expectations having plummeted as we approached the reporting period. The second figure remains putrid, but I look for it to improve the balance of 2014, barring a confidence-wrenching event.

Europe and Asia

As expected, the European Central Bank held the line again on interest rates at its monthly meeting, but ECB President Mario Draghi made it clear he was prepared to act come the next gathering, June 5.

“The governing council is comfortable with acting next time,” he said, at which point if Draghi is to save face he will lower the main lending rate from 0.25% to zero, and perhaps move other instruments below zero (I’ll get into this more as we get closer to the date).

Inflation is too low, 0.7%, though the ECB wanted to wait for one more round of data points before setting a new policy. Draghi offered the 24-member ECB council was “dissatisfied about the projected path of inflation” and is “not resigned to have too low inflation for too long a time.”

Draghi has been a man of words, not actions, but his declarations such as his July 2012 pledge to do “whatever it takes” to save the euro have worked. In June, however, he will have to take real steps as well as continue to use moral suasion. 

There was some data this week. Markit’s final eurozone composite of manufacturing and the service-sector came in at 54.0 for April, same as the earlier flash report, vs. 53.1 in March. Markit’s economist sees second-quarter GDP coming in at 0.5%.

An ‘output measurement’ for the Irish economy was 60.8, a 94-month high, while for Spain it was 56.3, an 85-month high. Germany was 56.1, Italy 52.6, but France just 50.6 as it continues to lag.

A March reading of retail sales for the eurozone rose 0.3% over February, but German factory orders for March unexpectedly fell 2.8% over the prior month.

Meanwhile, the European Commission raised its growth outlook for the eurozone for 2014 to 1.6%, predicting unemployment for the EA18 will fall to 11.4% from its current 11.8%. “The recovery has taken hold,” said the EC.

The EC has Germany growing at 1.8%, Italy 0.6%, Spain 1.1% and France 1.0%. Inflation is estimated at just 0.8%.

The above-mentioned OECD upped its eurozone GDP forecast to 1.2% from 1.0%, though it has the U.K. growing 3.2%, which would be better than the U.S.

And after all my warnings on the European bond market, particularly with regards to the likes of Italy and Spain, whose 10-year bonds are around 3.00%, Jose Vinals, director of the IMF’s monetary and capital markets department, told the Financial Times that when it comes to such yields, “We are seeing a lot of what I would call ‘pricing to perfection’ in financial markets, by which I mean pricing outcomes which are really quite good. There is a danger that if outcomes are not perfect, there is room for disappointment.”

Lots of room, I’d add, though in the immediate short term, bonds can rally a little further with the ECB’s pending looser monetary policy.

Turning to European politics, last time I wrote about my experience in Paris with the National Front party of Marine Le Pen and addressed the far-right movement in general across Europe ahead of the May 22-25 European Parliament elections.

So this week there were a slew of articles on the topic, including a couple on the U.K.’s Independence Party, UKIP (some list it as Ukip, because that is how it’s pronounced, but it’s UKIP on the official website).

British Prime Minister David Cameron has called UKIP a bunch of “clowns” but the clowns, led by Nigel Farage, are polling ahead of Cameron’s Conservatives in the Euro vote, and could even make a run at first, ahead of Labour. Actually, a YouGov poll last weekend put Cameron’s Tories in third place with 19%, behind UKIP’s 31% and Labour’s 28%. Farage, as I’ve noted before, has a simple message, say ‘no’ to immigration, and ‘no’ to the European Union (or Brussels).

UKIP’s stark campaign poster highlights its policy in showing an escalator running from the English Channel up the White Cliffs of Dover with the slogan: “No Border. No Control. The EU has opened our borders to 4,000 people a week.”

But Farage has also said he admired Vladimir Putin as a statesman, which frees Cameron to say things like: “The choice is clear: if you want a serious party with a credible long-term plan and a party that’s delivering on that plan, then you only have one choice: you have got to vote Conservative.”

The message the British establishment wants to get across when it comes to UKIP is that it’s racist.

But back to Putin and the support he receives from some in Europe’s far right, Philip Stephens said some of the following recently in the Financial Times:

“The parties of the xenophobic right who hope to prosper in (the) European elections are more shameless still in their backing for Moscow. They share Mr. Putin’s authoritarian instincts and cultural conservatism. He can count on the support of the neo-Nazi Jobbik in Hungary and Golden Dawn in Greece. Nigel Farage...has been positively gushing about the Russian president. Marine Le Pen...accuses the EU of hypocrisy over Crimea....

“Left-leaning academics cite the invasions of Iraq and Afghanistan in order to draw a phony moral equivalence between Russia and the U.S. The logic is at very best twisted. If U.S. military adventurism was so heinous, how can it be acceptable for Russian troops to trample over Ukraine? Am I missing something? Or does liberal postmodernism now inhabit a perverse world where if it is anti-American it must be right?

“Ultimately, the west’s democratic diversity is its strength. Its cities are full of Russians. Mr. Putin’s apologists would not dream of running off to live in Moscow. Nor can Moscow’s effort to destroy Ukraine hide the simple fact that Tsar Vladimir is leading Russia into precipitate decline. But Europeans need to learn to speak up again for their values. The continent’s freedom, peace and security have long been taken for granted. Mr. Putin has thrown them into serious question.”

Lastly, regarding Le Pen, in a poll published last Sunday, the National Front is running neck and neck with the mainstream center right UMP for the Euro Parliament election, with Francois Hollande’s Socialists well behind in third. Hollande’s approval ratings remain below 20%, though his new prime minister, Manuel Valls, is at 64%. It’s Valls who is urging the French to “fight the extremes.”

---

A few notes on China. HSBC’s purchasing managers index for April came in at just 48.1 vs. 48.0 in March, the fourth month in a row of contraction. The official government reading was 50.4. Remember, HSBC looks primarily at the private sector, the government’s Statistics Bureau is focused mostly on large government-owned companies.

China did receive better than expected news on the export front, up 0.9% from a year earlier in April after being down two straight months. Imports rose 0.8% after being down 11.3% in March.

And inflation rose only 1.8% in April from a year earlier, though producer prices fell for a 26th straight month, down 2%, as overcapacity in areas such as steel and cement hits hard.

Food prices rose just 2.3% and this is good.  So you put all the inflation data together and the government definitely has room to loosen policy. Speaking at the World Economic Forum in Nigeria, Premier Li Keqiang said he was still confident China could hit its targets this year, call it 7.3% to 7.5% on GDP, with the OECD having lowered its China outlook from an earlier forecasted 8.2% to 7.4%.

Street Bytes

--Stocks finished mixed, with the Dow Jones tacking on 0.4%, 71 points, to close the week at an all-time high of 16583. For the year it is now up 0.04%. But the S&P 500 lost 3 points (0.1%) and Nasdaq fell 1.3% to remain down 2.5% for 2014.

Shares of Apple hit $600 for the first time since October 2012, but finished the week at $585.

--U.S. Treasury Yields

6-mo. 0.05% 2-yr. 0.38% 10-yr. 2.62%  30-yr. 3.46%

The 10-year hit the low end of its trading range, 2.57%-2.58%, but didn’t crack.

--Hedge fund manager David Einhorn recently had a dinner conversation with former Fed chief Ben Bernanke and Einhorn told Bloomberg’s Katherine Burton that some of Bernanke’s answers to his questions were “frightening.”

Einhorn, for example, has been critical of the Fed’s maintaining interest rates at zero for five years, arguing the benefits of low rates have diminishing returns over time, and that the Fed’s stimulus has led to income inequality. Bernanke responded “you are wrong.”

On the issue of inflation, Bernanke said he was 100% certain there would be no hyperinflation, to which Einhorn told Bloomberg, “Not that I think there will be hyperinflation, but how do you get to 100% certainty about anything? Why can’t you be 99% certain?”

I agree with Mr. Einhorn on both topics.

--J.P. Morgan Chase & Co. said its trading revenues would continue to slump in the second quarter to the tune of 20% vs. the first quarter’s drop of 17%. This doesn’t bode well for the others.

--Chinese Internet giant Alibaba filed for its IPO in the U.S., with the company hoping to raise $15 billion or thereabouts. Alibaba is the largest online retailer in China and through its filing we learned it had revenue of $6.5 billion in the nine months to the end of December 2013 (up 57% over the same period a year earlier), making a net profit of $2.9 billion. 11.3 billion orders were placed on its various platforms.

Yahoo owns 22.6% of Alibaba, while Japan’s Softbank owns 34%. Yahoo will be selling about 40% of its stake in the IPO, generating an estimated $10 billion, while Softbank will maintain its stake at 30%.

--Shares in Twitter collapsed following the end of restrictions on insider sales following its November IPO. On Tuesday, the stock fell $6.90 to close at $31.85, finishing the week at $32.05, which is down from its Dec. 26 high of $74.70. Many of the insiders had a cost basis in the $2.00 to $2.50 range. Others around $10. So why not take the profit?

--Two of the biggest advertising firms in the world, Publicis and Omnicom, scrapped their merger plans. The $35 billion combination would have created the world’s biggest such operation but the two said there were challenges that “remained to be overcome” and the slow pace of progress created uncertainty that was detrimental to both of them. There was no break-up fee.

Some had warned the merger would have created conflicts of interest between clients of the two companies – as they represented rival firms in many sectors.

--Barclays will have cut 19,000 jobs by 2016, with 14,000 of those job losses occurring this year. 7,000 will be in the investment banking division, which employs around 26,000.

Half of the 14,000 lost this year will be in the U.K. The 14,000 figure is higher than the 10,000 to 12,000 estimate the bank first estimated earlier in the year.

CEO Antony Jenkins said, “We will be a focused international bank, operating only in areas where we have capability, scale and competitive advantage.”

--Apple is in talks to acquire Beats Electronics, the headphone maker and music streaming operator founded by music producer Jimmy Iovine and hip-hop mogul Dr Dre. The reported price tag, $3.2 billion, would be Apple’s largest acquisition and a departure from past strategy, as well as an admission Apple needed help staying in the lead in the music industry as iTunes has waned in popularity.

--Tesla Motors Inc. reported it lost $49.8 million in the first quarter compared to a small profit in the same period a year earlier, but ex-adjustments earned $17 million. Revenue rose to $620.5 million for the electric car company compared with $561.8 million in the prior period.

But the shares were rocked as it announced sales of its Model X sport utility vehicle will be delayed until next year. Seeing as this is the company’s second model, it’s important to get something new into the showroom.

Tesla is manufacturing about 700 vehicles per week of its Model S, up 15% from the rate at the end of the fourth quarter and on its way to 1,000 per week by year end.

Tesla’s big immediate issue is tight battery cell supply, which it says will improve in the third quarter. But as for plans for the “gigafactory,” or large-scale battery plant needed to turn out enough power units for a mass-market vehicle, the company is still targeting 2017, but some analysts are growing leery.

So Tesla shares cratered to $182.25....down from a Feb. 26 all-time high of $265.

--Jena McGregor / Washington Post...on the “silver tsunami,” the pending wave of retirements in the postal service.

“In a report released Monday, the postal inspector general’s office said that 35% of postal executives were eligible for retirement as of 2012, and it expects 49% will be eligible by 2015. Making matters worse: About 30% of the people currently being groomed to succeed them are in a position to retire, too. That number will balloon to 73% in the next seven years.”

Uh oh.

--Barry Rosenstein, founder of hedge fund Jana Partners LLC, purchased an 18-acre beachfront property in East Hampton, New York for $147 million, breaking the U.S. single-family price record of $120 million set last month for a Greenwich, Conn., waterfront property.

According to DataQuick, home purchases of $2 million or more jumped 33% in January and February from a year earlier.

--The proposed takeover of Britain’s AstraZeneca by U.S. rival Pfizer for $106 billion (which Pfizer will have to raise further) has become a major political issue in the U.K., with Prime Minister David Cameron vowing his government would “back British jobs, British research and development and British science,” but Labour leader Ed Miliband said Cameron should intervene directly in the deal, even as the government has very limited ability in the realm of protecting jobs or investment in research and development.

Many officials who have dealt with Pfizer in the past on foreign acquisitions claim it’s about profitability and cost cutting, rather than increasing R&D.

In the case of Pfizer-AstraZeneca, specifically, it’s being driven in no small part by tax concerns. AstraZeneca has 6,700 employees in the U.K., Pfizer has 2,500.

--Merck & Co. sold its consumer unit that includes Claritin allergy medicines and Coppertone sunscreens to Bayer AG for $14.2 billion. Merck said it would use some of the proceeds to fund the development of its MK-3475 experimental cancer drug, which analysts are high on, assuming it eventually reaches market.

--The French government said it would oppose General Electric’s $13.5 billion takeover bid for Alstom’s energy business, with French industry minister Arnaud Montebourg telling GE it wanted a “balanced partnership” rather than a takeover.

Montebourg had earlier said “French companies are not prey,” though clearly he prefers a rival offer from Germany’s Siemens. GE said it was open to continuing dialogue.

--Target Corp. CEO Gregg Steinhafel was forced out, following the Christmas-season massive cyberattack that exposed millions of its customers to potential fraud. Steinhafel, who had been at the helm for six years, was also in charge of a disastrous expansion into Canada and a poor e-commerce strategy, as well as a fresh food initiative that sputtered. No word on who is replacing him.

Steinhafel, by the way, could receive parting gifts totaling $55 million, including pension benefits, deferred comp, and restricted stock that would vest immediately.

--For the first time in a decade, Wal-Mart’s Web sales grew faster than Amazon’s, up 30% to $10 billion during the year ended Jan. 31, vs. Amazon’s 20% growth over the same period, according to data from trade publication Internet Retailer. [Wall Street Journal]

--Walt Disney Co. reported profit for the first quarter that exceeded Wall Street’s expectations, boosted by continued strength from its animated film “Frozen.” Net income increased to $1.9 billion from $1.5 billion a year earlier.

“Frozen” had worldwide ticket sales of $1.2 billion. The company’s ESPN unit continues to rake it in as well. And higher average ticket prices helped lift operating income at Disney’s theme parks by 19% to $457 million.

--CBS reported first-quarter earnings rose 6%, thanks in no small part to its Showtime division, but overall revenue fell 5% from last year, below expectations, and the stock was hit hard.

--Toyota made a net profit of $17.8 billion in the year to March 31, almost double the prior year though below its initial forecast. Japan’s firms, like Toyota, have benefited from the weakness in the yen which helps lift their profits when they repatriate the cash.

--I missed April auto sales when I was posting from Paris last weekend so for the archives, sales in the U.S. hit their highest monthly level since the mid-2000s and suggest sales for the year of 16.5 million, up about 10% over last year if the trends persist.

General Motors reported sales were up 7% over the same period last year, Chrysler’s April sales were up 14%, Toyota’s rose 13.3%, Nissan’s 18.5% (an April record) and Hyundai’s rose 4.4%.

But Ford’s fell 1% from a year ago and Volkswagen’s declined 8.4%.

--Hedge funds have recorded two consecutive losing months for the first time since April and May of 2012, according to researcher HFR Inc. The average decline was 0.17% in April after a 0.33% decline in March. 

Those funds heavily weighted to the tech sector and momentum plays were hit hard. [Wall Street Journal]

--FedEx Corp. is changing the way it ships bulky packages, charging by size rather than weight, which means big price increases for those delivering items such as toilet paper or diapers on a regular basis. Web shoppers using someone like Zappos.com for shoes will be impacted in a major way. No word yet on whether UPS will follow suit. The new policy goes into effect in January.

As reported by the Wall Street Journal, “Under the new rate system the price of shipping an eight-pound, 32-pack of toilet paper between 601 and 1,000 miles would increase 37% to $13.81.”

--Franco-American network-equipment company Alcatel-Lucent SA continued its comeback in narrowing its loss in the first quarter, though the company also continued to burn through cash. Revenue fell 3.3%, largely on the rise of the euro against the dollar as well as allowing unprofitable contracts to run off. The company’s Internet-routing division saw an 11% rise in revenue, thanks to growth in Asia.

The shares have risen 180% in the past year.

--Shares in Whole Foods dropped nearly 19% on Wednesday, their worst one-day performance in five years, after the upmarket grocer warned of increased competition in natural and organic foods. Same-store sales growth in its second quarter slowed from 6.9% to 4.5%.

CEO John Mackey said on a conference call: “For a long time, Whole Foods market was this small niche... It’s just gotten to be a very big niche and in some ways it’s gone mainstream. There’s a lot more competition, (including) conventional supermarkets copying and imitating a lot of what we’re doing.”

The company reduced its forecast for the full year.

--McDonald’s said same-store sales rose 1.2% in April, with strong results in China offsetting flat sales in the U.S.

I went to McDonald’s this week to get the 2-for-1 Big Mac special and when the girl at the counter rang it up she charged full price for each one. So I said, “No, I want the 2-for-1,” to which she replied, “Oh, you want that.”

I still like the food.

--Turmoil in Ukraine is having a major impact on wheat prices, which hit a 13-month high this week. Not only is Ukraine a major wheat exporter, but much of it is shipped through Odessa, which has seen major clashes.

--Coca-Cola announced it was removing a controversial ingredient, BVO, brominated vegetable oil, from its fruit and sports drinks such as Fanta and Powerade. This comes after concerns that an element of the additive is also found in flame retardants. Earlier this year, Pepsi removed it from its Gatorade sports drink.

--Speaking of Coke, at Berkshire Hathaway’s annual shareholder meeting, Warren Buffett said of his abstention from the shareholder vote on Coca-Cola’s equity compensation plan for executives:

“We made a very clear statement about the excessiveness of the plan and, at the same time, we in no way went to war with Coca-Cola. I don’t think going to war is a very good idea in most situations.”

Buffett said he has had conversations with Coke CEO Muhtar Kent, telling him he thought the plan was excessive.

--Office Depot said it would close at least 400 U.S. stores amid sliding sales. Rival office-supplies retailer Staples previously announced it was closing as many as 225 of its stores by the end of the year.

--Canada’s unemployment rate for April remained steady at 6.9%, as since August 2013, the Canadian economy has seen little overall job growth.

--Good news out of Ireland...car sales continue to improve and are now forecast to soar to 100,000 next year, up 15,000 to 20,000, which would be an increase of 25% over 2013. Every extra 1,000 new car sales generates 130 jobs, according to economists. [Irish Independent]

--The property market in Ireland also continues to improve and, importantly, not just in Dublin, which accounts for a third of the country’s overall sales.

As for prices, they are up 7.8% nationally, and up 13.4% in Dublin compared to a year ago (using March data).

--The U.N. issued a report that says nearly 3 billion people will have access to the Internet by the end of 2014, which still means 60% of the world’s population – about 4.2 billion – will remain unconnected.

78% of those in developed countries will have access, but only 32% of the population in developing nations will. [Salvador Rodriguez / Los Angeles Times]

--According to a report from the Agriculture Department, as part of its 2012 Census of Agriculture data just released, “22% of all farmers were beginning farmers in 2012....Young, beginning principal operators who reported their primary occupation as farming increased from 36,396 to 40,499 between 2007 and 2012. That’s an 11.3% increase in the number of young people getting into agriculture as a full-time job.”

--NBCUniversal, which already owned the U.S. media rights to the Olympics through 2020, paid another $7.75 billion to provide coverage through 2022-2032, or an average of $1.275 billion for each Games, 16% higher than the average for the 2014-2020 Games.

A key for NBC is that the price will not be adjusted for inflation.

I just really wonder if there will be an Olympic Games by 2032. We’ll know by around 2025 when the rights to 2032 would be issued.

--Claude Monet’s “Water Lilies” fell short of expectations when it sold for $24 million, ex-fees, at a Christie’s auction this week, part of a total haul of $285.9 million worth of Impressionist and modern art. The unidentified buyer was from China. A Picasso work sold for $22.6 million.

[I attempted to sell my Lew Alcindor rookie card for $6.25 million but was rebuffed.]

--Demand for salmon has been rising rapidly, 6% to 7% for 2012-13, with the value of Norwegian salmon exports last year rising 35% over 2012. But prices are also rising rapidly, affected by production challenges to meet the demand, and so salmon could lose its mass market status, as producers and investors put it at this week’s Seafood Expo in Brussels. That would be fun to attend. “Hey, which one of you guys is mislabeling the stuff?” [Emiko Terazono / Financial Times]

Prices, by the way, could fall back owing to warmer sea temperatures this year that lead to better fish growth.

--A World Health Organization study of the world’s most polluted cities found New Delhi to be number one in terms of dirtiest air. India had 13 of the 20 dirtiest cities, while Beijing placed 77th, however, Beijing submitted data from 2010 and didn’t begin reporting accurate data on small particulates until 2012. It’s probably really top five.

Three of the cleaner cities were Canadian, including Vancouver. Plus Canada has the best beer. Or, as I like to say, “That’s Canada, the nation with the premium domestic.”

Foreign Affairs

Ukraine: Pro-Russian separatists in eastern Ukraine vowed to press ahead with a referendum on independence, Sunday, defying Russian President Vladimir Putin’s call to postpone the vote. As a spokesman for the self-proclaimed Donetsk People’s Republic said at a news conference on Thursday in Donetsk, “Civil war has already begun. The referendum can put a stop to it and start a political process.”

On Wednesday, Putin claimed some of the estimated 40,000 troops on the border with Ukraine had been pulled back, but the United States and NATO saw zero evidence of this.

Putin said, “We believe that the most important thing is to create direct, full-fledged dialogue between the Kiev authorities and representatives of southeast Ukraine.”

Putin also said Ukraine’s presidential election on May 25 is a step “in the right direction.” But then he said the vote would decide nothing unless the rights of “all citizens” were protected.

But who is going to participate in this sham? And can it possibly be fair and clean? Of course not. It’s as much illegitimate as Putin likes to say the upcoming Ukrainian presidential election will be.

Meanwhile, Putin oversaw a massive Russian military exercise that included the firing of intercontinental ballistic missiles from submarines and cruise missiles from a Tupelov bomber; Vlad the Impaler saying this demonstrated the readiness of his “strategic offensive and defensive forces.”

And then on Friday, Russia staged its largest Victory Day celebration in 20 years as tanks rumbled across Red Square and fighter jets screamed overhead.

Putin used Crimea to whip up patriotism (with the big-time help of state media), and then some, with Russia’s accusations of neo-fascists on the rise in Ukraine, while praising the Soviet Union for defeating same in World War II.

“The iron will of the Soviet people, their fearlessness and stamina saved Europe from slavery,” Putin said. “It was our country which chased the Nazis to their lair, achieved their full and final destruction, won at the cost of millions of victims and terrible hardships.

“We will always guard this sacred and unfading truth and will not allow the betrayal and obliteration of heroes, of all who, not caring about themselves, preserved peace on the planet.”

Putin then traveled to Crimea for his first visit since Russia annexed the peninsula. The State Department called the trip “provocative and unnecessary.” The Kiev government called it a “gross violation of Ukraine’s sovereignty.”

During his visit, Putin said Crimea had shown loyalty to a “historical truth” in choosing to be part of Russia. The BBC said Putin was treated as a conquering hero as he walked through the main square of Sevastopol.

It was a bloody week, overall, including 20 dead in the city of Mariupol on Friday, though frankly it’s impossible to keep up with the casualties as both sides are giving different figures. 

In other developments, it seems the fire at the trade union building in Odessa last weekend that killed 40 was not caused by pro-Ukraine nationalists, but rather pro-Russian protesters who had taken cover in the building and then accidentally dropped their Molotov cocktails when they took to the roof. 

At least the seven OSCE inspectors being held hostage by pro-Russia separatists were freed. One inspector said he “will never forgive” his captors.

Prime Minister Yatseniuk, when asked by the Financial Times how he was holding up under the pressure, said the job is “worse” than anticipated. “We face the Russian military, Russian-backed terrorism, the economy is insolvent, our own military has been dismantled, the police are disorientated. The last government stole everything they could.”

Russia can easily dismember a country that doesn’t seem legitimate.

In a Pew Research Center poll conducted last month, following the annexation of Crimea, Vladimir Putin had an 80% approval rating back home, while two-thirds of Ukrainians said Russia is a bad influence on their country (and this was before the most recent violence). In 2009, only a quarter considered its impact as a negative.

Only 23% of Russians now have a favorable opinion of the United States, down from 51% last year. As for the European Union, 39% of Russians have a favorable opinion, down from 63% in 2013.

But in a poll conducted by Moscow-based Levada Center and published Tuesday, Russians who supported the potential accession of other Ukrainian regions to Russia (outside of Crimea) fell to 58% in April, from 79% a month earlier. That’s telling.

And in a further sign of how things are changing rapidly on the European continent, non-NATO members Sweden and Finland are looking at a new defense alliance, with a focus on 2016 and beyond. Finland shares an 830-mile border with Russia – more than the other 27 EU members combined – and fought two wars against the Soviet Union during World War II. Russia is also Finland’s biggest trade partner, including receiving 100% of its natural gas from its neighbor.

Both nations concede their armies are currently inadequate to defend more than a small portion of their countries for a short period of time.

Iran / Israel: Talks on Iran’s nuclear program resume next week and Russia’s envoy, Sergei Ryabkov, said he expects the outlines for a long-term deal to emerge at that time. The interim agreement reached last November technically expires July 20, with Reuters reporting some experts are optimistic, but the biggest remaining obstacle is rather important; the scope of any uranium-enrichment program that Iran is allowed to keep.

By all accounts the United States is prepared to allow Iran to continue with some level of nuclear work, as long as it’s not technically capable of producing a nuclear weapon. But as Michael Wilner of the Jerusalem Post reports:

“That standard requires constant checks on multiple fronts: research and development would have to be invasively monitored, centrifuges would have to be dismantled, and remaining enrichment sites would require constant oversight. And the international community would have to rely on the International Atomic Energy Agency to successfully police the deal on a daily basis, possibly for decades.

“Israel’s fears are in these details. Iran’s retention of active research teams will be hard to police; they have finely honed the efficiency of Iran’s centrifuges, enabling Iran to break out from low levels of uranium enrichment at a quicker pace.”

Israel is not going to be happy at whatever the P5+1 agrees to with Tehran. It seems the bottom line will be Iran’s ability to enrich enough high-grade uranium for a weapon will only be extended a few months.

Speaking to the Washington Institute for Near East Policy, former Israeli Prime Minister Ehud Barak charged that President Obama had changed the goal posts when it came to Iran and its nuclear program.

“The American administration changed its objective from no nuclear military Iran to no nuclear military Iran during the term of this administration,” adding that the U.S. “is perceived to have been weakened” over the last several years.

At the same time, Barak said a U.S. attack on Iran’s nuclear facilities would take a “fraction of one night” to complete if Obama chose to order one. “It’s a simpler operation to get rid of the [Iranian] arsenal” than it would have been to attack Bashar Assad’s chemical weapons infrastructure.

But on a broader issue, Barak had an interesting observation on today’s geopolitical environment; that international crisis management had become a “gestalt, where everything depends on everything else.”

Handling China and disputes in the South China Sea, for example, complicate the situation in Iran, which has had an impact on Ukraine, which leaves “no room for real cooperation on Syria.” [Michael Wilner / Jerusalem Post]

As for Prime Minister Netanyahu, he met with National Security Adviser Susan Rice and Netanyahu told her of his opposition to the trajectory of the negotiations with Tehran.

“Why do they need thousands of centrifuges?” the Times of Israel quoted him as saying. “Why do they need tons of enriched uranium? Only for the production of nuclear weapons.”

Separately, in a monthly Peace Index poll of Israeli Jews, 68% believe the decision by the security cabinet to suspend negotiations with the Palestinians, after Fatah and Hamas signed a unity deal, was appropriate, while 27% disagree with the move.

When questioned on President Obama’s assessment that neither Israeli nor Palestinian leaders showed the political will to make difficult decisions, only 39% of Israeli Jews said they agreed that both sides were equally responsible. 56% disagreed with Obama.

58% said the Hamas-Fatah reconciliation agreement was dangerous. [Jerusalem Post]

Syria: I’m on record as saying the United States blew it in this theater back in 2012 and it’s essentially been over ever since so I don’t necessarily agree with all of the following, but it’s a different take.

John Bolton / New York Post

“(An) effective U.S. Middle East policy must recognize that, tragic though it’s been, the conflict in Syria is a strategic sideshow. The real threats to the United States come not from those directly engaged in that fighting, but from their patrons and larger incarnations.

“Thus, the Assad regime, loathsome as it is, couldn’t survive without substantial Iranian assistance. And it is Iran, through its pursuit of nuclear weapons and its decades-long role as international terrorism’s central banker, which poses the central danger.

“Instead of focusing on overthrowing Assad or aiding his enemies, we should be vigorously pursuing regime change in Iran. As Alexander Haig once put it, ‘go to the source.’

“Obama, by contrast, is doing very nearly the opposite. By negotiating with Iran, he has not only allowed it a path to legitimize its nuclear-weapons program, but objectively facilitated the deadly global menace in Tehran.

“Some will concede that a victory by Syria’s rebels is likely to replace Assad with terrorists, but nonetheless worry that al-Qaeda is capitalizing on U.S. inaction, using Syria to recruit new adherents. Yet Washington’s ability to affect the outcome in Syria is decidedly limited; aiding the rebels mainly increases the chances of an al-Qaeda regime in Damascus – hardly preferable to the current bloodshed.

“Instead, America’s proper policy is to redouble our efforts to destroy al-Qaeda worldwide. The administration’s own reports show al-Qaeda is rapidly rejuvenating itself.

“In short, Washington must focus on the real threats, neither minimizing nor dismissing them, and not be distracted by Syria’s conflict. We can only hope, contrary to the available evidence, that the collapse of the Syrian ‘peace’ negotiations, Russia’s continuing perfidy in Ukraine and elsewhere and Iran’s unrelenting pursuit of nuclear weapons may yet awaken our president from dreamland.”

Egypt: In yet another example of a mass trial without little or no access to due process, 102 alleged supporters of the Muslim Brotherhood were sentenced to 10 years in prison. At the same time, three reporters for Al Jazeera have now been jailed for more than four months.

Abdel Fattah Sisi, the man who would be president, said in his first televised Q&A that it will not be possible for the Brotherhood to reenter political life, which flies in the face of what the White House and much of the West wants, an all-inclusive political system.

The vote for president is set for May 26-27. Sisi will roll, especially as backers of the Brotherhood will boycott the election.

Iraq: Preliminary results in Iraq’s recent election are slated for May 15. Final results May 25. Nothing to say until then, except in the case of the man I long wanted to be Iraq’s leader, Iyad Allawi, who has said if Nouri al-Maliki remains prime minister (as expected), Allawi will abandon politics. “Either Iraq can remake itself, rebuild and move ahead, or it will be destroyed; I believe we are approaching the final stage.” [The Economist]

China: China demanded Vietnam withdraw its ships from a part of the disputed South China Sea where a Chinese oil company, CNOOC, is putting up an oil rig. A senior Foreign Ministry official in Beijing said China was “shocked” at the “provocations of Vietnam,” accusing it of ramming Chinese ships in the area...but it was the other way around! The same official warned Washington not to interfere, referring to remarks by U.S. officials about “dangerous conduct and intimidation by vessels” in the area.

Beijing announced the drilling off Triton Island, known as Zhongjian Island in China, on Saturday, with Hanoi saying the drilling was illegal, whereupon Vietnam sent its patrol vessels. On Wednesday, Hanoi said Chinese vessels had used water cannon to attack the Vietnamese ships. The Chinese foreign ministry representative said using water cannon was the “most restrained measure” that could be taken.

At the same time, tensions between China and the Philippines have ratcheted up with Philippine police seizing a Chinese boat near disputed “Half Moon Shoal” in the South China Sea after it was found to have hauled in 500 turtles.

Editorial / Wall Street Journal

“Less than a week after President Obama’s Asian Reassurance Tour, Beijing offered its rejoinder, sending a flotilla of 80 military and civilian ships to install China’s first oil rig in disputed South China Sea waters, well within Vietnam’s 200-mile exclusive economic zone. When some 30 Vietnamese naval vessels demanded the rig’s withdrawal on Sunday, China’s ships responded by ramming several of the Vietnamese boats and injuring six sailors....

“China claims sovereignty over some 90% of the 1.35-million-square-mile South China Sea, and it is staking that claim by flexing its muscle around the sea’s outer reaches....

“As Chinese-Vietnamese relations have worsened, Hanoi has procured new military hardware – including Kilo-class submarines, guided-missile frigates, land-based antiship cruise missiles and jet fighters – and sought closer ties with India, Japan and the U.S....

“So it goes across Asia – Chinese territorial revanchism is spurring arms purchases and defense cooperation among China’s neighbors and with Washington. These are welcome developments, yet China continues on its aggressive course.

“ ‘It’s fair to say both Vietnam and China have rights to claim sovereignty over the Paracels,’ said America’s top Asia hand, Assistant Secretary of State Danny Russel, in Hanoi Thursday. ‘It is not for the U.S. to say which position is stronger. It’s within the rights of the United States and the international community to call all parties to address the dispute in a peaceful way.’ China has heard such U.S. rhetoric many times, including as it grabbed Scarborough Shoal from Manila over three months in 2012. Beijing says it plans to drill for oil at least until Aug. 15.”

Separately, China suffered its third mass knife attack on a transportation hub as men with knives slashed and injured at least six people at the main train station in Guangzhou on Tuesday, the third such incident since March.

Lastly, here’s a crazy story, from the Guardian:

“China is considering plans to build a high-speed railway line to the U.S., the country’s official media has reported.

“The proposed line would begin in north-east China and run up through Siberia, pass through a tunnel underneath the Pacific Ocean then cut through Alaska and Canada to reach the continental U.S. ....

“Crossing the Bering Strait in between Russia and Alaska would require about 125 miles of undersea tunnel,” according to the Beijing Times.

The entire trip would take two days, with the train averaging 220mph.

No word on whether Washington has been apprised of this plan.

North Korea: Meanwhile, with everything else that is going on in the world these days, North Korea is lying in the weeds, a threat of unknown levels. What we should know is we better be taking it seriously.

On Thursday, the White House was forced to condemn a racist screed against President Obama, calling the rhetoric from Pyongyang “particularly ugly and disrespectful.”

The published lengthy rant called Obama a “clown,” a “dirty fellow” and somebody who “does not even have the basic appearances of a human being.”

There was also the declaration: “It would be perfect for Obama to live with a group of monkeys in the world’s largest African natural zoo and lick the breadcrumbs thrown by spectators.”

Unbelievable.

On a more critical front, there have been conflicting reports on whether Pyongyang is about to hold its fourth nuclear test. Some intelligence suggests it’s imminent, other reports say it isn’t. 

At the same time, The Telegraph had a report that Beijing is increasingly worried on the impact from a collapse of Kim Jong-un’s regime.

Nigeria: I got a kick out of how ‘suddenly’ Boko Haram hit the headlines and all the networks rushed to cover a terror group I have been talking about since 2010. In fact, while the vast majority of folks seemed to just learn this week of the abduction of hundreds of girls, I wrote back on April 19 in this space:

“Islamist militant group Boko Haram was responsible for a bus station bombing in Abuja, the capital, that killed at least 75 in the largest such attack on the city, and then on Wednesday, the terrorists are believed to have been responsible for the kidnapping of as many as 100 girls from a school with the belief at week’s end that they were taken hostage to become sex slaves.

“Boko Haram was also responsible for attacks elsewhere in Nigeria last weekend that killed 217 in Borno State, the same region as the school kidnapping.”

So that was two weeks before we (read the White House) got all concerned, and only then because some women’s groups picked up the cause of the girls.

It was too late! Just like by the fall of 2012, it was too late in Syria! 

I know, as the State Department would say, that Nigerian President Goodluck Jonathan didn’t request our help, but you had to know by April 21-23, let’s say, the girls had long been scattered, let alone freakin’ May 4-7.

So now Mr. Jonathan said this was “the beginning of the end” of terrorism in his country. Right. This is the same Nigerian government that, according to Amnesty International on Friday, had more than four hours’ warning of the raid by Boko Haram and the Nigerian military did nothing. [The army denies this was the case...but it’s clear they were scared to engage the usually more heavily armed militants.]

Jonathan also said at a meeting of the World Economic Forum in Abuja, that extremism was a relatively new and “strange phenomenon” in his country. Hardly. I have written for years how Nigeria is divided, north and south, Muslim and Christian, and what a joke it is to talk of Nigeria’s economic success.

So the White House announced on Tuesday it was sending a team to help assist the government in its search, though this will not include any SEAL type operations, as yet. Eventually, the U.S. will do what it can to take out the command of Boko Haram, but can’t until the fate of at least some of the girls is known.

Ayaan Hirsi Ali / Wall Street Journal

“Since the kidnapping of 276 schoolgirls in Nigeria last month, the meaning of Boko Haram – the name used by the terrorist group that seized the girls – has become more widely known. The translation from the Hausa language is usually given in English-language media as ‘Western Education is Forbidden,’ though ‘Non-Muslim Teaching Is Forbidden’ might be more accurate.

“But little attention has been paid to the group’s formal Arabic name: Jam’at Ahl as-Sunnah lid-da’wa wal-Jihad. That roughly translates as ‘The Fellowship of the People of the Tradition for Preaching and Holy War.’ That’s a lot less catchy than Boko Haram but significantly more revealing about the group and its mission. Far from being an aberration among Islamist terror groups, as some observers suggest, Boko Haram in its goals and methods is in fact all too representative.

“The kidnapping of the schoolgirls throws into bold relief a central part of what the jihadists are about: the oppression of women. Boko Haram sincerely believes that girls are better off enslaved than educated....

“Where are the Muslim college-student organizations denouncing Boko Haram? Where is the outrage during Friday prayers? These girls’ lives deserve more than a Twitter hashtag protest....

“Where governments are weak, corrupt or nonexistent, the message of Boko Haram and its counterparts is especially compelling. Not implausibly, they can blame poverty on official corruption and offer as an antidote the pure principles of the Prophet. And in these countries, women are more vulnerable and their options are fewer....

“It is...time for Western liberals to wake up. If they choose to regard Boko Haram as an aberration, they do so at their peril. The kidnapping of these schoolgirls is not an isolated tragedy; their fate reflects a new wave of jihadism that extends far beyond Nigeria and poses a mortal threat to the rights of women and girls. If my pointing this out offends some people more than the odious acts of Boko Haram, then so be it.”

Ayaan Hirsi Ali should be a hero to all women around the world.

On Wednesday, Boko Haram killed another 300 in a town in Borno state. Since the start of the year, the Islamists have killed over 1,500.

Lastly, this is yet another issue that provides fodder for presidential debates in 2016. The State Department under Hillary Clinton, after all, failed to designate Boko Haram a terrorist group. They weren’t until fall of last year. All manner of officials are now coming forward to say they urged the State Department to make this move and at the time State said it would cause more harm than good by enhancing the group’s standing. Pitiful.

Russia: Vladimir Putin’s crackdown on free speech and the Internet continued, with the signing of a law requiring larger, more popular online voices to register with the government. Any site with more than 3,000 visitors daily will fall under this new guideline. Bloggers can also no longer remain anonymous, which is fine with me, wrote the transparent editor.

It was back on Feb. 1 that a law went into effect in Russia, giving the Kremlin the power to block websites, which it then used against critics such as Alexei Navalny.

Putin also strengthened laws against rioting and large demonstrations, envisaging prison terms of 8 to 15 years for organizing “mass riots accompanied by violence, pogroms, arson, destruction of property, use of weapons, explosive devices, explosive and poisonous substances.”

Nicholas Eberstadt / Wall Street Journal

“History is full of instances where a rising power, aggrieved and dissatisfied, acts aggressively to obtain new borders or other international concessions. In Russia today we see a much more unusual case: This increasingly menacing and ambitious political actor is a state in decline....

“Let’s start with the ‘good’ demographic news for Moscow: Russia’s post-Soviet population decline has halted. Thanks to immigration chiefly from the ‘near abroad’ of former Soviet states, a rebound in births from their 1999 nadir and a drift downward of the death rate, Russia’s total population today is officially estimated to be nearly a million higher than five years ago. For the first time in the post-Soviet era, Russia saw more births than deaths last year.

“Yet even this seemingly bright news isn’t as promising as it seems. First: Russia’s present modest surfeit of births over deaths comes entirely from historically Muslim areas like Chechnya and Dagestan, and from heavily tribal regions like the Tuva Republic. Take the North Caucasus Federal District out of the picture – Chechnya, Dagestan, etc. – and the rest of Russia today remains a net-mortality society.

“Second: Despite its baby surge, which takes Russia’s fertility level from below the average to just above the average for the rest of Europe, the 1.7 births per Russian woman in 2012 was still 20% below replacement level. According to the most recent official Russian calculations, on current trajectories the country’s population, absent immigration, is still set to shrink by almost 20% from one generation to the next.

“But while Russia’s childbearing patterns today look entirely European, its mortality patterns look Third World – and in some ways worse. According to estimates by the World Health Organization, life expectancy in 2012 for a 15-year-old male was three years lower in Russia than in Haiti. By WHO’s reckoning, a 15-year-old youth has worse survival chances today in Russia than in 33 of the 48 places the United Nations designates as ‘least developed countries,’ including such impoverished locales as Mali, Yemen and even Afghanistan. Though health levels are distinctly better for women than men in Russia, even the life expectancy of 61 years for a 15-year-old Russian female in 2012 was an estimated three years lower than for her counterpart in Cambodia, another of the U.N.’s least-developed countries....

“If all this were not bad enough for Moscow, Russia’s geopolitical potential is being squeezed further by the rapid world-wide growth of skilled manpower pools. According to the International Institute of Applied Systems Analysis in Austria, in 1990 Russia accounted for nearly 9% of the world’s working-age college graduates; that share is declining and by 2030 will have dropped to 3%. On this front, as on many others, Russia is simply being left behind by the rest of the world.

“Despite Vladimir Putin’s posturing, he is leading a country in serious decline. If his dangerous new brinkmanship is a response to that bad news, then we should expect more of it in the future, possibly much more.”

Thailand: Prime Minister Yingluck was ousted after the Constitutional Court ruled she abused her position in transferring the secretary-general of the National Security Council. With an election slated for July 20, needless to say there is a current power vacuum. Yingluck’s power base is in rural areas. Civil war remains a possibility.

South Africa: In this country’s fifth all-race elections, the African National Congress scored another win, though with a few votes left to tally, the ANC will fall short of its goal of 2/3s, sitting at 62% at last word. Despite being highly unpopular, and lacking in brain power, President Jacob Zuma will remain in control for a second term, the ANC having received 66% of the vote in 2009.

Zuma is a far cry from the ANC’s first elected leader, Nelson Mandela, who won the initial democratic election in 1994.

Britain: With just 12 months left until the U.K.’s general election (differentiate this from the European Parliament vote end of the month), Labour, led by Ed Miliband, has a lead of one point, 32% to 31%, over David Cameron’s Conservatives (Tories). The Liberals are at 15% and UKIP is at 13%.

Northern Ireland: Sinn Fein leader Gerry Adams was released without charge after being detained and questioned for four days about a 1972 murder he has long claimed he had no part of. His file has been sent to the prosecution office and he could still be charged.

Some have called Adams’ arrest, just weeks before major elections in Northern Ireland and the Republic of Ireland, politically motivated as Sinn Fein’s candidates are doing surprisingly well in the polls leading up to the vote.

Random Musings

--Various poll #s: A CNN/ORC International poll has President Obama with a 43% job approval rating. Among registered voters, 46% say they will vote Republican for Congress, 45% Democrat.

In a USA TODAY/Pew Research Center survey, regarding this last one, 47% say they will vote Republican, 43% Democrat. Obama’s job approval was 44%

In the USA TODAY/Pew poll, a record 55% disapprove of the Affordable Care Act, with only 41% approving of it.

And by more than 2-1, 65%-30%, Americans say they want the president elected in 2016 to pursue different policies and programs than the Obama administration, rather than similar ones. This might be as telling as any single poll number of recent memory. 

--North Carolina Republican House Speaker Thom Tillis won the party’s nomination for U.S. Senate in a primary, turning back tea party challengers who might have hindered efforts to take down incumbent Democratic Sen. Kay Hagan, a key to retaking the Senate for Republicans.

Later in the month, the Republican establishment faces similar primary tests in Kentucky and Georgia; the former where Senate Minority Leader Mitch McConnell faces a stiff tea party challenger.

[While the Democrats hold a 55-45 majority in the Senate (including two independents who caucus with the party), Dems are defending 21 of the 36 seats in play, with many of these in red states.]

--Speaking in Manila the other day on his Asian swing, President Obama said he was frustrated how his critics didn’t understand his foreign policy.

“You hit singles, you hit doubles; every once in a while we may be able to hit a home run. But we steadily advance the interests of the American people and our partnership with folks around the world.”

David Ignatius / Washington Post

“It’s painful watching the YouTube video of President Obama in Manila last week, talking about hitting singles and doubles in foreign policy. Everything he says is measured, and most of it is correct. But he acts as if he’s talking to a rational world, as opposed to one inhabited by leaders such as Russia’s Vladimir Putin....

“Under Obama, the United States has suffered some real reputational damage. I say that as someone who sympathizes with many of Obama’s foreign policy goals. This damage, unfortunately, has largely been self-inflicted by an administration that focuses too much on short-term messaging. At key turning points – in Egypt and Libya during the Arab Spring, in Syria, in Ukraine and, yes, in Benghazi – the administration was driven by messaging priorities rather than sound, interests-based policy....

“How can Obama repair the damage? One obvious answer is to be careful: The perception of weakness can goad a president into taking rash and counterproductive actions to show he’s strong. The deeper you slide into a perceived reputational hole, the worse this dilemma....

“The key for Obama is to base policy on the fundamentals, where U.S. strength is overwhelming and the weakness of Russia (or any other potential adversary) is palpable....

“Russia...is a mess and getting worse....

“Ukraine, in contrast to foundering Russia, has a new $17 billion IMF loan, with plans for stabilizing its financial system, reducing corruption and ending dependence on Russian energy.

“Stay the course, in other words. With sanctions, diplomatic pressure, NATO resolve....

“The counter to Putin is strong, sustainable U.S. policy. To a battered Obama, three words: Suck it up.”

--Peggy Noonan / Wall Street Journal...comparing Iran-Contra to Benghazi.

“(Iran-Contra) broke in a Mideast newspaper. The administration denied it – all of it. Reporters began to dig.

“It was a big enough scandal on its own, but then came word that profits from the arms sales had been illegally funneled to the Nicaraguan Contras, who were fighting the communist Sandinista government.

“The attorney general, Ed Meese, launched a review of the affair. It was a real investigation, and he went public with his findings. The national security adviser who oversaw the operation had left, but his replacement resigned and his deputy was fired.

“The president delivered a national address. Two congressional committees launched investigations. Networks covered the hearings live. Ben Bradlee of the Washington Post said it was the most fun he’d had since Watergate.

“Reagan waived executive privilege so his aides would testify. He announced a special commission to investigate everything. There was a full housecleaning. Colin Powell was brought in to run the National Security Council, and (Sec. of State George) Shultz given full authority for all dealings with Iran. Ultimately Reagan dumped his chief of staff.

“The Iran-Contra affair did not spring from low motives. There was no hope of partisan gain, it wasn’t a political play.

“All involved were trying – sometimes stupidly, almost childishly – to save lives, and perhaps establish a new opening with Iran. They had good reasons, but the actions were bad, and everyone involved paid a price.

“Compare that with how the Obama White House has handled Benghazi. It’s all been spin, close ranks, point fingers, obfuscate, withhold documents, accuse your accusers of base motives. Nobody in the administration has paid a price.

“The reporter Bob Timberg, who along with the late Michael Kelly toughly covered Iran-Contra for the Baltimore Sun, suggests the press had its own biases. ‘At a certain point, though, I realized that the comparison to Watergate...didn’t hold up when looked at in light of the motives,’ he writes in his new memoir, ‘Blue-Eyed Boy.’

“No, Benghazi was no Iran-Contra, in terms of the nature of the crime or the handling of it.

“Dude, that was, like, almost 30 years ago. You can look it up.

“Dude, that’s how patriots, not punks, deal with scandals.”

--Maureen Dowd / New York Times

“Monica Lewinsky says she would meet me for a drink. I’m game.

“In her new meditation in Vanity Fair...(Monica says) she want to ‘burn the beret and bury the blue dress’ and get unstuck from ‘the horrible image’ of an intern who messed around with the president in the pantry off the Oval Office, spilled the details to the wrong girlfriend and sparked a crazy impeachment scandal.

“I wish her luck. Though she’s striking yet another come-hither pose in the magazine, there’s something poignant about a 40-year-old frozen like a fly in amber for something reckless she did in her 20s, while the unbreakable Clintons bulldoze ahead. Besides, with the Clinton restoration barreling toward us and stretching as far as the eye can see to President Chelsea, we could all use a drink.”

Ruth Marcus / Washington Post

“Monica Lewinsky may not have intended it this way, but she just did Hillary Clinton a big favor.

“Lewinsky could be forgiven, of course, if she did not mean to join Team Hillary. She is the forgotten, tragic roadkill of the affair.

“Bill Clinton paid the price of public humiliation and House impeachment, but he moved on, concluding what is remembered as a successful (if tarnished) presidency and a post-presidency at least as successful.

“Hillary Clinton, humiliated in her own way, emerged seemingly stronger. Her marriage endured; she became senator and secretary of state. Having put cracks in the glass ceiling, she is poised to break it, should she choose, in 2016.

“And then there is Lewinsky, who alone among the protagonists in the national soap opera saw her life irreparably shattered. Bill and Hillary made millions on the speaking circuit. Lewinsky, she writes for the June issue of Vanity Fair, ‘turned down offers that would have earned me more than $10 million, because they didn’t feel like the right thing to do.’....

“Lewinsky says it’s time to stop ‘tiptoeing around my past – and other people’s futures.’ Other people? Hmmm, wonder who that might be. Here, though, is why her going public is good for Clinton 2016:

“The Lewinsky affair never really came up in 2008; the subject was too raw and too fraught, and Clinton did not make it to the ugliness of a general election campaign. It’s clear, though, that the subject will not be taboo in 2016. Sen. Rand Paul (R-Ky.) has already raised the question of whether Democrats in general, and Hillary Clinton in particular, should consort with a ‘sexual predator’ like Bill Clinton.

“Lewinsky’s account makes clear that her affair with the president was between two consenting adults...

“So her piece defuses Paul’s line of attack. And it does so before any presidential announcement.

“If and when a Clinton presidential announcement comes, Lewinsky will be old news. ‘It’s time to burn the beret and bury the blue dress,’ Lewinsky writes. That would be good news for both women.”

--I’ve been saying for over a year that New Jersey Gov. Chris Christie’s performance was overrated and that my state just wasn’t doing that well under his watch, so I can’t help but note a front-page story in last Sunday’s Star-Ledger by Salvador Rizzo that starts out:

“It’s not the bridge, Governor: It’s the economy.

“Gov. Chris Christie has been bombarded with new revelations that many experts say could be a major roadblock to a bid for the White House – and they have nothing to do with the George Washington Bridge scandal that has plagued him all year long.

“With each day last week, the news about New Jersey’s troubled fiscal condition grew worse.

“A gaping $807 million hole in the state budget. Warnings that the state may not be able to make its promised pension payments. The threat of slashing property-tax rebates or school funding. And yet another downgrade of New Jersey’s already-low credit rating – the fifth one under the Republican governor’s watch.

“At the heart of these budget problems is a sputtering New Jersey economy, which has brought in billions less in tax revenue than Christie has forecast over the past three years....

“What it means is that if Christie chooses to run for president, fiscally conservative Republicans in a GOP primary would have plenty of fodder to tear into his record, as would Hillary Clinton or another Democrat in the general election.”

By the way, the federal government has allocated $1.8 billion in Hurricane Sandy disaster relief aid for New Jersey, but less than a quarter has been distributed, according to a new state report. [Erin O’Neill / Star-Ledger]

Granted, much of this is in the pipeline or headed out the door, but still....

--Yet another New York City politician was indicted, this one City Council member Ruben Wills, a Democrat from Queens, who was charged with a dozen crimes, including scheming to defraud, grand larceny and falsifying business records.

“I’m telling you...that I’m innocent,” he told reporters. “This is America, people. You are presumed innocent until you are proved guilty.”

You just have to laugh. New York Attorney General Eric Schneiderman said that Wills’ actions “constituted a stunning violation of the faith that he asked voters to place in him.”

Wills took funds from a nonprofit he founded, including a $33,000 state grant. He was nabbed as part of the ongoing probe of State Senator Shirley Huntley, a powerbroker in the Democratic party in Queens who decided to cooperate with the feds and secretly recorded conversations with the likes of Wills.

But he’s innocent until proven guilty...cough cough...cough...

--In yet another 5-4 ruling, the Supreme Court ruled that the Constitution allows town boards to start their sessions with sectarian prayers. Writing for the majority, Justice Anthony Kennedy said the prayers, as used in a town in upstate New York, were ceremonial and added nothing more than to the solemnity of the occasion. The prayers were “meant to lend gravity to the occasion and reflect values long part of the nation’s heritage.”

In a dissenting opinion, Justice Elena Kagan said the town’s practices could not be reconciled “with the First Amendment’s promise that every citizen, irrespective of her religion, owns an equal share in her government.”

Kagan wasn’t proposing to ban prayer, rather she said officials needed to assure all faiths were represented. Almost all of those giving prayers for the town in question were Christian.

--According to the 2013 National Assessment of Educational Progress, 12th-graders showed no improvement in math or reading test scores since the last federal testing in 2009. A majority of students received marks of below basic or basic for both subjects in both years. As Cornelia Orr, executive director of the National Assessment Governing Board said, “Too few students are achieving at a level to make our country competitive at an international level.”

As I noted the other week, graduation rates are going up, to 81% in the 2011-12 school year, up from 74% in 1991-92, but, as Orr adds: “Students have a low bar to graduate from high school but it’s not a high enough bar to really pursue a career actively when they leave.” [Caroline Porter / Wall Street Journal]

--The White House released the government’s new assessment on climate change and global warming and, basically, you are advised to sleep with one eye open the rest of your lives because, for starters, water levels are going to rise inexorably until the entire east coast of the United States is underwater....or something like that. President Obama met with television meteorologists, who were summoned from pliable networks to help get the message across. Personally, I have decided to flee another 50 miles inland.

You’ve known my take on all this since day one of the column. The entire global warming debate is mislabeled. It’s about global pollution. It’s very simple. If it looks like s--- in the air, or in our nation’s waterways, it’s not good. Clean air and water are our birthright.    It’s why I believe the Chinese people are closer than anyone thinks to outright revolution over this idea.

I am much more of an environmentalist than many of my readers understand. But I’m also a realist. 

Editorial / Wall Street Journal

“(As) a marketing exercise, the report has the feel of that infomercial footage of the people who can’t crack an egg or perform routine household tasks until they acquire this or that as-seen-on-TV product. The cautious findings of serious empirical climate literature are so obviously exaggerated and colored that the document is best understood as a political tract with a few scientific footnotes.

“For instance, the report’s ‘overview’ summary asserts that ‘extreme weather events with links to climate change have become more frequent and/or intense,’ climate change is already ‘disrupting people’s lives,’ and ‘this evidence tells an unambiguous story.’ Good thing we’ve been building that ark in the backyard.

“But the fine print that few will ever read acknowledges the real uncertainties of something as complex as the planet’s atmosphere. ‘There has been no universal trend in the overall extent of drought across the continental U.S. since 1900,’ the authors observe. We also learn that ‘trends in severe storms, including the intensity and frequency of tornadoes, hail, and damaging thunderstorm winds, are uncertain and are being studied intensively.’ And so on....

“Inherent scientific uncertainty and the possibility that the models are wrong means that the best insurance policy is economic progress. Floods have been happening since the Old Testament and natural disasters are not unknown in the American experience. California has gone through droughts before and will again. But a more affluent society is better placed to adapt to whatever nature and such byproducts of modernity as fossil fuels oblige humans to confront.

“The irony is that to the extent Mr. Obama’s agenda damages economic growth, he is leaving the country less prepared for climate change. Gallup recently reported that only a third of Americans worry about global warming and that the share that thinks the threat is exaggerated rose 15 percentage points to 42% over the last two decades. If liberals are wondering why the public is skeptical, one reason is because politicians are abusing science.”

--The World Health Organization declared the spread of polio is an international public health emergency. Outbreaks in Asia, Africa and the Middle East are an “extraordinary event” needing a coordinated response, says the WHO.

Specifically, Pakistan, Cameroon, and Syria “pose the greatest risk of further wild poliovirus exportations in 2014.”

Tragically, attacks on vaccination campaigns in Pakistan have allowed the virus to spread beyond the borders.

Syria, which was polio-free for 14 years, was re-infected with the virus from Pakistan, and with Syrian refugees poring across the borders, it is impossible to check those vaccinated.

--Here’s an unpleasant thought...the UN issued a report through the World Health Organization that says one billion people worldwide still practice “open defecation,” which leads to the spread of fatal diseases. Bruce Gordon, acting coordinator for sanitation and health at the WHO said “this is the root cause of so many diseases,” putting those societies that practice it at risk from cholera, diarrhea, dysentery, hepatitis A and typhoid.

Some countries, such as Vietnam and Bangladesh, have made great progress in tackling this.

--So last week I wrote of a Chinese tourist behaving badly while I was in Paris.  If you thought this was harsh on my part, I saw the following headline in the South China Morning Post two days later, Monday.

“Beijing park staff bemoan bad behavior of holiday visitors”

“Some of the people enjoying the Labor Day holiday [Ed. May Day] in Beijing’s parks plucked flowers from beds, trampled over lawns, spat and allowed their children to urinate in public, but nobody was punished for anti-social behavior, a mainland newspaper reported. [Ed. The Beijing Morning Post]

“Staff at the capital’s administration center of parks said the bad behavior also included people camping on lawns at the city’s botanical gardens.

“Security guards tried to reason with campers and persuade them to leave, but many pretended not to hear, the report said....

“At a tulip show in Zhongshan Park, 2,000 plants were trampled underfoot, the report said. Visitors often stepped into flower beds to take photos.

“Instead of educating children, some parents encouraged them to pick flowers and step in to take photos.

“Parents also allowed their children to urinate in public, even though there were public toilets meters away.”

--German art hoarder Cornelius Gurlitt died. He was 81. It was in February 2012 that investigators found more than 1,400 Nazi-looted works in his small Munich apartment – though they only revealed this late last year. The collection is estimated to be worth $1.35 billion.

Since the discovery, Gurlitt had cooperated with German authorities in attempting to establish the paintings’ provenance, and returning them to their rightful owners. He wasn’t obligated to return any since he was protected by a statute of limitations, so the fact he was willing to do so before his death gained him some praise.

But now with his passing there is no word on what will happen to the collection that contains works from Renoir, Matisse and Picasso.

--Finally, it’s clear President Obama must immediately relieve Gen. Eric Shinseki of his duties at the Dept. of Veterans Affairs. But you just know the president and his advisers are trying to figure out how this issue impacts the mid-term elections and not, first and foremost, what is best for our veterans. It’s sad.

---

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

God bless America.
---

Gold closed at $1287
Oil $99.99

Returns for the week 5/5-5/9

Dow Jones +0.4% [16583]
S&P 500 -0.1% [1878]
S&P MidCap -0.6%
Russell 2000 -1.9%
Nasdaq -1.3% [4071]

Returns for the period 1/1/14-5/9/14

Dow Jones +0.04%
S&P 500 +1.6%
S&P MidCap +0.8%
Russell 2000 -4.9%
Nasdaq -2.5%

Bulls 55.8
Bears 19.7 [Source: Investors Intelligence]

Dr. Bortrum has a new column posted.

Catch me on Twitter @stocksandnews

Happy Mother’s Day!

Brian Trumbore