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11/29/2014

For the week 11/24-11/28

[Posted 12:00 AM ET]

Edition 816

Washington and Wall Street

It was a depressing week, owing to the events Monday night in Ferguson, Missouri, plus a storm that hampered the plans of millions on the busiest travel day of the year. Overseas there were a slew of terror attacks, including one in Kenya that makes you wonder all over again just what kind of world we really live in these days. [Hint: It’s only getting worse.]

But stocks rose a sixth straight week, even if fractionally for the Dow Jones and S&P 500, while the price of crude oil collapsed. More on this in a bit.

On the data front, the week started off with the first revision to third-quarter GDP and it came in far hotter than expected, up 3.9% when the forecast was for a decrease from the flash estimate of 3.5% to 3.2%.

So couple the 3.9% with the second quarter’s 4.6% rise and this represented the biggest back-to-back advances for GDP since late 2003.

There were some potential warning signs, though, as consumer spending, which you all know represents 2/3’s of the economy, rose a modest 2.2% annualized in Q3 vs. a 2.5% pace in Q2. And on Wednesday there was a slew of data for October, including a poor reading on durable goods, -1.3% ex-aircraft, which is a core reading, while personal income, +0.2%, and consumption, also +0.2% for last month, were lighter than forecast.

New home sales for October were also below expectations, just 458,000 on an annualized basis, while the S&P / Case-Shiller home price index for September was up 4.9% year over year on the 20-city barometer, down from August’s 5.6% 12-month increase.

There’s just lackluster demand in housing these days, though also improved affordability with still historically low mortgage rates.

[One other item of note...the November Chicago Purchasing Managers Index was a solid 60.8, but it too didn’t meet analysts’ forecasts.]

Then there was the price action in oil. Last week, West Texas Intermediate (the figure I quote at the end of each WIR) broke a seven-week slide, finishing at $76.81 on Nov. 21. This week the collapse resumed and oil went cascading down below $70.00 a barrel to finish the week at $66.15...down a whopping 14% on the week, with the price having fallen over $40 since the mid-June weekly closing highs of nearly $107.00, or off about 38% in five months.

Early in the week we learned that U.S. imports of crude oil from OPEC nations are at the lowest levels in almost 30 years, according to a Financial Times analysis of Department of Energy data, with OPEC’s share dropping to 40%, the lowest since May 1985. At its peak, 1976, OPEC represented 88% of U.S. oil imports.

With U.S. domestic production at about 9m barrels a day, the highest level since the mid-1980s, and demand expanding eastward, producers from the Middle East, west Africa and Latin America are increasingly turning towards Asia; though the U.S. is still the second-largest net oil importer after China. [Anjil Raval / Financial Times]

Secondly, OPEC members met in Vienna this week and a number of things happened. Prior to the meeting, executives from non-OPEC Russian energy companies met with the cartel in the hopes OPEC would cut production, and/or Russia would do the same to boost prices, but Russia left quickly empty-handed.

Then on Thursday, OPEC ministers decided not to cut production levels to stem the price collapse. 

Abdalla Salem el-Badri, OPEC’s Libyan-born secretary general, brushed aside concerns about too much oil on the market leading to declining prices, saying OPEC was looking for a fair price and does not target a maximum or minimum one.

“We are not trying to send signals to anybody,” el-Badri said, in a reference to geopolitical considerations should the price continue to fall. “We should not rush or panic, we have to wait for the market to settle. The decline in prices that we have seen does not reflect fundamentals.”

But then the price promptly fell about $8 after the announcement. OPEC’s poorer members, such as Venezuela and Nigeria, let alone Iran, which is dealing with sanctions that have limited its exports, and non-member Russia, are suffering badly with the decline in revenues.

Liam Denning, writing in the Wall Street Journal’s “Heard on the Street” column, said “It will likely be years before we see triple-digit oil again.

“Saudi Arabia, the de facto leader of (OPEC), has a beef with a number of oil-market participants. It also appears to have woken up to the fact that OPEC has once again lost its grip on prices.

“Saudi Arabia’s chief antagonist is fellow OPEC member, and main geopolitical rival, Iran. Lower oil prices squeeze Iran’s finances and capacity to oppose Riyadh’s aims in regional warzones such as Syria. As an added bonus, lower oil prices also hurt non-member Russia, another antagonist....

“Beyond geopolitics,” continues Denning, “Saudi Arabia must simply try to reassert its primacy in the market. For much of the past decade, OPEC seemed to be in the driver’s seat. In reality, high prices, particularly in recent years, partly reflected OPEC’s inability to ensure adequate supply in the face of strong demand from emerging markets such as China. The eventual result is as old as commodity markets themselves: efforts to mitigate demand and a surge in alternative supplies, especially from the U.S....

“(For the Saudis), cutting output might juice oil prices in the short term, but would also give U.S. producers an incentive to keep drilling and consumers to keep conserving. What is more, many OPEC members, along with Russia, would free-ride off others’ cuts and keep pumping.”

So for the Saudis it’s about credibility, plus they’ve been using the days of $100+ oil to build up their foreign exchange reserves. They can weather a period of much lower prices. Others can’t. The Saudis want to slow shale development and undermine conservation efforts, and they will on both fronts.

As the meeting in Vienna adjourned, there was no talk of any extraordinary sessions before the next scheduled gathering in June, though this can change.

I have been writing for weeks now that some analysts were getting too cocky when it came to America’s producers’ ability to withstand a big decline in prices, particularly for shale projects. I wrote last week, before the latest downdraft, that a “renewed decline (in prices) due to slower economic growth, both here and abroad, will do a number on the likes of North Dakota, which at some point will be yet another classic example of boom and bust.”

I also noted how Deutsche Bank warned “that if oil fell to $60, there could be a 30% default rate among borrowers in the energy sector, who loaded up on debt to fund their operations and acquire new acreage in states like North Dakota.”

People who ignore history do so at their peril. While I haven’t been to North Dakota in about ten years, I am very familiar with some of the towns where the boom has transpired the past five...the rush to build housing for the flood of workers, new schools, the strain on city services, higher crime rates, fast-food workers making $20 an hour because of the labor shortage, etc. I’ve seen the stories on the network news and read a slew of articles on same.

I also remember a time in the summer of 1978 when I was between my sophomore and junior years in college and sold books door to door in Oklahoma and Kansas. One day my sales partner and I drove to the little town of Maud, Oklahoma, outside Shawnee, to try and pick up some sales. Within an hour we realized we were in a virtual ghost town, a once booming oil town that had long gone bust, and instead we ended up in a trailer that had been converted into a bar...but that’s a different story.

The point being boom and bust cycles occur endlessly in the commodities sector and while I have no idea if we are entering an official ‘bust,’ or if crude will rally back to the $80s and settle there for a spell, at which point everyone would breathe a sigh of relief, at some point the likes of North Dakota are going bust.

And while that may be good for most U.S. consumers, who pick up some extra cash to spend with lower prices at the pump, you all know the energy sector has been fueling the economic recovery, so what has been a nice run of GDP figures, save for the first quarter’s weather-related debacle, could reverse on a dime in the other direction.

It’s also not necessarily a good thing that Russia is getting absolutely crushed. There is no telling how Vlad the Impaler will react. I’ve felt for years Putin would be pushed out by his long-time crony, Igor Sechin, who runs energy behemoth Rosneft.

Just last year, 2013, Sechin spent $55 billion to acquire competitor TNK-BP, creating a giant that pumped almost 5% of the world’s total crude.

But with the plunge in prices, the entire Rosneft operation, including TNK-BP, is worth far less than the $55 billion Sechin paid for the latter!

Rosneft has huge amounts of debt to repay, like to the tune of $60 billion, and Sechin has been asking his buddy Putin to dig into the treasury to help him out.

It’s going to get very complicated, and increasingly messy. According to Bloomberg, $30 billion of Rosneft’s debt comes due by end of 2015 and this is but a microcosm of many companies, globally, in the sector.

But for now, enjoy the decline at the pump. Treat yourself to a nice meal, a play, a sporting event, some premium beer. Just remember there will be some potentially scary costs to the immediate benefits many of us are reaping.

Europe and Asia

Turning to Europe, the Organization for Economic Cooperation and Development (OECD) said the euro area may be stuck in persistent stagnation. The GDP of the euro-18 nations is still below its pre-crisis peak, compared with the U.S. and U.K. that have handily surpassed theirs.

The OECD said the euro area “will remain weak because of still-high public and private debt, tight credit conditions and high unemployment.” Plus there is no shortage of geopolitical risks in Eastern Europe.

So the OECD is calling on the European Central Bank to introduce “additional stimulus measures to keep long-term interest rates constant over the coming two years,” stepping up asset purchases, as reported by BBC News.

And that is what the ECB has been stating it will do, with Vice President Vitor Constancio saying this week that the ECB will likely begin buying sovereign debt in the first quarter. ECB President Mario Draghi has said his desire is to revive inflation “as fast as possible.”

So with the ECB gathering next week for another session of the Governing Council, amid the expectation of a further announcement on specifics, yields collapsed to new record lows across euroland.

The yield on the German 10-year bund finished the week at 0.70% (vs. the yield on the U.S. 10-year of 2.17%). France’s paper is at 0.97%. Spain’s down to 1.89%. Italy finished the week at just 2.03%. Portugal 2.83%.

Only Greece continues to suffer because of ongoing political and financial concerns and its 10-year yield has been rising anew, back up to 8.13%.

I’m sticking with my prior statement that you are playing with fire in the euro bond markets, particularly Italy. Many smart investors have made a killing, including in Greece, going back to the height of the crisis.

But unless there is consistent economic growth, when you’re Italy with a debt-to-GDP ratio of 135%, and an economy back in recession, 2.03% makes little sense no matter what the ECB does.

Granted there is no inflation in euroland, either, as Eurostats’ flash estimate for prices in November came in at 0.3% annualized vs. October’s 0.4%, well below the ECB’s 2.0% target. Spain’s National Statistics Institute said consumer prices fell 0.5% in November, year over year. Prices are falling in Belgium as well.

Eurostats also released the euro-18 unemployment figures for October, unchanged at 11.5% vs. September, and down just 0.4% from the 11.9% pace of a year earlier. That’s just a further sign of stagnation, sports fans.

While Eurostats pegs Germany’s unemployment rate at a eurozone low of 4.9%, with Austria at 5.1%, France was unchanged at 10.5% for October, up from 10.2% a year earlier, while Italy rose to a record 13.2%. It was 12.3%, 10/13.

Spain’s has come down to 24.0% from 26.0% a year earlier, but that’s still 24.0%. Greece is at 25.9% for August (latest data point there).

[For those following Ireland closely, such as yours truly, its rate is 10.9%, down from 12.4% year over year.]

But then you still have the youth unemployment situation. The jobless rate for the under 25 set is down to 49.3% in Greece (August), but still 53.8% in Spain and up to 43.3% in Italy.

So European Commission President Jean-Claude Juncker unveiled a long-awaited stimulus program, some $393 billion worth, and immediately critics said it was too small.

For starters, $393 billion for investment in items like broadband, energy networks and transport infrastructure, as well as education and research, may seem like a decent sum, but understand the EC is kicking in only about $26 billion in “seed money,” with private investors expected to “pitch in” most of the rest. The head of the European Trade Union Confederation, Bernadette Segol, suggested the Commission was “relying on a financial miracle like the loaves and fishes.” 

Segol told the BBC that the leverage factor of 15 between the $26bn and $393bn was “almost certainly unrealistic.”

Plus talk about zero specifics. For starters, Juencker said he could not promise how much investment would go to each country, which given the contentious European Parliament will be a veritable slugfest when it gets down to divvying up the tiny initial amount.

Plus given the current state of affairs, how many in the private sector will be jumping up and down to take on risks?

This week, Pope Francis gave an address to members of the Euro parliament wherein he depicted the sense of decline across the continent. “We encounter a general impression of weariness and ageing, of a Europe that is now a grandmother, no longer fertile and vibrant,” the Pope said.

“The great ideals which once inspired Europe seem to have lost their attraction, only to be replaced by the bureaucratic technicalities of its institutions,” he added.

Pope Francis exhorted lawmakers to build Europe “not around the economy, but around the sacred nature of the human person.”

Hey, you may not agree with the Pope, but Europe is broken. His remedy is worth trying.

Martin Schulz, the German socialist and president of the body, said in response: “Your message of peace and dialogue, sincerity and responsibility for each other, of solidarity and togetherness make it very clear that together we need to find common solutions to our challenges.” 

Manfred Weber, a German Christian Democrat who is chairman of the center-right European People’s Party, called the Pope’s speech a “timely wake-up call” to Europeans. [James Politi / Financial Times]

--Just a few notes on the British economy. Consumer spending rose 0.8% in the third quarter, though business investment declined 0.7%. GDP for the third quarter over the second was up 0.7%, 3% annualized.

In Asia, China will be releasing a slew of month-end data next week so nothing there for now on the economic front except to note industrial profits fell 2.1% from a year earlier in October, the worst performance since August 2012.

In Japan, inflation in the month of October was up 2.9% year over year, but up just 0.9% ex-effects of April’s tax hike. Retail sales fell a worse than expected 1.4% in the month over September, while industrial production rose just 0.2%. Household spending declined 4% from a year ago, also not good. The jobless rate, though, is just 3.5%.

Prime Minister Abe is seeking a fresh mandate for Abenomics with the snap election on Dec. 14.

Street Bytes

--As noted above the Dow Jones and S&P 500 registered fractional gains for the holiday-shortened week. The Dow picked up 0.1% to close at a new all-time high of 17828. The S&P was up 0.2% to 2067, though on Wednesday it closed at its new high, 2072. Nasdaq gained a solid 1.7% to 4791 and is now up 14.7% on the year.

But stocks certainly aren’t cheap, with a trailing P/E on the S&P of 20, while the 17 multiple on forecast earnings for the next 12 months is also pricey. David Kostin, Goldman Sachs’ chief U.S. stock strategist, says this later number normally averages 12.6. [E.S. Browning / Wall Street Journal]

--The past five Decembers have seen the S&P 500 gain about 2.5% on average for the month. But as Spencer Jakab of the Wall Street Journal notes, globally, the best December performance is “from a country where relatively few boys and girls wait for St. Nick: India,” with a whopping average gain of 3.8% in the month over the past 20 years.

--U.S. Treasury Yields

6-mo. 0.07% 2-yr. 0.48% 10-yr. 2.17% 30-yr. 2.90%

The 10-year busted out of that 2.30% to 2.38% trading range I noted last time, running the streak to 20 straight sessions on Monday before the yield fell below 2.30%. 2.17% is a five-week low.

The Fed’s preferred inflation indicator, the PCE, or personal consumption expenditures index, ran at a 1.4% pace in October, 1.6% on core, so below the 2% target for a 30th consecutive month.

--On the Ebola front, last weekend you had a potential nightmare when bandits stopped a taxi van in Guinea and took blood samples believed to be infected with the virus. Four Red Cross officials were accompanying the samples when armed assailants stopped the vehicle. I haven’t seen any updates.

But there was some potentially good news as GlaxoSmithKline said a vaccine it has been working on could be given to healthcare workers in west Africa early next year after initial testing on humans showed promise. [Merck (through a recent acquisition) and Johnson & Johnson are also working on vaccines but GSK’s is the most advanced.]

UN Secretary General Ban Ki-moon said the Ebola outbreak can be ended “by the  middle of next year” if the world speeds up its response, though he added while the number of cases in parts of west Africa was slowing, Mali, with at least six deaths, was of deep concern, where over 500 are under surveillance.

Anthony Banbury, the head of the UN Ebola mission, said the world was “far away” from beating the virus.

The pace of new cases in Liberia may be declining, but as the New York Times’ Jeffrey Gettleman reported Friday, more than 1,800 new cases have been reported in Sierra Leone just this month, according to the World Health Organization, three times the level in Liberia. 

And The Economist raised the topic that was the original reason for my updates on Ebola specifically in this section of WIR. The costs, both economic and human.

“The cost to west Africa under (two scenarios given by the World Bank) ranges from $1.6 billion to $25 billion over time. By way of comparison, the economy of Liberia produces a little less than $2 billion a year and that of Sierra Leone under $5 billion.

“These estimates assume that the disease does not spread much within west Africa. If it does, the cost could exceed $32 billion by the end of 2015, according to the World Bank.

“Over the longer term the costs are likely to be far higher, and the impacts more insidious. Among the first casualties of Ebola are healthcare workers. Many of those who do not fall ill flee. Within weeks of the disease breaking out in Liberia, it was estimated that fewer than 50 local doctors were still at their post. By weakening already fragile health systems, Ebola will also kill tens of thousands indirectly through malaria, diarrhea and HIV. Investors and skilled foreigners will shun affected countries, depriving them of skills and capital. Three of Africa’s poorest countries will be yet poorer.”

Ebola isn’t the only medical issue to be concerned about these days. An outbreak of plague in Madagascar had killed at least 40 as of last weekend, according to the WHO, as it warned of a “rapid spread” of the disease in the capital, Antanavarivo. 

Humans normally get the plague after being bitten by an infected flea carried by rodents.

As reported by BBC News, “If diagnosed early, bubonic plague can be treated with antibiotics. But 2% of the cases in Madagascar are the more dangerous pneumonic form of the disease, which can be spread person-to-person by coughing.”

--For the record, AAA said the average price for a gallon of regular gasoline nationwide was $2.81 on Nov. 23, lowest in four years. The Lundberg survey, released last Sunday, pegged it at $2.84. The peak this year was in May, $3.72. Of course it’s coming down further.

--A report in Xinhua, the official China news agency, said a company whose name begins with ‘M’ had been penalized for tax evasion. That’s ‘M’ as in Microsoft, which, according to the Financial Times, has been charged by the Chinese government with owing $140 million in back taxes and interest. Xinhua says Microsoft admitted to the tax evasion.

Microsoft, however, said it had agreed to pay the $140 million as a “bilateral advanced pricing agreement” going back to 2012, per a previous deal between tax authorities in the U.S. and China.

--Meanwhile, while Americans were eating their turkey and watching unexciting football on Thursday, France and Germany asked the European Union to look into new competition rules that would target the business practices of the likes of U.S. tech giants such as Apple, Facebook and Google.

This comes after Europe’s privacy regulators asked Google to extend the EU’s new “right to be forgotten” rules to websites outside Europe, while the U.K. is demanding Facebook and its ilk do more to identify and erase extremist content.

European authorities are upset at the reach of Silicon Valley’s leaders and how they pay relatively little corporate tax in Europe despite pulling in huge revenues.

This battle has been simmering and it’s about to boil over, with Euro governments also complaining they can’t keep up with Google and Facebook on issues such as privacy and surveillance. We’ve already seen how upset Germany becomes over privacy issues, going back to the Merkel / cellphone debacle. [Though as we’ve also learned, they play the game too.]

--Canada’s economy grew at a 2.8% annualized pace in the third quarter, the government reported on Friday, better than expected though down from Q2’s 3.6% clip.

--Brazil reported GDP growth of 0.1% in the third quarter over the second, thus technically ending recession here, though the economy is far from being out of the woods.

--India’s economy recorded growth of 5.3% in Q3 over a year earlier, with manufacturing, 15% of economic activity, expanding just 0.1%. India grew at a 5.7% annualized clip in the second quarter. It had been growing at an 8% pace for a decade, starting in 2003.

--Sweden recorded growth of 0.3% in the third quarter from the second, beating estimates. The central bank is forecasting growth of 1.9% this year and 2.7% in 2015.

--Denmark grew at a 0.5% clip in Q3 over Q2. Most economists forecast a decline in economic activity. Said economists blow.

--According to the Government Accountability Office (GAO), the average cost for each military satellite launch performed by a joint venture owned by Boeing Co. and Lockheed Martin Corp., has soared to $420 million, while Elon Musk said his upstart SpaceX can do it for $100 million, as reported by the Los Angeles Times’ Melody Petersen.

“Air Force officials are in the final stages of a years-long, detailed review of the rocket company’s launches and operations. A decision on whether to certify SpaceX for the launches, they said, is expected next month.

“ ‘This is huge,’ said Marco Caceres, senior analyst and director of space studies at Teal Group. ‘It would break up a monopoly and has the potential to save the taxpayer an awful lot of money.’”

Boeing and Lockheed have faced no competition for the launches, which now rank as the nation’s “fourth-most-costly weapons program,” as noted by Ms. Petersen.

Before the joint venture, Boeing and Lockheed competed against each other for contracts. The bill skyrocketed after they began working together. Gee, how does that happen?

Those supporting the Boeing-Lockheed venture note their launches have been very reliable.

--The U.S. Environmental Protection Agency proposed lower limits for ground-level ozone, or smog, which is part of a battle between businesses and environmental groups that has been going on for three years now, back to 2011, when the EPA estimated that proposed standards would cost utilities and other businesses an estimated $90 billion vs. $100 billion a year in public-health benefits. President Obama then delayed issuing them.

Now, the EPA just estimates the costs at between $3 billion and $15 billion in 2025, vs. benefits of between $6.4 billion and $19 billion, as reported by Amy Harder of the Wall Street Journal.

Well this is screwed up.

It’s also the states, not business, that must comply with ozone standards.

The EPA did say there will be a public comment period so nothing is happening, either way, for a while, though this may not be clear from some of the political rhetoric you hear on both sides.

It was the Bush 43 administration that first tightened the standards and states and businesses have been largely complying with them.

--The high-end home market is booming in Southern California, with the number of homes bought for $2 million or more in recent months the highest on record, as reported by the Los Angeles Times’ Tim Logan.

According to CoreLogic DataQuick, a record 1,436 homes worth $2 million or more were sold in the six-county Southland in the second quarter; 1,431 in the third quarter, which comes even as I’ve written recently of how the broader market in the region has leveled off.

It’s the Fed-infused economy in a nutshell. Cheap money has fueled financial assets for the top 1% or so, while the middle-class, which largely doesn’t have the Wall Street exposure, has been dealing, for starters, with stagnant wages.

--Hewlett-Packard Co. reported its latest financial results and revenue has now declined 12 of the last 13 quarters, including a 2.5% decline in the three months ended Oct. 31 when compared with last year. But profits have improved over this time, the three-years Meg Whitman has been CEO.

H-P is proceeding with its plan to break up the company in two...Hewlett-Packard Enterprises – which will include hardware, software and consulting – the supposed growth company, while the other, dubbed HP Inc., includes the old-line businesses of personal computers and printers.

The thing is H-P Enterprises, the arm Whitman is slated to run, had a 4.7% revenue decline for the quarter, while the old-guard business lines posted a slight increase.

--For the month of October, North Dakota continued to have the lowest unemployment rate in the country, 2.8%*. South Dakota was next at 3.3%, with Nebraska at 3.4%. Georgia is the highest, 7.7%.

*This could be about to change.

--Hedge fund king David Tepper is returning a reported $2 billion to $4 billion to investors in his $20 billion Appaloosa Management funds in an attempt to become more “nimble,” as noted by the New York Post.

Through October, his main Palomino fund was down 2.3% for the year, but I can’t believe his investors are that upset because the same fund was up 42% and 29% in each of the prior two years! As Ronald Reagan would have said, ‘Not bad, not bad all.’

Plus Tepper almost always returns some money at year end. He’ll come roaring back in 2015.

--Tiffany & Co.’s quarterly results are always a pretty good economic barometer, including of the picture overseas, particularly Asia. Sales rose 5.3% in the October quarter (a slight miss vs. expectations) with same-store sales growth in the Americas of 11%!

But that means things weren’t as good elsewhere and same-store sales fell 6% in Japan during that period. Overall in the Asia-Pacific region, same-store sales fell 3%.

The shares nonetheless hit a new all-time high of $110.60 before closing the week at $107.90.

--Speaking of luxury, Crain’s New York Business and Bloomberg reported that the landmark Saks Fifth Avenue building in Manhattan was appraised at $3.7 billion! Goodness gracious. The parent, Hudson’s Bay Co., is seeking to squeeze more money out of its real estate and the property could be used to secure additional debt, or spun out as part of a real estate investment trust.

Shares in Hudson Bay rose 12% on the news, in no small part because the company had acquired the ‘entire’ Saks chain last year for $2.9 billion.

The Saks store and building is about to undergo a $250 million renovation starting next year.

--Despite political tensions between Japan and China, the number of Chinese tourists to the island nation is up 80% for the first ten months of 2014 vs. the same period last year. Overall, the Japan National Tourism Organization revealed tourism is up 27.1%, owing in no small part to a favorable exchange rate. Tourism is a huge part of the Japanese government’s efforts to boost the domestic economy.

But they would be doing even better if the government had not recently shelved a bill that repealed the ban on casinos.

--Sir Chris Hohn is one of the world’s leading hedge fund operators with a personal fortune said to be in the neighborhood of $1.3 billion, according to the Financial Times.

Well make that $1.3 billion minus $530 million, the amount he has agreed to pay his American-born ex-wife, Jamie Cooper Hohn, in the biggest divorce settlement ever awarded by an English court. It is said Ms. Cooper-Hohn will receive $493 million in cash and a house in Connecticut.

Someone tell Jamie I have no problem living in Connecticut. 

This case comes just weeks after oil billionaire Harold Hamm agreed to pay his ex-wife about $973 million in a divorce settlement in Oklahoma.

--According to Nielsen Media Research, Fox News Channel won the ratings game on Monday night with its Ferguson, Mo., coverage, averaging about 5.6 million people during prime-time. CNN was second with about 5 million viewers. MSNBC had 1.6 million.   

--Needless to say, Wednesday was a sloppy weather day in the Mid-Atlantic and Northeast, though it could have been worse. That said if you were stuck at Newark Liberty International or LaGuardia airports, it was probably more than a bit “frustrating.” According to a survey by Bloomberg Businessweek, these two are the most frustrating among 36 major airports across the U.S. and Canada.

Vancouver International was the least frustrating, followed by Portland Oregon International (I like this one).

But did I tell you Newark doesn’t have enough bathrooms? I did? Like 52 times over the years? Oh, sorry.

--On Nov. 21, 1964, the Verrazano-Narrows Bridge opened; connecting Staten Island to New York’s other boroughs. The toll then was 50 cents each way. Today the round-trip cash toll is $15. 17.6 million vehicles used it its first full year in service. In 2013, the total was 65 million. [Colleen Wilson / Wall Street Journal]

--I liked this comment from a Dollar Tree official on why his company doesn’t do anything special for Black Friday.

“We sell our items for $1 or less all year round, so we feel we’re already providing a great value to our customers.”

--Crain’s New York Business reports only 88% of companies this year will host a holiday party, vs. 96% last year and 91% in 2012, according to executive recruiting firm, Battalia Winston’s annual national survey on the topic. [Lisa Fickenscher]

Kind of surprising, though here at StocksandNews, we are eschewing the party for a tenth straight year, with the owner this time blaming a huge ObamaCare related premium increase of 60%, in order to keep our doctor. “If you like your doctor, you can keep your doctor”...you just might have to pay 60% more. We’ve been Grubered.

Foreign Affairs

Iran: As expected, talks between Iran and the P5+1 (U.S., U.K., France, China, Russia and Germany) on Tehran’s nuclear program were extended another seven months, through next June, as no agreement was reached by the Nov. 24 deadline. The extension itself is longer than I would have thought and many are not happy with this fact.

Negotiators said the second extension of the original interim agreement reached in November 2013, will continue to restrain Iran’s attempts to develop a nuclear weapon. But you can be sure the new Republican Senate will increase pressure on the White House to step up economic sanctions, though for now, Sen. Bob Corker (Tenn.), the ranking Republican on the Foreign Relations Committee who will become chairman in January, offered, “I would rather the administration continue to negotiate than agree to a bad deal. Congress must have the opportunity to weigh in before implementation of any final agreement and begin preparing alternatives, including tougher sanctions, should negotiations fail.”

House Intelligence Committee Chairman Mike Rogers (R-Mich.) said the negotiations “have done little to advance the security of the United States and our allies, but they have benefited Iran,” which has been allowed to continue enrichment and won back some of its sanctions-frozen assets.

“While the White House longs for a deal, Iran strengthens its hand,” Rogers said. “It is time for the administration to reconsider its entire approach to Iran.” [Carol Morello and Karen DeYoung / Washington Post]

Secretary of State John Kerry said “Real and substantial progress” was made, while acknowledging “significant points of disagreement” remain.

“These talks are not going to get any easier just because we extend them,” he said. “They’re tough.” He added that all sides will reassess where they stand after the next four months.

For his part, Israeli Prime Minister Benjamin Netanyahu said, Israel “is watching very carefully what is happening here, and Israel always – always – reserves the right to defend itself.”

It is said the prime remaining issues are the number of centrifuges Iran is allowed to permanently operate and the level of enrichment; new levels of inspection, including on suspected weapons tests; and how fast sanctions could be lifted.

Bottom line...it’s about how quickly Iran could “break out,” or rapidly amass enough weapons grade material to build a bomb.

Iranian President Hassan Rohani predicted that more negotiations “will lead to a deal, sooner or later.”

Iran’s supreme leader, Ayatollah Ali Khamenei, said in an address on Thursday, “I do not disagree with the extension of negotiations, as I have not disagreed with negotiations in the first place.”

Khamenei said Iran’s negotiating team had been firm and “have not caved in.”

But earlier Khamenei blasted the U.S. in various statements, saying: “America is a chameleon; every day it says something new.”

And... “On the nuclear issue, the United States and European colonialist countries gathered and applied their entire efforts to bring the Islamic Republic to its knees but they could not and they will not.”

And... “If the negotiations do not yield results, it is America that will be the loser.”

As Karim Sadjadpour, an Iran expert at the Carnegie Endowment for International Peace in Washington, told the Wall Street Journal: “Between now and January 2017, Obama wants to avert an Iranian bomb and avert bombing Iran. Extending negotiations is not ideal but it checks both these boxes.”

Lee Smith / The Weekly Standard

“Maybe the Obama administration was simply naïve to have believed that Supreme Leader Ali Khamenei would give newly elected President Hassan Rohani a lot of room to maneuver in nuclear talks. Perhaps the White House was arrogant to think that sanctions relief would get Rohani, as some administration officials put it, ‘addicted to cash’ and force him to make concessions on the nuclear program in order to revive the Iranian economy.

“If it wasn’t simply naivete and arrogance, then the White House misled the American people and their representatives in Congress as well as U.S. allies. Either way, the end result is an empowered Islamic Republic and a further crumbling of the American-brokered order in the Middle East.

“The White House prides itself on the notion that its nuclear negotiations with Iran will have prevented an otherwise inevitable war. The truth is the opposite. In lifting sanctions and yielding repeatedly to an expansionist Iran, the Obama administration has brought America and its allies to this pass: Either Iran will get a nuclear bomb, or war will be the only way to stop it. Worse, the administration has increased the chances we might get both outcomes at once.”

Bret Stephens / Wall Street Journal

(What’s) at stake in these negotiations isn’t their outcome, assuming there ever is an outcome. It’s the extent to which the outcome facilitates, or obstructs, our willingness to continue to fool ourselves about the consequences of an Iran with a nuclear weapon.

“The latest confirmation of the obvious comes to us courtesy of a Nov. 17 report from David Albright and his team at the scrupulously nonpartisan Institute for Science and International Security. The ISIS study, based on findings from the International Atomic Energy Agency, concluded that Iran was stonewalling U.N. inspectors on the military dimensions of its program. It noted that Tehran had tested a model for an advanced centrifuge, in violation of the 2013 interim agreement. And it cited Iran for trying to conceal evidence of nuclear-weapons development at a military facility called Parchin.

“ ‘By failing to address the IAEA’s concerns, Iran is complicating, and even threatening, the achievement of a long term nuclear deal,’ the report notes dryly.

“These are only Iran’s most recent evasions, piled atop two decades of documented nuclear deception....but what are we to make of an American administration that is intent on providing cover for Iran’s cover-ups? ‘The IAEA has verified that Iran has complied with its commitments,’ Wendy Sherman, the top U.S. nuclear negotiator, testified in July to the Senate Foreign Relations Committee. ‘It has done what it promised to do.’ John Kerry went one better, telling reporters Monday that ‘Iran has lived up’ to its commitments.

“The statement is false: Yukiya Amano, the director general of the IAEA, complained last week that Iran had ‘not provided any explanations that enable the Agency to clarify the outstanding practical measures’ related to suspected work on weaponization. Since when did trust but verify become whitewash and hornswoggle?:...

“Eventually, something will happen. Perhaps Iran will simply walk away from the talks, daring this feckless administration to act. Perhaps we will discover another undeclared Iranian nuclear facility, possibly not in Iran itself. Perhaps the Israelis really will act. Perhaps the Saudis will.

“All of this may suit the president’s psychological yearning to turn himself into a bystander – innocent, in his own eyes – in the Iranian nuclear crisis. But it’s also a useful reminder that, in the contest between hard-won experience and disappointed idealism, the latter always wins in the liberal mind.”

Iraq / Syria / ISIS: Iraqi forces are said to have held off an ISIS assault on government headquarters in the capital of Anbar province, Ramadi, which is one of the last major urban areas in Anbar under government control.

The province’s governor, Ahmad al-Dulaimi, told German television, where he is recovering after being wounded by a mortar round in September, “If we lose Anbar...we will lose Iraq.” [Daily Star] I think I would stay in Germany, Mr. Dulaimi.

ISIS still controls three key cities – Mosul, Tikrit and Fallujah, let alone vast tracts of Anbar.

It’s so difficult these days getting accurate information on the fighting in both Iraq and Syria. I legitimately read about 20 sources a day and I just do my best to piece it together, having a good understanding after all these years what is probably close to being accurate and what is B.S.

For example the Daily Star reports that the “Soufan think tank,” which I’ve never heard of, “said ISIS needed a victory in Anbar to maintain the threat against Baghdad, discourage a mass Sunni tribal campaign and boost its ranks’ morale.

“ ‘Facing a bleak future in which its opponents get stronger while it gets weaker and further encircled, [ISIS] is pushing hard in Anbar province,’ it said.

“ISIS ‘is trying to gain more strongholds closer to Baghdad from which to launch attacks into the capital,’ it added.”

As for Syria, the British-based Syrian Observatory for Human Rights said President Bashar Assad carried out airstrikes on a provincial capital, Raqqa, that had been seized by ISIS, and at least 95 were killed, more than half of them civilians.

This is a direct result of U.S. policy, or lack thereof. On Sunday, Vice President Biden held talks with Turkish leaders, including President Erdogan, and Ankara continues to insist that U.S. strategy include ejecting President Assad. Anything less is “incoherent.”

Dennis Ross (former special assistant to President Obama and Middle East envoyt) / Washington Post:

“Perhaps it is time for the administration to rethink its position on creating a buffer for the Syrian opposition along the Turkish-Syrian border. The buffer could be created by declaring that any Syrian aircraft that flies within 75 miles of the border will be shot down by the Patriot batteries that NATO has deployed along the border. The buffer area would address a variety of needs: Politically, it would give the opposition an area within Syria to organize, coalesce and overcome their differences; militarily, it would provide a base to train in Syria, providing forces there far greater legitimacy; and from a humanitarian standpoint, it would provide a haven at a time when Syrian refugees are being blocked from entering Turkey, Jordan and Lebanon.”

Yup, all together now. I wrote we should have been doing all the above two years ago!

Michael Young / Daily Star

“(President) Obama has set down foreign policy conditions, or red lines, that make a coherent (Middle East) policy next to impossible. And the president refuses to separate himself from the one person whose job it is to coordinate and impose a direction when it comes to American foreign affairs: the national security adviser, Susan Rice....

“(When ambassador to the United Nations, Rice) took strong positions on the slaughter in Syria, leading many to remember her regret for having failed to urge action to stop the genocide in Rwanda in 1994 when she was in the National Security Council. Rice famously said, ‘I swore to myself that if I ever faced such a crisis again, I would come down on the side of dramatic action, going down in flames if that was required.’

“But since she joined the White House two years ago, she has conveniently put that vow aside, much as did her successor at the U.N., Samantha Power, the author of a much-hailed book on American inaction toward genocide. Insincerity in the defense of a career is no vice. Instead, what has gone down in flames are America’s alliances in the Middle East, so that next to Obama, even George W. Bush comes across as a great conciliator.

“Recall how the earnest Norwegians of the Nobel Peace Prize committee rewarded Obama back in 2009, imagining that he ticked all the boxes in their checklist of global responsibility. That was before his indifference to the carnage in Syria would destroy his integrity, and long before he sent a letter to Iran’s Ayatollah Ali Khamenei reassuring him that American attacks against ISIS in Syria would not target the Assad regime’s forces, which have continued to murder Syrians with abandon.”

This week, Russian President Vladimir Putin and Foreign Minister Sergey Lavrov held talks with Assad’s foreign minister, Walid al-Moallem, on the Black Sea, with Putin and Lavrov reiterating their support for Assad and his efforts to combat “terrorism” in the Middle East. There have been no peace talks in Syria since the last round collapsed in February. But as I noted, also two years ago, it’s been long already over.

Israel: Shin Bet said it thwarted a series of Hamas-planned terror attacks, including at a rail station and soccer stadium in Jerusalem. More than 30 Hamas members have been arrested for their suspected involvement.

William Kristol / The Weekly Standard

“Congress can’t bring about ‘peace’ between Israel and its enemies. But it can help bring about relative quiet and stability. One way it can do so is to tell the administration to stop making things worse with the ‘peace process,’ which has become a terror process. An obsession with the ‘peace process’ encourages Palestinians and their backers around the world to think that with a little more pressure – ranging from terror to boycotts – Israel can be forced to make concessions. But having pulled out of Gaza, and having tried time and again to respect Palestinian wishes and demands (God forbid Jews should intone prayers themselves on the Temple Mount!), Israel is not now going to make further concessions under pressure. Nor should she.

“America has the misfortune to have an anti-Israel president for two more years. America has the good fortune to have a pro-Israel Congress for that same period of time. It should be a priority for that Congress, through speech and deed, to signal unequivocally to Israel and its enemies that terror and pressure against Israel will not succeed, and that America stands with Israel in our common fight against terror and barbarism.”

On a different issue, last Sunday the Israeli cabinet descended into a shouting match over the controversial “Jewish state bill.” I profess to know little of the topic, so I’m relying on a report by Lahav Harkovherg Keinon in the Jerusalem Post.

“(Prime Minister) Netanyahu said Israel is the national home of the Jewish people where there are equal rights for every citizen. ‘But there are national rights only for the Jewish people; a flag, anthem, the right of every Jew to immigrate to Israel, and other national symbols,’ he said.

“The prime minister said this law was needed at this time because many people are challenging the idea that Israel is the national homeland of the Jewish people.

“ ‘The Palestinians refuse to recognize this, and there is also opposition from within – there are those who want to establish autonomy in the Galilee and the Negev, and who deny our national rights,’ he said. “ I also don’t understand those who call for two states for two peoples, but at the same time opposing anchoring that in law. They are quick to recognize a Palestinian national home, but adamantly oppose a Jewish national home.’

“The cabinet authorized three versions of the Basic Law: Israel as the Nation-State of the Jewish People with 15 votes in favor and six opposed” – including Netanyahu’s version.

But the issue devolved into a shouting match with Netanyahu saying it was no time for weakness, while some ministers said just because they may not agree, didn’t mean they were weak.

“Netanyahu banged on the table and said ‘it cannot be that Arabs can live in Jewish towns, but Jews can’t live in Arab towns. A country within a country is developing.’”

To be continued...or maybe not...

Russia: While it’s not getting a lot of press, deadly fighting in Ukraine’s disputed Donetsk and Luhansk regions continues.

German Chancellor Angela Merkel has issued some tough statements concerning Russian President Vladimir Putin and his ambitions, warning him this week to stay out of the Balkans and Georgia. Berlin worries that even EU member states like Bulgaria are vulnerable. Other targets include the likes of Slovakia and Hungary, both heavily dependent on Russia for gas, or Estonia and Latvia, with their heavy Russian minorities.

A German official told the Financial Times: “This is really about Moscow’s influence on the outside world. There is no reason why it should be limited to Ukraine. If they want to stake out a claim for the future they will do it everywhere. It’s quite clear in Serbia.”

Yes, Serbia is a name that keeps coming up because the Serbs are still miffed over the aftermath of the Balkan wars of the 1990s and the loss of Kosovo, which broke away in 1999. Kosovo is recognized by most EU states, but Russia supports Belgrade’s non-recognition.

Meanwhile, NATO Secretary-General Jens Stoltenberg said of the Kremlin’s actions in Ukraine:

“We see the movement of troops, of equipment, of tanks, of artillery, of advance air-defense systems, and this is in violation of the cease-fire agreements.”

NATO’s top military commander, U.S. Gen. Philip Breedlove, was in Kiev on Wednesday and accused Moscow of “militarizing” Crimea, adding “the alliance was on the watch for indications that Russia would station ‘nuclear capabilities’ on the territory,” as reported by Carol J. Williams of the Los Angeles Times.

Separately, in an interview published by state news agency TASS last Sunday, Vladimir Putin said he does not intend to remain president for life as keeping the post for too long would be “not good and detrimental for the country and I do not need it,” though he did not rule out running for re-election in 2018.

Putin, addressing the issue of whether Russia is increasingly isolated, said he is not seeking to steer the country in the direction of another Iron Curtain.

“We realize the malignity of the Iron Curtain for us. There were periods in the history of other countries, which tried to isolate themselves from the rest of the world and paid very dearly for that...Undoubtedly we are not taking this path.”

On his relationship with Barack Obama, Putin said: “The president of the United States and I know each other. I can’t say that we have quite close relationships, but he is a clever person and can evaluate all this.” [Moscow Times]

Editorial / Washington Post

“The Kremlin is certainly behaving as if it has nothing to fear from the United States or European Union. In the past two weeks, it has brazenly dispatched more troops and heavy weapons to eastern Ukraine while shrugging off protests from NATO. Ukrainian government officials say they believe the Russian forces and their puppet allies may be preparing a major offensive to capture more territory – Mr. Putin is thought to covet a land bridge between Russia and the occupied province of Crimea. As it is, Moscow’s forces are launching small-scale attacks nearly every day. According to the United Nations, more than 1,000 people have been killed since a cease-fire deal on terms dictated by Russia was signed Sept. 5.

“Yet last week Vice President Biden once again turned aside pleas from Ukrainian leaders for defensive weapons, such as antitank missiles, that might help deter more Russian aggression. Instead, he lectured the democratically elected government on the need to adopt economic austerity and legal reforms.

“On Monday, Mr. Putin signed a treaty with the puppet state of Abkhazia, a province of Georgia that Russian troops invaded and occupied in 2008. Moscow’s attempt to win international recognition for Abkhazia and another Georgian province, South Ossetia, as independent states failed. So it is taking steps to incorporate them into Russia. The treaty with Abkhazia gives Moscow control over the province’s military, foreign policy and economy and allows residents to easily obtain Russian citizenship. The State Department issued a statement saying it wouldn’t recognize the treaty, but there was no mention of further sanctions.

“In fact, the West appears to be tiring of confronting Russia even as Mr. Putin escalates his imperialism.”

As for the state of the Russian economy...Editorial / The Economist

“Vladimir Putin is not short of problems, many of his own creation. There is the carnage in eastern Ukraine, where he is continuing to stir things up. There are his fraught relations with the West, with even Germany turning against him now. There is an Islamist insurgency on his borders and at home there is grumbling among the growing numbers who doubt the wisdom of his Ukraine policy. But one problem could yet eclipse all these: Russia’s wounded economy could fall into a crisis.

“Some of Russia’s ailments are well known. Its oil-fired economy surged upward on rising energy prices; now that oil has tumbled, from an average of almost $110 a barrel in the first half of the year to below $80, Russia is hurting. More than two-thirds of exports come from energy. The ruble has fallen by 23% in three months. [Ed. more now] Western sanctions have also caused pain, as bankers have applied the restrictions not just to Mr. Putin’s cronies, but to a much longer tally of Russian businesses. More generally, years of kleptocracy have had a corrosive effect on the place. Much of the country’s wealth has been divided among Mr. Putin’s friends.

“Everybody expects continued stagnation, but the conventional wisdom is that Mr. Putin is strong enough to withstand this. The falling ruble has made some export industries like farming more competitive. These exports combined with Mr. Putin’s import-blocking counter-sanctions mean Russia still has a small trade surplus. It has a stash of foreign-exchange reserves, some $370 billion according to the central bank’s figures. Add in the resilience of the Russian people, who are also inclined to blame deprivation on foreigners, and the view from Moscow is that Mr. Putin has time to maneuver....

“In fact, a crisis could happen a lot sooner. Russia’s defenses are weaker than they first appear and they could be tested by any one of a succession of possibilities – another dip in the oil price, a bungled debt rescheduling by Russian firms, further Western sanctions. When economies are on an unsustainable course, international finance often acts as a fast-forward button, pushing countries over the edge more quickly than politicians or investors expect.”

Other Russkie tidbits:

--A poll by the independent Levada research group showed that 53% of Russians believe their country’s troops are not fighting in eastern Ukraine, but nearly half (45%) would be glad if it turned out they were (34% would disapprove). 25% did not believe the Kremlin’s denials that Russia has sent soldiers to back separatists fighting Ukrainian government forces.

--As reported by the Moscow Times’ Alexey Eremenko, “Russia’s leading expert on domestic security services, Andrei Soldatov, said the pattern of (cyberattacks on the West) indicated that the Russian government may be mounting a covert Internet offensive.

“Experts could not say, however, whether heavy guns with the FSB [Ed. successor to KGB] electronic espionage agencies have been deployed.

“ ‘All government-linked attacks so far have been carried out by people on the market: the cyber-mercenaries,’ said Soldatov....

“In mid-October, U.S. company iSight Partners said Russian hackers had exploited a Microsoft Windows bug to access computers belonging to NATO, the EU, Ukraine and certain energy and telecom firms.”

According to Deutsche Telecom, “Russia was the world’s No. 1 source of cyberattacks as of last month with 2.7 million launched, but the runner-up was Germany, followed by the U.S. and China.”

These aren’t necessarily the actions of each government, but in many instances that of cyber-mercenaries originating in same.

--French President Francois Hollande suspended the delivery of the first of two Mistral helicopter carriers to Russia “until further notice,” as he has been under increasing pressure from western allies to scrap the $1.5 billion contract. Hollande’s office issued a statement:

“The President of the Republic considers that the situation in the east of Ukraine still does not permit the delivery of the first BPC (helicopter carrying and command vessel).

“He has therefore decided that it is appropriate to suspend, until further notice.” [Financial Times]

--Moscow is about to launch its third Borei-class nuclear missile submarine, the next-generation “boomers” – large subs packed with nuclear tipped intercontinental ballistic missiles (ICBMs) that can be deployed anywhere in the world. The Boreis are capable of carrying up to 12 Bulava missiles, Russia’s newest ICBM.

Isn’t this reassuring?

--Russia’s propaganda machine was in full swing with the riots in Ferguson, Missouri. State-run media and the Foreign Ministry claimed President Obama had lost total control of domestic affairs as a result of his inability to protect human rights in the U.S. The Foreign Ministry issued a scathing statement urging U.S. authorities to focus on domestic problems rather than foreign affairs.

“(It is) finally time to focus on their large-scale internal problems...rather than engaging in baseless and futile mentoring and propagandistic moral preaching to other countries.” [Allison Quinn / Moscow Times]

Afghanistan: Terrible week here as a suicide bomber in a car struck a British embassy vehicle in Kabul, killing a British national working for the embassy and at least four others. Earlier in the week a Taliban attack killed two soldiers belonging to the U.S.-led coalition.

Late Wednesday, the Taliban kidnapped 15 government officials in the northern province of Kunduz.

And last Sunday, at least 50 were killed in the country’s deadliest insurgent attack of the year, as a suicide bomber targeted a volleyball tournament that had attracted a large crowd. The provincial governor in Paktika said the explosion was so powerful, 42 were killed instantly with the dead including at least 10 members of the police force.

Witnesses said the bomber approached the police commander and shook his hand before shouting “Allahu Akbar” and detonating explosives on his body.

We also learned this week that recently, President Obama signed a secret order “authorizing a more expansive mission for the military in Afghanistan in 2015 than originally planned, a move that ensures American troops will have a direct role in fighting in the war-ravaged country for at least another year.” [Mark Mazzetti and Eric Schmitt / New York Times]

Recall, last May, Obama said the American military would have no combat role in Afghanistan next year, with the 9,800 troops remaining being limited to training Afghan forces and to hunting the “remnants of Al Qaeda.”

Finally, the lower house of the Afghan parliament overwhelmingly approved a security agreement allowing U.S. and NATO troops to remain in the country. The upper house still needs to ratify it but this isn’t supposed to be an issue.

Kenya: Suspected al-Shabab militia hijacked a bus in Northern Kenya and asked the passengers to recite passages from the Koran, shooting dead those not able to prove they were practicing Muslims. 28 of the reported 60 on board were killed. A senior adviser to President Kenyatta told the BBC that al-Shabab is trying to start a religious war.

Pakistan: Gunmen attacked a polio vaccination team Wednesday, killing four aid workers, including three women. Militants oppose the ongoing vaccination campaign, saying it is an attempt to spy on them. Pakistan is one of only three countries in the world where polio is still prevalent, with the incidence of it in the country hitting a 15-year high. Over the years, hundreds of health workers doing nothing more than administering the vaccine have been killed. [Los Angeles Times]

China: In its annual report submitted to Congress, the U.S.-China Economic and Security Review Commission said China had made big gains in military development, driven by two decades of double-digit increases in its defense spending.

“As a result of China’s comprehensive and rapid military modernization, the regional balance of power between China, on the one hand, and the United States and its allies and associates on the other, is shifting in China’s direction,” it said. [Cary Huang / South China Morning Post]

In line with the above, China is building a massive island in the South China Sea that undoubtedly is slated to host an airfield in an area where Beijing is locked in territorial disputes. A U.S. military spokesman said the land reclamation project in the Spratly Islands, known in China as Yongshu Reef, is one of several that could yield airstrips.

IHS Jane’s Defense said there are four such projects there. [Agence France-Presse]

Separately, over 100 were arrested in a 12-hour period as police rounded up student protest leaders in Hong Kong.

North Korea: Kim Jong-un’s younger sister, Kim Yo-jong, who is said to be in her mid- to late-twenties, has been identified for the first time as a senior party official on the powerful Central Committee. Guys, not sure if she’s married, but if I were you I’d take a pass.

Mexico: President Enrique Pena Nieto, proposed a series of measures designed to clean up local police by putting them under state government control as he faces the biggest crisis of his presidency over the kidnapping and suspected murder of 43 college students in the southern town of Iguala two months ago. 

But few believe Pena Nieto’s initiatives, which include creation of a special prosecutor to tackle corruption among government officials will bear fruit.

On the other hand you have to start somewhere.

Random Musings

--Defense Secretary Chuck Hagel resigned this week. A U.S. defense official told Bloomberg’s Jonathan Allen and Mike Dorning:

“Hagel chafed at the way a small cadre of Obama loyalists centralized power in the White House. When Obama backed off a threat to bomb Syria last year, he made the decision on a walk with his chief of staff, Denis McDonough. Hagel was informed of the decision later.

“Tension between Hagel and White House aides got so bad, the defense official said, that Hagel would often phone Obama after the meetings to make sure his voice was heard.”

The National Security Council staff has grown substantially under Obama – “to roughly 270 people from about 200 under President George W. Bush, according to Reuters.

“Its size and physical proximity to the White House, just across a small access road, have given it greater influence than Cabinet agencies in the development, and sometimes the implementation, of policy, according to a former defense official who requested anonymity to discuss a sensitive matter.” [Bloomberg]

Editorial / Washington Post

“If the resignation of Defense Secretary Chuck Hagel augurs a move by President Obama to shake up his national security team and reconsider his strategy in crisis areas such as Syria and Ukraine, then it will be welcomed. So far, there’s not much sign of it. Mr. Hagel has been a weak leader at the Pentagon who, at least in public, has been less of a force in policy discussions than some of the generals who report to him. But his thinly disguised dismissal came after reports that he had raised sensible questions about Mr. Obama’s overly constrained approach to fighting the Islamic State....

“Like the two defense secretaries who preceded him [Ed. Robert Gates and Leon Panetta] in Mr. Obama’s Cabinet, Mr. Hagel found himself caught between an insular White House team and military commanders who chafed at what they see as both micromanagement and the absence of a workable strategy. By this fall, according to the New York Times, Mr. Hagel was telling the president what he least wished to hear: that U.S. policy in Syria was inadequate because of its failure to address the regime of Bashar al-Assad....

“Commanders including the Joint Chiefs of Staff chairman, Gen. Martin Dempsey, have suggested that the campaign in Iraq will eventually require the limited use of U.S. ground forces – something the White House strongly resists. As Mr. Obama’s first defense secretary, Robert Gates, recently put it, ‘When you...deny the military the authorities they require to achieve the objective, you leave them with a great sense of frustration.’....

“What’s needed is a seasoned, independent policymaker with a genuine command of military affairs who is able to win the respect of both the generals and the White House. Former undersecretary of defense Michele Flournoy*, whose knowledge of Pentagon budget arcana as well as grand strategy is formidable, would be an excellent choice....

“Mr. Obama needs to choose advisers who will offer him fresh thinking about national security challenges – and be ready to set aside his own fixed ideas.”

*Flournoy reportedly withdrew her name from consideration.

Editorial / Wall Street Journal

“Chuck Hagel wasn’t our favorite to run the Pentagon, but it speaks volumes about this Administration’s national security decision-making that even he turned out to be too independent for the job. The former Republican Senator and infantry soldier chose to resign on Monday rather than endure more White House micromanagement....

“If President Obama really wanted a fresh start in his last two years, he’d begin by sacking most of his White House national security team. They’re the tenderfoot Talleyrands who have presided over the radiating calamity in Syria, the collapse of the Iraqi military, the rise of Islamic State, and the failure to deter or stop Vladimir Putin’s march into Ukraine.

“Why does national security adviser Susan Rice still have a job? Or spinner-in-chief Ben Rhodes? Mr. Hagel was hired in part because Mr. Obama believed he would take orders from these visionaries. But as the world turned darker, the Pentagon chief began to represent the views of the generals who are increasingly worried about U.S. security....

“Mr. Hagel has (been) vindicated as the U.S. has watched while Bashar Assad’s government tries to wipe out the Free Syrian Army rebels we are training to be our allies, and Turkey keeps a distance from the coalition because we won’t help to oust Assad. But telling the truth in this Administration gets you a scolding from Vice President Valerie Jarrett, and on Tuesday White House leakers were saying Mr. Hagel wasn’t creative enough in providing security options. The options this White House seems to want are those that provide the appearance of solving problems without having to solve them.”

--According to a new Wall Street Journal/NBC News poll, former Arkansas Gov. Mike Huckabee, who defied expectations in 2008 by winning the Iowa caucuses, is once again doing so in the early race for the Republican nomination in 2016. He is viewed more positively by fellow Republicans than nine potential rivals, including Chris Christie, Jeb Bush and Rand Paul.

“Some 52% (of Republicans) had a favorable opinion of Mr. Huckabee...Just 8% expressed negative views.

“Compare those numbers to Messrs. Bush and Christie, and Mr. Huckabee starts looking even more formidable. One-in-five Republicans view Mr. Christie negatively, about half as many Republicans who view him positively. For Mr. Bush, 12% of Republicans express dim views of the former Florida governor, while 44% view him favorably.

“(Rand Paul has solid support, garnering positive reviews from 48% of self-described Republicans and negative reviews from just 6% of those Republicans polled.)”

Potential candidates such as Governors John Kasich (Ohio) and Scott Walker (Wisconsin) just aren’t that well known nationally as yet, while more know (and like) Ben Carson.

--In a poll of Republican primary voters in New Hampshire, Chris Christie and Rand Paul are tied at 16%, with Jeb Bush at 14%. But if Mitt Romney was added to the mix, he would lead the way with 30%, followed by Paul, 11%, and Christie, 9%.

--New York Democratic Sen. Charles Schumer garnered a ton of inside-the-Beltway publicity when he slammed his party for pursuing healthcare reform in 2009 and 2010, arguing that Democrats hurt themselves politically by not focusing instead on policies centered around helping middle-class Americans.

“After passing the stimulus, Democrats should have continued to propose middle class-oriented programs and built on the partial success of the stimulus. But unfortunately, Democrats blew the opportunity the American people gave them. We took their mandate and put all of our focus on the wrong problem – healthcare reform.”

But his remarks at a speech to the National Press Club were disputed by some in his own party, seeing as Schumer himself was a major proponent of ObamaCare.

House Minority Leader Nancy Pelosi told CNN in a statement, “We come here to do a job, not keep a job. There are more than 14 million reasons why that’s wrong.”

Schumer, in looking ahead to 2016, said, “Democrats lost in 2014 because the government made mistakes that eroded the electorate’s confidence in its ability to improve the lives of the middle class.”

Schumer said Democrats need to emphasize how government can help the middle-class and pass legislation on that front.

--Investigators for the Treasury Inspector General for Tax Administration, the watchdog agency for the Internal Revenue Service, recovered as many as 30,000 missing emails belonging to former IRS official, Lois Lerner, the focus of congressional inquiries.

IRS officials had previously told lawmakers the emails were missing because Lerner’s computer hard drive crashed in 2011. But TIGTA investigators located thousands of them on backup tapes.

While some of the emails will prove to be duplicates of those previously released, as the Wall Street Journal’s John D. McKinnon noted: “Still, the revelations are another headache for IRS Commissioner John Koskinen, who also has drawn criticism from GOP lawmakers for failing to alert them when the problem of the missing emails emerged.”

This will be for the new Congress to tackle. The emails need to be worked on first, including to redact any taxpayer ID information.

--According to a study commissioned by Japan’s Health Ministry, “E-cigarettes contain up to 10 times the amount of cancer-causing agents as regular tobacco, the latest blow to an invention once heralded as less harmful than smoking,” as reported by Agence France-Presse.

“Researchers found carcinogens such as formaldehyde and acetaldehyde in vapor produced by several types of e-cigarette liquids....

“Formaldehyde – a substance found in building materials and embalming fluids – was present at levels 10 times those found in the smoke from regular cigarettes.” [South China Morning Post]

--I have a good friend in Ireland who has had some health issues and she’s told me of the nightmares she has faced with the healthcare system there.

So I read with interest a report from the Irish Independent:

“Hospital staff are neglecting to wash their hands despite repeated warnings.

“Basic hygiene standards have dropped over the past three years in eight of the country’s hospitals – putting vulnerable patients at risk of potentially lethal superbugs and other illnesses...

“Figures show that seven in every 10 of our public hospitals are still flouting basic hand-washing rules to varying degrees, even though they are essential to avoid passing on infection to patients....

“(The findings come) as thousands of patients who are already being treated for illness are going on to pick up a range of avoidable urinary tract and other bugs, including MRSA...”

This last bit is what happened to my friend, best she can determine.

That said the U.S. is hardly blameless in this same regard. 

--We note the passing of former four-term Washington, D.C. mayor, the iconic Marion Barry, 78. He had just been discharged from the hospital, when he collapsed walking into his home, apparently from a heart attack.

Andrew Siddons and Emmarie Huetteman / New York Times:

“He was a man venerated, disgraced and redeemed in a political career that spanned four decades and included four terms as mayor and six months in prison on drug charges.

“President Obama on Sunday summed up the conflicts that defined Mr. Barry’s life, describing his career as ‘storied,’ but also, ‘tumultuous.’ Attorney General Eric H. Holder Jr. called him ‘a complicated man.’

“Carol Schwartz, a former District of Columbia council member who ran unsuccessfully against Mr. Barry in two mayoral races, said he was a kind, caring and smart friend. ‘Such a personality,’ she said, ‘even in spite of his foibles.’

Ah, the foibles. Hidden-camera images of Barry and crack cocaine from 1990 that defined him in the eyes of many nationwide. But he was also a hero to many he served.

--From Geoff Earle / New York Post

“He’s a mega bundler for President Obama. He’s been on Air Force One. He’s shared a Christmas visit with Michelle Obama at the White House. And now he’s being accused of sex with a minor.

“Terry Bean, 66, a gay activist and major Democratic fund-raiser, was arrested Wednesday (Nov. 19) in Portland, Ore., for allegedly having sex with a 15-year-old boy.”

Bean’s ex-boyfriend was also arrested in connection with the incident.

“Authorities said the duo found the 15-year-old online and had a sexual encounter with him in an Oregon hotel in 2013.”

Bean’s attorney said his client “was the victim of an extortion ring.”

Bean’s former boyfriend has multiple prior arrests.

--I don’t make it a habit to comment on items such as Ferguson, Missouri. But like all of you watching Monday night in particular, I was upset and depressed by what I saw in response to the grand jury’s failure to indict a police officer in the shooting of 18-year-old Michael Brown last August.

President Obama said the day after in Chicago: “Burning buildings, torching cars, destroying property, putting people at risk – that’s destructive, and there’s no excuse for it. Those are criminal acts, and people should be prosecuted for it.”

Also on Tuesday, the officer, Darren Wilson, sat down with George Stephanopoulos of ABC and in speaking publicly for the first time on the shooting, said there was “no way” Brown had his hands up when he was fatally shot and that there was nothing he could have done differently to have prevented Brown’s death.

Wilson said “I have a clean conscience (because) I know I did my job right.”

We’ll never know the full truth. But....

Jason L. Riley / Wall Street Journal

“Not that any amount of evidence would have stopped the hooligans in Ferguson Monday night who were determined to use Brown’s death as a pretext for more bad behavior. Nor will evidence thwart liberals who are bent on making excuses for black criminality and pretending that police shootings are responsible for America’s high black body count.

“According to the FBI, homicide is the leading cause of death among young black men, who are 10 times more likely than their white counterparts to be murdered. And while you’d never know it watching MSNBC, the police are not to blame. Blacks are just 13% of the population but responsible for a majority of all murders in the U.S., and more than 90% of black murder victims are killed by other blacks. Liberals like to point out that most whites are killed by other whites, too. That’s true but beside the point given that the white crime rate is so much lower than the black rate.

“Blacks commit violent crimes at 7 to 10 times the rate that whites do. The fact that their victims tend to be of the same race suggests that young black men in the ghetto live in danger of being shot by each other, not cops. Nor is this a function of ‘over-policing’ certain neighborhoods to juice black arrest rates. Research has long shown that the rate at which blacks are arrested is nearly identical to the rate at which crime victims identify blacks as their assailants. The police are in these communities because that’s where the emergency calls originate, and they spend much of their time trying to stop residents of the same race from harming one another.

“Former New York Mayor Rudy Giuliani pointed this out recently on ‘Meet the Press’ in a debate with sociologist Michael Eric Dyson. ‘What about the poor black child that is killed by another black child? Why aren’t you protesting that?’ Mr. Giuliani asked.

“ ‘Those people go to jail,’ Mr. Dyson responded. ‘I do protest it. I’m a minister. They go to jail.’

“Mr. Dyson might want to try protesting a little harder. Chicago had 507 murders in 2012, only 26% of which were solved. ‘To put it another way: About three-quarters of the people who killed someone in Chicago in 2012 have gotten away with murder – so far, at least,’ Chicago Magazine noted. Mr. Dyson and others on the left are not oblivious to this black pathology, but they are at pains even to acknowledge it, let alone make it a focus. Instead, liberals spend their time spotlighting white racism, real or imagined, and touting it as an all-purpose explanation for bad black outcomes.”

Finally, here is what upset me most.

Missouri Gov. Jay Nixon proved he was a clown back in August, and his disappearing act on Monday and then his performance at his all-too-brief press conference Tuesday was reprehensible. Why those business owners didn’t have the protection they were promised, particularly with regards to the National Guard, is beyond belief.

Gov. Nixon shouldn’t just resign, he should be impeached. CNN’s Jeffrey Toobin said on Tuesday that clearly Nixon wasn’t taking responsibility for his state being on fire. That’s why the state legislature must take action.

If Nixon had done his job, you and I know the pictures would have been much different, and the images being beamed around the world would have been so as well.

Having traveled overseas extensively, I’m always sickened by how some perceive America. Many Europeans, for example, know our history far better than most of us do, but it is heavily slanted. No doubt Iraq hasn’t helped the cause in defending America these days, and I’ve had more than a few arguments in pubs over that topic. [In the end, by the way, always...always...let the other person win. I try to smile a lot while being bludgeoned, rhetorically that is.]

But, lastly, you can’t win arguments in the case of Michael Brown and Darren Wilson. There are some who simply refuse to look at the facts that are known, and who fail to acknowledge that there were many brave Americans who voluntarily testified before the grand jury to make sure the ‘truth’ was heard.

And I can’t help but add that I thought St. Louis County Prosecuting Attorney Robert McCulloch was masterful in his lengthy explanation of the grand jury’s findings. I tweeted, and I stand by it, that it was “a profile in courage.” That wasn’t accepted well by some, but never fight back in those forums.

In fact believe it or not, when I first started StocksandNews and I was doing a lot of advertising, nationwide, and appearing on radio shows around the country, I received a fair amount of hate mail. The best way to defuse it? Reply immediately and say, “Thanks for taking the time to write. Take care.” The critic never wrote back a second time.

--Finally, on a lighter note, George Will / Washington Post:

“Before the tryptophan in the turkey induces somnolence, give thanks for living in such an entertaining country....

“A severely moral California high school principal prohibited the football booster club from raising money by selling donated Chick-fil-A meals because this company opposed same-sex marriage. The school superintendent approved the ban because ‘we value inclusivity and diversity.’ Up to a point. At a Washington state community college, invitations to a ‘happy hour’ celebrating diversity and combating racism said white people were not invited....

“The federal government, which has Tomahawk cruise missiles and Apache and Lakota helicopters, used the code name ‘Geronimo’ in the attack that killed Osama bin Laden but objected to the name of the Washington Redskins....A U.S. Forest Service article on safe marshmallow toasting did not neglect to nag us: It suggested fruit rather than chocolate in s’mores....

“Niagara County, N.Y., spent $700,000 of its Tobacco Master Settlement Money not on fighting smoking but on golf course equipment....

“Joe Biden was off by 160,839 when citing the number of people killed in the 2011 Joplin, Mo., tornado. He said 161,000. But the former chairman of the Senate Foreign Relations Committee expressed optimism about ‘the nation of Africa.’....

“Alarmed by reports that global warming will cause a four-foot rise in sea levels, California Gov. Jerry Brown (D) warned that ‘Los Angeles’ airport’s going to be underwater.’ It is more than 120 feet above sea level.”

---

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

God bless America.
---

Gold closed at $1175
Oil $66.15...down $10.66 on the week

Returns for the week 11/24-11/28

Dow Jones +0.1% [17828]
S&P 500 +0.2% [2067]
S&P MidCap -0.1%
Russell 2000 +0.1%
Nasdaq +1.7% [4791]

Returns for the period 1/1/14-11/28/14

Dow Jones +7.6%
S&P 500 +11.9%
S&P MidCap +7.5%
Russell 2000 +0.8%
Nasdaq +14.7%

Bulls 56.5
Bears 13.8 [Source: Investors Intelligence]

Hope you had a good Thanksgiving. I appreciate your support.

Brian Trumbore



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-11/29/2014-      
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Week in Review

11/29/2014

For the week 11/24-11/28

[Posted 12:00 AM ET]

Edition 816

Washington and Wall Street

It was a depressing week, owing to the events Monday night in Ferguson, Missouri, plus a storm that hampered the plans of millions on the busiest travel day of the year. Overseas there were a slew of terror attacks, including one in Kenya that makes you wonder all over again just what kind of world we really live in these days. [Hint: It’s only getting worse.]

But stocks rose a sixth straight week, even if fractionally for the Dow Jones and S&P 500, while the price of crude oil collapsed. More on this in a bit.

On the data front, the week started off with the first revision to third-quarter GDP and it came in far hotter than expected, up 3.9% when the forecast was for a decrease from the flash estimate of 3.5% to 3.2%.

So couple the 3.9% with the second quarter’s 4.6% rise and this represented the biggest back-to-back advances for GDP since late 2003.

There were some potential warning signs, though, as consumer spending, which you all know represents 2/3’s of the economy, rose a modest 2.2% annualized in Q3 vs. a 2.5% pace in Q2. And on Wednesday there was a slew of data for October, including a poor reading on durable goods, -1.3% ex-aircraft, which is a core reading, while personal income, +0.2%, and consumption, also +0.2% for last month, were lighter than forecast.

New home sales for October were also below expectations, just 458,000 on an annualized basis, while the S&P / Case-Shiller home price index for September was up 4.9% year over year on the 20-city barometer, down from August’s 5.6% 12-month increase.

There’s just lackluster demand in housing these days, though also improved affordability with still historically low mortgage rates.

[One other item of note...the November Chicago Purchasing Managers Index was a solid 60.8, but it too didn’t meet analysts’ forecasts.]

Then there was the price action in oil. Last week, West Texas Intermediate (the figure I quote at the end of each WIR) broke a seven-week slide, finishing at $76.81 on Nov. 21. This week the collapse resumed and oil went cascading down below $70.00 a barrel to finish the week at $66.15...down a whopping 14% on the week, with the price having fallen over $40 since the mid-June weekly closing highs of nearly $107.00, or off about 38% in five months.

Early in the week we learned that U.S. imports of crude oil from OPEC nations are at the lowest levels in almost 30 years, according to a Financial Times analysis of Department of Energy data, with OPEC’s share dropping to 40%, the lowest since May 1985. At its peak, 1976, OPEC represented 88% of U.S. oil imports.

With U.S. domestic production at about 9m barrels a day, the highest level since the mid-1980s, and demand expanding eastward, producers from the Middle East, west Africa and Latin America are increasingly turning towards Asia; though the U.S. is still the second-largest net oil importer after China. [Anjil Raval / Financial Times]

Secondly, OPEC members met in Vienna this week and a number of things happened. Prior to the meeting, executives from non-OPEC Russian energy companies met with the cartel in the hopes OPEC would cut production, and/or Russia would do the same to boost prices, but Russia left quickly empty-handed.

Then on Thursday, OPEC ministers decided not to cut production levels to stem the price collapse. 

Abdalla Salem el-Badri, OPEC’s Libyan-born secretary general, brushed aside concerns about too much oil on the market leading to declining prices, saying OPEC was looking for a fair price and does not target a maximum or minimum one.

“We are not trying to send signals to anybody,” el-Badri said, in a reference to geopolitical considerations should the price continue to fall. “We should not rush or panic, we have to wait for the market to settle. The decline in prices that we have seen does not reflect fundamentals.”

But then the price promptly fell about $8 after the announcement. OPEC’s poorer members, such as Venezuela and Nigeria, let alone Iran, which is dealing with sanctions that have limited its exports, and non-member Russia, are suffering badly with the decline in revenues.

Liam Denning, writing in the Wall Street Journal’s “Heard on the Street” column, said “It will likely be years before we see triple-digit oil again.

“Saudi Arabia, the de facto leader of (OPEC), has a beef with a number of oil-market participants. It also appears to have woken up to the fact that OPEC has once again lost its grip on prices.

“Saudi Arabia’s chief antagonist is fellow OPEC member, and main geopolitical rival, Iran. Lower oil prices squeeze Iran’s finances and capacity to oppose Riyadh’s aims in regional warzones such as Syria. As an added bonus, lower oil prices also hurt non-member Russia, another antagonist....

“Beyond geopolitics,” continues Denning, “Saudi Arabia must simply try to reassert its primacy in the market. For much of the past decade, OPEC seemed to be in the driver’s seat. In reality, high prices, particularly in recent years, partly reflected OPEC’s inability to ensure adequate supply in the face of strong demand from emerging markets such as China. The eventual result is as old as commodity markets themselves: efforts to mitigate demand and a surge in alternative supplies, especially from the U.S....

“(For the Saudis), cutting output might juice oil prices in the short term, but would also give U.S. producers an incentive to keep drilling and consumers to keep conserving. What is more, many OPEC members, along with Russia, would free-ride off others’ cuts and keep pumping.”

So for the Saudis it’s about credibility, plus they’ve been using the days of $100+ oil to build up their foreign exchange reserves. They can weather a period of much lower prices. Others can’t. The Saudis want to slow shale development and undermine conservation efforts, and they will on both fronts.

As the meeting in Vienna adjourned, there was no talk of any extraordinary sessions before the next scheduled gathering in June, though this can change.

I have been writing for weeks now that some analysts were getting too cocky when it came to America’s producers’ ability to withstand a big decline in prices, particularly for shale projects. I wrote last week, before the latest downdraft, that a “renewed decline (in prices) due to slower economic growth, both here and abroad, will do a number on the likes of North Dakota, which at some point will be yet another classic example of boom and bust.”

I also noted how Deutsche Bank warned “that if oil fell to $60, there could be a 30% default rate among borrowers in the energy sector, who loaded up on debt to fund their operations and acquire new acreage in states like North Dakota.”

People who ignore history do so at their peril. While I haven’t been to North Dakota in about ten years, I am very familiar with some of the towns where the boom has transpired the past five...the rush to build housing for the flood of workers, new schools, the strain on city services, higher crime rates, fast-food workers making $20 an hour because of the labor shortage, etc. I’ve seen the stories on the network news and read a slew of articles on same.

I also remember a time in the summer of 1978 when I was between my sophomore and junior years in college and sold books door to door in Oklahoma and Kansas. One day my sales partner and I drove to the little town of Maud, Oklahoma, outside Shawnee, to try and pick up some sales. Within an hour we realized we were in a virtual ghost town, a once booming oil town that had long gone bust, and instead we ended up in a trailer that had been converted into a bar...but that’s a different story.

The point being boom and bust cycles occur endlessly in the commodities sector and while I have no idea if we are entering an official ‘bust,’ or if crude will rally back to the $80s and settle there for a spell, at which point everyone would breathe a sigh of relief, at some point the likes of North Dakota are going bust.

And while that may be good for most U.S. consumers, who pick up some extra cash to spend with lower prices at the pump, you all know the energy sector has been fueling the economic recovery, so what has been a nice run of GDP figures, save for the first quarter’s weather-related debacle, could reverse on a dime in the other direction.

It’s also not necessarily a good thing that Russia is getting absolutely crushed. There is no telling how Vlad the Impaler will react. I’ve felt for years Putin would be pushed out by his long-time crony, Igor Sechin, who runs energy behemoth Rosneft.

Just last year, 2013, Sechin spent $55 billion to acquire competitor TNK-BP, creating a giant that pumped almost 5% of the world’s total crude.

But with the plunge in prices, the entire Rosneft operation, including TNK-BP, is worth far less than the $55 billion Sechin paid for the latter!

Rosneft has huge amounts of debt to repay, like to the tune of $60 billion, and Sechin has been asking his buddy Putin to dig into the treasury to help him out.

It’s going to get very complicated, and increasingly messy. According to Bloomberg, $30 billion of Rosneft’s debt comes due by end of 2015 and this is but a microcosm of many companies, globally, in the sector.

But for now, enjoy the decline at the pump. Treat yourself to a nice meal, a play, a sporting event, some premium beer. Just remember there will be some potentially scary costs to the immediate benefits many of us are reaping.

Europe and Asia

Turning to Europe, the Organization for Economic Cooperation and Development (OECD) said the euro area may be stuck in persistent stagnation. The GDP of the euro-18 nations is still below its pre-crisis peak, compared with the U.S. and U.K. that have handily surpassed theirs.

The OECD said the euro area “will remain weak because of still-high public and private debt, tight credit conditions and high unemployment.” Plus there is no shortage of geopolitical risks in Eastern Europe.

So the OECD is calling on the European Central Bank to introduce “additional stimulus measures to keep long-term interest rates constant over the coming two years,” stepping up asset purchases, as reported by BBC News.

And that is what the ECB has been stating it will do, with Vice President Vitor Constancio saying this week that the ECB will likely begin buying sovereign debt in the first quarter. ECB President Mario Draghi has said his desire is to revive inflation “as fast as possible.”

So with the ECB gathering next week for another session of the Governing Council, amid the expectation of a further announcement on specifics, yields collapsed to new record lows across euroland.

The yield on the German 10-year bund finished the week at 0.70% (vs. the yield on the U.S. 10-year of 2.17%). France’s paper is at 0.97%. Spain’s down to 1.89%. Italy finished the week at just 2.03%. Portugal 2.83%.

Only Greece continues to suffer because of ongoing political and financial concerns and its 10-year yield has been rising anew, back up to 8.13%.

I’m sticking with my prior statement that you are playing with fire in the euro bond markets, particularly Italy. Many smart investors have made a killing, including in Greece, going back to the height of the crisis.

But unless there is consistent economic growth, when you’re Italy with a debt-to-GDP ratio of 135%, and an economy back in recession, 2.03% makes little sense no matter what the ECB does.

Granted there is no inflation in euroland, either, as Eurostats’ flash estimate for prices in November came in at 0.3% annualized vs. October’s 0.4%, well below the ECB’s 2.0% target. Spain’s National Statistics Institute said consumer prices fell 0.5% in November, year over year. Prices are falling in Belgium as well.

Eurostats also released the euro-18 unemployment figures for October, unchanged at 11.5% vs. September, and down just 0.4% from the 11.9% pace of a year earlier. That’s just a further sign of stagnation, sports fans.

While Eurostats pegs Germany’s unemployment rate at a eurozone low of 4.9%, with Austria at 5.1%, France was unchanged at 10.5% for October, up from 10.2% a year earlier, while Italy rose to a record 13.2%. It was 12.3%, 10/13.

Spain’s has come down to 24.0% from 26.0% a year earlier, but that’s still 24.0%. Greece is at 25.9% for August (latest data point there).

[For those following Ireland closely, such as yours truly, its rate is 10.9%, down from 12.4% year over year.]

But then you still have the youth unemployment situation. The jobless rate for the under 25 set is down to 49.3% in Greece (August), but still 53.8% in Spain and up to 43.3% in Italy.

So European Commission President Jean-Claude Juncker unveiled a long-awaited stimulus program, some $393 billion worth, and immediately critics said it was too small.

For starters, $393 billion for investment in items like broadband, energy networks and transport infrastructure, as well as education and research, may seem like a decent sum, but understand the EC is kicking in only about $26 billion in “seed money,” with private investors expected to “pitch in” most of the rest. The head of the European Trade Union Confederation, Bernadette Segol, suggested the Commission was “relying on a financial miracle like the loaves and fishes.” 

Segol told the BBC that the leverage factor of 15 between the $26bn and $393bn was “almost certainly unrealistic.”

Plus talk about zero specifics. For starters, Juencker said he could not promise how much investment would go to each country, which given the contentious European Parliament will be a veritable slugfest when it gets down to divvying up the tiny initial amount.

Plus given the current state of affairs, how many in the private sector will be jumping up and down to take on risks?

This week, Pope Francis gave an address to members of the Euro parliament wherein he depicted the sense of decline across the continent. “We encounter a general impression of weariness and ageing, of a Europe that is now a grandmother, no longer fertile and vibrant,” the Pope said.

“The great ideals which once inspired Europe seem to have lost their attraction, only to be replaced by the bureaucratic technicalities of its institutions,” he added.

Pope Francis exhorted lawmakers to build Europe “not around the economy, but around the sacred nature of the human person.”

Hey, you may not agree with the Pope, but Europe is broken. His remedy is worth trying.

Martin Schulz, the German socialist and president of the body, said in response: “Your message of peace and dialogue, sincerity and responsibility for each other, of solidarity and togetherness make it very clear that together we need to find common solutions to our challenges.” 

Manfred Weber, a German Christian Democrat who is chairman of the center-right European People’s Party, called the Pope’s speech a “timely wake-up call” to Europeans. [James Politi / Financial Times]

--Just a few notes on the British economy. Consumer spending rose 0.8% in the third quarter, though business investment declined 0.7%. GDP for the third quarter over the second was up 0.7%, 3% annualized.

In Asia, China will be releasing a slew of month-end data next week so nothing there for now on the economic front except to note industrial profits fell 2.1% from a year earlier in October, the worst performance since August 2012.

In Japan, inflation in the month of October was up 2.9% year over year, but up just 0.9% ex-effects of April’s tax hike. Retail sales fell a worse than expected 1.4% in the month over September, while industrial production rose just 0.2%. Household spending declined 4% from a year ago, also not good. The jobless rate, though, is just 3.5%.

Prime Minister Abe is seeking a fresh mandate for Abenomics with the snap election on Dec. 14.

Street Bytes

--As noted above the Dow Jones and S&P 500 registered fractional gains for the holiday-shortened week. The Dow picked up 0.1% to close at a new all-time high of 17828. The S&P was up 0.2% to 2067, though on Wednesday it closed at its new high, 2072. Nasdaq gained a solid 1.7% to 4791 and is now up 14.7% on the year.

But stocks certainly aren’t cheap, with a trailing P/E on the S&P of 20, while the 17 multiple on forecast earnings for the next 12 months is also pricey. David Kostin, Goldman Sachs’ chief U.S. stock strategist, says this later number normally averages 12.6. [E.S. Browning / Wall Street Journal]

--The past five Decembers have seen the S&P 500 gain about 2.5% on average for the month. But as Spencer Jakab of the Wall Street Journal notes, globally, the best December performance is “from a country where relatively few boys and girls wait for St. Nick: India,” with a whopping average gain of 3.8% in the month over the past 20 years.

--U.S. Treasury Yields

6-mo. 0.07% 2-yr. 0.48% 10-yr. 2.17% 30-yr. 2.90%

The 10-year busted out of that 2.30% to 2.38% trading range I noted last time, running the streak to 20 straight sessions on Monday before the yield fell below 2.30%. 2.17% is a five-week low.

The Fed’s preferred inflation indicator, the PCE, or personal consumption expenditures index, ran at a 1.4% pace in October, 1.6% on core, so below the 2% target for a 30th consecutive month.

--On the Ebola front, last weekend you had a potential nightmare when bandits stopped a taxi van in Guinea and took blood samples believed to be infected with the virus. Four Red Cross officials were accompanying the samples when armed assailants stopped the vehicle. I haven’t seen any updates.

But there was some potentially good news as GlaxoSmithKline said a vaccine it has been working on could be given to healthcare workers in west Africa early next year after initial testing on humans showed promise. [Merck (through a recent acquisition) and Johnson & Johnson are also working on vaccines but GSK’s is the most advanced.]

UN Secretary General Ban Ki-moon said the Ebola outbreak can be ended “by the  middle of next year” if the world speeds up its response, though he added while the number of cases in parts of west Africa was slowing, Mali, with at least six deaths, was of deep concern, where over 500 are under surveillance.

Anthony Banbury, the head of the UN Ebola mission, said the world was “far away” from beating the virus.

The pace of new cases in Liberia may be declining, but as the New York Times’ Jeffrey Gettleman reported Friday, more than 1,800 new cases have been reported in Sierra Leone just this month, according to the World Health Organization, three times the level in Liberia. 

And The Economist raised the topic that was the original reason for my updates on Ebola specifically in this section of WIR. The costs, both economic and human.

“The cost to west Africa under (two scenarios given by the World Bank) ranges from $1.6 billion to $25 billion over time. By way of comparison, the economy of Liberia produces a little less than $2 billion a year and that of Sierra Leone under $5 billion.

“These estimates assume that the disease does not spread much within west Africa. If it does, the cost could exceed $32 billion by the end of 2015, according to the World Bank.

“Over the longer term the costs are likely to be far higher, and the impacts more insidious. Among the first casualties of Ebola are healthcare workers. Many of those who do not fall ill flee. Within weeks of the disease breaking out in Liberia, it was estimated that fewer than 50 local doctors were still at their post. By weakening already fragile health systems, Ebola will also kill tens of thousands indirectly through malaria, diarrhea and HIV. Investors and skilled foreigners will shun affected countries, depriving them of skills and capital. Three of Africa’s poorest countries will be yet poorer.”

Ebola isn’t the only medical issue to be concerned about these days. An outbreak of plague in Madagascar had killed at least 40 as of last weekend, according to the WHO, as it warned of a “rapid spread” of the disease in the capital, Antanavarivo. 

Humans normally get the plague after being bitten by an infected flea carried by rodents.

As reported by BBC News, “If diagnosed early, bubonic plague can be treated with antibiotics. But 2% of the cases in Madagascar are the more dangerous pneumonic form of the disease, which can be spread person-to-person by coughing.”

--For the record, AAA said the average price for a gallon of regular gasoline nationwide was $2.81 on Nov. 23, lowest in four years. The Lundberg survey, released last Sunday, pegged it at $2.84. The peak this year was in May, $3.72. Of course it’s coming down further.

--A report in Xinhua, the official China news agency, said a company whose name begins with ‘M’ had been penalized for tax evasion. That’s ‘M’ as in Microsoft, which, according to the Financial Times, has been charged by the Chinese government with owing $140 million in back taxes and interest. Xinhua says Microsoft admitted to the tax evasion.

Microsoft, however, said it had agreed to pay the $140 million as a “bilateral advanced pricing agreement” going back to 2012, per a previous deal between tax authorities in the U.S. and China.

--Meanwhile, while Americans were eating their turkey and watching unexciting football on Thursday, France and Germany asked the European Union to look into new competition rules that would target the business practices of the likes of U.S. tech giants such as Apple, Facebook and Google.

This comes after Europe’s privacy regulators asked Google to extend the EU’s new “right to be forgotten” rules to websites outside Europe, while the U.K. is demanding Facebook and its ilk do more to identify and erase extremist content.

European authorities are upset at the reach of Silicon Valley’s leaders and how they pay relatively little corporate tax in Europe despite pulling in huge revenues.

This battle has been simmering and it’s about to boil over, with Euro governments also complaining they can’t keep up with Google and Facebook on issues such as privacy and surveillance. We’ve already seen how upset Germany becomes over privacy issues, going back to the Merkel / cellphone debacle. [Though as we’ve also learned, they play the game too.]

--Canada’s economy grew at a 2.8% annualized pace in the third quarter, the government reported on Friday, better than expected though down from Q2’s 3.6% clip.

--Brazil reported GDP growth of 0.1% in the third quarter over the second, thus technically ending recession here, though the economy is far from being out of the woods.

--India’s economy recorded growth of 5.3% in Q3 over a year earlier, with manufacturing, 15% of economic activity, expanding just 0.1%. India grew at a 5.7% annualized clip in the second quarter. It had been growing at an 8% pace for a decade, starting in 2003.

--Sweden recorded growth of 0.3% in the third quarter from the second, beating estimates. The central bank is forecasting growth of 1.9% this year and 2.7% in 2015.

--Denmark grew at a 0.5% clip in Q3 over Q2. Most economists forecast a decline in economic activity. Said economists blow.

--According to the Government Accountability Office (GAO), the average cost for each military satellite launch performed by a joint venture owned by Boeing Co. and Lockheed Martin Corp., has soared to $420 million, while Elon Musk said his upstart SpaceX can do it for $100 million, as reported by the Los Angeles Times’ Melody Petersen.

“Air Force officials are in the final stages of a years-long, detailed review of the rocket company’s launches and operations. A decision on whether to certify SpaceX for the launches, they said, is expected next month.

“ ‘This is huge,’ said Marco Caceres, senior analyst and director of space studies at Teal Group. ‘It would break up a monopoly and has the potential to save the taxpayer an awful lot of money.’”

Boeing and Lockheed have faced no competition for the launches, which now rank as the nation’s “fourth-most-costly weapons program,” as noted by Ms. Petersen.

Before the joint venture, Boeing and Lockheed competed against each other for contracts. The bill skyrocketed after they began working together. Gee, how does that happen?

Those supporting the Boeing-Lockheed venture note their launches have been very reliable.

--The U.S. Environmental Protection Agency proposed lower limits for ground-level ozone, or smog, which is part of a battle between businesses and environmental groups that has been going on for three years now, back to 2011, when the EPA estimated that proposed standards would cost utilities and other businesses an estimated $90 billion vs. $100 billion a year in public-health benefits. President Obama then delayed issuing them.

Now, the EPA just estimates the costs at between $3 billion and $15 billion in 2025, vs. benefits of between $6.4 billion and $19 billion, as reported by Amy Harder of the Wall Street Journal.

Well this is screwed up.

It’s also the states, not business, that must comply with ozone standards.

The EPA did say there will be a public comment period so nothing is happening, either way, for a while, though this may not be clear from some of the political rhetoric you hear on both sides.

It was the Bush 43 administration that first tightened the standards and states and businesses have been largely complying with them.

--The high-end home market is booming in Southern California, with the number of homes bought for $2 million or more in recent months the highest on record, as reported by the Los Angeles Times’ Tim Logan.

According to CoreLogic DataQuick, a record 1,436 homes worth $2 million or more were sold in the six-county Southland in the second quarter; 1,431 in the third quarter, which comes even as I’ve written recently of how the broader market in the region has leveled off.

It’s the Fed-infused economy in a nutshell. Cheap money has fueled financial assets for the top 1% or so, while the middle-class, which largely doesn’t have the Wall Street exposure, has been dealing, for starters, with stagnant wages.

--Hewlett-Packard Co. reported its latest financial results and revenue has now declined 12 of the last 13 quarters, including a 2.5% decline in the three months ended Oct. 31 when compared with last year. But profits have improved over this time, the three-years Meg Whitman has been CEO.

H-P is proceeding with its plan to break up the company in two...Hewlett-Packard Enterprises – which will include hardware, software and consulting – the supposed growth company, while the other, dubbed HP Inc., includes the old-line businesses of personal computers and printers.

The thing is H-P Enterprises, the arm Whitman is slated to run, had a 4.7% revenue decline for the quarter, while the old-guard business lines posted a slight increase.

--For the month of October, North Dakota continued to have the lowest unemployment rate in the country, 2.8%*. South Dakota was next at 3.3%, with Nebraska at 3.4%. Georgia is the highest, 7.7%.

*This could be about to change.

--Hedge fund king David Tepper is returning a reported $2 billion to $4 billion to investors in his $20 billion Appaloosa Management funds in an attempt to become more “nimble,” as noted by the New York Post.

Through October, his main Palomino fund was down 2.3% for the year, but I can’t believe his investors are that upset because the same fund was up 42% and 29% in each of the prior two years! As Ronald Reagan would have said, ‘Not bad, not bad all.’

Plus Tepper almost always returns some money at year end. He’ll come roaring back in 2015.

--Tiffany & Co.’s quarterly results are always a pretty good economic barometer, including of the picture overseas, particularly Asia. Sales rose 5.3% in the October quarter (a slight miss vs. expectations) with same-store sales growth in the Americas of 11%!

But that means things weren’t as good elsewhere and same-store sales fell 6% in Japan during that period. Overall in the Asia-Pacific region, same-store sales fell 3%.

The shares nonetheless hit a new all-time high of $110.60 before closing the week at $107.90.

--Speaking of luxury, Crain’s New York Business and Bloomberg reported that the landmark Saks Fifth Avenue building in Manhattan was appraised at $3.7 billion! Goodness gracious. The parent, Hudson’s Bay Co., is seeking to squeeze more money out of its real estate and the property could be used to secure additional debt, or spun out as part of a real estate investment trust.

Shares in Hudson Bay rose 12% on the news, in no small part because the company had acquired the ‘entire’ Saks chain last year for $2.9 billion.

The Saks store and building is about to undergo a $250 million renovation starting next year.

--Despite political tensions between Japan and China, the number of Chinese tourists to the island nation is up 80% for the first ten months of 2014 vs. the same period last year. Overall, the Japan National Tourism Organization revealed tourism is up 27.1%, owing in no small part to a favorable exchange rate. Tourism is a huge part of the Japanese government’s efforts to boost the domestic economy.

But they would be doing even better if the government had not recently shelved a bill that repealed the ban on casinos.

--Sir Chris Hohn is one of the world’s leading hedge fund operators with a personal fortune said to be in the neighborhood of $1.3 billion, according to the Financial Times.

Well make that $1.3 billion minus $530 million, the amount he has agreed to pay his American-born ex-wife, Jamie Cooper Hohn, in the biggest divorce settlement ever awarded by an English court. It is said Ms. Cooper-Hohn will receive $493 million in cash and a house in Connecticut.

Someone tell Jamie I have no problem living in Connecticut. 

This case comes just weeks after oil billionaire Harold Hamm agreed to pay his ex-wife about $973 million in a divorce settlement in Oklahoma.

--According to Nielsen Media Research, Fox News Channel won the ratings game on Monday night with its Ferguson, Mo., coverage, averaging about 5.6 million people during prime-time. CNN was second with about 5 million viewers. MSNBC had 1.6 million.   

--Needless to say, Wednesday was a sloppy weather day in the Mid-Atlantic and Northeast, though it could have been worse. That said if you were stuck at Newark Liberty International or LaGuardia airports, it was probably more than a bit “frustrating.” According to a survey by Bloomberg Businessweek, these two are the most frustrating among 36 major airports across the U.S. and Canada.

Vancouver International was the least frustrating, followed by Portland Oregon International (I like this one).

But did I tell you Newark doesn’t have enough bathrooms? I did? Like 52 times over the years? Oh, sorry.

--On Nov. 21, 1964, the Verrazano-Narrows Bridge opened; connecting Staten Island to New York’s other boroughs. The toll then was 50 cents each way. Today the round-trip cash toll is $15. 17.6 million vehicles used it its first full year in service. In 2013, the total was 65 million. [Colleen Wilson / Wall Street Journal]

--I liked this comment from a Dollar Tree official on why his company doesn’t do anything special for Black Friday.

“We sell our items for $1 or less all year round, so we feel we’re already providing a great value to our customers.”

--Crain’s New York Business reports only 88% of companies this year will host a holiday party, vs. 96% last year and 91% in 2012, according to executive recruiting firm, Battalia Winston’s annual national survey on the topic. [Lisa Fickenscher]

Kind of surprising, though here at StocksandNews, we are eschewing the party for a tenth straight year, with the owner this time blaming a huge ObamaCare related premium increase of 60%, in order to keep our doctor. “If you like your doctor, you can keep your doctor”...you just might have to pay 60% more. We’ve been Grubered.

Foreign Affairs

Iran: As expected, talks between Iran and the P5+1 (U.S., U.K., France, China, Russia and Germany) on Tehran’s nuclear program were extended another seven months, through next June, as no agreement was reached by the Nov. 24 deadline. The extension itself is longer than I would have thought and many are not happy with this fact.

Negotiators said the second extension of the original interim agreement reached in November 2013, will continue to restrain Iran’s attempts to develop a nuclear weapon. But you can be sure the new Republican Senate will increase pressure on the White House to step up economic sanctions, though for now, Sen. Bob Corker (Tenn.), the ranking Republican on the Foreign Relations Committee who will become chairman in January, offered, “I would rather the administration continue to negotiate than agree to a bad deal. Congress must have the opportunity to weigh in before implementation of any final agreement and begin preparing alternatives, including tougher sanctions, should negotiations fail.”

House Intelligence Committee Chairman Mike Rogers (R-Mich.) said the negotiations “have done little to advance the security of the United States and our allies, but they have benefited Iran,” which has been allowed to continue enrichment and won back some of its sanctions-frozen assets.

“While the White House longs for a deal, Iran strengthens its hand,” Rogers said. “It is time for the administration to reconsider its entire approach to Iran.” [Carol Morello and Karen DeYoung / Washington Post]

Secretary of State John Kerry said “Real and substantial progress” was made, while acknowledging “significant points of disagreement” remain.

“These talks are not going to get any easier just because we extend them,” he said. “They’re tough.” He added that all sides will reassess where they stand after the next four months.

For his part, Israeli Prime Minister Benjamin Netanyahu said, Israel “is watching very carefully what is happening here, and Israel always – always – reserves the right to defend itself.”

It is said the prime remaining issues are the number of centrifuges Iran is allowed to permanently operate and the level of enrichment; new levels of inspection, including on suspected weapons tests; and how fast sanctions could be lifted.

Bottom line...it’s about how quickly Iran could “break out,” or rapidly amass enough weapons grade material to build a bomb.

Iranian President Hassan Rohani predicted that more negotiations “will lead to a deal, sooner or later.”

Iran’s supreme leader, Ayatollah Ali Khamenei, said in an address on Thursday, “I do not disagree with the extension of negotiations, as I have not disagreed with negotiations in the first place.”

Khamenei said Iran’s negotiating team had been firm and “have not caved in.”

But earlier Khamenei blasted the U.S. in various statements, saying: “America is a chameleon; every day it says something new.”

And... “On the nuclear issue, the United States and European colonialist countries gathered and applied their entire efforts to bring the Islamic Republic to its knees but they could not and they will not.”

And... “If the negotiations do not yield results, it is America that will be the loser.”

As Karim Sadjadpour, an Iran expert at the Carnegie Endowment for International Peace in Washington, told the Wall Street Journal: “Between now and January 2017, Obama wants to avert an Iranian bomb and avert bombing Iran. Extending negotiations is not ideal but it checks both these boxes.”

Lee Smith / The Weekly Standard

“Maybe the Obama administration was simply naïve to have believed that Supreme Leader Ali Khamenei would give newly elected President Hassan Rohani a lot of room to maneuver in nuclear talks. Perhaps the White House was arrogant to think that sanctions relief would get Rohani, as some administration officials put it, ‘addicted to cash’ and force him to make concessions on the nuclear program in order to revive the Iranian economy.

“If it wasn’t simply naivete and arrogance, then the White House misled the American people and their representatives in Congress as well as U.S. allies. Either way, the end result is an empowered Islamic Republic and a further crumbling of the American-brokered order in the Middle East.

“The White House prides itself on the notion that its nuclear negotiations with Iran will have prevented an otherwise inevitable war. The truth is the opposite. In lifting sanctions and yielding repeatedly to an expansionist Iran, the Obama administration has brought America and its allies to this pass: Either Iran will get a nuclear bomb, or war will be the only way to stop it. Worse, the administration has increased the chances we might get both outcomes at once.”

Bret Stephens / Wall Street Journal

(What’s) at stake in these negotiations isn’t their outcome, assuming there ever is an outcome. It’s the extent to which the outcome facilitates, or obstructs, our willingness to continue to fool ourselves about the consequences of an Iran with a nuclear weapon.

“The latest confirmation of the obvious comes to us courtesy of a Nov. 17 report from David Albright and his team at the scrupulously nonpartisan Institute for Science and International Security. The ISIS study, based on findings from the International Atomic Energy Agency, concluded that Iran was stonewalling U.N. inspectors on the military dimensions of its program. It noted that Tehran had tested a model for an advanced centrifuge, in violation of the 2013 interim agreement. And it cited Iran for trying to conceal evidence of nuclear-weapons development at a military facility called Parchin.

“ ‘By failing to address the IAEA’s concerns, Iran is complicating, and even threatening, the achievement of a long term nuclear deal,’ the report notes dryly.

“These are only Iran’s most recent evasions, piled atop two decades of documented nuclear deception....but what are we to make of an American administration that is intent on providing cover for Iran’s cover-ups? ‘The IAEA has verified that Iran has complied with its commitments,’ Wendy Sherman, the top U.S. nuclear negotiator, testified in July to the Senate Foreign Relations Committee. ‘It has done what it promised to do.’ John Kerry went one better, telling reporters Monday that ‘Iran has lived up’ to its commitments.

“The statement is false: Yukiya Amano, the director general of the IAEA, complained last week that Iran had ‘not provided any explanations that enable the Agency to clarify the outstanding practical measures’ related to suspected work on weaponization. Since when did trust but verify become whitewash and hornswoggle?:...

“Eventually, something will happen. Perhaps Iran will simply walk away from the talks, daring this feckless administration to act. Perhaps we will discover another undeclared Iranian nuclear facility, possibly not in Iran itself. Perhaps the Israelis really will act. Perhaps the Saudis will.

“All of this may suit the president’s psychological yearning to turn himself into a bystander – innocent, in his own eyes – in the Iranian nuclear crisis. But it’s also a useful reminder that, in the contest between hard-won experience and disappointed idealism, the latter always wins in the liberal mind.”

Iraq / Syria / ISIS: Iraqi forces are said to have held off an ISIS assault on government headquarters in the capital of Anbar province, Ramadi, which is one of the last major urban areas in Anbar under government control.

The province’s governor, Ahmad al-Dulaimi, told German television, where he is recovering after being wounded by a mortar round in September, “If we lose Anbar...we will lose Iraq.” [Daily Star] I think I would stay in Germany, Mr. Dulaimi.

ISIS still controls three key cities – Mosul, Tikrit and Fallujah, let alone vast tracts of Anbar.

It’s so difficult these days getting accurate information on the fighting in both Iraq and Syria. I legitimately read about 20 sources a day and I just do my best to piece it together, having a good understanding after all these years what is probably close to being accurate and what is B.S.

For example the Daily Star reports that the “Soufan think tank,” which I’ve never heard of, “said ISIS needed a victory in Anbar to maintain the threat against Baghdad, discourage a mass Sunni tribal campaign and boost its ranks’ morale.

“ ‘Facing a bleak future in which its opponents get stronger while it gets weaker and further encircled, [ISIS] is pushing hard in Anbar province,’ it said.

“ISIS ‘is trying to gain more strongholds closer to Baghdad from which to launch attacks into the capital,’ it added.”

As for Syria, the British-based Syrian Observatory for Human Rights said President Bashar Assad carried out airstrikes on a provincial capital, Raqqa, that had been seized by ISIS, and at least 95 were killed, more than half of them civilians.

This is a direct result of U.S. policy, or lack thereof. On Sunday, Vice President Biden held talks with Turkish leaders, including President Erdogan, and Ankara continues to insist that U.S. strategy include ejecting President Assad. Anything less is “incoherent.”

Dennis Ross (former special assistant to President Obama and Middle East envoyt) / Washington Post:

“Perhaps it is time for the administration to rethink its position on creating a buffer for the Syrian opposition along the Turkish-Syrian border. The buffer could be created by declaring that any Syrian aircraft that flies within 75 miles of the border will be shot down by the Patriot batteries that NATO has deployed along the border. The buffer area would address a variety of needs: Politically, it would give the opposition an area within Syria to organize, coalesce and overcome their differences; militarily, it would provide a base to train in Syria, providing forces there far greater legitimacy; and from a humanitarian standpoint, it would provide a haven at a time when Syrian refugees are being blocked from entering Turkey, Jordan and Lebanon.”

Yup, all together now. I wrote we should have been doing all the above two years ago!

Michael Young / Daily Star

“(President) Obama has set down foreign policy conditions, or red lines, that make a coherent (Middle East) policy next to impossible. And the president refuses to separate himself from the one person whose job it is to coordinate and impose a direction when it comes to American foreign affairs: the national security adviser, Susan Rice....

“(When ambassador to the United Nations, Rice) took strong positions on the slaughter in Syria, leading many to remember her regret for having failed to urge action to stop the genocide in Rwanda in 1994 when she was in the National Security Council. Rice famously said, ‘I swore to myself that if I ever faced such a crisis again, I would come down on the side of dramatic action, going down in flames if that was required.’

“But since she joined the White House two years ago, she has conveniently put that vow aside, much as did her successor at the U.N., Samantha Power, the author of a much-hailed book on American inaction toward genocide. Insincerity in the defense of a career is no vice. Instead, what has gone down in flames are America’s alliances in the Middle East, so that next to Obama, even George W. Bush comes across as a great conciliator.

“Recall how the earnest Norwegians of the Nobel Peace Prize committee rewarded Obama back in 2009, imagining that he ticked all the boxes in their checklist of global responsibility. That was before his indifference to the carnage in Syria would destroy his integrity, and long before he sent a letter to Iran’s Ayatollah Ali Khamenei reassuring him that American attacks against ISIS in Syria would not target the Assad regime’s forces, which have continued to murder Syrians with abandon.”

This week, Russian President Vladimir Putin and Foreign Minister Sergey Lavrov held talks with Assad’s foreign minister, Walid al-Moallem, on the Black Sea, with Putin and Lavrov reiterating their support for Assad and his efforts to combat “terrorism” in the Middle East. There have been no peace talks in Syria since the last round collapsed in February. But as I noted, also two years ago, it’s been long already over.

Israel: Shin Bet said it thwarted a series of Hamas-planned terror attacks, including at a rail station and soccer stadium in Jerusalem. More than 30 Hamas members have been arrested for their suspected involvement.

William Kristol / The Weekly Standard

“Congress can’t bring about ‘peace’ between Israel and its enemies. But it can help bring about relative quiet and stability. One way it can do so is to tell the administration to stop making things worse with the ‘peace process,’ which has become a terror process. An obsession with the ‘peace process’ encourages Palestinians and their backers around the world to think that with a little more pressure – ranging from terror to boycotts – Israel can be forced to make concessions. But having pulled out of Gaza, and having tried time and again to respect Palestinian wishes and demands (God forbid Jews should intone prayers themselves on the Temple Mount!), Israel is not now going to make further concessions under pressure. Nor should she.

“America has the misfortune to have an anti-Israel president for two more years. America has the good fortune to have a pro-Israel Congress for that same period of time. It should be a priority for that Congress, through speech and deed, to signal unequivocally to Israel and its enemies that terror and pressure against Israel will not succeed, and that America stands with Israel in our common fight against terror and barbarism.”

On a different issue, last Sunday the Israeli cabinet descended into a shouting match over the controversial “Jewish state bill.” I profess to know little of the topic, so I’m relying on a report by Lahav Harkovherg Keinon in the Jerusalem Post.

“(Prime Minister) Netanyahu said Israel is the national home of the Jewish people where there are equal rights for every citizen. ‘But there are national rights only for the Jewish people; a flag, anthem, the right of every Jew to immigrate to Israel, and other national symbols,’ he said.

“The prime minister said this law was needed at this time because many people are challenging the idea that Israel is the national homeland of the Jewish people.

“ ‘The Palestinians refuse to recognize this, and there is also opposition from within – there are those who want to establish autonomy in the Galilee and the Negev, and who deny our national rights,’ he said. “ I also don’t understand those who call for two states for two peoples, but at the same time opposing anchoring that in law. They are quick to recognize a Palestinian national home, but adamantly oppose a Jewish national home.’

“The cabinet authorized three versions of the Basic Law: Israel as the Nation-State of the Jewish People with 15 votes in favor and six opposed” – including Netanyahu’s version.

But the issue devolved into a shouting match with Netanyahu saying it was no time for weakness, while some ministers said just because they may not agree, didn’t mean they were weak.

“Netanyahu banged on the table and said ‘it cannot be that Arabs can live in Jewish towns, but Jews can’t live in Arab towns. A country within a country is developing.’”

To be continued...or maybe not...

Russia: While it’s not getting a lot of press, deadly fighting in Ukraine’s disputed Donetsk and Luhansk regions continues.

German Chancellor Angela Merkel has issued some tough statements concerning Russian President Vladimir Putin and his ambitions, warning him this week to stay out of the Balkans and Georgia. Berlin worries that even EU member states like Bulgaria are vulnerable. Other targets include the likes of Slovakia and Hungary, both heavily dependent on Russia for gas, or Estonia and Latvia, with their heavy Russian minorities.

A German official told the Financial Times: “This is really about Moscow’s influence on the outside world. There is no reason why it should be limited to Ukraine. If they want to stake out a claim for the future they will do it everywhere. It’s quite clear in Serbia.”

Yes, Serbia is a name that keeps coming up because the Serbs are still miffed over the aftermath of the Balkan wars of the 1990s and the loss of Kosovo, which broke away in 1999. Kosovo is recognized by most EU states, but Russia supports Belgrade’s non-recognition.

Meanwhile, NATO Secretary-General Jens Stoltenberg said of the Kremlin’s actions in Ukraine:

“We see the movement of troops, of equipment, of tanks, of artillery, of advance air-defense systems, and this is in violation of the cease-fire agreements.”

NATO’s top military commander, U.S. Gen. Philip Breedlove, was in Kiev on Wednesday and accused Moscow of “militarizing” Crimea, adding “the alliance was on the watch for indications that Russia would station ‘nuclear capabilities’ on the territory,” as reported by Carol J. Williams of the Los Angeles Times.

Separately, in an interview published by state news agency TASS last Sunday, Vladimir Putin said he does not intend to remain president for life as keeping the post for too long would be “not good and detrimental for the country and I do not need it,” though he did not rule out running for re-election in 2018.

Putin, addressing the issue of whether Russia is increasingly isolated, said he is not seeking to steer the country in the direction of another Iron Curtain.

“We realize the malignity of the Iron Curtain for us. There were periods in the history of other countries, which tried to isolate themselves from the rest of the world and paid very dearly for that...Undoubtedly we are not taking this path.”

On his relationship with Barack Obama, Putin said: “The president of the United States and I know each other. I can’t say that we have quite close relationships, but he is a clever person and can evaluate all this.” [Moscow Times]

Editorial / Washington Post

“The Kremlin is certainly behaving as if it has nothing to fear from the United States or European Union. In the past two weeks, it has brazenly dispatched more troops and heavy weapons to eastern Ukraine while shrugging off protests from NATO. Ukrainian government officials say they believe the Russian forces and their puppet allies may be preparing a major offensive to capture more territory – Mr. Putin is thought to covet a land bridge between Russia and the occupied province of Crimea. As it is, Moscow’s forces are launching small-scale attacks nearly every day. According to the United Nations, more than 1,000 people have been killed since a cease-fire deal on terms dictated by Russia was signed Sept. 5.

“Yet last week Vice President Biden once again turned aside pleas from Ukrainian leaders for defensive weapons, such as antitank missiles, that might help deter more Russian aggression. Instead, he lectured the democratically elected government on the need to adopt economic austerity and legal reforms.

“On Monday, Mr. Putin signed a treaty with the puppet state of Abkhazia, a province of Georgia that Russian troops invaded and occupied in 2008. Moscow’s attempt to win international recognition for Abkhazia and another Georgian province, South Ossetia, as independent states failed. So it is taking steps to incorporate them into Russia. The treaty with Abkhazia gives Moscow control over the province’s military, foreign policy and economy and allows residents to easily obtain Russian citizenship. The State Department issued a statement saying it wouldn’t recognize the treaty, but there was no mention of further sanctions.

“In fact, the West appears to be tiring of confronting Russia even as Mr. Putin escalates his imperialism.”

As for the state of the Russian economy...Editorial / The Economist

“Vladimir Putin is not short of problems, many of his own creation. There is the carnage in eastern Ukraine, where he is continuing to stir things up. There are his fraught relations with the West, with even Germany turning against him now. There is an Islamist insurgency on his borders and at home there is grumbling among the growing numbers who doubt the wisdom of his Ukraine policy. But one problem could yet eclipse all these: Russia’s wounded economy could fall into a crisis.

“Some of Russia’s ailments are well known. Its oil-fired economy surged upward on rising energy prices; now that oil has tumbled, from an average of almost $110 a barrel in the first half of the year to below $80, Russia is hurting. More than two-thirds of exports come from energy. The ruble has fallen by 23% in three months. [Ed. more now] Western sanctions have also caused pain, as bankers have applied the restrictions not just to Mr. Putin’s cronies, but to a much longer tally of Russian businesses. More generally, years of kleptocracy have had a corrosive effect on the place. Much of the country’s wealth has been divided among Mr. Putin’s friends.

“Everybody expects continued stagnation, but the conventional wisdom is that Mr. Putin is strong enough to withstand this. The falling ruble has made some export industries like farming more competitive. These exports combined with Mr. Putin’s import-blocking counter-sanctions mean Russia still has a small trade surplus. It has a stash of foreign-exchange reserves, some $370 billion according to the central bank’s figures. Add in the resilience of the Russian people, who are also inclined to blame deprivation on foreigners, and the view from Moscow is that Mr. Putin has time to maneuver....

“In fact, a crisis could happen a lot sooner. Russia’s defenses are weaker than they first appear and they could be tested by any one of a succession of possibilities – another dip in the oil price, a bungled debt rescheduling by Russian firms, further Western sanctions. When economies are on an unsustainable course, international finance often acts as a fast-forward button, pushing countries over the edge more quickly than politicians or investors expect.”

Other Russkie tidbits:

--A poll by the independent Levada research group showed that 53% of Russians believe their country’s troops are not fighting in eastern Ukraine, but nearly half (45%) would be glad if it turned out they were (34% would disapprove). 25% did not believe the Kremlin’s denials that Russia has sent soldiers to back separatists fighting Ukrainian government forces.

--As reported by the Moscow Times’ Alexey Eremenko, “Russia’s leading expert on domestic security services, Andrei Soldatov, said the pattern of (cyberattacks on the West) indicated that the Russian government may be mounting a covert Internet offensive.

“Experts could not say, however, whether heavy guns with the FSB [Ed. successor to KGB] electronic espionage agencies have been deployed.

“ ‘All government-linked attacks so far have been carried out by people on the market: the cyber-mercenaries,’ said Soldatov....

“In mid-October, U.S. company iSight Partners said Russian hackers had exploited a Microsoft Windows bug to access computers belonging to NATO, the EU, Ukraine and certain energy and telecom firms.”

According to Deutsche Telecom, “Russia was the world’s No. 1 source of cyberattacks as of last month with 2.7 million launched, but the runner-up was Germany, followed by the U.S. and China.”

These aren’t necessarily the actions of each government, but in many instances that of cyber-mercenaries originating in same.

--French President Francois Hollande suspended the delivery of the first of two Mistral helicopter carriers to Russia “until further notice,” as he has been under increasing pressure from western allies to scrap the $1.5 billion contract. Hollande’s office issued a statement:

“The President of the Republic considers that the situation in the east of Ukraine still does not permit the delivery of the first BPC (helicopter carrying and command vessel).

“He has therefore decided that it is appropriate to suspend, until further notice.” [Financial Times]

--Moscow is about to launch its third Borei-class nuclear missile submarine, the next-generation “boomers” – large subs packed with nuclear tipped intercontinental ballistic missiles (ICBMs) that can be deployed anywhere in the world. The Boreis are capable of carrying up to 12 Bulava missiles, Russia’s newest ICBM.

Isn’t this reassuring?

--Russia’s propaganda machine was in full swing with the riots in Ferguson, Missouri. State-run media and the Foreign Ministry claimed President Obama had lost total control of domestic affairs as a result of his inability to protect human rights in the U.S. The Foreign Ministry issued a scathing statement urging U.S. authorities to focus on domestic problems rather than foreign affairs.

“(It is) finally time to focus on their large-scale internal problems...rather than engaging in baseless and futile mentoring and propagandistic moral preaching to other countries.” [Allison Quinn / Moscow Times]

Afghanistan: Terrible week here as a suicide bomber in a car struck a British embassy vehicle in Kabul, killing a British national working for the embassy and at least four others. Earlier in the week a Taliban attack killed two soldiers belonging to the U.S.-led coalition.

Late Wednesday, the Taliban kidnapped 15 government officials in the northern province of Kunduz.

And last Sunday, at least 50 were killed in the country’s deadliest insurgent attack of the year, as a suicide bomber targeted a volleyball tournament that had attracted a large crowd. The provincial governor in Paktika said the explosion was so powerful, 42 were killed instantly with the dead including at least 10 members of the police force.

Witnesses said the bomber approached the police commander and shook his hand before shouting “Allahu Akbar” and detonating explosives on his body.

We also learned this week that recently, President Obama signed a secret order “authorizing a more expansive mission for the military in Afghanistan in 2015 than originally planned, a move that ensures American troops will have a direct role in fighting in the war-ravaged country for at least another year.” [Mark Mazzetti and Eric Schmitt / New York Times]

Recall, last May, Obama said the American military would have no combat role in Afghanistan next year, with the 9,800 troops remaining being limited to training Afghan forces and to hunting the “remnants of Al Qaeda.”

Finally, the lower house of the Afghan parliament overwhelmingly approved a security agreement allowing U.S. and NATO troops to remain in the country. The upper house still needs to ratify it but this isn’t supposed to be an issue.

Kenya: Suspected al-Shabab militia hijacked a bus in Northern Kenya and asked the passengers to recite passages from the Koran, shooting dead those not able to prove they were practicing Muslims. 28 of the reported 60 on board were killed. A senior adviser to President Kenyatta told the BBC that al-Shabab is trying to start a religious war.

Pakistan: Gunmen attacked a polio vaccination team Wednesday, killing four aid workers, including three women. Militants oppose the ongoing vaccination campaign, saying it is an attempt to spy on them. Pakistan is one of only three countries in the world where polio is still prevalent, with the incidence of it in the country hitting a 15-year high. Over the years, hundreds of health workers doing nothing more than administering the vaccine have been killed. [Los Angeles Times]

China: In its annual report submitted to Congress, the U.S.-China Economic and Security Review Commission said China had made big gains in military development, driven by two decades of double-digit increases in its defense spending.

“As a result of China’s comprehensive and rapid military modernization, the regional balance of power between China, on the one hand, and the United States and its allies and associates on the other, is shifting in China’s direction,” it said. [Cary Huang / South China Morning Post]

In line with the above, China is building a massive island in the South China Sea that undoubtedly is slated to host an airfield in an area where Beijing is locked in territorial disputes. A U.S. military spokesman said the land reclamation project in the Spratly Islands, known in China as Yongshu Reef, is one of several that could yield airstrips.

IHS Jane’s Defense said there are four such projects there. [Agence France-Presse]

Separately, over 100 were arrested in a 12-hour period as police rounded up student protest leaders in Hong Kong.

North Korea: Kim Jong-un’s younger sister, Kim Yo-jong, who is said to be in her mid- to late-twenties, has been identified for the first time as a senior party official on the powerful Central Committee. Guys, not sure if she’s married, but if I were you I’d take a pass.

Mexico: President Enrique Pena Nieto, proposed a series of measures designed to clean up local police by putting them under state government control as he faces the biggest crisis of his presidency over the kidnapping and suspected murder of 43 college students in the southern town of Iguala two months ago. 

But few believe Pena Nieto’s initiatives, which include creation of a special prosecutor to tackle corruption among government officials will bear fruit.

On the other hand you have to start somewhere.

Random Musings

--Defense Secretary Chuck Hagel resigned this week. A U.S. defense official told Bloomberg’s Jonathan Allen and Mike Dorning:

“Hagel chafed at the way a small cadre of Obama loyalists centralized power in the White House. When Obama backed off a threat to bomb Syria last year, he made the decision on a walk with his chief of staff, Denis McDonough. Hagel was informed of the decision later.

“Tension between Hagel and White House aides got so bad, the defense official said, that Hagel would often phone Obama after the meetings to make sure his voice was heard.”

The National Security Council staff has grown substantially under Obama – “to roughly 270 people from about 200 under President George W. Bush, according to Reuters.

“Its size and physical proximity to the White House, just across a small access road, have given it greater influence than Cabinet agencies in the development, and sometimes the implementation, of policy, according to a former defense official who requested anonymity to discuss a sensitive matter.” [Bloomberg]

Editorial / Washington Post

“If the resignation of Defense Secretary Chuck Hagel augurs a move by President Obama to shake up his national security team and reconsider his strategy in crisis areas such as Syria and Ukraine, then it will be welcomed. So far, there’s not much sign of it. Mr. Hagel has been a weak leader at the Pentagon who, at least in public, has been less of a force in policy discussions than some of the generals who report to him. But his thinly disguised dismissal came after reports that he had raised sensible questions about Mr. Obama’s overly constrained approach to fighting the Islamic State....

“Like the two defense secretaries who preceded him [Ed. Robert Gates and Leon Panetta] in Mr. Obama’s Cabinet, Mr. Hagel found himself caught between an insular White House team and military commanders who chafed at what they see as both micromanagement and the absence of a workable strategy. By this fall, according to the New York Times, Mr. Hagel was telling the president what he least wished to hear: that U.S. policy in Syria was inadequate because of its failure to address the regime of Bashar al-Assad....

“Commanders including the Joint Chiefs of Staff chairman, Gen. Martin Dempsey, have suggested that the campaign in Iraq will eventually require the limited use of U.S. ground forces – something the White House strongly resists. As Mr. Obama’s first defense secretary, Robert Gates, recently put it, ‘When you...deny the military the authorities they require to achieve the objective, you leave them with a great sense of frustration.’....

“What’s needed is a seasoned, independent policymaker with a genuine command of military affairs who is able to win the respect of both the generals and the White House. Former undersecretary of defense Michele Flournoy*, whose knowledge of Pentagon budget arcana as well as grand strategy is formidable, would be an excellent choice....

“Mr. Obama needs to choose advisers who will offer him fresh thinking about national security challenges – and be ready to set aside his own fixed ideas.”

*Flournoy reportedly withdrew her name from consideration.

Editorial / Wall Street Journal

“Chuck Hagel wasn’t our favorite to run the Pentagon, but it speaks volumes about this Administration’s national security decision-making that even he turned out to be too independent for the job. The former Republican Senator and infantry soldier chose to resign on Monday rather than endure more White House micromanagement....

“If President Obama really wanted a fresh start in his last two years, he’d begin by sacking most of his White House national security team. They’re the tenderfoot Talleyrands who have presided over the radiating calamity in Syria, the collapse of the Iraqi military, the rise of Islamic State, and the failure to deter or stop Vladimir Putin’s march into Ukraine.

“Why does national security adviser Susan Rice still have a job? Or spinner-in-chief Ben Rhodes? Mr. Hagel was hired in part because Mr. Obama believed he would take orders from these visionaries. But as the world turned darker, the Pentagon chief began to represent the views of the generals who are increasingly worried about U.S. security....

“Mr. Hagel has (been) vindicated as the U.S. has watched while Bashar Assad’s government tries to wipe out the Free Syrian Army rebels we are training to be our allies, and Turkey keeps a distance from the coalition because we won’t help to oust Assad. But telling the truth in this Administration gets you a scolding from Vice President Valerie Jarrett, and on Tuesday White House leakers were saying Mr. Hagel wasn’t creative enough in providing security options. The options this White House seems to want are those that provide the appearance of solving problems without having to solve them.”

--According to a new Wall Street Journal/NBC News poll, former Arkansas Gov. Mike Huckabee, who defied expectations in 2008 by winning the Iowa caucuses, is once again doing so in the early race for the Republican nomination in 2016. He is viewed more positively by fellow Republicans than nine potential rivals, including Chris Christie, Jeb Bush and Rand Paul.

“Some 52% (of Republicans) had a favorable opinion of Mr. Huckabee...Just 8% expressed negative views.

“Compare those numbers to Messrs. Bush and Christie, and Mr. Huckabee starts looking even more formidable. One-in-five Republicans view Mr. Christie negatively, about half as many Republicans who view him positively. For Mr. Bush, 12% of Republicans express dim views of the former Florida governor, while 44% view him favorably.

“(Rand Paul has solid support, garnering positive reviews from 48% of self-described Republicans and negative reviews from just 6% of those Republicans polled.)”

Potential candidates such as Governors John Kasich (Ohio) and Scott Walker (Wisconsin) just aren’t that well known nationally as yet, while more know (and like) Ben Carson.

--In a poll of Republican primary voters in New Hampshire, Chris Christie and Rand Paul are tied at 16%, with Jeb Bush at 14%. But if Mitt Romney was added to the mix, he would lead the way with 30%, followed by Paul, 11%, and Christie, 9%.

--New York Democratic Sen. Charles Schumer garnered a ton of inside-the-Beltway publicity when he slammed his party for pursuing healthcare reform in 2009 and 2010, arguing that Democrats hurt themselves politically by not focusing instead on policies centered around helping middle-class Americans.

“After passing the stimulus, Democrats should have continued to propose middle class-oriented programs and built on the partial success of the stimulus. But unfortunately, Democrats blew the opportunity the American people gave them. We took their mandate and put all of our focus on the wrong problem – healthcare reform.”

But his remarks at a speech to the National Press Club were disputed by some in his own party, seeing as Schumer himself was a major proponent of ObamaCare.

House Minority Leader Nancy Pelosi told CNN in a statement, “We come here to do a job, not keep a job. There are more than 14 million reasons why that’s wrong.”

Schumer, in looking ahead to 2016, said, “Democrats lost in 2014 because the government made mistakes that eroded the electorate’s confidence in its ability to improve the lives of the middle class.”

Schumer said Democrats need to emphasize how government can help the middle-class and pass legislation on that front.

--Investigators for the Treasury Inspector General for Tax Administration, the watchdog agency for the Internal Revenue Service, recovered as many as 30,000 missing emails belonging to former IRS official, Lois Lerner, the focus of congressional inquiries.

IRS officials had previously told lawmakers the emails were missing because Lerner’s computer hard drive crashed in 2011. But TIGTA investigators located thousands of them on backup tapes.

While some of the emails will prove to be duplicates of those previously released, as the Wall Street Journal’s John D. McKinnon noted: “Still, the revelations are another headache for IRS Commissioner John Koskinen, who also has drawn criticism from GOP lawmakers for failing to alert them when the problem of the missing emails emerged.”

This will be for the new Congress to tackle. The emails need to be worked on first, including to redact any taxpayer ID information.

--According to a study commissioned by Japan’s Health Ministry, “E-cigarettes contain up to 10 times the amount of cancer-causing agents as regular tobacco, the latest blow to an invention once heralded as less harmful than smoking,” as reported by Agence France-Presse.

“Researchers found carcinogens such as formaldehyde and acetaldehyde in vapor produced by several types of e-cigarette liquids....

“Formaldehyde – a substance found in building materials and embalming fluids – was present at levels 10 times those found in the smoke from regular cigarettes.” [South China Morning Post]

--I have a good friend in Ireland who has had some health issues and she’s told me of the nightmares she has faced with the healthcare system there.

So I read with interest a report from the Irish Independent:

“Hospital staff are neglecting to wash their hands despite repeated warnings.

“Basic hygiene standards have dropped over the past three years in eight of the country’s hospitals – putting vulnerable patients at risk of potentially lethal superbugs and other illnesses...

“Figures show that seven in every 10 of our public hospitals are still flouting basic hand-washing rules to varying degrees, even though they are essential to avoid passing on infection to patients....

“(The findings come) as thousands of patients who are already being treated for illness are going on to pick up a range of avoidable urinary tract and other bugs, including MRSA...”

This last bit is what happened to my friend, best she can determine.

That said the U.S. is hardly blameless in this same regard. 

--We note the passing of former four-term Washington, D.C. mayor, the iconic Marion Barry, 78. He had just been discharged from the hospital, when he collapsed walking into his home, apparently from a heart attack.

Andrew Siddons and Emmarie Huetteman / New York Times:

“He was a man venerated, disgraced and redeemed in a political career that spanned four decades and included four terms as mayor and six months in prison on drug charges.

“President Obama on Sunday summed up the conflicts that defined Mr. Barry’s life, describing his career as ‘storied,’ but also, ‘tumultuous.’ Attorney General Eric H. Holder Jr. called him ‘a complicated man.’

“Carol Schwartz, a former District of Columbia council member who ran unsuccessfully against Mr. Barry in two mayoral races, said he was a kind, caring and smart friend. ‘Such a personality,’ she said, ‘even in spite of his foibles.’

Ah, the foibles. Hidden-camera images of Barry and crack cocaine from 1990 that defined him in the eyes of many nationwide. But he was also a hero to many he served.

--From Geoff Earle / New York Post

“He’s a mega bundler for President Obama. He’s been on Air Force One. He’s shared a Christmas visit with Michelle Obama at the White House. And now he’s being accused of sex with a minor.

“Terry Bean, 66, a gay activist and major Democratic fund-raiser, was arrested Wednesday (Nov. 19) in Portland, Ore., for allegedly having sex with a 15-year-old boy.”

Bean’s ex-boyfriend was also arrested in connection with the incident.

“Authorities said the duo found the 15-year-old online and had a sexual encounter with him in an Oregon hotel in 2013.”

Bean’s attorney said his client “was the victim of an extortion ring.”

Bean’s former boyfriend has multiple prior arrests.

--I don’t make it a habit to comment on items such as Ferguson, Missouri. But like all of you watching Monday night in particular, I was upset and depressed by what I saw in response to the grand jury’s failure to indict a police officer in the shooting of 18-year-old Michael Brown last August.

President Obama said the day after in Chicago: “Burning buildings, torching cars, destroying property, putting people at risk – that’s destructive, and there’s no excuse for it. Those are criminal acts, and people should be prosecuted for it.”

Also on Tuesday, the officer, Darren Wilson, sat down with George Stephanopoulos of ABC and in speaking publicly for the first time on the shooting, said there was “no way” Brown had his hands up when he was fatally shot and that there was nothing he could have done differently to have prevented Brown’s death.

Wilson said “I have a clean conscience (because) I know I did my job right.”

We’ll never know the full truth. But....

Jason L. Riley / Wall Street Journal

“Not that any amount of evidence would have stopped the hooligans in Ferguson Monday night who were determined to use Brown’s death as a pretext for more bad behavior. Nor will evidence thwart liberals who are bent on making excuses for black criminality and pretending that police shootings are responsible for America’s high black body count.

“According to the FBI, homicide is the leading cause of death among young black men, who are 10 times more likely than their white counterparts to be murdered. And while you’d never know it watching MSNBC, the police are not to blame. Blacks are just 13% of the population but responsible for a majority of all murders in the U.S., and more than 90% of black murder victims are killed by other blacks. Liberals like to point out that most whites are killed by other whites, too. That’s true but beside the point given that the white crime rate is so much lower than the black rate.

“Blacks commit violent crimes at 7 to 10 times the rate that whites do. The fact that their victims tend to be of the same race suggests that young black men in the ghetto live in danger of being shot by each other, not cops. Nor is this a function of ‘over-policing’ certain neighborhoods to juice black arrest rates. Research has long shown that the rate at which blacks are arrested is nearly identical to the rate at which crime victims identify blacks as their assailants. The police are in these communities because that’s where the emergency calls originate, and they spend much of their time trying to stop residents of the same race from harming one another.

“Former New York Mayor Rudy Giuliani pointed this out recently on ‘Meet the Press’ in a debate with sociologist Michael Eric Dyson. ‘What about the poor black child that is killed by another black child? Why aren’t you protesting that?’ Mr. Giuliani asked.

“ ‘Those people go to jail,’ Mr. Dyson responded. ‘I do protest it. I’m a minister. They go to jail.’

“Mr. Dyson might want to try protesting a little harder. Chicago had 507 murders in 2012, only 26% of which were solved. ‘To put it another way: About three-quarters of the people who killed someone in Chicago in 2012 have gotten away with murder – so far, at least,’ Chicago Magazine noted. Mr. Dyson and others on the left are not oblivious to this black pathology, but they are at pains even to acknowledge it, let alone make it a focus. Instead, liberals spend their time spotlighting white racism, real or imagined, and touting it as an all-purpose explanation for bad black outcomes.”

Finally, here is what upset me most.

Missouri Gov. Jay Nixon proved he was a clown back in August, and his disappearing act on Monday and then his performance at his all-too-brief press conference Tuesday was reprehensible. Why those business owners didn’t have the protection they were promised, particularly with regards to the National Guard, is beyond belief.

Gov. Nixon shouldn’t just resign, he should be impeached. CNN’s Jeffrey Toobin said on Tuesday that clearly Nixon wasn’t taking responsibility for his state being on fire. That’s why the state legislature must take action.

If Nixon had done his job, you and I know the pictures would have been much different, and the images being beamed around the world would have been so as well.

Having traveled overseas extensively, I’m always sickened by how some perceive America. Many Europeans, for example, know our history far better than most of us do, but it is heavily slanted. No doubt Iraq hasn’t helped the cause in defending America these days, and I’ve had more than a few arguments in pubs over that topic. [In the end, by the way, always...always...let the other person win. I try to smile a lot while being bludgeoned, rhetorically that is.]

But, lastly, you can’t win arguments in the case of Michael Brown and Darren Wilson. There are some who simply refuse to look at the facts that are known, and who fail to acknowledge that there were many brave Americans who voluntarily testified before the grand jury to make sure the ‘truth’ was heard.

And I can’t help but add that I thought St. Louis County Prosecuting Attorney Robert McCulloch was masterful in his lengthy explanation of the grand jury’s findings. I tweeted, and I stand by it, that it was “a profile in courage.” That wasn’t accepted well by some, but never fight back in those forums.

In fact believe it or not, when I first started StocksandNews and I was doing a lot of advertising, nationwide, and appearing on radio shows around the country, I received a fair amount of hate mail. The best way to defuse it? Reply immediately and say, “Thanks for taking the time to write. Take care.” The critic never wrote back a second time.

--Finally, on a lighter note, George Will / Washington Post:

“Before the tryptophan in the turkey induces somnolence, give thanks for living in such an entertaining country....

“A severely moral California high school principal prohibited the football booster club from raising money by selling donated Chick-fil-A meals because this company opposed same-sex marriage. The school superintendent approved the ban because ‘we value inclusivity and diversity.’ Up to a point. At a Washington state community college, invitations to a ‘happy hour’ celebrating diversity and combating racism said white people were not invited....

“The federal government, which has Tomahawk cruise missiles and Apache and Lakota helicopters, used the code name ‘Geronimo’ in the attack that killed Osama bin Laden but objected to the name of the Washington Redskins....A U.S. Forest Service article on safe marshmallow toasting did not neglect to nag us: It suggested fruit rather than chocolate in s’mores....

“Niagara County, N.Y., spent $700,000 of its Tobacco Master Settlement Money not on fighting smoking but on golf course equipment....

“Joe Biden was off by 160,839 when citing the number of people killed in the 2011 Joplin, Mo., tornado. He said 161,000. But the former chairman of the Senate Foreign Relations Committee expressed optimism about ‘the nation of Africa.’....

“Alarmed by reports that global warming will cause a four-foot rise in sea levels, California Gov. Jerry Brown (D) warned that ‘Los Angeles’ airport’s going to be underwater.’ It is more than 120 feet above sea level.”

---

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

God bless America.
---

Gold closed at $1175
Oil $66.15...down $10.66 on the week

Returns for the week 11/24-11/28

Dow Jones +0.1% [17828]
S&P 500 +0.2% [2067]
S&P MidCap -0.1%
Russell 2000 +0.1%
Nasdaq +1.7% [4791]

Returns for the period 1/1/14-11/28/14

Dow Jones +7.6%
S&P 500 +11.9%
S&P MidCap +7.5%
Russell 2000 +0.8%
Nasdaq +14.7%

Bulls 56.5
Bears 13.8 [Source: Investors Intelligence]

Hope you had a good Thanksgiving. I appreciate your support.

Brian Trumbore