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03/14/2015

For the week 3/9-3/13

[Posted 12:00 AM ET]

Edition 831

Washington and Wall Street

This coming week there is one big story when it comes to the markets and that is the Federal Reserve’s Open Market Committee meeting, March 17-18, with Chair Janet Yellen holding a press conference after it wraps up. It’s all about whether the Fed drops the word “patient” from its accompanying statement and just a week or two ago it seemed a certainty the Fed would, thus laying the groundwork for its first rate hike since the Stone Age, perhaps as early as June.

The jobs numbers have been strong, after all, with the unemployment rate all the way down to 5.5%, and the prospect that wages, a lagging indicator, will increase in coming months. It was a pretty simple equation.

Or was it? Lately, in terms of the stock and bond markets it’s been about two things, the rising dollar and a renewed collapse in the oil price.

Falling oil can be disconcerting, even as it’s a boon to consumers, as profits in the energy sector crater and jobs are lost in what had been the prime engine of growth for the U-S-of-A, while the soaring dollar is doing a number on U.S. multinationals, particularly those with large European exposures. The euro currency has plunged from $1.40 last year to $1.04 on Friday and U.S. corporate profits are getting hit hard. We saw signs of this with the release of the fourth-quarter earnings reports. Imagine what the same multi-nationals will say in mid-April about their first-quarter results and the impact of the rising dollar on their business across the pond.

It’s estimated that corporate profits for the S&P 500 will fall 3.8% in Q1 and another 1.9% in Q2, according to Thomson Reuters*, so that certainly isn’t going to be good for stocks.

*Bloomberg forecasts declines of 5.3% and 3.5%, respectively.

But at the same time as interest rates stay low here, helped in no small part by European investors looking to our shores for more competitive yields (vs. what you’ll see below being offered in euroland), you would think this would limit the damage to U.S. equities.

Meanwhile, while the amount of economic data this week, including in Europe, was on the light side, the two big releases here definitely give the Fed further pause when it comes to their confab.

February retail sales fell 0.6% when a gain of 0.4% was expected, the third straight month of declines despite cheaper gas and an improving labor outlook. Consumers just remain cautious; plus the weather truly sucked for a large population group.

And then you had producer prices for February, down 0.5%, and down a like amount on the core, ex-food and energy, the fourth straight decline for this metric. Year over year the PPI is down 0.7%, up 1.0% ex- the stuff we consume.

Ergo...we shouldn’t be surprised if the Fed leaves in “patient.” 

I haven’t called on the following for his thoughts in quite a while....

Paul Krugman / New York Times

“We’ve been warned over and over that the Federal Reserve, in its effort to improve the economy, is ‘debasing’ the dollar. The archaic word itself tells you a lot about where the people issuing such warnings are coming from. It’s an allusion to the ancient practice of replacing pure gold or silver coins with ‘debased’ coins in which the precious-metal content was adulterated with cheaper stuff. Message to the gold bugs and Ayn Rand disciples who dominate the Republican Party: That’s not how modern money works. Still, the Fed’s critics keep insisting that easy-money policies will lead to a plunging dollar.

“Reality, however, keeps declining to oblige. Far from heading downstairs to debasement, the dollar soared through the roof. (Sorry). Over the past year, it has risen 20 percent, on average, against other major currencies; it’s up 27 percent against the euro. Hooray for the strong dollar!

“Or not. Actually, the strong dollar is bad for America. In an immediate sense, it will weaken our long-delayed economic recovery by widening the trade deficit. In a deeper sense, the message from the dollar’s surge is that we’re less insulated than many thought from problems overseas. In particular, you should think of the strong dollar/weak euro combination as the way Europe exports its troubles to the rest of the world, America very much included....

“U.S. growth has improved lately, with employment rising at a pace not seen since the Clinton years. Yet the state of the economy still leaves a lot to be desired. In particular, the absence of much evidence for rising wages tells us that the job market is still weak despite the fall in the headline unemployment rate. Meanwhile, the returns America offers investors are ridiculously low by historical standards, with even long-term bonds paying only a bit more than 2 percent interest.

“Currency markets, however, always grade countries on a curve. The United States isn’t exactly booming, but it looks great compared with Europe, where the present is bad and the future looks worse....many European bonds are now offering negative interest rates.

“This remarkable situation makes even those low, low U.S. returns look attractive by comparison. So capital is heading our way, driving the euro down and the dollar up.

“Who wins from this market move? Europe: a weaker euro makes European industry more competitive against rivals, boosting both exports and firms that compete with imports, and the effect is to mitigate the euroslump. Who loses? We do, as our industry loses competitiveness, not just in European markets, but in countries where our exports compete with theirs....

“In effect, then, Europe is managing to export some of its stagnation to the rest of us....

“And the effects may be quite large....

“One thing that worries me is that I’m not at all sure that policy makers have fully taken the implication of a rising dollar into account. The Fed, still eager to raise interest rates despite low inflation and stagnant wages, seems to me to be too sanguine about the economic drag....

“Is there a policy moral to all this? One thing is that it’s really important for all of us that Mario Draghi at the European Central Bank and associates succeed in steering Europe away from a deflationary trap; the euro is their currency, but it turns out to be our problem. Mainly, though, this is another reason for the Fed to fight the urge to pretend that the crisis is over. Don’t raise rates until you see the whites of inflation’s eyes!”

Europe and Asia

The European Central Bank started its policy of quantitative easing (QE) this week, the purchase of sovereign debt across the eurozone, as the ECB prints euros to buy the paper, which ECB President Mario Draghi said will be the case through September 2016, at least. Bond yields in euroland hit new all-time record lows.

Following are representative 10-year yields, March 6, prior to QE, and March 13, one week into the operation.

Germany 0.39% (March 6)...0.26% (March 13)...Wednesday closing low of 0.20%
France 0.69%...0.50%
Italy 1.31%...1.15%
Spain 1.29%...1.14%
Portugal...1.74%...1.53%
Greece 9.09%...10.43%...more in a bit

*non-euro Britain 1.95%...1.71%
U.S. 2.24%...2.11%

Nothing like a highly motivated buyer in the ECB to juice prices and lower yields.

Meanwhile, the euro hit a 12-year low vs. the dollar, 1.04, which we now know is great for European exporters, who are beginning to make very bullish statements on the future impact on earnings, while since foreign goods coming into Europe are more expensive, the ECB hopes this will give inflation a boost. [Conversely, those from the U.S. traveling to Europe get a huge boost of their own.]

As for Greece, time is running out. Greece must pay down some large chunks of debt in the next two weeks or face default.

Prime Minister Alexis Tsipras tried to reassure his eurozone partners that his country would stick to its extended bailout agreement reached just a few weeks ago.

Tsipras said, “There is no reason for concern...even if there is no timely disbursement of a (loan) tranche, Greece will meet its obligations,” he told reporters at a meeting of the Organization for Economic Cooperation and Development.

“We are here in order for the OECD to put its stamp on the reforms that the Greek government wants to push on with and I believe that this stamp in our passport will be very significant to build mutual trust with our lenders.”

[Tsipras wants to restructure Greece’s mountain of debt, but the eurozone nations have said there is no question of writing off any of it, though they are open to loan extensions if Athens implements required reforms.] 

But this soothing tone was in stark contrast to the words exchanged by Greek Finance Minister Yanis Varoufakis and German Finance Minister Wolfgang Schaeuble.

Schaeuble denied having called Varoufakis “foolishly naïve,” as reported by Greek media. Schaeuble recounted a private meeting with Varoufakis this week, telling reporters in Brussels: “He said to me ‘The media are dreadful.’ So I said: ‘Yes but the first impression you made on us was that you were stronger at communication than on substance. That may have been a mistake.’”

So then the Greek government reopened the issue of World War II reparations, which is supposed be a closed issue per the 1990 treaty that reunited East and West Germany; a pact signed by the four powers that occupied Germany and the OECD, of which Greece is a member.

German Foreign Minister Frank-Walter Steinmeier said “there won’t be a reopening of this debate on reparations.”

Greece said the 1990 agreement does not preclude further reparations and it’s a topic that still needs to be addressed.

Tsipras said in a speech this week, “We will approach this matter with the sensitivity that is required, with a sense of responsibility, with honesty, and with an attitude that supports understanding and dialogues. We expect the same from the German government – for political, historical, symbolic, and moral reasons.” [Bloomberg News]

This is nuts.

The ECB did once again raise the limit on emergency lending assistance to Greece’s banks, which is keeping them afloat.

But as Eurogroup (the group of finance ministers) chairman Jeroen Dijsselbloem said of Greece, “It seems their money box is almost empty.

Varoufakis said last Sunday, “I can only say that we have money to pay salaries and pensions of public employees. For the rest we will see.”

Alexis Tsipras said a referendum could be on the table, asking the question of the Greek people, “Do you want your dignity or a continuation of this unworthy policy (referring to the bailout terms), then everyone would choose dignity regardless of difficulties that would accompany that decision.” 

Which means leaving the eurozone...a Grexit.

Among the Greek electorate, the approval rating of the new government is down to 64% from 84% in February.

George Pagoulatos, a professor of European politics and economy at Athens University, summed up Tsipras’ dilemma.

“Maintaining the unity of the anti-bailout coalition, while striking a deal which would ease the immense pressure on the economy, is proving to be almost a ‘Mission Impossible.’” [Heather Harris / Bloomberg News]

Referring to the negotiations of the past few weeks between the creditors and Greece, post-four-month bailout extension, Jeroen Dijsselbloem said they have been a “complete waste of time. So the question arises: how serious are they?”

Just a few other EU tidbits....

--French industrial production for January was up 0.4% month on month, better than expected.

--U.K. manufacturing output fell 0.5% in January, but is up 0.4% for the 3-months thru the month. GDP is estimated at 2.7% for 2015.

--And hats off to Ireland on the eve of St. Patrick’s Day as the Central Statistics Office said the Irish economy grew by 4.8% in 2014, the fastest pace in seven years, outstripping any other European country; actually, five times that of the 0.9% rate for the eurozone as a whole.

Turning to Asia...the news out of China was not good. Due to the Lunar New Year holiday, which this year was in February, China’s National Statistics Bureau lumps January and February together to avoid distortions with the prior year (such as the holiday falling in January).

So for Jan. and Feb. factory production was up only 6.8% over the same two months in 2014. Retail sales were up 10.7%. Fixed-asset investment up just 13.9%; all three less than expected and a further sign of slowing.

In fact this is the slowest start to a year since 2009. Factory production is measured against a 7.9% hike in December, year on year; retail sales were up 11.9% in December, and the fixed-asset figure compares with 15.7% for all of 2014, which in turn was the weakest since Dec. 2000.

Exports did come in for Jan. and Feb. up 15%, better than expected, so this is good, while imports fell 20% due to sharp drops in commodity prices.

Another sour note...the value of property sales for the first two months of 2015 was down 15.8% from a year earlier.

Separately, consumer prices for February rose 1.4% year over year, an improvement from the 0.8% pace in January, but still well below the government’s 3% target.

Producer or factory gate prices fell 4.8% in February, which means prices have now declined, monthly, for three full years.

In Japan, fourth-quarter GDP was revised down to 1.5% from an initial estimate of 2.2% owing to the fact inventories shrunk, but household consumption was revised upwards to 2.0% from 1.1%, and this is good.

The Tokyo Nikkei stock index also hit a 15-year high.

Philip Stephens / Financial Times

“The West has a new industry. It is the booming business of calculating geopolitical risk. Glance around the world at the fires burning in the Middle East, at Russia’s march into Ukraine and the tensions in East Asia fuelled by China’s rise, and it is easy to see why. These conflicts and collisions are more than an unhappy coincidence. The end of history has made way for the era of systemic disorder...

“The optimism in the West that greeted the collapse of communism was rooted in a clutch of organizing assumptions. The world has become a more dangerous and unpredictable place during the intervening 25 years because most of these suppositions have now unwound.

“The first was the permanence of the Pax Americana. Remember the breathless commentary about the impregnable hegemony of the U.S.? At the turn of the millennium Washington assumed, and most experts concurred, that the sole superpower would set the terms of international relations for most of the 21st century. There would be adjustments to accommodate the new powers, but the U.S. would continue to act as guarantor of the peace.

“The historians no doubt will debate when precisely the illusion was shattered. The chaos that followed shock and awe in Iraq is as good a point as any....

“The second unwinding has been in Europe. The creation of the euro was intended to complete the work of the EU’s founding fathers, replacing the deep scars of competing nationalisms with a postmodern model of deep integration. Europe’s borders had been fixed in perpetuity and the continent had said goodbye to war.

“The thought, too, was that Europe’s postwar model would be exported, first to the EU’s neighbors in the east and then as a template for the rising world. For a while it worked: a procession of once-communist states queuing to join the democratic club testified to the potency of normative power....

“And now? The euro has been exposed as a half-finished project, a statement of intent that lacks vital political and economic underpinnings.... The resurgence of nationalism is not confined to arguments about debt and deficits. Populists of left and right have prospered across Europe by demanding governments slam the door against the alleged depredations of globalization.

“There lies the third unwinding – of the assumption that economic interdependence would soften national competition and that global supply chains would beget more effective global governance. Instead we have seen the return of nationalist competition, in Russian President Vladimir Putin’s revanchism, and in the territorial disputes between China and its neighbors in the East and China seas....

“As they operate their multi-nation supply chains and just-in-time production processes, businesses should understand that the world has changed. The cold war era was dangerous but stable. The great unwinding has created a world that is dangerously unpredictable. If there is money to be made in calculating geopolitical risk, there is money to be saved in understanding it.”

Finally, who wants to talk about nuclear war? The other day The Economist’s lead editorial was on the topic. I’ve been freely saying for months there will be a nuclear scare this year, a serious threat from Putin or whoever replaces him.

“Within the next few weeks, after years of stalling and evasion, Iran may at last agree to curb its nuclear program. In exchange for relief from sanctions it will accept, in principle, that it should allow intrusive inspections and limit how much uranium will cascade through its centrifuges. After 2025 Iran will gradually be allowed to expand its efforts. It insists these are peaceful, but the world is convinced they are designed to produce a nuclear weapon....

“Benjamin Netanyahu...fulminated against the prospect of such a deal (in his speech to Congress)....

“Mr. Netanyahu is wrong about the deal. [Ed. more below] It is the best on offer and much better than no deal at all, which would lead to stalemate, cheating and, eventually, the dash to the very bomb he fears. But he is right to worry about nuclear war – and not just because of Iran. Twenty-five years after the Soviet collapse, the world is entering a new nuclear age. Nuclear strategy has become a cockpit of rogue regimes and regional foes jostling with the five original nuclear-weapons powers (America, Britain, France, China and Russia), whose own dealings are infected by suspicion and rivalry.

“Thanks in part to Mr. Netanyahu’s efforts, Iran commands worldwide attention. Unfortunately, the rest of the nuclear-weapons agenda is bedeviled by complacency and neglect....

“Some countries want nuclear weapons to prop up a tottering state. Pakistan insists its weapons are safe, but the outside world cannot shake the fear that they may fall into the hands of Islamist terrorists, or even religious zealots within its own armed forces. When history catches up with North Korea’s Kim dynasty, as sooner or later it must, nobody knows what will happen to its nukes – whether they might be inherited, sold, eliminated or, in a last futile gesture, detonated.

“Others want nuclear weapons not to freeze the status quo, but to change it. Russia has started to wield nuclear threats as an offensive weapon in its strategy of intimidation. Its military exercises routinely stage dummy nuclear attacks on such capitals as Warsaw and Stockholm. Mr. Putin’s speeches contain veiled nuclear threats. Dmitry Kiselev, one of the Kremlin’s mouthpieces, has declared with relish that Russian nuclear forces could turn America into ‘radioactive ash.’

“Just rhetoric, you may say. But the murder of Boris Nemtsov, an opposition leader, on the Kremlin’s doorstep on February 27th was only the latest sign that Mr. Putin’s Russia is heading into the geopolitical badlands. Resentful, nationalistic and violent, it wants to rewrite the Western norms that underpin the status quo. First in Georgia and now in Ukraine, Russia has shown it will escalate to extremes to assert its hold over its neighbors and convince the West that intervention is pointless. Even if Mr. Putin is bluffing about nuclear weapons (and there is no reason to think he is), any nationalist leader who comes after him could be even more dangerous.”

Just as I’ve been saying...now who wants a beer?

Street Bytes

--Another down week for the major averages as the Dow Jones lost 0.6% to 17749, while the S&P 500 fell 0.9% and Nasdaq 1.1%. The Dow and S&P now have fractional losses for the year while Nasdaq is still up nearly 3%.

Monday marked the six-year anniversary of the market lows, March 9, 2009. Since then the S&P is up 204%.

--U.S. Treasury Yields

6-mo. 0.11% 2-yr. 0.66%  10-yr. 2.11% 30-yr. 2.70%

Volatility continues in the bond pits with the yield on the 10-year falling 13 basis points from 2.24% the prior week.

--The Treasury Department revealed the budget deficit narrowed in February from a year earlier from $193.5 billion to $192.3 billion. For the first five months of the fiscal year that begins Oct. 1, the deficit is $386.5 billion compared with $376.4 billion from Oct. 2013 through Feb. 2014.

The Congressional Budget Office estimates the full year deficit (thru Sept. 30) will be $486 billion, or 2.7 percent of GDP, down from 9.8 percent in 2009. I think they will be wrong...$500bn+.

--The Federal Reserve reported that net worth for households rose by $1.5 trillion in the fourth quarter, or 1.9% from the prior three months, to $82.9 trillion.

--For the first time since the Federal Reserve started ‘stress tests’ for the nation’s banks, the Fed approved every U.S. bank’s capital plan, paving the way for higher dividends and share buybacks.

But the Fed vetoed the capital plans of the U.S. operations of Deutsche Bank and Santander; respectively the largest banks in Germany and Spain. The two were found to have serious deficiencies in risk management and capital planning. Santander has failed what is called the Comprehensive Capital Analysis and Review (CCAR) two years in succession. 

Meanwhile, Citigroup passed the CCAR after failing last year. Had it done so again, CEO Mike Corbat would have been history by his own admission.

Some of the U.S. banks did have to adjust their capital-distribution plans to win approval, such as Goldman Sachs, JPMorgan Chase and Morgan Stanley. Bank of America only received ‘conditional’ approval, so it needs to make further adjustments to its risk-management procedures by the third quarter.

--Credit Suisse is dumping CEO Brady Dougan, replacing him with Tidjane Thiam, 52, the current CEO of Britain’s Prudential insurance group, which he has led since 2009. Thiam is from the Ivory Coast and has never worked in banking, but is highly respected. He becomes just the second black chief executive of a global bank; Stanley O’Neal, who led Merrill Lynch for four years up to 2007, being the other.

Dougan, 55, led Credit Suisse through the financial crisis, but he was criticized for failing to see some of the changes in investment banking, bungling a number of attempts at overhauling the business.

--Canada’s unemployment rate jumped to a five-month high in February to 6.8% from 6.6%, as the oil shock impacts jobs in the most important sector for the Canadian economy. Alberta, home to the bulk of Canada’s oil production, posted a decline of 14,000 jobs in the month.

--Intel Corp. said first-quarter sales may miss its previous forecast by more than $1bn, not a small deal, due to weak corporate demand and ongoing sluggishness in Europe.

The corporate upgrade cycle appears to have run its course after a solid 2014. Seeing as Intel supplies chips for more than 80 percent of PCs, this doesn’t bode well for Microsoft, which had been helped by corporations upgrading to replace obsolete Windows XP software. Shares in both companies fell on the news Thursday.

--Apple unveiled its new Apple Watch on Monday, with some models going for thousands of dollars in what immediately becomes the highest profile wearable device to date.

CEO Tim Cook said: “Apple brings a whole new personal dimension in timekeeping that’s never been done before.

“It’s a revolutionary new way to communicate with others and it’s a comprehensive fitness companion. There will be some great third party apps... When you unleash that creativity it’s incredible.”

The Watch will have a battery life of 18 hours and is slated to go on sale in the U.S. and eight other countries on April 24.

I’ll pass.

--As reported by Adrian Wan of the South China Morning Post:

“If imitation is the sincerest form of flattery, Shenzhen is devoutly paying homage to Apple with several companies launching clones of the Apple Watch ahead of its release next month.

“The fact that such devices are on the market so early – some companies launched their Apple Watch imitator months ago – underscores the speed at which Chinese shanzhai (knock-off) manufacturers are able to bring copies to the market.”

But some of the watches have unexpected features not found on the official device. One, mainland-based company Zeaplus, has an aluminum-bodied Zeaplus Watch that “could easily be mistaken for an Apple product if you don’t get past its appearance and try out its functions.

“It has a 2 megapixel camera at the bottom of the watch that can be taken off when you want to take a photograph, according to the company’s website, which markets the watch as a covert spying device.”

This particular watch also has a pedometer for counting steps and a heart rate sensor.

“Since the early 2000s, companies in Shenzhen have been the center of the mainland’s shanzhai industry, which churns out electronic goods that imitate well-known brands very quickly – concept to delivery is often achieved within weeks – and very cheaply, often at less than half the price of the genuine product.”

And they undoubtedly shanzhai U.S. aircraft carriers and fighter jets, too, mused your editor.

--According to Chinese media reports, Tesla Motors is slashing 30% of its workforce in China, about 180 jobs, owing to putrid sales. One analyst said just 2,500 Teslas were sold in the nine months last year the automaker was delivering its cars to Chinese customers. 2015 thus far looks like Tesla is on track for 5,000 to 6,000 extrapolating out numbers given by research firm JL Warren.

Tesla had been shipping in 500 to 700 Model S cars a month but selling only in the mid-400s.

--According to the New York state comptroller, Wall Street bonuses rose 2% last year to about $173,000. Those at Goldman Sachs and Morgan Stanley fell 5%. After two years of declines, the securities industry in Gotham added 2,300 jobs, though remains 20,000 below the pre-crisis peak.

How important is Wall Street to state tax collections? Try 19% of all collections and 21% of all private-sector wages paid in the city. [Aaron Elstein / Crain’s New York Business]

--As reported by the Wall Street Journal’s Christopher M. Matthews on Friday, “Federal prosecutors and the (FBI) are probing potential manipulation of Herbalife Ltd. stock and have interviewed people hired by hedge-fund billionaire William Ackman, who has led a long-running campaign against the nutritional-products company, people familiar with the matter said.”

Neither Mr. Ackman nor his firm, Pershing Square Capital Management LP, have been subpoenaed or visited by FBI agents in connection with the probe to date.

This goes back to an initial campaign against the company that Ackman launched in December 2012 and the myriad of people he hired to feed regulators stories on Herbalife’s business practices and thus spur investigations that would impact the share price.

Friday, Herbalife shares rallied 8% on the Journal report.

--Ericsson, the world’s largest maker of telecoms equipment will eliminate 2,200 jobs in Sweden as part of a massive cost-cutting initiative, the bulk of the cuts being in research and development. Ericsson employed 118,000 globally at the end of 2014, with 17,600 in Sweden alone. The company is turning away from the commoditized parts of the business to focus on key growth areas.

--Target is laying off 1,700 employees at its headquarters in Minneapolis, as well as another 1,400 open positions; the announcement coming a week after the retailer said it would cut more than 2,000 jobs over the next two years. Employees will get 15 weeks of pay plus severance based on years with the company. [USA TODAY]

--Investors pulled $18 million out of Bill Gross’ new bond fund at Janus Capital last month, the first for it since his departure last September from PIMCO, not a good sign. Of the fund’s $1.44bn, half is Gross’ own money.

--Shares in Disney soared $4 to $107 on Thursday, an all-time high, after CEO Bob Iger’s announcement at an annual shareholder meeting that “Star Wars: Episode VIII” will be released in the spring of 2017, while talking of a new “Frozen” flick. The first one has taken in $1.3 billion at the global box office, plus another $1 billion in related merchandise.

--A senior Russian lawmaker, Alexei Pushkov, the head of the Russian parliament’s foreign affairs committee, said McDonald’s and Coca-Cola should leave the Russian market because of Washington’s clash with Moscow over Ukraine, but former Finance Minister Alexei Kudrin defended the two.

“If high-tech U.S. companies limit their supplies because of political pressure from a few deputies, it will really hit Russian industry.”

Kudrin added the withdrawal of the companies would harm the local workforce and domestic suppliers.

“It seems Mr. Pushkov does not know that 85 percent of raw produce delivered to McDonald’s comes from more than 160 Russian companies,” Kudrin said on Twitter. “Coca-Cola buys more than 75 percent of its raw materials in Russia. Thousands of people would be left without jobs – a great anti-crisis program.” [Moscow Times]

--But speaking of McDonald’s, it reported more dreadful news on the sales front for the month of February, with global sales dropping 1.7% in the month, much worse than forecast, and sales dropping a whopping 4% in the U.S., 4.4% in the Asia-Pacific. They were up slightly in Europe.

The shares, however, hung in there because new CEO Steve Easterbrook is in his honeymoon period, after Don Thompson’s rocky three years at the helm.

--I forgot to include the story last week of Amgen Inc. and the FDA’s approval of a competitor’s knockoff version of Amgen’s leading chemotherapy recovery drug, Neupogen; the FDA’s first approval of a so-called biosimilar in the U.S.

Amgen and other “biologic makers” face fierce competition and the approved knockoff – Zarxio, made by Sandoz, a unit of Novartis, is one of four drugs Amgen could lose out on to the tune of $11 billion in U.S. sales.

But Amgen will start copying competitors’ biologics as quickly as possible and could end up doing better in this vein than the revenues it is losing the other way. 

The share price, which peaked at about $159.50 the week of March 2, closed on Friday at $154.25; not a huge deal thus far.

[Consumers are the beneficiaries in this competition, which is one of the positives of the Affordable Care Act.]

--Alibaba Group Holdings Ltd. is investing $200 million in Snapchat Inc., which as Bloomberg News reports values the popular messaging and entertainment app at $15 billion. Snapchat raised $486 million late last year at a valuation of $10 billion.

--China’s movie box office rose 34 percent last year to $4.8 billion, while the U.S.-Canada box fell 5 percent to $10.4 billion, according to the Motion Picture Association of America.

The projection for China in 2017: $11.5 billion...while the U.S.-Canada, which the MPAA counts as a single market, slides to $8.9 billion. 

Analyst Paul Dergarabedian, who compiled the data for the MPAA, said “Content is being modified for that market.”

Example, “Transformers 4,” which was geared towards the China market, did $245 million box in the U.S.-Canada, but $320 million in China for Paramount. [Richard Morgan / New York Post]

--Following the damning report on “60 Minutes” March 1, shares in Lumber Liquidators Holdings Inc. crashed from $51.85 (Feb. 27 close) to $27.95 Monday, March 9. But they rallied back some to finish this week at $30.55 (though this was well off the intraday high of nearly $38) after the seller of laminate flooring with excessive levels of formaldehyde, manufactured in China (as laid out in the “60 Minutes” story) said same-store sales may fall as much as 4.4% in the first quarter, though it was impossible to gauge the impact for the full year.

The company said it will offer free, third-party testing to customers and may replace some flooring as it seeks to regain customers’ confidence. Lumber Liquidators stands by the safety of its products and said CBS used an improper procedure in testing them.

--Blackstone Group CEO Stephen Schwarzman, who made $690 million in cash and prizes in 2014, is set to become the first leader of a public company to be paid more than $1 billion in a single year. The reason Schwarzman can achieve this (last year 30 times what Goldman Sachs CEO Lloyd Blankfein earned, $24 million) is he has a slice of the gains generated by Blackstone’s leveraged-buyout funds and other investment vehicles. Right now Blackstone is invested in about 80 companies. [Aaron Elstein / Crain’s New York Business]

Mrs. Blankfein was caught on our hidden microphone during lunch at the Four Seasons with friends. “My Lloyd deserves at least $700 million for working as hard as he does!”

--It’s going to take a while, up to 39 months, but the three biggest credit-reporting agencies, Equifax, Experian and TransUnion reached an agreement with the New York State Attorney General Eric Schneiderman on coming up with a more proactive way of resolving disputes.

The credit-reporting firms will be required to train employees to review the documentation consumers send in when they believe there is an error in their files. 

It’s been a disgrace how awful this industry has been, since day one, but hopefully there will be real change.

--I saw a rating of airport hotels and #1 in the world was the Regal Airport Hotel in Hong Kong, which is where I spent a week last February. I couldn’t agree more. Shopping mall right there, five-minute walk from the terminals, IMAX theatre, restaurants, bars...newspapers! [Really, the old-fashioned kind.]

Foreign Affairs

Iran: Monday, 47 Republican senators sent a letter to Tehran’s leaders clearly designed to kill any potential nuclear arms deal. Written by Sen. Tom Cotton (R-Ark.), the letter suggests that any agreement between the president and the Iranian leadership could be undone by Congress or a future president and that it was only an “executive agreement.”

The letter states; “The next president could revoke such an executive agreement with the stroke of a pen and future Congresses could modify the terms of the agreement at any time.”

President Obama said after the letter was made public, “I think it’s somewhat ironic to see some members of Congress wanting to make common cause with the hard-liners in Iran. It’s an unusual coalition.”

Vice President Biden said it was “beneath the dignity of an institution I revere.”

Iran’s foreign minister labeled it a propaganda ploy.

In a speech to the Assembly of Experts*, Ayatollah Khamenei, responding to the open letter to Iran’s leadership that any nuclear agreement could become null and void once President Obama leaves office, said:

“Some think that the United States does not need to act cunningly or do tricks because of its political, economic and military power. But the Americans need to use tricks and deception a lot, and they are doing the same now, and this reality worries us....

“U.S. senators officially announce that when this government leaves, its commitments will become nullified. Isn’t that the ultimate collapse of political ethics and the disintegration of the U.S. system?’ [Wall Street Journal]

*Ayatollah Mohammad Yazdi is the new head of the Assembly of Experts, worth noting as Khamenei suffers from prostate cancer.

German Foreign Minister Frank-Walter Steinmeier said the Republicans’ letter played into Iran’s hands, allowing it to claim the West wasn’t negotiating in good faith. At a speech to a Washington think tank:

“Suddenly, Iran can say to us, ‘Are you actually trustworthy in the proposals you make if 47 senators say that no matter what the government agrees to, we will subsequently take that off the table again?’ This is no small matter we’re talking about.”

Sen. John McCain (R-Ariz.), who signed the letter, said, “I stand by it. The Congress of the United States must ratify any agreement between the United States and Iran, and anybody that says we shouldn’t ignores history and ignores the impact of this treaty.”

Both McCain and Sen. Lindsey Graham (R-S.C.) also criticized Steinmeier, with Graham saying, “Germany has been sort of pathetic in handling Russia, so I’m not really taking my cues from Germany on how to deal with dictatorships.” [Aresu Eqbali and Asa Fitch / Wall Street Journal]

In a Wall Street Journal/NBC News poll, 71% said the negotiations between Tehran and the Obama administration and the other members of the P5+1 will not make a real difference in preventing Iran from producing nuclear weapons; 24% said it will make a difference.

Editorial / Washington Post

“Congressional Republicans are trying to obstruct President Obama from concluding a nuclear agreement with Iran, but the only tangible result of their efforts has been to impede serious debate about the legitimate issues arising from the potential deal. The latest GOP gambit, an open letter to Iran’s leaders disparaging any accord not approved by Congress, prompted predictable blasts of rhetoric from the White House, the Senate caucuses and even the Iranian foreign minister, Mohammad Javad Zarif, but not a word of discussion about what the Republicans say worries them: whether the terms being offered to Iran by the Obama administration are in the United States’ interest....

“Members of Congress, from both parties, are frustrated by the administration’s announced intention to implement any deal with Iran without votes in either chamber by using waiver authority to suspend sanctions that were imposed by legislation. Though Mr. Obama has the legal authority to proceed in this way, in so doing he risks – as the letter pointed out – leaving a tenuous legacy that the next president or Congress could seek to undo. It’s worth recalling that a controversial nuclear accord struck by President Bill Clinton with North Korea was scrapped by the administration of George W. Bush after it concluded the regime was cheating.

“That said, it’s not clear how the letter, authored by Sen. Tom Cotton (Ark.) and signed by 46 other Republican senators, advances the opposition’s cause.... (If) the Iranian leader rejects the accord, Tehran will surely pin blame on U.S. Republicans and Mr. Netanyahu, which wouldn’t help any effort to sustain international sanctions.

“Republicans had an opportunity to focus attention on weaknesses in the emerging accord with Iran and mobilize bipartisan pressure on the administration to demand better terms. Instead they have engaged in grandstanding tactics that have alienated potential supporters while obscuring critical issues. Their antics are making it easier rather than harder for Mr. Obama to proceed unilaterally.”

Editorial / Wall Street Journal

“President Obama’s looming nuclear deal with Iran may be the security blunder of the young century, and Congress should vote on it. Which is why it’s too bad that Republican Senators took their eye off that ball on Monday with a letter to the government of Iran.

“Forty-seven of the 54 GOP Senators signed the open letter addressed to ‘the Leaders of the Islamic Republic of Iran.’ The letter explained to Tehran’s non-democratic rulers that ‘under our Constitution,’ while the President negotiates international agreements, ‘Congress plays the significant role of ratifying them.’....

“The problem with the GOP letter is that it’s a distraction from what should be the main political goal of persuading the American people. Democratic votes will be needed if the pact is going to be stopped, and even to get the 67 votes to override a veto of the Corker-Menendez bill to require such a vote. Monday’s letter lets Mr. Obama change the subject to charge that Republicans are playing politics as he tries to make it harder for Democrats to vote for Corker-Menendez.

“The security stakes couldn’t be higher if Mr. Obama enables a new age of nuclear proliferation, and Republicans need to keep focused on a critique of the deal’s substance. Giving Mr. Obama a meaningless letter to shoot at detracts from that debate.”

Kathleen Parker / Washington Post

“Iran quickly dismissed the letter as ‘propaganda.’ Democrats were forced into a partisan corner. Even the seven heroic Republicans who declined to sign the letter have been undermined as they fix their sights on a longer-term strategy to derail a bad deal.

“Sen. Bob Corker (R-Tenn.), chairman of the Foreign Relations Committee, who did not sign the letter, has sponsored what he hoped would be a veto-proof bill requiring congressional approval of any deal with Iran. But for it to be veto-proof, he needs Democrats.

“Nice going, guys.

“In the great meanwhile, inching up to the March 24 framework deadline with Iran, there is as yet neither a deal to protest nor details to fret about. The ‘framework’ is a sort-of, more-or-less outline of theoretically agreeable points, while the ‘deadline’ is a kinda-sorta aspirational goal line for a deal that may or may not happen.

“So what was the rush to tell Iran, essentially, ‘You’re wasting your time’? The 47 senators are like food critics who condemn a chef before he has finished preparing the entrée. Their letter also signals to the world that they have zero respect for our president, or for the other world powers attempting to try diplomacy first.

“This cannot have been helpful to any but the signees’ legendary standing in their own minds....

“The foregoing observations don’t mean that Republicans are wrong about their concerns. Many Democrats are concerned, too. No American disagrees that Iran is a bad actor undeserving of faith or trust. But there are other ways to accomplish our goals than profiling for political profit. The 47 may have felt like Zorro, inking their opposition with the bold felt tips of their swords, but they were acting like children at the school fair whose single purpose is to dunk the principal.”

Editorial / Washington Post

“The Obama administration is seeking to assure U.S. allies and congressional skeptics that the nuclear accord it is contemplating with Iran will not lead to a broader détente with the Islamic republic. ‘We are not seeking a grand bargain,’ Secretary of State John F. Kerry declared last week during a visit to Riyadh he made with the explicit purpose of countering Saudi Arabian suspicions to the contrary. ‘We will not take our eye off of Iran’s other destabilizing actions in places like Syria, Lebanon, Iraq and the Arabian Peninsula.’

“The political imperative behind this clarification is easily understood. In recent months, the notion that President Obama is prepared to scrap the 35-year-old U.S. policy of seeking to contain Iranian influence in the Middle East has been widely accepted by Arab and Israeli officials and U.S. commentators; opposition to such a reversal is one reason the prospective nuclear deal is generating bipartisan unease in Congress....

“Unfortunately, the administration’s assurances are at odds with its actions. While the nuclear negotiations have continued, Mr. Obama has refused to support military action against the Assad regime in Syria, in accord with his letter’s [Ed. his most recent one to Khamenei] reported promise, and his administration has tacitly blessed an ongoing, Iranian-led offensive in Iraq’s Sunni heartland. It took no action to stop the ouster by an Iranian-backed militia of a pro-U.S. Yemeni regime. Nor has it reacted to Iran’s deployment of thousands of Shiite fighters to southern Syria, near the Israeli-occupied Golan Heights.

“That record raises the question of what the administration’s response will be to further Iranian adventurism following a nuclear deal. Will it help its allies fight back, or will it restrain itself in the interest of preventing a rupture of the nuclear accord and in order to ‘improve relations over times’? Mr. Obama argued last week that if Iran obtained nuclear weapons it ‘would make it far more dangerous and would give it scope for even greater action in the region.’ That’s clearly true; the worry is that his current policies, combined with the lifting of sanctions, could have the same result.”

Meanwhile, Iranian hardliners have been trying to undermine the centrist (using the term loosely) President Rohani. As one reformist politician told the Financial Times, “One of the biggest concerns of fundamentalists is that a national hero should not emerge from the reformist camp for putting an end to the nuclear dilemma. Fundamentalists do not want people to ever think that moderate and reformist groups prevented a big crisis.”

Finally, I didn’t have a chance last time to include this opinion from Ray Takeyh in the March 1 Washington Post:

“As Khamenei presses toward an accord that will place him in an enviable nuclear position, he can also be assured that technical violations of his commitments would not be firmly opposed. Once a deal is transacted, the most essential sanctions against Iran will evaporate. It is unlikely that Europeans, much less China and Russia, would agree to their reconstitution should Iran be caught cheating. And as far as the use of force is concerned, the United States has negotiated arms-control compacts for at least five decades and has never used force to punish a state that has incrementally violated its treaty obligations. As the reaction to North Korea’s atomic provocations shows, the international community typically deals with such infractions through endless mediation. Once an agreement is signed, too many nations become invested in its perpetuation to risk a rupture.

“Iran’s achievements today are a tribute to the genius of an unassuming midlevel cleric. In a region where many dictatorial regimes have collapsed, the Islamic Republic goes on. Khamenei is in command of the most consequential state from the Persian Gulf to the banks of the Mediterranean. He has routinely entered negotiations with the weakest hand and emerged in the strongest position. God is indeed great.”

Regarding the Republican senators’ letter, I said weeks ago that at this point we should first let the negotiations play out, especially as there was bipartisan support to at least tack on further satisfactions if the result of the talks wasn’t to the Senate’s satisfaction. 

I said at the time that many in Congress were forgetting it was the P5+1, not just Iran and the United States, a point Republican Sen. Jeff Flake of Arizona made this past week in explaining why he didn’t sign the letter. Republicans made an incredibly stupid move.

The nuclear negotiations resume in Lausanne, Switzerland, next week. It’s crunch time.

Iraq / Syria / ISIS: Iraqi troops and Shiite militiamen pressed the offensive in Tikrit this week and reportedly have control of large parts of the city, though ISIS has been launching car bomb attacks and the place is infested with snipers. It does seem just a matter of time before Baghdad can claim its biggest victory over the terrorists as Iraq’s defense minister, Khaled al-Obeidi, said, “We are very keen for our losses to be as low as possible. Time is on our side, we have the initiative.” There have been zero reports from either side on casualties but it has to be assumed they are heavy. The Daily Star and Reuters report “Dozens of bodies are being driven south to Baghdad and the Shiite holy city of Najaf almost every day” so while the government has the upper hand, ISIS has done a lot of damage.

Obeidi visited troops and met with the myriad of factions making up the Iraqi effort, including the lead, Iranian Maj. Gen. Qassem Soleimani, commander of the Quds Force, the elite unit that is part of Iran’s Revolutionary Guard.

So these next few days and weeks are critical. Does Iran’s overt role in the fighting in Tikrit eventually lead to a revival of sectarian conflict and ethnic cleansing in Tikrit? [Though it’s pretty tough to ethnically cleanse locals when they seemingly have all fled the fighting.] Tikrit is overwhelmingly Sunni. Obeidi is also a Sunni and thus far has said he is confident the Iraqi forces will not alienate the Sunnis.

Meanwhile, in the north, Kurdish Peshmerga forces have captured a number of villages held by ISIS the past nine months.

But ISIS launched its largest attack in months in Anbar’s capital, Ramadi, on Wednesday, sending at least 17 truck and car bombs into the city.

Editorial / Wall Street Journal

“While Washington focuses on Iran-U.S. nuclear talks, the Islamic Republic is making a major but little-noticed strategic advance. Iran’s forces are quietly occupying more of Iraq in a way that could soon make its neighbor a de facto Shiite satellite of Tehran.

“That’s the larger import of the dominant role Iran and its Shiite militia proxies are playing in the military offensive to take back territory from the Islamic State, or ISIS. The first battle is over the Sunni-majority of Tikrit, and while the Iraqi army is playing a role, the dominant forces are Shiite militias supplied and coordinated from Iran....

“The irony is that critics long complained that the U.S.-led invasion of Iraq in 2003 created a strategic opening for Iran. But the 2007 surge defeated the Shiite militias and helped Sunni tribal sheikhs oust al-Qaeda from Anbar. U.S. forces provided a rough balancing while they stayed in Iraq through 2011. But once they departed on President Obama’s orders, the Iraq government tilted again to Iran and against the Sunni minority.

“Iran’s military surge is now possible because of the vacuum created by the failure of the U.S. to deploy ground troops or rally a coalition of forces from surrounding Sunni states to fight Islamic State.....

“The strategic implications of this Iranian advance are enormous. Iran already had political sway over most of Shiite southern Iraq. Its militias may now have the ability to control much of Sunni-dominated Anbar, especially if they use the chaos to kill moderate Sunnis. Iran is essentially building an arc of dominance from Tehran through Baghdad and Damascus to Beirut on the Mediterranean....

“The Sunni states in Turkey, Saudi Arabia, Egypt and the Gulf are watching all of this and may conclude that a new U.S.-Iran condominium threatens their interests. They will assess a U.S.-Iran nuclear deal in this context, making them all the more likely to seek their own nuclear deterrent....

“All of this is one more consequence of America leading from behind. The best way to defeat Islamic State would be for the U.S. to assemble a coalition of Iraqis, Kurds and neighboring Sunni countries led by U.S. Special Forces that minimized the role of Iran. Such a Sunni force would first roll back ISIS from Iraq and then take on ISIS and the Assad government in Syria. The latter goal in particular would meet Turkey’s test for participating, but the Obama administration refused lest it upset Iran.

“The result is that an enemy of the U.S. with American blood on its hands is taking a giant step toward becoming the dominant power in the Middle East.”

Meanwhile, a spokesman for IS leader Abu Bakr al-Baghdadi said IS accepted a pledge of allegiance from Nigerian Islamists Boko Haram.

“Our caliph, God save him, has accepted the pledge of loyalty of our brothers of Boko Haram so we congratulate Muslims and our jihadi brothers in West Africa,” the spokesman, Adnani, said. He also called on those who couldn’t enter the fight in Iraq and Syria to enter combat in Africa instead. Adnani then issued a threat to Jews and Christians.

“If you want to save your blood and money and live in safety from our swords...you have two choices: either convert or pay jezyah,” referring to a tax for non-Muslims under Islamic rule. “[Otherwise] you will soon bite your fingers with remorse.”  [Reuters / Daily Star]

Personally, I’ll pass. It’s time for March Madness and then The Masters...a tradition unlike any other...on CBS.

Lastly, a report by 21 aid agencies said the UN Security Council has failed to implement resolutions to protect and help civilians in Syria, with the likes of Oxfam and Save the Children saying 2014 was the “worst year” for civilians since the conflict began in 2011.

76,000 Syrians were killed in 2014.

4.8 million in need reside in areas defined by the UN as “hard to reach,” one million more than in 2013.

5.6 million children are in need of aid.

A separate analysis says 83% of Syria’s lights visible from space have gone out.  [BBC News]

Israel: Lost in the news of the day is the fact Israel holds an election on Tuesday, March 17, and it doesn’t look good for Prime Minister Benjamin Netanyahu. According to a Panel Politics poll, the opposition Zionist Union (a center-left alliance of the Labor Party and another political faction) led by Isaac Herzog, would take 24 out of parliament’s 120 seats, with Netanyahu’s ruling Likud capturing 21. A Channel 2 News survey suggested it would be 25-21 for the Zionist Union.

But, since the vote is splintered among 12 potential parties, Netanyahu could still be the one to form a coalition, primarily out of the hardliners.

Netanyahu has complained in broadcast remarks there was a “huge, worldwide effort” to ensure he loses the election.

For his part, Herzog has promised to restart talks with Palestinians and smooth the prime minister’s relations with the White House. Herzog is in partnership with Tzipi Livni and has said he would rotate the prime ministry with her after two years.

Russia / Ukraine: A daughter of Russian opposition leader Boris Nemtsov said Vladimir Putin bears responsibility for his murder. Zhanna Nemtsova told the BBC Putin was “politically” to blame.

Russia’s FSB, successor to the KGB, announced it had arrested up to five men, all from Chechnya, on suspicion of killing Nemtsov. Russian media quoted sources close to the investigation as saying the arrests were aided by surveillance camera footage and phone record and evidence left in the getaway car. But there was no word on who might have ordered the killing.

One of the men charged over the murder told prison visitors that he was tied up for two days with a bag on his head, and only confessed to the killing so that a friend would be freed.

The opposition expressed skepticism about the news of the arrests, especially with the theory being advanced in some Kremlin and Chechen circles that the killing was in retaliation for Nemtsov’s defense of the Charlie Hebdo cartoons of the Prophet Mohammed.

Ms. Nemtsova said, “After (her father’s) death the opposition is beheaded and everybody is frightened.”

Editorial / Washington Post

“The aftermath of the murder of Russian opposition leader Boris Nemtsov has been chilling even by the sinister standards of Vladimir Putin. Ten days after the gangland-style hit on a bridge near the Kremlin, police arrested and charged several ethnic Chechens, including one who was said to have confessed. That man, Zaur Dadaev, turns out to be the former deputy commander of an elite police squad controlled by the Chechen leader Ramzan Kadyrov, a fierce Putin loyalist. Mr. Kadyrov quickly praised the suspect as ‘a real patriot of Russia.’ Mr. Putin, meanwhile, chose Monday to present Mr. Kadyrov with an Order of Honor, along with Andrei Lugovoi, the leading suspect in the 2006 London murder of another Kremlin critic.

“If this all seems rather unsubtle, then that may be the point. Mr. Kadyrov, whom the Russian leader installed as Chechnya’s absolute ruler and who in turn serves as a Kremlin attack dog, has been a suspect in the unsolved assassinations of other Putin opponents, including of journalist Anna Politkovskaya, who was gunned down on Putin’s birthday in 2006. In each instance Mr. Putin has shielded and defended Mr. Kadyrov. In the Politkovskaya case, several Chechens were arrested and eventually convicted of the killings in questionable trials that never explained who had ordered the murder.

“The suspects in the Nemtsov killing also look like fall guys. According to a member of the Kremlin’s official human rights advisory council, three of the five suspects arrested were probably tortured; a sixth was reported to have blown himself up with a hand grenade. Those abused include Mr. Dadaev, who reportedly retracted what he said was a forced confession....

“Of course, there is no proof that either Mr. Kadyrov or Mr. Putin were involved in Mr. Nemtsov’s murder, and there may never be. But Russians following the case have gotten a clear message. Anyone who opposes the Putin regime, no matter how prominent, can be killed – and those responsible are more likely to receive a Kremlin medal than a court summons.”

In an interview with the Financial Times’ Kathrin Hille, Russian opposition leader Alexei Navalny said the West should impose travel bans and asset freezes on dozens more oligarchs and officials loyal to President Putin, as well as members of their families. This would include, for example, Roman Abramovich, owner of the Chelsea football club. “You have to hit the propagandists of war, the ones who finance the war, the real party of war,” said Navalny.

Navalny said that after the Nemtsov murder, “Putin was bent on ruling until the end of his life,” as reported by Ms. Hille, “and systematically installing the younger generation of families from his inner circle in positions across Russia’s economy.”

Navalny, more pessimistic than he’s been since a protest movement against election fraud sprung up after Putin’s return to the presidency in 2012, said:

“A few years ago, we thought this was just nepotism, but now we realize that this is long-term planning: he is installing dynastic rule,” Navalny said of Putin. He said only a different set of western sanctions targeting the clans that help Putin control Russia’s wealth has a chance of success.

Navalny appears lost without Nemtsov. “He was the communicator,” he said. “He could bring together everyone in the opposition from liberals to the far left, but he would also talk to people inside the system, like the Communists, who did not accept his views but were open to dialogue with him.”

One more...the press secretary of self-exiled opposition figure Mikhail Khodorkovsky found a funeral wreath outside the door of her Moscow apartment this week.

Turning to Ukraine, the International Monetary Fund approved a $17.5 billion loan program for Kiev, including an immediate disbursement of $5 billion to help the government stave off default. It is hoped the eventual size of the four-year program, including aid from the United States and the European Union, hits $40 billion.

The Ukrainian economy is expected to plunge nearly 12% this year (Russia’s is projected to contract 4.5%).

As for the latest ceasefire negotiated in Minsk, it appears to be largely holding, though on Wednesday the U.S. said Russian separatists had violated the agreement, as Russia denies its sending troops and weapons into eastern Ukraine.

The U.S. did announce it would provide more substantial arms and military equipment this week in the form of Humvees, drones and counter-mortar radars, but once again is declining to include “lethal aid” that members of Congress and Kiev have been clamoring for.

Separately, Poland has issued a call for people to join the 20,000-strong national reserve over fears Russia could eventually move on it.

German Chancellor Angela Merkel said she would boycott Russia’s May commemoration of the 70th anniversary of the end of the second world war in protest over the Ukraine crisis.

Finally, you have the situation with Putin’s prolonged absence. As I go to post, he hasn’t been seen in about ten days. Speculation flared after he postponed a visit to his Kazakh counterpart, Nazarbayev. A Kazakh spokesman couldn’t provide a reason, but then a Kazakh government source said that “it looks like he [Putin] has fallen ill.”

So then the rumor mill exploded, while Putin’s spokesman, Dmitry Peskov, said Wednesday that Putin was “perfectly healthy.” When asked by a Russian news station if Putin’s handshake remained firm, Peskov said it was strong enough to break hands; adding the president has been working “exhaustively” with documents.

Working with documents was the reason often given when Boris Yeltsin used to disappear.

But the Kremlin did itself no good when it published a photo, dated March 11, purporting to show Putin meeting with the leader of a northern republic, only local media reported the meeting had taken place a week prior. [Moscow Times]

Putin did meet with Italy’s Prime Minister Matteo Renzi on March 5. 

China: From Geoff Dyer and George Parker / Financial Times

“The White House accused the UK on Thursday of a ‘constant accommodation’ of China after the British government decided to join a new China-led financial institution that could become a rival to the World Bank.

“The rare rebuke of one of the U.S.’s closest allies comes as Britain prepares to announce it will become a founding member of the $50bn Asian Infrastructure Investment Bank, making it the first G7 country to join an institution launched by China last October....

“Relations between Washington and David Cameron’s government have been strained over recent weeks, with senior U.S. officials criticizing Britain over falling defense spending, which could soon fall below the NATO target of 2 percent of GDP.”

The British decision was made with “virtually no consultation with the U.S.,” according to a senior administration official.

I agree with President Obama on this one. But then many European nations have been fawning all over China. What will be interesting is the issue of Hong Kong. The House of Commons’ foreign affairs committee said the British government should press China harder on the issue and demand political reforms. Some MPs were forbidden last fall from visiting Hong Kong during the protests and the Cameron government said little.

Meanwhile, China has forced video websites to delete the environmental documentary, “Under the Dome,” the story of China’s catastrophic air pollution that had attracted hundreds of millions of views on Chinese websites within days of its release a week earlier. The damage is already done, though now the intrigue is over who sought to kill it.

We know the investigative reporter responsible for it...he worked for China Central Television, with help from the state network, but he also had support from the environmental ministry and some inside the party, as reported by the New York Times’ Edward Wong.

But then once it came out, other government officials quashed it and this came a day after the start of the annual session of the National People’s Congress.

Finally, David Shambaugh, professor of international affairs and the director of the China Policy Program at George Washington University, had an essay last weekend in the Wall Street Journal titled “The Coming Chinese Crackup.” Among some of his things to look for:

“Despite appearances, China’s political system is badly broken, and nobody knows it better than the Communist Party itself. China’s strongman leader, Xi Jinping, is hoping that a crackdown on dissent and corruption wil shore up the party’s rule. He is determined to avoid becoming the Mikhail Gorbachev of China, presiding over the party’s collapse. But instead of being the antithesis of Mr. Gorbachev, Mr. Xi may well wind up having the same effect. His despotism is severely stressing China’s system and society – and bringing it closer to a breaking point....

“In 2014, Shanghai’s Hurun Research Institute, which studies China’s wealthy, found that 64% of the ‘high net worth individuals’ whom it polled – 393 millionaires and billionaires – were either emigrating or planning to do so. Rich Chinese are sending their children to study abroad in record numbers...

“(Since taking office in 2012,) Xi has greatly intensified the political repression that has blanketed China since 2009. The targets include the press, social media, film, arts and literature, religious groups, the Internet, intellectuals, Tibetans and Uighurs, dissidents, lawyers, NGOs, university students and textbooks....

“Some experts think that Mr. Xi’s harsh tactics may actually presage a more open and reformist direction later in his term. I don’t buy it. This leader and regime see politics in zero-sum terms: Relaxing control, in their view, is a sure step toward the demise of the system and their own downfall....

“Looking ahead, China-watchers should keep their eyes on the regime’s instruments of control and on those assigned to use those instruments. Large numbers of citizens and party members alike are already voting with their feet and leaving the country or displaying their insincerity by pretending to comply with party dictates.

“We should watch for the day when the regime’s propaganda agents and its internal security apparatus start becoming lax in enforcing the party’s writ... When human empathy starts to win out over ossified authority, the endgame of Chinese communism will really have begun.”

Nigeria: After pledging allegiance to ISIS, Boko Haram is suspected of launching five suicide bomb attacks on the northeastern city of Maiduguri, killing at least 58.

Brazil: The government of President Dilma Rousseff has been roiled by a Supreme Court ruling approving of an investigation into dozens of politicians for their alleged involvement in a kickback scheme at the state-run oil firm Petrobras. The allegations involve private firms paying off corrupt officials to gain contracts and among the 54 accused of taking bribes are the speakers of both chambers of Congress, and former President Collor de Mello; though current President Rousseff, who chaired the board at Petrobras for seven years when much of the corruption was supposedly taking place, has been cleared of any direct involvement.

The scandal has been costly to Petrobras, one of the largest energy businesses in the world. It has lost a ton of market value since the charges were first brought last September. [Like from $20 to $5.00 in that time period.

Random Musings

--Editorial / Washington Post

“Hillary Rodham Clinton offered a soupcon of regret at a news conference Tuesday for having used private e-mail exclusively during her nearly four years as secretary of state. ‘Looking back, it would’ve been better’ if she had not used a private e-mail account for official business, she conceded. Ms. Clinton said she decided to do so for ‘convenience’ because ‘I thought it would be easier to carry just one device for my work and for my personal e-mails instead of two.’

“Ms. Clinton noted that it is a ‘government employee’s responsibility to determine what’s personal and what’s work-related.’ In general, this has been true; if a State Department official writes a personal note to a family member from a work e-mail address, that official can decide to withhold it from government archives. Each official has a responsibility to preserve federal records – messages and documents about policies and decisions. The methods of preservation have differed over time and among agencies; some still use paper printouts, and others have software options for preserving a record or e-mail. Government agencies are required to move to electronic preservation of e-mail records by the end of 2016.

“What Ms. Clinton did not mention was that the Obama administration had clearly directed officials to use government e-mail networks for official business. She departed from this for ‘convenience.’ Did she know about the policy? Did others know of her exclusive use of private e-mail? Did anyone raise an objection?

“By Ms. Clinton’s account Tuesday, the sorting of more than 60,000 e-mail messages from her time at the State Department – to separate the personal and the work-related – was carried out entirely by her and her lawyer. She claims that all the work messages have been turned over to the department, but there is no way to check. She disclosed Tuesday that the remainder, the personal e-mails, were deleted. Why did she not provide the work-related e-mails when she left the department? Had she used government e-mail in the first place, it is possible that the messages would have been preserved there, and there might have been fewer doubts today.

“Ms. Clinton also confirmed that she used a mail server at her home in New York, which was also for former president Bill Clinton, ‘on property guarded by the Secret Service’ – as if the primary risk was not cybertheft but rather burglars sneaking in to steal floppy disks. Ms. Clinton said she did not discuss classified material in e-mail, but surely her days and messages were taken up with ‘sensitive but unclassified’ matters that would be of interest to snoopers. She didn’t address that security issue, nor did she say anything about whether the State Department had security concerns about her private arrangement.

“In the end, it is clear Ms. Clinton was acting in a gray zone, one created in part by the rapid pace of technological change. But it is also apparent that her decisions on her e-mail were based on what was best for her – what was ‘convenient’ and not so much for the public trust.”

As for 2016, there is pressure for Clinton to move up her formal announcement that she is a candidate in order to shift the focus to issues other than her server. Hillary Rosen, a Democratic strategist, told the Wall Street Journal’s Peter Nicholas, as a declared candidate she would have been able to deliver a positive message “every day and all day. That’s the downside of starting late.”

Instead, Ms. Clinton’s dreadful performance on Tuesday caused House committee chairman, Rep. Trey Gowdy (R-S.C.), to call for an independent arbiter to verify that she didn’t hold back emails the public, by law, was entitled to see.

Editorial / Wall Street Journal

“Hillary Clinton’s admirers say she’ll run for President in part by invoking the glory days of the 1990s. For a taste of that era, we recommend her brief press conference Tuesday explaining why she had used a private email account as Secretary of State. It had everything nostalgia buffs could want – deleted evidence, blustery evasions, and preposterous explanations that only James Carville could pretend to believe.

“In the preposterous category, Mrs. Clinton explained that she preferred a private email account simply as a ‘convenience’ because it allowed her to ‘carry just one device for my work and for my personal emails instead of two.’ We know plenty of people who have two accounts on the same device, and they don’t even have a retinue of aides to help carry their devices.

“To allow for such splendid convenience, Mrs. Clinton had to go to the inconvenience of getting her own domain name for this secret email on the day of her confirmation hearing in 2009, and then setting up a system to manage it. Her ‘one device’ excuse reminds us of her explanation from 1993 that she had made a 10,000% killing on cattle futures by reading the Wall Street Journal....

“Asked on Tuesday why she didn’t turn over the emails from the start, Mrs. Clinton ducked the question and claimed ‘I’d be happy to have somebody talk to you about the rules.’ She then added a new entry for the Clinton Ethics Pantheon: ‘I fully complied with every rule that I was governed by.’ Just not the policy she was supposed to abide by.

“The biggest news Tuesday was Mrs. Clinton’s disclosure that she has since destroyed the rest of the emails that she didn’t turn over to State. These were ‘personal’ business, she averred, and ‘I didn’t see any reason to keep them.’ They were about, you know, things like daughter Chelsea’s wedding, her mother’s funeral, and her ‘yoga routines,’ and ‘no one wants their personal emails made public.’

“Now, that’s what we call convenient. With those emails gone, and her private server off-limits to investigators, no one else will be able to see how much of that ‘private’ business really was private....

“The entire performance raised more questions than it answered, but if the 1990s pattern holds don’t expect any more explanations. The Clinton method is to settle on a defense and then hunker down unless some new information forces her hand. Maybe the emails will show up in a White House bedroom in 2018, like her Rose Law firm billing records once did....

“Which ought to make Democrats nervous. They’ve convinced themselves that only Mrs. Clinton can save them from a Republican government in 2017. They might want to delete that assumption and think again.”

Maureen Dowd / New York Times

“The Clintons don’t sparkle with honesty and openness. Between his lordly appetites and her queenly prerogatives, you always feel as if there’s something afoot.

“Everything needs to be a secret, from the Rose Law Firm records that popped up in a White House closet two years after they were subpoenaed to the formulation of her health care plan.

“Yet the Clintons always act as though it’s bad form when you bring up their rule-bending. They want us to compartmentalize, just as they do, to connect the dots that form a pretty picture and leave the other dots alone.

“If you’re aspiring to be the second president in the family, why is it so hard to be straight and direct and stand for something? Why can’t you just be upright and steady and good?

“Given all the mistakes they’ve made, why do they keep making them? Why do they somehow never do anything that doesn’t involve shadows?”

Peggy Noonan / Wall Street Journal

“For a while I’ve assumed Hillary Clinton would run for her party’s nomination and be a formidable candidate in the general election. After Tuesday’s news conference I’m not so sure.

“Did she seem to you a happy, hungry warrior? She couldn’t make eye contact with her questioners, and when she did she couldn’t sustain it. She looked at the ceiling and down at notes, trying, it seemed, to stick to or remember scripted arguments. She was shaky. She couldn’t fake good cheer and confidence. It is seven years since she ran for office. You could see it....

“This wasn’t high-class spin. These were not respectable dodges. They didn’t make you grudgingly tip your hat at a gift for duplicity. I could almost feel an army of oppo people of both parties saying, ‘You can do better than that, Hillary!’....

“She didn’t look hungry for the battle, she looked tired of the battle....

“She has her causes – women’s rights, income inequality. But she can advance them in other ways....

“Maybe she doesn’t, really, want to run. Maybe she’s not sure she can. Or maybe she’ll go for it: It’s what she’s been going toward all her life.

“Maybe Democrats who saw that news conference will sense an opening and jump in. There’s the myth of the empty bench, but it won’t be empty if she leaves it.   That’s another law of physics: Nature abhors a vacuum.

“We all talk so much about the presidency and who’s got the best chance. Maybe it’s not Hillary. Maybe that’s over and no one knows, even her.”

As for President Obama and the email controversy...Michael D. Shear / New York Times:

“President Obama said Saturday that he had learned only last week that Hillary Rodham Clinton used a private email system for her official correspondence while she was secretary of state.

“In an interview with Bill Plante of CBS News, Mr. Obama said the policy of his administration was to ‘encourage transparency’ and that he was pleased that Mrs. Clinton had instructed the State Department to turn over her emails for archiving.

“ ‘My emails, the Blackberry I carry around, all those records are available and archived,’ Mr. Obama said... ‘I’m glad that Hillary’s instructed that those emails about official business need to be disclosed.’....

“Mr. Obama did not address how he could have avoided noticing that Mrs. Clinton was sending emails from a ‘clintonemail.com’ address throughout the years she served in his administration.”

Then there’s Bill Clinton. His spokesman on Wednesday, the day after Hillary’s press conference, was forced to admit the former president never sent emails to his wife, disputing her claim “personal communications from my husband and me” was one reason she wouldn’t allow independent scrutiny of her computer system. In fact, Bill Clinton has repeatedly said he has only sent two emails in his entire life – both as president. One was to returning astronaut Jon Glenn after his return trip to space in 1998. The other was to troops serving in the Adriatic.

John Podhoretz / New York Post

“The person who gave a press conference Tuesday at the United Nations to explain the controversy over her emails will never be president of the United States.

“That Hillary Clinton – who spoke before the press for the first time about the strange private email system she set up during her tenure as secretary of state – delivered what may have been the worst public performance by a major American politician since Texas Gov. Rick Perry spent 53 seconds during a Republican debate in 2011 trying to remember the name of a government agency before giving up and saying, ‘Oops.’

“I don’t mean Hillary will never be president. I mean that Hillary will never be president....

“As she preps her 2016 run, Hillary Clinton shows every sign of having morphed into Dumb Hillary Clinton, and it’s only getting worse....

“The problem is that in playing dumb, she acts stupid.

“I’m talking about the Hillary Clinton who makes unforced errors every time she opens her mouth – the one who last year described herself as having been ‘dead broke’ in 2001 when she had $20 million in book advances coming her way. That moment of playing dumb was designed to make her seem more accessible to the hoi polloi she wanted to buy her new book.

“I mean the Hillary Clinton who said, ‘What difference, at this point, does it make?’ in 2013, when asked about security lapses under her watch on the night the Benghazi massacre took place. She said it because she was trying to make the point that Republicans were harping on a dead issue – but instead, she made herself seem indifferent to the deaths at Benghazi.

“On Tuesday, she informed us that she used her own server for her own email because it was too difficult for her to have two iPhones – so she was playing Dumb Hillary Clinton, with her implicit argument that it’s easier to have your own server in your own house than to use a government device. Who believes that?...

“The press corps covering the conference, and hundreds of reporters following it live on Twitter, seemed utterly agog at the falsity, the stonewalling and the flashes of anger that offered the only real indication she knows perfectly well how damaging all this might be for her....

“Mrs. Clinton is going to have to transform herself, to get rid of Dumb Hillary and find a new persona to cope with troubled times, because the person who made so horrendous an accounting of herself yesterday has no future other than ignominious defeat.”

Charles Krauthammer / Washington Post

“The point of regulations is to ensure government transparency. The point of owning the server is to ensure opacity. Because she holds the e-mails, all document requests by Congress, by subpoena, by Freedom of Information Act inquiries have ultimately to go through her lawyers, who will stonewall until the end of time – or Election Day 2016, whichever comes first.

“It’s a smart political calculation. Taking a few weeks of heat now – it’s only March 2015 – is far less risky than being blown up by some future e-mail discovery. Moreover, around April 1, the Clinton apologists will begin dismissing the whole story as ‘old news.’

“But even if nothing further is found, the damage is done. After all, what is Hillary running on? Her experience and record, say her supporters.

“What record? She’s had three major jobs. Secretary of state: Can you name a single achievement in four years? U.S. senator: Can you name a single achievement in eight years? First lady: her one achievement in eight years? Hillarycare, a shipwreck.

“In reality, Hillary Clinton is running on two things: gender and name. Gender is not to be underestimated. It will make her the Democratic nominee. The name is equally valuable. It evokes the warm memory of the golden 1990s, a decade of peace and prosperity during our holiday from history.

“Now breaking through, however, is a stark reminder of the underside of that Clinton decade: the chicanery, the sleaze, the dodging, the parsing, the wordplay. It’s a dual legacy that Hillary Clinton cannot escape and that will be a permanent drag on her candidacy.

“You can feel it. It’s a recurrence of an old ailment. It was bound to set in, but not this soon. What you’re feeling now is Early Onset Clinton Fatigue. The CDC is recommending elaborate precautions. Forget it. The only known cure is Elizabeth Warren.”

--But for all the flack Hillary Clinton took this week, a new Wall Street Journal/NBC News poll showed 86% of prospective Democratic primary voters said they could see themselves supporting Clinton for the nomination. That compared with 54% who said the same of Vice President Biden and 51% who said so of Sen. Elizabeth Warren.

--On the Republican side, the WSJ/NBC survey revealed 49% of people who plan to vote in GOP primaries said they could see themselves supporting Jeb Bush and 42% said they couldn’t. The two who start out with the best positives are Sen. Marco Rubio (56% could see supporting him, 26% couldn’t) and Scott Walker (53% positive, just 17% negative). 

Conversely, New Jersey Gov. Chris Christie’s numbers are miserable. 32% could support him, 57% wouldn’t.

A McClatchy-Marist College poll found that only 6% of Republicans and GOP-leaning independents favored Gov. Christie for the 2016 Republican nomination, with Jeb Bush at 19%, Scott Walker at 18%, and Mike Huckabee at 10%.

A Quinnipiac University poll last month gave Christie just 4% of likely Iowa Republican caucus-goers, vs. Walker with 25%, Rand Paul 13%, and Ben Carson and Huckabee at 11%. [Bush 10%.]

Ergo, what the heck is Christie thinking he still has a shot?  The McClatchy-Marist poll had Walker at just 3% in December and Christie at 10%.

Back to Marco Rubio, those are strong numbers in the WSJ/NBC survey. You obviously couldn’t have a Bush/Rubio ticket, but Walker/Rubio is kind of interesting.

--And back to Christie, because sometimes it’s too easy, a new study by the National Association of State Retirement Administrators revealed that New Jersey’s record of funding its pension system is the worst in the country. As reported by Samantha Marcus for NJ.com:

“In a comparison of state’s contributions as a percentage of the annual required contribution, from fiscal year 2001 to 2013, New Jersey came dead last at 38 percent. Some states such as Connecticut, Montana, Maine and West Virginia exceeded required contributions.

“New Jersey and Pennsylvania were the only states whose payments over that time frame were less than half of what was recommended. All but six contributed at least 75 percent.”

Of course in looking at the time period, it’s not all about Christie, we’ve had other lousy governors here in my home state.

--Jeb Bush’s latest on education reform, as put forward in an op-ed for the Washington Post.

“Fundamentally, the needed transformation of our education system will never be achieved by Washington. The best reform ideas begin at the state and local level. That’s where reform will succeed....

“When I was governor, Florida began grading schools on an A-to-F scale in 1999 and offered dramatic school-choice options to parents. Now, 16 states grade their schools, 19 have choice programs and all but eight have charter school laws.

“These successes all have two things in common. The initiatives placed the needs of students first, and the federal government had nothing to do with them.

“That said, the federal government has a role in creating transparency to ensure that failure is unacceptable. Before the last reauthorization of ESEA [Elementary and Secondary Education Act] in 2001, known as No Child Left Behind (NCLB), most states had no accountability system. They plowed billions of taxpayer dollars into education bureaucracies, often getting nothing in return.

“NCLB changed that by creating a common yardstick. Now, all states participate in the National Assessment of Educational Progress, a series of high-quality tests known as the Nation’s Report Card. The results give us an apples-to-apples comparison among states. Annual testing and reporting also force states to confront their failures, especially the substandard education often offered to disadvantaged children.

“NCLB is far from perfect. It doesn’t give states the flexibility they need, and the system can be gamed. But those flaws can be fixed...

“The key to success is this: If we are to move forward on education reform, the states and local authorities must be allowed to lead. And for that to happen, it should be made clear in law that the federal government should always be in the back seat.”

--According to an annual survey conducted by the Associated Press-NORC Center for Public Affairs Research and the General Social Survey, only 11% of Americans are confident in the presidency, approaching the record low 10% from 1996. The 44% who now say they have hardly any confidence at all is at a record high.

Confidence in the Supreme Court is at an all-time low, just 23%. A mere 5% have confidence in Congress.

Only 7% have confidence in the press, another record low. Confidence in banks and financial institutions has risen from a low of 11% in 2010 to 15% today. The survey’s all-time high for banks was 42% in 1977.

About half have confidence in the military. Source: apnorc.org

--Bret Stephens / Wall Street Journal...on the Justice Department’s allegation, in a second report related to the Michael Brown / Ferguson case that accused the Ferguson police department of systemic racism.

“Then there’s the report’s abuse of statistics, notably of the fact that African-Americans are 67% of Ferguson’s population but are disproportionately arrested for crime.

“Is this racism? The Missouri Statistical Analysis Center notes that in 2012 African-Americans, about 12% of the state’s population, constituted 65% of murder arrests and 62% of murder victims. To suggest that the glaring statistical disproportion between relative population size and murder rate is somehow a function of race would be erroneous and offensive. Yet tarring a police force as racist for far smaller statistical discrepancies is now one of the privileged ‘truths’ of 21st century America.

“The lesson of Darren Wilson is that there is no truth in narrative. And the lesson of Ferguson is that there is no truth in statistics. There is truth in fact. There is truth in reason. There is truth in truthfulness. Nothing less.”

After two police officers were shot and wounded in Ferguson Wednesday night amid protests following the resignation of the police chief, Attorney General Eric Holder said:

“Such senseless acts of violence threaten the very reforms that non-violent protesters in Ferguson and around the country have been working towards for the past several months,” adding the shooting “turned his stomach” with disgust.

Appearing on Jimmy Kimmel’s program, President Obama said:

“I think that what had been happening in Ferguson was oppressive and objectionable and was worthy of protest. But there was no excuse for criminal acts.... Whoever fired those shots shouldn’t detract from the issue; they’re criminals,” he added.

They’re worse than that Mr. President.

--I was going to write about the latest Secret Service debacle but it’s another classic case of ‘wait 24 hours.’ The facts aren’t clear as I go to post. Wouldn’t be prudent.

--Pope Francis gave an interview to a tabloid in Argentina and commented on ISIS plots to assassinate him.

“Look, life is in God’s hands,” the pope told La Carcova news. “I have said to the Lord: take care of me. But if your will is that I should die or that they do something to me, I ask you one favor: that they don’t hurt me. Because I’m a real scaredy cat when it comes to physical pain.”

--The U.S. Geological Survey raised its estimate of the chance of a magnitude 8.0 or greater earthquake hitting California in the next three decades from 4.7% to 7%. As reported by the Los Angeles Times: “Scientists said the reason for the increased estimate was because of the growing understanding that earthquakes aren’t limited to separate faults, but can start on one fault and jump to others. The result could be multiple faults rupturing in a simultaneous mega-quake.”

Well that would suck. A massive 9.0 earthquake that hit off the Japanese coast in 2011 jumped fault boundaries, triggering the Fukushima tsunami.

--According to an investigative report by Gabriel Sherman in this week’s New York magazine, before he re-upped for five years as “Nightly News” anchor, Brian Williams asked NBC about replacing Jay Leno, which led to the low-rated, later canceled “Rock Center,” and then he pitched CBS CEO Les Moonves on succeeding David Letterman. Pathetic.

--After an extensive investigation, the Alabama Securities Commission has concluded Harper Lee is capable of making her own decisions with regards to the release of her second book, “Go Set a Watchman,” the follow-up to the 1960 classic “To Kill a Mockingbird.”

Alabama was compelled to look into reports Lee, 88, may have been a victim of elder abuse and that the permission to release her novel could have been coerced by her agent and other parties, including HarperCollins Publishers.

Joseph Borg, director of the state securities commission, said, “The first part of determining financial fraud, is ‘Do they understand what’s going on?’ Obviously, since I closed the file, it’s fair to say she understood.” [Wall Street Journal]

--I was in a fraternity at Wake Forest, Pi Kappa Alpha, and had friends at every other frat on campus, as I reflected on my college days with the news out of the University of Oklahoma this week. I’m proud of being as responsible as anyone in recruiting the first black into our frat in 1978, who went on to become our chapter’s president. I was ‘big brother’ to two other African-Americans, though neither stayed.   One left due to finances, the other just didn’t feel comfortable and joined a black organization. 

But that was a long time ago, for sure. With today’s social media, I wonder what I would have been involved in? Embarrassing party videos, no doubt, though I would have been seen singing a Bill Withers tune (“Lovely Day”), not some idiotic, racist rap screed.

However, in yet another case of my adage “wait 24 hours,” in the Oklahoma case, it took a day for many, including constitutional scholars, to say, hey, you can’t expel the fraternity members for a racist chant on a bus. Erwin Chemerinksky, dean of the law school at the University of California, Irvine, told the New York Times:

“The courts are very clear that hateful, racist speech is protected by the First Amendment.” If the students’ chant constituted a direct threat, that’s one thing, but in this case, Chemerinksy and legal scholars have said, there is no direct threat or provocation. [Manny Fernandez and Erik Eckholm / New York Times] 

That said, no way the kids would want to stay, I’m assuming, and this whole ugly episode is yet another example of young people needing to be extremely careful in all they do on social media.

---

Pray for the men and women of our armed forces...and all the fallen, including the eleven who perished in the tragic training accident off the Gulf Coast. One Marine lived ten minutes from here.

God bless America.
---

Gold closed at $1152...lowest weekly close since April 2010
Oil $44.84...lowest since Feb. 2009

Returns for the week 3/9-3/13

Dow Jones -0.6% [17749]
S&P 500 -0.9% [2053]
S&P MidCap +0.3%
Russell 2000 +1.2%
Nasdaq -1.1% [4871]

Returns for the period 1/1/15-3/13/15

Dow Jones -0.4%
S&P 500 -0.3%
S&P MidCap +2.7%
Russell 2000 +2.3%
Nasdaq +2.9%

Bulls 53.6
Bears 14.1 [Source: Investors Intelligence...bear number unchanged for four weeks.]

Happy St. Patrick’s Day. I appreciate your support.

Brian Trumbore



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Week in Review

03/14/2015

For the week 3/9-3/13

[Posted 12:00 AM ET]

Edition 831

Washington and Wall Street

This coming week there is one big story when it comes to the markets and that is the Federal Reserve’s Open Market Committee meeting, March 17-18, with Chair Janet Yellen holding a press conference after it wraps up. It’s all about whether the Fed drops the word “patient” from its accompanying statement and just a week or two ago it seemed a certainty the Fed would, thus laying the groundwork for its first rate hike since the Stone Age, perhaps as early as June.

The jobs numbers have been strong, after all, with the unemployment rate all the way down to 5.5%, and the prospect that wages, a lagging indicator, will increase in coming months. It was a pretty simple equation.

Or was it? Lately, in terms of the stock and bond markets it’s been about two things, the rising dollar and a renewed collapse in the oil price.

Falling oil can be disconcerting, even as it’s a boon to consumers, as profits in the energy sector crater and jobs are lost in what had been the prime engine of growth for the U-S-of-A, while the soaring dollar is doing a number on U.S. multinationals, particularly those with large European exposures. The euro currency has plunged from $1.40 last year to $1.04 on Friday and U.S. corporate profits are getting hit hard. We saw signs of this with the release of the fourth-quarter earnings reports. Imagine what the same multi-nationals will say in mid-April about their first-quarter results and the impact of the rising dollar on their business across the pond.

It’s estimated that corporate profits for the S&P 500 will fall 3.8% in Q1 and another 1.9% in Q2, according to Thomson Reuters*, so that certainly isn’t going to be good for stocks.

*Bloomberg forecasts declines of 5.3% and 3.5%, respectively.

But at the same time as interest rates stay low here, helped in no small part by European investors looking to our shores for more competitive yields (vs. what you’ll see below being offered in euroland), you would think this would limit the damage to U.S. equities.

Meanwhile, while the amount of economic data this week, including in Europe, was on the light side, the two big releases here definitely give the Fed further pause when it comes to their confab.

February retail sales fell 0.6% when a gain of 0.4% was expected, the third straight month of declines despite cheaper gas and an improving labor outlook. Consumers just remain cautious; plus the weather truly sucked for a large population group.

And then you had producer prices for February, down 0.5%, and down a like amount on the core, ex-food and energy, the fourth straight decline for this metric. Year over year the PPI is down 0.7%, up 1.0% ex- the stuff we consume.

Ergo...we shouldn’t be surprised if the Fed leaves in “patient.” 

I haven’t called on the following for his thoughts in quite a while....

Paul Krugman / New York Times

“We’ve been warned over and over that the Federal Reserve, in its effort to improve the economy, is ‘debasing’ the dollar. The archaic word itself tells you a lot about where the people issuing such warnings are coming from. It’s an allusion to the ancient practice of replacing pure gold or silver coins with ‘debased’ coins in which the precious-metal content was adulterated with cheaper stuff. Message to the gold bugs and Ayn Rand disciples who dominate the Republican Party: That’s not how modern money works. Still, the Fed’s critics keep insisting that easy-money policies will lead to a plunging dollar.

“Reality, however, keeps declining to oblige. Far from heading downstairs to debasement, the dollar soared through the roof. (Sorry). Over the past year, it has risen 20 percent, on average, against other major currencies; it’s up 27 percent against the euro. Hooray for the strong dollar!

“Or not. Actually, the strong dollar is bad for America. In an immediate sense, it will weaken our long-delayed economic recovery by widening the trade deficit. In a deeper sense, the message from the dollar’s surge is that we’re less insulated than many thought from problems overseas. In particular, you should think of the strong dollar/weak euro combination as the way Europe exports its troubles to the rest of the world, America very much included....

“U.S. growth has improved lately, with employment rising at a pace not seen since the Clinton years. Yet the state of the economy still leaves a lot to be desired. In particular, the absence of much evidence for rising wages tells us that the job market is still weak despite the fall in the headline unemployment rate. Meanwhile, the returns America offers investors are ridiculously low by historical standards, with even long-term bonds paying only a bit more than 2 percent interest.

“Currency markets, however, always grade countries on a curve. The United States isn’t exactly booming, but it looks great compared with Europe, where the present is bad and the future looks worse....many European bonds are now offering negative interest rates.

“This remarkable situation makes even those low, low U.S. returns look attractive by comparison. So capital is heading our way, driving the euro down and the dollar up.

“Who wins from this market move? Europe: a weaker euro makes European industry more competitive against rivals, boosting both exports and firms that compete with imports, and the effect is to mitigate the euroslump. Who loses? We do, as our industry loses competitiveness, not just in European markets, but in countries where our exports compete with theirs....

“In effect, then, Europe is managing to export some of its stagnation to the rest of us....

“And the effects may be quite large....

“One thing that worries me is that I’m not at all sure that policy makers have fully taken the implication of a rising dollar into account. The Fed, still eager to raise interest rates despite low inflation and stagnant wages, seems to me to be too sanguine about the economic drag....

“Is there a policy moral to all this? One thing is that it’s really important for all of us that Mario Draghi at the European Central Bank and associates succeed in steering Europe away from a deflationary trap; the euro is their currency, but it turns out to be our problem. Mainly, though, this is another reason for the Fed to fight the urge to pretend that the crisis is over. Don’t raise rates until you see the whites of inflation’s eyes!”

Europe and Asia

The European Central Bank started its policy of quantitative easing (QE) this week, the purchase of sovereign debt across the eurozone, as the ECB prints euros to buy the paper, which ECB President Mario Draghi said will be the case through September 2016, at least. Bond yields in euroland hit new all-time record lows.

Following are representative 10-year yields, March 6, prior to QE, and March 13, one week into the operation.

Germany 0.39% (March 6)...0.26% (March 13)...Wednesday closing low of 0.20%
France 0.69%...0.50%
Italy 1.31%...1.15%
Spain 1.29%...1.14%
Portugal...1.74%...1.53%
Greece 9.09%...10.43%...more in a bit

*non-euro Britain 1.95%...1.71%
U.S. 2.24%...2.11%

Nothing like a highly motivated buyer in the ECB to juice prices and lower yields.

Meanwhile, the euro hit a 12-year low vs. the dollar, 1.04, which we now know is great for European exporters, who are beginning to make very bullish statements on the future impact on earnings, while since foreign goods coming into Europe are more expensive, the ECB hopes this will give inflation a boost. [Conversely, those from the U.S. traveling to Europe get a huge boost of their own.]

As for Greece, time is running out. Greece must pay down some large chunks of debt in the next two weeks or face default.

Prime Minister Alexis Tsipras tried to reassure his eurozone partners that his country would stick to its extended bailout agreement reached just a few weeks ago.

Tsipras said, “There is no reason for concern...even if there is no timely disbursement of a (loan) tranche, Greece will meet its obligations,” he told reporters at a meeting of the Organization for Economic Cooperation and Development.

“We are here in order for the OECD to put its stamp on the reforms that the Greek government wants to push on with and I believe that this stamp in our passport will be very significant to build mutual trust with our lenders.”

[Tsipras wants to restructure Greece’s mountain of debt, but the eurozone nations have said there is no question of writing off any of it, though they are open to loan extensions if Athens implements required reforms.] 

But this soothing tone was in stark contrast to the words exchanged by Greek Finance Minister Yanis Varoufakis and German Finance Minister Wolfgang Schaeuble.

Schaeuble denied having called Varoufakis “foolishly naïve,” as reported by Greek media. Schaeuble recounted a private meeting with Varoufakis this week, telling reporters in Brussels: “He said to me ‘The media are dreadful.’ So I said: ‘Yes but the first impression you made on us was that you were stronger at communication than on substance. That may have been a mistake.’”

So then the Greek government reopened the issue of World War II reparations, which is supposed be a closed issue per the 1990 treaty that reunited East and West Germany; a pact signed by the four powers that occupied Germany and the OECD, of which Greece is a member.

German Foreign Minister Frank-Walter Steinmeier said “there won’t be a reopening of this debate on reparations.”

Greece said the 1990 agreement does not preclude further reparations and it’s a topic that still needs to be addressed.

Tsipras said in a speech this week, “We will approach this matter with the sensitivity that is required, with a sense of responsibility, with honesty, and with an attitude that supports understanding and dialogues. We expect the same from the German government – for political, historical, symbolic, and moral reasons.” [Bloomberg News]

This is nuts.

The ECB did once again raise the limit on emergency lending assistance to Greece’s banks, which is keeping them afloat.

But as Eurogroup (the group of finance ministers) chairman Jeroen Dijsselbloem said of Greece, “It seems their money box is almost empty.

Varoufakis said last Sunday, “I can only say that we have money to pay salaries and pensions of public employees. For the rest we will see.”

Alexis Tsipras said a referendum could be on the table, asking the question of the Greek people, “Do you want your dignity or a continuation of this unworthy policy (referring to the bailout terms), then everyone would choose dignity regardless of difficulties that would accompany that decision.” 

Which means leaving the eurozone...a Grexit.

Among the Greek electorate, the approval rating of the new government is down to 64% from 84% in February.

George Pagoulatos, a professor of European politics and economy at Athens University, summed up Tsipras’ dilemma.

“Maintaining the unity of the anti-bailout coalition, while striking a deal which would ease the immense pressure on the economy, is proving to be almost a ‘Mission Impossible.’” [Heather Harris / Bloomberg News]

Referring to the negotiations of the past few weeks between the creditors and Greece, post-four-month bailout extension, Jeroen Dijsselbloem said they have been a “complete waste of time. So the question arises: how serious are they?”

Just a few other EU tidbits....

--French industrial production for January was up 0.4% month on month, better than expected.

--U.K. manufacturing output fell 0.5% in January, but is up 0.4% for the 3-months thru the month. GDP is estimated at 2.7% for 2015.

--And hats off to Ireland on the eve of St. Patrick’s Day as the Central Statistics Office said the Irish economy grew by 4.8% in 2014, the fastest pace in seven years, outstripping any other European country; actually, five times that of the 0.9% rate for the eurozone as a whole.

Turning to Asia...the news out of China was not good. Due to the Lunar New Year holiday, which this year was in February, China’s National Statistics Bureau lumps January and February together to avoid distortions with the prior year (such as the holiday falling in January).

So for Jan. and Feb. factory production was up only 6.8% over the same two months in 2014. Retail sales were up 10.7%. Fixed-asset investment up just 13.9%; all three less than expected and a further sign of slowing.

In fact this is the slowest start to a year since 2009. Factory production is measured against a 7.9% hike in December, year on year; retail sales were up 11.9% in December, and the fixed-asset figure compares with 15.7% for all of 2014, which in turn was the weakest since Dec. 2000.

Exports did come in for Jan. and Feb. up 15%, better than expected, so this is good, while imports fell 20% due to sharp drops in commodity prices.

Another sour note...the value of property sales for the first two months of 2015 was down 15.8% from a year earlier.

Separately, consumer prices for February rose 1.4% year over year, an improvement from the 0.8% pace in January, but still well below the government’s 3% target.

Producer or factory gate prices fell 4.8% in February, which means prices have now declined, monthly, for three full years.

In Japan, fourth-quarter GDP was revised down to 1.5% from an initial estimate of 2.2% owing to the fact inventories shrunk, but household consumption was revised upwards to 2.0% from 1.1%, and this is good.

The Tokyo Nikkei stock index also hit a 15-year high.

Philip Stephens / Financial Times

“The West has a new industry. It is the booming business of calculating geopolitical risk. Glance around the world at the fires burning in the Middle East, at Russia’s march into Ukraine and the tensions in East Asia fuelled by China’s rise, and it is easy to see why. These conflicts and collisions are more than an unhappy coincidence. The end of history has made way for the era of systemic disorder...

“The optimism in the West that greeted the collapse of communism was rooted in a clutch of organizing assumptions. The world has become a more dangerous and unpredictable place during the intervening 25 years because most of these suppositions have now unwound.

“The first was the permanence of the Pax Americana. Remember the breathless commentary about the impregnable hegemony of the U.S.? At the turn of the millennium Washington assumed, and most experts concurred, that the sole superpower would set the terms of international relations for most of the 21st century. There would be adjustments to accommodate the new powers, but the U.S. would continue to act as guarantor of the peace.

“The historians no doubt will debate when precisely the illusion was shattered. The chaos that followed shock and awe in Iraq is as good a point as any....

“The second unwinding has been in Europe. The creation of the euro was intended to complete the work of the EU’s founding fathers, replacing the deep scars of competing nationalisms with a postmodern model of deep integration. Europe’s borders had been fixed in perpetuity and the continent had said goodbye to war.

“The thought, too, was that Europe’s postwar model would be exported, first to the EU’s neighbors in the east and then as a template for the rising world. For a while it worked: a procession of once-communist states queuing to join the democratic club testified to the potency of normative power....

“And now? The euro has been exposed as a half-finished project, a statement of intent that lacks vital political and economic underpinnings.... The resurgence of nationalism is not confined to arguments about debt and deficits. Populists of left and right have prospered across Europe by demanding governments slam the door against the alleged depredations of globalization.

“There lies the third unwinding – of the assumption that economic interdependence would soften national competition and that global supply chains would beget more effective global governance. Instead we have seen the return of nationalist competition, in Russian President Vladimir Putin’s revanchism, and in the territorial disputes between China and its neighbors in the East and China seas....

“As they operate their multi-nation supply chains and just-in-time production processes, businesses should understand that the world has changed. The cold war era was dangerous but stable. The great unwinding has created a world that is dangerously unpredictable. If there is money to be made in calculating geopolitical risk, there is money to be saved in understanding it.”

Finally, who wants to talk about nuclear war? The other day The Economist’s lead editorial was on the topic. I’ve been freely saying for months there will be a nuclear scare this year, a serious threat from Putin or whoever replaces him.

“Within the next few weeks, after years of stalling and evasion, Iran may at last agree to curb its nuclear program. In exchange for relief from sanctions it will accept, in principle, that it should allow intrusive inspections and limit how much uranium will cascade through its centrifuges. After 2025 Iran will gradually be allowed to expand its efforts. It insists these are peaceful, but the world is convinced they are designed to produce a nuclear weapon....

“Benjamin Netanyahu...fulminated against the prospect of such a deal (in his speech to Congress)....

“Mr. Netanyahu is wrong about the deal. [Ed. more below] It is the best on offer and much better than no deal at all, which would lead to stalemate, cheating and, eventually, the dash to the very bomb he fears. But he is right to worry about nuclear war – and not just because of Iran. Twenty-five years after the Soviet collapse, the world is entering a new nuclear age. Nuclear strategy has become a cockpit of rogue regimes and regional foes jostling with the five original nuclear-weapons powers (America, Britain, France, China and Russia), whose own dealings are infected by suspicion and rivalry.

“Thanks in part to Mr. Netanyahu’s efforts, Iran commands worldwide attention. Unfortunately, the rest of the nuclear-weapons agenda is bedeviled by complacency and neglect....

“Some countries want nuclear weapons to prop up a tottering state. Pakistan insists its weapons are safe, but the outside world cannot shake the fear that they may fall into the hands of Islamist terrorists, or even religious zealots within its own armed forces. When history catches up with North Korea’s Kim dynasty, as sooner or later it must, nobody knows what will happen to its nukes – whether they might be inherited, sold, eliminated or, in a last futile gesture, detonated.

“Others want nuclear weapons not to freeze the status quo, but to change it. Russia has started to wield nuclear threats as an offensive weapon in its strategy of intimidation. Its military exercises routinely stage dummy nuclear attacks on such capitals as Warsaw and Stockholm. Mr. Putin’s speeches contain veiled nuclear threats. Dmitry Kiselev, one of the Kremlin’s mouthpieces, has declared with relish that Russian nuclear forces could turn America into ‘radioactive ash.’

“Just rhetoric, you may say. But the murder of Boris Nemtsov, an opposition leader, on the Kremlin’s doorstep on February 27th was only the latest sign that Mr. Putin’s Russia is heading into the geopolitical badlands. Resentful, nationalistic and violent, it wants to rewrite the Western norms that underpin the status quo. First in Georgia and now in Ukraine, Russia has shown it will escalate to extremes to assert its hold over its neighbors and convince the West that intervention is pointless. Even if Mr. Putin is bluffing about nuclear weapons (and there is no reason to think he is), any nationalist leader who comes after him could be even more dangerous.”

Just as I’ve been saying...now who wants a beer?

Street Bytes

--Another down week for the major averages as the Dow Jones lost 0.6% to 17749, while the S&P 500 fell 0.9% and Nasdaq 1.1%. The Dow and S&P now have fractional losses for the year while Nasdaq is still up nearly 3%.

Monday marked the six-year anniversary of the market lows, March 9, 2009. Since then the S&P is up 204%.

--U.S. Treasury Yields

6-mo. 0.11% 2-yr. 0.66%  10-yr. 2.11% 30-yr. 2.70%

Volatility continues in the bond pits with the yield on the 10-year falling 13 basis points from 2.24% the prior week.

--The Treasury Department revealed the budget deficit narrowed in February from a year earlier from $193.5 billion to $192.3 billion. For the first five months of the fiscal year that begins Oct. 1, the deficit is $386.5 billion compared with $376.4 billion from Oct. 2013 through Feb. 2014.

The Congressional Budget Office estimates the full year deficit (thru Sept. 30) will be $486 billion, or 2.7 percent of GDP, down from 9.8 percent in 2009. I think they will be wrong...$500bn+.

--The Federal Reserve reported that net worth for households rose by $1.5 trillion in the fourth quarter, or 1.9% from the prior three months, to $82.9 trillion.

--For the first time since the Federal Reserve started ‘stress tests’ for the nation’s banks, the Fed approved every U.S. bank’s capital plan, paving the way for higher dividends and share buybacks.

But the Fed vetoed the capital plans of the U.S. operations of Deutsche Bank and Santander; respectively the largest banks in Germany and Spain. The two were found to have serious deficiencies in risk management and capital planning. Santander has failed what is called the Comprehensive Capital Analysis and Review (CCAR) two years in succession. 

Meanwhile, Citigroup passed the CCAR after failing last year. Had it done so again, CEO Mike Corbat would have been history by his own admission.

Some of the U.S. banks did have to adjust their capital-distribution plans to win approval, such as Goldman Sachs, JPMorgan Chase and Morgan Stanley. Bank of America only received ‘conditional’ approval, so it needs to make further adjustments to its risk-management procedures by the third quarter.

--Credit Suisse is dumping CEO Brady Dougan, replacing him with Tidjane Thiam, 52, the current CEO of Britain’s Prudential insurance group, which he has led since 2009. Thiam is from the Ivory Coast and has never worked in banking, but is highly respected. He becomes just the second black chief executive of a global bank; Stanley O’Neal, who led Merrill Lynch for four years up to 2007, being the other.

Dougan, 55, led Credit Suisse through the financial crisis, but he was criticized for failing to see some of the changes in investment banking, bungling a number of attempts at overhauling the business.

--Canada’s unemployment rate jumped to a five-month high in February to 6.8% from 6.6%, as the oil shock impacts jobs in the most important sector for the Canadian economy. Alberta, home to the bulk of Canada’s oil production, posted a decline of 14,000 jobs in the month.

--Intel Corp. said first-quarter sales may miss its previous forecast by more than $1bn, not a small deal, due to weak corporate demand and ongoing sluggishness in Europe.

The corporate upgrade cycle appears to have run its course after a solid 2014. Seeing as Intel supplies chips for more than 80 percent of PCs, this doesn’t bode well for Microsoft, which had been helped by corporations upgrading to replace obsolete Windows XP software. Shares in both companies fell on the news Thursday.

--Apple unveiled its new Apple Watch on Monday, with some models going for thousands of dollars in what immediately becomes the highest profile wearable device to date.

CEO Tim Cook said: “Apple brings a whole new personal dimension in timekeeping that’s never been done before.

“It’s a revolutionary new way to communicate with others and it’s a comprehensive fitness companion. There will be some great third party apps... When you unleash that creativity it’s incredible.”

The Watch will have a battery life of 18 hours and is slated to go on sale in the U.S. and eight other countries on April 24.

I’ll pass.

--As reported by Adrian Wan of the South China Morning Post:

“If imitation is the sincerest form of flattery, Shenzhen is devoutly paying homage to Apple with several companies launching clones of the Apple Watch ahead of its release next month.

“The fact that such devices are on the market so early – some companies launched their Apple Watch imitator months ago – underscores the speed at which Chinese shanzhai (knock-off) manufacturers are able to bring copies to the market.”

But some of the watches have unexpected features not found on the official device. One, mainland-based company Zeaplus, has an aluminum-bodied Zeaplus Watch that “could easily be mistaken for an Apple product if you don’t get past its appearance and try out its functions.

“It has a 2 megapixel camera at the bottom of the watch that can be taken off when you want to take a photograph, according to the company’s website, which markets the watch as a covert spying device.”

This particular watch also has a pedometer for counting steps and a heart rate sensor.

“Since the early 2000s, companies in Shenzhen have been the center of the mainland’s shanzhai industry, which churns out electronic goods that imitate well-known brands very quickly – concept to delivery is often achieved within weeks – and very cheaply, often at less than half the price of the genuine product.”

And they undoubtedly shanzhai U.S. aircraft carriers and fighter jets, too, mused your editor.

--According to Chinese media reports, Tesla Motors is slashing 30% of its workforce in China, about 180 jobs, owing to putrid sales. One analyst said just 2,500 Teslas were sold in the nine months last year the automaker was delivering its cars to Chinese customers. 2015 thus far looks like Tesla is on track for 5,000 to 6,000 extrapolating out numbers given by research firm JL Warren.

Tesla had been shipping in 500 to 700 Model S cars a month but selling only in the mid-400s.

--According to the New York state comptroller, Wall Street bonuses rose 2% last year to about $173,000. Those at Goldman Sachs and Morgan Stanley fell 5%. After two years of declines, the securities industry in Gotham added 2,300 jobs, though remains 20,000 below the pre-crisis peak.

How important is Wall Street to state tax collections? Try 19% of all collections and 21% of all private-sector wages paid in the city. [Aaron Elstein / Crain’s New York Business]

--As reported by the Wall Street Journal’s Christopher M. Matthews on Friday, “Federal prosecutors and the (FBI) are probing potential manipulation of Herbalife Ltd. stock and have interviewed people hired by hedge-fund billionaire William Ackman, who has led a long-running campaign against the nutritional-products company, people familiar with the matter said.”

Neither Mr. Ackman nor his firm, Pershing Square Capital Management LP, have been subpoenaed or visited by FBI agents in connection with the probe to date.

This goes back to an initial campaign against the company that Ackman launched in December 2012 and the myriad of people he hired to feed regulators stories on Herbalife’s business practices and thus spur investigations that would impact the share price.

Friday, Herbalife shares rallied 8% on the Journal report.

--Ericsson, the world’s largest maker of telecoms equipment will eliminate 2,200 jobs in Sweden as part of a massive cost-cutting initiative, the bulk of the cuts being in research and development. Ericsson employed 118,000 globally at the end of 2014, with 17,600 in Sweden alone. The company is turning away from the commoditized parts of the business to focus on key growth areas.

--Target is laying off 1,700 employees at its headquarters in Minneapolis, as well as another 1,400 open positions; the announcement coming a week after the retailer said it would cut more than 2,000 jobs over the next two years. Employees will get 15 weeks of pay plus severance based on years with the company. [USA TODAY]

--Investors pulled $18 million out of Bill Gross’ new bond fund at Janus Capital last month, the first for it since his departure last September from PIMCO, not a good sign. Of the fund’s $1.44bn, half is Gross’ own money.

--Shares in Disney soared $4 to $107 on Thursday, an all-time high, after CEO Bob Iger’s announcement at an annual shareholder meeting that “Star Wars: Episode VIII” will be released in the spring of 2017, while talking of a new “Frozen” flick. The first one has taken in $1.3 billion at the global box office, plus another $1 billion in related merchandise.

--A senior Russian lawmaker, Alexei Pushkov, the head of the Russian parliament’s foreign affairs committee, said McDonald’s and Coca-Cola should leave the Russian market because of Washington’s clash with Moscow over Ukraine, but former Finance Minister Alexei Kudrin defended the two.

“If high-tech U.S. companies limit their supplies because of political pressure from a few deputies, it will really hit Russian industry.”

Kudrin added the withdrawal of the companies would harm the local workforce and domestic suppliers.

“It seems Mr. Pushkov does not know that 85 percent of raw produce delivered to McDonald’s comes from more than 160 Russian companies,” Kudrin said on Twitter. “Coca-Cola buys more than 75 percent of its raw materials in Russia. Thousands of people would be left without jobs – a great anti-crisis program.” [Moscow Times]

--But speaking of McDonald’s, it reported more dreadful news on the sales front for the month of February, with global sales dropping 1.7% in the month, much worse than forecast, and sales dropping a whopping 4% in the U.S., 4.4% in the Asia-Pacific. They were up slightly in Europe.

The shares, however, hung in there because new CEO Steve Easterbrook is in his honeymoon period, after Don Thompson’s rocky three years at the helm.

--I forgot to include the story last week of Amgen Inc. and the FDA’s approval of a competitor’s knockoff version of Amgen’s leading chemotherapy recovery drug, Neupogen; the FDA’s first approval of a so-called biosimilar in the U.S.

Amgen and other “biologic makers” face fierce competition and the approved knockoff – Zarxio, made by Sandoz, a unit of Novartis, is one of four drugs Amgen could lose out on to the tune of $11 billion in U.S. sales.

But Amgen will start copying competitors’ biologics as quickly as possible and could end up doing better in this vein than the revenues it is losing the other way. 

The share price, which peaked at about $159.50 the week of March 2, closed on Friday at $154.25; not a huge deal thus far.

[Consumers are the beneficiaries in this competition, which is one of the positives of the Affordable Care Act.]

--Alibaba Group Holdings Ltd. is investing $200 million in Snapchat Inc., which as Bloomberg News reports values the popular messaging and entertainment app at $15 billion. Snapchat raised $486 million late last year at a valuation of $10 billion.

--China’s movie box office rose 34 percent last year to $4.8 billion, while the U.S.-Canada box fell 5 percent to $10.4 billion, according to the Motion Picture Association of America.

The projection for China in 2017: $11.5 billion...while the U.S.-Canada, which the MPAA counts as a single market, slides to $8.9 billion. 

Analyst Paul Dergarabedian, who compiled the data for the MPAA, said “Content is being modified for that market.”

Example, “Transformers 4,” which was geared towards the China market, did $245 million box in the U.S.-Canada, but $320 million in China for Paramount. [Richard Morgan / New York Post]

--Following the damning report on “60 Minutes” March 1, shares in Lumber Liquidators Holdings Inc. crashed from $51.85 (Feb. 27 close) to $27.95 Monday, March 9. But they rallied back some to finish this week at $30.55 (though this was well off the intraday high of nearly $38) after the seller of laminate flooring with excessive levels of formaldehyde, manufactured in China (as laid out in the “60 Minutes” story) said same-store sales may fall as much as 4.4% in the first quarter, though it was impossible to gauge the impact for the full year.

The company said it will offer free, third-party testing to customers and may replace some flooring as it seeks to regain customers’ confidence. Lumber Liquidators stands by the safety of its products and said CBS used an improper procedure in testing them.

--Blackstone Group CEO Stephen Schwarzman, who made $690 million in cash and prizes in 2014, is set to become the first leader of a public company to be paid more than $1 billion in a single year. The reason Schwarzman can achieve this (last year 30 times what Goldman Sachs CEO Lloyd Blankfein earned, $24 million) is he has a slice of the gains generated by Blackstone’s leveraged-buyout funds and other investment vehicles. Right now Blackstone is invested in about 80 companies. [Aaron Elstein / Crain’s New York Business]

Mrs. Blankfein was caught on our hidden microphone during lunch at the Four Seasons with friends. “My Lloyd deserves at least $700 million for working as hard as he does!”

--It’s going to take a while, up to 39 months, but the three biggest credit-reporting agencies, Equifax, Experian and TransUnion reached an agreement with the New York State Attorney General Eric Schneiderman on coming up with a more proactive way of resolving disputes.

The credit-reporting firms will be required to train employees to review the documentation consumers send in when they believe there is an error in their files. 

It’s been a disgrace how awful this industry has been, since day one, but hopefully there will be real change.

--I saw a rating of airport hotels and #1 in the world was the Regal Airport Hotel in Hong Kong, which is where I spent a week last February. I couldn’t agree more. Shopping mall right there, five-minute walk from the terminals, IMAX theatre, restaurants, bars...newspapers! [Really, the old-fashioned kind.]

Foreign Affairs

Iran: Monday, 47 Republican senators sent a letter to Tehran’s leaders clearly designed to kill any potential nuclear arms deal. Written by Sen. Tom Cotton (R-Ark.), the letter suggests that any agreement between the president and the Iranian leadership could be undone by Congress or a future president and that it was only an “executive agreement.”

The letter states; “The next president could revoke such an executive agreement with the stroke of a pen and future Congresses could modify the terms of the agreement at any time.”

President Obama said after the letter was made public, “I think it’s somewhat ironic to see some members of Congress wanting to make common cause with the hard-liners in Iran. It’s an unusual coalition.”

Vice President Biden said it was “beneath the dignity of an institution I revere.”

Iran’s foreign minister labeled it a propaganda ploy.

In a speech to the Assembly of Experts*, Ayatollah Khamenei, responding to the open letter to Iran’s leadership that any nuclear agreement could become null and void once President Obama leaves office, said:

“Some think that the United States does not need to act cunningly or do tricks because of its political, economic and military power. But the Americans need to use tricks and deception a lot, and they are doing the same now, and this reality worries us....

“U.S. senators officially announce that when this government leaves, its commitments will become nullified. Isn’t that the ultimate collapse of political ethics and the disintegration of the U.S. system?’ [Wall Street Journal]

*Ayatollah Mohammad Yazdi is the new head of the Assembly of Experts, worth noting as Khamenei suffers from prostate cancer.

German Foreign Minister Frank-Walter Steinmeier said the Republicans’ letter played into Iran’s hands, allowing it to claim the West wasn’t negotiating in good faith. At a speech to a Washington think tank:

“Suddenly, Iran can say to us, ‘Are you actually trustworthy in the proposals you make if 47 senators say that no matter what the government agrees to, we will subsequently take that off the table again?’ This is no small matter we’re talking about.”

Sen. John McCain (R-Ariz.), who signed the letter, said, “I stand by it. The Congress of the United States must ratify any agreement between the United States and Iran, and anybody that says we shouldn’t ignores history and ignores the impact of this treaty.”

Both McCain and Sen. Lindsey Graham (R-S.C.) also criticized Steinmeier, with Graham saying, “Germany has been sort of pathetic in handling Russia, so I’m not really taking my cues from Germany on how to deal with dictatorships.” [Aresu Eqbali and Asa Fitch / Wall Street Journal]

In a Wall Street Journal/NBC News poll, 71% said the negotiations between Tehran and the Obama administration and the other members of the P5+1 will not make a real difference in preventing Iran from producing nuclear weapons; 24% said it will make a difference.

Editorial / Washington Post

“Congressional Republicans are trying to obstruct President Obama from concluding a nuclear agreement with Iran, but the only tangible result of their efforts has been to impede serious debate about the legitimate issues arising from the potential deal. The latest GOP gambit, an open letter to Iran’s leaders disparaging any accord not approved by Congress, prompted predictable blasts of rhetoric from the White House, the Senate caucuses and even the Iranian foreign minister, Mohammad Javad Zarif, but not a word of discussion about what the Republicans say worries them: whether the terms being offered to Iran by the Obama administration are in the United States’ interest....

“Members of Congress, from both parties, are frustrated by the administration’s announced intention to implement any deal with Iran without votes in either chamber by using waiver authority to suspend sanctions that were imposed by legislation. Though Mr. Obama has the legal authority to proceed in this way, in so doing he risks – as the letter pointed out – leaving a tenuous legacy that the next president or Congress could seek to undo. It’s worth recalling that a controversial nuclear accord struck by President Bill Clinton with North Korea was scrapped by the administration of George W. Bush after it concluded the regime was cheating.

“That said, it’s not clear how the letter, authored by Sen. Tom Cotton (Ark.) and signed by 46 other Republican senators, advances the opposition’s cause.... (If) the Iranian leader rejects the accord, Tehran will surely pin blame on U.S. Republicans and Mr. Netanyahu, which wouldn’t help any effort to sustain international sanctions.

“Republicans had an opportunity to focus attention on weaknesses in the emerging accord with Iran and mobilize bipartisan pressure on the administration to demand better terms. Instead they have engaged in grandstanding tactics that have alienated potential supporters while obscuring critical issues. Their antics are making it easier rather than harder for Mr. Obama to proceed unilaterally.”

Editorial / Wall Street Journal

“President Obama’s looming nuclear deal with Iran may be the security blunder of the young century, and Congress should vote on it. Which is why it’s too bad that Republican Senators took their eye off that ball on Monday with a letter to the government of Iran.

“Forty-seven of the 54 GOP Senators signed the open letter addressed to ‘the Leaders of the Islamic Republic of Iran.’ The letter explained to Tehran’s non-democratic rulers that ‘under our Constitution,’ while the President negotiates international agreements, ‘Congress plays the significant role of ratifying them.’....

“The problem with the GOP letter is that it’s a distraction from what should be the main political goal of persuading the American people. Democratic votes will be needed if the pact is going to be stopped, and even to get the 67 votes to override a veto of the Corker-Menendez bill to require such a vote. Monday’s letter lets Mr. Obama change the subject to charge that Republicans are playing politics as he tries to make it harder for Democrats to vote for Corker-Menendez.

“The security stakes couldn’t be higher if Mr. Obama enables a new age of nuclear proliferation, and Republicans need to keep focused on a critique of the deal’s substance. Giving Mr. Obama a meaningless letter to shoot at detracts from that debate.”

Kathleen Parker / Washington Post

“Iran quickly dismissed the letter as ‘propaganda.’ Democrats were forced into a partisan corner. Even the seven heroic Republicans who declined to sign the letter have been undermined as they fix their sights on a longer-term strategy to derail a bad deal.

“Sen. Bob Corker (R-Tenn.), chairman of the Foreign Relations Committee, who did not sign the letter, has sponsored what he hoped would be a veto-proof bill requiring congressional approval of any deal with Iran. But for it to be veto-proof, he needs Democrats.

“Nice going, guys.

“In the great meanwhile, inching up to the March 24 framework deadline with Iran, there is as yet neither a deal to protest nor details to fret about. The ‘framework’ is a sort-of, more-or-less outline of theoretically agreeable points, while the ‘deadline’ is a kinda-sorta aspirational goal line for a deal that may or may not happen.

“So what was the rush to tell Iran, essentially, ‘You’re wasting your time’? The 47 senators are like food critics who condemn a chef before he has finished preparing the entrée. Their letter also signals to the world that they have zero respect for our president, or for the other world powers attempting to try diplomacy first.

“This cannot have been helpful to any but the signees’ legendary standing in their own minds....

“The foregoing observations don’t mean that Republicans are wrong about their concerns. Many Democrats are concerned, too. No American disagrees that Iran is a bad actor undeserving of faith or trust. But there are other ways to accomplish our goals than profiling for political profit. The 47 may have felt like Zorro, inking their opposition with the bold felt tips of their swords, but they were acting like children at the school fair whose single purpose is to dunk the principal.”

Editorial / Washington Post

“The Obama administration is seeking to assure U.S. allies and congressional skeptics that the nuclear accord it is contemplating with Iran will not lead to a broader détente with the Islamic republic. ‘We are not seeking a grand bargain,’ Secretary of State John F. Kerry declared last week during a visit to Riyadh he made with the explicit purpose of countering Saudi Arabian suspicions to the contrary. ‘We will not take our eye off of Iran’s other destabilizing actions in places like Syria, Lebanon, Iraq and the Arabian Peninsula.’

“The political imperative behind this clarification is easily understood. In recent months, the notion that President Obama is prepared to scrap the 35-year-old U.S. policy of seeking to contain Iranian influence in the Middle East has been widely accepted by Arab and Israeli officials and U.S. commentators; opposition to such a reversal is one reason the prospective nuclear deal is generating bipartisan unease in Congress....

“Unfortunately, the administration’s assurances are at odds with its actions. While the nuclear negotiations have continued, Mr. Obama has refused to support military action against the Assad regime in Syria, in accord with his letter’s [Ed. his most recent one to Khamenei] reported promise, and his administration has tacitly blessed an ongoing, Iranian-led offensive in Iraq’s Sunni heartland. It took no action to stop the ouster by an Iranian-backed militia of a pro-U.S. Yemeni regime. Nor has it reacted to Iran’s deployment of thousands of Shiite fighters to southern Syria, near the Israeli-occupied Golan Heights.

“That record raises the question of what the administration’s response will be to further Iranian adventurism following a nuclear deal. Will it help its allies fight back, or will it restrain itself in the interest of preventing a rupture of the nuclear accord and in order to ‘improve relations over times’? Mr. Obama argued last week that if Iran obtained nuclear weapons it ‘would make it far more dangerous and would give it scope for even greater action in the region.’ That’s clearly true; the worry is that his current policies, combined with the lifting of sanctions, could have the same result.”

Meanwhile, Iranian hardliners have been trying to undermine the centrist (using the term loosely) President Rohani. As one reformist politician told the Financial Times, “One of the biggest concerns of fundamentalists is that a national hero should not emerge from the reformist camp for putting an end to the nuclear dilemma. Fundamentalists do not want people to ever think that moderate and reformist groups prevented a big crisis.”

Finally, I didn’t have a chance last time to include this opinion from Ray Takeyh in the March 1 Washington Post:

“As Khamenei presses toward an accord that will place him in an enviable nuclear position, he can also be assured that technical violations of his commitments would not be firmly opposed. Once a deal is transacted, the most essential sanctions against Iran will evaporate. It is unlikely that Europeans, much less China and Russia, would agree to their reconstitution should Iran be caught cheating. And as far as the use of force is concerned, the United States has negotiated arms-control compacts for at least five decades and has never used force to punish a state that has incrementally violated its treaty obligations. As the reaction to North Korea’s atomic provocations shows, the international community typically deals with such infractions through endless mediation. Once an agreement is signed, too many nations become invested in its perpetuation to risk a rupture.

“Iran’s achievements today are a tribute to the genius of an unassuming midlevel cleric. In a region where many dictatorial regimes have collapsed, the Islamic Republic goes on. Khamenei is in command of the most consequential state from the Persian Gulf to the banks of the Mediterranean. He has routinely entered negotiations with the weakest hand and emerged in the strongest position. God is indeed great.”

Regarding the Republican senators’ letter, I said weeks ago that at this point we should first let the negotiations play out, especially as there was bipartisan support to at least tack on further satisfactions if the result of the talks wasn’t to the Senate’s satisfaction. 

I said at the time that many in Congress were forgetting it was the P5+1, not just Iran and the United States, a point Republican Sen. Jeff Flake of Arizona made this past week in explaining why he didn’t sign the letter. Republicans made an incredibly stupid move.

The nuclear negotiations resume in Lausanne, Switzerland, next week. It’s crunch time.

Iraq / Syria / ISIS: Iraqi troops and Shiite militiamen pressed the offensive in Tikrit this week and reportedly have control of large parts of the city, though ISIS has been launching car bomb attacks and the place is infested with snipers. It does seem just a matter of time before Baghdad can claim its biggest victory over the terrorists as Iraq’s defense minister, Khaled al-Obeidi, said, “We are very keen for our losses to be as low as possible. Time is on our side, we have the initiative.” There have been zero reports from either side on casualties but it has to be assumed they are heavy. The Daily Star and Reuters report “Dozens of bodies are being driven south to Baghdad and the Shiite holy city of Najaf almost every day” so while the government has the upper hand, ISIS has done a lot of damage.

Obeidi visited troops and met with the myriad of factions making up the Iraqi effort, including the lead, Iranian Maj. Gen. Qassem Soleimani, commander of the Quds Force, the elite unit that is part of Iran’s Revolutionary Guard.

So these next few days and weeks are critical. Does Iran’s overt role in the fighting in Tikrit eventually lead to a revival of sectarian conflict and ethnic cleansing in Tikrit? [Though it’s pretty tough to ethnically cleanse locals when they seemingly have all fled the fighting.] Tikrit is overwhelmingly Sunni. Obeidi is also a Sunni and thus far has said he is confident the Iraqi forces will not alienate the Sunnis.

Meanwhile, in the north, Kurdish Peshmerga forces have captured a number of villages held by ISIS the past nine months.

But ISIS launched its largest attack in months in Anbar’s capital, Ramadi, on Wednesday, sending at least 17 truck and car bombs into the city.

Editorial / Wall Street Journal

“While Washington focuses on Iran-U.S. nuclear talks, the Islamic Republic is making a major but little-noticed strategic advance. Iran’s forces are quietly occupying more of Iraq in a way that could soon make its neighbor a de facto Shiite satellite of Tehran.

“That’s the larger import of the dominant role Iran and its Shiite militia proxies are playing in the military offensive to take back territory from the Islamic State, or ISIS. The first battle is over the Sunni-majority of Tikrit, and while the Iraqi army is playing a role, the dominant forces are Shiite militias supplied and coordinated from Iran....

“The irony is that critics long complained that the U.S.-led invasion of Iraq in 2003 created a strategic opening for Iran. But the 2007 surge defeated the Shiite militias and helped Sunni tribal sheikhs oust al-Qaeda from Anbar. U.S. forces provided a rough balancing while they stayed in Iraq through 2011. But once they departed on President Obama’s orders, the Iraq government tilted again to Iran and against the Sunni minority.

“Iran’s military surge is now possible because of the vacuum created by the failure of the U.S. to deploy ground troops or rally a coalition of forces from surrounding Sunni states to fight Islamic State.....

“The strategic implications of this Iranian advance are enormous. Iran already had political sway over most of Shiite southern Iraq. Its militias may now have the ability to control much of Sunni-dominated Anbar, especially if they use the chaos to kill moderate Sunnis. Iran is essentially building an arc of dominance from Tehran through Baghdad and Damascus to Beirut on the Mediterranean....

“The Sunni states in Turkey, Saudi Arabia, Egypt and the Gulf are watching all of this and may conclude that a new U.S.-Iran condominium threatens their interests. They will assess a U.S.-Iran nuclear deal in this context, making them all the more likely to seek their own nuclear deterrent....

“All of this is one more consequence of America leading from behind. The best way to defeat Islamic State would be for the U.S. to assemble a coalition of Iraqis, Kurds and neighboring Sunni countries led by U.S. Special Forces that minimized the role of Iran. Such a Sunni force would first roll back ISIS from Iraq and then take on ISIS and the Assad government in Syria. The latter goal in particular would meet Turkey’s test for participating, but the Obama administration refused lest it upset Iran.

“The result is that an enemy of the U.S. with American blood on its hands is taking a giant step toward becoming the dominant power in the Middle East.”

Meanwhile, a spokesman for IS leader Abu Bakr al-Baghdadi said IS accepted a pledge of allegiance from Nigerian Islamists Boko Haram.

“Our caliph, God save him, has accepted the pledge of loyalty of our brothers of Boko Haram so we congratulate Muslims and our jihadi brothers in West Africa,” the spokesman, Adnani, said. He also called on those who couldn’t enter the fight in Iraq and Syria to enter combat in Africa instead. Adnani then issued a threat to Jews and Christians.

“If you want to save your blood and money and live in safety from our swords...you have two choices: either convert or pay jezyah,” referring to a tax for non-Muslims under Islamic rule. “[Otherwise] you will soon bite your fingers with remorse.”  [Reuters / Daily Star]

Personally, I’ll pass. It’s time for March Madness and then The Masters...a tradition unlike any other...on CBS.

Lastly, a report by 21 aid agencies said the UN Security Council has failed to implement resolutions to protect and help civilians in Syria, with the likes of Oxfam and Save the Children saying 2014 was the “worst year” for civilians since the conflict began in 2011.

76,000 Syrians were killed in 2014.

4.8 million in need reside in areas defined by the UN as “hard to reach,” one million more than in 2013.

5.6 million children are in need of aid.

A separate analysis says 83% of Syria’s lights visible from space have gone out.  [BBC News]

Israel: Lost in the news of the day is the fact Israel holds an election on Tuesday, March 17, and it doesn’t look good for Prime Minister Benjamin Netanyahu. According to a Panel Politics poll, the opposition Zionist Union (a center-left alliance of the Labor Party and another political faction) led by Isaac Herzog, would take 24 out of parliament’s 120 seats, with Netanyahu’s ruling Likud capturing 21. A Channel 2 News survey suggested it would be 25-21 for the Zionist Union.

But, since the vote is splintered among 12 potential parties, Netanyahu could still be the one to form a coalition, primarily out of the hardliners.

Netanyahu has complained in broadcast remarks there was a “huge, worldwide effort” to ensure he loses the election.

For his part, Herzog has promised to restart talks with Palestinians and smooth the prime minister’s relations with the White House. Herzog is in partnership with Tzipi Livni and has said he would rotate the prime ministry with her after two years.

Russia / Ukraine: A daughter of Russian opposition leader Boris Nemtsov said Vladimir Putin bears responsibility for his murder. Zhanna Nemtsova told the BBC Putin was “politically” to blame.

Russia’s FSB, successor to the KGB, announced it had arrested up to five men, all from Chechnya, on suspicion of killing Nemtsov. Russian media quoted sources close to the investigation as saying the arrests were aided by surveillance camera footage and phone record and evidence left in the getaway car. But there was no word on who might have ordered the killing.

One of the men charged over the murder told prison visitors that he was tied up for two days with a bag on his head, and only confessed to the killing so that a friend would be freed.

The opposition expressed skepticism about the news of the arrests, especially with the theory being advanced in some Kremlin and Chechen circles that the killing was in retaliation for Nemtsov’s defense of the Charlie Hebdo cartoons of the Prophet Mohammed.

Ms. Nemtsova said, “After (her father’s) death the opposition is beheaded and everybody is frightened.”

Editorial / Washington Post

“The aftermath of the murder of Russian opposition leader Boris Nemtsov has been chilling even by the sinister standards of Vladimir Putin. Ten days after the gangland-style hit on a bridge near the Kremlin, police arrested and charged several ethnic Chechens, including one who was said to have confessed. That man, Zaur Dadaev, turns out to be the former deputy commander of an elite police squad controlled by the Chechen leader Ramzan Kadyrov, a fierce Putin loyalist. Mr. Kadyrov quickly praised the suspect as ‘a real patriot of Russia.’ Mr. Putin, meanwhile, chose Monday to present Mr. Kadyrov with an Order of Honor, along with Andrei Lugovoi, the leading suspect in the 2006 London murder of another Kremlin critic.

“If this all seems rather unsubtle, then that may be the point. Mr. Kadyrov, whom the Russian leader installed as Chechnya’s absolute ruler and who in turn serves as a Kremlin attack dog, has been a suspect in the unsolved assassinations of other Putin opponents, including of journalist Anna Politkovskaya, who was gunned down on Putin’s birthday in 2006. In each instance Mr. Putin has shielded and defended Mr. Kadyrov. In the Politkovskaya case, several Chechens were arrested and eventually convicted of the killings in questionable trials that never explained who had ordered the murder.

“The suspects in the Nemtsov killing also look like fall guys. According to a member of the Kremlin’s official human rights advisory council, three of the five suspects arrested were probably tortured; a sixth was reported to have blown himself up with a hand grenade. Those abused include Mr. Dadaev, who reportedly retracted what he said was a forced confession....

“Of course, there is no proof that either Mr. Kadyrov or Mr. Putin were involved in Mr. Nemtsov’s murder, and there may never be. But Russians following the case have gotten a clear message. Anyone who opposes the Putin regime, no matter how prominent, can be killed – and those responsible are more likely to receive a Kremlin medal than a court summons.”

In an interview with the Financial Times’ Kathrin Hille, Russian opposition leader Alexei Navalny said the West should impose travel bans and asset freezes on dozens more oligarchs and officials loyal to President Putin, as well as members of their families. This would include, for example, Roman Abramovich, owner of the Chelsea football club. “You have to hit the propagandists of war, the ones who finance the war, the real party of war,” said Navalny.

Navalny said that after the Nemtsov murder, “Putin was bent on ruling until the end of his life,” as reported by Ms. Hille, “and systematically installing the younger generation of families from his inner circle in positions across Russia’s economy.”

Navalny, more pessimistic than he’s been since a protest movement against election fraud sprung up after Putin’s return to the presidency in 2012, said:

“A few years ago, we thought this was just nepotism, but now we realize that this is long-term planning: he is installing dynastic rule,” Navalny said of Putin. He said only a different set of western sanctions targeting the clans that help Putin control Russia’s wealth has a chance of success.

Navalny appears lost without Nemtsov. “He was the communicator,” he said. “He could bring together everyone in the opposition from liberals to the far left, but he would also talk to people inside the system, like the Communists, who did not accept his views but were open to dialogue with him.”

One more...the press secretary of self-exiled opposition figure Mikhail Khodorkovsky found a funeral wreath outside the door of her Moscow apartment this week.

Turning to Ukraine, the International Monetary Fund approved a $17.5 billion loan program for Kiev, including an immediate disbursement of $5 billion to help the government stave off default. It is hoped the eventual size of the four-year program, including aid from the United States and the European Union, hits $40 billion.

The Ukrainian economy is expected to plunge nearly 12% this year (Russia’s is projected to contract 4.5%).

As for the latest ceasefire negotiated in Minsk, it appears to be largely holding, though on Wednesday the U.S. said Russian separatists had violated the agreement, as Russia denies its sending troops and weapons into eastern Ukraine.

The U.S. did announce it would provide more substantial arms and military equipment this week in the form of Humvees, drones and counter-mortar radars, but once again is declining to include “lethal aid” that members of Congress and Kiev have been clamoring for.

Separately, Poland has issued a call for people to join the 20,000-strong national reserve over fears Russia could eventually move on it.

German Chancellor Angela Merkel said she would boycott Russia’s May commemoration of the 70th anniversary of the end of the second world war in protest over the Ukraine crisis.

Finally, you have the situation with Putin’s prolonged absence. As I go to post, he hasn’t been seen in about ten days. Speculation flared after he postponed a visit to his Kazakh counterpart, Nazarbayev. A Kazakh spokesman couldn’t provide a reason, but then a Kazakh government source said that “it looks like he [Putin] has fallen ill.”

So then the rumor mill exploded, while Putin’s spokesman, Dmitry Peskov, said Wednesday that Putin was “perfectly healthy.” When asked by a Russian news station if Putin’s handshake remained firm, Peskov said it was strong enough to break hands; adding the president has been working “exhaustively” with documents.

Working with documents was the reason often given when Boris Yeltsin used to disappear.

But the Kremlin did itself no good when it published a photo, dated March 11, purporting to show Putin meeting with the leader of a northern republic, only local media reported the meeting had taken place a week prior. [Moscow Times]

Putin did meet with Italy’s Prime Minister Matteo Renzi on March 5. 

China: From Geoff Dyer and George Parker / Financial Times

“The White House accused the UK on Thursday of a ‘constant accommodation’ of China after the British government decided to join a new China-led financial institution that could become a rival to the World Bank.

“The rare rebuke of one of the U.S.’s closest allies comes as Britain prepares to announce it will become a founding member of the $50bn Asian Infrastructure Investment Bank, making it the first G7 country to join an institution launched by China last October....

“Relations between Washington and David Cameron’s government have been strained over recent weeks, with senior U.S. officials criticizing Britain over falling defense spending, which could soon fall below the NATO target of 2 percent of GDP.”

The British decision was made with “virtually no consultation with the U.S.,” according to a senior administration official.

I agree with President Obama on this one. But then many European nations have been fawning all over China. What will be interesting is the issue of Hong Kong. The House of Commons’ foreign affairs committee said the British government should press China harder on the issue and demand political reforms. Some MPs were forbidden last fall from visiting Hong Kong during the protests and the Cameron government said little.

Meanwhile, China has forced video websites to delete the environmental documentary, “Under the Dome,” the story of China’s catastrophic air pollution that had attracted hundreds of millions of views on Chinese websites within days of its release a week earlier. The damage is already done, though now the intrigue is over who sought to kill it.

We know the investigative reporter responsible for it...he worked for China Central Television, with help from the state network, but he also had support from the environmental ministry and some inside the party, as reported by the New York Times’ Edward Wong.

But then once it came out, other government officials quashed it and this came a day after the start of the annual session of the National People’s Congress.

Finally, David Shambaugh, professor of international affairs and the director of the China Policy Program at George Washington University, had an essay last weekend in the Wall Street Journal titled “The Coming Chinese Crackup.” Among some of his things to look for:

“Despite appearances, China’s political system is badly broken, and nobody knows it better than the Communist Party itself. China’s strongman leader, Xi Jinping, is hoping that a crackdown on dissent and corruption wil shore up the party’s rule. He is determined to avoid becoming the Mikhail Gorbachev of China, presiding over the party’s collapse. But instead of being the antithesis of Mr. Gorbachev, Mr. Xi may well wind up having the same effect. His despotism is severely stressing China’s system and society – and bringing it closer to a breaking point....

“In 2014, Shanghai’s Hurun Research Institute, which studies China’s wealthy, found that 64% of the ‘high net worth individuals’ whom it polled – 393 millionaires and billionaires – were either emigrating or planning to do so. Rich Chinese are sending their children to study abroad in record numbers...

“(Since taking office in 2012,) Xi has greatly intensified the political repression that has blanketed China since 2009. The targets include the press, social media, film, arts and literature, religious groups, the Internet, intellectuals, Tibetans and Uighurs, dissidents, lawyers, NGOs, university students and textbooks....

“Some experts think that Mr. Xi’s harsh tactics may actually presage a more open and reformist direction later in his term. I don’t buy it. This leader and regime see politics in zero-sum terms: Relaxing control, in their view, is a sure step toward the demise of the system and their own downfall....

“Looking ahead, China-watchers should keep their eyes on the regime’s instruments of control and on those assigned to use those instruments. Large numbers of citizens and party members alike are already voting with their feet and leaving the country or displaying their insincerity by pretending to comply with party dictates.

“We should watch for the day when the regime’s propaganda agents and its internal security apparatus start becoming lax in enforcing the party’s writ... When human empathy starts to win out over ossified authority, the endgame of Chinese communism will really have begun.”

Nigeria: After pledging allegiance to ISIS, Boko Haram is suspected of launching five suicide bomb attacks on the northeastern city of Maiduguri, killing at least 58.

Brazil: The government of President Dilma Rousseff has been roiled by a Supreme Court ruling approving of an investigation into dozens of politicians for their alleged involvement in a kickback scheme at the state-run oil firm Petrobras. The allegations involve private firms paying off corrupt officials to gain contracts and among the 54 accused of taking bribes are the speakers of both chambers of Congress, and former President Collor de Mello; though current President Rousseff, who chaired the board at Petrobras for seven years when much of the corruption was supposedly taking place, has been cleared of any direct involvement.

The scandal has been costly to Petrobras, one of the largest energy businesses in the world. It has lost a ton of market value since the charges were first brought last September. [Like from $20 to $5.00 in that time period.

Random Musings

--Editorial / Washington Post

“Hillary Rodham Clinton offered a soupcon of regret at a news conference Tuesday for having used private e-mail exclusively during her nearly four years as secretary of state. ‘Looking back, it would’ve been better’ if she had not used a private e-mail account for official business, she conceded. Ms. Clinton said she decided to do so for ‘convenience’ because ‘I thought it would be easier to carry just one device for my work and for my personal e-mails instead of two.’

“Ms. Clinton noted that it is a ‘government employee’s responsibility to determine what’s personal and what’s work-related.’ In general, this has been true; if a State Department official writes a personal note to a family member from a work e-mail address, that official can decide to withhold it from government archives. Each official has a responsibility to preserve federal records – messages and documents about policies and decisions. The methods of preservation have differed over time and among agencies; some still use paper printouts, and others have software options for preserving a record or e-mail. Government agencies are required to move to electronic preservation of e-mail records by the end of 2016.

“What Ms. Clinton did not mention was that the Obama administration had clearly directed officials to use government e-mail networks for official business. She departed from this for ‘convenience.’ Did she know about the policy? Did others know of her exclusive use of private e-mail? Did anyone raise an objection?

“By Ms. Clinton’s account Tuesday, the sorting of more than 60,000 e-mail messages from her time at the State Department – to separate the personal and the work-related – was carried out entirely by her and her lawyer. She claims that all the work messages have been turned over to the department, but there is no way to check. She disclosed Tuesday that the remainder, the personal e-mails, were deleted. Why did she not provide the work-related e-mails when she left the department? Had she used government e-mail in the first place, it is possible that the messages would have been preserved there, and there might have been fewer doubts today.

“Ms. Clinton also confirmed that she used a mail server at her home in New York, which was also for former president Bill Clinton, ‘on property guarded by the Secret Service’ – as if the primary risk was not cybertheft but rather burglars sneaking in to steal floppy disks. Ms. Clinton said she did not discuss classified material in e-mail, but surely her days and messages were taken up with ‘sensitive but unclassified’ matters that would be of interest to snoopers. She didn’t address that security issue, nor did she say anything about whether the State Department had security concerns about her private arrangement.

“In the end, it is clear Ms. Clinton was acting in a gray zone, one created in part by the rapid pace of technological change. But it is also apparent that her decisions on her e-mail were based on what was best for her – what was ‘convenient’ and not so much for the public trust.”

As for 2016, there is pressure for Clinton to move up her formal announcement that she is a candidate in order to shift the focus to issues other than her server. Hillary Rosen, a Democratic strategist, told the Wall Street Journal’s Peter Nicholas, as a declared candidate she would have been able to deliver a positive message “every day and all day. That’s the downside of starting late.”

Instead, Ms. Clinton’s dreadful performance on Tuesday caused House committee chairman, Rep. Trey Gowdy (R-S.C.), to call for an independent arbiter to verify that she didn’t hold back emails the public, by law, was entitled to see.

Editorial / Wall Street Journal

“Hillary Clinton’s admirers say she’ll run for President in part by invoking the glory days of the 1990s. For a taste of that era, we recommend her brief press conference Tuesday explaining why she had used a private email account as Secretary of State. It had everything nostalgia buffs could want – deleted evidence, blustery evasions, and preposterous explanations that only James Carville could pretend to believe.

“In the preposterous category, Mrs. Clinton explained that she preferred a private email account simply as a ‘convenience’ because it allowed her to ‘carry just one device for my work and for my personal emails instead of two.’ We know plenty of people who have two accounts on the same device, and they don’t even have a retinue of aides to help carry their devices.

“To allow for such splendid convenience, Mrs. Clinton had to go to the inconvenience of getting her own domain name for this secret email on the day of her confirmation hearing in 2009, and then setting up a system to manage it. Her ‘one device’ excuse reminds us of her explanation from 1993 that she had made a 10,000% killing on cattle futures by reading the Wall Street Journal....

“Asked on Tuesday why she didn’t turn over the emails from the start, Mrs. Clinton ducked the question and claimed ‘I’d be happy to have somebody talk to you about the rules.’ She then added a new entry for the Clinton Ethics Pantheon: ‘I fully complied with every rule that I was governed by.’ Just not the policy she was supposed to abide by.

“The biggest news Tuesday was Mrs. Clinton’s disclosure that she has since destroyed the rest of the emails that she didn’t turn over to State. These were ‘personal’ business, she averred, and ‘I didn’t see any reason to keep them.’ They were about, you know, things like daughter Chelsea’s wedding, her mother’s funeral, and her ‘yoga routines,’ and ‘no one wants their personal emails made public.’

“Now, that’s what we call convenient. With those emails gone, and her private server off-limits to investigators, no one else will be able to see how much of that ‘private’ business really was private....

“The entire performance raised more questions than it answered, but if the 1990s pattern holds don’t expect any more explanations. The Clinton method is to settle on a defense and then hunker down unless some new information forces her hand. Maybe the emails will show up in a White House bedroom in 2018, like her Rose Law firm billing records once did....

“Which ought to make Democrats nervous. They’ve convinced themselves that only Mrs. Clinton can save them from a Republican government in 2017. They might want to delete that assumption and think again.”

Maureen Dowd / New York Times

“The Clintons don’t sparkle with honesty and openness. Between his lordly appetites and her queenly prerogatives, you always feel as if there’s something afoot.

“Everything needs to be a secret, from the Rose Law Firm records that popped up in a White House closet two years after they were subpoenaed to the formulation of her health care plan.

“Yet the Clintons always act as though it’s bad form when you bring up their rule-bending. They want us to compartmentalize, just as they do, to connect the dots that form a pretty picture and leave the other dots alone.

“If you’re aspiring to be the second president in the family, why is it so hard to be straight and direct and stand for something? Why can’t you just be upright and steady and good?

“Given all the mistakes they’ve made, why do they keep making them? Why do they somehow never do anything that doesn’t involve shadows?”

Peggy Noonan / Wall Street Journal

“For a while I’ve assumed Hillary Clinton would run for her party’s nomination and be a formidable candidate in the general election. After Tuesday’s news conference I’m not so sure.

“Did she seem to you a happy, hungry warrior? She couldn’t make eye contact with her questioners, and when she did she couldn’t sustain it. She looked at the ceiling and down at notes, trying, it seemed, to stick to or remember scripted arguments. She was shaky. She couldn’t fake good cheer and confidence. It is seven years since she ran for office. You could see it....

“This wasn’t high-class spin. These were not respectable dodges. They didn’t make you grudgingly tip your hat at a gift for duplicity. I could almost feel an army of oppo people of both parties saying, ‘You can do better than that, Hillary!’....

“She didn’t look hungry for the battle, she looked tired of the battle....

“She has her causes – women’s rights, income inequality. But she can advance them in other ways....

“Maybe she doesn’t, really, want to run. Maybe she’s not sure she can. Or maybe she’ll go for it: It’s what she’s been going toward all her life.

“Maybe Democrats who saw that news conference will sense an opening and jump in. There’s the myth of the empty bench, but it won’t be empty if she leaves it.   That’s another law of physics: Nature abhors a vacuum.

“We all talk so much about the presidency and who’s got the best chance. Maybe it’s not Hillary. Maybe that’s over and no one knows, even her.”

As for President Obama and the email controversy...Michael D. Shear / New York Times:

“President Obama said Saturday that he had learned only last week that Hillary Rodham Clinton used a private email system for her official correspondence while she was secretary of state.

“In an interview with Bill Plante of CBS News, Mr. Obama said the policy of his administration was to ‘encourage transparency’ and that he was pleased that Mrs. Clinton had instructed the State Department to turn over her emails for archiving.

“ ‘My emails, the Blackberry I carry around, all those records are available and archived,’ Mr. Obama said... ‘I’m glad that Hillary’s instructed that those emails about official business need to be disclosed.’....

“Mr. Obama did not address how he could have avoided noticing that Mrs. Clinton was sending emails from a ‘clintonemail.com’ address throughout the years she served in his administration.”

Then there’s Bill Clinton. His spokesman on Wednesday, the day after Hillary’s press conference, was forced to admit the former president never sent emails to his wife, disputing her claim “personal communications from my husband and me” was one reason she wouldn’t allow independent scrutiny of her computer system. In fact, Bill Clinton has repeatedly said he has only sent two emails in his entire life – both as president. One was to returning astronaut Jon Glenn after his return trip to space in 1998. The other was to troops serving in the Adriatic.

John Podhoretz / New York Post

“The person who gave a press conference Tuesday at the United Nations to explain the controversy over her emails will never be president of the United States.

“That Hillary Clinton – who spoke before the press for the first time about the strange private email system she set up during her tenure as secretary of state – delivered what may have been the worst public performance by a major American politician since Texas Gov. Rick Perry spent 53 seconds during a Republican debate in 2011 trying to remember the name of a government agency before giving up and saying, ‘Oops.’

“I don’t mean Hillary will never be president. I mean that Hillary will never be president....

“As she preps her 2016 run, Hillary Clinton shows every sign of having morphed into Dumb Hillary Clinton, and it’s only getting worse....

“The problem is that in playing dumb, she acts stupid.

“I’m talking about the Hillary Clinton who makes unforced errors every time she opens her mouth – the one who last year described herself as having been ‘dead broke’ in 2001 when she had $20 million in book advances coming her way. That moment of playing dumb was designed to make her seem more accessible to the hoi polloi she wanted to buy her new book.

“I mean the Hillary Clinton who said, ‘What difference, at this point, does it make?’ in 2013, when asked about security lapses under her watch on the night the Benghazi massacre took place. She said it because she was trying to make the point that Republicans were harping on a dead issue – but instead, she made herself seem indifferent to the deaths at Benghazi.

“On Tuesday, she informed us that she used her own server for her own email because it was too difficult for her to have two iPhones – so she was playing Dumb Hillary Clinton, with her implicit argument that it’s easier to have your own server in your own house than to use a government device. Who believes that?...

“The press corps covering the conference, and hundreds of reporters following it live on Twitter, seemed utterly agog at the falsity, the stonewalling and the flashes of anger that offered the only real indication she knows perfectly well how damaging all this might be for her....

“Mrs. Clinton is going to have to transform herself, to get rid of Dumb Hillary and find a new persona to cope with troubled times, because the person who made so horrendous an accounting of herself yesterday has no future other than ignominious defeat.”

Charles Krauthammer / Washington Post

“The point of regulations is to ensure government transparency. The point of owning the server is to ensure opacity. Because she holds the e-mails, all document requests by Congress, by subpoena, by Freedom of Information Act inquiries have ultimately to go through her lawyers, who will stonewall until the end of time – or Election Day 2016, whichever comes first.

“It’s a smart political calculation. Taking a few weeks of heat now – it’s only March 2015 – is far less risky than being blown up by some future e-mail discovery. Moreover, around April 1, the Clinton apologists will begin dismissing the whole story as ‘old news.’

“But even if nothing further is found, the damage is done. After all, what is Hillary running on? Her experience and record, say her supporters.

“What record? She’s had three major jobs. Secretary of state: Can you name a single achievement in four years? U.S. senator: Can you name a single achievement in eight years? First lady: her one achievement in eight years? Hillarycare, a shipwreck.

“In reality, Hillary Clinton is running on two things: gender and name. Gender is not to be underestimated. It will make her the Democratic nominee. The name is equally valuable. It evokes the warm memory of the golden 1990s, a decade of peace and prosperity during our holiday from history.

“Now breaking through, however, is a stark reminder of the underside of that Clinton decade: the chicanery, the sleaze, the dodging, the parsing, the wordplay. It’s a dual legacy that Hillary Clinton cannot escape and that will be a permanent drag on her candidacy.

“You can feel it. It’s a recurrence of an old ailment. It was bound to set in, but not this soon. What you’re feeling now is Early Onset Clinton Fatigue. The CDC is recommending elaborate precautions. Forget it. The only known cure is Elizabeth Warren.”

--But for all the flack Hillary Clinton took this week, a new Wall Street Journal/NBC News poll showed 86% of prospective Democratic primary voters said they could see themselves supporting Clinton for the nomination. That compared with 54% who said the same of Vice President Biden and 51% who said so of Sen. Elizabeth Warren.

--On the Republican side, the WSJ/NBC survey revealed 49% of people who plan to vote in GOP primaries said they could see themselves supporting Jeb Bush and 42% said they couldn’t. The two who start out with the best positives are Sen. Marco Rubio (56% could see supporting him, 26% couldn’t) and Scott Walker (53% positive, just 17% negative). 

Conversely, New Jersey Gov. Chris Christie’s numbers are miserable. 32% could support him, 57% wouldn’t.

A McClatchy-Marist College poll found that only 6% of Republicans and GOP-leaning independents favored Gov. Christie for the 2016 Republican nomination, with Jeb Bush at 19%, Scott Walker at 18%, and Mike Huckabee at 10%.

A Quinnipiac University poll last month gave Christie just 4% of likely Iowa Republican caucus-goers, vs. Walker with 25%, Rand Paul 13%, and Ben Carson and Huckabee at 11%. [Bush 10%.]

Ergo, what the heck is Christie thinking he still has a shot?  The McClatchy-Marist poll had Walker at just 3% in December and Christie at 10%.

Back to Marco Rubio, those are strong numbers in the WSJ/NBC survey. You obviously couldn’t have a Bush/Rubio ticket, but Walker/Rubio is kind of interesting.

--And back to Christie, because sometimes it’s too easy, a new study by the National Association of State Retirement Administrators revealed that New Jersey’s record of funding its pension system is the worst in the country. As reported by Samantha Marcus for NJ.com:

“In a comparison of state’s contributions as a percentage of the annual required contribution, from fiscal year 2001 to 2013, New Jersey came dead last at 38 percent. Some states such as Connecticut, Montana, Maine and West Virginia exceeded required contributions.

“New Jersey and Pennsylvania were the only states whose payments over that time frame were less than half of what was recommended. All but six contributed at least 75 percent.”

Of course in looking at the time period, it’s not all about Christie, we’ve had other lousy governors here in my home state.

--Jeb Bush’s latest on education reform, as put forward in an op-ed for the Washington Post.

“Fundamentally, the needed transformation of our education system will never be achieved by Washington. The best reform ideas begin at the state and local level. That’s where reform will succeed....

“When I was governor, Florida began grading schools on an A-to-F scale in 1999 and offered dramatic school-choice options to parents. Now, 16 states grade their schools, 19 have choice programs and all but eight have charter school laws.

“These successes all have two things in common. The initiatives placed the needs of students first, and the federal government had nothing to do with them.

“That said, the federal government has a role in creating transparency to ensure that failure is unacceptable. Before the last reauthorization of ESEA [Elementary and Secondary Education Act] in 2001, known as No Child Left Behind (NCLB), most states had no accountability system. They plowed billions of taxpayer dollars into education bureaucracies, often getting nothing in return.

“NCLB changed that by creating a common yardstick. Now, all states participate in the National Assessment of Educational Progress, a series of high-quality tests known as the Nation’s Report Card. The results give us an apples-to-apples comparison among states. Annual testing and reporting also force states to confront their failures, especially the substandard education often offered to disadvantaged children.

“NCLB is far from perfect. It doesn’t give states the flexibility they need, and the system can be gamed. But those flaws can be fixed...

“The key to success is this: If we are to move forward on education reform, the states and local authorities must be allowed to lead. And for that to happen, it should be made clear in law that the federal government should always be in the back seat.”

--According to an annual survey conducted by the Associated Press-NORC Center for Public Affairs Research and the General Social Survey, only 11% of Americans are confident in the presidency, approaching the record low 10% from 1996. The 44% who now say they have hardly any confidence at all is at a record high.

Confidence in the Supreme Court is at an all-time low, just 23%. A mere 5% have confidence in Congress.

Only 7% have confidence in the press, another record low. Confidence in banks and financial institutions has risen from a low of 11% in 2010 to 15% today. The survey’s all-time high for banks was 42% in 1977.

About half have confidence in the military. Source: apnorc.org

--Bret Stephens / Wall Street Journal...on the Justice Department’s allegation, in a second report related to the Michael Brown / Ferguson case that accused the Ferguson police department of systemic racism.

“Then there’s the report’s abuse of statistics, notably of the fact that African-Americans are 67% of Ferguson’s population but are disproportionately arrested for crime.

“Is this racism? The Missouri Statistical Analysis Center notes that in 2012 African-Americans, about 12% of the state’s population, constituted 65% of murder arrests and 62% of murder victims. To suggest that the glaring statistical disproportion between relative population size and murder rate is somehow a function of race would be erroneous and offensive. Yet tarring a police force as racist for far smaller statistical discrepancies is now one of the privileged ‘truths’ of 21st century America.

“The lesson of Darren Wilson is that there is no truth in narrative. And the lesson of Ferguson is that there is no truth in statistics. There is truth in fact. There is truth in reason. There is truth in truthfulness. Nothing less.”

After two police officers were shot and wounded in Ferguson Wednesday night amid protests following the resignation of the police chief, Attorney General Eric Holder said:

“Such senseless acts of violence threaten the very reforms that non-violent protesters in Ferguson and around the country have been working towards for the past several months,” adding the shooting “turned his stomach” with disgust.

Appearing on Jimmy Kimmel’s program, President Obama said:

“I think that what had been happening in Ferguson was oppressive and objectionable and was worthy of protest. But there was no excuse for criminal acts.... Whoever fired those shots shouldn’t detract from the issue; they’re criminals,” he added.

They’re worse than that Mr. President.

--I was going to write about the latest Secret Service debacle but it’s another classic case of ‘wait 24 hours.’ The facts aren’t clear as I go to post. Wouldn’t be prudent.

--Pope Francis gave an interview to a tabloid in Argentina and commented on ISIS plots to assassinate him.

“Look, life is in God’s hands,” the pope told La Carcova news. “I have said to the Lord: take care of me. But if your will is that I should die or that they do something to me, I ask you one favor: that they don’t hurt me. Because I’m a real scaredy cat when it comes to physical pain.”

--The U.S. Geological Survey raised its estimate of the chance of a magnitude 8.0 or greater earthquake hitting California in the next three decades from 4.7% to 7%. As reported by the Los Angeles Times: “Scientists said the reason for the increased estimate was because of the growing understanding that earthquakes aren’t limited to separate faults, but can start on one fault and jump to others. The result could be multiple faults rupturing in a simultaneous mega-quake.”

Well that would suck. A massive 9.0 earthquake that hit off the Japanese coast in 2011 jumped fault boundaries, triggering the Fukushima tsunami.

--According to an investigative report by Gabriel Sherman in this week’s New York magazine, before he re-upped for five years as “Nightly News” anchor, Brian Williams asked NBC about replacing Jay Leno, which led to the low-rated, later canceled “Rock Center,” and then he pitched CBS CEO Les Moonves on succeeding David Letterman. Pathetic.

--After an extensive investigation, the Alabama Securities Commission has concluded Harper Lee is capable of making her own decisions with regards to the release of her second book, “Go Set a Watchman,” the follow-up to the 1960 classic “To Kill a Mockingbird.”

Alabama was compelled to look into reports Lee, 88, may have been a victim of elder abuse and that the permission to release her novel could have been coerced by her agent and other parties, including HarperCollins Publishers.

Joseph Borg, director of the state securities commission, said, “The first part of determining financial fraud, is ‘Do they understand what’s going on?’ Obviously, since I closed the file, it’s fair to say she understood.” [Wall Street Journal]

--I was in a fraternity at Wake Forest, Pi Kappa Alpha, and had friends at every other frat on campus, as I reflected on my college days with the news out of the University of Oklahoma this week. I’m proud of being as responsible as anyone in recruiting the first black into our frat in 1978, who went on to become our chapter’s president. I was ‘big brother’ to two other African-Americans, though neither stayed.   One left due to finances, the other just didn’t feel comfortable and joined a black organization. 

But that was a long time ago, for sure. With today’s social media, I wonder what I would have been involved in? Embarrassing party videos, no doubt, though I would have been seen singing a Bill Withers tune (“Lovely Day”), not some idiotic, racist rap screed.

However, in yet another case of my adage “wait 24 hours,” in the Oklahoma case, it took a day for many, including constitutional scholars, to say, hey, you can’t expel the fraternity members for a racist chant on a bus. Erwin Chemerinksky, dean of the law school at the University of California, Irvine, told the New York Times:

“The courts are very clear that hateful, racist speech is protected by the First Amendment.” If the students’ chant constituted a direct threat, that’s one thing, but in this case, Chemerinksy and legal scholars have said, there is no direct threat or provocation. [Manny Fernandez and Erik Eckholm / New York Times] 

That said, no way the kids would want to stay, I’m assuming, and this whole ugly episode is yet another example of young people needing to be extremely careful in all they do on social media.

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Pray for the men and women of our armed forces...and all the fallen, including the eleven who perished in the tragic training accident off the Gulf Coast. One Marine lived ten minutes from here.

God bless America.
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Gold closed at $1152...lowest weekly close since April 2010
Oil $44.84...lowest since Feb. 2009

Returns for the week 3/9-3/13

Dow Jones -0.6% [17749]
S&P 500 -0.9% [2053]
S&P MidCap +0.3%
Russell 2000 +1.2%
Nasdaq -1.1% [4871]

Returns for the period 1/1/15-3/13/15

Dow Jones -0.4%
S&P 500 -0.3%
S&P MidCap +2.7%
Russell 2000 +2.3%
Nasdaq +2.9%

Bulls 53.6
Bears 14.1 [Source: Investors Intelligence...bear number unchanged for four weeks.]

Happy St. Patrick’s Day. I appreciate your support.

Brian Trumbore