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03/07/2015

For the week 3/2-3/6

[Posted 12:00 AM ET]

Edition 830

[Warning: If you print the column out, understand it is record length, over 40 pages, due to my coverage of foreign affairs. Sometimes it’s about building the history of our times unlike any other and this is one such week.]

Washington and Wall Street

Stocks tanked on Friday on the heels of yet another strong jobs report, with the economy adding 295,000 in February and the unemployment rate dropping to 5.5%, meaning the latter is already within the 5.2% to 5.5% band the Federal Reserve considers to be full employment.

The U.S. economy has thus added 200,000 plus jobs for a 12th consecutive month, the best streak since 1995. [January was revised down slightly from an initial 257,000 to 239,000.]

Average hourly earnings, though, rose a disappointing 0.1% for the month and are now up 2.0% year over year, vs. January’s 2.2% pace, but I maintain true wage growth is just around the corner.

Two other items of import. The labor participation rate came in at 62.8%, still near the lowest levels since the late 1970s, while U6, the underemployment barometer that measures involuntary part-time workers fell to 11.0% from 11.3% the prior month.

So the reason why the Dow Jones swooned 278 points on Friday, with the S&P 500 and Nasdaq responding in kind, is because our supposedly data dependent Fed has now seen mostly positive numbers in recent months and it’s assumed that when Chair Janet Yellen and her band of merry pranksters next gather March 17-18, they will remove the word “patient” from their statement, which will be a sign to the markets to expect the first rate hike off the zero mark since the New York Mets were last competitive, 2008, in either June or a month or two after.

The Fed can still argue that inflation is too low for comfort, and that wage growth isn’t a concern, so it can keep rates at zero, but the other data says these two items will follow, especially if you believe oil is in a bottoming process and firmer prices are ahead.

Ergo, the Fed should be raising rates. But here’s the rub. Everyone and their mother around the world continues to lower rates. The European Central Bank is about to finally initiate its bond-buying program, China and India lowered interest rates this week, as did a few others, and with expectations our Fed is hiking in the not too distant future, the U.S. dollar is hitting 11-year highs, which is doing a number on our multinationals that for the most part generate about half their sales overseas!

So this is another reason why the market tanked on Friday, the feeling that the Fed is not only boxed in, but that it waited far too long to begin to normalize rates.

Just a few other economic items on the week. Personal income in January was up 0.3%, basically in line with expectations, while consumption was down 0.2%, owing to tumbling gasoline prices that month, but when you look at the core up 0.3%.

January construction spending fell 1.1%, far worse than expected, which may have been weather-related, while January factory orders were down 0.2%, in line.

The ISM manufacturing reading for February was just 52.9, the lowest since Jan. 2014, while the ISM services reading was 56.9 vs. 53.5 the prior month.

Europe and Asia

European Central Bank chief Mario Draghi announced the much-anticipated bond-buying program of sovereign bonds, quantitative easing, will begin next week. But long before it was formally launched it’s been working. Look at these 10-year yields at the close on Friday.

Germany 0.39%
France 0.69%
Spain 1.29%
Italy 1.31%
Portugal 1.74%

How much better can it get? Plus the data, as I spell out shortly, is largely improving, while the euro has declined steadily against the dollar and other currencies to below $1.10 ($1.08, Friday) vs. around $1.40 last summer. The euro’s fall hasn’t juiced European exports as hoped, but it still might.

What Mario Draghi knows is that the ECB, with QE, will have done all it can, so now it’s up to the individual governments to enact the needed economic reforms that with few exceptions have been slow in coming.

The ongoing danger, as the Wall Street Journal opined on Friday, is that “Europe’s political class doesn’t want to do (the) heavy lifting, so it relies instead on Mr. Draghi’s monetary policies to spur growth. The more aggressive he is, the more the politicians conclude they can do less.”

Before I get to the ECB’s new growth and inflation forecasts, a look at some of the current numbers.

Eurozone retail sales for January were up 1.1% compared with December, 3.7% year over year which is the best pace since Aug. 2005. Germany’s were up 2.9% in January over the prior month (best since Jan. 2008), 5.4% yoy, while France’s January figure was just 0.1%, but up 4.1% from a year earlier.

The final eurozone manufacturing PMI for February was 51.0, unchanged from January, with Germany at 51.1, Italy 51.9 (7-mo. high), Spain 54.2, and France 47.6 (2-mo. low). Ireland had its best reading, 57.5, since 2000 (1998 according to Investec).

The final Euro-19 composite reading for February (manufacturing and services) was 53.3 vs. January’s 52.6. The services reading was 53.7 vs. 52.7.

The unemployment rate in January for the eurozone was 11.2%, down from 11.3% in December and 11.8% a year earlier. 11.2% is the lowest since April 2012.

Germany came in at 4.7%, France 10.2%, Italy 12.6%, Netherlands 7.2%, Portugal 13.3% (down from 15.0% Jan. 2014), Spain 23.4% (down from 25.5%) and Greece 25.8% (November).

The youth rate remains sky high in some countries...

Greece 50.6% (November), Spain 50.9% (though down from 54.9% Jan. 2014), Italy 41.2% (43.2% Jan. ‘14), Portugal 33.6%, and France 24.9% (which is actually up from 23.8% Jan. ’14).

Finally, the flash February inflation reading for the EU-19 came in at -0.3%, after registering -0.6% in January, annualized. The core rate, ex-food and energy, was unchanged in February at up 0.6%, far below the ECB’s 2% inflation target.

So with the above mainly positive background, Draghi and the ECB have raised the projected growth rate for the eurozone to 1.5% this year from 1%, and to 1.9% in 2016 from an earlier outlook of 1.5%. GDP could hit 2.1% in 2017, with the euro economy not having expanded at a 2% clip since 2007.

On the inflation front, prices are projected to be flat over the whole of 2015, but rise 1.5% next year, on up to 1.8% in 2017.

As for Greece and the negotiations that will be ongoing for weeks and months to come, some finance ministers say it will need a third bailout. Greece also needs to take a lesson from Ireland and Spain, arguably the two best performing Euro economies these days. Both went through the wringer of austerity and structural reform but it’s been paying off. Portugal is another now learning this lesson.

But not Greece as yet and here the issue of tax evasion/collection continues to be the most immediate one as the new government faces a cash crunch. Mario Draghi reiterated in announcing that the ECB would provide the country with more needed liquidity for its banks, that it must also make progress on reforms.

Monday is another key day as Greek Finance Minister Yanis Varoufakis presents details of his government’s new reform plan to his counterparts in Brussels, hoping to unlock further funds. In just the next three weeks, Greece must refinance or repay some 6.5 billion euros in debt and interest (1.5bn, $1.7bn, to the IMF alone). Here again, Greece’s aversion to paying taxes is killing the new leadership. 

Wolfgang Munchau / Financial Times

“The economic equivalent of a ceasefire agreement is a debt rollover of an insolvent state. In Europe, we have had both in the past three weeks. Europe’s political and economic diplomacy is focused solely on averting imminent catastrophe with no strategic purpose. The danger is that Ukraine and Greece are ending up as failed states.

“Just look where Greece has ended up after five years of crisis resolution. It has had one of the worst performances in economic history; yet we have just concluded an extension of the same policy.

“Can this be sustainable? The pragmatists in Europe’s chancelleries say they can roll over loans indefinitely at very low interest rates. Economically, this is the equivalent of a debt writedown; yet politically it is easier to deliver because you do not need to recognize losses. The equivalent statement in a military conflict would be: if you renew a ceasefire often enough, you end up with peace.

“This type of argument is not only immoral and dishonest. It also does not work. While you play this game of extend-and-pretend, the real economy implodes: austerity has caused a meltdown in income and employment. Monetary policy mistakes caused a fall in eurozone-wide inflation rates that made it impossible for Greece and other periphery countries to improve the competitiveness they lost in the early years of monetary union.

“If the EU deals with Ukraine in the same way it dealt with Greece, you can expect to see a parallel development in a few years. The Minsk ceasefire, negotiated between the leaders of Russia, Ukraine, France and Germany, may hold for a while, more or less. The Europeans may use this as a pretext for not renewing sanctions, and for not imposing new ones. And once the ceasefire breaks down – as it will – the European policy making establishment will pretend to be surprised and appalled, leaving Ukraine as a failed state and a buffer zone between the EU and Russia.

“They will also have failed to rein in Russian President Vladimir Putin’s territorial ambitions elsewhere in eastern Europe. The EU should have confronted Greek debt and Mr. Putin’s territorial ambition early on, rather than allowing both to spin out of control. By playing it safe for now, the EU puts at risk its military and economic security.”

Turning to Asia, in a long-awaited move, China’s government, at its annual meeting of the National People’s Congress in Beijing, set its economic growth target for this year at around 7 percent, the lowest in more than a decade.

Premier Li Keqiang said in the opening of the NPC:

“China’s economic development has entered a new normal. Our country is in a crucial period during which challenges need to be overcome and problems need to be resolved.

“Systematic, institutional and structural problems have become ‘tigers in the road’ holding up development....

“(The 7% target) is both aligned with our goal of finishing building on a moderately prosperous society in all respects and is appropriate in terms of the need to grow and upgrade our economy.” [South China Morning Post]

Li highlighted other goals and targets, one of which, defense spending, I address below.

China’s consumer inflation target is 3%, and it is aiming for a budget deficit for 2015 of 2.3% of GDP.

The government aims to create 10 million new jobs this year and to ensure urban unemployment does not exceed 4.5%.

Premier Li added a zero tolerance stance on corruption is here to stay. He also addressed the issue of pollution, acknowledging it was “a blight on people’s quality of life and a trouble that weighs on their hearts.”

“We must strictly enforce environmental laws and regulations; crack down on those guilty of creating illegal emissions and ensure they pay a heavy price for such offenses,” said Li. [BBC News]

Back to the growth rate, last year’s 7.4% was the lowest since 1990 when the mainland was hit by sanctions after the Tiananmen Square crackdown. This week, HSBC released its final figure for the February manufacturing PMI, 50.7 vs. a flash estimate of 50.1, so this is better. January was 49.7.

The government’s official February figure was 49.9 vs. 49.8 in January. HSBC is more focused on the private sector, the Central Statistics Bureau on state-run enterprises.

HSBC’s reading is compiled by Markit and their economist, Annabel Fiddes, said of the data:

“China’s manufacturing sector saw an improvement in overall operating conditions in February, with companies registering the strongest expansion of output since last summer while total new business also rose at a faster rate. However, the renewed fall in new export orders suggests that foreign demand has weakened, while manufacturers continued to cut their staff numbers.”

On the service sector, HSBC’s number was 52.0 vs. 51.8 in January, while the government had 53.9 last month vs. 53.7.

The Central Bank cut its benchmark interest rate 25 basis points this week for the second time in four months in an effort to stimulate more activity.

Nothing to report regarding Japan, but there were some moves in India worth noting. The central bank surprised markets with a cut to its key lending rate for a second time this year, continuing the global trend addressed above. The Reserve Bank of India cited weakness in parts of the economy along with favorable inflation as a reason for making another move.

But the real reason for mentioning India this week was the unveiling of Prime Minister Narendra Modi’s first full-year budget, in which his government is promising to boost spending on infrastructure and to lower the corporate tax rate, which Indian industry cheered.

Modi also announced new welfare programs for the poor, including the creation of a new social security plan, while targeting a 7.4% growth rate, which would be greater than China’s.

But the moves were more incremental than bold. Critics pointed to a missed opportunity to cut spending, including on inefficient subsidy programs, like its massive one for food, fuel and fertilizer. 

Editorial / Wall Street Journal

“Badly needed reforms governing land acquisition and firing workers were left unmentioned, and subsidies on food, fertilizer and fuel were left untouched....

“These failures are especially unfortunate as Mr. Modi had criticized Congress’ inefficient programs that tried to curry favor with the poor. The victory of a populist upstart in the Delhi state election last month may have convinced Mr. Modi to go slow. The silver lining is that the government plans to pay more of the benefits from these programs directly in cash, reducing the corruption and inefficiency of the current system.

“Last year Mr. Modi started a program to encourage the rural poor to open bank accounts. Now he plans to help them buy insurance and set up pensions. Done right, these initiatives could lay the foundation for upward mobility. Done wrong, they could become more expensive handouts that don’t help the intended beneficiaries.

“To judge by Saturday’s budget, there’s reason to be skeptical. India needs a reformer in the mold of Margaret Thatcher, not a tinkerer like former Prime Minister Manmohan Singh. Incrementalism betrays the hopes of hundreds of millions of Indians who elected Mr. Modi last year on a platform of sweeping change.”

Bibi Comes to Town

On Monday, the day before Israeli Prime Minister Benjamin Netanyahu’s address to a joint session of Congress, President Obama gave an interview to Reuters wherein he acknowledged the odds of reaching a deal with Tehran on its nuclear program, one that would freeze its nuclear activity for at least a decade, weren’t good and that only if other countries were able to verify that Iran was keeping its word would a deal be plausible.

“There’s no other steps we can take that would give us such assurance that they don’t have a nuclear weapon,” he said. The U.S. goal was to ensure “there’s at least a year between us seeing them try to get a nuclear weapon and them actually being able to obtain one.”

Netanyahu told the American Israel Public Affairs Committee the same day, “The purpose of my address to Congress tomorrow is to speak up about a potential deal with Iran that could threaten the survival of Israel.”

Netanyahu insisted his visit was “not intended to show any disrespect to President Obama” or his office. “I have great respect for both,” he said.

Obama said, “Netanyahu made all sorts of claims – this was going to be a terrible deal, this was going to result in Iran getting $50 billion worth of relief, Iran would not abide by the agreement.”

None of this had come true, said the president.

“During this period we’ve seen Iran not advance its program. In many ways, it’s rolled back elements of its program.”

[This continues to be the great lie. Iran has done nothing but jerk the IAEA around.]

So Tuesday morning, Netanyahu strode in and gave his address. He started by praising the president for his support and noted Israel was grateful to the Congress for its assistance as well, including on missile defense, specifically Iron Dome.

He then said he had come to speak about an issue threatening the survival of Israel, Iran’s quest for nuclear weapons.

[Excerpts]

“Today the Jewish people face another attempt by yet another Persian potentate to destroy us. Iran’s Supreme Leader Ayatollah Khamenei spews the oldest hatred of anti-Semitism with the newest technology. He tweets that Israel must be annihilated – he tweets. You know, in Iran, there isn’t exactly free Internet. But he tweets in English that Israel must be destroyed.

“For those who believe that Iran threatens the Jewish state, but not the Jewish people, listen to Hassan Nasrallah, the leader of Hizbullah, Iran’s chief terrorist proxy. He said: If all the Jews gather in Israel, it will save us the trouble of chasing them down around the world....

“I’m standing here in Washington, D.C. and the difference is so stark. America’s founding document promises life, liberty and the pursuit of happiness. Iran’s founding document pledges death, tyranny, and the pursuit of jihad.

“And as states are collapsing across the Middle East, Iran is charging into the void to do just that. Iran’s goons in Gaza, its lackeys in Lebanon, its revolutionary guards on the Golan Heights are clutching Israel with three tentacles of terror. Backed by Iran, Assad is slaughtering Syrians. Backed by Iran, Shiite militias are rampaging through Iraq. Backed by Iran, Houthis are seizing control of Yemen, threatening the strategic straits at the mouth of the Red Sea. Along with the Straits of Hormuz, that would give Iran a second choke-point on the world’s oil supply....

“In the Middle East, Iran now dominates four Arab capitals, Baghdad, Damascus, Beirut and Sanaa. And if Iran’s aggression is left-unchecked, more will surely follow.

“So, at a time when many hope that Iran will join the community of nations, Iran is busy gobbling up the nations.

“We must all stand together to stop Iran’s march of conquest, subjugation and terror....

“Don’t be fooled. The battle between Iran and ISIS doesn’t turn Iran into a friend of America.

“Iran and ISIS are competing for the crown of militant Islam. One calls itself the Islamic Republic. The other calls itself the Islamic State. Both want to impose a militant Islamic empire first on the region and then on the entire world. They just disagree among themselves who will be the ruler of that empire.

“In this deadly game of thrones, there’s no place for America or for Israel, no peace for Christians, Jews or Muslims who don’t share the Islamist medieval creed, no rights for women, no freedom for anyone.

“So when it comes to Iran and ISIS, the enemy of your enemy is your enemy.

“The difference is that ISIS is armed with butcher knives, captured weapons and YouTube, whereas Iran could soon be armed with intercontinental ballistic missiles and nuclear bombs. We must always remember...the greatest danger facing our world is the marriage of militant Islam with nuclear weapons. To defeat ISIS and let Iran get nuclear weapons would be to win the battle, but lose the war....

“But that, my friends, is exactly what could happen, if the deal now being negotiated is accepted by Iran. That deal will not prevent Iran from developing nuclear weapons. It would all but guarantee that Iran gets those weapons, lots of them....

“Absent a dramatic change, we know for sure that any deal with Iran will include two major concessions to Iran.

“The first major concession would leave Iran with a vast nuclear infrastructure, providing it with a short break-out time to the bomb. Break-out time is the time it takes to amass enough weapons-grade uranium or plutonium for a nuclear bomb.

“According to the deal, not a single nuclear facility would be demolished. Thousands of centrifuges used to enrich uranium would be left spinning. Thousands more would be temporarily disconnected, but not destroyed.

“Because Iran’s nuclear program would be left largely intact, Iran’s break-out time would be very short – about a year by U.S. assessment, even shorter by Israel’s.

“And if Iran’s work on advanced centrifuges, faster and faster centrifuges, is not stopped, that break-out time could still be shorter, a lot shorter.

“True, certain restrictions would be imposed on Iran’s nuclear program and Iran’s adherence to those restrictions would be supervised by international inspectors. But here’s the problem. You see, inspectors document violations; they don’t stop them.

“Inspectors knew when North Korea broke to the bomb, but that didn’t stop anything. North Korea turned off the cameras, kicked out the inspectors. Within a few years, it got the bomb.

“Now, we’re warned that within five years North Korea could have an arsenal of 100 nuclear bombs....

“Now, I know this is not gonna come as a shock to any of you, but Iran not only defies inspectors, it also plays a pretty good game of hide-and-cheat with them.

“The U.N.’s nuclear watchdog agency, the IAEA, said again yesterday that Iran still refuses to come clean about its military nuclear program. Iran was also caught – caught twice, not once, twice – operating secret nuclear facilities in Natanz and Qom, facilities that inspectors didn’t even know existed....

“(The) second major concession creates an even greater danger that Iran could get to the bomb by keeping the deal. Because virtually all the restrictions on Iran’s nuclear program will automatically expire in about a decade.

“Now, a decade may seem like a long time in political life, but it’s the blink of an eye in the life of a nation. It’s a blink of an eye in the life of our children.

“We all have a responsibility to consider what will happen when Iran’s nuclear capabilities are virtually unrestricted and all the sanctions will have been lifted. Iran would then be free to build a huge nuclear capacity that could produce many, many nuclear bombs....

“So you see, my friends, this deal has two major concessions: one, leaving Iran with a vast nuclear program and two, lifting the restrictions on that program in about a decade.

“That’s why this deal is so bad. It doesn’t block Iran’s path to the bomb; it paves Iran’s path to the bomb.

“So why would anyone make this deal? Because they hope that Iran will change for the better in the coming years, or they believe that the alternative to this deal is worse?

“Well, I disagree. I don’t believe that Iran’s radical regime will change for the better after this deal. This regime has been in power for 36 years, and its voracious appetite for aggression grows with each passing year. This deal would only wet Iran’s appetite for more.

“Would Iran be less aggressive when sanctions are removed and its economy is stronger? If Iran is gobbling up four countries right now while it’s under sanctions, how many more countries will Iran devour when sanctions are lifted? Would Iran fund less terrorism when it has mountains of cash with which to fund more terrorism?

“Why should Iran’s radical regime change for the better when it can enjoy the best of both worlds: aggression abroad, prosperity at home?....

“Ladies and gentlemen, I’ve come here today to tell you we don’t have to bet the security of the world on the hope that Iran will change for the better. We don’t have to gamble with our future and with our children’s future.

“We can insist that restrictions on Iran’s nuclear program not be lifted for as long as Iran continues its aggression in the region and in the world.

“Before lifting those restrictions, the world should demand that Iran do three things. First, stop its aggression against its neighbors in the Middle East. Second, stop supporting terrorism around the world. And third, stop threatening to annihilate my country....

“If the world powers are not prepared to insist that Iran change its behavior before a deal is signed, at the very least they should insist that Iran change its behavior before a deal expires.

“If Iran changes its behavior, the restrictions would be lifted. If Iran doesn’t change its behavior, the restrictions should not be lifted.

“If Iran wants to be treated like a normal country, let it act like a normal country....

“Ladies and gentlemen, history has placed us at a fateful crossroads. We must now choose between two paths. One path leads to a bad deal that will at best curtail Iran’s nuclear ambitions for a while, but it will inexorably lead to a nuclear-armed Iran whose unbridled aggression will inevitably lead to war.

“The second path, however difficult, could lead to a much better deal, that would prevent a nuclear-armed Iran, a nuclearized Middle East and the horrific consequences of both to all of humanity....

“(I can) guarantee you this, the days when the Jewish people remained passive in the face of genocidal enemies, those days are over.

“We are no longer scattered among the nations, powerless to defend ourselves. We restored our sovereignty in our ancient home. And the soldiers who defend our home have boundless courage. For the first time in 100 generations, we, the Jewish people, can defend ourselves.

“This is why, as a prime minister of Israel, I can promise you one more thing: Even if Israel has to stand alone, Israel will stand.”

President Obama immediately responded on Tuesday that “as far as I can tell, there was nothing new” in Netanyahu’s address.

“The prime minister didn’t offer any viable alternatives,” Obama said, urging Congress to wait to evaluate a nuclear deal until an agreement has been finalized.

House Minority Leader Nancy Pelosi pathetically slammed the address as “an insult to the intelligence of the United States.”

When Netanyahu landed back in Israel on Wednesday, he pushed back against those saying there was no tactical alternative in his speech. The prime minister said he did indeed present one, a practical alternative that would extend Iran’s break out time by adding new restrictions.

He added that he presented a case for not lifting sanctions until the Iranians stopped their hostile actions against their neighbors and stopped threatening to annihilate Israel.

Charles Krauthammer / Washington Post

“Benjamin Netanyahu’s address to Congress was notable in two respects. Queen Esther got her first standing O in 2,500 years. And President Obama came up empty in his campaign to preemptively undermine Netanyahu before the Israeli prime minister could present his case on the Iran negotiations.

“On the contrary. The steady stream of slights and insults turned an irritant into an international event and vastly increased the speech’s audience and reach. Instead of dramatically unveiling an Iranian nuclear deal as a fait accompli, Obama must now first defend his Iranian diplomacy.

“In particular, argues The Post, he must defend its fundamental premise. It had been the policy of every president since 1979 that Islamist Iran must be sanctioned and contained. Obama, however, is betting instead on détente to tame Iran’s aggressive behavior and nuclear ambitions.

“For six years, Obama has offered the mullahs an extended hand. He has imagined that with Kissingerian brilliance he would turn the Khamenei regime into a de facto U.S. ally in pacifying the Middle East. For his pains, Obama has been rewarded with an Iran that has ramped up its aggressiveness in Iraq, Syria, Lebanon, Gaza and Yemen, and brazenly defied the world on uranium enrichment.

“He did the same with Russia. He offered Vladimir Putin a new détente. ‘Reset,’ he called it. Putin responded by decimating his domestic opposition, unleashing a vicious anti-American propaganda campaign, ravaging Ukraine and shaking the post-Cold War European order to its foundations.

“Like the Bourbons, however, Obama learns nothing. He persists in believing that Iran’s radical Islamist regime can be turned by sweet reason and fine parchment into a force for stability. It’s akin to his refusal to face the true nature of the Islamic State, Iran’s Sunni counterpart. He simply can’t believe that such people actually believe what they say.

“That’s what made Netanyahu’s critique of the U.S.-Iran deal so powerful. Especially his dissection of the sunset clause. In about 10 years, the deal expires. Sanctions are lifted and Iran is permitted unlimited uranium enrichment with an unlimited number of centrifuges of unlimited sophistication. As the Wall Street Journal’s Bret Stephens points out, we don’t even allow that for democratic South Korea.

“The prime minister offered a concrete alternative. Sunset? Yes, but only after Iran changes its behavior, giving up its regional aggression and worldwide support for terror.

“Netanyahu’s veiled suggestion was that such a modification – plus a significant reduction in Iran’s current nuclear infrastructure, which the Obama deal leaves intact – could produce a deal that ‘Israel and its [Arab] neighbors may not like, but with which we could live, literally.’

“Obama’s petulant response was: ‘The prime minister didn’t offer any viable alternatives.’   But he just did: conditional sunset, smaller infrastructure. And if the Iranians walk away, then you ratchet up sanctions, as Congress is urging, which, with collapsed oil prices, would render the regime extremely vulnerable.

“And if that doesn’t work? Hence Netanyahu’s final point: Israel is prepared to stand alone, a declaration that was met with enthusiastic applause reflecting widespread popular support. It was an important moment, especially because of the libel being perpetrated by some that Netanyahu is trying to get America to go to war with Iran. This is as malicious a calumny as Charles Lindbergh’s charge on Sept. 11, 1941, that ‘the three most important groups who have been pressing this country toward war are the British, the Jewish and the Roosevelt administration.’

“In its near-70 year history, Israel has never once asked America to fight for it. Not in 1948 when 650,000 Jews faced 40 million Arabs. Not in 1967 when Israel was being encircled and strangled by three Arab armies. Not in 1973 when Israel was on the brink of destruction. Not in the three Gaza wars or the two Lebanon wars.

“Compare that to a very partial list of nations for which America has fought and for which so many Americans have fallen: Kuwait, Iraq, Afghanistan, Somalia, Vietnam, Korea, and every West European country beginning with France (twice).

“Change the deal, strengthen the sanctions, give Israel a free hand. Netanyahu offered a different path in his clear, bold and often moving address, Churchillian in its appeal to resist appeasement. This was not Churchill of the 1940s, but Churchill of the 1930s, the wilderness prophet. Which is why for all its sonorous strength, Netanyahu’s speech had a terrible poignancy. After all, Churchill was ignored.”

Michael Young / Daily Star...the view from Lebanon

“What was striking in Benjamin Netanyahu’s speech before the U.S. House of Representatives Tuesday was how the Israeli prime minister exploited the Obama administration’s ambiguities on the broader implications of a nuclear deal with Iran.

“While Netanyahu’s proposals for how to strengthen the nuclear accord are not likely to be implemented, two issues he raised cannot be readily ignored by President Barack Obama: How a deal might enhance Iran’s regional influence; and whether regional wariness with a deal could spur nuclear proliferation.

“Iran’s regional role is an issue that the U.S. has strenuously, and foolishly, sought to separate from the nuclear discussions. This has alarmed the Gulf States – and now Israel – who fear that a lifting of sanctions on Iran and a rapprochement with the U.S. would facilitate Iranian expansionism. The Arab states understand that the implications of a nuclear accord are mainly political. Having signed a long-awaited arrangement with Tehran, the U.S. is unlikely to turn around and enter into new conflicts to prevent it from widening its reach in the Arab world.

“Indeed, there are signs that the Obama administration would do precisely the contrary. Obama, in a letter last October to Iran’s supreme leader, Ayatollah Ali Khamenei, effectively recognized Iran’s role in Syria by reassuring him that coalition airstrikes against ISIS would not target Bashar Assad’s forces. Moreover, by affirming the parallel interests of the U.S. and Iran in combating ISIS, Obama defined a basis for regional cooperation with Tehran....

“(Whatever) Netanyahu’s duplicity, the questions he raised are the same ones that many Arab states have, and to which Obama has offered no answers. Iranian influence in Iraq, Lebanon, Syria, the Palestinian territories and now Yemen, is very real, and Tehran has spent years building it up, patiently and deliberately.

“Obama has explained his Iran policy poorly, and there is a growing sense that this has been intentional. Why? Because Obama’s true ambition is to reduce America’s role in the Middle East, and, to quote analyst Tony Badran, leave in its place ‘a new security structure, of which Iran is a principal pillar.’ Because such a scheme is bound to anger U.S. allies in the region, Obama has concealed his true intentions....

“Obama may get his deal with Iran, but he has prepared the terrain so carelessly that the consequences may be quite damaging. Iran is a rising power in a region where Arab states are disintegrating. Agreeing with Iran, if that happens, will be the easy part. Much tougher will be leaving in place a stable regional order. And given Obama’s performance until now, no one is wagering much that the U.S. will succeed in that.”

Editorial / Washington Post

“(Mr. Netanyahu’s) arguments deserve a serious response from the Obama administration – one it has yet to provide. The White House has sought to dismiss the Israeli leader as a politician seeking reelection; has said that he was wrong in his support for the Iraq war and in his opposition to an interim agreement with Iran; and has claimed that he offers no alternative to President Obama’s policy. Such rhetoric will not satisfy those in and out of Congress who share Mr. Netanyahu’s legitimate questions.”

Editorial / New York Daily News

“The world leader who addressed a joint meeting of Congress on Tuesday was a man with a clear vision of Iran as an expansionist, extremist, radical Islamist power sure to use nuclear weaponry for domination....

“Across most of the six years of his presidency, Obama accepted without forceful response Iran’s defiant and duplicitous march toward becoming a nuclear state. As a result, his partisans now resignedly contend that, because there’s no way to return the genie to the bottle, Obama’s deal would at least place a check on the rogues.

“For Netanyahu – and for America – a check is far from enough, not on a government whose leader has vowed to annihilate Israel, that is relentlessly extending its sway over the Middle East and that could smilingly claim world approval as it stands within months of assembling a bomb.

“And, hell to the chief, the prime minister said so, rousing the chamber with an unflinching presentation of geopolitical realities that Obama has skated past while Secretary of State John Kerry struggles to come to terms with the mullahs....

“Pathetically, Obama falsely derided Netanyahu for failing to propose ‘viable alternatives’ for further reining Iran in. Even more pathetically, at this 11th hour, Iran rejected the 10-year freeze* that’s crucial to Obama’s scheme, flatly deeming it ‘unacceptable.’

“The Iranians’ sudden deal-breaking intransigence highlights the folly of Obama’s enterprise and points the U.S. toward the action that Netanyahu, in fact, called for:

“Get up from the table and lead the world to impose an ever-increasing economic chokehold on a rogue regime that has proved vulnerable to sanctions.

“Obama fails to see so-called viable alternatives only because he has neither the nerve nor the wisdom to use them.”

*Tuesday, Iran rejected the demand as "unacceptable." Foreign Minister Zarif was quoted by the semi-official Fars news agency as saying, “Obama’s stance...is expressed in unacceptable and threatening phrases... Iran will not accept excessive and illogical demands... Tehran will continue nuclear negotiations with the six powers.” [Jerusalem Post]

William A. Galston / Wall Street Journal

“We have to face facts. We cannot entirely eliminate Iran’s capacity to enrich nuclear materials – even through a military strike. The best we can do is mix carrots and sticks, inspections and surveillance to deter Iran from breaking through negotiated limits and racing toward nuclear weapons.

“Judged against the ideal, the emerging deal doesn’t look good. Judged against feasible goals and actual alternatives, it looks a lot better.”

Editorial / Wall Street Journal

“Given Mr. Obama’s reaction, the prime minister knows his real audience is Congress and the American people. His speech raised serious doubts about an accord that has been negotiated in secret and which Mr. Obama wants Americans to accept without a vote in Congress. Now maybe we can have a debate worthy of the high nuclear stakes.”

At week’s end, Sec. of State Kerry said a potential nuclear deal with Iran isn’t part of a “grand bargain” to improve U.S. relations with the Islamic Republic.

Kerry met in Riyadh on Thursday with Saudi and other Gulf Arab state leaders to brief them on the talks. Once again discussion devolves into Shia vs. Sunni; Iran backing Shiites, Saudi Arabia and the Gulf States supporting Sunni factions. 

The Sunni Arab states see Iran as the major source of regional turmoil. Iran blames the Sunnis for the spread of the likes of al-Qaeda and ISIS.

With good reason, the Sunnis, led by the Saudis, point to Iran’s growing influence in Iraq (covered further below), specifically the battle over Tikrit. Kerry said the offensive is an “Iraqi-designed, Iraqi-led” operation, which is a lie.

Meanwhile, the U.S. Senate has prepared an Iran bill that would require a vote of Congress on any nuclear-arms deal, one that is nearly veto proof. Led by Tennessee Sen. Bob Corker, Chairman of the Foreign Relations Committee, and New Jersey’s Robert Menendez, the committee’s ranking minority member, the bill says President Obama must submit the text of any final Iran arms deal to Congress within 60 days to allow time for hearings and a vote. Democrats who support the legislation include Bill Nelson (Fla.), Tim Kaine (Va.), Heidi Heitkamp (N.D.), and Maine Independent Angus King.

Senate Majority Leader Mitch McConnell announced he would bring the Corker-Menendez bill to the floor next week, but Democrats balked. Then more Democrats, such as Chuck Schumer (N.Y.) announced they would support the bill. According to the Wall Street Journal’s Daniel Henninger, this would make 64 Senators, or three short of a veto-proof majority.

As of today, the bill is not going to the floor next week, but will be marked up in committee later this month.

Street Bytes

--Stocks suffered their worst losses in five weeks with the bulk of the damage occurring on Friday amid fears the Fed would have to hike rates sooner than perhaps some believed. The Dow Jones lost 1.5% to 17856, while the S&P 500 fell 1.6% and Nasdaq 0.7% on the week.

The Dow and S&P both hit new closing highs earlier, 18288 for the former, 2117 for the latter, while Nasdaq did close at 5008 at one point, its first close over 5000 since March 2000, but then it fell back to finish at 4927 on Friday.

But regarding the Dow we had a big announcement.  Apple Inc. is being added to the index, replacing AT&T, which will add to the volatility of the Dow in a substantial way. Apple will join at the close of trading March 18. While most don’t see this as a big deal since the S&P 500 is the benchmark for money managers, those who pooh-pooh the Dow are idiots.

What market index captures the headlines on the nightly news, the S&P? No, the Dow! What thus influences the sentiment of Mr. and Mrs. Middle America, the S&P? No, the Dow! And what has more influence in spending and voting patterns, the S&P? No, the Dow! So cut the crap, Dow bashers. The index has been around 119 years and held up pretty well as a representative benchmark. 

As for Apple’s inclusion, seeing as it is handily the world’s most-valuable company, the move only makes sense. Plus with the upcoming launch of the Apple Watch, the Dow could be in the headlines even more, for good or bad.

--U.S. Treasury Yields

6-mo. 0.10% 2-yr. 0.72% 10-yr. 2.24% 30-yr. 2.84%

The 10-year ended 2014 at 2.17%, fell all the way to 1.64%, and now look...2.24%. Those are huge percentage swings, sports fans.

--The Federal Reserve said all 31 U.S. banks passed its latest round of annual “stress tests” to see how they would cope in the next financial crisis; the banks having enough capital to keep lending during a severe global recession. It was the first time since the tests began in 2009 that all the banks had a capital level above the minimum required.

But Goldman Sachs, Morgan Stanley and JPMorgan Chase were among five with the lowest readings for a capital ratio of at least 5%.

--U.S. gasoline prices at the pump have risen 35 straight days after bottoming at a nationwide price for regular of $2.03. It’s now $2.45 as of Friday. Refinery issues are a big reason for the rise, despite record inventories.

--February represented the 22nd consecutive month of withdrawals for the PIMCO Total Return Fund, though the $8.6 billion figure was the lowest since the departure of manager Bill Gross last fall.

At its peak, the world’s largest bond fund had assets of $293 billion in April 2013 and it’s down to $124.7 billion as of the end of last month.

--Vanguard, in contrast to issues PIMCO has faced, attracted more new business than any other asset manager in the mutual fund industry in 2014, $291 billion, a fifth of the industry’s net inflows, according to Morningstar. PIMCO, overall, had outflows of $175 billion, by far the worst among the 3,164 groups tracked by the data provider.

--February U.S. auto sales were mostly up, despite the brutal weather in some parts of the country. General Motors’ sales rose 4.2% over last February, Chrysler’s were up 5.6%, but Ford’s fell 1.9%, though this was largely because dealers lacked inventory to meet demand for the new F-150 pickup truck.

Meanwhile, Toyota’s sales rose a strong 13.3%, Nissan’s were up 2.7% and Honda’s grew 5% year over year.

And for the record...the top-selling vehicles in the U.S. in February:

Ford F-Series 55,236
Chevy Silverado 45,395
Toyota Camry 32,942
Ringling Brothers’ Clown Car 43

--Apple Inc.’s new mobile-payment system, Apple Pay, has been hit by fraudulent transactions using stolen credit-card data obtained in security breaches of retailers such as Target and Home Depot, as reported by the Wall Street Journal on Friday.

The Apple Pay system itself hasn’t been hacked, but the fraudsters are entering stolen credit card info into phones, that are then used to make purchases without a physical card being presented.

The service has accounted for two of every three dollars spent in the U.S. via mobile payments on the three major credit-card networks.

Apple has tried to solve the issue of stolen credit cards, as noted by the Journal, “by working with the card networks to mask the user’s information by issuing a one-time code for each purchase. But this doesn’t prevent thieves from loading already stolen cards into the service.”

--Apple retook the lead in the fourth quarter as the world’s No. 1 smartphone seller, according to Gartner, beating out Samsung for the first time since 2011, thanks to the release of the iPhone 6 and 6 Plus models.

Apple sales equated to more than one in five smartphones, while Samsung was just under 20% - 10 points less than a year ago, as noted by Gartner.

Samsung is doing OK on the high-end, but it is getting whacked with its lower-end offerings, losing out to rivals such as Lenovo and China’s Xiaomi.

Xiaomi sold 18.6 million phones during the quarter (Apple sold 74.8m, Samsung 73m), which was triple the year-ago figure. The company announced on Thursday it expects sales and smartphone shipments to rise by more than 30% this year, which includes slowing domestic demand in China.

--Speaking of China, the government’s proposed anti-terrorism law could be yet another nail in the coffin for some leading U.S. tech firms, such as Cisco and Microsoft. China would require firms doing business with the mainland to provide encryption keys and install backdoors granting law enforcement access for counterterrorism investigations. President Obama said in a Reuters interview that China must change the draft law if it were “to do business with the United States.”

A Chinese parliamentary spokesman said his nation’s proposals were “in accordance with the principles of China’s administrative law as well as international common practices, and won’t affect Internet firms’ reasonable interests.” [Reuters]

But while the United States and others in the West complain about being increasingly shut out of the Chinese market, the likes of China’s Huawei and ZTE Corp., two Chinese telecom equipment makers, have been essentially locked out of the U.S. on cybersecurity concerns.

Much of this mess is directly related to Edward Snowden’s revelations, which have emboldened China’s leadership. I’m biting my tongue.

On a related topic, Li Yufu, vice-chairman of the All China Federation of Trade Unions, warned of alleged involvement of “hostile foreign forces” in the country’s labor movement.

This is another bad sign, as Li is in essence targeting non-governmental organizations (NGOs) who will face ramped up police surveillance, making it tougher for them to operate, as reported by the Financial Times. This will be a common refrain for Communist leaders, though the NGOs are simply out to protect workers’ rights.

--Shares in Ali Baba hit their lowest level since the September IPO on Tuesday, $80, which while up from the IPO price of $68 is down substantially from the $120 high of Nov. 13. The stock did rally back some to close the week at $85.

Alibaba has been suffering in no small part because of poor publicity and scathing criticism from the Chinese government over perceived lack of oversight with some of its websites. In addition rival JD.com is gaining traction.

Can’t help but repeat what I’ve said from day one. I wouldn’t touch these shares.

--February casino revenue in Macau was down a full half from year ago levels, 48.6%, the biggest drop on record and the ninth straight month of declines despite the Lunar New Year holiday. Revenues were down 17.4% in January year over year. Add the two together to smooth out the holiday and it fell 35%.

The February comparison is tough as a year ago happened to be the most profitable month on record.

One company to watch is Galaxy Entertainment Group, which opens a new resort on May 27 so analysts will be looking to see how many tables they open, the number of dealers hired, that kind of thing, after the government’s anti-corruption campaign has killed business.

--Retail giant Target plans on cutting 2,000 jobs as part of a major restructuring that included pulling out of the Canadian market. CEO Brian Cornell said: “[I] am confident that by implementing our strategy, simplifying how we work and practicing financial discipline, we will ignite Target’s innovative spirit and deliver sustained growth.”

While it’s cutting staff, it also plans to invest up to $2.2 billion to catch up with rivals in its online operation. The market has liked all of Cornell’s moves since he took over following the massive security breach and the shares have been at basically all-time high levels.

--Canada’s economy grew at a faster than expected pace in the fourth quarter, up 2.4% annualized, according to Statistics Canada. The agency also revised the third quarter mark up to 3.2% from an initially reported 2.8%.

--Shares in Lumber Liquidators Holdings Inc. plunged 35% on the week after a scathing “60 Minutes” piece on Sunday called into question the quality of its Chinese-made flooring, specifically the issue of illegal levels of formaldehyde. The investigation, using reporters with hidden cameras, found the flooring was often billed as meeting California health and safety standards even though it didn’t. Managers at three Chinese factories conceded as much.

“60 Minutes” also tested flooring from China that was being sold in several states and of the 31 products tested, only one would have been legal in California.

It was a helluva story. Go online if you missed it.

--Aer Lingus’ short-haul traffic was down 0.9% in February compared to a year ago, owing to increased competition from Ryanair, but long-haul service was up 21.7%. Aer Lingus is introducing service from Dublin to Washington, D.C. this year. 

--Liberia’s last confirmed Ebola patient walked (danced) out of a clinic on Thursday, a major moment, though Liberia isn’t out of the woods yet. 106 people are still being monitored in the country and it won’t be declared Ebola-free until it goes 42 days without a single case.

It has been a year since the virus hit West Africa. 24,000 caught Ebola. About 10,000 died. It is still claiming lives in Guinea and in Sierra Leone, but the epidemic is fading.

The hope is for a vaccine before it flares up again, which is inevitable until then.

--California’s unemployment rate dropped to 6.9% in January, the lowest since May 2008.

--McDonald’s announced that over the next two years it will stop using chicken treated with antibiotics commonly used for humans.

Christopher Muller, professor of hospitality* at Boston University, told USA Today, “It will change things for everyone,” making McDonald’s a “market maker” for these products.

McDonald’s purchased 3% to 4% of all the chicken produced in the U.S. last year.

*Regarding the “professor of hospitality,” I now realize I missed the boat. I would have loved that career path.

“Hey, how ya doin’? Want a beer?”

“Thanks, Professor. But we’re good for now.”

“OK, just let me know.”

Plus you receive a nice pension (once you’re tenured, of course). I imagine it’s also pretty much 9-5....or 4 to 12.

--In Forbes magazine’s latest annual ranking of global billionaires, Microsoft owner Bill Gates was declared the richest man in the world for the 16th time, once again beating out Mexican businessman Carlos Slim; Gates having an estimated net worth of $79 billion to Slim’s $77bn. Warren Buffett is third at $72.7bn.

4. Amancio Ortega $64.5bn (Zara and other fashion chains)
5. Larry Ellison $54.3bn (Oracle)
6-7. Charles and David Koch $42.9bn apiece

Facebook’s Mark Zuckerberg moved up to No. 16 at $33.4bn.

Basketball’s Michael Jordan hit the list at $1bn.

--Speaking of Zuckerberg, at the Mobile World Congress in Barcelona this week, he revealed what he looks for in a prospective employee. And the answer is simple.

“I will only hire someone to work directly for me if I would work for that person. It’s a pretty good test and I think this rule has served me well.”

--The aforementioned Buffett released his annual letter to shareholders on Saturday, reflecting on 50 years at the helm of one of the world’s largest companies and Buffett, 84, wouldn’t reveal a successor, but his partner, vice chairman Charlie Munger, writing separately to commemorate Buffett’s 50 years of running Berkshire Hathaway, suggested that insurance executive Ajit Jain or Greg Abel, head of Berkshire’s energy business, would likely receive the top job down the road.

A third potential candidate, Matthew Rose, chief of Burlington Northern Santa Fe, Berkshire’s railway holding, received rare criticism for his company’s problems in Buffett’s letter (though he wasn’t named directly). Buffett has called Burlington Northern his “most important noninsurance subsidiary” and Berkshire is going to spend $6 billion on plant and equipment improvements over the coming year.

Buffett, while highly optimistic, warned investors in Berkshire not to expect the kinds of gains witnessed in the first 50 years, writing: “The numbers have become too big. I think Berkshire will outperform the average American company, but our advantage, if any, won’t be great.” [David Gelles / New York Times]

Separately, in the part of the letter devoted to stream of consciousness, Buffett wrote of investment bankers: “The Street’s denizens are always ready to suspend disbelief when dubious maneuvers are used to manufacture rising per-share earnings, particularly if these acrobatics produce mergers that generate huge fees for investment bankers.

Buffett added: “Investment bankers, being paid as they are for action, constantly urge acquirers to pay 20 to 50 percent premiums over market price for publicly held businesses. The bankers tell the buyer that the premium is justified for ‘control value’ and for the wonderful things that are going to happen once the acquirer’s CEO takes charge.   (What acquisition-hungry manager will challenge that assertion?)”

Then, Buffett continues: “A few years later, bankers – bearing straight faces – again appear and just as earnestly urge spinning off the earlier acquisition in order to ‘unlock shareholder value,’” he wrote. “Spin-offs, of course, strip the owning company of its purported ‘control value’ without any compensation payment. The bankers explain that the spun-off company will flourish because its management will be more entrepreneurial, having been freed from the smothering bureaucracy of the parent company. (So much for that talented CEO we met earlier.)” [David Gelles / New York Times...different article]

--Blackstone Group LP co-founder and CEO Stephen Schwarzman took in cash and prizes of $690 million for 2014, the highest annual payout ever notched by a founder of a publicly traded private-equity firm.

--I was reading a piece in Crain’s New York Business by Aaron Elstein and I didn’t realize shares in Nathan’s Famous Inc., the hot-dog people, had doubled in 24 months, and that their dogs are now sold in 33,000 supermarkets, five times more than a decade ago. They also are up to 300 outlets across 27 states and 10 countries.

--NBC News brought back the former president of the division, Andrew Lack, to take a senior role (some details still a bit unclear as I go to post). Lack ran NBC News from 1993 to 2001, a strong period for the unit.

The big thing here is Lack is also a good friend of Brian Williams, ergo, Williams could return, or as a source told the New York Post, “Andy Lack wouldn’t come back without Brian.” We’ll see. Lack has his hands full.

--The New York Philharmonic’s home at Lincoln Center has been known as Avery Fisher Hall for more than 40 years, but now David Geffen, the co-founder of DreamWorks Animation, has donated $100 million in exchange for naming rights to the performance space...by September, David Geffen Hall.

The money is going towards a substantial renovation. Geffen said in a statement: “As a native New Yorker, I recognize that Lincoln Center is a beacon to artists and musicians around the world. To be involved with such a beloved and iconic institution is deeply satisfying.” [Yoona Ha / Crain’s New York Business]

Good for him. I passed it the other day and what a beautiful spot. We need more culture! Especially when you consider the next item....

Foreign Affairs

Iraq / Syria / ISIS: In a major test of its ability to eventually retake Mosul, Iraq’s biggest city under ISIS control, the Iraqi army, backed by Shiite militia and the elite Quds Force of Iran’s Revolutionary Guards Corps, under the direct control of Major General Qassem Soleimani, is going after ISIS’ base in Tikrit. Sec. of State Kerry conceded Soleimani was on the ground, directing action, but that the United States wasn’t coordinating with him. 

In an effort to hold on to the city, ISIS militants set fire to oil wells northeast of town to obstruct the assault. The Ajil oil field is a major source of cash for IS and the field produced 25,000 barrels per day of crude that were shipped to the Kirkuk refinery. While ISIS doesn’t have the technical expertise, once it took over the fields they still managed to pump oil though at lower volumes.

The main initial goal of the Iraqi force is to cut off the supply lines between Tikrit and Mosul.

Iraqi Prime Minister Haider Abadi urged his troops “to respect human rights and preserve [civilian] property” amid fears of reprisals against Sunnis that would lead to civil war.

Editorial / Washington Post

“U.S. commanders are taking an upbeat view of Iran’s close involvement in an assault by Iraqi forces on the city of Tikrit, which has been held by the Islamic State since summer. After reporting that two-thirds of the attackers were from Shiite militias and the operation had ‘overt...Iranian support,’ Joint Chiefs Chairman Gen. Martin Dempsey said in a congressional hearing Tuesday that ‘if they perform in a credible way...then it will in the main have been a positive thing.’

“Such optimism seems shortsighted. While any reduction in the Islamic State has benefits, the Tikrit operation raises multiple red flags. The United States was excluded by the Iraqi government of Haider al-Abadi; meanwhile, Iran has dispatched its own ground forces, artillery and drones. The assistance is being overseen by a notorious general, Qassem Soleimani, who previously supervised attacks on U.S. forces in Iraq.

“Tikrit, the home town of Saddam Hussein, is part of Iraq’s Sunni heartland, so the heavy involvement of Shiite Iran and the militias allied with it could turn what is supposed to be a counterterrorism campaign into a sectarian bloodbath. Even if it does not, a victory would advance Tehran’s goal of extending its influence across Iraq, rather than being limited to the central government in Baghdad and Shiite-populated areas.

“Mr. Abadi, who took office promising reconciliation with Sunni leaders, is saying that Tikrit will be turned over to Sunni police and tribes when it is recaptured and its refugee population invited to return. But fewer than 1,000 Sunni fighters are included in the 30,000-strong attacking force; the government has not delivered sufficient arms to Sunni tribes willing to fight the Islamic State. Moreover, Shiite militia leaders, as The Post’s Erin Cunningham reported, have portrayed the offensive as revenge for a massacre of mostly Shiite Iraqi soldiers by the Islamic State in June. For his part, Mr. Abadi alarmed human rights monitors by declaring that ‘there is no neutral party’ in Tikrit and that residents not siding with the attackers would be considered supporters of the Islamic State....

“By allowing Iran to take the military lead in Tikrit and other parts of Iraq, the United States might speed the destruction of the Islamic State. But the administration is also risking the undoing of all the work that has been done since last summer to prevent Iraq from fragmenting along sectarian lines – and it is allowing Iran to take another step toward replacing the terrorist regime with its own malevolent hegemony.”

In other developments in the region....

--ISIS attacked the ancient archaeological site of Nimrud in northern Iraq, the latest in a series of attacks on ancient structures and artifacts, including the Mosul Museum. Nimrud wsa founded by the Assyrian King Shalamansar I, who died in 1245 B.C. As NBC’s Richard Engel first put it, “cultural genocide.”

--The military commander of the Nusra Front and several other top leaders were killed in an airstrike in Syria’s Idlib province, apparently a Syrian regime attack on the leadership of Al-Qaeda’s affiliate in the region. The U.S. denied it was involved.

--The Islamic State, despite repeated attempts by Twitter to thwart ISIS threats, propaganda and online recruiting, supposedly has a minimum of 46,000 Twitter accounts, according to a study from the Brookings Institution and Google Ideas. This was the first public attempt to measure the influence of IS members or their sympathizers on social media.

Twitter says it has suspended well in excess of the 1,000 accounts the study says it has. [ABC News says the total is over 2,000.] This week it emerged Twitter executives have been targeted by ISIS.

Israel et al...more on Obama’s foreign policy:

Daniel Henninger / Wall Street Journal

“Mr. Netanyahu’s critics say the prime minister seriously damaged the traditional alliance between the U.S. and Israel. If so, he’s at the back of a long line. Add to Israel the already broken relationships with Saudi Arabia and Egypt. Add as well the trips made to the Pacific region by both Vice President Joe Biden and Secretary Kerry explicitly to reassure allies there that the U.S. hadn’t abandoned them to China’s aggressions. Anyone who talked to senior officials from Asia was hearing unprecedented misgivings about the U.S. commitment.

“Add to it the Western-leaning people of Ukraine, whose army was routed form Debaltseve last month for lack of weapons to defend themselves from Russian tanks, artillery and missiles. Add to it the moderate Syrian opposition that is dissolving into the flood tide of Islamic extremists for lack of support when it would have mattered.

“What are the big Obama foreign-policy wins that have earned the limitless benefit of the doubt he’s asking for?

“There is the killing of bin Laden, a discrete special operation engineered by Admiral William McRaven. The drone wars in Pakistan and Yemen have indeed eliminated terrorists.

“By the administration’s lights, its most noted diplomatic successes are the opening to Cuba and the deal to draw down Syria’s chemical weapons, which was proposed by Vladimir Putin. The reset with Russia is now in ashes.....

“Barack Obama chose to run his presidency as he saw fit, which is to say, out of his own thoughts and oblivious to anyone else’s. The result, which now haunts his Iran deal, is that the reservoir of trust, and political support necessary to establish the credibility of a major U.S. commitment does not exist. Weep for that.”

Egypt: Strange situation in Riyadh last Sunday as Egyptian President al-Sisi met with Saudi leadership. At the same time, Turkish President Erdogan was in Riyadh, but Sisi and Erdogan did not get together, with it being well known Sisi accuses Erdogan of backing the banned Muslim Brotherhood. Erdogan is ticked at Sisi for ousting Islamist predecessor Mohammed Morsi.

At the same time Saudi King Salman clearly favored Sisi in meeting him at the airport, a breach of official protocol that Erdogan wasn’t the recipient of.

Sisi and Salman discussed Sisi’s proposal for a joint anti-terrorism force that would tackle regional threats from the likes of Yemen, Libya and Syria. The force would include Jordan and the UAE.

Separately, the Egyptian government announced it would construct a new capital city, located east of Cairo towards Suez, to which it will relocate. It is forecast to take twelve years to build and Gulf-based companies will build it. Specifically, a Dubai developer, Emaar Properties, is said to be involved, according to the Jerusalem Post.

Emaar Properties is connected to the ruler of Dubai.

Jordan: The government announced there are over 3.4 million people from Arab countries that currently reside in Jordan, living alongside 6.5 million Jordanians. The Kingdom is hosting around 1.4 million Syrian refugees, 500,000 Iraqis and 1.5 million Palestinians who are not Jordanian citizens.

That gives you a sense of the dicey situation the Kingdom always finds itself in, but more so today due to the spillover from the war in Syria.

Russia / Ukraine: The Organization for Security and Cooperation in Europe (OSCE) says the ceasefire is largely holding in eastern Ukraine, but it’s been impossible to verify whether heavy weapons have been withdrawn from the front lines as agreed upon. Germany has warned of further sanctions against Russia if the Feb. 12 accord isn’t implemented.

On Thursday, eight Republicans and three top Democrats – including the ranking members of the Armed Services, Intelligence, and Foreign Affairs Committees – sent President Obama a letter urging him “in the strongest possible terms” to quickly approve the transfer of lethal and defensive weapons systems to Ukraine, as reported by Molly O’Toole of Defense One.

“In anticipation of the near certainty that Russia and its separatist proxies continue their efforts to destabilize Ukraine and seize additional territory,” the lawmakers wrote, “we urge you to quickly approve additional efforts to support Ukraine’s efforts to defend its sovereign territory, including through the transfer of lethal, defensive weapons systems to the Ukrainian military.”

Administration officials have long maintained providing Ukraine with lethal aid would escalate the conflict and would be unlikely to turn the tide.

The authors of the letter to the president counter: “In the face of Russian aggression, the lack of clarity on our overall strategy thus far has done little to reassure our friends and allies in the region who, understandably, feel vulnerable. This needs to change.”

Earlier in the week, Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey said: “I think we should absolutely consider providing lethal aid.” Defense Secretary Ashton Carter had said in his confirmation hearings two weeks ago he was inclined to support arming Ukraine.

For its part Russia launched large-scale war games at week’s end, including Crimea and the disputed territories, along with the Northern Caucasus, Abkhazia, South Ossetia and Armenia. The exercises will run until April 10. [Abkhazia and South Ossetia are the breakaway regions from Georgia.]

The State Department said on Wednesday that Russia had “thousands and thousands” of soldiers in Ukraine. [One report has as many as 12,000.]

Meanwhile, a report by the European Leadership Network think-tank reveals that six key countries, NATO members, are cutting their defense budgets, despite pledges to reverse declines in spending.

Germany is spending less, while France’s military budget has stagnated. Even in Britain, where Prime Minister David Cameron vowed to increase spending on defense, it appears to be at its lowest level in 25 years.

Two other items...Gazprom has reached a temporary agreement with Ukraine on payments to ease concerns a standoff may disrupt exports to Europe shipped through the country. About one third of Europe’s gas comes from Russia. Ukraine has vowed to keep paying in advance for natural gas deliveries.

And as if there wasn’t enough tragedy in Ukraine already, 32 were killed in an explosion at a coal mine in the eastern region. The mine is under the control of the rebels. It was a methane gas explosion.

On the issue of the assassination of Kremlin opposition leader Boris Nemtsov, Feb. 28, Vladimir Putin said on Wednesday that the murder was a shameful tragedy that carried a political subtext.

In a speech during a meeting with Interior Ministry officials, Vlad the Impaler said:

“The most serious attention should be paid to high-profile crimes, including the ones with a political subtext. Russia should be devoid at last of the kind of shame and tragedies that we have recently endured and seen.

“I mean the murder, the audacious murder of Boris Nemtsov right in the center of the capital.”

Tens of thousands marched in silence on Sunday in memory of Nemtsov through downtown Moscow and onto Bolshoi Moskvoretsky Bridge, where Nemtsov was gunned down. 

Thousands more flocked to the Sakharov human rights center in Moscow on Tuesday to pay their final respects. Senior officials from Poland and Latvia who attempted to attend the wake were denied entry into Russia.

“Nemtsov’s killing is a dramatic page in Russia’s history because we have seen that a political opponent can be stopped with arms. This is a new, unacceptable reality that makes the country’s government responsible for preventing it,” former Finance Minister Alexei Kudrin told reporters after laying flowers at the coffin.

The Kremlin continues to deny any involvement, saying it was a “provocation” designed to discredit Putin and strengthen his opponents, which is beyond absurd. Equally absurd are claims the assassination could have been orchestrated by ISIS.

No arrests have been made, though the director of Russia’s Federal Security Service said an investigation identified several suspects, without giving any specifics.

The key witness to the crime, Nemtsov’s girlfriend, Anna Duritskaya, returned to her native Ukraine after three days of questioning and is in hiding with her mother, at last report.

It is still not clear whether CCTV cameras at the site of the killing were operating on Friday night, or even who is responsible for the cameras, with various authorities making conflicting claims.

Putin told Nemtsov’s mother that everything would be done “to ensure that the perpetrators of this foul and cynical crime and those who stand behind them are properly punished.” It makes you want to throw up.

Separately, Kremlin opposition leader Alexei Navalny was released from prison after serving a 15-day sentence for handing out leaflets to promote a protest rally, that then became the memorial march for Boris Nemtsov. Speaking to reporters following his release, Navalny vowed to continue his work. 

“That terrorist act didn’t achieve its aim, it didn’t frighten anyone, doesn’t frighten me or my associates.”

Putin’s popularity, by the way, remains near record levels at 86%, according to the independent Levada polling center. What’s worse is the number of people having no sympathy for the opposition has risen to 68% from 59% three years ago. [The poll was released the day Nemtsov was killed, so it will be interesting to see if these numbers change any the next time a survey is conducted.]

Editorial / Financial Times

“Sergei Yushenkov (2003). Yuri Shchekochikin (2003). Anna Politkovskaya (2006). Stanislav Markelov (2009). Anastasia Baburova (2009). Natalia Estimirova (2009).

“To this sad and shameful roll call of politicians, journalists, and human rights activists assassinated in Vladimir Putin’s Russia must now be added the name of Boris Nemtsov... Rarely, if ever, have any of their killers been brought to justice....

“(Nemtsov’s) murder marks a further sickening downwards lurch in Russia’s culture of political violence. Coming two days ahead of a march on Sunday to protest against the war in Ukraine, his death tears a hole in Russia’s threadbare opposition movement. One bunch of flowers left on the bridge where he was shot included the message: ‘Without you, spring will not come.’...

“In speaking out against state corruption and the Kremlin’s involvement in the war in Ukraine, Nemtsov was denounced as a traitor on state television and vilified on social media. Posters of him and his supporters were hung in central Moscow accusing them of being a ‘Fifth Column.’

“This war psychosis, promoted by the Kremlin, has re-awoken the ultranationalist demons from the darkest chapters of Russia’s past. Nemtsov was mystified why the west did not sanction those Kremlin propagandists responsible for stoking this culture of hate....

“At a time of international tension over Ukraine, it is tempting for the West to wash its hands of Russia and isolate the country. But that would do a terrible disservice to Nemtsov’s life’s work and Russia’s remaining democratic campaigners. Just as in Soviet times, Russia’s dissidents look to Western democracies as a source of hope and moral support. While sanctioning the regime, the West should never cease to engage – wherever possible – with the Russian people.

“Nemtsov embodied a vision of another Russia, at peace with itself and the outside world. The outside world should in turn honor that memory. One leaflet at a time.”

Garry Kasparov / Wall Street Journal

“The early themes in Mr. Putin’s reign – restoring the national pride and structure that were lost with the fall of the Soviet Union – have been replaced with a toxic mix of nationalism, belligerence and hatred. By 2014 the increasingly depleted opposition movement, long treated with contempt and ridicule, had been rebranded in the Kremlin-dominated media as dangerous fifth columnists, or ‘national traitors,’ in the vile language lifted directly from Nazi propaganda.

“Mr. Putin openly shifted his support to the most repressive, reactionary and bloodthirsty elements in the regime....In this environment, blood becomes the coin of the realm, the way to show loyalty to the regime. This is what President Putin has wrought to keep his grip on power, a culture of death and fear that spans all 11 Russian time zones and is now being exported to eastern Ukraine....

“We may never know who killed Boris Nemtsov, but we do know that the sooner President Putin is gone, the better the chances are that the chaos and violence Boris feared can be avoided.”

Mark Almond / Irish Independent

“Every newspaper photograph of the crime scene has the Kremlin’s towers in the background. This view was an accusation in itself: the finger of blame pointed directly at the Russian president. Whoever was organized enough to track the movements of Nemtsov and his Ukrainian girlfriend across Red Square, drive up to them on the Moskvoretsky Bridge, shoot him in the back and then get away must have known whose face would flash around the world as the ‘most wanted.’

“Vladimir Putin is already the West’s ‘Public Enemy Number One.’ Many observers jumped to the conclusion that the murder beneath his Kremlin windows was Putin’s perverse confessional ‘selfie.’

“But while the president might be ruthless, is he really foolish or brazen enough to stage the killing of a fallen rival from the ‘90s with his office in the background?

“It seems more likely to me that the killers of Nemtsov wanted to incriminate Putin. The Kremlin’s spokesmen are desperately anxious to shift the blame and point to sinister ‘provocateurs,’ steered from the West, at work. Well, maybe, but what about the violently nationalistic forces unleashed over the past year inside Russia? Did one want to nail Putin’s colors to their mast by leaving this bloodstain on the Kremlin?....

“(Those) hoping for Putin’s fall should remember what the Chinese have long warned us: be careful what you wish for. From Whitehall to Washington, there is a naïve assumption that anyone but Putin must be better for Russia and the West. The devil you know is always more predictable than chaos.

“The collapse of the Communist system was largely bloodless. Let’s not assume that the collapse of post-Communist Russia would not send shock waves westwards.”

I included Mr. Almond’s view because his conclusion is similar to what I have been saying for years. Putin will one day be undone from within by a ‘dark third force.’ And I agree, as inconceivable as this may seem with Putin currently running roughshod in Ukraine, his replacement could be even worse.

China: Regarding the new budget, China announced it would increase military spending this year by about 10%, following a 12.2% increase last year. National People’s Congress spokeswoman, Fu Ying, who was all over the place this week...but then again that’s what a spokeswoman does...said, “China is a big nation that needs to protect its national security. Military modernization is part of the nation’s modernization drive, and it needs budgetary support.”

The defense budget grew by 11.2% in 2012 and 12.6% in 2011. 

Separately, Premier Li said the implementation of the “one country, two systems” principle must strictly comply with the Chinese constitution and the Basic Law as it pertains to the issue of Hong Kong. Li reinstated the promise of “Hong Kong people governing Hong Kong” as well as the city’s “high degree of autonomy” in his remarks, which were omitted a year earlier.

Li said, “We [the central government] will steadfastly carry out the principles of ‘one country, two systems,’ the people of Hong Kong governing Hong Kong, the people of Macau governing Macau, and both regions enjoying a high degree of autonomy.

“And we will strictly comply with the constitution and the basic laws of these two regions.”

These words will be examined and parsed...and examined and parsed...but they do give cause for slight optimism.

That said, Hong Kong’s big election is in 2017 and there will be waves of protests leading up to it, no doubt. The key is “universal suffrage” and whether that is achieved two years hence.

Lastly, U.S. federal agents targeted “maternity tourism” schemes in which pregnant Chinese women travel to the United States, usually on tourist visas, so that their children will be born U.S. citizens, as reported by the Los Angeles Times’ Victoria Kim and Frank Shyong.

This should tick off every American to no end.

“Efforts to outlaw or regulate the practice has so far been unsuccessful. A bill in the 2013 Congress to limit birthright citizenship to babies with at least one American parent was never voted on.”

The purpose is to enable the children to apply to U.S. colleges, as well as make it easier for the parents to then immigrate here.

South Korea: It was more than a bit disturbing that the U.S. ambassador to South Korea, Mark Lippert, was severely slashed in the face and left hand by a militant Korean nationalist who was well known to officials for being a nut job who apparently has close ties to the North.

The assailant reportedly shouted “South and North Korea should be reunified!” before lashing out at the envoy with a blade ten inches long, and he also reportedly condemned the joint military exercises being held by the United States and the South. How this wacko got close to the ambassador is a travesty.

Afghanistan: A series of flash floods and avalanches in the northern part of the country killed at least 285 this week. 

Nigeria: Witnesses said Boko Haram killed at least 64 people in a village in Borno state this week, targeting men and boys before setting the village on fire, survivors told a news website Sahara Reporters.

But there were also stories that Chad’s military continues to make gains in aiding the Nigerian military; this as Boko Haram has made cross-border raids into Chad, Niger and Cameroon in recent weeks.

Chadian President Idriss Deby vowed to “wipe out” Boko Haram, adding the group’s leader, Abubakar Shekau, needed to give himself up and that he knew where the terrorist was hiding.

Britain: Counter-terrorism officials announced they are monitoring 3,000 extremists who they fear could commit acts of domestic terror or become future “Jihadi Johns.” With the unmasking of a Londoner, Mohammed Emwazi, as Jihadi John (so nicknamed by the press), Britain’s domestic security service MI5 told the Financial Times there was now a real concern over the impact of social media on radical Islamists in Britain.

Argentina: The ex-wife of top prosecutor Alberto Nisman, who died mysteriously in January, presented a report by top forensic specialists claiming he was the victim of a homicide, not suicide after he was found in the bathroom of his apartment with a bullet wound to his head. The specialists maintain Nisman’s body was moved after he was shot.

The prosecutor investigating the case, Viviana Fein, had preliminarily concluded Nisman killed himself, but she has yet to officially rule on the cause of death and in ensuing weeks has said she wouldn’t rule out any theories.

The thing is, the ex-wife, Sandra Arroyo Salgado, is a top federal judge herself. Prior to this report, the government has ramped up its attacks on Nisman’s motives behind a report on the 1994 terrorist attack on a Jewish community center in Buenos Aires that most believe was carried out by Iran through its proxies.

Random Musings

--Late Wednesday night, Hillary Clinton tweeted out: “I want the public to see my email.”

Mrs. Clinton is giving in to a public uproar, with fire coming not just from Republicans but some Democrats, over her possible breach of federal law in having a private email account while she was secretary of state.

This also comes after we learned on Wednesday that she had her own internet server at home in Chappaqua, New York, as first reported by the Associated Press.

The New York Times had revealed this week that Clinton did not have a government email address during her time at State and that government watchdogs and former officials from the National Archives and Records Administration said this was a serious breach.

In addition, what Clinton was doing made her correspondence far more vulnerable to hackers.

The correspondence of federal officials is considered government records under federal law. Her spokespeople thus far insist she has complied with the “letter and spirit of the rules.”

Clinton’s people first fell back on her having previously handed over 55,000 pages of emails to the State Department. Thus far, she has been unable to give a good reason why she used a personal account. Well, many of us know why, and she was caught on camera by ABC News a while back complaining that she would never have a government email account because of all the investigations she had been through.

State Department officials have confirmed Clinton exclusively used a personal account during her time in office. Both spokespeople for the department as well as White House spokesman Josh Earnest defended Clinton, saying she had turned over everything, but then all parties said they were relying on information from the Clinton team.

The Republican-led congressional investigation looking into her actions during the Benghazi attack has been prevented from compiling a final report because Clinton didn’t hand over all her emails related to the incident. This week, the chairman of the investigating committee, Republican Rep. Trey Gowdy (S.C.), said: ‘I want the documents. Sooner rather than later.”

Sen. Charles Grassley (R-Iowa) told the Washington Post that he was concerned the State Department did not turn over all emails by Clinton aide Huma Abedin that he requested in 2013 as part of an effort to see whether Abedin was simultaneously working for the government and an outside consulting firm.

“Abedin, like Clinton, sometimes used a private clintonemail.com account.

“ ‘The trend of using private email for public business is detrimental to good government,’ Grassley said. ‘The public’s business ought to be public with few exceptions.’”

Dick Harpootlian, a former Democratic Party chairman in South Carolina who has said he hopes Vice President Biden runs, told the Washington Post: “There’s always another shoe to drop with Hillary. Do we nominate her not knowing what’s in those emails?”

Editorial / Washington Post

“Hillary Rodham Clinton has served as first lady, a senator from New York and secretary of state. She is no newcomer to the corridors of power. Her decision to exclusively use a private email account while secretary suggests she made a deliberate decision to shield her messages from scrutiny. It was a mistake that reflects poor judgment about a public trust.

“Under the rules as they existed during Ms. Clinton’s time as secretary, from 2009 to 2013, government officials were not strictly required to use official email accounts. However, in 2011 the White House spokesman, Jay Carney, said, ‘We are definitely instructed that we need to conduct all of our work on our government accounts...’ He said it was ‘administration policy’ to use government accounts. Did this not apply to Ms. Clinton at the State Department?

“If government officials did use private emails for public business, they were required to consider the emails to be equivalent to government records and to preserve them. Ms. Clinton took her email with her when she left office in 2013, and then, in December, when asked by the State Department, turned over 55,000 pages of emails from the private account. Her spokesman said that in cases when she wrote to department officials at their formal addresses, those emails should still be in the department’s system. President Obama signed amendments to a law last November that require government employees who use private email for official business to forward it to government systems within 20 days.

“Ms. Clinton is not the first high-ranking government official to write private emails about public business. But a host of questions arise from her decision to use private email exclusively while serving as secretary. How secure was the private email? What was her motive? Did anyone ask why the secretary of state was breaking with an announced administration policy? Why did she not turn over the emails promptly upon leaving office? Has she withheld anything?”

Editorial / Wall Street Journal

“Hillary Clinton hasn’t even begun her expected presidential candidacy, but already Americans are being reminded of the political entertainment they can expect. To wit, the normal rules of government ethics and transparency apply to everyone except Bill and Hillary.

“Last week we learned that the Clinton Foundation had accepted donations from foreign governments despite having made a public display of not doing so. The Family Clinton had agreed not to accept such donations while Mrs. Clinton was serving as Secretary of State, with rare exceptions approved by State’s ethics shop.

“But, lo, the foundation quietly began accepting such gifts from the likes of Qatar and Algeria after she left the State Department – though everyone in the world knew she was likely to run for president in 2016. The foundation didn’t announce the donations, which our Journal colleagues discovered in a search of the foundation’s online data base.

“Then Monday, the New York Times reported that Mrs. Clinton used a personal email account for official business as Secretary of State, despite a federal transparency law that requires officials to maintain emails on government servers....

“The real story here is that none of this is a surprise. This is how the Clintons roll. They’re a political version of the old Peanuts cartoon character who was always surrounded by a cloud of dirt. Ethical shortcuts and controversies are standard operating procedure. A brief 1990s roll call: The Riadys, Johnny Chung, Travelgate, the vanishing Rose billing records, a killing in cattle futures, the Marc Rich pardon.

“The Clintons and Democrats want Americans to forget all of that. But as the email and foundation discoveries show, the Clintons haven’t changed. They still think they can do what they please and get away with it.”

Peggy Noonan / Wall Street Journal

“(Clinton) had her own private email addresses and her own private Internet domain, on her own private server at one of her own private homes, in Chappaqua, N.Y. Which means she had, and has, complete control of the emails. If a journalist filed a Freedom of Information Act request asking to see emails of the secretary of state, the State Department had nothing to show. If Congress asked to see them, State could say there was nothing to see. (Two months ago, on the request of State, Mrs. Clinton turned over a reported 55,000 pages of her emails. She and her private aides apparently got to pick which ones.)

“Is it too much to imagine that Mrs. Clinton wanted to conceal the record of her communications as America’s top diplomat because she might have been doing a great deal of interesting work in those emails, not only with respect to immediate and unfolding international events but with respect to those who would like to make a positive impression on the American secretary of state by making contributions to the Clinton Foundation, which not only funds many noble causes but is the seat of operations of Clinton Inc. and its numerous offices, operatives, hangers-on and campaign-in-waiting?...

“The press is painting all this as a story about how Mrs. Clinton, in her love for secrecy and control, has given ammunition to her enemies. But that’s not the story. The story is that this is what she does, and always has. The rules apply to others, not her. She’s special, entitled, exempt from the rules – the rules under which, as the Federalist reports, the State Department in 2012 forced the resignation of a U.S. ambassador, ‘in part for setting up an unsanctioned private email system.’

“Why doesn’t the legacy press swarm her on this? Because she is political royalty. They are used to seeing her as a regal, queenly figure. They’ve been habituated to understand that Mrs. Clinton is not to be harried, not to be subjected to gotcha questions or impertinent grilling....

“In 1992 the Clintons were new and golden. Now, so many years later, their reputation for rule breaking and corruption is so deep, so assumed, that it really has become old news. And old news isn’t news....

“What is freezing the Democrats is her mystique. But mystique can be broken. A nobody called Obama broke hers in 2008.

“Do we really have to return to Scandal Land? It’s what she brings wherever she goes. And it’s not going to stop.”

--But wait...there’s more!

Michael Goodwin / New York Post

“On top of her tactical blunders, there was an overarching reason why sure victory eluded Hillary Clinton in 2008. She simply was not a very appealing candidate, offering neither charisma nor a compelling message. She ran with a sense of entitlement that the Oval Office was owed to her.

“If anything has changed, it’s a well-kept secret.  Already, her run this time is marked by mistakes, gaffes and reports of ethical corner-cutting, which adds up to watching the same bad movie twice. [Ed. Goodwin wrote his column prior to the revelation on the emails.]....

“To describe her four-year tenure (at State) as empty of accomplishment doesn’t do justice to the damage. She was complicit in the foreign-policy disasters now erupting around the world.

“Remember her clever Russian reset? Benghazi, Syria, Egypt, Iraq, Iran, Israel, China – the list of things that got worse on her watch is long, while it is a challenge to name one significant advance in America’s favor.

“That record is who she is. Once viewed as a smart, passionate woman whose brilliance would shine when she was liberated, she is, at 67, getting long in the tooth to be talked of in terms of potential.”

Lastly, as I go to post the State Department is reviewing “whether work emails sent from Clinton’s personal account included sensitive information that is typically required to be handled on a system that meets security protocols,” as reported by the Washington Post.

--Sen. Rand Paul (R-Ky.) won the Conservative Political Action Conference (CPAC) straw poll last weekend for a third year in a row with 26% of the vote, down from 31% in 2014. Wisconsin Gov. Scott Walker finished second at 21%. Sen. Ted Cruz (Tex.) finished third with 11.5%. Jeb Bush was fifth with 8.3%, behind Dr. Ben Carson’s 11%.

--Whit Ayres / Wall Street Journal

“Republicans stand a slim chance of winning the presidency in 2016 – unless they nominate a transformational candidate who can dramatically broaden the GOP’s appeal. That assertion may seem incongruous in light of stunning Republican triumphs in the past two midterm elections. But success in 2014 no more indicates the outcome of the 2016 presidential election than victory in 2010 foretold the presidential winner in 2012.

“The continuing problem for the Republican Party is the country’s changing demographics. GOP congressional candidates won 60% of white voters in 2010 and 2014, producing landslide victories. The calculation works differently in presidential elections, however, when turnout is higher, particularly among minorities. In 2012, Republican presidential nominee Mitt Romney won 59% of white voters, the highest percentage of any Republican challenging an incumbent president in the history of exit polling. He won every significant white subgroup – men and women; young and old; Protestants and Catholics – often by overwhelming margins. Yet Mr. Romney still lost the election by five million votes.

“Barack Obama won because he achieved breathtaking majorities among every other racial group. The president won 93% of African-Americans and more than 70% of Hispanics and Asians. As a result, the first African-American president won re-election with only four out of 10 white voters.”

Bottom line, with the trends in place, the 2016 electorate will be about 69% white and 31% nonwhite. Whites accounted for 88% of the electorate in 1976, 72% in 2012.

“In 2012, Mr. Obama won 39% of the white vote and 82% of the nonwhite vote on the way to a 51.1% re-election victory. If the 2016 Democratic nominee can hold the same share of the white vote, he or she could win with only 75% of nonwhites.”

We’ll see how the scandals play out with Hillary, but she would win more of the white vote in all likelihood. Whit Ayres adds: If she can push her support among whites up to 42%, she will need only 68% of the nonwhite vote to win the presidency. That is far lower than even the 73% of nonwhites John Kerry carried in 2004.”

--The House passed legislation fully funding the Department of Homeland Security through September, the end of the fiscal year. House Speaker John Boehner ticked off a vast majority of his own caucus by giving into Democratic demands that this was the only way to avoid a shutdown. The vote was 257 to 167, with the support of all Democrats who voted but just 75 Republicans.

Many Republicans have been seeking to overturn President Obama’s executive actions on immigration and they gained no concessions.

So with other big items on the docket, including funding for federal highway programs and a budget resolution this spring, Boehner faces a huge leadership challenge.

Kathleen Parker / Washington Post

“Insisting that Homeland Security funding be attached to the president’s executive actions to curtail deportations of immigrants here illegally – a predictably losing gamble for Republicans – was a touchdown for the other team.

“Once again, Democrats were handed the opportunity to point out that Republicans aren’t in town to govern. They’re in town to lose....

“Whether this solution changes public perception sufficiently – and whether it can hold up through the Republican primary process – is yet to be seen. In the meantime, what we do know is that a Republican can’t win the presidency if the party more widely is considered not ready for prime time.

“Without the 40 percent of the Hispanic vote widely considered necessary to win – and enough independents and moderates who are turned off by the more-righteous-than-thou Freedom Caucus [Ed tea party faction] – a Republican doesn’t stand a chance.”

--The CIA is creating a special division to conduct digital espionage. The new directorate will try to penetrate the ranks of foreign hackers and state sponsors of terror who try to sabotage crucial U.S. infrastructure. Additionally, the unit will help American spies overseas cover their tracks.

--The fate of ObamaCare is once again seemingly in the hands of the Supreme Court, which seemed divided as ever during heated arguments on Wednesday pertaining to whether 7-8 million low- and middle-income people in some three dozen states will continue to receive subsidies to help them buy health insurance.

If the court rules the subsidies were not authorized by the ACA, most in this group would no longer be able to afford insurance. Then the exchanges in those impacted states would collapse and with it, probably ObamaCare. At least that’s the theory.

But once again it will be up to Chief Justice John Roberts or Justice Anthony Kennedy and we’ll find out most likely in late June. 

--This week, Ben Carson launched his presidential exploratory committee as he seeks the Republican nomination. But the same day he was asked by CNN’s Chris Cuomo if he believes being gay was a choice and Dr. Carson replied: “Absolutely.”

“Because a lot of people who go into prison go into prison straight – and when they come out, they’re gay,” he told CNN. “So, did something happen while they were in there? Ask yourself that question.”

Carson apologized later that day, noting in part on Facebook: “I answered a question without really thinking about it thoroughly. No excuses. I deeply regret my statement and I promise you, on this journey, I may err again, but unlike politicians when I make an error I will take full responsibility and never hide or parse words.”

--Since 2004, New Jersey has been battling with Exxon Mobil Corp. over decades of environmental contamination in the northern part of the state, but news hit the other day that what had been an $8.9 billion claim was settled for about $250 million. The New York Times then reported that, according to a past commissioner of New Jersey’s Dept. of Environmental Protection, Bradley Campbell, Gov. Chris Christie’s chief counsel, Christopher S. Porrino, “inserted himself into the case, elbowed aside the attorney general and career employees who had developed and prosecuted the litigation, and cut the deal favorable to Exxon,” as Campbell stated in an op-ed for the paper.

The settlement came just two months after the attorney general’s office argued in a court brief for the $8.9 billion, saying, “The scope of the environmental damage resulting from the discharges is as obvious as it is staggering and unprecedented in New Jersey.”

This is yet another potential black mark against the governor and state senate Democrats are all over this seemingly sweetheart settlement, the reasons for which are not totally clear. As a lifelong resident of Jersey, the environmental damage inflicted by some of our industries has been immense.

--Meanwhile, the aforementioned New Jersey Democratic Sen. Robert Menendez is soon to be indicted, according to numerous reports, as federal investigators prepare to file charges for corruption, based on a years-long probe centering around his travel with a Florida doctor, and allegations on at least one occasion that he may have had a tryst with an underage prostitute in the Dominican Republic.

But the main issue is the senator’s financial connections to the doctor, who is facing an unrelated probe into his billing practices, and whether Menendez improperly sought to help the doctor in that case.

I’m conflicted. As a Republican I didn’t like the senator, initially, and viewed him as being corrupt from the get-go. But I admire his stances on U.S. foreign policy and, don’t tell anyone, but for now I’m willing to forgive any past transgressions if he can help do the right thing regarding Iran. [Now please delete this last item so it doesn’t go on my permanent cyber record.]

--Sen. Marco Rubio (R-Fla.) and Sen. Mike Lee (R-Utah) floated a tax reform proposal we can all dream about, a true effort to simplify the tax code, which I imagine if I live another 30 years I’ll be writing the same thing then. But it’s what’s needed. As reported by Mark Schoeff Jr. of Investment News:

“(The plan) would establish two individual tax rates – 15% for incomes up to $75,000 and 35% for earnings above that level – and would eliminate all tax deductions except those for mortgage interest and charitable giving.

“The plan also would end the estate tax and taxation of capital gains and dividends. On the corporate side of the tax ledger, it would consolidate all business taxes into a 25% rate, a ceiling that also would apply to businesses that pay taxes through their owner’s personal income tax return.

“The senators put the plan out as a white paper and hope to turn it into legislation as Congress begins to debate comprehensive tax reform.”

--Maryland Democratic Sen. Barbara Mikulski, the longest-serving woman in congressional history, announced she will retire in 2016. She’s in good health and I do like her comment: “Do I spend my time raising money? Or do I spend my time raising hell?”

Mikulski added, “There’s nothing gloomy about this announcement. I’m not frustrated with the Senate.”

I probably agreed with 10% of Mikulski’s views over the years, but even her detractors have to admit one thing. She was the epitome of what you want a United States Senator to be.

--Ferguson, Missouri police officer Darren Wilson was cleared of civil rights violations in the shooting of Michael Brown last August that touched off violent protests. After a lengthy investigation the Justice Department rejected the popular myth that developed that Mr. Brown had his hands up and reached the same conclusion a state grand jury did in November. The Justice Department investigation said forensic evidence and other witnesses backed up Officer Wilson’s account of that day...that Brown fought with him, reached for his gun, then moments later charged at him.

The report said: “There is no evidence upon which prosecutors can rely to disprove Wilson’s stated subjective belief that he feared for his safety.”

As to the witnesses who claimed that Brown was surrendering, the report concluded: “Some of those accounts are inaccurate because they are inconsistent with the physical and forensic evidence; some of those accounts are materially inconsistent with that witnesses’ own prior statements with no explanation.

“Although some witnesses state that Brown held his hands up at shoulder level with his palms facing outward for a brief moment, these same witnesses describe Brown then dropping his hands and ‘charging’ at Wilson,” it added.

“Those witness accounts stating that Brown never moved back toward Wilson could not be relied upon in a prosecution because their accounts cannot be reconciled with the DNA bloodstain evidence and other credible witness accounts.”

At the same time, the Justice Department issued a separate report on the broader civil rights investigation involving the Ferguson Police Department and that was damning, revealing a wide pattern of discrimination by the police force.

Attorney General Eric Holder Jr. said in a statement: “It is time for Ferguson’s leaders to take immediate, wholesale and structural corrective action.” [Matt Apuzzo / New York Times]

--New York City Mayor Bill de Blasio has added two Muslim holy days (Eid al-Fitr and Eid al-Adha) to the school calendar, pleasing Muslim activists who have long sought this. New York thus becomes the first metropolis to do so.

De Blasio had pledged to do this during his campaign. His predecessor, Mayor Michael Bloomberg, rejected the idea, saying schoolchildren needed more time in the classroom, not less.

Of course you can imagine how there is now a little uproar in the Chinese community to close schools on the Lunar New Year.

Many of us would like to see two other holidays be recognized on a nationwide basis: Opening Day and the Monday after the Super Bowl. If elected president.....

--More weather news, specifically, just how awful February was. Here in New Jersey, it turned out to be the third coldest on record (121 years of records), statewide...the sixth coldest month overall.

For the meteorological winter (December to February), it was the coldest here since 1994.

Alas, finally, next week we get some ‘normal’ March temperatures.

--Meanwhile, out west, Squaw Valley, California (think Lake Tahoe), through Wednesday had received just 38 inches of snow at its 6,200-foot base, compared with 275 inches by that date during the last big snow season four years ago. Some of the golf courses are open, months earlier than usual.

--Finally, I note the passing of Cardinal Edward Egan, 82. I was there in Rome when he was elevated to Cardinal, 2001, though I was a guest of Cardinal Avery Dulles, and totally thrilled to be there at the same time for the elevation of Cardinal Theodore McCarrick, who I communicated with when he was Archbishop of Newark. Love that man. [My two prized possessions are pictures of myself with Dulles and McCarrick.]

Egan took over from the late, beloved Cardinal O’Connor, whose funeral I attended. Man, O’Connor was all New York...terrific. 

Egan did his best, amid severe financial issues and scandal.

His successor, Timothy Dolan, is wonderful.

I was born and raised a Catholic and always will be. Oh, I haven’t been the greatest one the past 12 years or so, but I think God will take me in at the end of my days. I’m hoping to see Gil Hodges.

---

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

God bless America.
---

Gold closed at $1164
Oil $49.61

Returns for the week 3/2-3/6

Dow Jones -1.5% [17856]
S&P 500 -1.6% [2071]
S&P MidCap -1.3%
Russell 2000 -1.3%
Nasdaq -0.7% [4927]

Returns for the period 1/1/15-3/6/15

Dow Jones +0.2%
S&P 500 +0.6%
S&P MidCap +2.3%
Russell 2000 +1.1%
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Bulls 58.7
Bears 14.1

Dr. Bortrum posted a new column.

Have a great week. I appreciate your support.

Brian Trumbore

 



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Week in Review

03/07/2015

For the week 3/2-3/6

[Posted 12:00 AM ET]

Edition 830

[Warning: If you print the column out, understand it is record length, over 40 pages, due to my coverage of foreign affairs. Sometimes it’s about building the history of our times unlike any other and this is one such week.]

Washington and Wall Street

Stocks tanked on Friday on the heels of yet another strong jobs report, with the economy adding 295,000 in February and the unemployment rate dropping to 5.5%, meaning the latter is already within the 5.2% to 5.5% band the Federal Reserve considers to be full employment.

The U.S. economy has thus added 200,000 plus jobs for a 12th consecutive month, the best streak since 1995. [January was revised down slightly from an initial 257,000 to 239,000.]

Average hourly earnings, though, rose a disappointing 0.1% for the month and are now up 2.0% year over year, vs. January’s 2.2% pace, but I maintain true wage growth is just around the corner.

Two other items of import. The labor participation rate came in at 62.8%, still near the lowest levels since the late 1970s, while U6, the underemployment barometer that measures involuntary part-time workers fell to 11.0% from 11.3% the prior month.

So the reason why the Dow Jones swooned 278 points on Friday, with the S&P 500 and Nasdaq responding in kind, is because our supposedly data dependent Fed has now seen mostly positive numbers in recent months and it’s assumed that when Chair Janet Yellen and her band of merry pranksters next gather March 17-18, they will remove the word “patient” from their statement, which will be a sign to the markets to expect the first rate hike off the zero mark since the New York Mets were last competitive, 2008, in either June or a month or two after.

The Fed can still argue that inflation is too low for comfort, and that wage growth isn’t a concern, so it can keep rates at zero, but the other data says these two items will follow, especially if you believe oil is in a bottoming process and firmer prices are ahead.

Ergo, the Fed should be raising rates. But here’s the rub. Everyone and their mother around the world continues to lower rates. The European Central Bank is about to finally initiate its bond-buying program, China and India lowered interest rates this week, as did a few others, and with expectations our Fed is hiking in the not too distant future, the U.S. dollar is hitting 11-year highs, which is doing a number on our multinationals that for the most part generate about half their sales overseas!

So this is another reason why the market tanked on Friday, the feeling that the Fed is not only boxed in, but that it waited far too long to begin to normalize rates.

Just a few other economic items on the week. Personal income in January was up 0.3%, basically in line with expectations, while consumption was down 0.2%, owing to tumbling gasoline prices that month, but when you look at the core up 0.3%.

January construction spending fell 1.1%, far worse than expected, which may have been weather-related, while January factory orders were down 0.2%, in line.

The ISM manufacturing reading for February was just 52.9, the lowest since Jan. 2014, while the ISM services reading was 56.9 vs. 53.5 the prior month.

Europe and Asia

European Central Bank chief Mario Draghi announced the much-anticipated bond-buying program of sovereign bonds, quantitative easing, will begin next week. But long before it was formally launched it’s been working. Look at these 10-year yields at the close on Friday.

Germany 0.39%
France 0.69%
Spain 1.29%
Italy 1.31%
Portugal 1.74%

How much better can it get? Plus the data, as I spell out shortly, is largely improving, while the euro has declined steadily against the dollar and other currencies to below $1.10 ($1.08, Friday) vs. around $1.40 last summer. The euro’s fall hasn’t juiced European exports as hoped, but it still might.

What Mario Draghi knows is that the ECB, with QE, will have done all it can, so now it’s up to the individual governments to enact the needed economic reforms that with few exceptions have been slow in coming.

The ongoing danger, as the Wall Street Journal opined on Friday, is that “Europe’s political class doesn’t want to do (the) heavy lifting, so it relies instead on Mr. Draghi’s monetary policies to spur growth. The more aggressive he is, the more the politicians conclude they can do less.”

Before I get to the ECB’s new growth and inflation forecasts, a look at some of the current numbers.

Eurozone retail sales for January were up 1.1% compared with December, 3.7% year over year which is the best pace since Aug. 2005. Germany’s were up 2.9% in January over the prior month (best since Jan. 2008), 5.4% yoy, while France’s January figure was just 0.1%, but up 4.1% from a year earlier.

The final eurozone manufacturing PMI for February was 51.0, unchanged from January, with Germany at 51.1, Italy 51.9 (7-mo. high), Spain 54.2, and France 47.6 (2-mo. low). Ireland had its best reading, 57.5, since 2000 (1998 according to Investec).

The final Euro-19 composite reading for February (manufacturing and services) was 53.3 vs. January’s 52.6. The services reading was 53.7 vs. 52.7.

The unemployment rate in January for the eurozone was 11.2%, down from 11.3% in December and 11.8% a year earlier. 11.2% is the lowest since April 2012.

Germany came in at 4.7%, France 10.2%, Italy 12.6%, Netherlands 7.2%, Portugal 13.3% (down from 15.0% Jan. 2014), Spain 23.4% (down from 25.5%) and Greece 25.8% (November).

The youth rate remains sky high in some countries...

Greece 50.6% (November), Spain 50.9% (though down from 54.9% Jan. 2014), Italy 41.2% (43.2% Jan. ‘14), Portugal 33.6%, and France 24.9% (which is actually up from 23.8% Jan. ’14).

Finally, the flash February inflation reading for the EU-19 came in at -0.3%, after registering -0.6% in January, annualized. The core rate, ex-food and energy, was unchanged in February at up 0.6%, far below the ECB’s 2% inflation target.

So with the above mainly positive background, Draghi and the ECB have raised the projected growth rate for the eurozone to 1.5% this year from 1%, and to 1.9% in 2016 from an earlier outlook of 1.5%. GDP could hit 2.1% in 2017, with the euro economy not having expanded at a 2% clip since 2007.

On the inflation front, prices are projected to be flat over the whole of 2015, but rise 1.5% next year, on up to 1.8% in 2017.

As for Greece and the negotiations that will be ongoing for weeks and months to come, some finance ministers say it will need a third bailout. Greece also needs to take a lesson from Ireland and Spain, arguably the two best performing Euro economies these days. Both went through the wringer of austerity and structural reform but it’s been paying off. Portugal is another now learning this lesson.

But not Greece as yet and here the issue of tax evasion/collection continues to be the most immediate one as the new government faces a cash crunch. Mario Draghi reiterated in announcing that the ECB would provide the country with more needed liquidity for its banks, that it must also make progress on reforms.

Monday is another key day as Greek Finance Minister Yanis Varoufakis presents details of his government’s new reform plan to his counterparts in Brussels, hoping to unlock further funds. In just the next three weeks, Greece must refinance or repay some 6.5 billion euros in debt and interest (1.5bn, $1.7bn, to the IMF alone). Here again, Greece’s aversion to paying taxes is killing the new leadership. 

Wolfgang Munchau / Financial Times

“The economic equivalent of a ceasefire agreement is a debt rollover of an insolvent state. In Europe, we have had both in the past three weeks. Europe’s political and economic diplomacy is focused solely on averting imminent catastrophe with no strategic purpose. The danger is that Ukraine and Greece are ending up as failed states.

“Just look where Greece has ended up after five years of crisis resolution. It has had one of the worst performances in economic history; yet we have just concluded an extension of the same policy.

“Can this be sustainable? The pragmatists in Europe’s chancelleries say they can roll over loans indefinitely at very low interest rates. Economically, this is the equivalent of a debt writedown; yet politically it is easier to deliver because you do not need to recognize losses. The equivalent statement in a military conflict would be: if you renew a ceasefire often enough, you end up with peace.

“This type of argument is not only immoral and dishonest. It also does not work. While you play this game of extend-and-pretend, the real economy implodes: austerity has caused a meltdown in income and employment. Monetary policy mistakes caused a fall in eurozone-wide inflation rates that made it impossible for Greece and other periphery countries to improve the competitiveness they lost in the early years of monetary union.

“If the EU deals with Ukraine in the same way it dealt with Greece, you can expect to see a parallel development in a few years. The Minsk ceasefire, negotiated between the leaders of Russia, Ukraine, France and Germany, may hold for a while, more or less. The Europeans may use this as a pretext for not renewing sanctions, and for not imposing new ones. And once the ceasefire breaks down – as it will – the European policy making establishment will pretend to be surprised and appalled, leaving Ukraine as a failed state and a buffer zone between the EU and Russia.

“They will also have failed to rein in Russian President Vladimir Putin’s territorial ambitions elsewhere in eastern Europe. The EU should have confronted Greek debt and Mr. Putin’s territorial ambition early on, rather than allowing both to spin out of control. By playing it safe for now, the EU puts at risk its military and economic security.”

Turning to Asia, in a long-awaited move, China’s government, at its annual meeting of the National People’s Congress in Beijing, set its economic growth target for this year at around 7 percent, the lowest in more than a decade.

Premier Li Keqiang said in the opening of the NPC:

“China’s economic development has entered a new normal. Our country is in a crucial period during which challenges need to be overcome and problems need to be resolved.

“Systematic, institutional and structural problems have become ‘tigers in the road’ holding up development....

“(The 7% target) is both aligned with our goal of finishing building on a moderately prosperous society in all respects and is appropriate in terms of the need to grow and upgrade our economy.” [South China Morning Post]

Li highlighted other goals and targets, one of which, defense spending, I address below.

China’s consumer inflation target is 3%, and it is aiming for a budget deficit for 2015 of 2.3% of GDP.

The government aims to create 10 million new jobs this year and to ensure urban unemployment does not exceed 4.5%.

Premier Li added a zero tolerance stance on corruption is here to stay. He also addressed the issue of pollution, acknowledging it was “a blight on people’s quality of life and a trouble that weighs on their hearts.”

“We must strictly enforce environmental laws and regulations; crack down on those guilty of creating illegal emissions and ensure they pay a heavy price for such offenses,” said Li. [BBC News]

Back to the growth rate, last year’s 7.4% was the lowest since 1990 when the mainland was hit by sanctions after the Tiananmen Square crackdown. This week, HSBC released its final figure for the February manufacturing PMI, 50.7 vs. a flash estimate of 50.1, so this is better. January was 49.7.

The government’s official February figure was 49.9 vs. 49.8 in January. HSBC is more focused on the private sector, the Central Statistics Bureau on state-run enterprises.

HSBC’s reading is compiled by Markit and their economist, Annabel Fiddes, said of the data:

“China’s manufacturing sector saw an improvement in overall operating conditions in February, with companies registering the strongest expansion of output since last summer while total new business also rose at a faster rate. However, the renewed fall in new export orders suggests that foreign demand has weakened, while manufacturers continued to cut their staff numbers.”

On the service sector, HSBC’s number was 52.0 vs. 51.8 in January, while the government had 53.9 last month vs. 53.7.

The Central Bank cut its benchmark interest rate 25 basis points this week for the second time in four months in an effort to stimulate more activity.

Nothing to report regarding Japan, but there were some moves in India worth noting. The central bank surprised markets with a cut to its key lending rate for a second time this year, continuing the global trend addressed above. The Reserve Bank of India cited weakness in parts of the economy along with favorable inflation as a reason for making another move.

But the real reason for mentioning India this week was the unveiling of Prime Minister Narendra Modi’s first full-year budget, in which his government is promising to boost spending on infrastructure and to lower the corporate tax rate, which Indian industry cheered.

Modi also announced new welfare programs for the poor, including the creation of a new social security plan, while targeting a 7.4% growth rate, which would be greater than China’s.

But the moves were more incremental than bold. Critics pointed to a missed opportunity to cut spending, including on inefficient subsidy programs, like its massive one for food, fuel and fertilizer. 

Editorial / Wall Street Journal

“Badly needed reforms governing land acquisition and firing workers were left unmentioned, and subsidies on food, fertilizer and fuel were left untouched....

“These failures are especially unfortunate as Mr. Modi had criticized Congress’ inefficient programs that tried to curry favor with the poor. The victory of a populist upstart in the Delhi state election last month may have convinced Mr. Modi to go slow. The silver lining is that the government plans to pay more of the benefits from these programs directly in cash, reducing the corruption and inefficiency of the current system.

“Last year Mr. Modi started a program to encourage the rural poor to open bank accounts. Now he plans to help them buy insurance and set up pensions. Done right, these initiatives could lay the foundation for upward mobility. Done wrong, they could become more expensive handouts that don’t help the intended beneficiaries.

“To judge by Saturday’s budget, there’s reason to be skeptical. India needs a reformer in the mold of Margaret Thatcher, not a tinkerer like former Prime Minister Manmohan Singh. Incrementalism betrays the hopes of hundreds of millions of Indians who elected Mr. Modi last year on a platform of sweeping change.”

Bibi Comes to Town

On Monday, the day before Israeli Prime Minister Benjamin Netanyahu’s address to a joint session of Congress, President Obama gave an interview to Reuters wherein he acknowledged the odds of reaching a deal with Tehran on its nuclear program, one that would freeze its nuclear activity for at least a decade, weren’t good and that only if other countries were able to verify that Iran was keeping its word would a deal be plausible.

“There’s no other steps we can take that would give us such assurance that they don’t have a nuclear weapon,” he said. The U.S. goal was to ensure “there’s at least a year between us seeing them try to get a nuclear weapon and them actually being able to obtain one.”

Netanyahu told the American Israel Public Affairs Committee the same day, “The purpose of my address to Congress tomorrow is to speak up about a potential deal with Iran that could threaten the survival of Israel.”

Netanyahu insisted his visit was “not intended to show any disrespect to President Obama” or his office. “I have great respect for both,” he said.

Obama said, “Netanyahu made all sorts of claims – this was going to be a terrible deal, this was going to result in Iran getting $50 billion worth of relief, Iran would not abide by the agreement.”

None of this had come true, said the president.

“During this period we’ve seen Iran not advance its program. In many ways, it’s rolled back elements of its program.”

[This continues to be the great lie. Iran has done nothing but jerk the IAEA around.]

So Tuesday morning, Netanyahu strode in and gave his address. He started by praising the president for his support and noted Israel was grateful to the Congress for its assistance as well, including on missile defense, specifically Iron Dome.

He then said he had come to speak about an issue threatening the survival of Israel, Iran’s quest for nuclear weapons.

[Excerpts]

“Today the Jewish people face another attempt by yet another Persian potentate to destroy us. Iran’s Supreme Leader Ayatollah Khamenei spews the oldest hatred of anti-Semitism with the newest technology. He tweets that Israel must be annihilated – he tweets. You know, in Iran, there isn’t exactly free Internet. But he tweets in English that Israel must be destroyed.

“For those who believe that Iran threatens the Jewish state, but not the Jewish people, listen to Hassan Nasrallah, the leader of Hizbullah, Iran’s chief terrorist proxy. He said: If all the Jews gather in Israel, it will save us the trouble of chasing them down around the world....

“I’m standing here in Washington, D.C. and the difference is so stark. America’s founding document promises life, liberty and the pursuit of happiness. Iran’s founding document pledges death, tyranny, and the pursuit of jihad.

“And as states are collapsing across the Middle East, Iran is charging into the void to do just that. Iran’s goons in Gaza, its lackeys in Lebanon, its revolutionary guards on the Golan Heights are clutching Israel with three tentacles of terror. Backed by Iran, Assad is slaughtering Syrians. Backed by Iran, Shiite militias are rampaging through Iraq. Backed by Iran, Houthis are seizing control of Yemen, threatening the strategic straits at the mouth of the Red Sea. Along with the Straits of Hormuz, that would give Iran a second choke-point on the world’s oil supply....

“In the Middle East, Iran now dominates four Arab capitals, Baghdad, Damascus, Beirut and Sanaa. And if Iran’s aggression is left-unchecked, more will surely follow.

“So, at a time when many hope that Iran will join the community of nations, Iran is busy gobbling up the nations.

“We must all stand together to stop Iran’s march of conquest, subjugation and terror....

“Don’t be fooled. The battle between Iran and ISIS doesn’t turn Iran into a friend of America.

“Iran and ISIS are competing for the crown of militant Islam. One calls itself the Islamic Republic. The other calls itself the Islamic State. Both want to impose a militant Islamic empire first on the region and then on the entire world. They just disagree among themselves who will be the ruler of that empire.

“In this deadly game of thrones, there’s no place for America or for Israel, no peace for Christians, Jews or Muslims who don’t share the Islamist medieval creed, no rights for women, no freedom for anyone.

“So when it comes to Iran and ISIS, the enemy of your enemy is your enemy.

“The difference is that ISIS is armed with butcher knives, captured weapons and YouTube, whereas Iran could soon be armed with intercontinental ballistic missiles and nuclear bombs. We must always remember...the greatest danger facing our world is the marriage of militant Islam with nuclear weapons. To defeat ISIS and let Iran get nuclear weapons would be to win the battle, but lose the war....

“But that, my friends, is exactly what could happen, if the deal now being negotiated is accepted by Iran. That deal will not prevent Iran from developing nuclear weapons. It would all but guarantee that Iran gets those weapons, lots of them....

“Absent a dramatic change, we know for sure that any deal with Iran will include two major concessions to Iran.

“The first major concession would leave Iran with a vast nuclear infrastructure, providing it with a short break-out time to the bomb. Break-out time is the time it takes to amass enough weapons-grade uranium or plutonium for a nuclear bomb.

“According to the deal, not a single nuclear facility would be demolished. Thousands of centrifuges used to enrich uranium would be left spinning. Thousands more would be temporarily disconnected, but not destroyed.

“Because Iran’s nuclear program would be left largely intact, Iran’s break-out time would be very short – about a year by U.S. assessment, even shorter by Israel’s.

“And if Iran’s work on advanced centrifuges, faster and faster centrifuges, is not stopped, that break-out time could still be shorter, a lot shorter.

“True, certain restrictions would be imposed on Iran’s nuclear program and Iran’s adherence to those restrictions would be supervised by international inspectors. But here’s the problem. You see, inspectors document violations; they don’t stop them.

“Inspectors knew when North Korea broke to the bomb, but that didn’t stop anything. North Korea turned off the cameras, kicked out the inspectors. Within a few years, it got the bomb.

“Now, we’re warned that within five years North Korea could have an arsenal of 100 nuclear bombs....

“Now, I know this is not gonna come as a shock to any of you, but Iran not only defies inspectors, it also plays a pretty good game of hide-and-cheat with them.

“The U.N.’s nuclear watchdog agency, the IAEA, said again yesterday that Iran still refuses to come clean about its military nuclear program. Iran was also caught – caught twice, not once, twice – operating secret nuclear facilities in Natanz and Qom, facilities that inspectors didn’t even know existed....

“(The) second major concession creates an even greater danger that Iran could get to the bomb by keeping the deal. Because virtually all the restrictions on Iran’s nuclear program will automatically expire in about a decade.

“Now, a decade may seem like a long time in political life, but it’s the blink of an eye in the life of a nation. It’s a blink of an eye in the life of our children.

“We all have a responsibility to consider what will happen when Iran’s nuclear capabilities are virtually unrestricted and all the sanctions will have been lifted. Iran would then be free to build a huge nuclear capacity that could produce many, many nuclear bombs....

“So you see, my friends, this deal has two major concessions: one, leaving Iran with a vast nuclear program and two, lifting the restrictions on that program in about a decade.

“That’s why this deal is so bad. It doesn’t block Iran’s path to the bomb; it paves Iran’s path to the bomb.

“So why would anyone make this deal? Because they hope that Iran will change for the better in the coming years, or they believe that the alternative to this deal is worse?

“Well, I disagree. I don’t believe that Iran’s radical regime will change for the better after this deal. This regime has been in power for 36 years, and its voracious appetite for aggression grows with each passing year. This deal would only wet Iran’s appetite for more.

“Would Iran be less aggressive when sanctions are removed and its economy is stronger? If Iran is gobbling up four countries right now while it’s under sanctions, how many more countries will Iran devour when sanctions are lifted? Would Iran fund less terrorism when it has mountains of cash with which to fund more terrorism?

“Why should Iran’s radical regime change for the better when it can enjoy the best of both worlds: aggression abroad, prosperity at home?....

“Ladies and gentlemen, I’ve come here today to tell you we don’t have to bet the security of the world on the hope that Iran will change for the better. We don’t have to gamble with our future and with our children’s future.

“We can insist that restrictions on Iran’s nuclear program not be lifted for as long as Iran continues its aggression in the region and in the world.

“Before lifting those restrictions, the world should demand that Iran do three things. First, stop its aggression against its neighbors in the Middle East. Second, stop supporting terrorism around the world. And third, stop threatening to annihilate my country....

“If the world powers are not prepared to insist that Iran change its behavior before a deal is signed, at the very least they should insist that Iran change its behavior before a deal expires.

“If Iran changes its behavior, the restrictions would be lifted. If Iran doesn’t change its behavior, the restrictions should not be lifted.

“If Iran wants to be treated like a normal country, let it act like a normal country....

“Ladies and gentlemen, history has placed us at a fateful crossroads. We must now choose between two paths. One path leads to a bad deal that will at best curtail Iran’s nuclear ambitions for a while, but it will inexorably lead to a nuclear-armed Iran whose unbridled aggression will inevitably lead to war.

“The second path, however difficult, could lead to a much better deal, that would prevent a nuclear-armed Iran, a nuclearized Middle East and the horrific consequences of both to all of humanity....

“(I can) guarantee you this, the days when the Jewish people remained passive in the face of genocidal enemies, those days are over.

“We are no longer scattered among the nations, powerless to defend ourselves. We restored our sovereignty in our ancient home. And the soldiers who defend our home have boundless courage. For the first time in 100 generations, we, the Jewish people, can defend ourselves.

“This is why, as a prime minister of Israel, I can promise you one more thing: Even if Israel has to stand alone, Israel will stand.”

President Obama immediately responded on Tuesday that “as far as I can tell, there was nothing new” in Netanyahu’s address.

“The prime minister didn’t offer any viable alternatives,” Obama said, urging Congress to wait to evaluate a nuclear deal until an agreement has been finalized.

House Minority Leader Nancy Pelosi pathetically slammed the address as “an insult to the intelligence of the United States.”

When Netanyahu landed back in Israel on Wednesday, he pushed back against those saying there was no tactical alternative in his speech. The prime minister said he did indeed present one, a practical alternative that would extend Iran’s break out time by adding new restrictions.

He added that he presented a case for not lifting sanctions until the Iranians stopped their hostile actions against their neighbors and stopped threatening to annihilate Israel.

Charles Krauthammer / Washington Post

“Benjamin Netanyahu’s address to Congress was notable in two respects. Queen Esther got her first standing O in 2,500 years. And President Obama came up empty in his campaign to preemptively undermine Netanyahu before the Israeli prime minister could present his case on the Iran negotiations.

“On the contrary. The steady stream of slights and insults turned an irritant into an international event and vastly increased the speech’s audience and reach. Instead of dramatically unveiling an Iranian nuclear deal as a fait accompli, Obama must now first defend his Iranian diplomacy.

“In particular, argues The Post, he must defend its fundamental premise. It had been the policy of every president since 1979 that Islamist Iran must be sanctioned and contained. Obama, however, is betting instead on détente to tame Iran’s aggressive behavior and nuclear ambitions.

“For six years, Obama has offered the mullahs an extended hand. He has imagined that with Kissingerian brilliance he would turn the Khamenei regime into a de facto U.S. ally in pacifying the Middle East. For his pains, Obama has been rewarded with an Iran that has ramped up its aggressiveness in Iraq, Syria, Lebanon, Gaza and Yemen, and brazenly defied the world on uranium enrichment.

“He did the same with Russia. He offered Vladimir Putin a new détente. ‘Reset,’ he called it. Putin responded by decimating his domestic opposition, unleashing a vicious anti-American propaganda campaign, ravaging Ukraine and shaking the post-Cold War European order to its foundations.

“Like the Bourbons, however, Obama learns nothing. He persists in believing that Iran’s radical Islamist regime can be turned by sweet reason and fine parchment into a force for stability. It’s akin to his refusal to face the true nature of the Islamic State, Iran’s Sunni counterpart. He simply can’t believe that such people actually believe what they say.

“That’s what made Netanyahu’s critique of the U.S.-Iran deal so powerful. Especially his dissection of the sunset clause. In about 10 years, the deal expires. Sanctions are lifted and Iran is permitted unlimited uranium enrichment with an unlimited number of centrifuges of unlimited sophistication. As the Wall Street Journal’s Bret Stephens points out, we don’t even allow that for democratic South Korea.

“The prime minister offered a concrete alternative. Sunset? Yes, but only after Iran changes its behavior, giving up its regional aggression and worldwide support for terror.

“Netanyahu’s veiled suggestion was that such a modification – plus a significant reduction in Iran’s current nuclear infrastructure, which the Obama deal leaves intact – could produce a deal that ‘Israel and its [Arab] neighbors may not like, but with which we could live, literally.’

“Obama’s petulant response was: ‘The prime minister didn’t offer any viable alternatives.’   But he just did: conditional sunset, smaller infrastructure. And if the Iranians walk away, then you ratchet up sanctions, as Congress is urging, which, with collapsed oil prices, would render the regime extremely vulnerable.

“And if that doesn’t work? Hence Netanyahu’s final point: Israel is prepared to stand alone, a declaration that was met with enthusiastic applause reflecting widespread popular support. It was an important moment, especially because of the libel being perpetrated by some that Netanyahu is trying to get America to go to war with Iran. This is as malicious a calumny as Charles Lindbergh’s charge on Sept. 11, 1941, that ‘the three most important groups who have been pressing this country toward war are the British, the Jewish and the Roosevelt administration.’

“In its near-70 year history, Israel has never once asked America to fight for it. Not in 1948 when 650,000 Jews faced 40 million Arabs. Not in 1967 when Israel was being encircled and strangled by three Arab armies. Not in 1973 when Israel was on the brink of destruction. Not in the three Gaza wars or the two Lebanon wars.

“Compare that to a very partial list of nations for which America has fought and for which so many Americans have fallen: Kuwait, Iraq, Afghanistan, Somalia, Vietnam, Korea, and every West European country beginning with France (twice).

“Change the deal, strengthen the sanctions, give Israel a free hand. Netanyahu offered a different path in his clear, bold and often moving address, Churchillian in its appeal to resist appeasement. This was not Churchill of the 1940s, but Churchill of the 1930s, the wilderness prophet. Which is why for all its sonorous strength, Netanyahu’s speech had a terrible poignancy. After all, Churchill was ignored.”

Michael Young / Daily Star...the view from Lebanon

“What was striking in Benjamin Netanyahu’s speech before the U.S. House of Representatives Tuesday was how the Israeli prime minister exploited the Obama administration’s ambiguities on the broader implications of a nuclear deal with Iran.

“While Netanyahu’s proposals for how to strengthen the nuclear accord are not likely to be implemented, two issues he raised cannot be readily ignored by President Barack Obama: How a deal might enhance Iran’s regional influence; and whether regional wariness with a deal could spur nuclear proliferation.

“Iran’s regional role is an issue that the U.S. has strenuously, and foolishly, sought to separate from the nuclear discussions. This has alarmed the Gulf States – and now Israel – who fear that a lifting of sanctions on Iran and a rapprochement with the U.S. would facilitate Iranian expansionism. The Arab states understand that the implications of a nuclear accord are mainly political. Having signed a long-awaited arrangement with Tehran, the U.S. is unlikely to turn around and enter into new conflicts to prevent it from widening its reach in the Arab world.

“Indeed, there are signs that the Obama administration would do precisely the contrary. Obama, in a letter last October to Iran’s supreme leader, Ayatollah Ali Khamenei, effectively recognized Iran’s role in Syria by reassuring him that coalition airstrikes against ISIS would not target Bashar Assad’s forces. Moreover, by affirming the parallel interests of the U.S. and Iran in combating ISIS, Obama defined a basis for regional cooperation with Tehran....

“(Whatever) Netanyahu’s duplicity, the questions he raised are the same ones that many Arab states have, and to which Obama has offered no answers. Iranian influence in Iraq, Lebanon, Syria, the Palestinian territories and now Yemen, is very real, and Tehran has spent years building it up, patiently and deliberately.

“Obama has explained his Iran policy poorly, and there is a growing sense that this has been intentional. Why? Because Obama’s true ambition is to reduce America’s role in the Middle East, and, to quote analyst Tony Badran, leave in its place ‘a new security structure, of which Iran is a principal pillar.’ Because such a scheme is bound to anger U.S. allies in the region, Obama has concealed his true intentions....

“Obama may get his deal with Iran, but he has prepared the terrain so carelessly that the consequences may be quite damaging. Iran is a rising power in a region where Arab states are disintegrating. Agreeing with Iran, if that happens, will be the easy part. Much tougher will be leaving in place a stable regional order. And given Obama’s performance until now, no one is wagering much that the U.S. will succeed in that.”

Editorial / Washington Post

“(Mr. Netanyahu’s) arguments deserve a serious response from the Obama administration – one it has yet to provide. The White House has sought to dismiss the Israeli leader as a politician seeking reelection; has said that he was wrong in his support for the Iraq war and in his opposition to an interim agreement with Iran; and has claimed that he offers no alternative to President Obama’s policy. Such rhetoric will not satisfy those in and out of Congress who share Mr. Netanyahu’s legitimate questions.”

Editorial / New York Daily News

“The world leader who addressed a joint meeting of Congress on Tuesday was a man with a clear vision of Iran as an expansionist, extremist, radical Islamist power sure to use nuclear weaponry for domination....

“Across most of the six years of his presidency, Obama accepted without forceful response Iran’s defiant and duplicitous march toward becoming a nuclear state. As a result, his partisans now resignedly contend that, because there’s no way to return the genie to the bottle, Obama’s deal would at least place a check on the rogues.

“For Netanyahu – and for America – a check is far from enough, not on a government whose leader has vowed to annihilate Israel, that is relentlessly extending its sway over the Middle East and that could smilingly claim world approval as it stands within months of assembling a bomb.

“And, hell to the chief, the prime minister said so, rousing the chamber with an unflinching presentation of geopolitical realities that Obama has skated past while Secretary of State John Kerry struggles to come to terms with the mullahs....

“Pathetically, Obama falsely derided Netanyahu for failing to propose ‘viable alternatives’ for further reining Iran in. Even more pathetically, at this 11th hour, Iran rejected the 10-year freeze* that’s crucial to Obama’s scheme, flatly deeming it ‘unacceptable.’

“The Iranians’ sudden deal-breaking intransigence highlights the folly of Obama’s enterprise and points the U.S. toward the action that Netanyahu, in fact, called for:

“Get up from the table and lead the world to impose an ever-increasing economic chokehold on a rogue regime that has proved vulnerable to sanctions.

“Obama fails to see so-called viable alternatives only because he has neither the nerve nor the wisdom to use them.”

*Tuesday, Iran rejected the demand as "unacceptable." Foreign Minister Zarif was quoted by the semi-official Fars news agency as saying, “Obama’s stance...is expressed in unacceptable and threatening phrases... Iran will not accept excessive and illogical demands... Tehran will continue nuclear negotiations with the six powers.” [Jerusalem Post]

William A. Galston / Wall Street Journal

“We have to face facts. We cannot entirely eliminate Iran’s capacity to enrich nuclear materials – even through a military strike. The best we can do is mix carrots and sticks, inspections and surveillance to deter Iran from breaking through negotiated limits and racing toward nuclear weapons.

“Judged against the ideal, the emerging deal doesn’t look good. Judged against feasible goals and actual alternatives, it looks a lot better.”

Editorial / Wall Street Journal

“Given Mr. Obama’s reaction, the prime minister knows his real audience is Congress and the American people. His speech raised serious doubts about an accord that has been negotiated in secret and which Mr. Obama wants Americans to accept without a vote in Congress. Now maybe we can have a debate worthy of the high nuclear stakes.”

At week’s end, Sec. of State Kerry said a potential nuclear deal with Iran isn’t part of a “grand bargain” to improve U.S. relations with the Islamic Republic.

Kerry met in Riyadh on Thursday with Saudi and other Gulf Arab state leaders to brief them on the talks. Once again discussion devolves into Shia vs. Sunni; Iran backing Shiites, Saudi Arabia and the Gulf States supporting Sunni factions. 

The Sunni Arab states see Iran as the major source of regional turmoil. Iran blames the Sunnis for the spread of the likes of al-Qaeda and ISIS.

With good reason, the Sunnis, led by the Saudis, point to Iran’s growing influence in Iraq (covered further below), specifically the battle over Tikrit. Kerry said the offensive is an “Iraqi-designed, Iraqi-led” operation, which is a lie.

Meanwhile, the U.S. Senate has prepared an Iran bill that would require a vote of Congress on any nuclear-arms deal, one that is nearly veto proof. Led by Tennessee Sen. Bob Corker, Chairman of the Foreign Relations Committee, and New Jersey’s Robert Menendez, the committee’s ranking minority member, the bill says President Obama must submit the text of any final Iran arms deal to Congress within 60 days to allow time for hearings and a vote. Democrats who support the legislation include Bill Nelson (Fla.), Tim Kaine (Va.), Heidi Heitkamp (N.D.), and Maine Independent Angus King.

Senate Majority Leader Mitch McConnell announced he would bring the Corker-Menendez bill to the floor next week, but Democrats balked. Then more Democrats, such as Chuck Schumer (N.Y.) announced they would support the bill. According to the Wall Street Journal’s Daniel Henninger, this would make 64 Senators, or three short of a veto-proof majority.

As of today, the bill is not going to the floor next week, but will be marked up in committee later this month.

Street Bytes

--Stocks suffered their worst losses in five weeks with the bulk of the damage occurring on Friday amid fears the Fed would have to hike rates sooner than perhaps some believed. The Dow Jones lost 1.5% to 17856, while the S&P 500 fell 1.6% and Nasdaq 0.7% on the week.

The Dow and S&P both hit new closing highs earlier, 18288 for the former, 2117 for the latter, while Nasdaq did close at 5008 at one point, its first close over 5000 since March 2000, but then it fell back to finish at 4927 on Friday.

But regarding the Dow we had a big announcement.  Apple Inc. is being added to the index, replacing AT&T, which will add to the volatility of the Dow in a substantial way. Apple will join at the close of trading March 18. While most don’t see this as a big deal since the S&P 500 is the benchmark for money managers, those who pooh-pooh the Dow are idiots.

What market index captures the headlines on the nightly news, the S&P? No, the Dow! What thus influences the sentiment of Mr. and Mrs. Middle America, the S&P? No, the Dow! And what has more influence in spending and voting patterns, the S&P? No, the Dow! So cut the crap, Dow bashers. The index has been around 119 years and held up pretty well as a representative benchmark. 

As for Apple’s inclusion, seeing as it is handily the world’s most-valuable company, the move only makes sense. Plus with the upcoming launch of the Apple Watch, the Dow could be in the headlines even more, for good or bad.

--U.S. Treasury Yields

6-mo. 0.10% 2-yr. 0.72% 10-yr. 2.24% 30-yr. 2.84%

The 10-year ended 2014 at 2.17%, fell all the way to 1.64%, and now look...2.24%. Those are huge percentage swings, sports fans.

--The Federal Reserve said all 31 U.S. banks passed its latest round of annual “stress tests” to see how they would cope in the next financial crisis; the banks having enough capital to keep lending during a severe global recession. It was the first time since the tests began in 2009 that all the banks had a capital level above the minimum required.

But Goldman Sachs, Morgan Stanley and JPMorgan Chase were among five with the lowest readings for a capital ratio of at least 5%.

--U.S. gasoline prices at the pump have risen 35 straight days after bottoming at a nationwide price for regular of $2.03. It’s now $2.45 as of Friday. Refinery issues are a big reason for the rise, despite record inventories.

--February represented the 22nd consecutive month of withdrawals for the PIMCO Total Return Fund, though the $8.6 billion figure was the lowest since the departure of manager Bill Gross last fall.

At its peak, the world’s largest bond fund had assets of $293 billion in April 2013 and it’s down to $124.7 billion as of the end of last month.

--Vanguard, in contrast to issues PIMCO has faced, attracted more new business than any other asset manager in the mutual fund industry in 2014, $291 billion, a fifth of the industry’s net inflows, according to Morningstar. PIMCO, overall, had outflows of $175 billion, by far the worst among the 3,164 groups tracked by the data provider.

--February U.S. auto sales were mostly up, despite the brutal weather in some parts of the country. General Motors’ sales rose 4.2% over last February, Chrysler’s were up 5.6%, but Ford’s fell 1.9%, though this was largely because dealers lacked inventory to meet demand for the new F-150 pickup truck.

Meanwhile, Toyota’s sales rose a strong 13.3%, Nissan’s were up 2.7% and Honda’s grew 5% year over year.

And for the record...the top-selling vehicles in the U.S. in February:

Ford F-Series 55,236
Chevy Silverado 45,395
Toyota Camry 32,942
Ringling Brothers’ Clown Car 43

--Apple Inc.’s new mobile-payment system, Apple Pay, has been hit by fraudulent transactions using stolen credit-card data obtained in security breaches of retailers such as Target and Home Depot, as reported by the Wall Street Journal on Friday.

The Apple Pay system itself hasn’t been hacked, but the fraudsters are entering stolen credit card info into phones, that are then used to make purchases without a physical card being presented.

The service has accounted for two of every three dollars spent in the U.S. via mobile payments on the three major credit-card networks.

Apple has tried to solve the issue of stolen credit cards, as noted by the Journal, “by working with the card networks to mask the user’s information by issuing a one-time code for each purchase. But this doesn’t prevent thieves from loading already stolen cards into the service.”

--Apple retook the lead in the fourth quarter as the world’s No. 1 smartphone seller, according to Gartner, beating out Samsung for the first time since 2011, thanks to the release of the iPhone 6 and 6 Plus models.

Apple sales equated to more than one in five smartphones, while Samsung was just under 20% - 10 points less than a year ago, as noted by Gartner.

Samsung is doing OK on the high-end, but it is getting whacked with its lower-end offerings, losing out to rivals such as Lenovo and China’s Xiaomi.

Xiaomi sold 18.6 million phones during the quarter (Apple sold 74.8m, Samsung 73m), which was triple the year-ago figure. The company announced on Thursday it expects sales and smartphone shipments to rise by more than 30% this year, which includes slowing domestic demand in China.

--Speaking of China, the government’s proposed anti-terrorism law could be yet another nail in the coffin for some leading U.S. tech firms, such as Cisco and Microsoft. China would require firms doing business with the mainland to provide encryption keys and install backdoors granting law enforcement access for counterterrorism investigations. President Obama said in a Reuters interview that China must change the draft law if it were “to do business with the United States.”

A Chinese parliamentary spokesman said his nation’s proposals were “in accordance with the principles of China’s administrative law as well as international common practices, and won’t affect Internet firms’ reasonable interests.” [Reuters]

But while the United States and others in the West complain about being increasingly shut out of the Chinese market, the likes of China’s Huawei and ZTE Corp., two Chinese telecom equipment makers, have been essentially locked out of the U.S. on cybersecurity concerns.

Much of this mess is directly related to Edward Snowden’s revelations, which have emboldened China’s leadership. I’m biting my tongue.

On a related topic, Li Yufu, vice-chairman of the All China Federation of Trade Unions, warned of alleged involvement of “hostile foreign forces” in the country’s labor movement.

This is another bad sign, as Li is in essence targeting non-governmental organizations (NGOs) who will face ramped up police surveillance, making it tougher for them to operate, as reported by the Financial Times. This will be a common refrain for Communist leaders, though the NGOs are simply out to protect workers’ rights.

--Shares in Ali Baba hit their lowest level since the September IPO on Tuesday, $80, which while up from the IPO price of $68 is down substantially from the $120 high of Nov. 13. The stock did rally back some to close the week at $85.

Alibaba has been suffering in no small part because of poor publicity and scathing criticism from the Chinese government over perceived lack of oversight with some of its websites. In addition rival JD.com is gaining traction.

Can’t help but repeat what I’ve said from day one. I wouldn’t touch these shares.

--February casino revenue in Macau was down a full half from year ago levels, 48.6%, the biggest drop on record and the ninth straight month of declines despite the Lunar New Year holiday. Revenues were down 17.4% in January year over year. Add the two together to smooth out the holiday and it fell 35%.

The February comparison is tough as a year ago happened to be the most profitable month on record.

One company to watch is Galaxy Entertainment Group, which opens a new resort on May 27 so analysts will be looking to see how many tables they open, the number of dealers hired, that kind of thing, after the government’s anti-corruption campaign has killed business.

--Retail giant Target plans on cutting 2,000 jobs as part of a major restructuring that included pulling out of the Canadian market. CEO Brian Cornell said: “[I] am confident that by implementing our strategy, simplifying how we work and practicing financial discipline, we will ignite Target’s innovative spirit and deliver sustained growth.”

While it’s cutting staff, it also plans to invest up to $2.2 billion to catch up with rivals in its online operation. The market has liked all of Cornell’s moves since he took over following the massive security breach and the shares have been at basically all-time high levels.

--Canada’s economy grew at a faster than expected pace in the fourth quarter, up 2.4% annualized, according to Statistics Canada. The agency also revised the third quarter mark up to 3.2% from an initially reported 2.8%.

--Shares in Lumber Liquidators Holdings Inc. plunged 35% on the week after a scathing “60 Minutes” piece on Sunday called into question the quality of its Chinese-made flooring, specifically the issue of illegal levels of formaldehyde. The investigation, using reporters with hidden cameras, found the flooring was often billed as meeting California health and safety standards even though it didn’t. Managers at three Chinese factories conceded as much.

“60 Minutes” also tested flooring from China that was being sold in several states and of the 31 products tested, only one would have been legal in California.

It was a helluva story. Go online if you missed it.

--Aer Lingus’ short-haul traffic was down 0.9% in February compared to a year ago, owing to increased competition from Ryanair, but long-haul service was up 21.7%. Aer Lingus is introducing service from Dublin to Washington, D.C. this year. 

--Liberia’s last confirmed Ebola patient walked (danced) out of a clinic on Thursday, a major moment, though Liberia isn’t out of the woods yet. 106 people are still being monitored in the country and it won’t be declared Ebola-free until it goes 42 days without a single case.

It has been a year since the virus hit West Africa. 24,000 caught Ebola. About 10,000 died. It is still claiming lives in Guinea and in Sierra Leone, but the epidemic is fading.

The hope is for a vaccine before it flares up again, which is inevitable until then.

--California’s unemployment rate dropped to 6.9% in January, the lowest since May 2008.

--McDonald’s announced that over the next two years it will stop using chicken treated with antibiotics commonly used for humans.

Christopher Muller, professor of hospitality* at Boston University, told USA Today, “It will change things for everyone,” making McDonald’s a “market maker” for these products.

McDonald’s purchased 3% to 4% of all the chicken produced in the U.S. last year.

*Regarding the “professor of hospitality,” I now realize I missed the boat. I would have loved that career path.

“Hey, how ya doin’? Want a beer?”

“Thanks, Professor. But we’re good for now.”

“OK, just let me know.”

Plus you receive a nice pension (once you’re tenured, of course). I imagine it’s also pretty much 9-5....or 4 to 12.

--In Forbes magazine’s latest annual ranking of global billionaires, Microsoft owner Bill Gates was declared the richest man in the world for the 16th time, once again beating out Mexican businessman Carlos Slim; Gates having an estimated net worth of $79 billion to Slim’s $77bn. Warren Buffett is third at $72.7bn.

4. Amancio Ortega $64.5bn (Zara and other fashion chains)
5. Larry Ellison $54.3bn (Oracle)
6-7. Charles and David Koch $42.9bn apiece

Facebook’s Mark Zuckerberg moved up to No. 16 at $33.4bn.

Basketball’s Michael Jordan hit the list at $1bn.

--Speaking of Zuckerberg, at the Mobile World Congress in Barcelona this week, he revealed what he looks for in a prospective employee. And the answer is simple.

“I will only hire someone to work directly for me if I would work for that person. It’s a pretty good test and I think this rule has served me well.”

--The aforementioned Buffett released his annual letter to shareholders on Saturday, reflecting on 50 years at the helm of one of the world’s largest companies and Buffett, 84, wouldn’t reveal a successor, but his partner, vice chairman Charlie Munger, writing separately to commemorate Buffett’s 50 years of running Berkshire Hathaway, suggested that insurance executive Ajit Jain or Greg Abel, head of Berkshire’s energy business, would likely receive the top job down the road.

A third potential candidate, Matthew Rose, chief of Burlington Northern Santa Fe, Berkshire’s railway holding, received rare criticism for his company’s problems in Buffett’s letter (though he wasn’t named directly). Buffett has called Burlington Northern his “most important noninsurance subsidiary” and Berkshire is going to spend $6 billion on plant and equipment improvements over the coming year.

Buffett, while highly optimistic, warned investors in Berkshire not to expect the kinds of gains witnessed in the first 50 years, writing: “The numbers have become too big. I think Berkshire will outperform the average American company, but our advantage, if any, won’t be great.” [David Gelles / New York Times]

Separately, in the part of the letter devoted to stream of consciousness, Buffett wrote of investment bankers: “The Street’s denizens are always ready to suspend disbelief when dubious maneuvers are used to manufacture rising per-share earnings, particularly if these acrobatics produce mergers that generate huge fees for investment bankers.

Buffett added: “Investment bankers, being paid as they are for action, constantly urge acquirers to pay 20 to 50 percent premiums over market price for publicly held businesses. The bankers tell the buyer that the premium is justified for ‘control value’ and for the wonderful things that are going to happen once the acquirer’s CEO takes charge.   (What acquisition-hungry manager will challenge that assertion?)”

Then, Buffett continues: “A few years later, bankers – bearing straight faces – again appear and just as earnestly urge spinning off the earlier acquisition in order to ‘unlock shareholder value,’” he wrote. “Spin-offs, of course, strip the owning company of its purported ‘control value’ without any compensation payment. The bankers explain that the spun-off company will flourish because its management will be more entrepreneurial, having been freed from the smothering bureaucracy of the parent company. (So much for that talented CEO we met earlier.)” [David Gelles / New York Times...different article]

--Blackstone Group LP co-founder and CEO Stephen Schwarzman took in cash and prizes of $690 million for 2014, the highest annual payout ever notched by a founder of a publicly traded private-equity firm.

--I was reading a piece in Crain’s New York Business by Aaron Elstein and I didn’t realize shares in Nathan’s Famous Inc., the hot-dog people, had doubled in 24 months, and that their dogs are now sold in 33,000 supermarkets, five times more than a decade ago. They also are up to 300 outlets across 27 states and 10 countries.

--NBC News brought back the former president of the division, Andrew Lack, to take a senior role (some details still a bit unclear as I go to post). Lack ran NBC News from 1993 to 2001, a strong period for the unit.

The big thing here is Lack is also a good friend of Brian Williams, ergo, Williams could return, or as a source told the New York Post, “Andy Lack wouldn’t come back without Brian.” We’ll see. Lack has his hands full.

--The New York Philharmonic’s home at Lincoln Center has been known as Avery Fisher Hall for more than 40 years, but now David Geffen, the co-founder of DreamWorks Animation, has donated $100 million in exchange for naming rights to the performance space...by September, David Geffen Hall.

The money is going towards a substantial renovation. Geffen said in a statement: “As a native New Yorker, I recognize that Lincoln Center is a beacon to artists and musicians around the world. To be involved with such a beloved and iconic institution is deeply satisfying.” [Yoona Ha / Crain’s New York Business]

Good for him. I passed it the other day and what a beautiful spot. We need more culture! Especially when you consider the next item....

Foreign Affairs

Iraq / Syria / ISIS: In a major test of its ability to eventually retake Mosul, Iraq’s biggest city under ISIS control, the Iraqi army, backed by Shiite militia and the elite Quds Force of Iran’s Revolutionary Guards Corps, under the direct control of Major General Qassem Soleimani, is going after ISIS’ base in Tikrit. Sec. of State Kerry conceded Soleimani was on the ground, directing action, but that the United States wasn’t coordinating with him. 

In an effort to hold on to the city, ISIS militants set fire to oil wells northeast of town to obstruct the assault. The Ajil oil field is a major source of cash for IS and the field produced 25,000 barrels per day of crude that were shipped to the Kirkuk refinery. While ISIS doesn’t have the technical expertise, once it took over the fields they still managed to pump oil though at lower volumes.

The main initial goal of the Iraqi force is to cut off the supply lines between Tikrit and Mosul.

Iraqi Prime Minister Haider Abadi urged his troops “to respect human rights and preserve [civilian] property” amid fears of reprisals against Sunnis that would lead to civil war.

Editorial / Washington Post

“U.S. commanders are taking an upbeat view of Iran’s close involvement in an assault by Iraqi forces on the city of Tikrit, which has been held by the Islamic State since summer. After reporting that two-thirds of the attackers were from Shiite militias and the operation had ‘overt...Iranian support,’ Joint Chiefs Chairman Gen. Martin Dempsey said in a congressional hearing Tuesday that ‘if they perform in a credible way...then it will in the main have been a positive thing.’

“Such optimism seems shortsighted. While any reduction in the Islamic State has benefits, the Tikrit operation raises multiple red flags. The United States was excluded by the Iraqi government of Haider al-Abadi; meanwhile, Iran has dispatched its own ground forces, artillery and drones. The assistance is being overseen by a notorious general, Qassem Soleimani, who previously supervised attacks on U.S. forces in Iraq.

“Tikrit, the home town of Saddam Hussein, is part of Iraq’s Sunni heartland, so the heavy involvement of Shiite Iran and the militias allied with it could turn what is supposed to be a counterterrorism campaign into a sectarian bloodbath. Even if it does not, a victory would advance Tehran’s goal of extending its influence across Iraq, rather than being limited to the central government in Baghdad and Shiite-populated areas.

“Mr. Abadi, who took office promising reconciliation with Sunni leaders, is saying that Tikrit will be turned over to Sunni police and tribes when it is recaptured and its refugee population invited to return. But fewer than 1,000 Sunni fighters are included in the 30,000-strong attacking force; the government has not delivered sufficient arms to Sunni tribes willing to fight the Islamic State. Moreover, Shiite militia leaders, as The Post’s Erin Cunningham reported, have portrayed the offensive as revenge for a massacre of mostly Shiite Iraqi soldiers by the Islamic State in June. For his part, Mr. Abadi alarmed human rights monitors by declaring that ‘there is no neutral party’ in Tikrit and that residents not siding with the attackers would be considered supporters of the Islamic State....

“By allowing Iran to take the military lead in Tikrit and other parts of Iraq, the United States might speed the destruction of the Islamic State. But the administration is also risking the undoing of all the work that has been done since last summer to prevent Iraq from fragmenting along sectarian lines – and it is allowing Iran to take another step toward replacing the terrorist regime with its own malevolent hegemony.”

In other developments in the region....

--ISIS attacked the ancient archaeological site of Nimrud in northern Iraq, the latest in a series of attacks on ancient structures and artifacts, including the Mosul Museum. Nimrud wsa founded by the Assyrian King Shalamansar I, who died in 1245 B.C. As NBC’s Richard Engel first put it, “cultural genocide.”

--The military commander of the Nusra Front and several other top leaders were killed in an airstrike in Syria’s Idlib province, apparently a Syrian regime attack on the leadership of Al-Qaeda’s affiliate in the region. The U.S. denied it was involved.

--The Islamic State, despite repeated attempts by Twitter to thwart ISIS threats, propaganda and online recruiting, supposedly has a minimum of 46,000 Twitter accounts, according to a study from the Brookings Institution and Google Ideas. This was the first public attempt to measure the influence of IS members or their sympathizers on social media.

Twitter says it has suspended well in excess of the 1,000 accounts the study says it has. [ABC News says the total is over 2,000.] This week it emerged Twitter executives have been targeted by ISIS.

Israel et al...more on Obama’s foreign policy:

Daniel Henninger / Wall Street Journal

“Mr. Netanyahu’s critics say the prime minister seriously damaged the traditional alliance between the U.S. and Israel. If so, he’s at the back of a long line. Add to Israel the already broken relationships with Saudi Arabia and Egypt. Add as well the trips made to the Pacific region by both Vice President Joe Biden and Secretary Kerry explicitly to reassure allies there that the U.S. hadn’t abandoned them to China’s aggressions. Anyone who talked to senior officials from Asia was hearing unprecedented misgivings about the U.S. commitment.

“Add to it the Western-leaning people of Ukraine, whose army was routed form Debaltseve last month for lack of weapons to defend themselves from Russian tanks, artillery and missiles. Add to it the moderate Syrian opposition that is dissolving into the flood tide of Islamic extremists for lack of support when it would have mattered.

“What are the big Obama foreign-policy wins that have earned the limitless benefit of the doubt he’s asking for?

“There is the killing of bin Laden, a discrete special operation engineered by Admiral William McRaven. The drone wars in Pakistan and Yemen have indeed eliminated terrorists.

“By the administration’s lights, its most noted diplomatic successes are the opening to Cuba and the deal to draw down Syria’s chemical weapons, which was proposed by Vladimir Putin. The reset with Russia is now in ashes.....

“Barack Obama chose to run his presidency as he saw fit, which is to say, out of his own thoughts and oblivious to anyone else’s. The result, which now haunts his Iran deal, is that the reservoir of trust, and political support necessary to establish the credibility of a major U.S. commitment does not exist. Weep for that.”

Egypt: Strange situation in Riyadh last Sunday as Egyptian President al-Sisi met with Saudi leadership. At the same time, Turkish President Erdogan was in Riyadh, but Sisi and Erdogan did not get together, with it being well known Sisi accuses Erdogan of backing the banned Muslim Brotherhood. Erdogan is ticked at Sisi for ousting Islamist predecessor Mohammed Morsi.

At the same time Saudi King Salman clearly favored Sisi in meeting him at the airport, a breach of official protocol that Erdogan wasn’t the recipient of.

Sisi and Salman discussed Sisi’s proposal for a joint anti-terrorism force that would tackle regional threats from the likes of Yemen, Libya and Syria. The force would include Jordan and the UAE.

Separately, the Egyptian government announced it would construct a new capital city, located east of Cairo towards Suez, to which it will relocate. It is forecast to take twelve years to build and Gulf-based companies will build it. Specifically, a Dubai developer, Emaar Properties, is said to be involved, according to the Jerusalem Post.

Emaar Properties is connected to the ruler of Dubai.

Jordan: The government announced there are over 3.4 million people from Arab countries that currently reside in Jordan, living alongside 6.5 million Jordanians. The Kingdom is hosting around 1.4 million Syrian refugees, 500,000 Iraqis and 1.5 million Palestinians who are not Jordanian citizens.

That gives you a sense of the dicey situation the Kingdom always finds itself in, but more so today due to the spillover from the war in Syria.

Russia / Ukraine: The Organization for Security and Cooperation in Europe (OSCE) says the ceasefire is largely holding in eastern Ukraine, but it’s been impossible to verify whether heavy weapons have been withdrawn from the front lines as agreed upon. Germany has warned of further sanctions against Russia if the Feb. 12 accord isn’t implemented.

On Thursday, eight Republicans and three top Democrats – including the ranking members of the Armed Services, Intelligence, and Foreign Affairs Committees – sent President Obama a letter urging him “in the strongest possible terms” to quickly approve the transfer of lethal and defensive weapons systems to Ukraine, as reported by Molly O’Toole of Defense One.

“In anticipation of the near certainty that Russia and its separatist proxies continue their efforts to destabilize Ukraine and seize additional territory,” the lawmakers wrote, “we urge you to quickly approve additional efforts to support Ukraine’s efforts to defend its sovereign territory, including through the transfer of lethal, defensive weapons systems to the Ukrainian military.”

Administration officials have long maintained providing Ukraine with lethal aid would escalate the conflict and would be unlikely to turn the tide.

The authors of the letter to the president counter: “In the face of Russian aggression, the lack of clarity on our overall strategy thus far has done little to reassure our friends and allies in the region who, understandably, feel vulnerable. This needs to change.”

Earlier in the week, Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey said: “I think we should absolutely consider providing lethal aid.” Defense Secretary Ashton Carter had said in his confirmation hearings two weeks ago he was inclined to support arming Ukraine.

For its part Russia launched large-scale war games at week’s end, including Crimea and the disputed territories, along with the Northern Caucasus, Abkhazia, South Ossetia and Armenia. The exercises will run until April 10. [Abkhazia and South Ossetia are the breakaway regions from Georgia.]

The State Department said on Wednesday that Russia had “thousands and thousands” of soldiers in Ukraine. [One report has as many as 12,000.]

Meanwhile, a report by the European Leadership Network think-tank reveals that six key countries, NATO members, are cutting their defense budgets, despite pledges to reverse declines in spending.

Germany is spending less, while France’s military budget has stagnated. Even in Britain, where Prime Minister David Cameron vowed to increase spending on defense, it appears to be at its lowest level in 25 years.

Two other items...Gazprom has reached a temporary agreement with Ukraine on payments to ease concerns a standoff may disrupt exports to Europe shipped through the country. About one third of Europe’s gas comes from Russia. Ukraine has vowed to keep paying in advance for natural gas deliveries.

And as if there wasn’t enough tragedy in Ukraine already, 32 were killed in an explosion at a coal mine in the eastern region. The mine is under the control of the rebels. It was a methane gas explosion.

On the issue of the assassination of Kremlin opposition leader Boris Nemtsov, Feb. 28, Vladimir Putin said on Wednesday that the murder was a shameful tragedy that carried a political subtext.

In a speech during a meeting with Interior Ministry officials, Vlad the Impaler said:

“The most serious attention should be paid to high-profile crimes, including the ones with a political subtext. Russia should be devoid at last of the kind of shame and tragedies that we have recently endured and seen.

“I mean the murder, the audacious murder of Boris Nemtsov right in the center of the capital.”

Tens of thousands marched in silence on Sunday in memory of Nemtsov through downtown Moscow and onto Bolshoi Moskvoretsky Bridge, where Nemtsov was gunned down. 

Thousands more flocked to the Sakharov human rights center in Moscow on Tuesday to pay their final respects. Senior officials from Poland and Latvia who attempted to attend the wake were denied entry into Russia.

“Nemtsov’s killing is a dramatic page in Russia’s history because we have seen that a political opponent can be stopped with arms. This is a new, unacceptable reality that makes the country’s government responsible for preventing it,” former Finance Minister Alexei Kudrin told reporters after laying flowers at the coffin.

The Kremlin continues to deny any involvement, saying it was a “provocation” designed to discredit Putin and strengthen his opponents, which is beyond absurd. Equally absurd are claims the assassination could have been orchestrated by ISIS.

No arrests have been made, though the director of Russia’s Federal Security Service said an investigation identified several suspects, without giving any specifics.

The key witness to the crime, Nemtsov’s girlfriend, Anna Duritskaya, returned to her native Ukraine after three days of questioning and is in hiding with her mother, at last report.

It is still not clear whether CCTV cameras at the site of the killing were operating on Friday night, or even who is responsible for the cameras, with various authorities making conflicting claims.

Putin told Nemtsov’s mother that everything would be done “to ensure that the perpetrators of this foul and cynical crime and those who stand behind them are properly punished.” It makes you want to throw up.

Separately, Kremlin opposition leader Alexei Navalny was released from prison after serving a 15-day sentence for handing out leaflets to promote a protest rally, that then became the memorial march for Boris Nemtsov. Speaking to reporters following his release, Navalny vowed to continue his work. 

“That terrorist act didn’t achieve its aim, it didn’t frighten anyone, doesn’t frighten me or my associates.”

Putin’s popularity, by the way, remains near record levels at 86%, according to the independent Levada polling center. What’s worse is the number of people having no sympathy for the opposition has risen to 68% from 59% three years ago. [The poll was released the day Nemtsov was killed, so it will be interesting to see if these numbers change any the next time a survey is conducted.]

Editorial / Financial Times

“Sergei Yushenkov (2003). Yuri Shchekochikin (2003). Anna Politkovskaya (2006). Stanislav Markelov (2009). Anastasia Baburova (2009). Natalia Estimirova (2009).

“To this sad and shameful roll call of politicians, journalists, and human rights activists assassinated in Vladimir Putin’s Russia must now be added the name of Boris Nemtsov... Rarely, if ever, have any of their killers been brought to justice....

“(Nemtsov’s) murder marks a further sickening downwards lurch in Russia’s culture of political violence. Coming two days ahead of a march on Sunday to protest against the war in Ukraine, his death tears a hole in Russia’s threadbare opposition movement. One bunch of flowers left on the bridge where he was shot included the message: ‘Without you, spring will not come.’...

“In speaking out against state corruption and the Kremlin’s involvement in the war in Ukraine, Nemtsov was denounced as a traitor on state television and vilified on social media. Posters of him and his supporters were hung in central Moscow accusing them of being a ‘Fifth Column.’

“This war psychosis, promoted by the Kremlin, has re-awoken the ultranationalist demons from the darkest chapters of Russia’s past. Nemtsov was mystified why the west did not sanction those Kremlin propagandists responsible for stoking this culture of hate....

“At a time of international tension over Ukraine, it is tempting for the West to wash its hands of Russia and isolate the country. But that would do a terrible disservice to Nemtsov’s life’s work and Russia’s remaining democratic campaigners. Just as in Soviet times, Russia’s dissidents look to Western democracies as a source of hope and moral support. While sanctioning the regime, the West should never cease to engage – wherever possible – with the Russian people.

“Nemtsov embodied a vision of another Russia, at peace with itself and the outside world. The outside world should in turn honor that memory. One leaflet at a time.”

Garry Kasparov / Wall Street Journal

“The early themes in Mr. Putin’s reign – restoring the national pride and structure that were lost with the fall of the Soviet Union – have been replaced with a toxic mix of nationalism, belligerence and hatred. By 2014 the increasingly depleted opposition movement, long treated with contempt and ridicule, had been rebranded in the Kremlin-dominated media as dangerous fifth columnists, or ‘national traitors,’ in the vile language lifted directly from Nazi propaganda.

“Mr. Putin openly shifted his support to the most repressive, reactionary and bloodthirsty elements in the regime....In this environment, blood becomes the coin of the realm, the way to show loyalty to the regime. This is what President Putin has wrought to keep his grip on power, a culture of death and fear that spans all 11 Russian time zones and is now being exported to eastern Ukraine....

“We may never know who killed Boris Nemtsov, but we do know that the sooner President Putin is gone, the better the chances are that the chaos and violence Boris feared can be avoided.”

Mark Almond / Irish Independent

“Every newspaper photograph of the crime scene has the Kremlin’s towers in the background. This view was an accusation in itself: the finger of blame pointed directly at the Russian president. Whoever was organized enough to track the movements of Nemtsov and his Ukrainian girlfriend across Red Square, drive up to them on the Moskvoretsky Bridge, shoot him in the back and then get away must have known whose face would flash around the world as the ‘most wanted.’

“Vladimir Putin is already the West’s ‘Public Enemy Number One.’ Many observers jumped to the conclusion that the murder beneath his Kremlin windows was Putin’s perverse confessional ‘selfie.’

“But while the president might be ruthless, is he really foolish or brazen enough to stage the killing of a fallen rival from the ‘90s with his office in the background?

“It seems more likely to me that the killers of Nemtsov wanted to incriminate Putin. The Kremlin’s spokesmen are desperately anxious to shift the blame and point to sinister ‘provocateurs,’ steered from the West, at work. Well, maybe, but what about the violently nationalistic forces unleashed over the past year inside Russia? Did one want to nail Putin’s colors to their mast by leaving this bloodstain on the Kremlin?....

“(Those) hoping for Putin’s fall should remember what the Chinese have long warned us: be careful what you wish for. From Whitehall to Washington, there is a naïve assumption that anyone but Putin must be better for Russia and the West. The devil you know is always more predictable than chaos.

“The collapse of the Communist system was largely bloodless. Let’s not assume that the collapse of post-Communist Russia would not send shock waves westwards.”

I included Mr. Almond’s view because his conclusion is similar to what I have been saying for years. Putin will one day be undone from within by a ‘dark third force.’ And I agree, as inconceivable as this may seem with Putin currently running roughshod in Ukraine, his replacement could be even worse.

China: Regarding the new budget, China announced it would increase military spending this year by about 10%, following a 12.2% increase last year. National People’s Congress spokeswoman, Fu Ying, who was all over the place this week...but then again that’s what a spokeswoman does...said, “China is a big nation that needs to protect its national security. Military modernization is part of the nation’s modernization drive, and it needs budgetary support.”

The defense budget grew by 11.2% in 2012 and 12.6% in 2011. 

Separately, Premier Li said the implementation of the “one country, two systems” principle must strictly comply with the Chinese constitution and the Basic Law as it pertains to the issue of Hong Kong. Li reinstated the promise of “Hong Kong people governing Hong Kong” as well as the city’s “high degree of autonomy” in his remarks, which were omitted a year earlier.

Li said, “We [the central government] will steadfastly carry out the principles of ‘one country, two systems,’ the people of Hong Kong governing Hong Kong, the people of Macau governing Macau, and both regions enjoying a high degree of autonomy.

“And we will strictly comply with the constitution and the basic laws of these two regions.”

These words will be examined and parsed...and examined and parsed...but they do give cause for slight optimism.

That said, Hong Kong’s big election is in 2017 and there will be waves of protests leading up to it, no doubt. The key is “universal suffrage” and whether that is achieved two years hence.

Lastly, U.S. federal agents targeted “maternity tourism” schemes in which pregnant Chinese women travel to the United States, usually on tourist visas, so that their children will be born U.S. citizens, as reported by the Los Angeles Times’ Victoria Kim and Frank Shyong.

This should tick off every American to no end.

“Efforts to outlaw or regulate the practice has so far been unsuccessful. A bill in the 2013 Congress to limit birthright citizenship to babies with at least one American parent was never voted on.”

The purpose is to enable the children to apply to U.S. colleges, as well as make it easier for the parents to then immigrate here.

South Korea: It was more than a bit disturbing that the U.S. ambassador to South Korea, Mark Lippert, was severely slashed in the face and left hand by a militant Korean nationalist who was well known to officials for being a nut job who apparently has close ties to the North.

The assailant reportedly shouted “South and North Korea should be reunified!” before lashing out at the envoy with a blade ten inches long, and he also reportedly condemned the joint military exercises being held by the United States and the South. How this wacko got close to the ambassador is a travesty.

Afghanistan: A series of flash floods and avalanches in the northern part of the country killed at least 285 this week. 

Nigeria: Witnesses said Boko Haram killed at least 64 people in a village in Borno state this week, targeting men and boys before setting the village on fire, survivors told a news website Sahara Reporters.

But there were also stories that Chad’s military continues to make gains in aiding the Nigerian military; this as Boko Haram has made cross-border raids into Chad, Niger and Cameroon in recent weeks.

Chadian President Idriss Deby vowed to “wipe out” Boko Haram, adding the group’s leader, Abubakar Shekau, needed to give himself up and that he knew where the terrorist was hiding.

Britain: Counter-terrorism officials announced they are monitoring 3,000 extremists who they fear could commit acts of domestic terror or become future “Jihadi Johns.” With the unmasking of a Londoner, Mohammed Emwazi, as Jihadi John (so nicknamed by the press), Britain’s domestic security service MI5 told the Financial Times there was now a real concern over the impact of social media on radical Islamists in Britain.

Argentina: The ex-wife of top prosecutor Alberto Nisman, who died mysteriously in January, presented a report by top forensic specialists claiming he was the victim of a homicide, not suicide after he was found in the bathroom of his apartment with a bullet wound to his head. The specialists maintain Nisman’s body was moved after he was shot.

The prosecutor investigating the case, Viviana Fein, had preliminarily concluded Nisman killed himself, but she has yet to officially rule on the cause of death and in ensuing weeks has said she wouldn’t rule out any theories.

The thing is, the ex-wife, Sandra Arroyo Salgado, is a top federal judge herself. Prior to this report, the government has ramped up its attacks on Nisman’s motives behind a report on the 1994 terrorist attack on a Jewish community center in Buenos Aires that most believe was carried out by Iran through its proxies.

Random Musings

--Late Wednesday night, Hillary Clinton tweeted out: “I want the public to see my email.”

Mrs. Clinton is giving in to a public uproar, with fire coming not just from Republicans but some Democrats, over her possible breach of federal law in having a private email account while she was secretary of state.

This also comes after we learned on Wednesday that she had her own internet server at home in Chappaqua, New York, as first reported by the Associated Press.

The New York Times had revealed this week that Clinton did not have a government email address during her time at State and that government watchdogs and former officials from the National Archives and Records Administration said this was a serious breach.

In addition, what Clinton was doing made her correspondence far more vulnerable to hackers.

The correspondence of federal officials is considered government records under federal law. Her spokespeople thus far insist she has complied with the “letter and spirit of the rules.”

Clinton’s people first fell back on her having previously handed over 55,000 pages of emails to the State Department. Thus far, she has been unable to give a good reason why she used a personal account. Well, many of us know why, and she was caught on camera by ABC News a while back complaining that she would never have a government email account because of all the investigations she had been through.

State Department officials have confirmed Clinton exclusively used a personal account during her time in office. Both spokespeople for the department as well as White House spokesman Josh Earnest defended Clinton, saying she had turned over everything, but then all parties said they were relying on information from the Clinton team.

The Republican-led congressional investigation looking into her actions during the Benghazi attack has been prevented from compiling a final report because Clinton didn’t hand over all her emails related to the incident. This week, the chairman of the investigating committee, Republican Rep. Trey Gowdy (S.C.), said: ‘I want the documents. Sooner rather than later.”

Sen. Charles Grassley (R-Iowa) told the Washington Post that he was concerned the State Department did not turn over all emails by Clinton aide Huma Abedin that he requested in 2013 as part of an effort to see whether Abedin was simultaneously working for the government and an outside consulting firm.

“Abedin, like Clinton, sometimes used a private clintonemail.com account.

“ ‘The trend of using private email for public business is detrimental to good government,’ Grassley said. ‘The public’s business ought to be public with few exceptions.’”

Dick Harpootlian, a former Democratic Party chairman in South Carolina who has said he hopes Vice President Biden runs, told the Washington Post: “There’s always another shoe to drop with Hillary. Do we nominate her not knowing what’s in those emails?”

Editorial / Washington Post

“Hillary Rodham Clinton has served as first lady, a senator from New York and secretary of state. She is no newcomer to the corridors of power. Her decision to exclusively use a private email account while secretary suggests she made a deliberate decision to shield her messages from scrutiny. It was a mistake that reflects poor judgment about a public trust.

“Under the rules as they existed during Ms. Clinton’s time as secretary, from 2009 to 2013, government officials were not strictly required to use official email accounts. However, in 2011 the White House spokesman, Jay Carney, said, ‘We are definitely instructed that we need to conduct all of our work on our government accounts...’ He said it was ‘administration policy’ to use government accounts. Did this not apply to Ms. Clinton at the State Department?

“If government officials did use private emails for public business, they were required to consider the emails to be equivalent to government records and to preserve them. Ms. Clinton took her email with her when she left office in 2013, and then, in December, when asked by the State Department, turned over 55,000 pages of emails from the private account. Her spokesman said that in cases when she wrote to department officials at their formal addresses, those emails should still be in the department’s system. President Obama signed amendments to a law last November that require government employees who use private email for official business to forward it to government systems within 20 days.

“Ms. Clinton is not the first high-ranking government official to write private emails about public business. But a host of questions arise from her decision to use private email exclusively while serving as secretary. How secure was the private email? What was her motive? Did anyone ask why the secretary of state was breaking with an announced administration policy? Why did she not turn over the emails promptly upon leaving office? Has she withheld anything?”

Editorial / Wall Street Journal

“Hillary Clinton hasn’t even begun her expected presidential candidacy, but already Americans are being reminded of the political entertainment they can expect. To wit, the normal rules of government ethics and transparency apply to everyone except Bill and Hillary.

“Last week we learned that the Clinton Foundation had accepted donations from foreign governments despite having made a public display of not doing so. The Family Clinton had agreed not to accept such donations while Mrs. Clinton was serving as Secretary of State, with rare exceptions approved by State’s ethics shop.

“But, lo, the foundation quietly began accepting such gifts from the likes of Qatar and Algeria after she left the State Department – though everyone in the world knew she was likely to run for president in 2016. The foundation didn’t announce the donations, which our Journal colleagues discovered in a search of the foundation’s online data base.

“Then Monday, the New York Times reported that Mrs. Clinton used a personal email account for official business as Secretary of State, despite a federal transparency law that requires officials to maintain emails on government servers....

“The real story here is that none of this is a surprise. This is how the Clintons roll. They’re a political version of the old Peanuts cartoon character who was always surrounded by a cloud of dirt. Ethical shortcuts and controversies are standard operating procedure. A brief 1990s roll call: The Riadys, Johnny Chung, Travelgate, the vanishing Rose billing records, a killing in cattle futures, the Marc Rich pardon.

“The Clintons and Democrats want Americans to forget all of that. But as the email and foundation discoveries show, the Clintons haven’t changed. They still think they can do what they please and get away with it.”

Peggy Noonan / Wall Street Journal

“(Clinton) had her own private email addresses and her own private Internet domain, on her own private server at one of her own private homes, in Chappaqua, N.Y. Which means she had, and has, complete control of the emails. If a journalist filed a Freedom of Information Act request asking to see emails of the secretary of state, the State Department had nothing to show. If Congress asked to see them, State could say there was nothing to see. (Two months ago, on the request of State, Mrs. Clinton turned over a reported 55,000 pages of her emails. She and her private aides apparently got to pick which ones.)

“Is it too much to imagine that Mrs. Clinton wanted to conceal the record of her communications as America’s top diplomat because she might have been doing a great deal of interesting work in those emails, not only with respect to immediate and unfolding international events but with respect to those who would like to make a positive impression on the American secretary of state by making contributions to the Clinton Foundation, which not only funds many noble causes but is the seat of operations of Clinton Inc. and its numerous offices, operatives, hangers-on and campaign-in-waiting?...

“The press is painting all this as a story about how Mrs. Clinton, in her love for secrecy and control, has given ammunition to her enemies. But that’s not the story. The story is that this is what she does, and always has. The rules apply to others, not her. She’s special, entitled, exempt from the rules – the rules under which, as the Federalist reports, the State Department in 2012 forced the resignation of a U.S. ambassador, ‘in part for setting up an unsanctioned private email system.’

“Why doesn’t the legacy press swarm her on this? Because she is political royalty. They are used to seeing her as a regal, queenly figure. They’ve been habituated to understand that Mrs. Clinton is not to be harried, not to be subjected to gotcha questions or impertinent grilling....

“In 1992 the Clintons were new and golden. Now, so many years later, their reputation for rule breaking and corruption is so deep, so assumed, that it really has become old news. And old news isn’t news....

“What is freezing the Democrats is her mystique. But mystique can be broken. A nobody called Obama broke hers in 2008.

“Do we really have to return to Scandal Land? It’s what she brings wherever she goes. And it’s not going to stop.”

--But wait...there’s more!

Michael Goodwin / New York Post

“On top of her tactical blunders, there was an overarching reason why sure victory eluded Hillary Clinton in 2008. She simply was not a very appealing candidate, offering neither charisma nor a compelling message. She ran with a sense of entitlement that the Oval Office was owed to her.

“If anything has changed, it’s a well-kept secret.  Already, her run this time is marked by mistakes, gaffes and reports of ethical corner-cutting, which adds up to watching the same bad movie twice. [Ed. Goodwin wrote his column prior to the revelation on the emails.]....

“To describe her four-year tenure (at State) as empty of accomplishment doesn’t do justice to the damage. She was complicit in the foreign-policy disasters now erupting around the world.

“Remember her clever Russian reset? Benghazi, Syria, Egypt, Iraq, Iran, Israel, China – the list of things that got worse on her watch is long, while it is a challenge to name one significant advance in America’s favor.

“That record is who she is. Once viewed as a smart, passionate woman whose brilliance would shine when she was liberated, she is, at 67, getting long in the tooth to be talked of in terms of potential.”

Lastly, as I go to post the State Department is reviewing “whether work emails sent from Clinton’s personal account included sensitive information that is typically required to be handled on a system that meets security protocols,” as reported by the Washington Post.

--Sen. Rand Paul (R-Ky.) won the Conservative Political Action Conference (CPAC) straw poll last weekend for a third year in a row with 26% of the vote, down from 31% in 2014. Wisconsin Gov. Scott Walker finished second at 21%. Sen. Ted Cruz (Tex.) finished third with 11.5%. Jeb Bush was fifth with 8.3%, behind Dr. Ben Carson’s 11%.

--Whit Ayres / Wall Street Journal

“Republicans stand a slim chance of winning the presidency in 2016 – unless they nominate a transformational candidate who can dramatically broaden the GOP’s appeal. That assertion may seem incongruous in light of stunning Republican triumphs in the past two midterm elections. But success in 2014 no more indicates the outcome of the 2016 presidential election than victory in 2010 foretold the presidential winner in 2012.

“The continuing problem for the Republican Party is the country’s changing demographics. GOP congressional candidates won 60% of white voters in 2010 and 2014, producing landslide victories. The calculation works differently in presidential elections, however, when turnout is higher, particularly among minorities. In 2012, Republican presidential nominee Mitt Romney won 59% of white voters, the highest percentage of any Republican challenging an incumbent president in the history of exit polling. He won every significant white subgroup – men and women; young and old; Protestants and Catholics – often by overwhelming margins. Yet Mr. Romney still lost the election by five million votes.

“Barack Obama won because he achieved breathtaking majorities among every other racial group. The president won 93% of African-Americans and more than 70% of Hispanics and Asians. As a result, the first African-American president won re-election with only four out of 10 white voters.”

Bottom line, with the trends in place, the 2016 electorate will be about 69% white and 31% nonwhite. Whites accounted for 88% of the electorate in 1976, 72% in 2012.

“In 2012, Mr. Obama won 39% of the white vote and 82% of the nonwhite vote on the way to a 51.1% re-election victory. If the 2016 Democratic nominee can hold the same share of the white vote, he or she could win with only 75% of nonwhites.”

We’ll see how the scandals play out with Hillary, but she would win more of the white vote in all likelihood. Whit Ayres adds: If she can push her support among whites up to 42%, she will need only 68% of the nonwhite vote to win the presidency. That is far lower than even the 73% of nonwhites John Kerry carried in 2004.”

--The House passed legislation fully funding the Department of Homeland Security through September, the end of the fiscal year. House Speaker John Boehner ticked off a vast majority of his own caucus by giving into Democratic demands that this was the only way to avoid a shutdown. The vote was 257 to 167, with the support of all Democrats who voted but just 75 Republicans.

Many Republicans have been seeking to overturn President Obama’s executive actions on immigration and they gained no concessions.

So with other big items on the docket, including funding for federal highway programs and a budget resolution this spring, Boehner faces a huge leadership challenge.

Kathleen Parker / Washington Post

“Insisting that Homeland Security funding be attached to the president’s executive actions to curtail deportations of immigrants here illegally – a predictably losing gamble for Republicans – was a touchdown for the other team.

“Once again, Democrats were handed the opportunity to point out that Republicans aren’t in town to govern. They’re in town to lose....

“Whether this solution changes public perception sufficiently – and whether it can hold up through the Republican primary process – is yet to be seen. In the meantime, what we do know is that a Republican can’t win the presidency if the party more widely is considered not ready for prime time.

“Without the 40 percent of the Hispanic vote widely considered necessary to win – and enough independents and moderates who are turned off by the more-righteous-than-thou Freedom Caucus [Ed tea party faction] – a Republican doesn’t stand a chance.”

--The CIA is creating a special division to conduct digital espionage. The new directorate will try to penetrate the ranks of foreign hackers and state sponsors of terror who try to sabotage crucial U.S. infrastructure. Additionally, the unit will help American spies overseas cover their tracks.

--The fate of ObamaCare is once again seemingly in the hands of the Supreme Court, which seemed divided as ever during heated arguments on Wednesday pertaining to whether 7-8 million low- and middle-income people in some three dozen states will continue to receive subsidies to help them buy health insurance.

If the court rules the subsidies were not authorized by the ACA, most in this group would no longer be able to afford insurance. Then the exchanges in those impacted states would collapse and with it, probably ObamaCare. At least that’s the theory.

But once again it will be up to Chief Justice John Roberts or Justice Anthony Kennedy and we’ll find out most likely in late June. 

--This week, Ben Carson launched his presidential exploratory committee as he seeks the Republican nomination. But the same day he was asked by CNN’s Chris Cuomo if he believes being gay was a choice and Dr. Carson replied: “Absolutely.”

“Because a lot of people who go into prison go into prison straight – and when they come out, they’re gay,” he told CNN. “So, did something happen while they were in there? Ask yourself that question.”

Carson apologized later that day, noting in part on Facebook: “I answered a question without really thinking about it thoroughly. No excuses. I deeply regret my statement and I promise you, on this journey, I may err again, but unlike politicians when I make an error I will take full responsibility and never hide or parse words.”

--Since 2004, New Jersey has been battling with Exxon Mobil Corp. over decades of environmental contamination in the northern part of the state, but news hit the other day that what had been an $8.9 billion claim was settled for about $250 million. The New York Times then reported that, according to a past commissioner of New Jersey’s Dept. of Environmental Protection, Bradley Campbell, Gov. Chris Christie’s chief counsel, Christopher S. Porrino, “inserted himself into the case, elbowed aside the attorney general and career employees who had developed and prosecuted the litigation, and cut the deal favorable to Exxon,” as Campbell stated in an op-ed for the paper.

The settlement came just two months after the attorney general’s office argued in a court brief for the $8.9 billion, saying, “The scope of the environmental damage resulting from the discharges is as obvious as it is staggering and unprecedented in New Jersey.”

This is yet another potential black mark against the governor and state senate Democrats are all over this seemingly sweetheart settlement, the reasons for which are not totally clear. As a lifelong resident of Jersey, the environmental damage inflicted by some of our industries has been immense.

--Meanwhile, the aforementioned New Jersey Democratic Sen. Robert Menendez is soon to be indicted, according to numerous reports, as federal investigators prepare to file charges for corruption, based on a years-long probe centering around his travel with a Florida doctor, and allegations on at least one occasion that he may have had a tryst with an underage prostitute in the Dominican Republic.

But the main issue is the senator’s financial connections to the doctor, who is facing an unrelated probe into his billing practices, and whether Menendez improperly sought to help the doctor in that case.

I’m conflicted. As a Republican I didn’t like the senator, initially, and viewed him as being corrupt from the get-go. But I admire his stances on U.S. foreign policy and, don’t tell anyone, but for now I’m willing to forgive any past transgressions if he can help do the right thing regarding Iran. [Now please delete this last item so it doesn’t go on my permanent cyber record.]

--Sen. Marco Rubio (R-Fla.) and Sen. Mike Lee (R-Utah) floated a tax reform proposal we can all dream about, a true effort to simplify the tax code, which I imagine if I live another 30 years I’ll be writing the same thing then. But it’s what’s needed. As reported by Mark Schoeff Jr. of Investment News:

“(The plan) would establish two individual tax rates – 15% for incomes up to $75,000 and 35% for earnings above that level – and would eliminate all tax deductions except those for mortgage interest and charitable giving.

“The plan also would end the estate tax and taxation of capital gains and dividends. On the corporate side of the tax ledger, it would consolidate all business taxes into a 25% rate, a ceiling that also would apply to businesses that pay taxes through their owner’s personal income tax return.

“The senators put the plan out as a white paper and hope to turn it into legislation as Congress begins to debate comprehensive tax reform.”

--Maryland Democratic Sen. Barbara Mikulski, the longest-serving woman in congressional history, announced she will retire in 2016. She’s in good health and I do like her comment: “Do I spend my time raising money? Or do I spend my time raising hell?”

Mikulski added, “There’s nothing gloomy about this announcement. I’m not frustrated with the Senate.”

I probably agreed with 10% of Mikulski’s views over the years, but even her detractors have to admit one thing. She was the epitome of what you want a United States Senator to be.

--Ferguson, Missouri police officer Darren Wilson was cleared of civil rights violations in the shooting of Michael Brown last August that touched off violent protests. After a lengthy investigation the Justice Department rejected the popular myth that developed that Mr. Brown had his hands up and reached the same conclusion a state grand jury did in November. The Justice Department investigation said forensic evidence and other witnesses backed up Officer Wilson’s account of that day...that Brown fought with him, reached for his gun, then moments later charged at him.

The report said: “There is no evidence upon which prosecutors can rely to disprove Wilson’s stated subjective belief that he feared for his safety.”

As to the witnesses who claimed that Brown was surrendering, the report concluded: “Some of those accounts are inaccurate because they are inconsistent with the physical and forensic evidence; some of those accounts are materially inconsistent with that witnesses’ own prior statements with no explanation.

“Although some witnesses state that Brown held his hands up at shoulder level with his palms facing outward for a brief moment, these same witnesses describe Brown then dropping his hands and ‘charging’ at Wilson,” it added.

“Those witness accounts stating that Brown never moved back toward Wilson could not be relied upon in a prosecution because their accounts cannot be reconciled with the DNA bloodstain evidence and other credible witness accounts.”

At the same time, the Justice Department issued a separate report on the broader civil rights investigation involving the Ferguson Police Department and that was damning, revealing a wide pattern of discrimination by the police force.

Attorney General Eric Holder Jr. said in a statement: “It is time for Ferguson’s leaders to take immediate, wholesale and structural corrective action.” [Matt Apuzzo / New York Times]

--New York City Mayor Bill de Blasio has added two Muslim holy days (Eid al-Fitr and Eid al-Adha) to the school calendar, pleasing Muslim activists who have long sought this. New York thus becomes the first metropolis to do so.

De Blasio had pledged to do this during his campaign. His predecessor, Mayor Michael Bloomberg, rejected the idea, saying schoolchildren needed more time in the classroom, not less.

Of course you can imagine how there is now a little uproar in the Chinese community to close schools on the Lunar New Year.

Many of us would like to see two other holidays be recognized on a nationwide basis: Opening Day and the Monday after the Super Bowl. If elected president.....

--More weather news, specifically, just how awful February was. Here in New Jersey, it turned out to be the third coldest on record (121 years of records), statewide...the sixth coldest month overall.

For the meteorological winter (December to February), it was the coldest here since 1994.

Alas, finally, next week we get some ‘normal’ March temperatures.

--Meanwhile, out west, Squaw Valley, California (think Lake Tahoe), through Wednesday had received just 38 inches of snow at its 6,200-foot base, compared with 275 inches by that date during the last big snow season four years ago. Some of the golf courses are open, months earlier than usual.

--Finally, I note the passing of Cardinal Edward Egan, 82. I was there in Rome when he was elevated to Cardinal, 2001, though I was a guest of Cardinal Avery Dulles, and totally thrilled to be there at the same time for the elevation of Cardinal Theodore McCarrick, who I communicated with when he was Archbishop of Newark. Love that man. [My two prized possessions are pictures of myself with Dulles and McCarrick.]

Egan took over from the late, beloved Cardinal O’Connor, whose funeral I attended. Man, O’Connor was all New York...terrific. 

Egan did his best, amid severe financial issues and scandal.

His successor, Timothy Dolan, is wonderful.

I was born and raised a Catholic and always will be. Oh, I haven’t been the greatest one the past 12 years or so, but I think God will take me in at the end of my days. I’m hoping to see Gil Hodges.

---

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

God bless America.
---

Gold closed at $1164
Oil $49.61

Returns for the week 3/2-3/6

Dow Jones -1.5% [17856]
S&P 500 -1.6% [2071]
S&P MidCap -1.3%
Russell 2000 -1.3%
Nasdaq -0.7% [4927]

Returns for the period 1/1/15-3/6/15

Dow Jones +0.2%
S&P 500 +0.6%
S&P MidCap +2.3%
Russell 2000 +1.1%
Nasdaq +4.0%

Bulls 58.7
Bears 14.1

Dr. Bortrum posted a new column.

Have a great week. I appreciate your support.

Brian Trumbore