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06/20/2015

For the week 6/15-6/19

[Posted 11:00 PM ET, Friday]

Edition 845

Washington and Wall Street

For the next few days, through Monday and most likely beyond, the key story remains Greece, which I’ll cover in a bit. It could get hairy.

In the United States, the Federal Reserve’s Open Market Committee met and held the line on interest rates, though Chair Janet Yellen and her band of merry pranksters acted like the current course leads to a hike in short-term interest rates come September, though equities rallied because Yellen made clear, as did vice-chair Stanley Fischer a few weeks back, that any hike in rates would be done extremely slowly...like drip.....drip....drip. Or as Fischer put it, the central bank would be “crawling” as it pursued incremental increases. Which is not exactly what savers want to hear, but then the Fed has long made it clear they couldn’t give a damn about you. 

The Fed accompanied its statement with its latest projections for GDP, which of course it’s never even remotely close to. For example, back in December, the Fed said the economy would grow 2.6% to 3.0% in 2015, but now owing to the dreadful first-quarter performance (-0.7%) the Fed says we’ll grow at 1.8% to 2.0%, a rather significant adjustment.

The Fed also says the funds rate will be at 0.625% come 12/31, and 1.65% in December 2016, which, again, means rates will be rising ever so slowly, if and when they get started.

The central bank said the economy is now “expanding moderately” following the first-quarter winter debacle, as it sees better consumer spending and general improvement in the housing sector, alongside a stronger labor market.

Wages are improving, and I still maintain the Fed will be forced at some point to raise rates a bit more than they currently plan to (assuming Europe doesn’t implode...or China crash).

Editorial / Wall Street Journal

“The Fed missed the dive in GDP in the first quarter and now predicts a more modest snap back to growth than it previously predicted.

“This has become standard operating practice going back for nearly all of the current recovery. The Fed has consistently estimated that its near-zero interest rate policy and bond buying would produce faster growth. Yet each year yields disappointment. Then the Fed used the reality of slower growth to explain why it needs to continue the policies that haven’t produced faster growth. The Fed has been in a perpetual policy feedback loop.

“The Open Market Committee’s predictions for interest rates on Wednesday seemed to forecast that it would finally begin lifting rates off zero by the end of the year. Then again, only some months ago the forecast had been that the Fed would start raising rates this month.

“Maybe the committee should consider that its extended indecision is leading to economic uncertainty that is hurting investment and thus contributing to slower growth. A fed funds rate of 0.25% or even 1% is still extraordinarily accommodative policy, so why not just go ahead and do it?”

Hear hear.

As for the economic data this week, May industrial production came in at -0.2%, worse than expected, while May housing starts fell 11.1% from April. However, the data on permits was stronger than forecast.

Consumer prices for May were in line, up 0.4%, up 0.1% ex-food and energy, while the year over year figure is unchanged, and up 1.7% on core.

Then you have the trade deal, the Trans-Pacific Partnership that is one of President Obama’s top remaining goals, which flamed out last Friday in a big way, 126-302, when it came to the second piece of legislation that was part of the entire package.

So early this week, House Speaker John Boehner and President Obama agreed on imposing a temporary rule whereby Boehner was to have until July 30 to bring up the trade debate any time for a do-over on the companion bill.

Then on Thursday, the House, by a 218-208 vote, voted again to give Obama fast-track authority to submit trade deals to Congress for an up-or-down vote, without amendments.

But it’s still tied to the worker-aid program, known as Trade Adjustment Assistance, or TAA.

And now the Senate will vote on fast-track, though some pro-trade Senate Democrats say they won’t vote for it without evidence TAA will pass both chambers.

House and Senate Republicans have agreed to pass TAA separately, and at week’s end, Senate Majority Leader Mitch McConnell said passage of the entire package was still possible, but that it would take “trusting each other to get there.”

But labor unions are still vowing to pressure Senate Democrats to oppose fast-track.

Next week the ball is in the Senate’s court, and actually we’re now talking four bills, not two, to be approved, though some pro-trade Democrats are saying they want all four to pass together instead of one by one.

McConnell said it has to be one at a time, starting with fast-track. Back in May, the Senate passed fast-track 62-37, with 14 Democrats joining 48 Republicans.

Just as in the case with Greece, we can’t do more than wait to see what happens next week.

Responding to last week’s shenanigans by Nancy Pelosi, which took down her president....

Editorial / Washington Post

“This blow to the United States’ standing among its Pacific Rim allies, and to majority rule, is not the result of Mr. Obama’s allegedly high-handed personality, which, according to some reports, alienated Democrats in the final furious hours of lobbying. No one has had frostier dealings with the president than Republican House Speaker John A. Boehner or Ways and Means Committee Chairman Paul Ryan, yet they managed to put that aside for the sake of a shared goal: the passage of fast-track authority.

“No, what we have here is a desperate, and somewhat cynical, maneuver by the opponents of fast-track authority, and it goes like this. Trade Adjustment Assistance is an aid program for workers displaced by imports; Democrats and their allies in organized labor have backed it for decades. It runs out in September, but in order to reassure Hill Democrats and attract votes for fast-track authority, Mr. Obama insisted on linking its passage to a bill reauthorizing (and expanding) the assistance program for six years. The Republicans agreed. However, once organized labor realized that it was not going to be able to deny the president a majority for fast-track authority, it began trying to stop that measure by pressuring House Democrats to kill the assistance program – and labor leaders succeeded, because a majority of Democrats, including, crucially, minority leader Nancy Pelosi, went along.

“In short, the forces opposing fast-track authority turned a long-standing Democratic Party policy priority into a short-term political hostage. So what if the assistance program – intended to help workers displaced by trade regardless of whether the president’s new free-trade measures are ever passed – is now on course to expire in September? Apparently opponents despise free trade even more than they like helping its purported victims.”

Lawrence Summers / Financial Times

“Repudiation of the TPP by Congress would neuter the presidency for the next 19 months. It would reinforce concerns that the vicissitudes of domestic politics are rendering the U.S. a less reliable ally. Coming on top of U.S. failure to stop or join the Asian Infrastructure Investment Bank, it would signal a lack of U.S. commitment to Asia at a time when China is flexing its muscles. And it would strengthen companies overseas at the expense of U.S. businesses....

“(The) global economic challenge is profoundly different from a generation ago. Just after the cold war and the Latin American debt crisis, and with Asia’s China-led renaissance in its early stages, the challenge was to enable new markets to emerge. Trade agreements that encourage adoption of market institutions in developing economies and helped them access the industrial economies were crucial in creating a global economy. Today, we have such an economy, one that has supported the greatest economic progress in emerging markets. It works spectacularly well for capital and a cosmopolitan elite that moves effortlessly around the world. But it presses down on the middle classes who lack the wherewithal to take advantage of new global markets and who do not want to compete with low-cost foreign labor. Our challenge now is not to create more globalization, but to make sure the globalization we have works for all our citizens.

“Ultimately, trade diplomacy must be one component of a broader approach whose primary stakeholders are not just global companies but also those concerned with economic equity, the environment, opportunities for workers to migrate and financial stability. If the TPP is to be secured, there must be clear signs that international economic diplomacy will turn to these concerns.”

Europe and Asia

The European Union has called an emergency summit of eurozone leaders after finance ministers this past Thursday were unable to reach a deal with Greece at bailout talks in Luxembourg and said no agreement was in sight.

Donald Tusk, president of the European Council, announced he would summon all eurozone presidents and prime ministers to Brussels to find a solution.

“It is time to urgently discuss the situation of Greece at the highest political level,” Tusk said in a statement.

Greece is trying to tap its last 7.2bn euro tranche of aid from the bailout program before it expires June 30. On that day, it is to repay a 1.5bn euro loan to the International Monetary Fund, which was to have been paid out in four installments over the course of the month but the IMF allowed Athens to bundle the payments for the last day.

It is still possible that the EU, European Central Bank, European Commission and IMF could attempt to drag things out even beyond June 30, or that Greece could receive a bailout extension and further funding through year end or as far out as next March, but the only way this is going to happen is if Greece puts something substantial on the table, like further pension reforms, and the Greek government of Prime Minister Alexis Tsipras has said there is no way his government will do so. In addition, in recent weeks, Tsipras has been demanding debt relief, which for most in the eurozone is a non-starter.

Jeroen Dijsselbloem, the Dutch finance minister who chairs the ministerial committee, acknowledged for the first time a third extension to the bailout would be needed for Greece to unlock the 7.2bn.

“Let’s say that we do reach an agreement, it’s unthinkable that the implementation and then disbursement will also have to take place before the end of the month,” he said. “That’s unthinkable. So in that scenario we would need an extension.”

Dijsselbloem said talks ended with no progress the other day because Greece put forward “too little measures... assessed to be credible.”

It was up to Greece to submit new proposals in the next few days, and the “ball is clearly in Greece’s court to seize that last opportunity,” he said.

Christine Lagarde, head of the IMF, said Greece’s proposals “cannot be smoke and mirrors.” Lagarde also said Greece won’t be given a grace period if it fails to pay the 1.5bn euros due to the fund.

“It will be in default – it will be in arrears vis-à-vis the IMF, yes, on July 1.”

Lagarde spoke after it was revealed the Greek government has suffered a collapse in revenues as companies and individuals delayed filing tax returns amid concerns emergency levies could be imposed in order to secure a deal from the creditors.

As reported by the Financial Times, “Greek government revenues in May were 900m euro, or 24 percent short of the monthly target, according to preliminary budget figures. It had met projections for the previous three months.”

Then you have the issue of the banks. At week’s end, the European Central Bank and Greek officials were trying to reassure citizens the banks would remain open next week, amid rumors they could be closed come Monday morning. Deposits have been flooding out, though it is not a classic “bank run” in that there has been no disorder on the streets in front of the institutions. At least not yet.

But while the ECB supplied more liquidity on Friday to the banks, with another 1.2bn flooding out today, just how long this will continue is probably a day-to-day supposition.

The key player opposite Greece remains German Chancellor Angela Merkel, who is determined to keep Greece in the eurozone, even as many in her own ruling party have publicly stated, let the country go.

“We are convinced – where there’s a will there’s a way,” Merkel told parliament. “When the politicians in Greece muster this will, then an agreement with the three institutions is still possible.”

Merkel’s finance minister, Wolfgang Schauble, is among the leading skeptics.

Merkel did chastise Greece, saying it “has constantly delayed several essential structural reforms,” while contrasting Athens with the likes of Ireland, Spain and Portugal, which have, Merkel said, implemented reforms.

The Greek central bank urged the country’s leaders to agree to a deal already on the table or risk an “uncontrollable crisis.” Finance Minister Yanis Varoufakis accused the bank of fanning liquidity fears in an “astonishing” fashion. Varoufakis said central banks have a duty to “douse any concerns about liquidity, then provide liquidity when it is lacking.”

Tsipras said Greece was being “blackmailed” and that there was an effort under way to spur capital flight, though no conspirator was named.

Among some of the other statements from the past week....

Michel Sapin, France’s finance minister, told France Info radio: “Greece has been insolvent for five years.  It survives thanks to European taxpayers. But if it were to leave the euro, that would be a complete catastrophe for Greece.”

Zoi Konstantopoulou, the speaker of the Greek parliament and a member of Syriza, refused to accept the Greek central bank’s report that failure to reach an accord would “mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country’s exit from the euro area – and most likely – from the European Union.”

Instead, Konstantopoulou said Greece’s debt is “odious” and shouldn’t be repaid.

Jean-Claude Juncker, the European Commission president: “I don’t care about the Greek government. I do care about the Greek people, mainly the poorest part.”

The European Central Bank holds 27bn euro in Greek bonds, with repayments of 3.5bn in July and 3.2bn in August; a legacy of the 2012 debt restructuring.

The Bundestag, German parliament, is now on recess and would have to be called back to approve any new Greek deal.

Philip Stephens / Financial Times

“In Berlin, as in capitals across Europe, politicians and policy makers have started thinking about the day after. Maybe that should be the week, month and year after. Step one is to prepare for the blame game if the Greek government decides to default. Step two asks what happens next. Exit from the euro and, possibly, from the EU? A failing state collapsing into a failed one? A Balkan foothold for Russia’s Vladimir Putin?

“Amid this swirl, I have heard half a dozen good reasons why German chancellor Angela Merkel and her fellow eurozone leaders – Madrid, Lisbon and Dublin to name but three take, if anything, a tougher line towards Athens – should call Greece’s bluff. Not from any sense of self-righteousness, nor in a spirit of punishment or retribution, but because negotiations have not thrown up a better alternative.

“Greek Prime Minister Alexis Tsipras had not a bad story to tell after his election victory in January. Greece needed debt relief; and the Syriza-led government had promised voters it would smash the clientelism that poisons the nation’s politics and economics. An objective observer would have spotted a deal: radical reform of state institutions, the taming of the oligarchs and rolling back of the cartels and closed shops that impoverish the Greek people, and a sustained attack on corruption in return for the promise of debt writedowns.

“The goodwill has been squandered. Syriza’s promises have come to naught. The cliques, cartels and oligarchs flourish as before. And in talks with eurozone creditors Athens has displayed a toxic mix of arrogance, amateurism and blatant venality....

“It is unsurprising, then, that to walk the corridors in Berlin these days is to sense a hardening frustration. From the chancellery to the finance and foreign ministries, the message is that Greece’s fate rests with its government. If the loudest voices are heard among Ms. Merkel’s Christian Democrats, the chancellor’s Social Democrat coalition partners have also shed their earlier sympathy for Syriza.

“People close to the chancellor say she is absolutely prepared to see Athens tumble out of the euro...she is looking over her shoulder at a potential mutiny within her party if she strays too far from the finance minister’s [Schauble’s] line. The chancellor, it is sometimes forgotten, is a leader well practiced in the art of self-preservation.”

Euro/EU bits....

--I’ll get into “contagion” next week, but for now, due to the Greece situation, yields in the periphery rose sharply at midweek, with the yield on Spain’s 10-year hitting 2.54%, highest since August, while Italy’s traded at 2.46% and Portugal’s 3.39%, for both the highest since October.

But then they all rallied back by week’s end. [2.26% for Spain, 2.28% for Italy, 3.01% for Portugal.]

--Denmark had an election and the center-right opposition won a majority, dethroning Helle Thorning-Schmidt as Danish prime minister.

But the center-right candidate for prime minister led his Liberal party to their worst result in a quarter century and, instead, the big winners on the right were the Danish People’s Party.

It’s confusing. The DPP finished second overall to Thorning-Schmidt’s Social Democrats, and it’s unclear if the DPP will enter government or seek to support it from parliament as they’ve done before.

If they enter a center-right coalition with the third place Liberals, it would mark the third Nordic country to have a populist party in government after Norway and Finland.

The Social Democrats, on the other hand, would only be in power in one Nordic country, Sweden, for the first time since after World War II.

--Eurostats reported the final look at inflation for May was 0.3% annualized, vs. January’s -0.6%, which is good. Greece, though, saw prices fall 1.4% ann.

--Euro car sales rose at their slowest pace in six months in May, up just 1.4% year on year, according to the European Automobile Manufacturers’ Association; nonetheless the 21st straight month of expansion.

Sales were down 6.7% in Germany, yoy, and 3.5% in France, but up 14% in Spain and 11% in Italy.

--May retail sales in the UK rose a better than expected 0.2% month on month, up 4.4% ex-fuel year over year. The unemployment rate, 5.5%, remains at its lowest since 2008. And wages for the three months to April are up 2.7% year on year, vs. zero inflation, which is good, sports fans!

--One huge issue taking a backseat to the Greek debt crisis is immigration. The governor of the Veneto region in northeastern Italy, for example, called for the removal of migrants from lodging near tourist destinations, warning their presence could have a ‘devastating’ effect on the holiday season and cause a ‘boomerang effect’ on bookings. [James Politi / Financial Times]

I don’t blame the guy. It’s a very ugly situation, especially when you see some of the pictures. I wouldn’t go there if I knew what it looked like in some spots. There are other sites to visit in Europe.

But the governor is a member of the populist, anti-euro and anti-immigrant Northern League, and he’s in conflict with Prime Minister Matteo Renzi’s center-left government, which has called for 5,000 migrants to be shifted out of Sicily to northern regions.

For his part, Renzi is dealing with over 47,000 migrants who have crossed the Mediterranean the first five months of the year, according to the Italian interior ministry.

As for the rest of the EU and the failure to cooperate with Italy and Greece on the migrant issue, Renzi is threatening to issue temporary visas to enable migrants to travel beyond Italy under existing EU rules.

--Lastly, France’s National Front announced it had formed a new far-right bloc in the European Parliament. Euro Parliament groups must have at least 25 members from at least seven countries to qualify for $millions in funding and extra speaking time and last year, FN (Front National) leader Marine Le Pen failed to gain a seventh country.

But this year, a European Parliament member from the UK’s right-wing UK Independent Party (UKIP) moved over to the new bloc after she was expelled from UKIP because of questions concerning expense claims. So Le Pen’s National Front is joined by the Dutch and Austrian Freedom parties, Italy’s Northern League and Flemish Interest of Belgium, as well as lawmakers with the Polish Congress of the New Right.

Geert Wilders, representing the Dutch Freedom Party, told reporters, “Today is D-Day, it’s the beginning of our liberation.... We are the voice of the European resistance.”

Turning to Asia, China’s Shanghai Composite benchmark index suffered its worst weekly loss, 13.3%, since June 2008. The market has been in a bubble, pure and simple. I’ve written a number of times it will end badly and there is far more damage to come, though I’m not saying it’s straight down further from here. 

But this economy is headed into the crapper, equaling the color of its waterways and skies, and that will be very dangerous for the world as President Xi feels compelled to play the nationalism card.

In Japan, May exports rose 2.4% from a year earlier, as reported by the Ministry of Finance, less than expected.

Street Bytes

--Stocks rose on the week, owing to the benign Fed news, but they slumped some Friday on Greece concerns heading into the weekend.

Overall, the Dow gained 0.6% to 18015, the S&P 500 added 0.8% and Nasdaq rose 1.3%, hitting a new all-time high in the process on Thursday, 5132, before finishing the week at 5117.

--U.S. Treasury Yields

6-mo. 0.05% 2-yr. 0.62% 10-yr. 2.26% 30-yr. 3.05%

Treasuries rallied with the FOMC’s and Yellen’s comments, as well as a flight to safety due to Greece uncertainty. The 2-year rallied 11 basis points (0.73% to 0.62%), while the yield on the 10-year fell 13 bps.

--The two biggest U.S. health insurers by revenue, UnitedHealth Group Inc. and Anthem Inc., are looking to buy smaller rivals to cut costs as part of dealing with ObamaCare.

UnitedHealth made a preliminary approach to acquire Aetna, while Aetna has been looking at Human Inc., which is looking to sell.

Anthem and Cigna Corp. have also been in discussions.

Getting bigger helps the insurers gain leverage in negotiating rates with hospitals, which are also in a merger frenzy; 100 last year, or double the rate of 2009, according to Irving Levin Associates and the Wall Street Journal.

--According to the International Energy Agency, oil supply has exceeded demand globally for the past five quarters, the longest such stretch since 1997 and the Asian crisis. And there are no signs of a slowdown given OPEC is continuing to pump away, with the potential that Iran could increase its own production if it reaches a deal on the nuke front that would ease sanctions on its exports.

For its part, Saudi Arabia is trying to intensify pressure on U.S. shale drillers by further increasing its production.

--Gap announced it is closing 175 of its stores while eliminating 250 positions at headquarters. At least 140 of the stores to be shuttered will be in North America. An unknown number of positions will be lost on this front. The move will leave Gap (which also owns Old Navy and Banana Republic), with 800 Gap stores in North America.

--CVS Health Corp. said it was spending about $1.9 billion to buy Target Corp.’s health and clinic businesses; more than 1,660 pharmacies at Target stores in 47 states. CVS Health will operate the pharmacies inside Target stores and open branded pharmacies at new Target stores.

--90-year-old Hank Greenberg, the former CEO and largest shareholder of AIG, scored a pyrrhic victory in his lawsuit against the U.S. government over the terms of the 2008 bailout of his company.

Judge Thomas Wheeler ruled the government acted unlawfully when it seized 80% of AIG in exchange for a $182bn rescue package.

But, Wheeler said, “if not for the government’s intervention, AIG would have filed for bankruptcy. In a bankruptcy proceeding, AIG’s shareholders would most likely have lost 100% of their stock value.”

Ergo, Wheeler awarded no damages to Greenberg.

But, in terms of a moral victory for Greenberg, Wheeler found that “while the government publicly singled out AIG as the poster child for causing the September 2008 economic crisis, the evidence supports a conclusion that AIG actually was less responsible for the crisis than other major institutions” such as Morgan Stanley, Goldman Sachs and Bank of America.

Those institutions received emergency funds from the government, but it “did not demand shareholder equity, high interest rates, or voting control of any entity except AIG,” wrote Wheeler.

The government argued it acted properly in protecting the taxpayer’s interest. An appeal is expected because this decision carries major ramifications for any future crises.

Alas, Greenberg still can’t be happy. [Tom Braithwaite / Financial Times]

--L. Gordon Crovitz / Wall Street Journal

“For China and the Internet, last week [Ed. week of 6/8] was the best and worst of times. Just as China’s most successful technology entrepreneur toured the U.S. to encourage its small businesses to sell directly online to Chinese consumers, news broke about Chinese cyberattacks against the U.S. government so outrageous they demand harsh retribution.

“Few events have inspired Internet optimists as much as the presentation Alibaba founder Jack Ma gave to the Economic Club of New York. ‘Alibaba was founded in China, but it was created for the world,’ he told a full house at the Waldorf Astoria’s grand ballroom. ‘We want to connect small business in the West with the largest, fastest-growing market in the East.’ Mr. Ma’s company transacts 80% of China’s online commerce and expects to surpass Wal-Mart in sales this year. ‘We need more American products to go to China,’ Mr. Ma said, so that ‘Chinese consumers will get to buy the American products they want.’....

“But just as Alibaba is opening China to the world as never before, Chinese officials are daring to be cut off. The U.S. last week disclosed unprecedented hacking by China of confidential databases held by the White House Office of Personnel Management. In one incident, hackers obtained the records of more than four million federal employees, which include listings of ‘close or continuous contacts.’ That tells Beijing which of its citizens are in contact with American officials....

“Beijing devotes enormous resources to monitoring and censoring the Internet within its borders, so it is no surprise China is also an aggressive practitioner of cyberwar. The U.S. hasn’t done much by way of deterrence....

“China’s citizens are blessed to have access to Alibaba’s open trade but cursed by an authoritarian government that treats them and the rest of the world with contempt. Americans should embrace Alibaba’s consumers while insisting Washington push back against a brazen Beijing.”

[The Washington Post’s Ellen Nakashima reported on Friday that the breach of the Office of Personnel Management’s security-clearance computer system “took place a year ago, giving Chinese government intruders access to sensitive data for a year.”]

--Southern California home prices rose slightly in May, while sales jumped during the spring buying season.

The median sales price for the six-county Southland was $426,000, up 2.2% from a year earlier, CoreLogic said Wednesday; the smallest gain in three years. Sales, though, were up 5% from a year earlier. [Los Angeles Times]

--For the first time in its history, McDonald’s is closing more stores in the U.S. than it is opening. In the latter category, the company plans on opening about 125 restaurants, but it has not stated how many may close. In some of its markets, the likes of Chipotle and Shake Shack are making inroads.

--Dow Jones, publisher of the Wall Street Journal, is cutting about 100 newsroom jobs and closing bureaus in an effort to lower costs and reassign resources to digitally focused departments. Editor-in-chief Gerard Baker wrote in a staff memo that the company will be adding “dozens more jobs” in the next few months in growth areas, including global economics.

--Fitbit, the maker of fitness trackers, saw its stock rise 50% in its trading debut Thursday on the New York Stock Exchange. The company raised $732 million after selling shares at $20, which then closed at $30. They finished the week at $32.75.

--Oracle Corp. missed the Street’s earnings and revenue expectations and the shares sold off, but the company blamed analysts for being so shortsighted. Some of them, however, looking to kiss the company’s butts, raised guidance. But the fact is revenue in software and for Oracle’s cloud initiative declined from year ago levels. [Pssst...c’mon, Workday.]

--Legendary JPMorgan Chase vice chairman and rainmaker James B. “Jimmy” Lee died unexpectedly Wednesday at the age of 62. CEO Jamie Dimon said in a statement:

“Jimmy was a great friend, leader and mentor to me and so many others. Jimmy was a master of his craft, but he was so much more – he was an incomparable force of nature.”

Lee was a former head of JPM’s investment bank and is credited with inventing the leveraged loan.

His death was the third of a well-known business executive in recent weeks; the other two being David Goldberg, husband of Facebook exec Cheryl Sandberg, and Ed Gilligan, the president and likely CEO heir apparent at American Express.

--Comcast Corp. founder Ralph Roberts died. He was 95. Roberts first began investing in the cable industry back in the early 1960s, acquiring a small Mississippi company, and the rest is history.

--Colt Defense, the name for the longtime gunmaker, is heading into Chapter 11, listing $500 million in debt as demand cooled for its civilian semiautomatic rifles and handguns, while sales to the U.S. and foreign governments was uneven.

But as Bloomberg’s Paul Barrett writes, “the main reason the company hasn’t weathered rocky market conditions since the winding down of the wars in Iraq and Afghanistan is that the New York financiers who control the company borrowed too much and paid themselves lavishly....

“(The) private equity firm Sciens Capital and its affiliates loaded Colt with debt since the mid-2000s while taking cash out in the form of ‘distributions’ and ‘advisory fees.’ Sciens remains the controlling owner of Colt Defense.” Bastards.

--We note the passing of billionaire financier Kirk Kerkorian, 98. Kerkorian was one of the founders of modern Las Vegas, the largest shareholder in MGM Resorts International, which he founded in the early 1990s. He invested in and operated airlines, carmakers and film studios.

But it was Vegas where he really made his name. From the International in 1969 to the $8.5 billion CityCenter development that opened in 2009, he was one of Sin City’s central figures.

MGM Resort Chairman Jim Murren said Tuesday the company was “honoring the memory of a great man, a great business leader, a great community leader, an innovator, and one of our country’s greatest generation.”

Kerkorian was born in Fresno, Calif., in 1917 to Armenian-born parents. The family moved to Los Angeles in 1922 and at age 9, he sold newspapers on street corners. Kerkorian would drop out of school in the eighth grade and become an amateur boxer.

But from this humble beginning he became one of the world’s richest men. I never read anything bad about the man.

--“Jurassic World” took in a record $208.8 million for its opening weekend in North America, a record (as well as another $315 million+ overseas).

But according to Box Office Mojo, a box-office tracking site, 1939’s “Gone With the Wind” had total sales of $1.64 billion in today’s dollars ($198 million originally). [Eric Schwartzel / Wall Street Journal]

--Brian Williams has been demoted to MSNBC following his suspension. He will receive a lower salary and has embarked on an apology tour. He will be an anchor of breaking news and special reports on the cable network, starting in mid-August, while Lester Holt, who has been filling in for Mr. Williams, will become the permanent anchor of “Nightly News,” thus becoming the first African-American to solo anchor a weekday evening newscast.

Williams will not be allowed to appear on the “Nightly News,” though he will be able to fill in on breaking news stories on NBC if Holt is unavailable.

In a statement, Williams said, “I’m sorry. I said things that weren’t true. I let down my NBC colleagues and our viewers, and I’m determined to earn back their trust.”

I didn’t like what I saw in his interview on “Today” with Matt Lauer. He was always too cute by half.

--Finally, in a depressing week comes word Carlsberg, which controls 8% of the global beer market, is launching Carlsberg Beer Beauty, a line of men’s grooming products that includes shampoo, conditioner and body lotion.

Yes, there really is Carlsberg beer in these offerings.

Now lest you think this is insane, beer is rich in vitamins and protein, which is why Guinness can claim “It’s good for you.” Alcohol is also a cleansing agent, so they say.

Foreign Affairs

Iraq/Syria/ISIS: Kurdish forces took the Syrian town of Tal Abyad, on the Turkish border, as ISIS abandoned it. The U.S. contributed a limited number of air strikes.

But the attack did create a new refugee wave into Turkey, with the Turkish government wary of the influence a Syrian Kurdish force aligned with Turkey’s blacklisted Kurdistan Workers’ party (PKK) could have. Turkish President Erdogan told a newspaper, “This leads to a structure that poses a threat to our borders.” 17,000 refugees, including ISIS fighters among them, have arrived at the border since June 3.

The importance in taking Tal Abyad is it cut off a major supply line to Raqqa, ISIS’ stronghold in Syria, which is where the Kurds vow to take the fight next.

Separately, Secretary of State John Kerry said on Tuesday that he was “absolutely certain” the overwhelming majority of chemical attacks in Syria had been carried out by the Assad regime and that “everyone’s patience is wearing thin.”

And there are growing concerns for Syria’s 700,000 Druze, who have largely stayed out of the civil war, including in the village of Hader, which is near the Israeli border. The al-Qaeda-linked Nusra Front has designs on it.

Finally, Iran is reportedly sending several thousand combatants to Syria to buck up Assad and his overstretched Syrian army.

Michael Young / The Daily Star

“The broader aim is, reportedly, to consolidate Bashar Assad’s hold over Damascus, central Syria, around Homs and Hama, and the coastal areas. To pursue such a strategy, it appears that Iran has persuaded Assad to withdraw his forces from outlying regions of Syria so that they can regroup in more defensible positions.”

But Iran is now denying reports about the reinforcements, which, as Michael Young notes, “could have been an effort to downplay the difficult situation of the Assad regime.”

Meanwhile, Islamic State militants attacked government forces and Shiite militia allies as part of the battle for control of Iraq’s biggest refinery near the city of Baiji, killing 11. ISIS employed four suicide bombers in vehicles packed with explosives in what has become their signature move...send them in in waves, as was the case in Ramadi.

In eastern Iraq, Kurdish forces battled with Shiite forces, these two previously cooperating.

In Washington, Defense Secretary Ash Carter and Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, strongly hinted a higher-risk role for U.S. troops in Iraq is in the cards, though President Obama has resisted thus far.

Dempsey and Carter told a House Armed Services Committee on Wednesday that they saw value in helping Iraqi forces when they go on the offensive, but that it would be a mistake to send thousands more American troops to replace faltering Iraqis.

Carter said: “I would not recommend that we put U.S. forces in harm’s way simply to stiffen the spine of local forces.”

Iran: Ten days to go before the deadline for achieving a final agreement on Iran’s nuclear program with the P5+1 (U.S., Russia, China, Britain, France and Germany), though it certainly appears as if the deadline will be extended, even if for a few weeks.

Iranian President Hassan Rohani defended the negotiations to a domestic crowd on Sunday, pledging to reach a deal that would lift the hardship of sanctions.

“With the guidance of the Supreme Leader and the support of the people, we will enrich both uranium and the economy in Iran.

“We want the nation to be happy and productive, to have a bright economy and social welfare – and to have centrifuges too.”

100 centrifuges in every garage, by god!

“We will go to the United Nations, where the sanctions against us were written, and there we will have them lifted,” Rohani added.

Addressing critics who say negotiators are making too many concessions, Rohani said, “Those who say sanctions are not important don’t know what is happening in people’s pockets.”

But at a following news conference, Rohani said it could take weeks or months for sanctions to be lifted after reaching a deal. [Jerusalem Post]

As to the key negotiating point at this stage, inspections, hardliners in Iran’s parliament are insisting they should not be allowed, nor should questioning of nuclear scientists.

Rohani, in the news conference, defended “voluntary” implementation of the Additional Protocol of the International Atomic Energy Agency, which grants inspectors access to declared and undeclared sites.

Rohani insists the country’s military secrets would not be disclosed.

The president also added that oil income would be down $13 billion this year. [Financial Times]

Meanwhile, Secretary of State Kerry said on Tuesday that Washington would not insist that Iran answer unresolved questions about its past nuclear activities because the United States already knows what Tehran has done.

In a teleconference with reporters, Kerry said, “We’re not fixated on Iran specifically accounting for what they did at one point in time or another. We know what they did. We have no doubt. We have absolute knowledge with respect to the certain military activities they were engaged in.”

“What we’re concerned about is going forward,” Kerry said. “It’s critical to us to know that going forward, those activities have been stopped, and that we can account for that in a legitimate way.” [Jerusalem Post]

I’m sorry, but with respect to the secretary’s comment ‘we know what they did in the past,’ he’s just not telling the truth.

Republican Senator Bob Corker, chairman of the Senate Foreign Relations Committee, wrote a harsh letter to President Obama urging him to strengthen the terms of any deal.

“It is breathtaking to see how far from your original goals and statements the [global powers] have come during negotiations with Iran,” wrote Corker. “I hope reports indicating potential concessions on inspections and on the full disclosure of Iran’s possible military dimensions are inaccurate.”

Rep. Brad Sherman (D., Calif.), also a member of the Foreign Affairs Committee, voiced alarm. “My fear is that Kerry’s concession today will be the first of several.”

The IAEA itself has identified 12 issues on Iran’s suspected past work it wants further information on, but Iran has only partially addressed one of them, according to IAEA officials. [Wall Street Journal]

Libya/Yemen...war on terror: Al-Qaeda’s branch in North Africa denied the jihadist leader Mokhtar Belmokhtar had been killed in an American airstrike in Libya this week.

In a statement, the terror group said: “In the face of these fallacies, and so that we do not leave our Muslim nation as prey to these lies, the jihadist commander Khaled Abou Abbas is still alive and kicking and wandering the land of God.”

Belmokhtar was the man behind the 2013 seizure of the Algerian gas plant that resulted in the deaths of 38 foreign hostages and a group affiliated with him, Al Mourabitoun, also denied he had been killed.

U.S. officials confirmed Belmokhtar was the target of the strike in Libya on Sunday, but they have consistently cautioned they needed forensic evidence to declare he had indeed been killed. It was the Libyan government that announced Belmokhtar’s death.

Al-Qaeda and its ilk are normally accurate when their fighters are taken out, believing them to be martyrs.

Last week, for example, when the leader of Al-Qaeda in the Arabian Peninsula (AQAP), Nasser al-Wuhayshi (also spelled Wahishi), was reportedly killed in a drone strike, the group immediately put out a video tribute, announcing his successor, military chief Qasim al-Raymi, in the process.

Al-Wuhayshi was seen as al-Qaeda’s second-in-command and was a former private secretary to Osama bin Laden. The State Department had offered a $10 million reward for anyone who could help bring him to justice. The Washington Post reported the CIA, which carried out the strike with the U.S. Joint Special Operations Command, did not actually know in advance al-Wuhayshi was among the suspected militants targeted.

Editorial / Wall Street Journal

“(The strikes are a reminder) that while killing senior jihadists has tactical and symbolic value – disrupting terrorist networks while underscoring U.S. resolve – they do not turn the tide of war. ‘Core’ al-Qaeda was not defeated after Osama bin Laden was killed in 2011, even if it was humbled. Neither was al-Qaeda in Iraq beaten after the killing of Abu Musab al-Zarqawi in 2006. Killing the kingpins is necessary but not sufficient for victory.

“That much was made clear by the way Wuhayshi met his end – near a beach in the Yemeni city of Al Mukalla, population 300,000. Al-Qaeda took control of Al Mukalla in April, seizing close to $80 million from the central bank. The group now controls the better part of southern Yemen....

“(The U.S.) will not defeat its terrorist enemies by going after them one at a time. This is what makes the recent success of the Kurdish Peshmerga against Islamic State so promising. This week the Kurds defeated Islamic State to take control of the Syrian town of Tal Abyad, on the Turkish border. Now the Kurds are headed south to Islamic State’s Syrian stronghold of Raqqa.

“Success in Raqqa would be the most important victory to date in rolling back ISIS, which is why the U.S. should concentrate military efforts in support of the offensive. The Kurds are among our best anti-jihadist allies, and they deserve more support than the U.S. has provided so far.”

Separately, Saudi-led coalition airstrikes on the Yemeni capital Sanaa killed at least nine, while at least 31 were killed in five simultaneous bombings claimed by ISIS at Shiite mosques and offices in Sanaa as well.

Sanaa was the scene of the March 20 ISIS attacks that killed at least 137.

More than 2,600 civilians and combatants have now been killed in Yemen amid a growing humanitarian crisis.

Israel: Hamas officials are in Doha, Qatar to formulate a long term five-year cease-fire plan with Israel, which would include a detached, floating Gaza port, which would be controlled by Israel or an international authority. The issue of building an airport in the Gaza Strip has been delayed.

Meanwhile, Prime Minister Netanyahu’s wife and the deputy director general of his staff are at the center of an investigation into the family’s use of state funds, though Netanyahu is not himself being targeted.

Egypt: An Egyptian court sentenced deposed President Mohammad Morsi to death Tuesday over a 2011 mass jailbreak that took place during the country’s uprising. Five leaders of the Muslim Brotherhood were also sentenced to death. The White House condemned what it called a politically motivated sentence, which also risks turning Morsi into a martyr.

Afghanistan: At least 20 police officers were killed in a Taliban ambush at a checkpoint in southern Helmand province. Weeks earlier a similar Taliban attack on a checkpoint in the northeast killed 18.

A surge in attacks across the country is also taking a toll on civilians, with their casualties jumping 16 percent in the first four months of 2015 vs. last year.

Russia/Ukraine: In the clearest sign yet the United States and Russia are headed towards another Cold War, Poland and Lithuania confirmed they are in talks with Washington about pre-positioning U.S. heavy military equipment close to the Russian border; enough to equip a brigade of 3,000 to 5,000 soldiers.

Both countries have been pressing the U.S. to enhance its position there and the rest of Eastern Europe.

Polish Defense Minister Tomasz Siemoniak said, “There are talks about the stationing of U.S. military equipment in Poland. We have been working for a while on increasing the American military presence in Poland and across the eastern flank of NATO.”

If the U.S. goes through with the request, it would be the first time it has committed equipment permanently to former Soviet-bloc countries.

The equipment would include Abrams battle tanks and Bradley armored fighting vehicles that would be stockpiled while troops remain on bases elsewhere.

In response, Russia warned the U.S. plans would be the “most aggressive step by the Pentagon and NATO” since the end of the Cold War.

General Yuri Yakubov said, Russia would “be left with no other option but to boost its troops and forces on the western flank.”

For his part, Russian President Vladimir Putin said Russia would add more than 40 new intercontinental ballistic missiles to its nuclear arsenal this year.

Addressing a military and arms fair, Putin, flanked by army officers, said, “More than 40 new intercontinental ballistic missiles able to overcome even the most technically advanced anti-missile defense systems will be added to the make-up of the nuclear arsenal this year.”

Russian Deputy Defense Minister Anatoly Antonov said at the same fair, “The feeling is that our colleagues from NATO countries are pushing us into an arms race.” [Irish Independent]

None of this would be happening, of course, without Russia’s moves in Ukraine. Last weekend, six Ukrainian servicemen were killed in clashes in territory held by the separatists.

Editorial / Washington Post

“Vladimir Putin recently told an Italian newspaper that ‘only an insane person and only in a dream can imagine that Russia would suddenly attack NATO.’ So what is a sane person to make of the vastly expanded military exercises, patrols and incursions ordered by Mr. Putin along NATO’s borders since his invasion of Ukraine last year? According to NATO’s figures, Russian air activity near NATO territory increased by 50 percent from 2013 to last year; on the ground, there have been multiple last-minute military exercises, kept secret from the West or announced belatedly.

“Russian military aircraft have flown unannounced over Poland; the three Baltic republics of Estonia, Latvia and Lithuania; and the North Sea. In April, a Russian fighter flew dangerously close to a U.S. plane over the Baltic Sea, even as the Russian navy conducted exercises in the waters below. Russian forces also have been deploying in the Arctic, forcing Sweden, Norway and Finland to contend with incursions by planes, and in Sweden’s case, a suspected submarine.

“All of this might be dismissed as bluffing and posturing by Mr. Putin. But given the fact that the Russian leader has now launched two military invasions across European borders, it is only prudent that NATO prepare for the possibility of an incursion into the Baltics, which joined NATO a decade ago, or even into former Warsaw Pact states such as Poland. Doing so will not only deter Mr. Putin but also reassure those nations, which sometimes question whether the United States, Britain and France would really come to the defense of Eastern Europe’s border nations....

“Some in the West oppose any step by Western countries to defend themselves, no matter how small, on the grounds that doing so could ‘provoke’ the Russian ruler. But it is more likely that a rejection of the Pentagon’s plan by President Obama would encourage Mr. Putin to believe NATO would crumble if challenged. Mr. Obama should approve the pre-positioning and make it clear that Moscow’s belligerence will be matched by tangible defensive acts.”

Friday, at the Saint Petersburg International Economic Forum, Putin acted like he didn’t have a care in the world, saying, “I would like to focus our attention on economic issues.”

His former finance minister, Alexei Kudrin, who remains an insider, said the day before that perhaps Russia should move up the 2018 presidential election to help Putin (or whoever is elected...wink wink) conduct sweeping reforms to pull Russia out of the current crisis.

China: In a huge development, Hong Kong’s legislature voted Thursday to reject a Beijing-drafted election plan that set off massive street protests last fall.

The framework for the semi-autonomous territory, while allowing citizens in Hong Kong to cast ballots directly for the city’s chief executive for the first time, is a sham because the number of candidates would be limited to two or three approved by a nominating committee that would be stacked with pro-Beijing figures.

Among those voting, only 8 were for the package and 28 were against, while 33 legislators did not cast votes. A group of pro-Beijing lawmakers had left the room in an attempt to delay the vote and then missed it, which is almost comical.

So as it stands now, however, for the 2017 election, the chief executive will still be chosen by a 1,200-member committee of mostly pro-Beijing loyalists.

A recent opinion poll showed that 47% of Hong Kongers endorsed the Beijing-proposed framework, with 38% opposing and 15% undecided. [Los Angeles Times]

So it’s a stalemate. No progress on democracy, but as one Hong Kong professor told the L.A. Times, “at least we didn’t take a step back. In this case, Beijing’s naked meddling in Hong Kong’s affairs has been exposed.”

On the mainland, a government mouthpiece, the Global Times, said, “The Hong Kong political reform proposal has been vetoed.”

As for future demonstrations, the student movement is split and the business community would never put up with a weeks-long disruption like what happened last fall, but its 2015 and the election is 2017. 2016 will be explosive. An editorial in the Global Times warned: “If the opposition force insists on rejecting the reform proposal, Hong Kong’s political reform would come to a standstill. Turmoil in Hong Kong would become a reality if the opposition force continues to cause trouble.” [South China Morning Post]

Meanwhile, the Chinese foreign ministry said Beijing will complete its land reclamation projects in the disputed South China Sea within days. It would then go on to build infrastructure on its territorial claims.

A foreign ministry statement read:

“Apart from satisfying the need for military defense, the main purpose of the reclamation projects is to meet various civilian demands and better carry out China’s international obligations and responsibilities.”

Professor Wang Hanling of the Chinese Academy of Social Sciences told the South China Morning Post: “Beijing wants to tell the Western media as well as Asian countries not to stir up the reclamation issue any more, because the size of the reclaimed land will soon be fixed.”

The U.S. says Beijing has reclaimed 2,000 acres of land over the past 18 months.

Wang said it was unfair to blame China because it was also providing maritime search and rescue help as well as disaster relief to those Asian countries who had claims in the South China Sea. Cough cough.

Actually, a couple of mean typhoons could do a number on these new military bases, don’t you think?

Separately, in a study under the auspices of the Chinese Academy of Sciences, researchers concluded the Pearl River is a soup of antibiotics. China consumes almost half the world’s antibiotics and they are in high levels in the waterways.

Antibiotics can be purchased without a prescription in local pharmacies, while “Local animal farm operators often add antibiotics into animal feed to prevent diseases and boost production,” according to a report.

North Korea: The government announced it is facing its worst drought in a century and more than 30% of rice paddies were “parching up,” according to the state news agency.

Hundreds of thousands are believed to have died during a famine in the 1990s, though this drought is not expected to be as deadly due to agriculture reforms.

Pyongyang also announced this week that the country test-fired a new anti-ship rocket, a month after it claimed to test a submarine-launched ballistic missile. But no specifics, such as photographs, were presented of the former and some of the pictures of the latter test may have been doctored.

North Korea is banned from testing or developing ballistic missiles under UN Security Council resolutions. [You are allowed to snicker.]

South Korea: The head of the World Health Organization said Seoul’s efforts to contain MERS were reassuring and the public risk low. Margaret Chan told reporters the disease, which has killed at least 24, isn’t spreading in the wider community and is confined to a few hospitals.

Separately, the Washington Post’s Lally Weymouth interviewed South Korean President Park Geun-hye and asked her to assess the current situation in North Korea.

Park: “Since Kim took power 3 ½ years ago, he has executed some 90 officials. Indeed, the reign of terror continues to this day. Although one can say that the reign of terror might work in the short term, in the mid- to long term, it is actually sowing and amplifying the seeds of instability for the regime.

“Currently, North Korea is constantly upgrading and enhancing the sophistication of its nuclear weapons, and developing and honing its missile capabilities as well. These represent a threat not just to the Korean Peninsula but also to the international community. So it is extremely urgent that we achieve a denuclearization of North Korea.”

But that won’t be easy. And last week the United States announced there were “additional unidentified nuclear facilities” in North Korea. Remember, IAEA inspectors haven’t been allowed inside North Korea for years.

Random Musings

--Some poll data...according to a Monmouth University national poll, 69% of Americans feel optimistic about the 2016 election and just 25% are pessimistic. Of six Republican and two Democratic candidates, only Florida Sen. Marco Rubio earns a net positive rating; 31% favorable / 27% unfavorable. Of the eight tested, Rubio polls best with independent voters – 33% favorable / 22% unfavorable. Jeb Bush receives just a 25% favorable / 44% unfavorable among independents.

Donald Trump (more on him below), earns just an 18% favorable and 57% unfavorable rating among American voters. 50% of Republicans have an unfavorable opinion of him.

As for Hillary Clinton, she received a 41% favorable / 44% unfavorable; importantly just 26% favorable / 55% unfavorable among independents.

In terms of a vote tally, Clinton has the support of 57% of Democrats and Democratic-leaning voters nationwide, which is little changed from the 60% support she registered two months ago. Joe Biden and Vermont Sen. Bernie Sanders receive 12% each. Sanders support isn’t too shabby, considering he has little name recognition as yet.

In a Quinnipiac University swing state poll, Clinton tops Rubio in Florida 47-44, while in Ohio, Gov. John Kasich leads Clinton 47-40. In Pennsylvania, Rubio edges Clinton 44-43, while Sen. Rand Paul leads Clinton 45-44.

Clinton’s favorability ratings are 47-45 in Florida; negative 44-48 in Ohio; and 46-48 in Pennsylvania.

She is not honest and trustworthy, Florida voters say by 51-43 percent, Ohio voters 53-40 percent and Pennsylvania voters 54-40 percent.

Against Jeb Bush, Clinton leads 46-42 in Florida, 42-41 in Ohio, 45-41 in Pennsylvania.

--In formally launching her campaign on Saturday (actually her second announcement), Hillary Clinton said: “These Republicans trip over themselves promising lower taxes for the wealthy and fewer rules for the biggest corporations without any regard on how that will make inequality worse.... I’m not running for some Americans. I’m running for all Americans.”

That’s very thoughtful of her, don’t you think?

But Hillary didn’t address the following....

--Editorial / Washington Post...on the trade deal.

“Of all the people who should be standing shoulder to shoulder with Mr. Obama at this moment, none could do more to help him than Hillary Clinton, who was an enthusiastic champion of these agreements throughout her tenure as secretary of state. The resistance to Mr. Obama’s trade agenda is led by Democrats in the House who fear that supporting the president will earn them the enmity of organized labor and other progressive groups that simplistically denounce the president’s trade agenda as a threat to jobs and the environment. These Democrats are joined, and validated, in this short-sighted position by Ms. Clinton’s rivals for the Democratic nomination, former governor Martin O’Malley of Maryland and Sen. Bernard Sanders (I-Vt.).

“Think of the bracing effect it might have had on her fellow Democrats if Ms. Clinton had stood up against election-year political pressure and reiterated what she said as America’s top diplomat in 2012: ‘that we need to keep upping our game both bilaterally and with partners across the region through agreements like the Trans-Pacific Partnership, or TPP.’ Imagine if she had read from her memoir, published just last year under the now ironic title ‘Hard Choices’: The TPP, Ms. Clinton wrote, ‘was also important for American workers, who would benefit from competing on a more level playing field. And it was a strategic initiative that would strengthen the position of the United States in Asia.’

“Instead, Ms. Clinton broke her silence on the issue only long enough to equivocate about it, or, as she did Monday, to expand on the ‘legitimate’ concerns of opponents of the TPP – and second-guess the president’s strategy. With 18 months to go in his second term, she now advises Mr. Obama to use the House Democrats’ obstruction of Trade Promotion Authority as ‘leverage’ against the 11 negotiating partners; perhaps to reopen it just as the Obama administration spent a couple of years redoing the U.S.-Korea trade deal it inherited from the Bush administration.

“What this politically unrealistic advice did not include, however, was a simple yes or no to the question of whether Mr. Obama should have the additional bargaining power of Trade Promotion Authority now, as he requests. And that is the question of the hour.”

--I watched Jeb Bush’s announcement he was formally entering the Republican race and I thought it was outstanding. Drawing a contrast with Marco Rubio, his former protégé, Bush said: “Executive experience is another term for preparation, and there is no substitute for that. We are not going to clean up the mess in Washington by electing the people who either helped create it or have proven incapable of fixing it.”

On the other side...Beth Reinhard / Wall Street Journal

“Mr. Bush said his two terms as governor showed he could boost growth, add jobs and cut taxes. In response, Florida’s Democratic Party called Mr. Bush’s tenure a ‘disaster’ and said it would remind voters of what it called a racially motivated purge of voter files in the state and of Mr. Bush’s effort to prolong the life of Terry Schiavo, the brain-damaged woman whose husband wanted to remove life support despite her parents’ objections.

“ ‘His record as governor certainly showed his preference for giving tax breaks to his wealthy friends and deep-pocketed donors over the middle class,’ said a statement from the Democratic National Committee.”

It’s going to be a very classy campaign, boys and girls.

--So back to Donald Trump...he’s in the race and there’s no reason to believe he can’t stick around a while. It helps that anytime he wants it, he can get some major press.

I watched his entire opening statement, where he said things like he’ll be “the greatest jobs President that god has ever created.”

And, “I am really rich. That is the kind of mindset, the kind of thinking, you need for this country....I am officially running for president of the United States and we are going to make our country great again.”

There were some xenophobic comments, such as describing some Mexican immigrants as “rapists,” while he pledged to be tougher on countries like China.

Trump attacked U.S. leaders for allowing the nation to descend into debt to China to the tune of $1.3 trillion.

“How stupid are our leaders. How stupid are these politicians to allow this to happen. How stupid are they? I love China but their leaders are much smarter than our leaders. It’s like taking the New England Patriots and (quarterback) Tom Brady and have them play your high-school football team. That is the difference between China’s leaders and our leaders. They are ripping us.”

And, “ISIS, China, Mexico are all beating us. Everybody is beating us.”

They’re beating us, Trump said, because we are run by “losers.”

Trump denied the report his campaign solicited actors at $50 a pop as he addressed supporters in New Hampshire. The New York Daily News cited a June 12 email from the Extra Mile Casting company that sought people “to wear T-shirts and carry signs and help cheer him in support of his announcement.”

Nothing illegal with this, just kind of funny. 

Larry Sabato, an expert on U.S. politics at the Univ. of Virginia, told the Financial Times: “What is significant is that Trump may well make it into the first GOP debate on August 6. Imagine Trump on the stage, dressing down candidates such as Jeb Bush. It could be quite a spectacle.”

Jennifer Rubin / Washington Post

“If you found Donald Trump’s rambling, incoherent announcement of his presidential run to be troubling, you will be dismayed to learn that he’s got a recipe for winning: ‘According to Donald Trump, a 2016 ticket of Trump for president and Oprah Winfrey for vice president would be a lock for the White House.’

Thunk.

“Now America has its share (maybe a larger share) of hucksters, con men, pranksters and the like who seek to grab their 15 minutes of fame. We should not be surprised when they show up in presidential races. And while Trump is a ludicrous figure with no chance to win, there are lots of other candidates who have an equally low chance (zero) to make it to the nomination. Still, it is worse having Trump there, since he obviously is using this opportunity purely as self-promotion and to air his obnoxious attitudes....

“I suppose it is too much for respectable news organizations to treat him with disdain, dropping the pretense he is a real candidate. Nevertheless, it is nice to think they would try. After all they are not the Trump PR department and should not pretend his policy positions are serious.”

As to the $8.7 billion net worth figure, as Aaron Elstein of Crain’s New York Business writes: “This figure is more than double other credible estimates of his wealth and raises the question of how seriously should we take Mr. Trump’s latest claim. The short answer: Not at all.

“Mr. Trump’s financial statement said his real estate licensing deals, brand and branded developments are worth $3.3 billion – his greatest source of wealth. Alas, there’s no information documenting the income or cash flows generated from lending out Mr. Trump’s name to casinos, condos or whatever. So you’ll just have to take his word for it. Is that good enough for you?

“More weird stuff: Under assets, Mr. Trump says he holds $302 million in cash and marketable securities. It’s hard to fudge cash. You either have it or you don’t, right? Wrong! In this case, Mr. Trump’s cash includes money he’s claiming ‘before the collection of significant receivables.’ Receivables are funds you are owed but haven’t been paid yet. Mr. Trump’s argument that receivables should be counted like cash is like saying if I give you an I.O.U. for $1 million, you are a millionaire.”

--Sen. Rand Paul pledged to “blow up the tax code and start over” with a federal flat tax of 14.5%...the same rate for corporations. Paul’s flat tax would apply to all personal income, wages, salaries, dividends, capital gains...and the first $50,000 of income for a family of four would be exempt. Most deductions would be eliminated except for mortgage interest and charitable contributions.

But government revenues would fall 5%, so spending would have to be reduced commensurately.

I like the idea but of course it will never pass. As the senator says, however, “It shows that we have something we can offer to the working class. The question we have for Hillary Clinton is: How are you going to help the working class?”

--Michael Goodwin / New York Post

“I can think of no other period when we simultaneously had such terrible leaders and ineffective lawmakers at all three levels. They seem to feed on each other’s worst instincts, competing to lay claim to the most sweeping changes, no matter the method or impact.

“And so we are engulfed in waves of corruption, incompetence and arrogance, trickling up and trickling down, as government smothers society with agenda-driven policies. Just as modern culture often works against parents and families, modern government often works against social harmony and individual liberty.

“Barack Obama leads the pack, and he will make history in two ways: As the first black president, and as the president who weakened America at home and abroad. Even race relations are on fire. [Ed. Goodwin wrote this prior to the Charleston massacre.]

“His signature legislative achievement, ObamaCare, remains as unpopular in its fifth year as when it passed in 2010. Yet he and his army of bureaucrats know best, breaking trust with the public as they impose their will.

“Obama’s foreign policy is beyond broken – it is a major contributor to the unfolding global catastrophe. Thanks to his failed leadership, Iran, the world’s largest sponsor of terrorism, will get a nuclear bomb, an event that will throw open the gates to hell.

“The Syrian civil war, which he pledged to stop, has killed 230,000 people and displaced 7.6 million. It helped to birth the Islamic State, the most ruthless and successful terrorist army the world has ever known. That’s Obama’s legacy.”

--Britain was forced to remove some of its spies after Russia and China accessed the documents taken by former U.S. intelligence contractor Edward Snowden, according to British media. Russia, as reported by the BBC and the Sunday Times, was able to decrypt more than one million files.

There is no information spies have been harmed, yet.
Editorial / Wall Street Journal

“Edward Snowden and his apologists have been lobbying President Obama to let the intelligence thief return from Russia with a slap on the wrist. But they’ll now have to explain the news that his stolen files have been cracked by Russian and Chinese intelligence services with great harm to U.S. and British defenses....

“The intelligence sources said Western agents are being targeted based on information in the files, forcing MI6 to move agents and change protocols. ‘Snowden has done incalculable damage. In some cases the agencies have been forced to intervene and lift their agents from operations to prevent them being identified and killed,’ one source told the (Sunday Times of London).

“Mr. Snowden has insisted that he’d taken precautions to make such access impossible, but that was always implausible. Even if Mr. Snowden wasn’t a foreign agent, he sought Chinese and Russian help to protect him from arrest after he fled the U.S., and those intelligence services would do anything to grab his files.

“The defector’s media pals will say these intelligence sources can’t be trusted, but Mr. Snowden is already a proven liar. He claims to have been motivated only by the best of intentions, but his actions have assisted dictators while harming defenders of democracy.”

--Pope Francis issued an encyclical, calling for swift action on climate change, while also slamming consumerism and irresponsible development. Placing most of the blame on fossil fuels and human activity, Francis warned of an “unprecedented destruction of ecosystems, with serious consequence for all of us” if swift action is not taken. Developed nations were obligated to help poorer ones confront the crisis.

“Climate change is a global problem with grave implications: environmental, social, economic, political and for the distribution of goods,” he wrote. “It represents one of the principal challenges facing humanity in our day.”

Francis praised the progress achieved by technology, such as in advancements in medicine, but, he added, “Our immense technological development has not been accompanied by a development in human responsibility, values and conscience.”

“The Earth, our home, is beginning to look more and more like an immense pile of filth.”

“All is not lost,” however. “Human beings, while capable of the worst, are also capable of rising above themselves, choosing again what is good, and making a new start.” [Jim Yardley and Laurie Goodstein / New York Times]

Kerry Emanuel, professor of atmospheric science at MIT, said, “The Pope more or less gets it right on the science. But what struck me was his linking of environmental degradation to cultural, political and social decline. That’s the most valuable part of the document because it says that climate change is not an isolated problem.”

Piers Forster, a professor of physical climate change at the University of Leeds, England, said, “By supporting the scientific consensus, the [Pope’s encyclical] could help convince some of the conservative element in the U.S. that has been skeptical.”

No doubt, many Republicans are worried how this will play out in 2016. Rick Santorum, for example, a Catholic, former senator and now presidential candidate, said the pope should “leave science to the scientists.” [Gautam Naik / Wall Street Journal]

Rush Limbaugh said Tuesday, “Essentially, what this papal encyclical is saying is that every Catholic should vote for the Democratic Party. That’s what it is. How else do you interpret it when the pope comes out and sounds like Al Gore on global warming and climate change?” 

Jeb Bush, a Catholic, said, “I respect the pope. I think he’s an incredible leader, but...I don’t go to Mass for economic policy or for things in politics.”

It’s a tough spot for Catholic politicians. In a recent Pew Research Center poll, Francis had an 86 percent approval rating among U.S. Catholics and 64 percent among Americans overall. [Karen Tumulty / Washington Post]

--September is going to be a helluva month, with both Pope Francis and Chinese President Xi Jinping visiting the U.S.

--Todd C. Frankel / Washington Post

“Drought-stricken California is not the only place draining underground aquifers in the hunt for fresh water.

“It’s happening across the world, according to two new studies by U.S. researchers released Tuesday.

“Twenty-one of the world’s 37 largest aquifers – in locations from India and China to the United States and France – have passed their sustainability tipping points, meaning more water is being removed than replaced from these vital underground reservoirs. Thirteen of 37 aquifers fell at rates that put them into the most troubled category.

“ ‘The situation is quite critical,’ said Jay Famiglietti, senior water scientist at NASA’s Jet Propulsion Laboratory and the University of California Irvine-led studies’ principal investigator.

“And it’s difficult to see it getting better soon. These groundwater reserves take thousands of years to accumulate and only slowly recharge with water from snowmelt and rains. Now, as drilling for water has taken off across the globe, the hidden water reservoirs are being stressed. Underground aquifers supply 35 percent of the water used by humans worldwide. Demand is even greater in times of drought. Rain-starved California is currently tapping aquifers for 60 percent of its water use, up from the usual 40 percent.”

Additionally, the researchers believe some of the aquifers might be smaller than first thought.

“ ‘The water table is dropping all over the world,’ Famiglietti said.”

--The National Oceanic and Atmospheric Administration released new data showing last month was the hottest May on record, and the past five months were the warmest start to a year on record as well, data going back to 1880.

Thirteen of the 14 hottest years are in the 21st century, and 2015 is on track to break the heat record again.

All three top monitoring agencies, NOAA, the Japan Meteorological Agency and NASA agree there has never been a hotter start to the year, though NASA had May as being tied for the second-hottest.

--Last Saturday, a friend and I were touring Gate of Heaven Cemetery in Hawthorne, N.Y., visiting Babe Ruth’s grave (and others...like Jimmy Cagney’s and Billy Martin’s...) when we were looking for the grave site of the daughter of a friend of Ken’s. We were gridding out this one section and I saw a model firetruck on a memorial and immediately thought it must be a 9/11 firefighter. It was.

Frederick Claude Scheffold Jr., Battalion Chief, Harlem. His shift was over when the call came in and he responded. He was going up when everyone else was going down. God love him.

--The unspeakable tragedy at Emanuel African Methodist Episcopal Church, “Mother Emanuel,” in Charleston, S.C., touched us all. It was chilling that Dylann Roof sat with his victims for a full hour before he uttered a hateful racial epithet and started shooting without warning.

Editorial / Wall Street Journal

“A white man murdering black people in the South forces bad memories to the surface, and so it surely was appropriate for President Obama to note this in his remarks Thursday. Specifically, Mr. Obama recalled the September 1963 bombing of the 16th Street Baptist Church in Birmingham, Ala., that killed four black girls.

“The President quoted at some length Rev. Martin Luther King Jr.’s remarks on the bombing: ‘They say to each of us, black and white alike, that we must substitute courage for caution. They say to us that we must be concerned not merely with [about] who murdered them, but about the system, the way of life, the philosophy which produced the murderers. Their death says to us that we must work passionately and unrelentingly for the realization of the American Dream.’

“Amid the horror of Charleston, it is also important to note that the U.S., notably the South, has moved forward to replace the system that enabled racist killings like those in the Birmingham church....

“The universal condemnation of the murders at the Emanuel AME Church and Dylann Roof’s quick capture by the combined efforts of local, state and federal police is a world away from what President Obama recalled as ‘a dark part of our history.’ Today the system and philosophy of institutionalized racism identified by Dr. King no longer exists.

“What causes young men such as Dylann Roof to erupt in homicidal rage, whatever their motivation, is a problem that defies explanation beyond the reality that evil still stalks humanity. It is no small solace that in committing such an act today, he stands alone.”

The death penalty needs to be applied swiftly. I know some of the victims’ families are already saying no, it shouldn’t. But it must.

---

Pray for the men and women of our armed forces...and all the fallen. We will remember Charleston.

God bless America.
---

Gold closed at $1201
Oil $59.61

Returns for the week 6/15-6/19

Dow Jones +0.6% [18015]
S&P 500 +0.8% [2109]
S&P MidCap +0.6%
Russell 2000 +1.5%
Nasdaq +1.3% [5117]

Returns for the period 1/1/15-6/19/15

Dow Jones +1.1%
S&P 500 +2.5%
S&P MidCap +6.1%
Russell 2000 +6.6%
Nasdaq +8.0%

Bulls 45.5
Bears 16.5 [Source: Investors Intelligence]

If you haven’t already contributed to the cause, don’t be afraid to. See the gofundme link above, or write me at PO Box 990, New Providence, NJ 07974.

Have a great week.

Brian Trumbore



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Week in Review

06/20/2015

For the week 6/15-6/19

[Posted 11:00 PM ET, Friday]

Edition 845

Washington and Wall Street

For the next few days, through Monday and most likely beyond, the key story remains Greece, which I’ll cover in a bit. It could get hairy.

In the United States, the Federal Reserve’s Open Market Committee met and held the line on interest rates, though Chair Janet Yellen and her band of merry pranksters acted like the current course leads to a hike in short-term interest rates come September, though equities rallied because Yellen made clear, as did vice-chair Stanley Fischer a few weeks back, that any hike in rates would be done extremely slowly...like drip.....drip....drip. Or as Fischer put it, the central bank would be “crawling” as it pursued incremental increases. Which is not exactly what savers want to hear, but then the Fed has long made it clear they couldn’t give a damn about you. 

The Fed accompanied its statement with its latest projections for GDP, which of course it’s never even remotely close to. For example, back in December, the Fed said the economy would grow 2.6% to 3.0% in 2015, but now owing to the dreadful first-quarter performance (-0.7%) the Fed says we’ll grow at 1.8% to 2.0%, a rather significant adjustment.

The Fed also says the funds rate will be at 0.625% come 12/31, and 1.65% in December 2016, which, again, means rates will be rising ever so slowly, if and when they get started.

The central bank said the economy is now “expanding moderately” following the first-quarter winter debacle, as it sees better consumer spending and general improvement in the housing sector, alongside a stronger labor market.

Wages are improving, and I still maintain the Fed will be forced at some point to raise rates a bit more than they currently plan to (assuming Europe doesn’t implode...or China crash).

Editorial / Wall Street Journal

“The Fed missed the dive in GDP in the first quarter and now predicts a more modest snap back to growth than it previously predicted.

“This has become standard operating practice going back for nearly all of the current recovery. The Fed has consistently estimated that its near-zero interest rate policy and bond buying would produce faster growth. Yet each year yields disappointment. Then the Fed used the reality of slower growth to explain why it needs to continue the policies that haven’t produced faster growth. The Fed has been in a perpetual policy feedback loop.

“The Open Market Committee’s predictions for interest rates on Wednesday seemed to forecast that it would finally begin lifting rates off zero by the end of the year. Then again, only some months ago the forecast had been that the Fed would start raising rates this month.

“Maybe the committee should consider that its extended indecision is leading to economic uncertainty that is hurting investment and thus contributing to slower growth. A fed funds rate of 0.25% or even 1% is still extraordinarily accommodative policy, so why not just go ahead and do it?”

Hear hear.

As for the economic data this week, May industrial production came in at -0.2%, worse than expected, while May housing starts fell 11.1% from April. However, the data on permits was stronger than forecast.

Consumer prices for May were in line, up 0.4%, up 0.1% ex-food and energy, while the year over year figure is unchanged, and up 1.7% on core.

Then you have the trade deal, the Trans-Pacific Partnership that is one of President Obama’s top remaining goals, which flamed out last Friday in a big way, 126-302, when it came to the second piece of legislation that was part of the entire package.

So early this week, House Speaker John Boehner and President Obama agreed on imposing a temporary rule whereby Boehner was to have until July 30 to bring up the trade debate any time for a do-over on the companion bill.

Then on Thursday, the House, by a 218-208 vote, voted again to give Obama fast-track authority to submit trade deals to Congress for an up-or-down vote, without amendments.

But it’s still tied to the worker-aid program, known as Trade Adjustment Assistance, or TAA.

And now the Senate will vote on fast-track, though some pro-trade Senate Democrats say they won’t vote for it without evidence TAA will pass both chambers.

House and Senate Republicans have agreed to pass TAA separately, and at week’s end, Senate Majority Leader Mitch McConnell said passage of the entire package was still possible, but that it would take “trusting each other to get there.”

But labor unions are still vowing to pressure Senate Democrats to oppose fast-track.

Next week the ball is in the Senate’s court, and actually we’re now talking four bills, not two, to be approved, though some pro-trade Democrats are saying they want all four to pass together instead of one by one.

McConnell said it has to be one at a time, starting with fast-track. Back in May, the Senate passed fast-track 62-37, with 14 Democrats joining 48 Republicans.

Just as in the case with Greece, we can’t do more than wait to see what happens next week.

Responding to last week’s shenanigans by Nancy Pelosi, which took down her president....

Editorial / Washington Post

“This blow to the United States’ standing among its Pacific Rim allies, and to majority rule, is not the result of Mr. Obama’s allegedly high-handed personality, which, according to some reports, alienated Democrats in the final furious hours of lobbying. No one has had frostier dealings with the president than Republican House Speaker John A. Boehner or Ways and Means Committee Chairman Paul Ryan, yet they managed to put that aside for the sake of a shared goal: the passage of fast-track authority.

“No, what we have here is a desperate, and somewhat cynical, maneuver by the opponents of fast-track authority, and it goes like this. Trade Adjustment Assistance is an aid program for workers displaced by imports; Democrats and their allies in organized labor have backed it for decades. It runs out in September, but in order to reassure Hill Democrats and attract votes for fast-track authority, Mr. Obama insisted on linking its passage to a bill reauthorizing (and expanding) the assistance program for six years. The Republicans agreed. However, once organized labor realized that it was not going to be able to deny the president a majority for fast-track authority, it began trying to stop that measure by pressuring House Democrats to kill the assistance program – and labor leaders succeeded, because a majority of Democrats, including, crucially, minority leader Nancy Pelosi, went along.

“In short, the forces opposing fast-track authority turned a long-standing Democratic Party policy priority into a short-term political hostage. So what if the assistance program – intended to help workers displaced by trade regardless of whether the president’s new free-trade measures are ever passed – is now on course to expire in September? Apparently opponents despise free trade even more than they like helping its purported victims.”

Lawrence Summers / Financial Times

“Repudiation of the TPP by Congress would neuter the presidency for the next 19 months. It would reinforce concerns that the vicissitudes of domestic politics are rendering the U.S. a less reliable ally. Coming on top of U.S. failure to stop or join the Asian Infrastructure Investment Bank, it would signal a lack of U.S. commitment to Asia at a time when China is flexing its muscles. And it would strengthen companies overseas at the expense of U.S. businesses....

“(The) global economic challenge is profoundly different from a generation ago. Just after the cold war and the Latin American debt crisis, and with Asia’s China-led renaissance in its early stages, the challenge was to enable new markets to emerge. Trade agreements that encourage adoption of market institutions in developing economies and helped them access the industrial economies were crucial in creating a global economy. Today, we have such an economy, one that has supported the greatest economic progress in emerging markets. It works spectacularly well for capital and a cosmopolitan elite that moves effortlessly around the world. But it presses down on the middle classes who lack the wherewithal to take advantage of new global markets and who do not want to compete with low-cost foreign labor. Our challenge now is not to create more globalization, but to make sure the globalization we have works for all our citizens.

“Ultimately, trade diplomacy must be one component of a broader approach whose primary stakeholders are not just global companies but also those concerned with economic equity, the environment, opportunities for workers to migrate and financial stability. If the TPP is to be secured, there must be clear signs that international economic diplomacy will turn to these concerns.”

Europe and Asia

The European Union has called an emergency summit of eurozone leaders after finance ministers this past Thursday were unable to reach a deal with Greece at bailout talks in Luxembourg and said no agreement was in sight.

Donald Tusk, president of the European Council, announced he would summon all eurozone presidents and prime ministers to Brussels to find a solution.

“It is time to urgently discuss the situation of Greece at the highest political level,” Tusk said in a statement.

Greece is trying to tap its last 7.2bn euro tranche of aid from the bailout program before it expires June 30. On that day, it is to repay a 1.5bn euro loan to the International Monetary Fund, which was to have been paid out in four installments over the course of the month but the IMF allowed Athens to bundle the payments for the last day.

It is still possible that the EU, European Central Bank, European Commission and IMF could attempt to drag things out even beyond June 30, or that Greece could receive a bailout extension and further funding through year end or as far out as next March, but the only way this is going to happen is if Greece puts something substantial on the table, like further pension reforms, and the Greek government of Prime Minister Alexis Tsipras has said there is no way his government will do so. In addition, in recent weeks, Tsipras has been demanding debt relief, which for most in the eurozone is a non-starter.

Jeroen Dijsselbloem, the Dutch finance minister who chairs the ministerial committee, acknowledged for the first time a third extension to the bailout would be needed for Greece to unlock the 7.2bn.

“Let’s say that we do reach an agreement, it’s unthinkable that the implementation and then disbursement will also have to take place before the end of the month,” he said. “That’s unthinkable. So in that scenario we would need an extension.”

Dijsselbloem said talks ended with no progress the other day because Greece put forward “too little measures... assessed to be credible.”

It was up to Greece to submit new proposals in the next few days, and the “ball is clearly in Greece’s court to seize that last opportunity,” he said.

Christine Lagarde, head of the IMF, said Greece’s proposals “cannot be smoke and mirrors.” Lagarde also said Greece won’t be given a grace period if it fails to pay the 1.5bn euros due to the fund.

“It will be in default – it will be in arrears vis-à-vis the IMF, yes, on July 1.”

Lagarde spoke after it was revealed the Greek government has suffered a collapse in revenues as companies and individuals delayed filing tax returns amid concerns emergency levies could be imposed in order to secure a deal from the creditors.

As reported by the Financial Times, “Greek government revenues in May were 900m euro, or 24 percent short of the monthly target, according to preliminary budget figures. It had met projections for the previous three months.”

Then you have the issue of the banks. At week’s end, the European Central Bank and Greek officials were trying to reassure citizens the banks would remain open next week, amid rumors they could be closed come Monday morning. Deposits have been flooding out, though it is not a classic “bank run” in that there has been no disorder on the streets in front of the institutions. At least not yet.

But while the ECB supplied more liquidity on Friday to the banks, with another 1.2bn flooding out today, just how long this will continue is probably a day-to-day supposition.

The key player opposite Greece remains German Chancellor Angela Merkel, who is determined to keep Greece in the eurozone, even as many in her own ruling party have publicly stated, let the country go.

“We are convinced – where there’s a will there’s a way,” Merkel told parliament. “When the politicians in Greece muster this will, then an agreement with the three institutions is still possible.”

Merkel’s finance minister, Wolfgang Schauble, is among the leading skeptics.

Merkel did chastise Greece, saying it “has constantly delayed several essential structural reforms,” while contrasting Athens with the likes of Ireland, Spain and Portugal, which have, Merkel said, implemented reforms.

The Greek central bank urged the country’s leaders to agree to a deal already on the table or risk an “uncontrollable crisis.” Finance Minister Yanis Varoufakis accused the bank of fanning liquidity fears in an “astonishing” fashion. Varoufakis said central banks have a duty to “douse any concerns about liquidity, then provide liquidity when it is lacking.”

Tsipras said Greece was being “blackmailed” and that there was an effort under way to spur capital flight, though no conspirator was named.

Among some of the other statements from the past week....

Michel Sapin, France’s finance minister, told France Info radio: “Greece has been insolvent for five years.  It survives thanks to European taxpayers. But if it were to leave the euro, that would be a complete catastrophe for Greece.”

Zoi Konstantopoulou, the speaker of the Greek parliament and a member of Syriza, refused to accept the Greek central bank’s report that failure to reach an accord would “mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country’s exit from the euro area – and most likely – from the European Union.”

Instead, Konstantopoulou said Greece’s debt is “odious” and shouldn’t be repaid.

Jean-Claude Juncker, the European Commission president: “I don’t care about the Greek government. I do care about the Greek people, mainly the poorest part.”

The European Central Bank holds 27bn euro in Greek bonds, with repayments of 3.5bn in July and 3.2bn in August; a legacy of the 2012 debt restructuring.

The Bundestag, German parliament, is now on recess and would have to be called back to approve any new Greek deal.

Philip Stephens / Financial Times

“In Berlin, as in capitals across Europe, politicians and policy makers have started thinking about the day after. Maybe that should be the week, month and year after. Step one is to prepare for the blame game if the Greek government decides to default. Step two asks what happens next. Exit from the euro and, possibly, from the EU? A failing state collapsing into a failed one? A Balkan foothold for Russia’s Vladimir Putin?

“Amid this swirl, I have heard half a dozen good reasons why German chancellor Angela Merkel and her fellow eurozone leaders – Madrid, Lisbon and Dublin to name but three take, if anything, a tougher line towards Athens – should call Greece’s bluff. Not from any sense of self-righteousness, nor in a spirit of punishment or retribution, but because negotiations have not thrown up a better alternative.

“Greek Prime Minister Alexis Tsipras had not a bad story to tell after his election victory in January. Greece needed debt relief; and the Syriza-led government had promised voters it would smash the clientelism that poisons the nation’s politics and economics. An objective observer would have spotted a deal: radical reform of state institutions, the taming of the oligarchs and rolling back of the cartels and closed shops that impoverish the Greek people, and a sustained attack on corruption in return for the promise of debt writedowns.

“The goodwill has been squandered. Syriza’s promises have come to naught. The cliques, cartels and oligarchs flourish as before. And in talks with eurozone creditors Athens has displayed a toxic mix of arrogance, amateurism and blatant venality....

“It is unsurprising, then, that to walk the corridors in Berlin these days is to sense a hardening frustration. From the chancellery to the finance and foreign ministries, the message is that Greece’s fate rests with its government. If the loudest voices are heard among Ms. Merkel’s Christian Democrats, the chancellor’s Social Democrat coalition partners have also shed their earlier sympathy for Syriza.

“People close to the chancellor say she is absolutely prepared to see Athens tumble out of the euro...she is looking over her shoulder at a potential mutiny within her party if she strays too far from the finance minister’s [Schauble’s] line. The chancellor, it is sometimes forgotten, is a leader well practiced in the art of self-preservation.”

Euro/EU bits....

--I’ll get into “contagion” next week, but for now, due to the Greece situation, yields in the periphery rose sharply at midweek, with the yield on Spain’s 10-year hitting 2.54%, highest since August, while Italy’s traded at 2.46% and Portugal’s 3.39%, for both the highest since October.

But then they all rallied back by week’s end. [2.26% for Spain, 2.28% for Italy, 3.01% for Portugal.]

--Denmark had an election and the center-right opposition won a majority, dethroning Helle Thorning-Schmidt as Danish prime minister.

But the center-right candidate for prime minister led his Liberal party to their worst result in a quarter century and, instead, the big winners on the right were the Danish People’s Party.

It’s confusing. The DPP finished second overall to Thorning-Schmidt’s Social Democrats, and it’s unclear if the DPP will enter government or seek to support it from parliament as they’ve done before.

If they enter a center-right coalition with the third place Liberals, it would mark the third Nordic country to have a populist party in government after Norway and Finland.

The Social Democrats, on the other hand, would only be in power in one Nordic country, Sweden, for the first time since after World War II.

--Eurostats reported the final look at inflation for May was 0.3% annualized, vs. January’s -0.6%, which is good. Greece, though, saw prices fall 1.4% ann.

--Euro car sales rose at their slowest pace in six months in May, up just 1.4% year on year, according to the European Automobile Manufacturers’ Association; nonetheless the 21st straight month of expansion.

Sales were down 6.7% in Germany, yoy, and 3.5% in France, but up 14% in Spain and 11% in Italy.

--May retail sales in the UK rose a better than expected 0.2% month on month, up 4.4% ex-fuel year over year. The unemployment rate, 5.5%, remains at its lowest since 2008. And wages for the three months to April are up 2.7% year on year, vs. zero inflation, which is good, sports fans!

--One huge issue taking a backseat to the Greek debt crisis is immigration. The governor of the Veneto region in northeastern Italy, for example, called for the removal of migrants from lodging near tourist destinations, warning their presence could have a ‘devastating’ effect on the holiday season and cause a ‘boomerang effect’ on bookings. [James Politi / Financial Times]

I don’t blame the guy. It’s a very ugly situation, especially when you see some of the pictures. I wouldn’t go there if I knew what it looked like in some spots. There are other sites to visit in Europe.

But the governor is a member of the populist, anti-euro and anti-immigrant Northern League, and he’s in conflict with Prime Minister Matteo Renzi’s center-left government, which has called for 5,000 migrants to be shifted out of Sicily to northern regions.

For his part, Renzi is dealing with over 47,000 migrants who have crossed the Mediterranean the first five months of the year, according to the Italian interior ministry.

As for the rest of the EU and the failure to cooperate with Italy and Greece on the migrant issue, Renzi is threatening to issue temporary visas to enable migrants to travel beyond Italy under existing EU rules.

--Lastly, France’s National Front announced it had formed a new far-right bloc in the European Parliament. Euro Parliament groups must have at least 25 members from at least seven countries to qualify for $millions in funding and extra speaking time and last year, FN (Front National) leader Marine Le Pen failed to gain a seventh country.

But this year, a European Parliament member from the UK’s right-wing UK Independent Party (UKIP) moved over to the new bloc after she was expelled from UKIP because of questions concerning expense claims. So Le Pen’s National Front is joined by the Dutch and Austrian Freedom parties, Italy’s Northern League and Flemish Interest of Belgium, as well as lawmakers with the Polish Congress of the New Right.

Geert Wilders, representing the Dutch Freedom Party, told reporters, “Today is D-Day, it’s the beginning of our liberation.... We are the voice of the European resistance.”

Turning to Asia, China’s Shanghai Composite benchmark index suffered its worst weekly loss, 13.3%, since June 2008. The market has been in a bubble, pure and simple. I’ve written a number of times it will end badly and there is far more damage to come, though I’m not saying it’s straight down further from here. 

But this economy is headed into the crapper, equaling the color of its waterways and skies, and that will be very dangerous for the world as President Xi feels compelled to play the nationalism card.

In Japan, May exports rose 2.4% from a year earlier, as reported by the Ministry of Finance, less than expected.

Street Bytes

--Stocks rose on the week, owing to the benign Fed news, but they slumped some Friday on Greece concerns heading into the weekend.

Overall, the Dow gained 0.6% to 18015, the S&P 500 added 0.8% and Nasdaq rose 1.3%, hitting a new all-time high in the process on Thursday, 5132, before finishing the week at 5117.

--U.S. Treasury Yields

6-mo. 0.05% 2-yr. 0.62% 10-yr. 2.26% 30-yr. 3.05%

Treasuries rallied with the FOMC’s and Yellen’s comments, as well as a flight to safety due to Greece uncertainty. The 2-year rallied 11 basis points (0.73% to 0.62%), while the yield on the 10-year fell 13 bps.

--The two biggest U.S. health insurers by revenue, UnitedHealth Group Inc. and Anthem Inc., are looking to buy smaller rivals to cut costs as part of dealing with ObamaCare.

UnitedHealth made a preliminary approach to acquire Aetna, while Aetna has been looking at Human Inc., which is looking to sell.

Anthem and Cigna Corp. have also been in discussions.

Getting bigger helps the insurers gain leverage in negotiating rates with hospitals, which are also in a merger frenzy; 100 last year, or double the rate of 2009, according to Irving Levin Associates and the Wall Street Journal.

--According to the International Energy Agency, oil supply has exceeded demand globally for the past five quarters, the longest such stretch since 1997 and the Asian crisis. And there are no signs of a slowdown given OPEC is continuing to pump away, with the potential that Iran could increase its own production if it reaches a deal on the nuke front that would ease sanctions on its exports.

For its part, Saudi Arabia is trying to intensify pressure on U.S. shale drillers by further increasing its production.

--Gap announced it is closing 175 of its stores while eliminating 250 positions at headquarters. At least 140 of the stores to be shuttered will be in North America. An unknown number of positions will be lost on this front. The move will leave Gap (which also owns Old Navy and Banana Republic), with 800 Gap stores in North America.

--CVS Health Corp. said it was spending about $1.9 billion to buy Target Corp.’s health and clinic businesses; more than 1,660 pharmacies at Target stores in 47 states. CVS Health will operate the pharmacies inside Target stores and open branded pharmacies at new Target stores.

--90-year-old Hank Greenberg, the former CEO and largest shareholder of AIG, scored a pyrrhic victory in his lawsuit against the U.S. government over the terms of the 2008 bailout of his company.

Judge Thomas Wheeler ruled the government acted unlawfully when it seized 80% of AIG in exchange for a $182bn rescue package.

But, Wheeler said, “if not for the government’s intervention, AIG would have filed for bankruptcy. In a bankruptcy proceeding, AIG’s shareholders would most likely have lost 100% of their stock value.”

Ergo, Wheeler awarded no damages to Greenberg.

But, in terms of a moral victory for Greenberg, Wheeler found that “while the government publicly singled out AIG as the poster child for causing the September 2008 economic crisis, the evidence supports a conclusion that AIG actually was less responsible for the crisis than other major institutions” such as Morgan Stanley, Goldman Sachs and Bank of America.

Those institutions received emergency funds from the government, but it “did not demand shareholder equity, high interest rates, or voting control of any entity except AIG,” wrote Wheeler.

The government argued it acted properly in protecting the taxpayer’s interest. An appeal is expected because this decision carries major ramifications for any future crises.

Alas, Greenberg still can’t be happy. [Tom Braithwaite / Financial Times]

--L. Gordon Crovitz / Wall Street Journal

“For China and the Internet, last week [Ed. week of 6/8] was the best and worst of times. Just as China’s most successful technology entrepreneur toured the U.S. to encourage its small businesses to sell directly online to Chinese consumers, news broke about Chinese cyberattacks against the U.S. government so outrageous they demand harsh retribution.

“Few events have inspired Internet optimists as much as the presentation Alibaba founder Jack Ma gave to the Economic Club of New York. ‘Alibaba was founded in China, but it was created for the world,’ he told a full house at the Waldorf Astoria’s grand ballroom. ‘We want to connect small business in the West with the largest, fastest-growing market in the East.’ Mr. Ma’s company transacts 80% of China’s online commerce and expects to surpass Wal-Mart in sales this year. ‘We need more American products to go to China,’ Mr. Ma said, so that ‘Chinese consumers will get to buy the American products they want.’....

“But just as Alibaba is opening China to the world as never before, Chinese officials are daring to be cut off. The U.S. last week disclosed unprecedented hacking by China of confidential databases held by the White House Office of Personnel Management. In one incident, hackers obtained the records of more than four million federal employees, which include listings of ‘close or continuous contacts.’ That tells Beijing which of its citizens are in contact with American officials....

“Beijing devotes enormous resources to monitoring and censoring the Internet within its borders, so it is no surprise China is also an aggressive practitioner of cyberwar. The U.S. hasn’t done much by way of deterrence....

“China’s citizens are blessed to have access to Alibaba’s open trade but cursed by an authoritarian government that treats them and the rest of the world with contempt. Americans should embrace Alibaba’s consumers while insisting Washington push back against a brazen Beijing.”

[The Washington Post’s Ellen Nakashima reported on Friday that the breach of the Office of Personnel Management’s security-clearance computer system “took place a year ago, giving Chinese government intruders access to sensitive data for a year.”]

--Southern California home prices rose slightly in May, while sales jumped during the spring buying season.

The median sales price for the six-county Southland was $426,000, up 2.2% from a year earlier, CoreLogic said Wednesday; the smallest gain in three years. Sales, though, were up 5% from a year earlier. [Los Angeles Times]

--For the first time in its history, McDonald’s is closing more stores in the U.S. than it is opening. In the latter category, the company plans on opening about 125 restaurants, but it has not stated how many may close. In some of its markets, the likes of Chipotle and Shake Shack are making inroads.

--Dow Jones, publisher of the Wall Street Journal, is cutting about 100 newsroom jobs and closing bureaus in an effort to lower costs and reassign resources to digitally focused departments. Editor-in-chief Gerard Baker wrote in a staff memo that the company will be adding “dozens more jobs” in the next few months in growth areas, including global economics.

--Fitbit, the maker of fitness trackers, saw its stock rise 50% in its trading debut Thursday on the New York Stock Exchange. The company raised $732 million after selling shares at $20, which then closed at $30. They finished the week at $32.75.

--Oracle Corp. missed the Street’s earnings and revenue expectations and the shares sold off, but the company blamed analysts for being so shortsighted. Some of them, however, looking to kiss the company’s butts, raised guidance. But the fact is revenue in software and for Oracle’s cloud initiative declined from year ago levels. [Pssst...c’mon, Workday.]

--Legendary JPMorgan Chase vice chairman and rainmaker James B. “Jimmy” Lee died unexpectedly Wednesday at the age of 62. CEO Jamie Dimon said in a statement:

“Jimmy was a great friend, leader and mentor to me and so many others. Jimmy was a master of his craft, but he was so much more – he was an incomparable force of nature.”

Lee was a former head of JPM’s investment bank and is credited with inventing the leveraged loan.

His death was the third of a well-known business executive in recent weeks; the other two being David Goldberg, husband of Facebook exec Cheryl Sandberg, and Ed Gilligan, the president and likely CEO heir apparent at American Express.

--Comcast Corp. founder Ralph Roberts died. He was 95. Roberts first began investing in the cable industry back in the early 1960s, acquiring a small Mississippi company, and the rest is history.

--Colt Defense, the name for the longtime gunmaker, is heading into Chapter 11, listing $500 million in debt as demand cooled for its civilian semiautomatic rifles and handguns, while sales to the U.S. and foreign governments was uneven.

But as Bloomberg’s Paul Barrett writes, “the main reason the company hasn’t weathered rocky market conditions since the winding down of the wars in Iraq and Afghanistan is that the New York financiers who control the company borrowed too much and paid themselves lavishly....

“(The) private equity firm Sciens Capital and its affiliates loaded Colt with debt since the mid-2000s while taking cash out in the form of ‘distributions’ and ‘advisory fees.’ Sciens remains the controlling owner of Colt Defense.” Bastards.

--We note the passing of billionaire financier Kirk Kerkorian, 98. Kerkorian was one of the founders of modern Las Vegas, the largest shareholder in MGM Resorts International, which he founded in the early 1990s. He invested in and operated airlines, carmakers and film studios.

But it was Vegas where he really made his name. From the International in 1969 to the $8.5 billion CityCenter development that opened in 2009, he was one of Sin City’s central figures.

MGM Resort Chairman Jim Murren said Tuesday the company was “honoring the memory of a great man, a great business leader, a great community leader, an innovator, and one of our country’s greatest generation.”

Kerkorian was born in Fresno, Calif., in 1917 to Armenian-born parents. The family moved to Los Angeles in 1922 and at age 9, he sold newspapers on street corners. Kerkorian would drop out of school in the eighth grade and become an amateur boxer.

But from this humble beginning he became one of the world’s richest men. I never read anything bad about the man.

--“Jurassic World” took in a record $208.8 million for its opening weekend in North America, a record (as well as another $315 million+ overseas).

But according to Box Office Mojo, a box-office tracking site, 1939’s “Gone With the Wind” had total sales of $1.64 billion in today’s dollars ($198 million originally). [Eric Schwartzel / Wall Street Journal]

--Brian Williams has been demoted to MSNBC following his suspension. He will receive a lower salary and has embarked on an apology tour. He will be an anchor of breaking news and special reports on the cable network, starting in mid-August, while Lester Holt, who has been filling in for Mr. Williams, will become the permanent anchor of “Nightly News,” thus becoming the first African-American to solo anchor a weekday evening newscast.

Williams will not be allowed to appear on the “Nightly News,” though he will be able to fill in on breaking news stories on NBC if Holt is unavailable.

In a statement, Williams said, “I’m sorry. I said things that weren’t true. I let down my NBC colleagues and our viewers, and I’m determined to earn back their trust.”

I didn’t like what I saw in his interview on “Today” with Matt Lauer. He was always too cute by half.

--Finally, in a depressing week comes word Carlsberg, which controls 8% of the global beer market, is launching Carlsberg Beer Beauty, a line of men’s grooming products that includes shampoo, conditioner and body lotion.

Yes, there really is Carlsberg beer in these offerings.

Now lest you think this is insane, beer is rich in vitamins and protein, which is why Guinness can claim “It’s good for you.” Alcohol is also a cleansing agent, so they say.

Foreign Affairs

Iraq/Syria/ISIS: Kurdish forces took the Syrian town of Tal Abyad, on the Turkish border, as ISIS abandoned it. The U.S. contributed a limited number of air strikes.

But the attack did create a new refugee wave into Turkey, with the Turkish government wary of the influence a Syrian Kurdish force aligned with Turkey’s blacklisted Kurdistan Workers’ party (PKK) could have. Turkish President Erdogan told a newspaper, “This leads to a structure that poses a threat to our borders.” 17,000 refugees, including ISIS fighters among them, have arrived at the border since June 3.

The importance in taking Tal Abyad is it cut off a major supply line to Raqqa, ISIS’ stronghold in Syria, which is where the Kurds vow to take the fight next.

Separately, Secretary of State John Kerry said on Tuesday that he was “absolutely certain” the overwhelming majority of chemical attacks in Syria had been carried out by the Assad regime and that “everyone’s patience is wearing thin.”

And there are growing concerns for Syria’s 700,000 Druze, who have largely stayed out of the civil war, including in the village of Hader, which is near the Israeli border. The al-Qaeda-linked Nusra Front has designs on it.

Finally, Iran is reportedly sending several thousand combatants to Syria to buck up Assad and his overstretched Syrian army.

Michael Young / The Daily Star

“The broader aim is, reportedly, to consolidate Bashar Assad’s hold over Damascus, central Syria, around Homs and Hama, and the coastal areas. To pursue such a strategy, it appears that Iran has persuaded Assad to withdraw his forces from outlying regions of Syria so that they can regroup in more defensible positions.”

But Iran is now denying reports about the reinforcements, which, as Michael Young notes, “could have been an effort to downplay the difficult situation of the Assad regime.”

Meanwhile, Islamic State militants attacked government forces and Shiite militia allies as part of the battle for control of Iraq’s biggest refinery near the city of Baiji, killing 11. ISIS employed four suicide bombers in vehicles packed with explosives in what has become their signature move...send them in in waves, as was the case in Ramadi.

In eastern Iraq, Kurdish forces battled with Shiite forces, these two previously cooperating.

In Washington, Defense Secretary Ash Carter and Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, strongly hinted a higher-risk role for U.S. troops in Iraq is in the cards, though President Obama has resisted thus far.

Dempsey and Carter told a House Armed Services Committee on Wednesday that they saw value in helping Iraqi forces when they go on the offensive, but that it would be a mistake to send thousands more American troops to replace faltering Iraqis.

Carter said: “I would not recommend that we put U.S. forces in harm’s way simply to stiffen the spine of local forces.”

Iran: Ten days to go before the deadline for achieving a final agreement on Iran’s nuclear program with the P5+1 (U.S., Russia, China, Britain, France and Germany), though it certainly appears as if the deadline will be extended, even if for a few weeks.

Iranian President Hassan Rohani defended the negotiations to a domestic crowd on Sunday, pledging to reach a deal that would lift the hardship of sanctions.

“With the guidance of the Supreme Leader and the support of the people, we will enrich both uranium and the economy in Iran.

“We want the nation to be happy and productive, to have a bright economy and social welfare – and to have centrifuges too.”

100 centrifuges in every garage, by god!

“We will go to the United Nations, where the sanctions against us were written, and there we will have them lifted,” Rohani added.

Addressing critics who say negotiators are making too many concessions, Rohani said, “Those who say sanctions are not important don’t know what is happening in people’s pockets.”

But at a following news conference, Rohani said it could take weeks or months for sanctions to be lifted after reaching a deal. [Jerusalem Post]

As to the key negotiating point at this stage, inspections, hardliners in Iran’s parliament are insisting they should not be allowed, nor should questioning of nuclear scientists.

Rohani, in the news conference, defended “voluntary” implementation of the Additional Protocol of the International Atomic Energy Agency, which grants inspectors access to declared and undeclared sites.

Rohani insists the country’s military secrets would not be disclosed.

The president also added that oil income would be down $13 billion this year. [Financial Times]

Meanwhile, Secretary of State Kerry said on Tuesday that Washington would not insist that Iran answer unresolved questions about its past nuclear activities because the United States already knows what Tehran has done.

In a teleconference with reporters, Kerry said, “We’re not fixated on Iran specifically accounting for what they did at one point in time or another. We know what they did. We have no doubt. We have absolute knowledge with respect to the certain military activities they were engaged in.”

“What we’re concerned about is going forward,” Kerry said. “It’s critical to us to know that going forward, those activities have been stopped, and that we can account for that in a legitimate way.” [Jerusalem Post]

I’m sorry, but with respect to the secretary’s comment ‘we know what they did in the past,’ he’s just not telling the truth.

Republican Senator Bob Corker, chairman of the Senate Foreign Relations Committee, wrote a harsh letter to President Obama urging him to strengthen the terms of any deal.

“It is breathtaking to see how far from your original goals and statements the [global powers] have come during negotiations with Iran,” wrote Corker. “I hope reports indicating potential concessions on inspections and on the full disclosure of Iran’s possible military dimensions are inaccurate.”

Rep. Brad Sherman (D., Calif.), also a member of the Foreign Affairs Committee, voiced alarm. “My fear is that Kerry’s concession today will be the first of several.”

The IAEA itself has identified 12 issues on Iran’s suspected past work it wants further information on, but Iran has only partially addressed one of them, according to IAEA officials. [Wall Street Journal]

Libya/Yemen...war on terror: Al-Qaeda’s branch in North Africa denied the jihadist leader Mokhtar Belmokhtar had been killed in an American airstrike in Libya this week.

In a statement, the terror group said: “In the face of these fallacies, and so that we do not leave our Muslim nation as prey to these lies, the jihadist commander Khaled Abou Abbas is still alive and kicking and wandering the land of God.”

Belmokhtar was the man behind the 2013 seizure of the Algerian gas plant that resulted in the deaths of 38 foreign hostages and a group affiliated with him, Al Mourabitoun, also denied he had been killed.

U.S. officials confirmed Belmokhtar was the target of the strike in Libya on Sunday, but they have consistently cautioned they needed forensic evidence to declare he had indeed been killed. It was the Libyan government that announced Belmokhtar’s death.

Al-Qaeda and its ilk are normally accurate when their fighters are taken out, believing them to be martyrs.

Last week, for example, when the leader of Al-Qaeda in the Arabian Peninsula (AQAP), Nasser al-Wuhayshi (also spelled Wahishi), was reportedly killed in a drone strike, the group immediately put out a video tribute, announcing his successor, military chief Qasim al-Raymi, in the process.

Al-Wuhayshi was seen as al-Qaeda’s second-in-command and was a former private secretary to Osama bin Laden. The State Department had offered a $10 million reward for anyone who could help bring him to justice. The Washington Post reported the CIA, which carried out the strike with the U.S. Joint Special Operations Command, did not actually know in advance al-Wuhayshi was among the suspected militants targeted.

Editorial / Wall Street Journal

“(The strikes are a reminder) that while killing senior jihadists has tactical and symbolic value – disrupting terrorist networks while underscoring U.S. resolve – they do not turn the tide of war. ‘Core’ al-Qaeda was not defeated after Osama bin Laden was killed in 2011, even if it was humbled. Neither was al-Qaeda in Iraq beaten after the killing of Abu Musab al-Zarqawi in 2006. Killing the kingpins is necessary but not sufficient for victory.

“That much was made clear by the way Wuhayshi met his end – near a beach in the Yemeni city of Al Mukalla, population 300,000. Al-Qaeda took control of Al Mukalla in April, seizing close to $80 million from the central bank. The group now controls the better part of southern Yemen....

“(The U.S.) will not defeat its terrorist enemies by going after them one at a time. This is what makes the recent success of the Kurdish Peshmerga against Islamic State so promising. This week the Kurds defeated Islamic State to take control of the Syrian town of Tal Abyad, on the Turkish border. Now the Kurds are headed south to Islamic State’s Syrian stronghold of Raqqa.

“Success in Raqqa would be the most important victory to date in rolling back ISIS, which is why the U.S. should concentrate military efforts in support of the offensive. The Kurds are among our best anti-jihadist allies, and they deserve more support than the U.S. has provided so far.”

Separately, Saudi-led coalition airstrikes on the Yemeni capital Sanaa killed at least nine, while at least 31 were killed in five simultaneous bombings claimed by ISIS at Shiite mosques and offices in Sanaa as well.

Sanaa was the scene of the March 20 ISIS attacks that killed at least 137.

More than 2,600 civilians and combatants have now been killed in Yemen amid a growing humanitarian crisis.

Israel: Hamas officials are in Doha, Qatar to formulate a long term five-year cease-fire plan with Israel, which would include a detached, floating Gaza port, which would be controlled by Israel or an international authority. The issue of building an airport in the Gaza Strip has been delayed.

Meanwhile, Prime Minister Netanyahu’s wife and the deputy director general of his staff are at the center of an investigation into the family’s use of state funds, though Netanyahu is not himself being targeted.

Egypt: An Egyptian court sentenced deposed President Mohammad Morsi to death Tuesday over a 2011 mass jailbreak that took place during the country’s uprising. Five leaders of the Muslim Brotherhood were also sentenced to death. The White House condemned what it called a politically motivated sentence, which also risks turning Morsi into a martyr.

Afghanistan: At least 20 police officers were killed in a Taliban ambush at a checkpoint in southern Helmand province. Weeks earlier a similar Taliban attack on a checkpoint in the northeast killed 18.

A surge in attacks across the country is also taking a toll on civilians, with their casualties jumping 16 percent in the first four months of 2015 vs. last year.

Russia/Ukraine: In the clearest sign yet the United States and Russia are headed towards another Cold War, Poland and Lithuania confirmed they are in talks with Washington about pre-positioning U.S. heavy military equipment close to the Russian border; enough to equip a brigade of 3,000 to 5,000 soldiers.

Both countries have been pressing the U.S. to enhance its position there and the rest of Eastern Europe.

Polish Defense Minister Tomasz Siemoniak said, “There are talks about the stationing of U.S. military equipment in Poland. We have been working for a while on increasing the American military presence in Poland and across the eastern flank of NATO.”

If the U.S. goes through with the request, it would be the first time it has committed equipment permanently to former Soviet-bloc countries.

The equipment would include Abrams battle tanks and Bradley armored fighting vehicles that would be stockpiled while troops remain on bases elsewhere.

In response, Russia warned the U.S. plans would be the “most aggressive step by the Pentagon and NATO” since the end of the Cold War.

General Yuri Yakubov said, Russia would “be left with no other option but to boost its troops and forces on the western flank.”

For his part, Russian President Vladimir Putin said Russia would add more than 40 new intercontinental ballistic missiles to its nuclear arsenal this year.

Addressing a military and arms fair, Putin, flanked by army officers, said, “More than 40 new intercontinental ballistic missiles able to overcome even the most technically advanced anti-missile defense systems will be added to the make-up of the nuclear arsenal this year.”

Russian Deputy Defense Minister Anatoly Antonov said at the same fair, “The feeling is that our colleagues from NATO countries are pushing us into an arms race.” [Irish Independent]

None of this would be happening, of course, without Russia’s moves in Ukraine. Last weekend, six Ukrainian servicemen were killed in clashes in territory held by the separatists.

Editorial / Washington Post

“Vladimir Putin recently told an Italian newspaper that ‘only an insane person and only in a dream can imagine that Russia would suddenly attack NATO.’ So what is a sane person to make of the vastly expanded military exercises, patrols and incursions ordered by Mr. Putin along NATO’s borders since his invasion of Ukraine last year? According to NATO’s figures, Russian air activity near NATO territory increased by 50 percent from 2013 to last year; on the ground, there have been multiple last-minute military exercises, kept secret from the West or announced belatedly.

“Russian military aircraft have flown unannounced over Poland; the three Baltic republics of Estonia, Latvia and Lithuania; and the North Sea. In April, a Russian fighter flew dangerously close to a U.S. plane over the Baltic Sea, even as the Russian navy conducted exercises in the waters below. Russian forces also have been deploying in the Arctic, forcing Sweden, Norway and Finland to contend with incursions by planes, and in Sweden’s case, a suspected submarine.

“All of this might be dismissed as bluffing and posturing by Mr. Putin. But given the fact that the Russian leader has now launched two military invasions across European borders, it is only prudent that NATO prepare for the possibility of an incursion into the Baltics, which joined NATO a decade ago, or even into former Warsaw Pact states such as Poland. Doing so will not only deter Mr. Putin but also reassure those nations, which sometimes question whether the United States, Britain and France would really come to the defense of Eastern Europe’s border nations....

“Some in the West oppose any step by Western countries to defend themselves, no matter how small, on the grounds that doing so could ‘provoke’ the Russian ruler. But it is more likely that a rejection of the Pentagon’s plan by President Obama would encourage Mr. Putin to believe NATO would crumble if challenged. Mr. Obama should approve the pre-positioning and make it clear that Moscow’s belligerence will be matched by tangible defensive acts.”

Friday, at the Saint Petersburg International Economic Forum, Putin acted like he didn’t have a care in the world, saying, “I would like to focus our attention on economic issues.”

His former finance minister, Alexei Kudrin, who remains an insider, said the day before that perhaps Russia should move up the 2018 presidential election to help Putin (or whoever is elected...wink wink) conduct sweeping reforms to pull Russia out of the current crisis.

China: In a huge development, Hong Kong’s legislature voted Thursday to reject a Beijing-drafted election plan that set off massive street protests last fall.

The framework for the semi-autonomous territory, while allowing citizens in Hong Kong to cast ballots directly for the city’s chief executive for the first time, is a sham because the number of candidates would be limited to two or three approved by a nominating committee that would be stacked with pro-Beijing figures.

Among those voting, only 8 were for the package and 28 were against, while 33 legislators did not cast votes. A group of pro-Beijing lawmakers had left the room in an attempt to delay the vote and then missed it, which is almost comical.

So as it stands now, however, for the 2017 election, the chief executive will still be chosen by a 1,200-member committee of mostly pro-Beijing loyalists.

A recent opinion poll showed that 47% of Hong Kongers endorsed the Beijing-proposed framework, with 38% opposing and 15% undecided. [Los Angeles Times]

So it’s a stalemate. No progress on democracy, but as one Hong Kong professor told the L.A. Times, “at least we didn’t take a step back. In this case, Beijing’s naked meddling in Hong Kong’s affairs has been exposed.”

On the mainland, a government mouthpiece, the Global Times, said, “The Hong Kong political reform proposal has been vetoed.”

As for future demonstrations, the student movement is split and the business community would never put up with a weeks-long disruption like what happened last fall, but its 2015 and the election is 2017. 2016 will be explosive. An editorial in the Global Times warned: “If the opposition force insists on rejecting the reform proposal, Hong Kong’s political reform would come to a standstill. Turmoil in Hong Kong would become a reality if the opposition force continues to cause trouble.” [South China Morning Post]

Meanwhile, the Chinese foreign ministry said Beijing will complete its land reclamation projects in the disputed South China Sea within days. It would then go on to build infrastructure on its territorial claims.

A foreign ministry statement read:

“Apart from satisfying the need for military defense, the main purpose of the reclamation projects is to meet various civilian demands and better carry out China’s international obligations and responsibilities.”

Professor Wang Hanling of the Chinese Academy of Social Sciences told the South China Morning Post: “Beijing wants to tell the Western media as well as Asian countries not to stir up the reclamation issue any more, because the size of the reclaimed land will soon be fixed.”

The U.S. says Beijing has reclaimed 2,000 acres of land over the past 18 months.

Wang said it was unfair to blame China because it was also providing maritime search and rescue help as well as disaster relief to those Asian countries who had claims in the South China Sea. Cough cough.

Actually, a couple of mean typhoons could do a number on these new military bases, don’t you think?

Separately, in a study under the auspices of the Chinese Academy of Sciences, researchers concluded the Pearl River is a soup of antibiotics. China consumes almost half the world’s antibiotics and they are in high levels in the waterways.

Antibiotics can be purchased without a prescription in local pharmacies, while “Local animal farm operators often add antibiotics into animal feed to prevent diseases and boost production,” according to a report.

North Korea: The government announced it is facing its worst drought in a century and more than 30% of rice paddies were “parching up,” according to the state news agency.

Hundreds of thousands are believed to have died during a famine in the 1990s, though this drought is not expected to be as deadly due to agriculture reforms.

Pyongyang also announced this week that the country test-fired a new anti-ship rocket, a month after it claimed to test a submarine-launched ballistic missile. But no specifics, such as photographs, were presented of the former and some of the pictures of the latter test may have been doctored.

North Korea is banned from testing or developing ballistic missiles under UN Security Council resolutions. [You are allowed to snicker.]

South Korea: The head of the World Health Organization said Seoul’s efforts to contain MERS were reassuring and the public risk low. Margaret Chan told reporters the disease, which has killed at least 24, isn’t spreading in the wider community and is confined to a few hospitals.

Separately, the Washington Post’s Lally Weymouth interviewed South Korean President Park Geun-hye and asked her to assess the current situation in North Korea.

Park: “Since Kim took power 3 ½ years ago, he has executed some 90 officials. Indeed, the reign of terror continues to this day. Although one can say that the reign of terror might work in the short term, in the mid- to long term, it is actually sowing and amplifying the seeds of instability for the regime.

“Currently, North Korea is constantly upgrading and enhancing the sophistication of its nuclear weapons, and developing and honing its missile capabilities as well. These represent a threat not just to the Korean Peninsula but also to the international community. So it is extremely urgent that we achieve a denuclearization of North Korea.”

But that won’t be easy. And last week the United States announced there were “additional unidentified nuclear facilities” in North Korea. Remember, IAEA inspectors haven’t been allowed inside North Korea for years.

Random Musings

--Some poll data...according to a Monmouth University national poll, 69% of Americans feel optimistic about the 2016 election and just 25% are pessimistic. Of six Republican and two Democratic candidates, only Florida Sen. Marco Rubio earns a net positive rating; 31% favorable / 27% unfavorable. Of the eight tested, Rubio polls best with independent voters – 33% favorable / 22% unfavorable. Jeb Bush receives just a 25% favorable / 44% unfavorable among independents.

Donald Trump (more on him below), earns just an 18% favorable and 57% unfavorable rating among American voters. 50% of Republicans have an unfavorable opinion of him.

As for Hillary Clinton, she received a 41% favorable / 44% unfavorable; importantly just 26% favorable / 55% unfavorable among independents.

In terms of a vote tally, Clinton has the support of 57% of Democrats and Democratic-leaning voters nationwide, which is little changed from the 60% support she registered two months ago. Joe Biden and Vermont Sen. Bernie Sanders receive 12% each. Sanders support isn’t too shabby, considering he has little name recognition as yet.

In a Quinnipiac University swing state poll, Clinton tops Rubio in Florida 47-44, while in Ohio, Gov. John Kasich leads Clinton 47-40. In Pennsylvania, Rubio edges Clinton 44-43, while Sen. Rand Paul leads Clinton 45-44.

Clinton’s favorability ratings are 47-45 in Florida; negative 44-48 in Ohio; and 46-48 in Pennsylvania.

She is not honest and trustworthy, Florida voters say by 51-43 percent, Ohio voters 53-40 percent and Pennsylvania voters 54-40 percent.

Against Jeb Bush, Clinton leads 46-42 in Florida, 42-41 in Ohio, 45-41 in Pennsylvania.

--In formally launching her campaign on Saturday (actually her second announcement), Hillary Clinton said: “These Republicans trip over themselves promising lower taxes for the wealthy and fewer rules for the biggest corporations without any regard on how that will make inequality worse.... I’m not running for some Americans. I’m running for all Americans.”

That’s very thoughtful of her, don’t you think?

But Hillary didn’t address the following....

--Editorial / Washington Post...on the trade deal.

“Of all the people who should be standing shoulder to shoulder with Mr. Obama at this moment, none could do more to help him than Hillary Clinton, who was an enthusiastic champion of these agreements throughout her tenure as secretary of state. The resistance to Mr. Obama’s trade agenda is led by Democrats in the House who fear that supporting the president will earn them the enmity of organized labor and other progressive groups that simplistically denounce the president’s trade agenda as a threat to jobs and the environment. These Democrats are joined, and validated, in this short-sighted position by Ms. Clinton’s rivals for the Democratic nomination, former governor Martin O’Malley of Maryland and Sen. Bernard Sanders (I-Vt.).

“Think of the bracing effect it might have had on her fellow Democrats if Ms. Clinton had stood up against election-year political pressure and reiterated what she said as America’s top diplomat in 2012: ‘that we need to keep upping our game both bilaterally and with partners across the region through agreements like the Trans-Pacific Partnership, or TPP.’ Imagine if she had read from her memoir, published just last year under the now ironic title ‘Hard Choices’: The TPP, Ms. Clinton wrote, ‘was also important for American workers, who would benefit from competing on a more level playing field. And it was a strategic initiative that would strengthen the position of the United States in Asia.’

“Instead, Ms. Clinton broke her silence on the issue only long enough to equivocate about it, or, as she did Monday, to expand on the ‘legitimate’ concerns of opponents of the TPP – and second-guess the president’s strategy. With 18 months to go in his second term, she now advises Mr. Obama to use the House Democrats’ obstruction of Trade Promotion Authority as ‘leverage’ against the 11 negotiating partners; perhaps to reopen it just as the Obama administration spent a couple of years redoing the U.S.-Korea trade deal it inherited from the Bush administration.

“What this politically unrealistic advice did not include, however, was a simple yes or no to the question of whether Mr. Obama should have the additional bargaining power of Trade Promotion Authority now, as he requests. And that is the question of the hour.”

--I watched Jeb Bush’s announcement he was formally entering the Republican race and I thought it was outstanding. Drawing a contrast with Marco Rubio, his former protégé, Bush said: “Executive experience is another term for preparation, and there is no substitute for that. We are not going to clean up the mess in Washington by electing the people who either helped create it or have proven incapable of fixing it.”

On the other side...Beth Reinhard / Wall Street Journal

“Mr. Bush said his two terms as governor showed he could boost growth, add jobs and cut taxes. In response, Florida’s Democratic Party called Mr. Bush’s tenure a ‘disaster’ and said it would remind voters of what it called a racially motivated purge of voter files in the state and of Mr. Bush’s effort to prolong the life of Terry Schiavo, the brain-damaged woman whose husband wanted to remove life support despite her parents’ objections.

“ ‘His record as governor certainly showed his preference for giving tax breaks to his wealthy friends and deep-pocketed donors over the middle class,’ said a statement from the Democratic National Committee.”

It’s going to be a very classy campaign, boys and girls.

--So back to Donald Trump...he’s in the race and there’s no reason to believe he can’t stick around a while. It helps that anytime he wants it, he can get some major press.

I watched his entire opening statement, where he said things like he’ll be “the greatest jobs President that god has ever created.”

And, “I am really rich. That is the kind of mindset, the kind of thinking, you need for this country....I am officially running for president of the United States and we are going to make our country great again.”

There were some xenophobic comments, such as describing some Mexican immigrants as “rapists,” while he pledged to be tougher on countries like China.

Trump attacked U.S. leaders for allowing the nation to descend into debt to China to the tune of $1.3 trillion.

“How stupid are our leaders. How stupid are these politicians to allow this to happen. How stupid are they? I love China but their leaders are much smarter than our leaders. It’s like taking the New England Patriots and (quarterback) Tom Brady and have them play your high-school football team. That is the difference between China’s leaders and our leaders. They are ripping us.”

And, “ISIS, China, Mexico are all beating us. Everybody is beating us.”

They’re beating us, Trump said, because we are run by “losers.”

Trump denied the report his campaign solicited actors at $50 a pop as he addressed supporters in New Hampshire. The New York Daily News cited a June 12 email from the Extra Mile Casting company that sought people “to wear T-shirts and carry signs and help cheer him in support of his announcement.”

Nothing illegal with this, just kind of funny. 

Larry Sabato, an expert on U.S. politics at the Univ. of Virginia, told the Financial Times: “What is significant is that Trump may well make it into the first GOP debate on August 6. Imagine Trump on the stage, dressing down candidates such as Jeb Bush. It could be quite a spectacle.”

Jennifer Rubin / Washington Post

“If you found Donald Trump’s rambling, incoherent announcement of his presidential run to be troubling, you will be dismayed to learn that he’s got a recipe for winning: ‘According to Donald Trump, a 2016 ticket of Trump for president and Oprah Winfrey for vice president would be a lock for the White House.’

Thunk.

“Now America has its share (maybe a larger share) of hucksters, con men, pranksters and the like who seek to grab their 15 minutes of fame. We should not be surprised when they show up in presidential races. And while Trump is a ludicrous figure with no chance to win, there are lots of other candidates who have an equally low chance (zero) to make it to the nomination. Still, it is worse having Trump there, since he obviously is using this opportunity purely as self-promotion and to air his obnoxious attitudes....

“I suppose it is too much for respectable news organizations to treat him with disdain, dropping the pretense he is a real candidate. Nevertheless, it is nice to think they would try. After all they are not the Trump PR department and should not pretend his policy positions are serious.”

As to the $8.7 billion net worth figure, as Aaron Elstein of Crain’s New York Business writes: “This figure is more than double other credible estimates of his wealth and raises the question of how seriously should we take Mr. Trump’s latest claim. The short answer: Not at all.

“Mr. Trump’s financial statement said his real estate licensing deals, brand and branded developments are worth $3.3 billion – his greatest source of wealth. Alas, there’s no information documenting the income or cash flows generated from lending out Mr. Trump’s name to casinos, condos or whatever. So you’ll just have to take his word for it. Is that good enough for you?

“More weird stuff: Under assets, Mr. Trump says he holds $302 million in cash and marketable securities. It’s hard to fudge cash. You either have it or you don’t, right? Wrong! In this case, Mr. Trump’s cash includes money he’s claiming ‘before the collection of significant receivables.’ Receivables are funds you are owed but haven’t been paid yet. Mr. Trump’s argument that receivables should be counted like cash is like saying if I give you an I.O.U. for $1 million, you are a millionaire.”

--Sen. Rand Paul pledged to “blow up the tax code and start over” with a federal flat tax of 14.5%...the same rate for corporations. Paul’s flat tax would apply to all personal income, wages, salaries, dividends, capital gains...and the first $50,000 of income for a family of four would be exempt. Most deductions would be eliminated except for mortgage interest and charitable contributions.

But government revenues would fall 5%, so spending would have to be reduced commensurately.

I like the idea but of course it will never pass. As the senator says, however, “It shows that we have something we can offer to the working class. The question we have for Hillary Clinton is: How are you going to help the working class?”

--Michael Goodwin / New York Post

“I can think of no other period when we simultaneously had such terrible leaders and ineffective lawmakers at all three levels. They seem to feed on each other’s worst instincts, competing to lay claim to the most sweeping changes, no matter the method or impact.

“And so we are engulfed in waves of corruption, incompetence and arrogance, trickling up and trickling down, as government smothers society with agenda-driven policies. Just as modern culture often works against parents and families, modern government often works against social harmony and individual liberty.

“Barack Obama leads the pack, and he will make history in two ways: As the first black president, and as the president who weakened America at home and abroad. Even race relations are on fire. [Ed. Goodwin wrote this prior to the Charleston massacre.]

“His signature legislative achievement, ObamaCare, remains as unpopular in its fifth year as when it passed in 2010. Yet he and his army of bureaucrats know best, breaking trust with the public as they impose their will.

“Obama’s foreign policy is beyond broken – it is a major contributor to the unfolding global catastrophe. Thanks to his failed leadership, Iran, the world’s largest sponsor of terrorism, will get a nuclear bomb, an event that will throw open the gates to hell.

“The Syrian civil war, which he pledged to stop, has killed 230,000 people and displaced 7.6 million. It helped to birth the Islamic State, the most ruthless and successful terrorist army the world has ever known. That’s Obama’s legacy.”

--Britain was forced to remove some of its spies after Russia and China accessed the documents taken by former U.S. intelligence contractor Edward Snowden, according to British media. Russia, as reported by the BBC and the Sunday Times, was able to decrypt more than one million files.

There is no information spies have been harmed, yet.
Editorial / Wall Street Journal

“Edward Snowden and his apologists have been lobbying President Obama to let the intelligence thief return from Russia with a slap on the wrist. But they’ll now have to explain the news that his stolen files have been cracked by Russian and Chinese intelligence services with great harm to U.S. and British defenses....

“The intelligence sources said Western agents are being targeted based on information in the files, forcing MI6 to move agents and change protocols. ‘Snowden has done incalculable damage. In some cases the agencies have been forced to intervene and lift their agents from operations to prevent them being identified and killed,’ one source told the (Sunday Times of London).

“Mr. Snowden has insisted that he’d taken precautions to make such access impossible, but that was always implausible. Even if Mr. Snowden wasn’t a foreign agent, he sought Chinese and Russian help to protect him from arrest after he fled the U.S., and those intelligence services would do anything to grab his files.

“The defector’s media pals will say these intelligence sources can’t be trusted, but Mr. Snowden is already a proven liar. He claims to have been motivated only by the best of intentions, but his actions have assisted dictators while harming defenders of democracy.”

--Pope Francis issued an encyclical, calling for swift action on climate change, while also slamming consumerism and irresponsible development. Placing most of the blame on fossil fuels and human activity, Francis warned of an “unprecedented destruction of ecosystems, with serious consequence for all of us” if swift action is not taken. Developed nations were obligated to help poorer ones confront the crisis.

“Climate change is a global problem with grave implications: environmental, social, economic, political and for the distribution of goods,” he wrote. “It represents one of the principal challenges facing humanity in our day.”

Francis praised the progress achieved by technology, such as in advancements in medicine, but, he added, “Our immense technological development has not been accompanied by a development in human responsibility, values and conscience.”

“The Earth, our home, is beginning to look more and more like an immense pile of filth.”

“All is not lost,” however. “Human beings, while capable of the worst, are also capable of rising above themselves, choosing again what is good, and making a new start.” [Jim Yardley and Laurie Goodstein / New York Times]

Kerry Emanuel, professor of atmospheric science at MIT, said, “The Pope more or less gets it right on the science. But what struck me was his linking of environmental degradation to cultural, political and social decline. That’s the most valuable part of the document because it says that climate change is not an isolated problem.”

Piers Forster, a professor of physical climate change at the University of Leeds, England, said, “By supporting the scientific consensus, the [Pope’s encyclical] could help convince some of the conservative element in the U.S. that has been skeptical.”

No doubt, many Republicans are worried how this will play out in 2016. Rick Santorum, for example, a Catholic, former senator and now presidential candidate, said the pope should “leave science to the scientists.” [Gautam Naik / Wall Street Journal]

Rush Limbaugh said Tuesday, “Essentially, what this papal encyclical is saying is that every Catholic should vote for the Democratic Party. That’s what it is. How else do you interpret it when the pope comes out and sounds like Al Gore on global warming and climate change?” 

Jeb Bush, a Catholic, said, “I respect the pope. I think he’s an incredible leader, but...I don’t go to Mass for economic policy or for things in politics.”

It’s a tough spot for Catholic politicians. In a recent Pew Research Center poll, Francis had an 86 percent approval rating among U.S. Catholics and 64 percent among Americans overall. [Karen Tumulty / Washington Post]

--September is going to be a helluva month, with both Pope Francis and Chinese President Xi Jinping visiting the U.S.

--Todd C. Frankel / Washington Post

“Drought-stricken California is not the only place draining underground aquifers in the hunt for fresh water.

“It’s happening across the world, according to two new studies by U.S. researchers released Tuesday.

“Twenty-one of the world’s 37 largest aquifers – in locations from India and China to the United States and France – have passed their sustainability tipping points, meaning more water is being removed than replaced from these vital underground reservoirs. Thirteen of 37 aquifers fell at rates that put them into the most troubled category.

“ ‘The situation is quite critical,’ said Jay Famiglietti, senior water scientist at NASA’s Jet Propulsion Laboratory and the University of California Irvine-led studies’ principal investigator.

“And it’s difficult to see it getting better soon. These groundwater reserves take thousands of years to accumulate and only slowly recharge with water from snowmelt and rains. Now, as drilling for water has taken off across the globe, the hidden water reservoirs are being stressed. Underground aquifers supply 35 percent of the water used by humans worldwide. Demand is even greater in times of drought. Rain-starved California is currently tapping aquifers for 60 percent of its water use, up from the usual 40 percent.”

Additionally, the researchers believe some of the aquifers might be smaller than first thought.

“ ‘The water table is dropping all over the world,’ Famiglietti said.”

--The National Oceanic and Atmospheric Administration released new data showing last month was the hottest May on record, and the past five months were the warmest start to a year on record as well, data going back to 1880.

Thirteen of the 14 hottest years are in the 21st century, and 2015 is on track to break the heat record again.

All three top monitoring agencies, NOAA, the Japan Meteorological Agency and NASA agree there has never been a hotter start to the year, though NASA had May as being tied for the second-hottest.

--Last Saturday, a friend and I were touring Gate of Heaven Cemetery in Hawthorne, N.Y., visiting Babe Ruth’s grave (and others...like Jimmy Cagney’s and Billy Martin’s...) when we were looking for the grave site of the daughter of a friend of Ken’s. We were gridding out this one section and I saw a model firetruck on a memorial and immediately thought it must be a 9/11 firefighter. It was.

Frederick Claude Scheffold Jr., Battalion Chief, Harlem. His shift was over when the call came in and he responded. He was going up when everyone else was going down. God love him.

--The unspeakable tragedy at Emanuel African Methodist Episcopal Church, “Mother Emanuel,” in Charleston, S.C., touched us all. It was chilling that Dylann Roof sat with his victims for a full hour before he uttered a hateful racial epithet and started shooting without warning.

Editorial / Wall Street Journal

“A white man murdering black people in the South forces bad memories to the surface, and so it surely was appropriate for President Obama to note this in his remarks Thursday. Specifically, Mr. Obama recalled the September 1963 bombing of the 16th Street Baptist Church in Birmingham, Ala., that killed four black girls.

“The President quoted at some length Rev. Martin Luther King Jr.’s remarks on the bombing: ‘They say to each of us, black and white alike, that we must substitute courage for caution. They say to us that we must be concerned not merely with [about] who murdered them, but about the system, the way of life, the philosophy which produced the murderers. Their death says to us that we must work passionately and unrelentingly for the realization of the American Dream.’

“Amid the horror of Charleston, it is also important to note that the U.S., notably the South, has moved forward to replace the system that enabled racist killings like those in the Birmingham church....

“The universal condemnation of the murders at the Emanuel AME Church and Dylann Roof’s quick capture by the combined efforts of local, state and federal police is a world away from what President Obama recalled as ‘a dark part of our history.’ Today the system and philosophy of institutionalized racism identified by Dr. King no longer exists.

“What causes young men such as Dylann Roof to erupt in homicidal rage, whatever their motivation, is a problem that defies explanation beyond the reality that evil still stalks humanity. It is no small solace that in committing such an act today, he stands alone.”

The death penalty needs to be applied swiftly. I know some of the victims’ families are already saying no, it shouldn’t. But it must.

---

Pray for the men and women of our armed forces...and all the fallen. We will remember Charleston.

God bless America.
---

Gold closed at $1201
Oil $59.61

Returns for the week 6/15-6/19

Dow Jones +0.6% [18015]
S&P 500 +0.8% [2109]
S&P MidCap +0.6%
Russell 2000 +1.5%
Nasdaq +1.3% [5117]

Returns for the period 1/1/15-6/19/15

Dow Jones +1.1%
S&P 500 +2.5%
S&P MidCap +6.1%
Russell 2000 +6.6%
Nasdaq +8.0%

Bulls 45.5
Bears 16.5 [Source: Investors Intelligence]

If you haven’t already contributed to the cause, don’t be afraid to. See the gofundme link above, or write me at PO Box 990, New Providence, NJ 07974.

Have a great week.

Brian Trumbore