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

 

Week in Review

http://www.gofundme.com/s3h2w8

AddThis Feed Button

   

06/07/2014

For the week 6/2-6/6

[Posted 12:00 AM ET]

Edition 791

Washington and Wall Street

First off, I apologize at the length of this column and last week’s as well. This is the definitive running history of our times and the last few weeks I’ve wanted to include everyone’s opinion, as well as my own, on issues such as the VA scandal, Obama’s critical West Point foreign policy address, the European Parliament elections, Ukraine, and, this week, Bowe Bergdahl and the prisoner swap. 

But up first, the U.S. economy and the stock market. Both the Dow Jones and S&P 500 hit one new high after another as stocks closed with their first three-week winning streak of the year amidst a backdrop of solid economic news.

Auto sales for May were at a strong pace (as detailed below), befitting the continued bounce-back from our awful winter. There are also signs sales in May at the nation’s retailers were solid, though few announce monthly sales comparisons anymore. At least a leader, Costco, reported sales rose 6%.

The May numbers from the Institute for Supply Management (ISM) for its manufacturing index came in at a strong 55.4 for May, and then 56.3 on the service sector, the latter the best reading in nine months, while April factory orders rose a better than expected 0.7% and construction spending in the month was 0.2%, less than expected.

The Fed’s beige book of economic activity found all 12 of its regions reporting “moderate” or “modest” growth, even as, separately, the Fed is increasingly wary of market complacency and low volatility, with an unusually low spread between corporate debt and Treasuries, the lowest since 2007, which of course was a danger point then. There is some dissent emerging on the Fed regarding holding interest rates at zero (duh!).

But then on Friday we had the May labor report and the economy added 217,000 jobs, in line with expectations, with April’s big gain revised down only slightly to 282,000, which was the best in more than two years. The U.S. economy has now added more than 200,000 each month since February, the longest such stretch since September 1999 to January 2000, and the economy has exceeded its pre-recession high in total employment.

The unemployment rate held steady at 6.3%. The labor participation rate, however, remained near its lowest level since the 1970s at 62.8%. Wages are up just 2.1% over year-ago levels.

U-6, the broader measure of employment, or underemployment, came in at 12.2% in May from 12.3% in April. [12.7% in March.]

All in all, quite good.

One other item, ObamaCare is back, though it largely got drowned out by other news coverage this week. About 2.2 million Americans who signed up for insurance through HealthCare.gov could be at risk of losing their coverage or be forced to repay part or all of their premium subsidy because of discrepancies with their applications, according to documents obtained by the Associated Press and confirmed by ABC News; roughly one in four applicants overall.

Some of the information provided online conflicts with that which the government has on file, the Department of Health and Human Services announced.

This doesn’t mean two million will be without coverage, necessarily, but further work is required, and, yes, some cases of fraud will be uncovered. 

And we learned on Friday the White House is revamping HealthCare.gov in an effort to avoid the problems associated with the launch, but some are wondering what this will mean when consumers return to the site in the fall to choose health plans. Some backend fixes are supposedly running behind schedule. To be continued....

Bowe Bergdahl

About 12 hours after I posted my last WIR, President Obama appeared in the Rose Garden with the parents of Army Sgt. Bowe Bergdahl to announce the release of their son after five years of captivity in Afghanistan, in exchange for five Taliban commanders who were being held at the military detention center at Guantanamo Bay, Cuba.

National Security Adviser Susan Rice then went on a Sunday morning talk show and said that Bergdahl had served with “honor and distinction.”

The White House expected a groundswell of support around the country, a feel-good moment. Instead, it boomeranged in a huge way as members of both sides of the political aisle, let alone the American public, first questioned the exchange, then the hero’s welcome we were supposed to accord Sgt. Bergdahl when many of his fellow team members immediately stepped forward to say he was a deserter, at best.

There are reports up to six U.S. troops (others say eight) may have been killed directly as a result of the search for Bergdahl, which as one team member put it, consumed the company for at least 60 days. Defense Secretary Chuck Hagel countered, “I do not know of specific circumstances or details of U.S. soldiers dying as a result of efforts to find and rescue Sgt. Bergdahl.”

Some in Congress were furious that they were not kept in the loop and given 30 days advance notice, as mandated by law.

President Obama defended his administration’s action (having given himself a legal loophole when he signed the bill in December, part of a “signing statement”), though acknowledged that some of the five Taliban released detainees, who will be under a sort of house arrest in Qatar as part of the agreement, could once again try to harm the United States.

“Is there the possibility of some of them trying to return to activities that are detrimental to us? Absolutely,” said the president from Poland.

Obama added:

“We have consulted with Congress for quite some time about the possibility that we might need to execute a prisoner exchange in order to recover Bergdahl. We saw an opportunity, and we were concerned about Bergdahl’s health. We had the cooperation of the Qataris to execute an exchange, and we seized that opportunity,” adding that “the process was truncated because we wanted to make sure we would not miss that window.”

The military, as the furor grew, said that once Bergdahl’s health improved, it would conduct a comprehensive investigation into the circumstances of his disappearance.

President Obama said, regardless of the eventual findings, “we still get back an American soldier if he’s held in captivity. Period. Full stop.”

The president then said of the difficult decisions that are often made at the end of a war, “It’s what happened to George Washington. It’s what happened to Lincoln. It’s what happened to FDR.”

Somehow I don’t associate Mr. Obama with these three, but that’s just me.

Sen. Dianne Feinstein (D-Calif.), chairwoman of the Senate Intelligence Committee, said that she and other senior lawmakers first discussed the possibility of a prisoner swap with administration officials in the fall of 2011.

During the consultations, Sen. Feinstein said, “There were very strong views and they were virtually unanimous against the trade,” adding, “The White House is pretty unilateral about what they want to do when they want to do it.” [Zachary A. Goldfarb and Ed O’Keefe; Scott Wilson and Anne Gearan / Washington Post]

White House Deputy National Security Adviser Tony Blinken called Feinstein to apologize for not informing her of the plans ahead of time, calling it an oversight. I am not a fan of this man, incidentally. I’ve seen him in interviews all too often flat-out lie.

For their part, the Taliban released a video of them turning Bergdahl over to American special forces, with the footage ending with a caption, “Don’ [sic] come back to Afghanistan,” a message that could apply to both U.S. forces and Bergdahl.

Wednesday evening, the White House delivered a classified briefing to all U.S. senators to show them a proof-of-life video of Bergdahl recorded in December 2013, where the administration was trying to point out evidence Bergdahl’s health was declining. Some senators, including Republican Sen. Mark Kirk (Ill.) said, “I would definitely think that it would have had an emotional impact on the president when he saw it.”

Other Republicans were not satisfied, especially regarding answers they received concerning the released Taliban members.

Democratic Sen. Joe Manchin of West Virginia said the concerns raised by the administration over Bergdahl’s health “did not sell me at all.”

“We all agree we are not dealing with a war hero... There’s a lot to be answered here,” said Manchin, who said he remained “very concerned.”

While then-national security adviser Thomas E. Donilon and his deputy, Denis McDonough, now the White House chief of staff, supported the five-for-one terms, then-CIA Director Leon Panetta and then-Defense Secretary Robert Gates, were among those opposing the swap; but with their departure, the administration moved more quickly to implement the plan as long as they received assurances on travel restrictions for the five Taliban once they got to Qatar.

It was back in January that Obama declared 2014 to be his “year of action.” Frustrated by Congressional gridlock, the president told reporters: “I’ve got a pen, and I’ve got a phone. And I can use that pen to sign executive orders and take executive actions and administration actions that move the ball forward.”

Meanwhile, Taliban leader Mullah Omar issued a public statement hailing the prisoner exchange, saying: “I extend my heartfelt congratulations to the entire Afghan Muslim nation.”

Mullah Omar had made no prior public appearances or speeches since 2001.

Opinion...from all sides...

Editorial / Wall Street Journal

“Start with the fact that little the Administration has said about this swap has turned out to be true. ‘He served the United States with honor and distinction,’ declared National Security Adviser Susan Rice on ABC on Sunday. But as everyone has since learned, the soldiers who served with Sgt. Bergdahl almost to a man believe that he deserted his post in Afghanistan in June 2009 before falling into the hands of the Taliban....

“You can argue the prisoner swap was necessary to retrieve our man, or a difficult moral choice, but it is not a reason for back-slapping and high fives....

“We think the President has the power as Commander in Chief to undertake the swap without telling Congress, but instead of saying this forthrightly, Mr. Obama said...that he consulted Congress ‘for quite some time’ on the possibility of a prisoner exchange. He also invoked the phony health excuse.

“Yet both Ms. Feinstein, who runs the Senate Intelligence Committee, and ranking Republican Saxby Chambliss said they hadn’t been consulted on the swap for months....

“The larger problem is that Mr. Obama treats all of foreign policy as if it’s merely part of his domestic political calculus. It’s all too easy to imagine him figuring that if he announced the withdrawal of all troops from Afghanistan by 2016 as he did last week, he could then more easily sell the prisoner swap, which would then help empty Guantanamo so he could fulfill that campaign promise too.

“Is it too much to ask that, in his final two and a half years in office, the President act as if more is at stake in foreign policy than his domestic approval rating?”

Bret Stephens / Wall Street Journal

“I spoke Monday with a highly decorated former Special Forces operator and asked what he thought about Bowe Bergdahl, the Army sergeant who was released over the weekend after five years of Taliban captivity in exchange for five hard cases out of Gitmo.

“The former operator suggested a firing squad might be appropriate.

“His view is widely shared in the community of warriors who risked – and, in at least six cases, lost – their lives searching for a soldier who wrote his parents that ‘the horror that is america (sic) is disgusting’ before vanishing from his post in Afghanistan in 2009.

“Whether Sgt. Bergdahl was taken by the enemy, deserted the Army or defected to the Taliban remains to be established. But just to be clear where the former operator is coming from, Article 85 of the Uniform Code of Military Justice states: ‘Any person found guilty of desertion or attempt to desert shall be punished, if the offense is committed in time of war, by death or such other punishment as a court-martial may direct.’

“But wait: We are not ‘in time of war.’ We are in time of Obama.

“In Time of Obama, dereliction of duty is heroism, releasing mass murderers with American blood on their hands is a good way to start a peace process, negotiating with terrorists is not negotiating with terrorists, and exchanging senior Taliban commanders for a lone American soldier is not an incentive to take other Americans hostage but rather proof that America brings its people home.

“In Time of Obama, we may get the facts about the circumstances of Sgt. Bergdahl’s disappearance and captivity. But first his parents are going to get an invitation to the White House so Mr. Obama can milk the occasion for his own political purposes.”

Editorial / Washington Post

“(The) impression reinforced by the deal is of a president anxious to disengage from Afghanistan as rapidly and as thoroughly as possible, with minimal regard for the consequences for Afghans. U.S. officials, who have been talking about a possible exchange of Sgt. Bergdahl for the Taliban commanders for several years, once presented it as a possible first step toward an Afghan peace accord. However, administration officials now play down that notion, and the Taliban dismissed it out of hand.

“In a rare statement, the movement’s leader, Mohammad Omar, instead said the release of the commanders brought the insurgency ‘closer to the harbor of victory.’ The released militants’ movements will be confined inside Qatar for a year, but there’s no sign the men are ready to give up the fight against the Afghan government.”

David Brooks / New York Times

“Americans don’t have a common ancestry. Therefore, we have to work hard to build national solidarity. We go in for more overt displays of patriotism than in most other countries: politicians wearing flag lapel pins, everybody singing the national anthem before games, saying the Pledge of Allegiance at big meetings, revering sacred creedal statements, like the Gettysburg Address.

“We need to do this because national solidarity is essential to the health of the country. This feeling of solidarity means that we pull together and not apart in times of crisis, like after the attacks on 9/11....

“National solidarity is especially important for the national defense....

“Soldiers in combat not only protect their buddies, they show amazing devotion to anyone in the uniform, without asking about state or ethnicity. This is the cohesion that makes armies effective.

“These commitments, so crucial, are based on deep fraternal sentiments that have to be nurtured with action. They are based on the notion that we are members of one national community. We will not abandon each other; we will protect one another; heroic measures will be taken to leave no one behind....

“The president and vice president, the only government officials elected directly by the entire nation, have a special responsibility to nurture this national solidarity. So, of course, President Obama had to take all measures necessary to secure the release of Sgt. Bowe Bergdahl....

“It doesn’t matter if Bergdahl had deserted his post or not....The debt we owe to fellow Americans is not based on individual merit. It is based on citizenship, and loyalty to the national community we all share....

“Israel once traded 1,027 Palestinian prisoners to get back one of their own. Another time they traded 1,150 prisoners to get back three of their own. They did it because of a deep awareness that national cohesion is essential to national survival....

“It doesn’t matter either that the United States government ended up dealing with terrorists.... America has always tried to reach a negotiated arrangement with the Taliban, and this agreement may be a piece of that. In the second place, this is the dirty world we live in....

“So President Obama made the right call. If he is to be faulted, it would be first for turning the release into an Oprah-esque photo-op, a political stunt filled with inaccurate rhetoric and unworthy grandstanding. It would next be for his administration’s astonishing tone-deafness about how this swap would be received....

“Still, the president’s instincts were right. His sense of responsibility for a fellow countryman was correct. It’s not about one person; it’s about the principle of all-for-one-and-one-for-all, which is the basis of citizenship.”

Charles Krauthammer / Washington Post

“What is it with Susan Rice and the Sunday morning talk shows? This time she said Sgt. Bowe Bergdahl had served in Afghanistan ‘with honor and distinction’ – the biggest whopper since she insisted the Benghazi attack was caused by a video....

“If he had served with honor and distinction, there would be no national uproar over his ransom and some of the widely aired objections to the deal would be as muted as they are flimsy. For example:

“ 1. America doesn’t negotiate with terrorists.

“Nonsense. Of course we do. Everyone does, while pretending not to....

“ 2. The administration did not give Congress 30-day notice as required by law.

“Of all the jurisdictional disputes between president and Congress, the president stands on the firmest ground as commander in chief. And commanders have the power to negotiate prisoner exchanges.

“Moreover, from where did this sudden assertion of congressional prerogative spring? After five years of supine acquiescence to President Obama’s multiple usurpations, Congress suddenly becomes exercised over a war power – where its claim is weakest. Congress does nothing in the face of 23 executive alterations of the president’s own Affordable Care Act. It does nothing when Obama essentially enacts by executive order the Dream Act, which Congress had refused to enact. It does nothing when the Justice Department unilaterally rewrites drug laws. And now it rises indignantly on its hind legs because it didn’t get 30 days’ notice of a prisoner swap?

“ 3. The Taliban release endangers national security.

“Indeed it does. The five released detainees are unrepentant, militant and dangerous....

“The administration pretense that we and the Qataris will monitor them is a joke. They can start planning against us tonight. And if they decide to leave Qatar tomorrow, who’s going to stop them?

“The administration might have tried honesty here and said: Yes, we gave away five important combatants. But that’s what you do to redeem hostages. In such exchanges, the West always gives more than it gets for the simple reason that we value individual human life more than do the barbarians with whom we deal....

“So why does the Bergdahl deal rankle? Because of how he became captive in the first place. That’s the real issue. He appears to have deserted, perhaps even defected....

“If he’s a defector – joined the enemy to fight against his country – then he deserves no freeing. Indeed, he deserves killing, the way we kill other enemies in the field, the way we killed Anwar al-Awlaki, an American who had openly joined al-Qaeda. A U.S. passport does not entitle a traitor to any special protection....

“Assume, however...that Bergdahl was not a defector. Simply wanted out – a deserter...Do you bargain for a deserter?

“Two imperatives should guide the answer. Bergdahl remains a member of the U.S. military and therefore is (a) subject to military justice and (b) subject to the soldiers’ creed that we don’t leave anyone behind.

“What to do? Free him, then try him....

“What is impossible to respect is a president who makes this heart-wrenching deal and then does a victory lap in the Rose Garden and has his senior officials declare it a cause for celebration....

“The Rose Garden stunt wasn’t a messaging failure. It’s a category error. The president seems oblivious to the gravity, indeed the very nature, of what he has just done. Which is why a stunned and troubled people are asking themselves what kind of man they have twice chosen to lead them.”

Daniel Henninger / Wall Street Journal

“Barack Obama will be remembered as a president who walked in his own spotlight. Whatever else, he’s been on view all the time. This week it’s the Barack Obama-Bowe Bergdahl deal....

“It is too bad Barack Obama can’t meet the Tank Man of Tiananmen Square. He would learn that sometimes in the affairs of the world, there comes a time to say, enough. Stop.

“This Thursday is the 25th anniversary of the Tank Man’s solitary protest. On June 5, 1989, the morning after the Chinese army crushed the students’ democracy rebellion in Tiananmen Square, with hundreds dead, a man in a white shirt walked in front of the army’s tanks, driving down a street near the square. For a while, he made the tanks stop.

“To this day, no one knows who the brave Tank Man was. But the whole world watched on global television as he stood down the tank commander. When the tanks tried to go around him, he moved in front of them. Eventually, two people came from the crowd and led him away. He was never seen again.

“There are two other anniversaries this week, and both evoke the same idea of taking an unmistakable political stand.

“Friday is the 70th anniversary of D-Day....

“Thursday is also the 10th anniversary of Ronald Reagan’s death. It was Reagan’s decision, early in his presidency, to make the Cold War stop by winning it. In November 1989, the Berlin Wall fell.

“Last week at the U.S. Military Academy at West Point, President Obama gave a speech describing his view of the U.S. role in the world. Any close reading of this speech would fail to identify a ‘situation,’ as we say today about places such as Ukraine, that would cause Mr. Obama to say simply: This must be stopped.

“The president and his supporters would argue, as he has, that the world today is different than the one that existed in 1944 or 1989. An alternative exists, Mr. Obama said at West Point, other than endless war and militarism or doing nothing.

“We straw men whom Mr. Obama set up and knocked down repeatedly in his Military Academy apologia would note that in the past years the space between all or nothing has filled with Russia’s border busting, Iran’s nuclear-bomb project, Syria’s sarin gas, China’s disruptions of its neighbors, North Korea’s threats against South Korea and Japan, Venezuela’s Tiananmen-like crackdown of its democracy protesters, and al-Qaeda subdividing into multiple cells from Asia to Africa....

“Barack Obama in the world resembles Casper the Friendly Ghost – with the U.S. role fading in and out of view as is his wont. Hillary Clinton flew a million miles as Secretary of State with no evident concept of what she was doing or why. John Kerry endlessly slips in and out of capitals, talking. This, they say, is ‘smart power.’

“Smart power just sprung a volunteer POW named Sgt. Bowe Bergdahl for five stone-killer Taliban. No one in the Obama White House, including as always Susan Rice, can give an adequate explanation for what this was all about. Only the president knows. That may work for him. But for everyone else in an unsettled world, not so well.”

Kathleen Parker / Washington Post

“As president – how time flies – Obama has followed through on his campaign promises to end the wars in Afghanistan and Iraq but not to close Guantanamo. Promises are sometimes harder to keep when the facts are in your face. Obama also has increased drone ‘warfare,’ eliminating enemies as well as civilians and at least one U.S. citizen deemed to be a combatant without, shall we say, due process.

“So yes, he is the non-war president, except...and he follows the law and protects the Constitution, unless...and he wants to close Guantanamo, but encountered the same daunting obstacles that George W. Bush did.

“Yes, yes, Bush created the problem. Noted. To the point of this column, however, when Obama was faced with whether to release prisoners in exchange for Bergdahl, he was forced to make an executive decision. And yes, he sidestepped the law requiring 30 days notification to Congress, but the law’s timetable was untenable, given the reportedly narrow window of opportunity. Whether the president indeed had been discussing the possibility with Congress remains a matter of dispute....

“Obama has justified his decision on the basis of precedent – other presidents have released prisoners as wars wind down – and on the principle that we don’t leave our people behind.

“Equivalency is a fragile argument here. Bush’s wars and Obama’s drones are clearly not the same, though you might find those in Afghanistan or Pakistan who would argue otherwise. And George Washington’s release of British prisoners during the Revolutionary War can’t be compared to freeing Taliban warriors. Rather than returning home to reclaim their civilian lives, jihadists likely return even more resolved to continue a war that ends only after everyone on the planet converts to Islam.”

Seth G. Jones / Wall Street Journal

“President Obama’s decision to withdraw troops from Afghanistan by 2016 is a risky step and may embolden Islamic extremists. So could the release of five high-level prisoners from Guantanamo Bay in a swap with the Taliban to win the freedom of Sgt. Bowe Bergdahl.

“The number of al-Qaeda and other jihadist groups and fighters are growing, not shrinking. U.S. disengagement – or even risking the return of terrorists to the field by freeing them from detention – is not the answer to the threat they pose. Instead, U.S. strategy should be revamped, prioritizing American interests and developing a more effective, light-footprint campaign.

“According to new data in a RAND report I have written, from 2010 to 2013 the number of jihadist groups world-wide has grown by 58%, to 49 from 31; the number of jihadist fighters has doubled to a high estimate of 100,000; and the number of attacks by al-Qaeda affiliates has increased to roughly 1,000 from 392. The most significant terrorism threat to the United States comes from groups operating in Yemen, Afghanistan, Pakistan and Syria. Moner Mohammad Abusalha, an American who was a member of the al-Qaeda affiliate organization al-Nusra, blew himself up in Syria on March 29.

“Today the U.S. faces complex, significant threats beyond jihadi terrorism. Russia has invaded Ukraine and threatens America’s NATO allies. China is flexing its military, economic and cyber muscles in East Asia. Iran remains dedicated to developing a nuclear-weapons capability. North Korea, which already has nuclear weapons, is highly unstable....

“The American departure from Afghanistan will most likely be a boost for insurgent and terrorist groups dedicated to overthrowing the Kabul government, establishing an extreme Islamic emirate, and allowing al-Qaeda and other groups to establish a sanctuary. As in Iraq, the withdrawal of U.S. troops does not make the terrorism problem go away. Al-Qaeda and other groups used the breathing space to expand their attacks and spread to neighboring countries like Syria.

“After more than a decade of war in countries like Afghanistan, it may be tempting for the U.S. to turn its attention elsewhere and scale back on counterterrorism efforts. But current trends suggest that the struggle against extremism is likely to be a generational one, much like the Cold War. Developing a long-term U.S. strategy to pursue those groups threatening the U.S. homeland and its interests overseas – including in Afghanistan and Pakistan – would be a good place to start.”

Michael Gerson / Washington Post

“After 5 ½ years, President Obama finally has a foreign policy doctrine all his own, which White House aides summarize as: ‘Don’t do stupid s---.’

“FDR had his Four Freedoms. Harry Truman would stand against the further expansion of communism in Europe. Ronald Reagan would attempt to roll back communism by providing assistance to freedom fighters. Jimmy Carter would use military force, if necessary, to defend U.S. interests in the Persian Gulf. George W. Bush would support the growth of democratic movements and institutions as an antidote to radicalism.

“Obama doesn’t do ‘stupid [stuff].’

“Like any good foreign policy doctrine, it has a number of corollaries. ‘Don’t do stupid [stuff],’ except calling for Syria’s Bashar al-Assad to step down, then doing almost nothing to make it happen – encouraging the creation of a chaotic terrorist haven at the heart of the Middle East. Except drawing a ‘red line’ against the use of chemical weapons, then rewarding Assad with engagement and legitimacy when he actually used them. Except launching a war for regime change in Libya and then failing to do postwar reconstruction, leading to the creation of another terrorist haven. Except failing, after a pathetic attempt, to conclude a status-of-forces agreement with the Iraqi government that might have helped stabilize a key country in a key region. Except needlessly alienating our Canadian ally by refusing to approve the Keystone XL pipeline for political reasons. Except initially poisoning our relations with Israel by demanding a settlement freeze. Except surging troops to Afghanistan while announcing a drawdown date that has encouraged the resistance and patience of the enemy.

“The Obama Doctrine has the virtue of simplicity, but it defies the rhetorician’s art. ‘Let every nation know, whether it wishes us well or ill, that we don’t do stupid s---.’ It is hard to carve the insipid into marble, or to inspire a nation with shrunken ambitions....

“A doctrine of risk aversion [Ed. such as that advanced at West Point] can be justified only by minimizing the seriousness of global challenges and miniaturizing the role of presidential leadership. Was serial risk-aversion effective in the Syrian crisis? Will it effectively deter Russian adventurism? Will it be sufficient in dealing with the rise of China?

“And this is the Obama Doctrine’s most serious problem: Its vapidity is evident to leaders around the world, who are even less inclined to trust or fear the United States when determining their own actions. Which is where the doctrine hits the fan.”

I’ve been holding back on some of my own opinions of the past few weeks and next week I let loose.

Europe and Asia

Before I get to the European Central Bank’s move...the following economic data for the eurozone was released prior to the ECB’s announcement on interest rates and other measures it was taking.

The economy for the Euro-18 continues to recover, though for some nations it is still in fits and starts, while France is flat-out stuck in neutral.

Eurozone GDP in the first quarter was released by Eurostat and it was 0.2% over the fourth quarter of 2013, up 0.9% on an annualized basis.

Germany’s Q1 GDP was up 0.8% (up 2.3% from a year ago), France 0.0% (+0.8% year over year), Italy -0.1% (-0.5% yoy), Spain +0.4% (0.5% yoy), Portugal -0.7% (+1.2% yoy), non-euro U.K. +0.8% (+3.1% yoy)

Yes, that’s the definition of fits and starts.

PMI manufacturing data for May had the overall index for the eurozone at 52.2 vs. 53.4 in April. Italy was at 53.2, Spain 52.9 (49-mo. high), Germany 52.3 (7-mo. low), France 49.6 (4-mo. low). 

[For new readers, 50 is the dividing line between growth and contraction, so the eurozone going from 53.4 to 52.2 in manufacturing from April to May is still showing it in growth mode, while, individually, France is contracting.]

On the critical employment front, for April the Euro-18 jobless rate was 11.7%, down just a smidgen from 12.0% one year earlier and 11.8% in March.

Germany’s unemployment rate is just 5.2% by Eurostat’s calculations (Eurostat being the official statistical arm of the European Union), but France was at 10.4% (10.3% a year earlier), Italy was 12.6% (12.0%, 4/13), Spain 25.1% (down from 26.3%, 4/13), and Greece is at 26.5% (February data...Greece lags a bit).

[Two other unemployment rates of note. Ireland’s is now 11.9%, down from 13.7% a year earlier, while the Netherlands has ticked up from 6.5% to 7.2%, befitting its stagnating economy that saw GDP decline 1.4% in Q1 over Q4, down 0.5% yoy.]

On the distressing youth unemployment front, the eurozone’s rate is 23.5% for April 2014 vs. 23.9% a year earlier. Again, as in the above, little year over year improvement.

Greece has a youth rate of 56.9% (Feb.), Spain 53.5% (vs. 55.5%, 4/13), Italy 43.3% (up from 39.4%, 4/13) and Portugal 36.1%.

But here’s the key figure for the European Central Bank...inflation. 

The flash estimate for May in the eurozone was up just 0.5%, annualized, when it was up 0.7% in April and the ECB’s target is 2.0%. Prices are declining in the likes of Greece and Portugal. Importantly, Germany’s inflation rate for May was only 0.6%.

So, as was well-telegraphed by ECB President Mario Draghi, he was ready to act after policymakers gathered this Wednesday and Thursday and the ECB cut its deposit rate for banks from zero to -0.1%, in order to encourage banks to lend to businesses rather than hold on to the money. The ECB thus became the first major central bank to introduce negative interest rates.

The ECB also cut its benchmark interest rate to 0.15% from 0.25%.

Even though this was expected, it was still bold, though it will take a few quarters before we know the impact of these two moves, let alone others to follow, as Draghi announced long term loans will be offered to commercial banks at cheap rates until 2018. The loans would be capped at 7% of the money they lend to companies, so the more the banks lend, the more money they can borrow cheaply from the ECB. The central bank is also looking into other moves, such as a large asset-buying program (quantitative easing), but no announcement as yet. Draghi insists, however, he will basically do anything necessary to get the economy on firmer footing and prices rising again.

“Are we finished? The answer is no. We aren’t finished here,” Draghi said.

Everything the ECB is doing is aimed at increasing lending to the “real economy.” And avoiding deflation... which would cause consumers to spend less as they wait for prices to fall further before making a purchase. That means even slower growth (or recession), with tumbling demand, layoffs, etc.

Draghi emphasized it’s not just the central bank that has to do its part, but also governments, which must step up reforms, while banks have to lend.

“In order to strengthen the economic recovery, banks and policymakers in the euro area must step up their efforts. Banks should take full advantage of this exercise to improve their capital and solvency position, thereby contributing to overcome any existing credit supply restriction that could hamper the recovery.”

Complicating matters, banks are facing stress tests that have forced many to hoard capital. The new loan program won’t begin until September, with another round in December, thus the reason for saying it will take up to a year to gauge the impact.

What neither Mario Draghi, nor the U.S. Federal Reserve for that matter, want is for their economies to slip into an era like Japan is still trying to pull itself out of. The Bank of Japan began running zero interest rates in 1999, but Japan did not climb out of recession until 2002-03, and hasn’t grown by more than 2% a year since. Deflation continued in Japan until 2013.

---

Just a few other EU economic tidbits....

Spanish Prime Minister Mariano Rajoy unveiled a new stimulus program of $8.6 billion, including a cut in the corporate tax rate to 25% from 30%, as well as credits to small- and medium-sized businesses, and investments in R&D and transport.

Industrial production in Spain rose the most in four years in April, up 4.3% year over year.

In Germany, the data continues to be mixed. Industrial production in April was up 1.8% yoy, less than expected, while exports for the month rose 5.5% over March, good, and factory orders for the month were up 3.1% over March, decent.

In the U.K., house prices, according to the Halifax index, rose 3.9% in May over April, up 11% the past year, continuing the bubble in this sector.

And back to Italy, Matteo Renzi may have done very well in the European Parliament vote, the first time he has been associated with a direct election, but the EU is still pressuring him to reduce Italy’s debt, now above 130% of GDP, while unemployment is at a record high. That means more spending cuts and tax increases, austerity, while Renzi is pleading for breathing space

Meanwhile, in France, the government is upset at the size of the penalty U.S. regulators are trying to wrest from the country’s largest bank, BNP Paribas; at least $10 billion.

Laurent Fabius, France’s foreign minister, said, “This poses a very, very big problem. We are in talks with the U.S. for a transatlantic partnership and this trade partnership can only be established on a basis of reciprocity.” Such a “unilateral” punishment would be “completely unreasonable.”

French officials fear a big fine would erode BNP’s capital base, thus curbing its ability to lend at a time when the economy is struggling mightily. Folks like Fabius are also trying to portray BNP as a threat to the overall European economy.

But there are stories BNP laundered as much as $100 billion out of terror state Sudan over seven years, 2002-09.

On the European Parliament front, post- the elections that represented an “earthquake” of sorts, for the next few weeks the myriad of parties will be attempting to form coalitions, including Marine Le Pen’s National Front, but the biggest immediate issue is selecting the next president of the European Commission and front-runner Jean-Claude Juncker, the former prime minister of Luxembourg, said he will not bow to British Prime Minister David Cameron’s objections to his nomination. Juncker says that as the lead candidate of the center-right European People’s party bloc, which won the most seats in the parliament elections, he has the mandate.

But Cameron has found an unlikely ally in Italy’s center-left prime minister, Matteo Renzi, who said a decision on Juncker should not be rushed.

Cameron needs a new deal to present to the British people (renegotiating the terms of EU membership, including concessions), and he’s warned Britain could “drift towards the exit” without one. Cameron has said if he wins the 2015 national election, he would hold a referendum by the end of 2017 on whether or not to remain in the EU; the prime minister expecting to have wrangled enough concessions by then to keep Britain in the fold.

Turning to China, HSBC’s final PMI on manufacturing for May was 49.4 vs. 48.1 in April, with new export orders at 53.2, which is good. The official government PMI for May came in at 50.8 vs. 50.4 in April.

The reading on the service sector for China was 55.5 last month vs. 54.8 the prior one. The service sector now makes up 43% of the overall economy.

But perhaps a good gauge of the slowdown in China (aside from Macau, see below), is the fact South Korea’s exports to the mainland were down 9.4% in May from a year ago, the worst decline since August 2009, even as exports to Europe surged 32% and were up 4.5% to the U.S.

Meanwhile, it’s worrisome that the U.S. and China are having a bit of a trade war these days, with the U.S. planning to impose additional import duties on Chinese-made solar panels of up to 35.2%.

Beijing, in a particularly angry response, said the U.S. had “ignored the facts” and accused Washington of using trade rules to protect its own industry.

Street Bytes

--The Dow Jones finished up 1.2% to a record 16924, while the S&P 500 added 1.3% to a new high, 1949. Nasdaq gained 1.9%. Aside from the solid economic news, hedge fund titan David Tepper helped the advance with bullish comments after earlier voicing a few concerns, particularly with regards to the European Central Bank, that have since been addressed.

--The German DAX 30 index jumped over 10,000 for the first time ever this week before closing at 9987.

--U.S. Treasury Yields

6-mo. 0.05% 2-yr. 0.40% 10-yr. 2.59% 30-yr. 3.43%

The yield on the 10-year is up 19 basis points in a little over a week after hitting a cycle low of 2.40%. The question is do we now settle back into a trading range of about 2.55% to 2.80%, or is my theory that the market will begin to get concerned over inflation about to be borne out?

Meanwhile, the yield on the 10-year in Spain collapsed to 2.63% and to 2.72% in Italy, after two weeks ago seeing yields substantially over 3.00% in both. It’s about the ECB action, but I am telling you this is nuts. You read the above bit on Italy’s debt, 130% of GDP.

And for the yield on Spain’s 10-year to be all of 4 basis points above that of the 10-year T-Note? C’mon.

Heck, the yield on Greece’s 10-year fell from 6.23% to 5.78% in one day, Friday. Congratulations if you were on the right side of those trades. Now be a good boy and take your profits.

--Bank of America is in talks to pay at least $12 billion in cash and homeowner relief to end its long-running case with the Justice Department that it mis-sold mortgage-backed securities. It paid $9.5 billion to resolve a similar investigation by the Federal Housing Finance Agency in March. Not including this latest probable deal, BofA has already shelled out $26.3 billion in fines and settlements since Jan. 2009. [JPMorgan Chase has coughed up nearly $26 billion as well.]

--From Julie Steinberg / Wall Street Journal

“A tough stretch for Wall Street traders is about to get even tougher.

“Slammed by declining revenue, the trading businesses inside the biggest global investment banks are expected to suffer job losses that could run into the thousands by the end of the year, according to people at the firms and recruiters who specialize in financial-services positions.

“The culprit: a persistent gap between revenue and employment. For the 10 largest global investment banks, trading revenue for fixed-income, currencies and commodities, or FICC, units in the first quarter plunged 15.7% from the same period a year earlier, according to data from research consultancy Coalition. The number of FICC traders, researchers and salespeople, meanwhile, fell just 4.8% over that period.”

At Goldman Sachs Group Inc., the FICC unit accounts for about 30% of its revenue. President Gary Cohn having recently said the dull market environment has made it “difficult” for Street firms.

For the month of May, trading volume on the U.S. major exchanges was the slowest since 2007. Wall Street needs volatility and thus far in 2014, the Dow has made a daily move of 2% or more just once, while it made such moves 10 times by this time of year in 2010 and 33 times in 2009.

--General Motors released an internal investigation into its ignition switch issue that has resulted in at least 50 crashes and 13 deaths, and the report laid out a narrative of incompetence and deceit, but fails to explain how a lone engineer, Ray DeGiorgio, could approve a less expensive part that failed to meet GM standards. Nor does it explain why the same engineer could substitute a part without changing the serial number, which critics see as a sign of a cover-up.

[For his part, DeGiorgio focused on electrical problems that caused the switch to have trouble starting cars in cold weather, over the torque issue, which allowed the car to accidentally switch off.]

The report claims GM executives didn’t know of the problems until January; blaming lower-level employees, 15 of whom were fired, and that there was no sign of a cover-up.

The ignition problem affected about 2.6 million Chevrolet Cobalts and other small cars, mostly 2003 to 2007 models.

According to the automaker’s report, the company didn’t push harder to address the problem because it did not understand it, including the fact it disabled air bags.

CEO Mary Barra, in announcing the findings, said employees did not share enough information.

“If this information had been disclosed, I believe in my heart the company would have dealt with this matter appropriately,” she said.

Barra announced a compensation program for victims and their families to be administered by Kenneth Feinberg, who ran similar funds for victims of 9/11 and the BP oil spill.

Investigations by the National Highway Traffic Safety Administration, the Department of Justice and Congress continue. For starters, even GM strongly hinted the death toll is greater than 13.

--Meanwhile, U.S. auto sales rose 11% in May to a seasonally adjusted annualized selling rate of 16.77 million cars and light trucks, according to Autodata Corp., confirming the rebound since the harsh winter cut demand. Ford’s were up 3%, GM’s 13%, Chrysler’s 17%, Toyota’s 17%, Honda Motor’s 9%, Nissan’s up 19%, BMW’s 17%, VW 15%.

As for Ford’s small increase, it nonetheless represented its best May sales since 2004.

Overall, automakers are headed for their best year since 2006.

--Rising stock markets and home prices lifted U.S. household wealth to a record in the first quarter, up $1.5 trillion to $81.8 trillion.

--My favorite China economic indicator, Macau casino revenues, rose 9.3% in May from a year earlier, far below estimates. In April, the increase was 10.6%. While these are strong numbers, the figures don’t match the 20% monthly gains we were used to seeing and are a further sign of a slowdown on the mainland.

--Australia’s economy grew more than forecast in the first quarter, up 1.1% from the previous quarter, with an annual growth rate of 3.5%, the highest in nearly two years. Mining accounted for around 80% of growth in the quarter, though with China slowing, demand for Australian resources could fall back as it had the past few years.

--Brazil’s economy grew 0.2% in Q1 over Q4, this as the World Cup begins this week. All we can do is sit back and see what happens, off the pitch, that is. How big will the protests be? Brazil has been counting on the month-long event to help spur growth.   Instead it could get something else.

--The Environmental Protection Agency unveiled a plan that will require deep cuts in carbon emission from existing power plants, including a 30% national target by 2030 – from 2005 levels.

The rule will trigger legal challenges, but the president asked the EPA to finalize its plan in June 2015, after which states get a year to craft their own plan, or the EPA could step in with its own version.

Opponents say the proposal will raise consumer prices for electricity, kill jobs and slow economic growth. Wyoming Republic Sen. Mike Enzi said in the GOP’s Saturday radio address that the Obama administration has “set out to kill coal and its 800,000 jobs.”

Many Democratic senators in both coal and oil and gas states aren’t happy, either. And you have Democratic governors like Colorado’s John Hickenlooper and Montana’s Steve Bullock who are ardently pro-fracking.

But a new Washington Post-ABC News poll found that 70% of Americans back federal carbon limits on existing power plants, and 63% - including 51% of Republicans, 64% of independents and 71% of Democrats – said they would be willing to pay $20 a month in order to do so.

Editorial / Wall Street Journal

“President Obama vowed last year that he wouldn’t wait on Congress to bless his anticarbon agenda, and the rule his Environmental Protection Agency proposed on Monday is equal to that promise. The agency is bidding to transform and nationalize U.S. energy the way ObamaCare is doing to medicine, but in this case without even the pretense of democratic consent....

“A Democratic Congress debated and rejected this anticarbon program in 2010, and there isn’t a chance it could get 50 Senate votes now. But no matter, the EPA claims the authority for this seeping power grab by pointing to an obscure clause of the 1970 Clean Air Act called Section 111(d) that runs merely a few hundred words and historically has been applied only to minor pollutants, not the entire economy.

“The new rule is unprecedented because EPA is supposed to regulate ‘inside the fenceline,’ meaning that its command-and-control powers are limited to individual energy generator sources. The agency can tell America’s 3,000 or so fossil-fuel power units to install on-site technology like scrubbers to reduce pollution, but not beyond. Now the agency is taking a ‘systems-based approach’ that usurps state responsibilities in order to move electricity production away first from coal and later natural gas.

“The EPA is claiming states can choose whatever methods they like to meet the carbon targets, from shuttering plants to installing more green sources like wind and solar. But beware of the Obama EPA bearing gifts....

“The EPA...claims that by some miracle the costs of this will be negligible, or even raise GDP, but it is impossible to raise the price of carbon energy without also raising costs across the economy. The costs will ultimately flow to consumers and businesses....

“Almost all economic and human activity has some carbon cost, and the huge indirect tax and wealth redistribution scheme that the EPA is imposing by fiat will profoundly touch every American. Voters should at least have a say and know the price they will pay before ceding so much power to regulators.”

--Hillshire Brands (think Jimmy Dean sausages) received a sweetened bid from Pilgrim’s Pride, $55 a share, topping last week’s $50-a-share offer from chicken giant Tyson Foods. Hillshire initially said it was planning on buying Pinnacle Foods, then Pilgrim’s Pride entered the picture, Tyson trumped it, and now we’re back to Pilgrim.

What’s confusing is Hillshire said it doesn’t have the right to “terminate” the Pinnacle Foods merger. So if I’m confused, imagine all the food items on grocery shelves and in freezers.

“Pssst....what’s going on with this merger talk?”

“I don’t know...but I hope that woman over there selects me...”

--PIMCO’s Total Return Fund suffered redemptions for a 13th consecutive month in May, another $4.3 billion for the world’s largest bond fund. Total assets have now declined from $293 billion to $229 billion. Performance-wise, the fund has lagged its peers badly over the past one- and five-year periods.

--I follow the weather in the Oklahoma Panhandle every day, mainly because of friends farming there, and for the period March 1 through May 18, the region recorded the driest season since 1956; on top of the now multi-year drought conditions that have existed.

--Nothing further to add on the Carl Icahn-Phil Mickelson-Billy Walters insider-trading probe. It seems the Feds blew it when details of the investigation leaked out.

--The U.S. charged a Russian man, Evgeniy Bogachev, with being behind a major cybercrime operation that affected individuals and businesses worldwide. He allegedly launched attacks on more than a million computers for the purpose of stealing personal and financial data.

The prime issue was a strain of malware known as Gameover Zeus and experts urge you to make sure your security software is up-to-date, as well as applying the latest Microsoft updates.

--If California Chrome wins the Belmont, understand that in the previous 11 years where horse racing had a Triple Crown winner, the Dow Jones fell in 8 of them, vs. a 66% winning percentage since the Dow was introduced in 1896. [Michael Driscoll / Wall Street Journal]

Foreign Affairs

Ukraine: Leaders of the G7 insisted Moscow recognize Petro Poroshenko, who takes office as president on Saturday. Russian President Vladimir Putin met with British Prime Minister David Cameron and French President Francois Hollande, and then President Obama, very briefly.

Cameron said after, “We need the Russians to properly recognize and work with this new president. We need de-escalation, we need to stop arms and people crossing the border. We need action on these fronts.”

But de-escalation would be ceding eastern Ukraine to Putin.

Poroshenko and Putin did meet and in a tense exchange agreed to cease-fire talks after Poroshenko is sworn in.

President Obama said, “Given its influence over the militants in Ukraine, Russia continues to have a responsibility to convince them to end their violence, lay down their weapons and enter into a dialogue with the Ukrainian government....if Russia’s provocations continue, it’s clear from our discussion here that the G7 nations are ready to impose additional costs on Russia.”

The Pentagon also announced on Thursday that a small team of American military advisers will head to Ukraine to assess its “mid- and long-term needs for defense reform.” Previously, $23 million in security assistance, including for body armor and night vision goggles, has been provided.

Meanwhile, the fighting continued in eastern Ukraine, with battles over checkpoints in the Donetsk and Luhansk regions. To give you the scope, in one clash near the city of Luhansk, 300 heavily armed separatists opened fire on a building housing a national guard regiment. Six militants were killed but the rebels eventually took control of the building. No word on Ukrainian army casualties. On Monday, 500 militants used rocket-propelled grenades and mortars to assault a border headquarters. Ukrainian officials said they repelled this one.

What’s clear is that combat has intensified (though verifiable casualty counts are impossible to come by), not what the news media would have you believe.  Why? Because many in the media have left! Since we aren’t seeing pictures every day from eastern Ukraine, it’s assumed things have stabilized. Yeah, they have. As in Donetsk and Luhansk are being annexed right in front of our eyes, if only we could see it.

One story I read put it this way: “The gleaming airport terminal that had Kiev a commuter-flight away has been shot to bits, with travel to the capital now marked by a bone-jangling journey past rebel checkpoints.”

Eventually, half the country could be under the banner of Novorossiya – New Russia.

Russian Prime Minister Dmitry Medvedev said the military operations in the east had forced thousands of civilians to flee into Russia, a claim he has made before when there is zero evidence this is the case. Medvedev said 4,000 had already requested asylum. On Wednesday, a Russian children’s rights official said that 7,000 Ukrainians had crossed the border into Russia’s Rostov region in 24 hours.

All bunk...but, granted, Ukraine’s border control is virtually nonexistent after the country abandoned a number of guard bases.

One issue where Ukraine and Russia appear to be closer to an agreement is on the price for Ukraine’s natural-gas supply.

Editorial / Washington Post

“Ukraine’s newly elected president, Petro Poroshenko, got a pledge of support from President Obama in Warsaw yesterday. But in the struggle over Ukraine’s future, Vladimir Putin was looking like the day’s winner. As Mr. Obama delivered another speech in Warsaw on the defense of freedom, Russian-backed forces were staging a major offensive in the Ukrainian province of Luhansk, where they overran a border command-and-control center and a national guard base. According to NATO’s supreme commander, U.S. Gen. Philip M. Breedlove, the insurgents were ‘very well led, very well financed [and] very well organized’ by Russia.

“Mr. Putin’s proxies are tightening their grip over Luhansk and the adjacent province of Donetsk in fighting that has steadily escalated since Mr. Poroshenko’s election.  Yet Mr. Putin not only has paid no price for the aggression – threatened U.S. and European Union sanctions remain on hold – but he was on his way Wednesday to D-Day celebrations in France, where he was invited to meet with the leaders of Britain, France and Germany. Mr. Obama, too, was talking up ‘the importance of maintaining good relations with Russia’ and his hope to ‘rebuild some of the trust’ with Moscow in coming months.

“So Mr. Putin has a foothold in eastern Ukraine, and he is firmly in control of Crimea. A substantial number of Russian troops are still camped on Ukraine’s borders, and irregular fighters and arms are pouring across. But the Russian leader is back to being courted by Western leaders, who are pushing Mr. Poroshenko to find a way to satisfy the Kremlin’s demands.”

Syria: President Bashar Assad won nearly 90% of the vote in the farcical election, Assad thus gaining a new seven-year term. The exiled opposition slammed it for being “illegitimate.” Assad said: “The high turnout was a strong message to the West and the countries implicated in the war on Syria.” Turnout among eligible voters was 73%, according to the government.

This is too much. At least 10 were killed in celebratory gunfire when the bullets fell back to earth, according to the Syrian Observatory for Human Rights.

Of course the election was only held in government-controlled areas. 60% of the country, though, is controlled by rebels.

British Foreign Secretary William Hague called the election an insult. Secretary of State John Kerry labeled it a “great big zero.”

But Russia insisted Syrians voted in “legitimate” polls.

At the G7, a topic of discussion was how to shore up Syria’s borders with its neighbors after an attack on the Jewish Museum in Brussels late last month that is believed to have been carried out by a young French jihadist fighter recently returned from Syria. Arrested in Marseille, Mehdi Nemmouche admitted the killings in a video.

French President Hollande said more than 30 French fighters had already died on the Syrian battlefront. Monday, French police arrested four suspected of having helped recruit volunteers for Islamist networks in Syria.

Current EU counter-terrorism coordinator, Gilles de Kerchove, said EU citizens returning after having fought as Mujahideen in Syria posed the gravest security threat to the EU.

Editorial / Wall Street Journal

“The fear of U.S. and European security officials that Syria is becoming a training ground for homegrown jihadists has received another confirmation. French police on Friday arrested a French jihadist from Syria suspected in the bloody attack on a Jewish museum in Brussels....

“Our ‘realist’ friends have opposed any Western help for the Syrian opposition on grounds that it would prolong the war and assist jihadists. Yet doing nothing to help the nonradical opposition has prolonged the war and helped the extremists recruit jihadists world-wide. Last week the State Department said a young American from Florida conducted a suicide truck bomb attack in Syria while fighting for the al-Qaeda-linked al-Nusrah front.

“The conceit of the anti-interventionists is that if we avoid the world’s conflicts, those conflicts will leave us alone. Syria’s won’t.”

Editorial / Financial Times

“President Assad evidently thinks his international foes are now more concerned about the revival of al-Qaeda in Syria and across its eastern border in western Iraq than about ousting him. He is not wholly wrong. Spies from spooked western capitals are beating a path to Damascus. Yet western policy makers need always to remember that Arab tyrants such as Mr. Assad amount to an assembly line to manufacture jihadis, and that he was responsible for funneling Sunni extremists into Iraq after the Anglo-American invasion of 2003 – using the same routes they now use back into Syria.

“Mr. Assad’s electoral coronation this week wins him more time. But if this is victory it is Pyrrhic in the extreme. More than 160,000 Syrians have been killed, an estimated further 200,000 have died through denied access to medical care, about 10m have been uprooted. Vast areas of cities such as Homs and Aleppo have been razed. Not much is left of an economy already monopolized and looted by the Assad clan. Syria’s reconstruction costs are so far estimated conservatively at $250 billion, and Damascus relies for the huge running costs of the war on a sanctions-hit Iran that does not have infinite billions to spare.

“President Assad has made a wasteland and called it peace. Yet he could eventually fall victim to the rapprochement currently being explored between Iran and the U.S. and its allies. Part of the price of that higher prize for Tehran will be a plausible transition out of the Syrian conflict. That would only be conceivable if Iran finally jettisons the Assads.”

Iran: The International Atomic Energy Agency said Iran has disclosed some past work with explosive components of potential use in triggering nuclear explosions, but Israel’s envoy to the watchdog group, Ambassador Merav Zafary-Odiz, said Iran has abused the U.N. investigation’s “step-by-step” approach, and the “pace of investigation is unacceptable,” as reported by Reuters.

“Iran will continue to provide false explanations and to hide the true nature of its activities,” the ambassador said.

For his part, Ayatollah Ali Khamenei proclaimed in a speech marking the 25th anniversary of the death of Ayatollah Khomeini, that a “military attack is not a priority for Americans now.”

“They realize that military attacks are as dangerous or even more dangerous for the assaulting country as they are for the country attacked,” the ayatollah said.

Khamenei was responding to Obama’s West Point speech, in essence saying Obama was chicken.

Iraq: In a further sign of the deteriorating situation in this country, “Hundreds of Sunni militants stormed the central Iraqi city of Samarra early Thursday, taking control of neighborhoods and government buildings in a siege that provoked a panicked government counteroffensive to prevent the loss of the town.” [Kareem Fahim / New York Times]

The government later claimed to have routed the insurgents, but this was in dispute. Hardline Islamists continue to control the western city of Falluja, for example, six months after entering it.

The U.N. reported on Sunday that violence claimed 799 Iraqis in May, the highest monthly death toll of the year. [603 civilians, 196 members of security forces.]

Israel: A poll by the Israel Democracy Institute and Tel Aviv University showed 49% of Israeli Jews and 72% of Israeli Arabs disagree with the idea that “Israel should officially annex the areas that are important to it for settlement and security in Judea & Samaria,” but 43% of Israeli Jews and 18% of Israeli Arabs agreed with the statement.

Most Israeli Jews (60%) oppose unilateral withdrawal from substantial parts of the West Bank, while 25% supported it.

Despite indications the U.S. blames Israel for failed peace talks, 64% of Israelis do not think the U.S. is scaling back its support for Israel. [Jerusalem Post]

The above is important as this week we saw the swearing in of the new Fatah-Hamas unity government, “terrorists in suits,” as Israeli Economic Affairs Minister Naftali Bennett put it. Bennett wants to see parts of the West Bank formally annexed in response. Israeli Prime Minister Benjamin Netanyahu wants to negotiate a final status agreement with the Palestinians, but he’s said such talks are impossible if Fatah aligns itself with Hamas. When Fatah announced the unity government was pending, Israel suspended talks with the Palestinians.

Netanyahu, according to the Jerusalem Post, is waiting for the moment when it becomes clear negotiations with the PLO is impossible before weighing options such as Bennett’s.

Egypt: Former army chief Abdel Fattah al-Sisi was officially declared president on Tuesday with 96.9% of the vote. He is being inaugurated early this coming week. So let the fun begin!

Afghanistan: Presidential frontrunner Abdullah Abdullah survived an assassination attempt on Friday, with a suicide bomber hitting his convoy and killing six people. Abdullah didn’t miss a beat. His run-off with Ashraf Ghani is still slated for June 14.

China: The rhetoric was flying between Washington and Beijing this week, with the Pentagon on Thursday saying China was modernizing its air force on an “unprecedented” scale and is “Rapidly closing the gap with western air forces.” The annual report on China’s capabilities pointed not only to advances in its aircraft, but also its use of jamming communications and electronic warfare.

The Pentagon said China is spending about $145 billion on its military, far higher than the $119.5 billion figure Beijing trumpets.

Last weekend, at a major regional security conference, Defense Secretary Chuck Hagel accused China of coercive tactics in the East and South China Seas, while Wang Guanzhong, deputy chief of the Chinese general staff blasted Hagel in turn.

Hagel said of the maritime conflicts: “These stakes are not just about the sovereignty of rocky shoals and island reefs, or even the natural resources that surround them and lie beneath them. They are about sustaining the Asia-Pacific’s rules-based order....

“China has undertaken destabilizing, unilateral actions asserting its claims in the South China Sea.”

Japanese Prime Minister Shinzo Abe said of China after a near-miss between Chinese and Japanese military aircraft close to the Senkaku islands (Diaoyu in China):

“We do not welcome dangerous encounters by fighter aircraft and vessels at sea. What we must exchange are words.”

But Fu Ying, chairwoman of the Chinese legislature’s foreign-affairs committee, accused Abe of engineering a crisis over disputed islands so as to create a “myth...that China as a country is posing a threat to Japan as a country.”

Then Chinese Lt. Gen. Wang, the deputy chief of general staff, told the audience at the regional defense conference in Singapore that Hagel’s speech was “full of hegemony, full of words of threat and intimidation,” and part of “a provocative challenge against China.”

Wang added: “The speeches by Mr. Abe and Mr. Hagel gave me the impression that they coordinated with each other, they supported each other, they encouraged each other and they took the advantage of speaking first....and staged provocative actions and challenges against China.”

Maj. Gen. Zhu Chenghu said in an interview with the Chinese media: “The Americans are making very, very important strategic mistakes right now. If you take China as an enemy, China will absolutely become the enemy of the U.S.” [Wall Street Journal / Financial Times]

Meanwhile, Vietnam released dramatic footage showing a large Chinese ship chasing and sinking a Vietnamese fishing boat near an oil rig in contested waters in the South China Sea, a May 26 incident that Hanoi decried an “inhuman act.” 10 fishermen on board were rescued by nearby vessels. Vietnam claims China has damaged 24 Vietnamese law enforcement vessels since the stand-off began in early May.

The oil rig is positioned in the vicinity of the contested Paracel Islands. A Vietnamese official said “Every day, China has between 30 and 137 boats around the oil rig, including six warships.” [South China Morning Post]

Separately, a report in Defense News talked of a U.S. National Defense University study that notes the People’s Liberation Army could turn to nuclear-tipped cruise missiles to counter U.S. Navy carrier strike groups. Former U.S. Navy Rear Adm. Michael McDevitt said he believes China “is likely already ‘arming nuclear attack submarines with nuclear-tipped cruise missiles.’” [Ed. there is no evidence of this as yet, however.]

On the pollution front...Terrence McCoy / Washington Post

“It’s so bad that in Zhejiang province last year a fire burned for three hours at a factory before locals noticed anything was amiss. It’s so bad that visibility in Harbin dropped to 10 meters last October, shuttering schools and the airport. It’s so bad that bags of mountain air were shipped into Zhengzhou last March, and contented-looking locals breathed deep like Mel Brooks in ‘Spaceballs.’ So bad that a glass jar of French air sold for $860. So bad that cans of fresh air are going for 80 cents and the millionaire who manufactured them claims he’s sold eight million.

“The smog is only the beginning. More than 20% of China’s farmland is polluted. You can’t drink 60% of its water supply. [Ed. I’d call it virtually 100%.] In Northern China, air pollution can shorten lifespans by nearly six years. Nearly two-thirds of the nation’s wealthy are thinking of leaving the country. Beijing’s concentration of PM2.5 – particles small enough to infect both the bloodstream and penetrate the lungs – hit a staggering 505 micrograms per cubic meter earlier this year. The World Health Organization’s recommended level: 25.

“China is killing itself. And it knows it.”

Finally, June 4 represented the 25th anniversary of the Tiananmen Square protests and massacre. Security was super tight in Beijing and there were no big incidents. Government censors crawled over the Internet and Google experienced significant service disruptions, with many sites being inaccessible. The Wall Street Journal said its English- and Chinese-language websites have been blocked since Saturday.

Chinese media are forbidden from mentioning the 1989 democracy movement. Many foreign journalists were warned not to report from the square.

But in Hong Kong, as many as 180,000 descended on Victoria Park to commemorate the date, calling for democracy. [Police put the crowd at 100,000.] As reported by the South China Morning Post, many traveled from the mainland to attend the event.

Finally, in its overall war on terrorism, Beijing police have dispatched 650 K9 teams to patrol the streets. Dogs are now being given a greater role, instead of just patrolling airports and railway stations.

According to The Beijing News, the dogs are said to be trained to go after specific parts of a suspect’s body under police officers’ instructions. “And once unleashed, they are able to tear along at speeds up to 40km/h.” [German shepherds, sports fans.]

North Korea: State media Friday said authorities had detained a U.S. tourist who committed “hostile acts” against the country during a tour. Jeffrey Edward Fowler entered the country on April 29. A brief statement didn’t specify the alleged crimes. Two other Americans also continue to be detained here.

Separately, the European Union on Wednesday said it was worried Pyongyang was getting closer to producing compact nuclear arms that can be fitted to missiles; obviously a serious breakthrough. The North is also fully prepared to conduct its fourth nuclear test; it’s just a matter of when is the politically expedient time to do so.

For those who believe the Orcs can fit a warhead on something like a medium-range Rodong ballistic missile, the issue is how the warhead would perform after re-entering the Earth’s atmosphere, according to Arms Control Today.

Russia: In an interview with the French media, President Putin said he expected France to honor a contract to sell it two Mistral helicopter carriers, a $1.6 billion deal that was agreed to before the crisis over Ukraine began. France is under big pressure to reconsider it.

And we learned this week that back in April, a Russian Su-27 fighter jet intercepted a U.S. surveillance plane off Russia’s east coast near Japan, flying within just 100 feet of the U.S. plane’s nose before flying off...an incredibly dangerous move. The Pentagon didn’t disclose the incident until this week, though, and gave no reason for the delay.

Nigeria: Remember the missing schoolgirls? How quickly we forget. No news.

But Boko Harma continued with its killing. In one instance this week, it slaughtered an estimated 200 civilians in three communities in the northeast of the country, with witnesses saying the military failed to intervene. The army was called when villagers in one district learned they were about to be attacked and nothing happened.

Separately, Nigerian media reported 10 generals and five other senior military officers had been tried before a court martial for supplying arms and information to Boko Haram. The military disputed the reports. [BBC News]

Ireland: The country has been roiled following an investigation into a home for unmarried mothers run by nuns where evidence suggests 796 children, from newborns to eight-year-olds, may have been buried without coffins or gravestones; the Catholic-run home having operated from 1925 to 1961. Death records were uncovered showing the children died from malnutrition, pneumonia and infectious diseases. This was at a time when women who became pregnant outside of marriage were labeled “fallen women” and ostracized by their own families, so they had nowhere to turn but to the homes run by nuns.

One of the many issues is if there are more homes with, in essence, mass graves, such as the one in Tuam. [Strongly suspected.]

Venezuela: As reported by Bloomberg, not only do residents in Caracas struggle to find toilet paper and deodorant, among other consumer goods, there is another serious shortage – drinking water. People wait in long lines at grocery stores for bottled water as soon as deliveries are made. Currency controls are the major cause. The central bank hasn’t provided data on product scarcity since January, when it said 28% of basic goods were out of stock at any given time.

Qatar: So the holders of the five Taliban commanders exchanged for Bowe Bergdahl have an issue of a different kind. There is zero doubt it bought votes leading up to the selection of Qatar as the host of the 2022 World Cup. The Sunday Times of London obtained millions of secret documents – emails, letters and bank transfers – which it alleges are proof a former Qatari football official made payments totaling $5 million to officials in return for their support for the Qatari bid.

There is also no doubt a new vote will have to be held. Fifa, meeting in Sao Paulo next week ahead of the June 12 start of the World Cup, may make a decision on this topic next week.

Spain: King Juan Carlos announced he was abdicating after nearly 40 years on the throne.

“A new generation must be at the forefront...younger people with new energies,” the 76-year-old king said. 

His son, Crown Prince Felipe, 45, will take over.

Juan Carlos’ reputation had been a good one over the decades, but in the past few years he has been tarnished by a corruption investigation into the business dealings of his daughter and her new husband, while Juan Carlos lost support after it was revealed he spent lavishly on an elephant hunting trip in April 2012, in the middle of Spain’s financial crisis.

Many in Spain wonder if the king’s move will be enough to save the monarchy.

Random Musings

--The VA scandal continues. Officials at a VA medical center in Albuquerque say as many as 3,000 patients were assigned to a doctor who didn’t actually see them, according to Congresswoman Michelle Lujan Grisham, (D-N.M.). It wasn’t clear how long they waited to be assigned to one that did see them.

But in the post-Shinseki era, real reform is needed, not just stopgap measures.

Editorial / Wall Street Journal

“Instead of paying for shorter delays, a better option is to fix the structure that causes delays. That means decentralizing the VA and selling off most of the institution. There is no medical or biological reason that former soldiers require special hospitals for routine treatments or even most complex conditions. The VA can prioritize specialized care for combat trauma and rehabilitation unique to military service, insurance vouchers for vets can replace socialized medicine, and markets will discipline a now-unaccountable bureaucratic culture.

“Such a privatization is unlikely given the political sensitivities, the power of veterans interest groups and the fact that liberals consider the VA a health-care model. But perhaps if Congress thinks more creatively than usual, the outcome will be better than another cosmetic VA renovation that guarantees disgraces for the next Administration.”

Well, on Thursday, senators announced a sweeping bipartisan agreement to address several issues at the VA with the hope the full Senate will vote on it as early as next week, whereupon it would be sent to the House, which has passed at least nine measures in recent months to improve veterans’ education/employment and health care.

The Senate agreement, among other things, would allow veterans who live more than 40 miles from a VA facility or who are experiencing long wait times to seek care at other government or private medical facilities, as well as a provision for providing $500 million for the VA to hire more doctors and nurses.

As Republican Sen. John McCain said, “This is not a perfect document,” but while he invited both sides to propose amendments, he begged them not to delay consideration of the bill.

“Can we sort of pledge that we are committed to seeing this all the way through? I would urge our colleagues to do that. Let’s not get hung up on certain other aspects of our differences that most people would view as gridlock in this body.” [Ed O’Keefe / Washington Post]

--Mississippi Republican Sen. Thad Cochran was forced into a runoff Wednesday against tea party challenger Chris McDaniel in what has been the nastiest primary fight this spring. The runoff takes place June 24, with McDaniel receiving 49.5% of the vote to Cochran’s 49%.   While other tea party challengers have been swept aside this campaign season, Cochran could be the first establishment GOP candidate to meet his end.

Cochran is 76 and has been in the Senate since 1978.

--In California, Neel Kashkari won the right to challenge Gov. Jerry Brown in November, defeating rival GOP candidate Tim Donnelly.

Kashkari, a former assistant U.S. Treasury secretary, has never held elective office. He has no money in his campaign coffers, while Brown has collected $20 million.

--Former New York City Mayor Michael Bloomberg’s commencement address at Harvard University, May 29:

“Repressing free expression is a natural human weakness, and it is up to us to fight it at every turn. Intolerance of ideas – whether liberal or conservative – is antithetical to individual rights and free societies, and it is no less antithetical to great universities and first-rate scholarship.

“There is an idea floating around college campuses – including here at Harvard – that scholars should be funded only if their work conforms to a particular view of justice. There’s a word for that idea: censorship. And it is just a modern-day form of McCarthyism....

“In the 2012 presidential race, according to Federal Election Commission data, 96% of all campaign contributions from Ivy League faculty and employees went to Barack Obama.

“Ninety-six percent. There was more disagreement among the old Soviet Politburo than there is among Ivy League donors....

“When 96% of Ivy League donors prefer one candidate to another, you have to wonder whether students are being exposed to the diversity of views that a great university should offer.”

--Walter Russell Mead / Washington Post...balanced assessment of Hillary Clinton as Secretary of State:

“Clinton was an influential secretary of state and a savvy manager with a clear agenda that, at least in part, she translated into policy. So how did it all work out?

“The answer: Historians will probably consider Clinton significantly more successful than run-of-the-mill secretaries of state such as James G. Blaine or the long-serving Cordell Hull, but don’t expect to see her on a pedestal with Dean Acheson or John Quincy Adams anytime soon.

“She weighed in hard and strong in favor of the president’s risky but ultimately justified decision to attack Osama bin Laden’s last refuge. The focus on Asia – relabeled a ‘pivot’ before it became a ‘rebalancing’ – reinvigorated America’s Pacific alliances but also elicited a more aggressive China, which has taken a harder line with Japan, the Philippines and Vietnam since the pivot began. The ‘reset’ with Russia enabled concrete cooperation on Iran’s nuclear program and at the United Nations (notably on the resolution authorizing intervention against Libya’s Moammar Gaddafi), but it would be hard to argue that Washington and Moscow have ended up in a good place. Here again the rhetoric of the ‘pivot to Asia’ may have encouraged Putin to think that the United States was taking its eye off Russia’s revisionist ambitions....

“If Burma was a success of the Clinton approach, Egypt and Libya were sobering failures. Except in Tunisia, U.S. efforts to promote democracy after the Arab Spring were largely unsuccessful, with Egypt a particularly dramatic case. But the greatest problem for Clinton’s legacy is likely to be the miserable aftermath of the U.S.-backed overthrow of Gaddafi. Here, advocates of the Libya mission failed to take seriously one of the most important lessons of Iraq: When you overthrow a dictator in the Arab world, expect chaos and violence to follow. The mess in Libya – besides leading to the Benghazi attack that has entangled Clinton in congressional investigations and conspiracy theories – strengthened the voices in the administration opposing the more activist Syria policy Clinton promoted. It also deepened public resistance to more use of American military power abroad. This is not the legacy Clinton hoped to leave behind....

“The verdict? Clinton brought a clear vision of U.S. interests and power to the job, and future presidents and secretaries of state will find many of her ideas essential. Yet she struggled to bring together the different elements of her vision into a coherent set of policies. The tension between America’s role as a revolutionary power and its role as a status quo power predates Clinton; the struggle to reconcile those two opposed but equally indispensable aspects of American foreign policy has survived her tenure at the State Department.”

--The Death toll from Ebola in Guinea hit 208. 21 died and 37 new cases were found between May 29 and June 1, alone. 16 others have died in Sierra Leone and Liberia.

--Yes, the Atlantic hurricane season is expected to be a light one, but it’s amazing that since the hyper-active 2005 season, the U.S. has not had a major hurricane (CAT 3 or higher) make landfall since that October...or about 3,148 days, with the previous longest span being 2 ½ years shorter, as reported by Brian McNoldy of the Washington Post.

--Gwynne Shotwell, president of Space Exploration Technologies Corp. (Elon Musk’s company), said failure to invest in the next frontier of human space travel would be both a “big disappointment” and a danger to mankind.

“It’s really risk management for humans,” said Shotwell, in addressing the Washington-based policy group, the Atlantic Council. “I’m pretty sure there will be a catastrophic event, and it would be nice to have humans living in more than one spot.” [Jonathan D. Salant / Bloomberg]

Boy, if you read a piece in the June 9 issue of TIME magazine on the number of asteroids NASA is tracking, 600,000, and understand how many we could miss, with catastrophic consequences, you’d be going ‘Amen’ on the topic of expanding our space program, now.

The National Research Council issued a report recommending that the U.S., and its international partners, set a goal of going to Mars.

“For the foreseeable future, the only feasible destinations for human exploration are the moon, asteroids, Mars, and the moons of Mars,” Jonathan Lunine, co-chairman of the committee behind the report, said in a statement. “Among this small set of plausible goals, the most distant and difficult is putting human boots on the surface of Mars, thus that is the horizon goal for human space exploration.”

Alas, this isn’t likely to happen in my lifetime. Mitch Daniels, committee co-chair and president of Purdue University, said: “Any human exploration program will only succeed if it is appropriately funded and receives a sustained commitment on the part of those who govern our nation. That commitment cannot change direction election after election.”

Back to SpaceX, the company’s previously announced Dragon V2 craft is the first the U.S. has built for manned space travel since the end of the shuttle program, and Elon Musk is targeting a launch by 2017. So fret not, kids, about Russia making waves they will cut the U.S. out by 2020 if we haven’t come up with an alternative to their $70 million taxi rides to the Space Station.

Plus others, including Boeing, Sierra Nevada and Blue Origin, are vying to be the first commercial outfit to take astronauts to space by 2017 and probably earlier.

--Pope Francis dismissed the entire board of the Vatican’s financial regulator as part of his sweeping reform and anti-corruption program at the Vatican bank. The Italian, five-person Financial Intelligence Authority is being replaced with four international experts from Italy, Singapore, Switzerland and the U.S.

--Maureen Dowd in her New York Times column described a scary experience eating a pot candy bar while reporting on legalized marijuana in Colorado. Sitting in her Denver hotel room, she nibbled on the bar.

“For an hour, I felt nothing...But then I felt a scary shudder go through my body and brain. I barely made it from the desk to the bed, where I lay curled up in a hallucinatory state for the next eight hours.”

The high wore off “distressingly slowly.”

“I had been convinced that I had died and no one was telling me.”

A medical consultant later told Dowd that inexperienced users should cut such a bar into 16 pieces, but Dowd said there was nothing of the kind on the packaging label.

The Rocky Mountain Poison Center reported a statistically significant increase in the number of parents calling the poison-control hotline to report their kids had consumed pot.

--Kathleen Parker / Washington Post...on Michelle Obama’s “Let’s Move!” program and her focus on whole foods.

“Mrs. Obama could suggest that parents prepare their children’s meals.

What?! You’ve got to be kidding! We’re too busy!!

“Since when were we too busy to scramble an egg or toast a slice of bread?....

“When it comes to home food preparation, the very poor need extra help, obviously, but quality nutrition, as most important things, begins at home. And for a majority of people, the cost is not prohibitive. Using data from the Bureau of Labor Statistics, we find that a piece of toast spread with peanut butter and topped with sliced banana – a filling breakfast loaded with protein, carbohydrates and potassium, among other nutrients – costs on average about 50 cents.

“We can’t all have a chef or send our children to private schools with meatier lunches, as the Obamas do. But we can feed our children for less trouble and money than some think. Maybe the first lady can modify her message along with our menus: Cook for your kids and they’ll grow smart and strong.”

--According to a report by the National Council on Teacher Quality, 1 in 6 teachers was “chronically absent” during the 2012-13 school year and accounted for about one-third of all teacher absences. Chronically absent is 18 days or more of a school year.

This is shocking.

But Randi Weingarten, president of the American Federation of Teachers, said, “While some, no doubt, will find fault with teachers in this attendance report, an overall 94% attendance rate shows the extraordinary dedication of teachers across the country, who come to school each day ready and excited to teach.” [Caroline Porter / Wall Street Journal]

Cough cough.

--Daniel Henninger above alluded to the 10th anniversary of Ronald Reagan’s death, June 5, 2004.

From Reagan’s televised address in 1964 for Republican nominee Barry Goldwater:

“You and I have a rendezvous with destiny. We’ll preserve for our children this, the last best hope of man on earth, or we’ll sentence them to take the last step into a thousand years of darkness.”

June 6, 1984, the 40th anniversary of D-Day, Reagan paying tribute to those who helped liberate Europe:

“These are the boys of Pointe du Hoc. These are the men who took the cliffs. These are the champions who helped free a continent. And these are the heroes who helped end a war.”

Jan. 28, 1986, following the explosion of the space shuttle Challenger:

“We will never forget them, nor the last time we saw them, this morning, as they prepared for their journey and waved goodbye and ‘slipped the surly bonds of earth’ to ‘touch the face of God.’”

--Finally, on this big anniversary of D-Day, James Jay Carafano of the Heritage Foundation:

“It is more than trite, but also more than true, to say that freedom isn’t free. D-Day was more than a liberation. It was a reminder that as long as there is evil in the world, America must always be prepared for more D-Days.

“The nation’s leaders have the responsibility to put forces in harm’s way only when it is absolutely necessary – to use military force with prudence and judgment.

“It is the nation’s responsibility to respond to the call with courage and commitment. That is the lesson of all our D-Days.”

Bob Dole / Washington Post

“Of 16 million World War II veterans, about 1 million survive. More than 500 die each day. Next year, for the first time since D-Day, three will be no World War II veterans in Congress....

“When I talk to veterans and other Americans during my frequent visits to the National World War II Memorial, I hear a refrain that may constitute the most important lesson of the war: Our nation must not become complacent. We cannot rest on the laurels that adorn this and other monuments. We must remain strong and vigilant. May God continue to bless the United States of America.”

For all those who died on the beaches of Normandy:

Think not only upon their passing...Remember the glory of their spirit.

---

Gold closed at $1252
Oil $102.66

Returns for the week 6/2-6/6

Dow Jones +1.2% [16924]
S&P 500 +1.3% [1949]
S&P MidCap +2.4%
Russell 2000 +2.7%
Nasdaq +1.9% [4321]

Returns for the period 1/1/14-6/6/14

Dow Jones +2.1%
S&P 500 +5.5%
S&P MidCap +5.1%
Russell 2000 +0.1%
Nasdaq +3.5%

Bulls 62.2
Bears 17.4 [Source: Investors Intelligence...reminder, contrarian indicator. Current spread is major-league danger territory, but, again, it can last a long time.]

Dr. Bortrum has a new column up.

Have a great week. I appreciate your support.

Go California Chrome!

Brian Trumbore



AddThis Feed Button

-06/07/2014-      
Web Epoch NJ Web Design  |  (c) Copyright 2016 StocksandNews.com, LLC.

Week in Review

06/07/2014

For the week 6/2-6/6

[Posted 12:00 AM ET]

Edition 791

Washington and Wall Street

First off, I apologize at the length of this column and last week’s as well. This is the definitive running history of our times and the last few weeks I’ve wanted to include everyone’s opinion, as well as my own, on issues such as the VA scandal, Obama’s critical West Point foreign policy address, the European Parliament elections, Ukraine, and, this week, Bowe Bergdahl and the prisoner swap. 

But up first, the U.S. economy and the stock market. Both the Dow Jones and S&P 500 hit one new high after another as stocks closed with their first three-week winning streak of the year amidst a backdrop of solid economic news.

Auto sales for May were at a strong pace (as detailed below), befitting the continued bounce-back from our awful winter. There are also signs sales in May at the nation’s retailers were solid, though few announce monthly sales comparisons anymore. At least a leader, Costco, reported sales rose 6%.

The May numbers from the Institute for Supply Management (ISM) for its manufacturing index came in at a strong 55.4 for May, and then 56.3 on the service sector, the latter the best reading in nine months, while April factory orders rose a better than expected 0.7% and construction spending in the month was 0.2%, less than expected.

The Fed’s beige book of economic activity found all 12 of its regions reporting “moderate” or “modest” growth, even as, separately, the Fed is increasingly wary of market complacency and low volatility, with an unusually low spread between corporate debt and Treasuries, the lowest since 2007, which of course was a danger point then. There is some dissent emerging on the Fed regarding holding interest rates at zero (duh!).

But then on Friday we had the May labor report and the economy added 217,000 jobs, in line with expectations, with April’s big gain revised down only slightly to 282,000, which was the best in more than two years. The U.S. economy has now added more than 200,000 each month since February, the longest such stretch since September 1999 to January 2000, and the economy has exceeded its pre-recession high in total employment.

The unemployment rate held steady at 6.3%. The labor participation rate, however, remained near its lowest level since the 1970s at 62.8%. Wages are up just 2.1% over year-ago levels.

U-6, the broader measure of employment, or underemployment, came in at 12.2% in May from 12.3% in April. [12.7% in March.]

All in all, quite good.

One other item, ObamaCare is back, though it largely got drowned out by other news coverage this week. About 2.2 million Americans who signed up for insurance through HealthCare.gov could be at risk of losing their coverage or be forced to repay part or all of their premium subsidy because of discrepancies with their applications, according to documents obtained by the Associated Press and confirmed by ABC News; roughly one in four applicants overall.

Some of the information provided online conflicts with that which the government has on file, the Department of Health and Human Services announced.

This doesn’t mean two million will be without coverage, necessarily, but further work is required, and, yes, some cases of fraud will be uncovered. 

And we learned on Friday the White House is revamping HealthCare.gov in an effort to avoid the problems associated with the launch, but some are wondering what this will mean when consumers return to the site in the fall to choose health plans. Some backend fixes are supposedly running behind schedule. To be continued....

Bowe Bergdahl

About 12 hours after I posted my last WIR, President Obama appeared in the Rose Garden with the parents of Army Sgt. Bowe Bergdahl to announce the release of their son after five years of captivity in Afghanistan, in exchange for five Taliban commanders who were being held at the military detention center at Guantanamo Bay, Cuba.

National Security Adviser Susan Rice then went on a Sunday morning talk show and said that Bergdahl had served with “honor and distinction.”

The White House expected a groundswell of support around the country, a feel-good moment. Instead, it boomeranged in a huge way as members of both sides of the political aisle, let alone the American public, first questioned the exchange, then the hero’s welcome we were supposed to accord Sgt. Bergdahl when many of his fellow team members immediately stepped forward to say he was a deserter, at best.

There are reports up to six U.S. troops (others say eight) may have been killed directly as a result of the search for Bergdahl, which as one team member put it, consumed the company for at least 60 days. Defense Secretary Chuck Hagel countered, “I do not know of specific circumstances or details of U.S. soldiers dying as a result of efforts to find and rescue Sgt. Bergdahl.”

Some in Congress were furious that they were not kept in the loop and given 30 days advance notice, as mandated by law.

President Obama defended his administration’s action (having given himself a legal loophole when he signed the bill in December, part of a “signing statement”), though acknowledged that some of the five Taliban released detainees, who will be under a sort of house arrest in Qatar as part of the agreement, could once again try to harm the United States.

“Is there the possibility of some of them trying to return to activities that are detrimental to us? Absolutely,” said the president from Poland.

Obama added:

“We have consulted with Congress for quite some time about the possibility that we might need to execute a prisoner exchange in order to recover Bergdahl. We saw an opportunity, and we were concerned about Bergdahl’s health. We had the cooperation of the Qataris to execute an exchange, and we seized that opportunity,” adding that “the process was truncated because we wanted to make sure we would not miss that window.”

The military, as the furor grew, said that once Bergdahl’s health improved, it would conduct a comprehensive investigation into the circumstances of his disappearance.

President Obama said, regardless of the eventual findings, “we still get back an American soldier if he’s held in captivity. Period. Full stop.”

The president then said of the difficult decisions that are often made at the end of a war, “It’s what happened to George Washington. It’s what happened to Lincoln. It’s what happened to FDR.”

Somehow I don’t associate Mr. Obama with these three, but that’s just me.

Sen. Dianne Feinstein (D-Calif.), chairwoman of the Senate Intelligence Committee, said that she and other senior lawmakers first discussed the possibility of a prisoner swap with administration officials in the fall of 2011.

During the consultations, Sen. Feinstein said, “There were very strong views and they were virtually unanimous against the trade,” adding, “The White House is pretty unilateral about what they want to do when they want to do it.” [Zachary A. Goldfarb and Ed O’Keefe; Scott Wilson and Anne Gearan / Washington Post]

White House Deputy National Security Adviser Tony Blinken called Feinstein to apologize for not informing her of the plans ahead of time, calling it an oversight. I am not a fan of this man, incidentally. I’ve seen him in interviews all too often flat-out lie.

For their part, the Taliban released a video of them turning Bergdahl over to American special forces, with the footage ending with a caption, “Don’ [sic] come back to Afghanistan,” a message that could apply to both U.S. forces and Bergdahl.

Wednesday evening, the White House delivered a classified briefing to all U.S. senators to show them a proof-of-life video of Bergdahl recorded in December 2013, where the administration was trying to point out evidence Bergdahl’s health was declining. Some senators, including Republican Sen. Mark Kirk (Ill.) said, “I would definitely think that it would have had an emotional impact on the president when he saw it.”

Other Republicans were not satisfied, especially regarding answers they received concerning the released Taliban members.

Democratic Sen. Joe Manchin of West Virginia said the concerns raised by the administration over Bergdahl’s health “did not sell me at all.”

“We all agree we are not dealing with a war hero... There’s a lot to be answered here,” said Manchin, who said he remained “very concerned.”

While then-national security adviser Thomas E. Donilon and his deputy, Denis McDonough, now the White House chief of staff, supported the five-for-one terms, then-CIA Director Leon Panetta and then-Defense Secretary Robert Gates, were among those opposing the swap; but with their departure, the administration moved more quickly to implement the plan as long as they received assurances on travel restrictions for the five Taliban once they got to Qatar.

It was back in January that Obama declared 2014 to be his “year of action.” Frustrated by Congressional gridlock, the president told reporters: “I’ve got a pen, and I’ve got a phone. And I can use that pen to sign executive orders and take executive actions and administration actions that move the ball forward.”

Meanwhile, Taliban leader Mullah Omar issued a public statement hailing the prisoner exchange, saying: “I extend my heartfelt congratulations to the entire Afghan Muslim nation.”

Mullah Omar had made no prior public appearances or speeches since 2001.

Opinion...from all sides...

Editorial / Wall Street Journal

“Start with the fact that little the Administration has said about this swap has turned out to be true. ‘He served the United States with honor and distinction,’ declared National Security Adviser Susan Rice on ABC on Sunday. But as everyone has since learned, the soldiers who served with Sgt. Bergdahl almost to a man believe that he deserted his post in Afghanistan in June 2009 before falling into the hands of the Taliban....

“You can argue the prisoner swap was necessary to retrieve our man, or a difficult moral choice, but it is not a reason for back-slapping and high fives....

“We think the President has the power as Commander in Chief to undertake the swap without telling Congress, but instead of saying this forthrightly, Mr. Obama said...that he consulted Congress ‘for quite some time’ on the possibility of a prisoner exchange. He also invoked the phony health excuse.

“Yet both Ms. Feinstein, who runs the Senate Intelligence Committee, and ranking Republican Saxby Chambliss said they hadn’t been consulted on the swap for months....

“The larger problem is that Mr. Obama treats all of foreign policy as if it’s merely part of his domestic political calculus. It’s all too easy to imagine him figuring that if he announced the withdrawal of all troops from Afghanistan by 2016 as he did last week, he could then more easily sell the prisoner swap, which would then help empty Guantanamo so he could fulfill that campaign promise too.

“Is it too much to ask that, in his final two and a half years in office, the President act as if more is at stake in foreign policy than his domestic approval rating?”

Bret Stephens / Wall Street Journal

“I spoke Monday with a highly decorated former Special Forces operator and asked what he thought about Bowe Bergdahl, the Army sergeant who was released over the weekend after five years of Taliban captivity in exchange for five hard cases out of Gitmo.

“The former operator suggested a firing squad might be appropriate.

“His view is widely shared in the community of warriors who risked – and, in at least six cases, lost – their lives searching for a soldier who wrote his parents that ‘the horror that is america (sic) is disgusting’ before vanishing from his post in Afghanistan in 2009.

“Whether Sgt. Bergdahl was taken by the enemy, deserted the Army or defected to the Taliban remains to be established. But just to be clear where the former operator is coming from, Article 85 of the Uniform Code of Military Justice states: ‘Any person found guilty of desertion or attempt to desert shall be punished, if the offense is committed in time of war, by death or such other punishment as a court-martial may direct.’

“But wait: We are not ‘in time of war.’ We are in time of Obama.

“In Time of Obama, dereliction of duty is heroism, releasing mass murderers with American blood on their hands is a good way to start a peace process, negotiating with terrorists is not negotiating with terrorists, and exchanging senior Taliban commanders for a lone American soldier is not an incentive to take other Americans hostage but rather proof that America brings its people home.

“In Time of Obama, we may get the facts about the circumstances of Sgt. Bergdahl’s disappearance and captivity. But first his parents are going to get an invitation to the White House so Mr. Obama can milk the occasion for his own political purposes.”

Editorial / Washington Post

“(The) impression reinforced by the deal is of a president anxious to disengage from Afghanistan as rapidly and as thoroughly as possible, with minimal regard for the consequences for Afghans. U.S. officials, who have been talking about a possible exchange of Sgt. Bergdahl for the Taliban commanders for several years, once presented it as a possible first step toward an Afghan peace accord. However, administration officials now play down that notion, and the Taliban dismissed it out of hand.

“In a rare statement, the movement’s leader, Mohammad Omar, instead said the release of the commanders brought the insurgency ‘closer to the harbor of victory.’ The released militants’ movements will be confined inside Qatar for a year, but there’s no sign the men are ready to give up the fight against the Afghan government.”

David Brooks / New York Times

“Americans don’t have a common ancestry. Therefore, we have to work hard to build national solidarity. We go in for more overt displays of patriotism than in most other countries: politicians wearing flag lapel pins, everybody singing the national anthem before games, saying the Pledge of Allegiance at big meetings, revering sacred creedal statements, like the Gettysburg Address.

“We need to do this because national solidarity is essential to the health of the country. This feeling of solidarity means that we pull together and not apart in times of crisis, like after the attacks on 9/11....

“National solidarity is especially important for the national defense....

“Soldiers in combat not only protect their buddies, they show amazing devotion to anyone in the uniform, without asking about state or ethnicity. This is the cohesion that makes armies effective.

“These commitments, so crucial, are based on deep fraternal sentiments that have to be nurtured with action. They are based on the notion that we are members of one national community. We will not abandon each other; we will protect one another; heroic measures will be taken to leave no one behind....

“The president and vice president, the only government officials elected directly by the entire nation, have a special responsibility to nurture this national solidarity. So, of course, President Obama had to take all measures necessary to secure the release of Sgt. Bowe Bergdahl....

“It doesn’t matter if Bergdahl had deserted his post or not....The debt we owe to fellow Americans is not based on individual merit. It is based on citizenship, and loyalty to the national community we all share....

“Israel once traded 1,027 Palestinian prisoners to get back one of their own. Another time they traded 1,150 prisoners to get back three of their own. They did it because of a deep awareness that national cohesion is essential to national survival....

“It doesn’t matter either that the United States government ended up dealing with terrorists.... America has always tried to reach a negotiated arrangement with the Taliban, and this agreement may be a piece of that. In the second place, this is the dirty world we live in....

“So President Obama made the right call. If he is to be faulted, it would be first for turning the release into an Oprah-esque photo-op, a political stunt filled with inaccurate rhetoric and unworthy grandstanding. It would next be for his administration’s astonishing tone-deafness about how this swap would be received....

“Still, the president’s instincts were right. His sense of responsibility for a fellow countryman was correct. It’s not about one person; it’s about the principle of all-for-one-and-one-for-all, which is the basis of citizenship.”

Charles Krauthammer / Washington Post

“What is it with Susan Rice and the Sunday morning talk shows? This time she said Sgt. Bowe Bergdahl had served in Afghanistan ‘with honor and distinction’ – the biggest whopper since she insisted the Benghazi attack was caused by a video....

“If he had served with honor and distinction, there would be no national uproar over his ransom and some of the widely aired objections to the deal would be as muted as they are flimsy. For example:

“ 1. America doesn’t negotiate with terrorists.

“Nonsense. Of course we do. Everyone does, while pretending not to....

“ 2. The administration did not give Congress 30-day notice as required by law.

“Of all the jurisdictional disputes between president and Congress, the president stands on the firmest ground as commander in chief. And commanders have the power to negotiate prisoner exchanges.

“Moreover, from where did this sudden assertion of congressional prerogative spring? After five years of supine acquiescence to President Obama’s multiple usurpations, Congress suddenly becomes exercised over a war power – where its claim is weakest. Congress does nothing in the face of 23 executive alterations of the president’s own Affordable Care Act. It does nothing when Obama essentially enacts by executive order the Dream Act, which Congress had refused to enact. It does nothing when the Justice Department unilaterally rewrites drug laws. And now it rises indignantly on its hind legs because it didn’t get 30 days’ notice of a prisoner swap?

“ 3. The Taliban release endangers national security.

“Indeed it does. The five released detainees are unrepentant, militant and dangerous....

“The administration pretense that we and the Qataris will monitor them is a joke. They can start planning against us tonight. And if they decide to leave Qatar tomorrow, who’s going to stop them?

“The administration might have tried honesty here and said: Yes, we gave away five important combatants. But that’s what you do to redeem hostages. In such exchanges, the West always gives more than it gets for the simple reason that we value individual human life more than do the barbarians with whom we deal....

“So why does the Bergdahl deal rankle? Because of how he became captive in the first place. That’s the real issue. He appears to have deserted, perhaps even defected....

“If he’s a defector – joined the enemy to fight against his country – then he deserves no freeing. Indeed, he deserves killing, the way we kill other enemies in the field, the way we killed Anwar al-Awlaki, an American who had openly joined al-Qaeda. A U.S. passport does not entitle a traitor to any special protection....

“Assume, however...that Bergdahl was not a defector. Simply wanted out – a deserter...Do you bargain for a deserter?

“Two imperatives should guide the answer. Bergdahl remains a member of the U.S. military and therefore is (a) subject to military justice and (b) subject to the soldiers’ creed that we don’t leave anyone behind.

“What to do? Free him, then try him....

“What is impossible to respect is a president who makes this heart-wrenching deal and then does a victory lap in the Rose Garden and has his senior officials declare it a cause for celebration....

“The Rose Garden stunt wasn’t a messaging failure. It’s a category error. The president seems oblivious to the gravity, indeed the very nature, of what he has just done. Which is why a stunned and troubled people are asking themselves what kind of man they have twice chosen to lead them.”

Daniel Henninger / Wall Street Journal

“Barack Obama will be remembered as a president who walked in his own spotlight. Whatever else, he’s been on view all the time. This week it’s the Barack Obama-Bowe Bergdahl deal....

“It is too bad Barack Obama can’t meet the Tank Man of Tiananmen Square. He would learn that sometimes in the affairs of the world, there comes a time to say, enough. Stop.

“This Thursday is the 25th anniversary of the Tank Man’s solitary protest. On June 5, 1989, the morning after the Chinese army crushed the students’ democracy rebellion in Tiananmen Square, with hundreds dead, a man in a white shirt walked in front of the army’s tanks, driving down a street near the square. For a while, he made the tanks stop.

“To this day, no one knows who the brave Tank Man was. But the whole world watched on global television as he stood down the tank commander. When the tanks tried to go around him, he moved in front of them. Eventually, two people came from the crowd and led him away. He was never seen again.

“There are two other anniversaries this week, and both evoke the same idea of taking an unmistakable political stand.

“Friday is the 70th anniversary of D-Day....

“Thursday is also the 10th anniversary of Ronald Reagan’s death. It was Reagan’s decision, early in his presidency, to make the Cold War stop by winning it. In November 1989, the Berlin Wall fell.

“Last week at the U.S. Military Academy at West Point, President Obama gave a speech describing his view of the U.S. role in the world. Any close reading of this speech would fail to identify a ‘situation,’ as we say today about places such as Ukraine, that would cause Mr. Obama to say simply: This must be stopped.

“The president and his supporters would argue, as he has, that the world today is different than the one that existed in 1944 or 1989. An alternative exists, Mr. Obama said at West Point, other than endless war and militarism or doing nothing.

“We straw men whom Mr. Obama set up and knocked down repeatedly in his Military Academy apologia would note that in the past years the space between all or nothing has filled with Russia’s border busting, Iran’s nuclear-bomb project, Syria’s sarin gas, China’s disruptions of its neighbors, North Korea’s threats against South Korea and Japan, Venezuela’s Tiananmen-like crackdown of its democracy protesters, and al-Qaeda subdividing into multiple cells from Asia to Africa....

“Barack Obama in the world resembles Casper the Friendly Ghost – with the U.S. role fading in and out of view as is his wont. Hillary Clinton flew a million miles as Secretary of State with no evident concept of what she was doing or why. John Kerry endlessly slips in and out of capitals, talking. This, they say, is ‘smart power.’

“Smart power just sprung a volunteer POW named Sgt. Bowe Bergdahl for five stone-killer Taliban. No one in the Obama White House, including as always Susan Rice, can give an adequate explanation for what this was all about. Only the president knows. That may work for him. But for everyone else in an unsettled world, not so well.”

Kathleen Parker / Washington Post

“As president – how time flies – Obama has followed through on his campaign promises to end the wars in Afghanistan and Iraq but not to close Guantanamo. Promises are sometimes harder to keep when the facts are in your face. Obama also has increased drone ‘warfare,’ eliminating enemies as well as civilians and at least one U.S. citizen deemed to be a combatant without, shall we say, due process.

“So yes, he is the non-war president, except...and he follows the law and protects the Constitution, unless...and he wants to close Guantanamo, but encountered the same daunting obstacles that George W. Bush did.

“Yes, yes, Bush created the problem. Noted. To the point of this column, however, when Obama was faced with whether to release prisoners in exchange for Bergdahl, he was forced to make an executive decision. And yes, he sidestepped the law requiring 30 days notification to Congress, but the law’s timetable was untenable, given the reportedly narrow window of opportunity. Whether the president indeed had been discussing the possibility with Congress remains a matter of dispute....

“Obama has justified his decision on the basis of precedent – other presidents have released prisoners as wars wind down – and on the principle that we don’t leave our people behind.

“Equivalency is a fragile argument here. Bush’s wars and Obama’s drones are clearly not the same, though you might find those in Afghanistan or Pakistan who would argue otherwise. And George Washington’s release of British prisoners during the Revolutionary War can’t be compared to freeing Taliban warriors. Rather than returning home to reclaim their civilian lives, jihadists likely return even more resolved to continue a war that ends only after everyone on the planet converts to Islam.”

Seth G. Jones / Wall Street Journal

“President Obama’s decision to withdraw troops from Afghanistan by 2016 is a risky step and may embolden Islamic extremists. So could the release of five high-level prisoners from Guantanamo Bay in a swap with the Taliban to win the freedom of Sgt. Bowe Bergdahl.

“The number of al-Qaeda and other jihadist groups and fighters are growing, not shrinking. U.S. disengagement – or even risking the return of terrorists to the field by freeing them from detention – is not the answer to the threat they pose. Instead, U.S. strategy should be revamped, prioritizing American interests and developing a more effective, light-footprint campaign.

“According to new data in a RAND report I have written, from 2010 to 2013 the number of jihadist groups world-wide has grown by 58%, to 49 from 31; the number of jihadist fighters has doubled to a high estimate of 100,000; and the number of attacks by al-Qaeda affiliates has increased to roughly 1,000 from 392. The most significant terrorism threat to the United States comes from groups operating in Yemen, Afghanistan, Pakistan and Syria. Moner Mohammad Abusalha, an American who was a member of the al-Qaeda affiliate organization al-Nusra, blew himself up in Syria on March 29.

“Today the U.S. faces complex, significant threats beyond jihadi terrorism. Russia has invaded Ukraine and threatens America’s NATO allies. China is flexing its military, economic and cyber muscles in East Asia. Iran remains dedicated to developing a nuclear-weapons capability. North Korea, which already has nuclear weapons, is highly unstable....

“The American departure from Afghanistan will most likely be a boost for insurgent and terrorist groups dedicated to overthrowing the Kabul government, establishing an extreme Islamic emirate, and allowing al-Qaeda and other groups to establish a sanctuary. As in Iraq, the withdrawal of U.S. troops does not make the terrorism problem go away. Al-Qaeda and other groups used the breathing space to expand their attacks and spread to neighboring countries like Syria.

“After more than a decade of war in countries like Afghanistan, it may be tempting for the U.S. to turn its attention elsewhere and scale back on counterterrorism efforts. But current trends suggest that the struggle against extremism is likely to be a generational one, much like the Cold War. Developing a long-term U.S. strategy to pursue those groups threatening the U.S. homeland and its interests overseas – including in Afghanistan and Pakistan – would be a good place to start.”

Michael Gerson / Washington Post

“After 5 ½ years, President Obama finally has a foreign policy doctrine all his own, which White House aides summarize as: ‘Don’t do stupid s---.’

“FDR had his Four Freedoms. Harry Truman would stand against the further expansion of communism in Europe. Ronald Reagan would attempt to roll back communism by providing assistance to freedom fighters. Jimmy Carter would use military force, if necessary, to defend U.S. interests in the Persian Gulf. George W. Bush would support the growth of democratic movements and institutions as an antidote to radicalism.

“Obama doesn’t do ‘stupid [stuff].’

“Like any good foreign policy doctrine, it has a number of corollaries. ‘Don’t do stupid [stuff],’ except calling for Syria’s Bashar al-Assad to step down, then doing almost nothing to make it happen – encouraging the creation of a chaotic terrorist haven at the heart of the Middle East. Except drawing a ‘red line’ against the use of chemical weapons, then rewarding Assad with engagement and legitimacy when he actually used them. Except launching a war for regime change in Libya and then failing to do postwar reconstruction, leading to the creation of another terrorist haven. Except failing, after a pathetic attempt, to conclude a status-of-forces agreement with the Iraqi government that might have helped stabilize a key country in a key region. Except needlessly alienating our Canadian ally by refusing to approve the Keystone XL pipeline for political reasons. Except initially poisoning our relations with Israel by demanding a settlement freeze. Except surging troops to Afghanistan while announcing a drawdown date that has encouraged the resistance and patience of the enemy.

“The Obama Doctrine has the virtue of simplicity, but it defies the rhetorician’s art. ‘Let every nation know, whether it wishes us well or ill, that we don’t do stupid s---.’ It is hard to carve the insipid into marble, or to inspire a nation with shrunken ambitions....

“A doctrine of risk aversion [Ed. such as that advanced at West Point] can be justified only by minimizing the seriousness of global challenges and miniaturizing the role of presidential leadership. Was serial risk-aversion effective in the Syrian crisis? Will it effectively deter Russian adventurism? Will it be sufficient in dealing with the rise of China?

“And this is the Obama Doctrine’s most serious problem: Its vapidity is evident to leaders around the world, who are even less inclined to trust or fear the United States when determining their own actions. Which is where the doctrine hits the fan.”

I’ve been holding back on some of my own opinions of the past few weeks and next week I let loose.

Europe and Asia

Before I get to the European Central Bank’s move...the following economic data for the eurozone was released prior to the ECB’s announcement on interest rates and other measures it was taking.

The economy for the Euro-18 continues to recover, though for some nations it is still in fits and starts, while France is flat-out stuck in neutral.

Eurozone GDP in the first quarter was released by Eurostat and it was 0.2% over the fourth quarter of 2013, up 0.9% on an annualized basis.

Germany’s Q1 GDP was up 0.8% (up 2.3% from a year ago), France 0.0% (+0.8% year over year), Italy -0.1% (-0.5% yoy), Spain +0.4% (0.5% yoy), Portugal -0.7% (+1.2% yoy), non-euro U.K. +0.8% (+3.1% yoy)

Yes, that’s the definition of fits and starts.

PMI manufacturing data for May had the overall index for the eurozone at 52.2 vs. 53.4 in April. Italy was at 53.2, Spain 52.9 (49-mo. high), Germany 52.3 (7-mo. low), France 49.6 (4-mo. low). 

[For new readers, 50 is the dividing line between growth and contraction, so the eurozone going from 53.4 to 52.2 in manufacturing from April to May is still showing it in growth mode, while, individually, France is contracting.]

On the critical employment front, for April the Euro-18 jobless rate was 11.7%, down just a smidgen from 12.0% one year earlier and 11.8% in March.

Germany’s unemployment rate is just 5.2% by Eurostat’s calculations (Eurostat being the official statistical arm of the European Union), but France was at 10.4% (10.3% a year earlier), Italy was 12.6% (12.0%, 4/13), Spain 25.1% (down from 26.3%, 4/13), and Greece is at 26.5% (February data...Greece lags a bit).

[Two other unemployment rates of note. Ireland’s is now 11.9%, down from 13.7% a year earlier, while the Netherlands has ticked up from 6.5% to 7.2%, befitting its stagnating economy that saw GDP decline 1.4% in Q1 over Q4, down 0.5% yoy.]

On the distressing youth unemployment front, the eurozone’s rate is 23.5% for April 2014 vs. 23.9% a year earlier. Again, as in the above, little year over year improvement.

Greece has a youth rate of 56.9% (Feb.), Spain 53.5% (vs. 55.5%, 4/13), Italy 43.3% (up from 39.4%, 4/13) and Portugal 36.1%.

But here’s the key figure for the European Central Bank...inflation. 

The flash estimate for May in the eurozone was up just 0.5%, annualized, when it was up 0.7% in April and the ECB’s target is 2.0%. Prices are declining in the likes of Greece and Portugal. Importantly, Germany’s inflation rate for May was only 0.6%.

So, as was well-telegraphed by ECB President Mario Draghi, he was ready to act after policymakers gathered this Wednesday and Thursday and the ECB cut its deposit rate for banks from zero to -0.1%, in order to encourage banks to lend to businesses rather than hold on to the money. The ECB thus became the first major central bank to introduce negative interest rates.

The ECB also cut its benchmark interest rate to 0.15% from 0.25%.

Even though this was expected, it was still bold, though it will take a few quarters before we know the impact of these two moves, let alone others to follow, as Draghi announced long term loans will be offered to commercial banks at cheap rates until 2018. The loans would be capped at 7% of the money they lend to companies, so the more the banks lend, the more money they can borrow cheaply from the ECB. The central bank is also looking into other moves, such as a large asset-buying program (quantitative easing), but no announcement as yet. Draghi insists, however, he will basically do anything necessary to get the economy on firmer footing and prices rising again.

“Are we finished? The answer is no. We aren’t finished here,” Draghi said.

Everything the ECB is doing is aimed at increasing lending to the “real economy.” And avoiding deflation... which would cause consumers to spend less as they wait for prices to fall further before making a purchase. That means even slower growth (or recession), with tumbling demand, layoffs, etc.

Draghi emphasized it’s not just the central bank that has to do its part, but also governments, which must step up reforms, while banks have to lend.

“In order to strengthen the economic recovery, banks and policymakers in the euro area must step up their efforts. Banks should take full advantage of this exercise to improve their capital and solvency position, thereby contributing to overcome any existing credit supply restriction that could hamper the recovery.”

Complicating matters, banks are facing stress tests that have forced many to hoard capital. The new loan program won’t begin until September, with another round in December, thus the reason for saying it will take up to a year to gauge the impact.

What neither Mario Draghi, nor the U.S. Federal Reserve for that matter, want is for their economies to slip into an era like Japan is still trying to pull itself out of. The Bank of Japan began running zero interest rates in 1999, but Japan did not climb out of recession until 2002-03, and hasn’t grown by more than 2% a year since. Deflation continued in Japan until 2013.

---

Just a few other EU economic tidbits....

Spanish Prime Minister Mariano Rajoy unveiled a new stimulus program of $8.6 billion, including a cut in the corporate tax rate to 25% from 30%, as well as credits to small- and medium-sized businesses, and investments in R&D and transport.

Industrial production in Spain rose the most in four years in April, up 4.3% year over year.

In Germany, the data continues to be mixed. Industrial production in April was up 1.8% yoy, less than expected, while exports for the month rose 5.5% over March, good, and factory orders for the month were up 3.1% over March, decent.

In the U.K., house prices, according to the Halifax index, rose 3.9% in May over April, up 11% the past year, continuing the bubble in this sector.

And back to Italy, Matteo Renzi may have done very well in the European Parliament vote, the first time he has been associated with a direct election, but the EU is still pressuring him to reduce Italy’s debt, now above 130% of GDP, while unemployment is at a record high. That means more spending cuts and tax increases, austerity, while Renzi is pleading for breathing space

Meanwhile, in France, the government is upset at the size of the penalty U.S. regulators are trying to wrest from the country’s largest bank, BNP Paribas; at least $10 billion.

Laurent Fabius, France’s foreign minister, said, “This poses a very, very big problem. We are in talks with the U.S. for a transatlantic partnership and this trade partnership can only be established on a basis of reciprocity.” Such a “unilateral” punishment would be “completely unreasonable.”

French officials fear a big fine would erode BNP’s capital base, thus curbing its ability to lend at a time when the economy is struggling mightily. Folks like Fabius are also trying to portray BNP as a threat to the overall European economy.

But there are stories BNP laundered as much as $100 billion out of terror state Sudan over seven years, 2002-09.

On the European Parliament front, post- the elections that represented an “earthquake” of sorts, for the next few weeks the myriad of parties will be attempting to form coalitions, including Marine Le Pen’s National Front, but the biggest immediate issue is selecting the next president of the European Commission and front-runner Jean-Claude Juncker, the former prime minister of Luxembourg, said he will not bow to British Prime Minister David Cameron’s objections to his nomination. Juncker says that as the lead candidate of the center-right European People’s party bloc, which won the most seats in the parliament elections, he has the mandate.

But Cameron has found an unlikely ally in Italy’s center-left prime minister, Matteo Renzi, who said a decision on Juncker should not be rushed.

Cameron needs a new deal to present to the British people (renegotiating the terms of EU membership, including concessions), and he’s warned Britain could “drift towards the exit” without one. Cameron has said if he wins the 2015 national election, he would hold a referendum by the end of 2017 on whether or not to remain in the EU; the prime minister expecting to have wrangled enough concessions by then to keep Britain in the fold.

Turning to China, HSBC’s final PMI on manufacturing for May was 49.4 vs. 48.1 in April, with new export orders at 53.2, which is good. The official government PMI for May came in at 50.8 vs. 50.4 in April.

The reading on the service sector for China was 55.5 last month vs. 54.8 the prior one. The service sector now makes up 43% of the overall economy.

But perhaps a good gauge of the slowdown in China (aside from Macau, see below), is the fact South Korea’s exports to the mainland were down 9.4% in May from a year ago, the worst decline since August 2009, even as exports to Europe surged 32% and were up 4.5% to the U.S.

Meanwhile, it’s worrisome that the U.S. and China are having a bit of a trade war these days, with the U.S. planning to impose additional import duties on Chinese-made solar panels of up to 35.2%.

Beijing, in a particularly angry response, said the U.S. had “ignored the facts” and accused Washington of using trade rules to protect its own industry.

Street Bytes

--The Dow Jones finished up 1.2% to a record 16924, while the S&P 500 added 1.3% to a new high, 1949. Nasdaq gained 1.9%. Aside from the solid economic news, hedge fund titan David Tepper helped the advance with bullish comments after earlier voicing a few concerns, particularly with regards to the European Central Bank, that have since been addressed.

--The German DAX 30 index jumped over 10,000 for the first time ever this week before closing at 9987.

--U.S. Treasury Yields

6-mo. 0.05% 2-yr. 0.40% 10-yr. 2.59% 30-yr. 3.43%

The yield on the 10-year is up 19 basis points in a little over a week after hitting a cycle low of 2.40%. The question is do we now settle back into a trading range of about 2.55% to 2.80%, or is my theory that the market will begin to get concerned over inflation about to be borne out?

Meanwhile, the yield on the 10-year in Spain collapsed to 2.63% and to 2.72% in Italy, after two weeks ago seeing yields substantially over 3.00% in both. It’s about the ECB action, but I am telling you this is nuts. You read the above bit on Italy’s debt, 130% of GDP.

And for the yield on Spain’s 10-year to be all of 4 basis points above that of the 10-year T-Note? C’mon.

Heck, the yield on Greece’s 10-year fell from 6.23% to 5.78% in one day, Friday. Congratulations if you were on the right side of those trades. Now be a good boy and take your profits.

--Bank of America is in talks to pay at least $12 billion in cash and homeowner relief to end its long-running case with the Justice Department that it mis-sold mortgage-backed securities. It paid $9.5 billion to resolve a similar investigation by the Federal Housing Finance Agency in March. Not including this latest probable deal, BofA has already shelled out $26.3 billion in fines and settlements since Jan. 2009. [JPMorgan Chase has coughed up nearly $26 billion as well.]

--From Julie Steinberg / Wall Street Journal

“A tough stretch for Wall Street traders is about to get even tougher.

“Slammed by declining revenue, the trading businesses inside the biggest global investment banks are expected to suffer job losses that could run into the thousands by the end of the year, according to people at the firms and recruiters who specialize in financial-services positions.

“The culprit: a persistent gap between revenue and employment. For the 10 largest global investment banks, trading revenue for fixed-income, currencies and commodities, or FICC, units in the first quarter plunged 15.7% from the same period a year earlier, according to data from research consultancy Coalition. The number of FICC traders, researchers and salespeople, meanwhile, fell just 4.8% over that period.”

At Goldman Sachs Group Inc., the FICC unit accounts for about 30% of its revenue. President Gary Cohn having recently said the dull market environment has made it “difficult” for Street firms.

For the month of May, trading volume on the U.S. major exchanges was the slowest since 2007. Wall Street needs volatility and thus far in 2014, the Dow has made a daily move of 2% or more just once, while it made such moves 10 times by this time of year in 2010 and 33 times in 2009.

--General Motors released an internal investigation into its ignition switch issue that has resulted in at least 50 crashes and 13 deaths, and the report laid out a narrative of incompetence and deceit, but fails to explain how a lone engineer, Ray DeGiorgio, could approve a less expensive part that failed to meet GM standards. Nor does it explain why the same engineer could substitute a part without changing the serial number, which critics see as a sign of a cover-up.

[For his part, DeGiorgio focused on electrical problems that caused the switch to have trouble starting cars in cold weather, over the torque issue, which allowed the car to accidentally switch off.]

The report claims GM executives didn’t know of the problems until January; blaming lower-level employees, 15 of whom were fired, and that there was no sign of a cover-up.

The ignition problem affected about 2.6 million Chevrolet Cobalts and other small cars, mostly 2003 to 2007 models.

According to the automaker’s report, the company didn’t push harder to address the problem because it did not understand it, including the fact it disabled air bags.

CEO Mary Barra, in announcing the findings, said employees did not share enough information.

“If this information had been disclosed, I believe in my heart the company would have dealt with this matter appropriately,” she said.

Barra announced a compensation program for victims and their families to be administered by Kenneth Feinberg, who ran similar funds for victims of 9/11 and the BP oil spill.

Investigations by the National Highway Traffic Safety Administration, the Department of Justice and Congress continue. For starters, even GM strongly hinted the death toll is greater than 13.

--Meanwhile, U.S. auto sales rose 11% in May to a seasonally adjusted annualized selling rate of 16.77 million cars and light trucks, according to Autodata Corp., confirming the rebound since the harsh winter cut demand. Ford’s were up 3%, GM’s 13%, Chrysler’s 17%, Toyota’s 17%, Honda Motor’s 9%, Nissan’s up 19%, BMW’s 17%, VW 15%.

As for Ford’s small increase, it nonetheless represented its best May sales since 2004.

Overall, automakers are headed for their best year since 2006.

--Rising stock markets and home prices lifted U.S. household wealth to a record in the first quarter, up $1.5 trillion to $81.8 trillion.

--My favorite China economic indicator, Macau casino revenues, rose 9.3% in May from a year earlier, far below estimates. In April, the increase was 10.6%. While these are strong numbers, the figures don’t match the 20% monthly gains we were used to seeing and are a further sign of a slowdown on the mainland.

--Australia’s economy grew more than forecast in the first quarter, up 1.1% from the previous quarter, with an annual growth rate of 3.5%, the highest in nearly two years. Mining accounted for around 80% of growth in the quarter, though with China slowing, demand for Australian resources could fall back as it had the past few years.

--Brazil’s economy grew 0.2% in Q1 over Q4, this as the World Cup begins this week. All we can do is sit back and see what happens, off the pitch, that is. How big will the protests be? Brazil has been counting on the month-long event to help spur growth.   Instead it could get something else.

--The Environmental Protection Agency unveiled a plan that will require deep cuts in carbon emission from existing power plants, including a 30% national target by 2030 – from 2005 levels.

The rule will trigger legal challenges, but the president asked the EPA to finalize its plan in June 2015, after which states get a year to craft their own plan, or the EPA could step in with its own version.

Opponents say the proposal will raise consumer prices for electricity, kill jobs and slow economic growth. Wyoming Republic Sen. Mike Enzi said in the GOP’s Saturday radio address that the Obama administration has “set out to kill coal and its 800,000 jobs.”

Many Democratic senators in both coal and oil and gas states aren’t happy, either. And you have Democratic governors like Colorado’s John Hickenlooper and Montana’s Steve Bullock who are ardently pro-fracking.

But a new Washington Post-ABC News poll found that 70% of Americans back federal carbon limits on existing power plants, and 63% - including 51% of Republicans, 64% of independents and 71% of Democrats – said they would be willing to pay $20 a month in order to do so.

Editorial / Wall Street Journal

“President Obama vowed last year that he wouldn’t wait on Congress to bless his anticarbon agenda, and the rule his Environmental Protection Agency proposed on Monday is equal to that promise. The agency is bidding to transform and nationalize U.S. energy the way ObamaCare is doing to medicine, but in this case without even the pretense of democratic consent....

“A Democratic Congress debated and rejected this anticarbon program in 2010, and there isn’t a chance it could get 50 Senate votes now. But no matter, the EPA claims the authority for this seeping power grab by pointing to an obscure clause of the 1970 Clean Air Act called Section 111(d) that runs merely a few hundred words and historically has been applied only to minor pollutants, not the entire economy.

“The new rule is unprecedented because EPA is supposed to regulate ‘inside the fenceline,’ meaning that its command-and-control powers are limited to individual energy generator sources. The agency can tell America’s 3,000 or so fossil-fuel power units to install on-site technology like scrubbers to reduce pollution, but not beyond. Now the agency is taking a ‘systems-based approach’ that usurps state responsibilities in order to move electricity production away first from coal and later natural gas.

“The EPA is claiming states can choose whatever methods they like to meet the carbon targets, from shuttering plants to installing more green sources like wind and solar. But beware of the Obama EPA bearing gifts....

“The EPA...claims that by some miracle the costs of this will be negligible, or even raise GDP, but it is impossible to raise the price of carbon energy without also raising costs across the economy. The costs will ultimately flow to consumers and businesses....

“Almost all economic and human activity has some carbon cost, and the huge indirect tax and wealth redistribution scheme that the EPA is imposing by fiat will profoundly touch every American. Voters should at least have a say and know the price they will pay before ceding so much power to regulators.”

--Hillshire Brands (think Jimmy Dean sausages) received a sweetened bid from Pilgrim’s Pride, $55 a share, topping last week’s $50-a-share offer from chicken giant Tyson Foods. Hillshire initially said it was planning on buying Pinnacle Foods, then Pilgrim’s Pride entered the picture, Tyson trumped it, and now we’re back to Pilgrim.

What’s confusing is Hillshire said it doesn’t have the right to “terminate” the Pinnacle Foods merger. So if I’m confused, imagine all the food items on grocery shelves and in freezers.

“Pssst....what’s going on with this merger talk?”

“I don’t know...but I hope that woman over there selects me...”

--PIMCO’s Total Return Fund suffered redemptions for a 13th consecutive month in May, another $4.3 billion for the world’s largest bond fund. Total assets have now declined from $293 billion to $229 billion. Performance-wise, the fund has lagged its peers badly over the past one- and five-year periods.

--I follow the weather in the Oklahoma Panhandle every day, mainly because of friends farming there, and for the period March 1 through May 18, the region recorded the driest season since 1956; on top of the now multi-year drought conditions that have existed.

--Nothing further to add on the Carl Icahn-Phil Mickelson-Billy Walters insider-trading probe. It seems the Feds blew it when details of the investigation leaked out.

--The U.S. charged a Russian man, Evgeniy Bogachev, with being behind a major cybercrime operation that affected individuals and businesses worldwide. He allegedly launched attacks on more than a million computers for the purpose of stealing personal and financial data.

The prime issue was a strain of malware known as Gameover Zeus and experts urge you to make sure your security software is up-to-date, as well as applying the latest Microsoft updates.

--If California Chrome wins the Belmont, understand that in the previous 11 years where horse racing had a Triple Crown winner, the Dow Jones fell in 8 of them, vs. a 66% winning percentage since the Dow was introduced in 1896. [Michael Driscoll / Wall Street Journal]

Foreign Affairs

Ukraine: Leaders of the G7 insisted Moscow recognize Petro Poroshenko, who takes office as president on Saturday. Russian President Vladimir Putin met with British Prime Minister David Cameron and French President Francois Hollande, and then President Obama, very briefly.

Cameron said after, “We need the Russians to properly recognize and work with this new president. We need de-escalation, we need to stop arms and people crossing the border. We need action on these fronts.”

But de-escalation would be ceding eastern Ukraine to Putin.

Poroshenko and Putin did meet and in a tense exchange agreed to cease-fire talks after Poroshenko is sworn in.

President Obama said, “Given its influence over the militants in Ukraine, Russia continues to have a responsibility to convince them to end their violence, lay down their weapons and enter into a dialogue with the Ukrainian government....if Russia’s provocations continue, it’s clear from our discussion here that the G7 nations are ready to impose additional costs on Russia.”

The Pentagon also announced on Thursday that a small team of American military advisers will head to Ukraine to assess its “mid- and long-term needs for defense reform.” Previously, $23 million in security assistance, including for body armor and night vision goggles, has been provided.

Meanwhile, the fighting continued in eastern Ukraine, with battles over checkpoints in the Donetsk and Luhansk regions. To give you the scope, in one clash near the city of Luhansk, 300 heavily armed separatists opened fire on a building housing a national guard regiment. Six militants were killed but the rebels eventually took control of the building. No word on Ukrainian army casualties. On Monday, 500 militants used rocket-propelled grenades and mortars to assault a border headquarters. Ukrainian officials said they repelled this one.

What’s clear is that combat has intensified (though verifiable casualty counts are impossible to come by), not what the news media would have you believe.  Why? Because many in the media have left! Since we aren’t seeing pictures every day from eastern Ukraine, it’s assumed things have stabilized. Yeah, they have. As in Donetsk and Luhansk are being annexed right in front of our eyes, if only we could see it.

One story I read put it this way: “The gleaming airport terminal that had Kiev a commuter-flight away has been shot to bits, with travel to the capital now marked by a bone-jangling journey past rebel checkpoints.”

Eventually, half the country could be under the banner of Novorossiya – New Russia.

Russian Prime Minister Dmitry Medvedev said the military operations in the east had forced thousands of civilians to flee into Russia, a claim he has made before when there is zero evidence this is the case. Medvedev said 4,000 had already requested asylum. On Wednesday, a Russian children’s rights official said that 7,000 Ukrainians had crossed the border into Russia’s Rostov region in 24 hours.

All bunk...but, granted, Ukraine’s border control is virtually nonexistent after the country abandoned a number of guard bases.

One issue where Ukraine and Russia appear to be closer to an agreement is on the price for Ukraine’s natural-gas supply.

Editorial / Washington Post

“Ukraine’s newly elected president, Petro Poroshenko, got a pledge of support from President Obama in Warsaw yesterday. But in the struggle over Ukraine’s future, Vladimir Putin was looking like the day’s winner. As Mr. Obama delivered another speech in Warsaw on the defense of freedom, Russian-backed forces were staging a major offensive in the Ukrainian province of Luhansk, where they overran a border command-and-control center and a national guard base. According to NATO’s supreme commander, U.S. Gen. Philip M. Breedlove, the insurgents were ‘very well led, very well financed [and] very well organized’ by Russia.

“Mr. Putin’s proxies are tightening their grip over Luhansk and the adjacent province of Donetsk in fighting that has steadily escalated since Mr. Poroshenko’s election.  Yet Mr. Putin not only has paid no price for the aggression – threatened U.S. and European Union sanctions remain on hold – but he was on his way Wednesday to D-Day celebrations in France, where he was invited to meet with the leaders of Britain, France and Germany. Mr. Obama, too, was talking up ‘the importance of maintaining good relations with Russia’ and his hope to ‘rebuild some of the trust’ with Moscow in coming months.

“So Mr. Putin has a foothold in eastern Ukraine, and he is firmly in control of Crimea. A substantial number of Russian troops are still camped on Ukraine’s borders, and irregular fighters and arms are pouring across. But the Russian leader is back to being courted by Western leaders, who are pushing Mr. Poroshenko to find a way to satisfy the Kremlin’s demands.”

Syria: President Bashar Assad won nearly 90% of the vote in the farcical election, Assad thus gaining a new seven-year term. The exiled opposition slammed it for being “illegitimate.” Assad said: “The high turnout was a strong message to the West and the countries implicated in the war on Syria.” Turnout among eligible voters was 73%, according to the government.

This is too much. At least 10 were killed in celebratory gunfire when the bullets fell back to earth, according to the Syrian Observatory for Human Rights.

Of course the election was only held in government-controlled areas. 60% of the country, though, is controlled by rebels.

British Foreign Secretary William Hague called the election an insult. Secretary of State John Kerry labeled it a “great big zero.”

But Russia insisted Syrians voted in “legitimate” polls.

At the G7, a topic of discussion was how to shore up Syria’s borders with its neighbors after an attack on the Jewish Museum in Brussels late last month that is believed to have been carried out by a young French jihadist fighter recently returned from Syria. Arrested in Marseille, Mehdi Nemmouche admitted the killings in a video.

French President Hollande said more than 30 French fighters had already died on the Syrian battlefront. Monday, French police arrested four suspected of having helped recruit volunteers for Islamist networks in Syria.

Current EU counter-terrorism coordinator, Gilles de Kerchove, said EU citizens returning after having fought as Mujahideen in Syria posed the gravest security threat to the EU.

Editorial / Wall Street Journal

“The fear of U.S. and European security officials that Syria is becoming a training ground for homegrown jihadists has received another confirmation. French police on Friday arrested a French jihadist from Syria suspected in the bloody attack on a Jewish museum in Brussels....

“Our ‘realist’ friends have opposed any Western help for the Syrian opposition on grounds that it would prolong the war and assist jihadists. Yet doing nothing to help the nonradical opposition has prolonged the war and helped the extremists recruit jihadists world-wide. Last week the State Department said a young American from Florida conducted a suicide truck bomb attack in Syria while fighting for the al-Qaeda-linked al-Nusrah front.

“The conceit of the anti-interventionists is that if we avoid the world’s conflicts, those conflicts will leave us alone. Syria’s won’t.”

Editorial / Financial Times

“President Assad evidently thinks his international foes are now more concerned about the revival of al-Qaeda in Syria and across its eastern border in western Iraq than about ousting him. He is not wholly wrong. Spies from spooked western capitals are beating a path to Damascus. Yet western policy makers need always to remember that Arab tyrants such as Mr. Assad amount to an assembly line to manufacture jihadis, and that he was responsible for funneling Sunni extremists into Iraq after the Anglo-American invasion of 2003 – using the same routes they now use back into Syria.

“Mr. Assad’s electoral coronation this week wins him more time. But if this is victory it is Pyrrhic in the extreme. More than 160,000 Syrians have been killed, an estimated further 200,000 have died through denied access to medical care, about 10m have been uprooted. Vast areas of cities such as Homs and Aleppo have been razed. Not much is left of an economy already monopolized and looted by the Assad clan. Syria’s reconstruction costs are so far estimated conservatively at $250 billion, and Damascus relies for the huge running costs of the war on a sanctions-hit Iran that does not have infinite billions to spare.

“President Assad has made a wasteland and called it peace. Yet he could eventually fall victim to the rapprochement currently being explored between Iran and the U.S. and its allies. Part of the price of that higher prize for Tehran will be a plausible transition out of the Syrian conflict. That would only be conceivable if Iran finally jettisons the Assads.”

Iran: The International Atomic Energy Agency said Iran has disclosed some past work with explosive components of potential use in triggering nuclear explosions, but Israel’s envoy to the watchdog group, Ambassador Merav Zafary-Odiz, said Iran has abused the U.N. investigation’s “step-by-step” approach, and the “pace of investigation is unacceptable,” as reported by Reuters.

“Iran will continue to provide false explanations and to hide the true nature of its activities,” the ambassador said.

For his part, Ayatollah Ali Khamenei proclaimed in a speech marking the 25th anniversary of the death of Ayatollah Khomeini, that a “military attack is not a priority for Americans now.”

“They realize that military attacks are as dangerous or even more dangerous for the assaulting country as they are for the country attacked,” the ayatollah said.

Khamenei was responding to Obama’s West Point speech, in essence saying Obama was chicken.

Iraq: In a further sign of the deteriorating situation in this country, “Hundreds of Sunni militants stormed the central Iraqi city of Samarra early Thursday, taking control of neighborhoods and government buildings in a siege that provoked a panicked government counteroffensive to prevent the loss of the town.” [Kareem Fahim / New York Times]

The government later claimed to have routed the insurgents, but this was in dispute. Hardline Islamists continue to control the western city of Falluja, for example, six months after entering it.

The U.N. reported on Sunday that violence claimed 799 Iraqis in May, the highest monthly death toll of the year. [603 civilians, 196 members of security forces.]

Israel: A poll by the Israel Democracy Institute and Tel Aviv University showed 49% of Israeli Jews and 72% of Israeli Arabs disagree with the idea that “Israel should officially annex the areas that are important to it for settlement and security in Judea & Samaria,” but 43% of Israeli Jews and 18% of Israeli Arabs agreed with the statement.

Most Israeli Jews (60%) oppose unilateral withdrawal from substantial parts of the West Bank, while 25% supported it.

Despite indications the U.S. blames Israel for failed peace talks, 64% of Israelis do not think the U.S. is scaling back its support for Israel. [Jerusalem Post]

The above is important as this week we saw the swearing in of the new Fatah-Hamas unity government, “terrorists in suits,” as Israeli Economic Affairs Minister Naftali Bennett put it. Bennett wants to see parts of the West Bank formally annexed in response. Israeli Prime Minister Benjamin Netanyahu wants to negotiate a final status agreement with the Palestinians, but he’s said such talks are impossible if Fatah aligns itself with Hamas. When Fatah announced the unity government was pending, Israel suspended talks with the Palestinians.

Netanyahu, according to the Jerusalem Post, is waiting for the moment when it becomes clear negotiations with the PLO is impossible before weighing options such as Bennett’s.

Egypt: Former army chief Abdel Fattah al-Sisi was officially declared president on Tuesday with 96.9% of the vote. He is being inaugurated early this coming week. So let the fun begin!

Afghanistan: Presidential frontrunner Abdullah Abdullah survived an assassination attempt on Friday, with a suicide bomber hitting his convoy and killing six people. Abdullah didn’t miss a beat. His run-off with Ashraf Ghani is still slated for June 14.

China: The rhetoric was flying between Washington and Beijing this week, with the Pentagon on Thursday saying China was modernizing its air force on an “unprecedented” scale and is “Rapidly closing the gap with western air forces.” The annual report on China’s capabilities pointed not only to advances in its aircraft, but also its use of jamming communications and electronic warfare.

The Pentagon said China is spending about $145 billion on its military, far higher than the $119.5 billion figure Beijing trumpets.

Last weekend, at a major regional security conference, Defense Secretary Chuck Hagel accused China of coercive tactics in the East and South China Seas, while Wang Guanzhong, deputy chief of the Chinese general staff blasted Hagel in turn.

Hagel said of the maritime conflicts: “These stakes are not just about the sovereignty of rocky shoals and island reefs, or even the natural resources that surround them and lie beneath them. They are about sustaining the Asia-Pacific’s rules-based order....

“China has undertaken destabilizing, unilateral actions asserting its claims in the South China Sea.”

Japanese Prime Minister Shinzo Abe said of China after a near-miss between Chinese and Japanese military aircraft close to the Senkaku islands (Diaoyu in China):

“We do not welcome dangerous encounters by fighter aircraft and vessels at sea. What we must exchange are words.”

But Fu Ying, chairwoman of the Chinese legislature’s foreign-affairs committee, accused Abe of engineering a crisis over disputed islands so as to create a “myth...that China as a country is posing a threat to Japan as a country.”

Then Chinese Lt. Gen. Wang, the deputy chief of general staff, told the audience at the regional defense conference in Singapore that Hagel’s speech was “full of hegemony, full of words of threat and intimidation,” and part of “a provocative challenge against China.”

Wang added: “The speeches by Mr. Abe and Mr. Hagel gave me the impression that they coordinated with each other, they supported each other, they encouraged each other and they took the advantage of speaking first....and staged provocative actions and challenges against China.”

Maj. Gen. Zhu Chenghu said in an interview with the Chinese media: “The Americans are making very, very important strategic mistakes right now. If you take China as an enemy, China will absolutely become the enemy of the U.S.” [Wall Street Journal / Financial Times]

Meanwhile, Vietnam released dramatic footage showing a large Chinese ship chasing and sinking a Vietnamese fishing boat near an oil rig in contested waters in the South China Sea, a May 26 incident that Hanoi decried an “inhuman act.” 10 fishermen on board were rescued by nearby vessels. Vietnam claims China has damaged 24 Vietnamese law enforcement vessels since the stand-off began in early May.

The oil rig is positioned in the vicinity of the contested Paracel Islands. A Vietnamese official said “Every day, China has between 30 and 137 boats around the oil rig, including six warships.” [South China Morning Post]

Separately, a report in Defense News talked of a U.S. National Defense University study that notes the People’s Liberation Army could turn to nuclear-tipped cruise missiles to counter U.S. Navy carrier strike groups. Former U.S. Navy Rear Adm. Michael McDevitt said he believes China “is likely already ‘arming nuclear attack submarines with nuclear-tipped cruise missiles.’” [Ed. there is no evidence of this as yet, however.]

On the pollution front...Terrence McCoy / Washington Post

“It’s so bad that in Zhejiang province last year a fire burned for three hours at a factory before locals noticed anything was amiss. It’s so bad that visibility in Harbin dropped to 10 meters last October, shuttering schools and the airport. It’s so bad that bags of mountain air were shipped into Zhengzhou last March, and contented-looking locals breathed deep like Mel Brooks in ‘Spaceballs.’ So bad that a glass jar of French air sold for $860. So bad that cans of fresh air are going for 80 cents and the millionaire who manufactured them claims he’s sold eight million.

“The smog is only the beginning. More than 20% of China’s farmland is polluted. You can’t drink 60% of its water supply. [Ed. I’d call it virtually 100%.] In Northern China, air pollution can shorten lifespans by nearly six years. Nearly two-thirds of the nation’s wealthy are thinking of leaving the country. Beijing’s concentration of PM2.5 – particles small enough to infect both the bloodstream and penetrate the lungs – hit a staggering 505 micrograms per cubic meter earlier this year. The World Health Organization’s recommended level: 25.

“China is killing itself. And it knows it.”

Finally, June 4 represented the 25th anniversary of the Tiananmen Square protests and massacre. Security was super tight in Beijing and there were no big incidents. Government censors crawled over the Internet and Google experienced significant service disruptions, with many sites being inaccessible. The Wall Street Journal said its English- and Chinese-language websites have been blocked since Saturday.

Chinese media are forbidden from mentioning the 1989 democracy movement. Many foreign journalists were warned not to report from the square.

But in Hong Kong, as many as 180,000 descended on Victoria Park to commemorate the date, calling for democracy. [Police put the crowd at 100,000.] As reported by the South China Morning Post, many traveled from the mainland to attend the event.

Finally, in its overall war on terrorism, Beijing police have dispatched 650 K9 teams to patrol the streets. Dogs are now being given a greater role, instead of just patrolling airports and railway stations.

According to The Beijing News, the dogs are said to be trained to go after specific parts of a suspect’s body under police officers’ instructions. “And once unleashed, they are able to tear along at speeds up to 40km/h.” [German shepherds, sports fans.]

North Korea: State media Friday said authorities had detained a U.S. tourist who committed “hostile acts” against the country during a tour. Jeffrey Edward Fowler entered the country on April 29. A brief statement didn’t specify the alleged crimes. Two other Americans also continue to be detained here.

Separately, the European Union on Wednesday said it was worried Pyongyang was getting closer to producing compact nuclear arms that can be fitted to missiles; obviously a serious breakthrough. The North is also fully prepared to conduct its fourth nuclear test; it’s just a matter of when is the politically expedient time to do so.

For those who believe the Orcs can fit a warhead on something like a medium-range Rodong ballistic missile, the issue is how the warhead would perform after re-entering the Earth’s atmosphere, according to Arms Control Today.

Russia: In an interview with the French media, President Putin said he expected France to honor a contract to sell it two Mistral helicopter carriers, a $1.6 billion deal that was agreed to before the crisis over Ukraine began. France is under big pressure to reconsider it.

And we learned this week that back in April, a Russian Su-27 fighter jet intercepted a U.S. surveillance plane off Russia’s east coast near Japan, flying within just 100 feet of the U.S. plane’s nose before flying off...an incredibly dangerous move. The Pentagon didn’t disclose the incident until this week, though, and gave no reason for the delay.

Nigeria: Remember the missing schoolgirls? How quickly we forget. No news.

But Boko Harma continued with its killing. In one instance this week, it slaughtered an estimated 200 civilians in three communities in the northeast of the country, with witnesses saying the military failed to intervene. The army was called when villagers in one district learned they were about to be attacked and nothing happened.

Separately, Nigerian media reported 10 generals and five other senior military officers had been tried before a court martial for supplying arms and information to Boko Haram. The military disputed the reports. [BBC News]

Ireland: The country has been roiled following an investigation into a home for unmarried mothers run by nuns where evidence suggests 796 children, from newborns to eight-year-olds, may have been buried without coffins or gravestones; the Catholic-run home having operated from 1925 to 1961. Death records were uncovered showing the children died from malnutrition, pneumonia and infectious diseases. This was at a time when women who became pregnant outside of marriage were labeled “fallen women” and ostracized by their own families, so they had nowhere to turn but to the homes run by nuns.

One of the many issues is if there are more homes with, in essence, mass graves, such as the one in Tuam. [Strongly suspected.]

Venezuela: As reported by Bloomberg, not only do residents in Caracas struggle to find toilet paper and deodorant, among other consumer goods, there is another serious shortage – drinking water. People wait in long lines at grocery stores for bottled water as soon as deliveries are made. Currency controls are the major cause. The central bank hasn’t provided data on product scarcity since January, when it said 28% of basic goods were out of stock at any given time.

Qatar: So the holders of the five Taliban commanders exchanged for Bowe Bergdahl have an issue of a different kind. There is zero doubt it bought votes leading up to the selection of Qatar as the host of the 2022 World Cup. The Sunday Times of London obtained millions of secret documents – emails, letters and bank transfers – which it alleges are proof a former Qatari football official made payments totaling $5 million to officials in return for their support for the Qatari bid.

There is also no doubt a new vote will have to be held. Fifa, meeting in Sao Paulo next week ahead of the June 12 start of the World Cup, may make a decision on this topic next week.

Spain: King Juan Carlos announced he was abdicating after nearly 40 years on the throne.

“A new generation must be at the forefront...younger people with new energies,” the 76-year-old king said. 

His son, Crown Prince Felipe, 45, will take over.

Juan Carlos’ reputation had been a good one over the decades, but in the past few years he has been tarnished by a corruption investigation into the business dealings of his daughter and her new husband, while Juan Carlos lost support after it was revealed he spent lavishly on an elephant hunting trip in April 2012, in the middle of Spain’s financial crisis.

Many in Spain wonder if the king’s move will be enough to save the monarchy.

Random Musings

--The VA scandal continues. Officials at a VA medical center in Albuquerque say as many as 3,000 patients were assigned to a doctor who didn’t actually see them, according to Congresswoman Michelle Lujan Grisham, (D-N.M.). It wasn’t clear how long they waited to be assigned to one that did see them.

But in the post-Shinseki era, real reform is needed, not just stopgap measures.

Editorial / Wall Street Journal

“Instead of paying for shorter delays, a better option is to fix the structure that causes delays. That means decentralizing the VA and selling off most of the institution. There is no medical or biological reason that former soldiers require special hospitals for routine treatments or even most complex conditions. The VA can prioritize specialized care for combat trauma and rehabilitation unique to military service, insurance vouchers for vets can replace socialized medicine, and markets will discipline a now-unaccountable bureaucratic culture.

“Such a privatization is unlikely given the political sensitivities, the power of veterans interest groups and the fact that liberals consider the VA a health-care model. But perhaps if Congress thinks more creatively than usual, the outcome will be better than another cosmetic VA renovation that guarantees disgraces for the next Administration.”

Well, on Thursday, senators announced a sweeping bipartisan agreement to address several issues at the VA with the hope the full Senate will vote on it as early as next week, whereupon it would be sent to the House, which has passed at least nine measures in recent months to improve veterans’ education/employment and health care.

The Senate agreement, among other things, would allow veterans who live more than 40 miles from a VA facility or who are experiencing long wait times to seek care at other government or private medical facilities, as well as a provision for providing $500 million for the VA to hire more doctors and nurses.

As Republican Sen. John McCain said, “This is not a perfect document,” but while he invited both sides to propose amendments, he begged them not to delay consideration of the bill.

“Can we sort of pledge that we are committed to seeing this all the way through? I would urge our colleagues to do that. Let’s not get hung up on certain other aspects of our differences that most people would view as gridlock in this body.” [Ed O’Keefe / Washington Post]

--Mississippi Republican Sen. Thad Cochran was forced into a runoff Wednesday against tea party challenger Chris McDaniel in what has been the nastiest primary fight this spring. The runoff takes place June 24, with McDaniel receiving 49.5% of the vote to Cochran’s 49%.   While other tea party challengers have been swept aside this campaign season, Cochran could be the first establishment GOP candidate to meet his end.

Cochran is 76 and has been in the Senate since 1978.

--In California, Neel Kashkari won the right to challenge Gov. Jerry Brown in November, defeating rival GOP candidate Tim Donnelly.

Kashkari, a former assistant U.S. Treasury secretary, has never held elective office. He has no money in his campaign coffers, while Brown has collected $20 million.

--Former New York City Mayor Michael Bloomberg’s commencement address at Harvard University, May 29:

“Repressing free expression is a natural human weakness, and it is up to us to fight it at every turn. Intolerance of ideas – whether liberal or conservative – is antithetical to individual rights and free societies, and it is no less antithetical to great universities and first-rate scholarship.

“There is an idea floating around college campuses – including here at Harvard – that scholars should be funded only if their work conforms to a particular view of justice. There’s a word for that idea: censorship. And it is just a modern-day form of McCarthyism....

“In the 2012 presidential race, according to Federal Election Commission data, 96% of all campaign contributions from Ivy League faculty and employees went to Barack Obama.

“Ninety-six percent. There was more disagreement among the old Soviet Politburo than there is among Ivy League donors....

“When 96% of Ivy League donors prefer one candidate to another, you have to wonder whether students are being exposed to the diversity of views that a great university should offer.”

--Walter Russell Mead / Washington Post...balanced assessment of Hillary Clinton as Secretary of State:

“Clinton was an influential secretary of state and a savvy manager with a clear agenda that, at least in part, she translated into policy. So how did it all work out?

“The answer: Historians will probably consider Clinton significantly more successful than run-of-the-mill secretaries of state such as James G. Blaine or the long-serving Cordell Hull, but don’t expect to see her on a pedestal with Dean Acheson or John Quincy Adams anytime soon.

“She weighed in hard and strong in favor of the president’s risky but ultimately justified decision to attack Osama bin Laden’s last refuge. The focus on Asia – relabeled a ‘pivot’ before it became a ‘rebalancing’ – reinvigorated America’s Pacific alliances but also elicited a more aggressive China, which has taken a harder line with Japan, the Philippines and Vietnam since the pivot began. The ‘reset’ with Russia enabled concrete cooperation on Iran’s nuclear program and at the United Nations (notably on the resolution authorizing intervention against Libya’s Moammar Gaddafi), but it would be hard to argue that Washington and Moscow have ended up in a good place. Here again the rhetoric of the ‘pivot to Asia’ may have encouraged Putin to think that the United States was taking its eye off Russia’s revisionist ambitions....

“If Burma was a success of the Clinton approach, Egypt and Libya were sobering failures. Except in Tunisia, U.S. efforts to promote democracy after the Arab Spring were largely unsuccessful, with Egypt a particularly dramatic case. But the greatest problem for Clinton’s legacy is likely to be the miserable aftermath of the U.S.-backed overthrow of Gaddafi. Here, advocates of the Libya mission failed to take seriously one of the most important lessons of Iraq: When you overthrow a dictator in the Arab world, expect chaos and violence to follow. The mess in Libya – besides leading to the Benghazi attack that has entangled Clinton in congressional investigations and conspiracy theories – strengthened the voices in the administration opposing the more activist Syria policy Clinton promoted. It also deepened public resistance to more use of American military power abroad. This is not the legacy Clinton hoped to leave behind....

“The verdict? Clinton brought a clear vision of U.S. interests and power to the job, and future presidents and secretaries of state will find many of her ideas essential. Yet she struggled to bring together the different elements of her vision into a coherent set of policies. The tension between America’s role as a revolutionary power and its role as a status quo power predates Clinton; the struggle to reconcile those two opposed but equally indispensable aspects of American foreign policy has survived her tenure at the State Department.”

--The Death toll from Ebola in Guinea hit 208. 21 died and 37 new cases were found between May 29 and June 1, alone. 16 others have died in Sierra Leone and Liberia.

--Yes, the Atlantic hurricane season is expected to be a light one, but it’s amazing that since the hyper-active 2005 season, the U.S. has not had a major hurricane (CAT 3 or higher) make landfall since that October...or about 3,148 days, with the previous longest span being 2 ½ years shorter, as reported by Brian McNoldy of the Washington Post.

--Gwynne Shotwell, president of Space Exploration Technologies Corp. (Elon Musk’s company), said failure to invest in the next frontier of human space travel would be both a “big disappointment” and a danger to mankind.

“It’s really risk management for humans,” said Shotwell, in addressing the Washington-based policy group, the Atlantic Council. “I’m pretty sure there will be a catastrophic event, and it would be nice to have humans living in more than one spot.” [Jonathan D. Salant / Bloomberg]

Boy, if you read a piece in the June 9 issue of TIME magazine on the number of asteroids NASA is tracking, 600,000, and understand how many we could miss, with catastrophic consequences, you’d be going ‘Amen’ on the topic of expanding our space program, now.

The National Research Council issued a report recommending that the U.S., and its international partners, set a goal of going to Mars.

“For the foreseeable future, the only feasible destinations for human exploration are the moon, asteroids, Mars, and the moons of Mars,” Jonathan Lunine, co-chairman of the committee behind the report, said in a statement. “Among this small set of plausible goals, the most distant and difficult is putting human boots on the surface of Mars, thus that is the horizon goal for human space exploration.”

Alas, this isn’t likely to happen in my lifetime. Mitch Daniels, committee co-chair and president of Purdue University, said: “Any human exploration program will only succeed if it is appropriately funded and receives a sustained commitment on the part of those who govern our nation. That commitment cannot change direction election after election.”

Back to SpaceX, the company’s previously announced Dragon V2 craft is the first the U.S. has built for manned space travel since the end of the shuttle program, and Elon Musk is targeting a launch by 2017. So fret not, kids, about Russia making waves they will cut the U.S. out by 2020 if we haven’t come up with an alternative to their $70 million taxi rides to the Space Station.

Plus others, including Boeing, Sierra Nevada and Blue Origin, are vying to be the first commercial outfit to take astronauts to space by 2017 and probably earlier.

--Pope Francis dismissed the entire board of the Vatican’s financial regulator as part of his sweeping reform and anti-corruption program at the Vatican bank. The Italian, five-person Financial Intelligence Authority is being replaced with four international experts from Italy, Singapore, Switzerland and the U.S.

--Maureen Dowd in her New York Times column described a scary experience eating a pot candy bar while reporting on legalized marijuana in Colorado. Sitting in her Denver hotel room, she nibbled on the bar.

“For an hour, I felt nothing...But then I felt a scary shudder go through my body and brain. I barely made it from the desk to the bed, where I lay curled up in a hallucinatory state for the next eight hours.”

The high wore off “distressingly slowly.”

“I had been convinced that I had died and no one was telling me.”

A medical consultant later told Dowd that inexperienced users should cut such a bar into 16 pieces, but Dowd said there was nothing of the kind on the packaging label.

The Rocky Mountain Poison Center reported a statistically significant increase in the number of parents calling the poison-control hotline to report their kids had consumed pot.

--Kathleen Parker / Washington Post...on Michelle Obama’s “Let’s Move!” program and her focus on whole foods.

“Mrs. Obama could suggest that parents prepare their children’s meals.

What?! You’ve got to be kidding! We’re too busy!!

“Since when were we too busy to scramble an egg or toast a slice of bread?....

“When it comes to home food preparation, the very poor need extra help, obviously, but quality nutrition, as most important things, begins at home. And for a majority of people, the cost is not prohibitive. Using data from the Bureau of Labor Statistics, we find that a piece of toast spread with peanut butter and topped with sliced banana – a filling breakfast loaded with protein, carbohydrates and potassium, among other nutrients – costs on average about 50 cents.

“We can’t all have a chef or send our children to private schools with meatier lunches, as the Obamas do. But we can feed our children for less trouble and money than some think. Maybe the first lady can modify her message along with our menus: Cook for your kids and they’ll grow smart and strong.”

--According to a report by the National Council on Teacher Quality, 1 in 6 teachers was “chronically absent” during the 2012-13 school year and accounted for about one-third of all teacher absences. Chronically absent is 18 days or more of a school year.

This is shocking.

But Randi Weingarten, president of the American Federation of Teachers, said, “While some, no doubt, will find fault with teachers in this attendance report, an overall 94% attendance rate shows the extraordinary dedication of teachers across the country, who come to school each day ready and excited to teach.” [Caroline Porter / Wall Street Journal]

Cough cough.

--Daniel Henninger above alluded to the 10th anniversary of Ronald Reagan’s death, June 5, 2004.

From Reagan’s televised address in 1964 for Republican nominee Barry Goldwater:

“You and I have a rendezvous with destiny. We’ll preserve for our children this, the last best hope of man on earth, or we’ll sentence them to take the last step into a thousand years of darkness.”

June 6, 1984, the 40th anniversary of D-Day, Reagan paying tribute to those who helped liberate Europe:

“These are the boys of Pointe du Hoc. These are the men who took the cliffs. These are the champions who helped free a continent. And these are the heroes who helped end a war.”

Jan. 28, 1986, following the explosion of the space shuttle Challenger:

“We will never forget them, nor the last time we saw them, this morning, as they prepared for their journey and waved goodbye and ‘slipped the surly bonds of earth’ to ‘touch the face of God.’”

--Finally, on this big anniversary of D-Day, James Jay Carafano of the Heritage Foundation:

“It is more than trite, but also more than true, to say that freedom isn’t free. D-Day was more than a liberation. It was a reminder that as long as there is evil in the world, America must always be prepared for more D-Days.

“The nation’s leaders have the responsibility to put forces in harm’s way only when it is absolutely necessary – to use military force with prudence and judgment.

“It is the nation’s responsibility to respond to the call with courage and commitment. That is the lesson of all our D-Days.”

Bob Dole / Washington Post

“Of 16 million World War II veterans, about 1 million survive. More than 500 die each day. Next year, for the first time since D-Day, three will be no World War II veterans in Congress....

“When I talk to veterans and other Americans during my frequent visits to the National World War II Memorial, I hear a refrain that may constitute the most important lesson of the war: Our nation must not become complacent. We cannot rest on the laurels that adorn this and other monuments. We must remain strong and vigilant. May God continue to bless the United States of America.”

For all those who died on the beaches of Normandy:

Think not only upon their passing...Remember the glory of their spirit.

---

Gold closed at $1252
Oil $102.66

Returns for the week 6/2-6/6

Dow Jones +1.2% [16924]
S&P 500 +1.3% [1949]
S&P MidCap +2.4%
Russell 2000 +2.7%
Nasdaq +1.9% [4321]

Returns for the period 1/1/14-6/6/14

Dow Jones +2.1%
S&P 500 +5.5%
S&P MidCap +5.1%
Russell 2000 +0.1%
Nasdaq +3.5%

Bulls 62.2
Bears 17.4 [Source: Investors Intelligence...reminder, contrarian indicator. Current spread is major-league danger territory, but, again, it can last a long time.]

Dr. Bortrum has a new column up.

Have a great week. I appreciate your support.

Go California Chrome!

Brian Trumbore