Week in Review

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Week in Review

01/23/2016

For the week 1/18-1/22

 [Posted 11:30 PM, Friday]

Warning: If you are used to printing this out, this one is about 36 pages.

Edition 876

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Washington and Wall Street

In another incredibly volatile week (holiday shortened at that), markets were hit by a slew of economic data from China, a slide in oil to a new 12+ year low (and then a big rebound), another round of jawboning by the European Central Bank, and a wave of terror attacks, though not in any major western cities.  Global equity markets may have hit a short-term bottom in the process.

But first the International Monetary Fund downgraded its outlook for world economic growth in 2015 from 3.6% to 3.4%, while calling for 3.6% growth in 2017; this after 2015 came in at 3.1%. 

Advanced economies are forecast to grow 2.1% this year, with emerging markets growing just 4.3%.

The IMF pegs China growth at 6.3% for 2016 and only 6.0% in 2017, while the U.S. is projected to grow 2.6% in both 2016 and ’17.  A lot of us would take that at this point in a heartbeat.

Meanwhile, Brazil is forecast to contract another 3.5% this year, with Russia down 1.0%.

Maury Obstfeld, economic counsellor at the IMF, said: “Growth expectations seem to fall consistently.  I think the year is going to be one of great challenges.”

He also warned, “We have to be vigilant not to fall into a deflationary trap” amid weak demand.

Back to Brazil and Latin America in general, the IMF has downgraded the region overall and now predicts a contraction of 0.3% this year, same as 2015. Brazil’s recession is its deepest since the Great Depression.

The IMF said that when it comes to oil prices, it expects them to remain “low for long.”

In a PwC survey of global chief executives, released before the annual World Economic Forum at Davos, Switzerland, only 27% of interviewees thought growth would improve this year, compared with 37% in 2015.

The Daily Telegraph’s Ambrose Evans-Pritchard:

“The global financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability, a leading monetary theorist has warned.

“ ‘The situation is worse than it was in 2007.  Our macroeconomic ammunition to fight downturns is essentially all used up,’ said William White, the Swiss-based chairman of the OECD’s review committee and former chief economist of the Bank for International Settlements.

“ ‘Debts have continued to build up over the last eight years and they have reached such levels in every part of the world that they have become a potent cause for mischief,’ he said.

“ ‘It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something,’ he told The Telegraph on the eve of the World Economic Forum.

“ ‘The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly.  Debt jubilees have been going on for 5,000 years, as far back as the Sumerians.’”

As for oil, I won’t get excited about any rebound until the price gets back to $40 and stays there for a while.

Editorial / The Economist

“Along with bank runs and market crashes, oil shocks have rare power to set monsters loose.  Starting with the Arab oil embargo of 1973, people have learnt that sudden surges in the price of oil cause economic havoc. Conversely, when the price slumps because of a glut, as in 1986, it has done the world a power of good. The rule of thumb is that a 10% fall in oil prices boosts growth by 0.1-0.5 percentage points.

“In the past 18 months the price has fallen by 75%, from $110 a barrel to below $27 [now $32].  Yet this time the benefits are less certain.  Although consumers have gained, producers are suffering grievously.  The effects are spilling into financial markets, and could yet depress consumer confidence.  Perhaps the benefits of such ultra-cheap oil still outweigh the costs, but markets have fallen so far so fast that even this is no longer clear....

“The lower the better, you might say.  Look at how cheap oil has boosted importers, from Europe to South Asia....

“Yet the latest lurch down is also a source of anxiety.  Collapsing revenues could bring political instability to fragile parts of the world, such as Venezuela and the Gulf, and fuel rivalries in the Middle East.  Cheap oil has a green lining, as it drags down the global price of natural gas, which crowds out coal, a dirtier fuel. But in the long run, cheap fossil fuels reduce the incentive to act on climate change.  Most worrying of all is the corrosive new economics of oil....

“In America spending on fixed assets in the oil industry has fallen by half from its peak.  The poison has spread: the purchasing managers’ index for December, of 48.2, registered an accelerating contraction across the whole of American manufacturing.  In Brazil the harm to Petrobras, the national oil company, from the oil price has been exacerbated by a corruption scandal that has paralyzed the highest echelons of government.

“The fall in investment and asset prices is all the more harmful because it is so rapid. As oil collapses against the backdrop of a fragile world economy, it could trigger defaults....

“But this oil shock comes as the world economy is still coping with the aftermath of the financial crash.  You might think that there could be no better time for a boost.  In fact, the world could yet be laid low by an oil monster on the prowl.”

Daniel Yergin / Financial Times

“The oil price collapses in 1986 and 1998 ended when oil exporters got together and reined in production.  But geopolitics is working against a quick settlement this time.  Saudi Arabia and the other Gulf countries believe that Iran is seeking to become the dominant power in the Middle East.  The nuclear agreement not only provides Iran with billions of dollars that had been sitting in international banks because of sanctions, but also enhances Iran’s political position....

“Today’s weak oil prices are having a devastating impact on the global energy industry and are putting enormous stress on oil-exporting countries, and on some regions in the U.S., Canada, Scotland and elsewhere. Worldwide, projects are being slowed, postponed or cancelled, which will begin to affect availability of supplies two or three years from now.  IHS projections show a $1.8tn reduction between 2015 and 2020.  Skilled professionals are leaving the industry and many will never return.

“This steady stream of negative developments only reinforces the sentiment that is weighing down on the oil price. One can add to this the fear among some that the global industry could run out of places to store the surplus.

“What could reverse the collapse?  Later this year, or in 2017, the workings of supply and demand are likely to start to bring the market back into balance.  But there will be a great deal of wrenching anguish between now and then.  Alternatively, the impact of the price collapse could be so devastating that exporting countries that have said they will not restrain production – including Russia and even Iran – could change their positions and come to terms with the Gulf countries, who insist that they will not cut by themselves....

“Now the question is exactly how much additional oil the Iranians will – or can – bring back to the market.  Iran’s finance minister has described the current oil price as representing ‘an all-out war’ for market share.  But if the actual volumes turn out to be lower than has been anticipated, or if the Iranians are slower in bringing them back, then the market would have further reason to moderate its bleak outlook.”

Finally, Robert Samuelson in the Washington Post had some of the following from one of my favorite economists, Samuelson himself being one as well.

“It’s only January, but what may be the year’s most important book on economics has already been published.  Called ‘The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War,’ it argues that we can’t expect new technologies to rekindle rapid economic growth.  Despite all the Internet hoopla, advances in living standards will be modest and grudging.  This somber message goes to the heart of the debate about America’s future.

“It’s not that the author, economist Robert J. Gordon of Northwestern University, dislikes technology.  Just the opposite: He’s fascinated by it, and almost all of his 762-page masterpiece describes the huge gains, mostly derived from new technologies, that have transformed daily life since the late 1800s.  Until then, writes Gordon, ‘life and work were risky, dull, tedious, dangerous and often either too hot or too cold.’....

“We all know what happened.  Primitive conditions gave way to modern amenities and technologies.  In 1870, there were no homes with electricity, and few – if any – with indoor plumbing or central heating.  By 1940, about 40 percent of homes had central heating, 60 percent had flush indoor toilets, 70 percent had running water and 80 percent had electricity....

“(But today) rapid advances are not assured.  What (Gordon) shows is that technology-driven growth has varied substantially over time. It was fastest between 1870 and 1970 – a period he calls a ‘special century’ – and slower both before and after.

“Consider the special century’s crucial technologies: telephones, airplanes, television, synthetic fibers, plastics, assembly lines, chain stores and, most important, the internal combustion engine (cars, trucks) and electricity.  This last technology dominated, because it enabled so much more: appliances that reduced housework; elevators that inspired skyscrapers; radio, TV and movies that remade pop culture; machines that overhauled factories; air conditioning that altered economic geography; and computers that manipulated data.

“ Because ‘these inventions cannot be repeated,’ the rapid economic growth they made possible won’t be repeated either, argues Gordon.....

“(Gordon is) unimpressed with the Internet revolution, which – though visible and disruptive – affects mainly the information, communications and entertainment sectors.  Smartphones were introduced in 2007, he writes, but have had no discernible impact on productivity figures.  [Ed. I’d argue they have hurt it.]  Moreover, he thinks middle-class income gains will be further eroded by inequality, high debt and an aging population requiring higher taxes to pay benefits....

“In the debate over the country’s future, the issue is not whether to be optimistic or pessimistic. The right approach is to be realistic.  The infatuation with technology is a source of strength, but also of simplistic self-deception. What Gordon has provided is not a rejection of technology but a sobering reminder of its limits.”

Europe and Asia

As global markets, including in Europe, with London’s FTSE hitting a three-year low, tanked anew early this week, European Central Bank President Mari Draghi once again rode to the rescue.

Draghi strongly hinted on Thursday that the ECB is prepared to offer more stimulus measures in March as it looks to boost inflation.  In December, Draghi acted like the ECB would reassess the situation next June, but now he is saying he is prepared to act sooner.

“There should be no doubt” that the ECB is ready to act, Draghi said, adding that the ECB has the “power, willingness and determination to act” to bring inflation up to its target of just below 2 percent.

“There are no limits to how far we can deploy our instruments within our mandate,” he added, without being specific.

But once again, the ECB faces a credibility balancing act and there seems little doubt the bank has reached the limits of what it can do to lift the eurozone.  It could increase its asset purchase program further and cut its deposit rate deeper into negative territory, but regarding the former, there is a limited amount of securities it can really buy without totally scraping the barrel.

Nonetheless Draghi’s remarks reversed markets on Thursday and the rally carried through Friday, with oil also responding in kind. It’s all crapola.

On the data front, a flash reading on the eurozone comp PMI for January was 53.5 vs. 54.3 in December, as put out by Markit.  The services PMI was 53.6 vs. 54.2 last month, while the manufacturing figure was 52.3 vs. 53.2.  France had a comp of 50.5, up from 50.1, while Germany was at 54.5 vs. 55.5, with the manufacturing PMI at 52.1 vs. December’s 53.2.

Chris Williamson, Chief Economist at Markit:

“The cooling in the pace of growth in euro area business activity at the start of 2016 is a disappointment but not surprising given the uncertainty caused by the financial market volatility seen so far this year.

“It would be wrong to get too worried.  The survey data are consistent with GDP rising at a steady quarterly rate of 0.3-0.4% at the start of the year.  Firms also appear to be looking to brighter times ahead, with business confidence improving, linked in turn to backlogs of work rising at the fastest rate since the spring of 2011.”

Eurostat reported the annualized inflation rate for the euro area in December was 0.2%, up from 0.1% in November, but obviously well off the ECB’s target of 2.0%.

Italy has an annualized inflation rate of 0.1%, Germany 0.2%, France 0.3% and Spain is still in deflation mode, -0.1%.

Meanwhile, Eurostat released statistics on euro area debt levels for the third quarter of 2015, down to 91.6% of GDP from 92.3% at the end of the second quarter. The highest ratios of debt to GDP at the end of Q3 were recorded in Greece (171.0%), Italy (134.6%) and Portugal (130.5%).

The ratios elsewhere: Germany (71.9%), France (97.0%), Spain (99.3%) and non-euro UK (88.6%).

When you look at Greece, Portugal and Italy in particular, the periphery of the eurozone, and their debt loads, it’s no wonder that some of their paper got hit hard this week, particularly Greece and Portugal.  Italian bonds were getting whacked until Mario Draghi’s latest statements provided some succor.

One more tidbit....

The unemployment rate in the UK, which is calculated on a rolling three-month basis, is 5.1%, the lowest since 2005, while the Office of National Statistics said wage growth there is running at 2.0%, a slight decrease from past numbers.

Turning to the migration front....increasingly, Europe’s leaders are warning they are at the breaking point.

Netherlands Prime Minister Mark Rutte said, “We see today that in the first three weeks of the year, there were 35,000 people crossing the (Aegean Sea to Greece) from Turkey.  Last year, it was only 1,600 in the full month of January.  When spring comes, the numbers will quadruple.  We can’t cope with these numbers any longer.”

Rutte added that the EU has “six to eight weeks” to save the Schengen system of border-free travel.

French Prime Minister Manuel Valls warned Europe could not take all the refugees fleeing what he called terrible wars in Iraq or Syria.  “Otherwise,” he said, “our societies will be totally destabilized.”

Valls, speaking to the BBC at the World Economic Forum, said urgent action to control the borders was needed.

“If Europe is not capable of protecting its own borders, it’s the very idea of Europe that will be questioned.”

This week Austria unveiled plans for the EU’s first cap on asylum seekers, while Germany’s president warned refugee quotas might be “morally and politically necessary.”

Joachim Gauck, the German president, put further pressure on Chancellor Angela Merkel when he told the World Economic Forum, “If democrats do not want to talk about limitations then populists and xenophobes will.”

He added: “Politicians have to reconcile citizens’ desire to see their society continue to function and the humanitarian urge to help those in need of protection.”

Meanwhile, Austrian Chancellor Werner Faymann said his country planned to limit the number of asylum seekers it would accept over the next four years to 127,500, following increasing concern in Vienna at the pace of inflows, which reached 90,000 in 2015.

The IMF has forecast an additional 1.3 million migrants a year in 2016 and 2017. European Council president Donald Tusk added his voice, warning the EU has just weeks to secure its borders.

“The March European Council (summit) will be the last moment to see if our strategy works.  If it doesn’t, we will face grave consequences, such as the collapse of Schengen.”

The Economist’s Intelligence Unit, in their Democracy Index 2015 report, said of France that it ceased to be classified as a full democracy, which was “the result of a deterioration in social cohesion” and pointed to the rise of the Front National (FN) as “just one example of an increased appetite among voters in western Europe for populist, anti-immigrant and eurosceptic parties.”

As I’ve written for months now, I just can’t imagine what it is like to be in a Vienna these days.  Forget being out of control, and sorry to repeat myself, but Europe is dead.  It’s over. It’s future is beyond bleak.

German Chancellor Merkel will not last the year.  Between the hordes crossing into Europe in the coming spring and summer, the people will turn on her in a flash when the inevitable wave of terror attacks hits.

And then there is British Prime Minister David Cameron, who attacked what he called “passive tolerance” of some people in Britain’s Muslim communities who support segregation and discrimination against women, saying his government would insist migrants learn English if they expected to be allowed to stay in the country.

“Where in the world do you think the following things are happening?   School governors’ meetings where male governors sit in the meeting room and the women have to sit out of sight in the corridor.  Young women only allowed to leave their house in the company of a male relative. Religious councils that openly discriminate against women and prevent them from leaving abusive marriages.  The answer, I’m sorry to say, is Britain,” Cameron said in an opinion piece for the (London) Times.  Muslims comprise 5% of the population in Britain.

Cameron added it is time for Britain to be “more assertive about our liberal values, more clear about the expectations we place on those who come to live here and build our country together and more creative and generous in the work we do to break down barriers.”

Finally, on a different topic, Europe’s leaders are pleading with Britain to remain in the European Union, fearing that “Brexit” could set off a disastrous chain of events at a time of existential crisis for the EU.

German finance minister Wolfgang Schaeuble said if Britain left the union, “It would be a disaster.”

Manuel Valls, the French prime minister, said the whole of European civilization was under grave threat and the region must stick together in self-defense.

Mr. Valls warned that the European system was alarmingly fragile. “Europe could lose its historical footing and the project could die quickly. Things could fall apart within months,” he told the World Economic Forum.

“We are involved in a world war against terrorism. We’re going to have to live with this threat for years,” insisting that Europe go on the offensive against ISIL.

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Turning to Asia, China reported fourth quarter GDP was 6.8% year over year, as reported by the National Bureau of Statistics, with GDP up 6.9% for the full year, the least since 1990, and down from 2014’s 7.3% pace.  2016 growth has been targeted at 6.5%, with President Xi Jinping’s goal being 6.5% thru 2020.

Industrial production rose 5.9% in December, year over year, down from November’s 6.2% pace.  Retail sales rose 11.1% in December, yoy.  Fixed asset investment rose 10% for 2015, the worst performance since 2000.

But at least Chinese house prices, as measured by the Bureau of Statistics’ 70-city index, rose 1.6% in December, yoy, with prices rising in 39 of the 70, compared to 33 in November. Beijing’s prices rose 8.3% yoy in December, while Shanghai’s were up 15.5%.

So forget if you believe these figures are anywhere close to accurate, you look at trends and while there are some bright spots, such as in retail sales (and maybe real estate), and the fact that services was 50.5% of output last year, the rest of the picture is largely gloomy.  For example, Chinese steel production and power generation both contracted last year for the first time in over 25 years, with the former down 2.3% and the latter 0.2%. China’s Iron & Steel Association predicts domestic steel consumption will fall 5% in 2016. 

Most economists believe the real growth rate in China is 4% to 5%.  Famed investor George Soros told Bloomberg Television this week he thought it was 3.5% for 2015, and that the country’s unsustainable debt burden and capital flight are both signals of a hard landing.  UBS estimates the government debt level is 260% of GDP, up from less than 160% in 2007.

Then you have the big issue of capital outflows, which the Institute of International Finance puts at $676 billion over the last year, far worse than they first forecast.

In terms of the authenticity of the Chinese government’s numbers, Wang Baoan, the head of the National Statistics Bureau, told reporters the data was “valid and reliable” and its methodology “in line with global standards.”  Cough cough....

Lastly, here’s the bottom line, courtesy of the American Chamber of Commerce in China.

“More than three-fourths of American companies in China feel less welcome than in the past and 45% say revenue is dropping or flat,” as reported by the Los Angeles Times’ Julie Makinen and Chuan Xu.

“The proportion of respondents reporting profits dropped to 64% in 2015 from 73% a year earlier.  Many businesses reported serious concern about rising labor costs, and shrinking margins are causing some U.S. companies to rethink their strategies in China.  Companies in the agricultural, automotive, machinery and other industrial sectors reported the biggest downturns in profits.”  [I’ve written U.S. automakers will get killed on their investments in China.  It’s just a matter of time.]

But more than 50% of respondents to the Chamber of Commerce survey still rank China as one of the top three investment destinations, and most are still optimistic about China’s domestic growth potential.

Yet nearly 80% of respondents said China’s Internet censorship negatively or somewhat negatively affects their ability to conduct normal business operations, and 77% complained about the slowness of accessing websites outside China.

“More than half the respondents also said China’s severe air pollution has created difficulty in recruiting senior executives to work in the country.”

Look for huge capital outflows to continue; the elite and anyone who can afford to fleeing, as the political situation gets more dangerous by the month.  Watch out Taiwan.

Street Bytes

--Stocks had their first positive week of 2016, with the Dow Jones up 0.7% to 16093, the S&P 500 up 1.4%, and Nasdaq surging 2.3%.  All three, however, remain down 7% to 8% for January.

Thus far the earnings reports, as described below, have been nothing to write home about.  Next week all eyes will be on Apple and the first look at Q4 GDP, which some have pegged at just 1 percent.

--U.S. Treasury Yields

6-mo. 0.39%  2-yr. 0.87%  10-yr. 2.05% 30-yr. 2.82%

Treasuries were unchanged on the week, though for one day the 10-year closed below 2.00% for the first time since October.

The CPI for December was -0.1%, +0.1% ex-food and energy.  For the 12 months, the CPI was +0.7%, +2.1% on core; yet another example of a reading already at the 2.0% level the Fed talks about, but they refuse to recognize this barometer, let alone others already reflecting 2.0% inflation.

--There was some housing data this week.  Housing starts for December were less than expected, down 2.5%, while existing home sales surged in the month, up 14.7%, as reported by the National Association of Realtors, the most on record.

But, this latter figure was highly deceptive as it was driven by industry adjustments to new mortgage regulations that delayed closings from a month earlier.

That said, for all of 2015, sales climbed to 5.26 million from 4.94 million.  And inventory is now down to 3.9 months, the lowest figure since January 2005. 

*I’ll have my own unique look at existing home sales on my “Wall Street History” link sometime Saturday if the power stays on.

--The National Retail Federation reported that the Christmas holiday shopping season (November and December) came in lighter than expected...up 3% vs. 2014 and compared to a forecast of 3.7%.

--A follow-up to my comments on the budget deficit last week. Tuesday, the Congressional Budget Office forecast the deficit will reach $544 billion in fiscal year 2016 (ending Sept. 30), or up 24% over last year’s total owing to the budget deal reached between House Speaker Paul Ryan and President Obama at yearend.

Spending will spike 6 percent to reach $3.9 trillion, while the government will collect just $3.4 trillion.

--According to AAA, the average gasoline pump price across the country was $1.88 as of Tuesday, with 38 states posting averages below $2.00 per gallon, led by Oklahoma at $1.59.

“Oooook-lahoma, where the wind comes sweepin’ down the plain....”  [sorry]

California has the highest at $2.75 and our hearts go out to the Golden Staters.

--The International Energy Agency warned the oil market “could drown in oversupply” with the rise in Iranian output post sanctions.

The IEA said that while production will decline outside OPEC this year, it would be offset by slower demand growth and Iran turning on the spigot.

It’s about the price Iran offers its customers and Saudi Arabia matching it to maintain market share.  Kind of simple.

The IEA said that under this scenario, there would be an enormous strain “on the ability of the oil system to absorb” the glut.

So we wait to see just how quickly Iran can act...not just through words but actions.

--Royal Dutch Shell said on Wednesday it expected profit for the fourth quarter would fall around 50 percent vs. Q4 2014.  It also warned profit for all of 2015 would be between $10.4bn and $10.7bn, vs. $22.6bn the prior year.

Shell said it would take write-offs in the range of $7bn amid collapsing prices.

--Schlumberger, the world’s largest oilfield services company, warned on Thursday of “unscheduled and abrupt activity cancellations” as it disclosed a $1bn loss for the fourth quarter and plans to cut 10,000 jobs from its current 95,000 staff.

This latest wave will mean Schlumberger will have slashed 34,000 jobs, or 26 percent of its original workforce, since November 2014!

The company warned of a “deepening financial crisis in the [exploration and production] industry” that was prompting customers to make further cuts to already reduced investment plans. 

Quarterly sales fell about 40 percent, but ex-charges, the earnings result was better than expected and the company announced a new $10bn share buyback program, so perversely the shares rallied.  [Mamta Badkar / Financial Times]

--Malaysian state oil firm Petronas announced it would slash capital spending by $11.4bn over the next four years, according to memos reviewed by the Wall Street Journal.  Chinese controlled Cnooc said it planned to cut production for the first time since the company first listed in 2001, some 33% compared with 2014.

The news just continues to get worse....

--Canada’s central bank sharply lowered its growth outlook for this year as plunging oil prices continue to roil the critical energy sector, which accounts for 10% of the Canadian economy.

The Bank of Canada cut its growth estimate for 2016 to 1.4% from a previous expectation of 2.0%.  The BoC said in its release that while Canadian energy firms have been announcing billions of dollars in cuts to capex, you can’t continue to do this forever. 

“Unlike conventional oil producers, oil sands producers find it difficult and expensive to scale back production, causing some to operate temporarily at a loss...Even at prices between US$40 and US$50 for WTI, many energy executives view the current composition of the industry as unsustainable.”

--Cheaper jet fuel propelled Delta Air lines to a $980 million profit in the fourth quarter despite revenue that came in 2% lower than a year ago.  The company said bookings for this spring were ahead of last year’s pace because lower gasoline and heating bills mean consumers have more money.

Delta and its Delta Connection affiliate saved nearly $2.8 billion on fuel compared with Q4 2014.  Delta expects to pay about $1.20 to $1.25 per gallon for fuel in the first quarter, even less than the $1.85 it paid in the fourth.

--But cheaper fuel wasn’t necessarily good for United Continental Holdings because of its exposure to the energy sector out of its Houston base.

“Lower oil prices reduced revenue from our corporate energy customers and we are also beginning to see a decline in revenue from the broader non-energy Houston market,” said Jim Compton, chief revenue officer.

But low prices remain a net positive for the bottom line and United shareholders received a pleasant surprise when CEO Oscar Munoz announced he would return from medical leave by the end of the first quarter, if not sooner, after undergoing a heart transplant just a few weeks ago!

--It is going to be another rough year on Wall Street in terms of employment as the plunge in oil prices has created anxiety due to the banks’ loan books and large sums the energy and commodity companies have borrowed.

James Gorman, Morgan Stanley’s chairman and chief executive, said during a conference call with analysts, “Our No. 1 priority is to control what we can control given the market realities.”

Bank of America is another where “Expenses are on our mind every day,” as the CFO put it the other day.

Bank of America reported earnings that beat by 2 cents, while revenues were essentially in line and up 4% year over year. 

Morgan Stanley beat the Street’s expectations on the bottom line, while revenues were little changed from a year earlier.  The bank also said it was shifting jobs to lower cost cities like Mumbai and Budapest.  Gorman said: “We have too many employees based in high-cost centers doing work that can sensibly be done in lower cost centers.”  Ye olde off-shoring.  They all do it, of course.  Goldman is among those with an operations center in Poland, for example.

--Speaking of Goldman Sachs, it significantly beat on the Street’s expectations, ex-charges, and overall revenues, though the latter was down 5% from year ago levels.

As has been the issue with all of Wall Street’s big banks, revenues from its fixed income, currencies and commodities business fell 8%.  But revenues at its investment bank arm rose 7%.

--Jamie Dimon of JPMorgan Chase was paid $27 million in 2015, up from $20 million the year before, the company said Thursday.  He’s probably a good target for Girl Scout cookies.

And we learned on Friday that Goldman’s Lloyd Blankfein will receive $23 million in cash and prizes.  Mrs. Blankfein, though, is not happy that her Lloyd is taking home less than Jamie.  Lots of sniping at lunches at the Four Seasons, no doubt.

--IBM issued a downbeat forecast for 2016, saying operating earnings would fall this year, below expectations, though its cloud computing, mobile, analytics, social and security businesses grew by 26 percent during 2015 and now account for 35 percent of total revenues.

But overall revenues fell 8.5 percent in the fourth quarter, the 15th straight sales drop. 

--Wal-Mart is giving its hourly store employees a raise next month, which will impact nearly 1.2 million U.S. employees at both Wal-Mart and Sam’s Club stores.  The company is looking to stem defections and cut down on training expenses for new hires.  Wal-Mart loses about half a million store employees a year.

“Retail workers in the U.S. earned an average of $14.95 an hour in December, up 3.6% from a year earlier, according to the Bureau of Labor Statistics.  With the raises planned for February, average hourly earnings will be $13.38 for Wal-Mart’s full-time store employees and $10.58 for part-time workers, the company said.” [Sarah Nassauer / Wall Street Journal]

--Starbucks Corp.’s second-quarter profit forecast missed the Street’s expectations following a sales-growth slowdown overseas, which the company blamed on the Paris attacks.

COO Kevin Johnson said there was a “dramatic decline” in consumer and tourist activity in western Europe following the November terrorist attacks, which prompted the company to close numerous locations temporarily.

Starbucks same-store sales rose just 1 percent in Europe, the Middle East and Africa during the fiscal first quarter, compared with an estimated 4.5 percent rise.  That’s a huge difference as these things go. 

They rose 5 percent in China and the Asia-Pacific region, which missed analysts’ estimates as well.

But same-store sales in the Americas rose a strong 9 percent, better than expected.  Total revenue was up 12 percent to $5.37 billion for the quarter, slightly less than forecast.

I get a kick out of CEO Howard Schultz.  Every time his company’s results are good but the stock doesn’t get rewarded, as was the case this time, he has this sourpuss look and he gets all defensive that his shares don’t get any respect...blah blah blah....

Hey, Howard.  Starbucks is great.  We know that.  But your P/E is 32.  You are more than fairly valued.

--UnitedHealth Group said its projected losses on the Affordable Care Act exchanges for 2016 will be more than $500 million, compared with earlier projections of $400 million to $425 million in losses.

But these plans represent a small share of UnitedHealth Group’s total business, and the company reported strong earnings and reiterated its forecast for 2016, with at least $180 billion in revenue.

--Luxury jeweler Tiffany warned that earnings for the 12 months to the end of January will be about 10% lower than the prior year, worse than previously forecast, and the company is looking to cut jobs, though it didn’t say how many.  Holiday season sales fell 6 percent, 3 percent on a constant currency basis.  Comp sales in the Americas fell 8 percent for the shopping period ending Dec. 31.

--German business software group SAP raised its sales and profit forecasts for this year amid strong demand from the U.S. and Europe in 2015.  Revenue increased 18 percent year-on-year in 2015; up 11 percent in the fourth quarter.

--Netflix said it finished the year with nearly 75 million members, for a net gain of 17 million in 2015.  Revenue jumped 23 percent to 1.82 billion in the fourth quarter of 2015.  Profits declined but both the top and bottom line were better than the Street had forecast, with revenue for the quarter of $1.82 billion, up 22.8 percent.

The company brought in 5.59 million members in the fourth quarter alone, 4.04 million of which came from international markets, though its additions in the U.S. were below an earlier company forecast. 

Netflix said it would make 600 hours of original programming in 2016, up from 450 hours last year; including 31 TV series, 10 new feature films, 30 children’s shows, 12 documentaries and 10 stand-up comedy specials.

--American Express Co. posted a 38% decline in fourth-quarter earnings as AmEx announced it would cut $1 billion in costs by the end of 2017 as revenue initiatives falter.

Revenue fell 7.6% in the quarter, though it was in line with the Street’s expectations.

AmEx is still suffering from losing its 16-year exclusive relationship with Costco, which the company has said affects roughly one in 10 AmEx cards in circulation.

The shares fell hard on Friday as there are calls for a change in the C-suite.

--Deutsche Bank warned it is facing a loss in the area of $10bn for 2015, after booking another round of charges to cover restructuring and legal costs.

--Farm income in the U.S. fell to $55.9 billion in 2015, down from a record $123.3 billion in 2013, according to the U.S. Department of Agriculture.  Farmers’ debt is rising at the same time, the highest ratio to income since 1984, when farm foreclosures were the most numerous since the Great Depression, according to BloombergBusinessweek.

--Taiwan’s Foxconn, the company that assembles the bulk of the world’s smartphones, has made an offer for Japan’s troubled Sharp Corp. in the neighborhood of $5.3bn.  The Japanese government has been leery of letting Sharp come under foreign control, because of some of its technology, but Foxconn has vowed not to replace Sharp’s top management. 

Sharp has another big deadline in March for making some huge debt payments to the banking units of Mitsubishi and Mizuho, among others.  It has already had two bank rescues in three years.

But the company remains a leader in display technology and that is what is most attractive to the likes of Foxconn.

--This is a telling figure, from the Moscow Times.  In the first eleven months of 2015, retail sales in Russia dropped by 9.3%, according to data from the Rosstat state statistics service, but Moscow saw a bigger decline of 13% last year.  Leasing prices in Moscow’s malls and shopping centers are down 15%, with the vacancy rate expected to reach 10% this year.

--Pearson, the British education publisher, announced plans to cut 10 percent of its workforce, or 4,000 jobs.  The company had previously sold the Financial Times and its stake in The Economist last year to focus on the education sector.

But better than expected employment numbers in the U.S. mean fewer mature students enrolling in further education, while education spending in emerging markets hasn’t been as strong as expected.

--Venture capital spending, despite a big drop in the fourth quarter, still came in at $58.8 billion for 2015, the biggest year since the dotcom era, according to Crain’s New York Business.  Silicon Valley accounted for $27.3 billion for the year.

--Johnson & Johnson announced it is cutting 3,000 jobs over the next two years as it restructures its medical-devices division.

--Chipotle announced last week it would temporarily close its entire system on Feb. 8 for a few hours of food safety training, after all the incidents of E. coli and one or two of norovirus, and the shares have been rising ever since, until a late week stumble.

This is nuts!  Sales are down a reported 30% since the issues arose.

But is this decision to hold a ‘safety’ call the best way to deal with the problem?  We’ll find out.  [I think this is a really, really dumb idea.  Just saturate the airwaves with new ads.]

--For the sixth year in a row, New York City has broken its record for number of tourists, some 58.3 million, an increase of 1.8 million from 2014.  46 million were domestic, while 12.3 million were international, according to NYC & Company, the city agency promoting tourism.

Hotel-room demand reached a new high as well, with 33.7 million hotel-room nights sold last year.  But Airbnb is impacting hotel revenue.

--So I eat a lot of heart-healthy nuts (they go good with beer), but I didn’t know until reading a piece in the Financial Times by Emiko Terazono just how much almond prices have been crushed.

“The market for standard almonds, which hit a record high of $4.70 a pound last August, has almost halved to $2.60 as the market was taken by surprise by a larger than expected harvest last year.

“Last year’s surge in prices depressed demand, and buyers in China, the Middle East and India, who have led consumption over the past three to four years, have disappeared....

“Reports of the health benefits from eating nuts boosted consumption growth among the growing middle classes in developing countries such as China.  Rising interest in a Mediterranean diet which includes nuts among consumers in developed markets has also fueled demand.”

And then you had California’s multiyear drought and since it “accounts for about 80 percent of the world’s almond supplies,” along with various other issues, including port strikes, the price soared.

So just wanted to point out how there are bubbles all over.  The rains and snows these days in California have only added to the bearish sentiment.

My favorite nut is the walnut, as I’m sure you were anxious to hear.  I like almonds with my cereal but not the biggest fan eating them separately.

--But wait...there’s more food news!  In the big battle between salmon and shrimp, the same Emiko Terazono of the FT reports, “Salmon has overtaken shrimp as the most popularly traded fish....

“In 2013, for the first time salmon overtook shrimp, accounting for 17 percent of the total traded value of seafood.  Shrimp, meanwhile, had a 15 percent share, according to new figures from the UN Food and Agricultural Organization.

“The trend is expected to have continued, with salmon accounting for about a fifth of all seafood trade in 2015 and shrimp 16 percent...”

Well, I’m the guy who has long written every Sunday is “Salmon Sunday” around here so these results don’t necessarily surprise me.

But I’m also a big fan of shrimp and I wish the little crustaceans luck in their ongoing efforts to regain the top slot, though this also means their destruction.

Foreign Affairs

Iraq/Syria/ISIS/Libya:

ISIS is gradually shifting its base of operations to Libya and ISIS militants attacked oil installations close to Libya’s Ras Lanuf terminal Thursday.  ISIS, in a video posted on the group’s official channel, vowed to take one oil facility after another.

Libya’s state-run National Oil Corporation said the area was facing an “environmental catastrophe,” with huge columns of smoke covering the area and damage to power lines supplying residential and industrial districts.  Pipelines are being targeted.

Some of the oil facilities have very strong guard forces and it’s no certainty ISIS can just have its way, but one thing is for sure.  The West will soon be heavily involved here.  The U.S. wants Britain and Italy to take the lead but there is a strong U.S. Special Forces presence already there, according to some reports.

Gen. Joseph Votel, the U.S. special ops chief, told Defense One this week, “There is a concern about Libya.  It can’t all be about Iraq and Syria.”

ISIS reportedly sent Abu Omar, a key leader in Iraq, to Libya, where he “has been tasked with tightening the terrorist group’s grip on [the town of] Sirte and preparing it as a possible bolt hole for ISIL’s leaders in Syria and Iraq,” London’s Daily Telegraph reported.

In Iraq, there is strong evidence U.S. airstrikes against ISIS are picking up and the coalition has killed more than 6,400 ISIS fighters in the past three months, and no doubt this is weakening them and hurting morale.

But in Syria, ISIS has been making gains, killing scores of Syrian government forces in the east of the country, with ISIS in control of most of Deir al-Zor province.  The Britain-based Syrian Observatory for Human Rights said 120 government forces and 70 ISIS fighters had been killed in fighting since last weekend.  200,000 residents in Deir al-Zor face severe food shortages, according to the UN.  ISIS kidnapped at least 400 civilians, but then Reuters reported ISIS released 270 of them, mostly women and children.

In other clashes, four member of Iran’s elite Revolutionary Guard were killed in fighting alongside Syrian forces, just to further prove Iran’s involvement.

Michael Fallon, the British defense secretary, called for a shift in coalition strategy against ISIS, urging a new focus on “tightening the noose” around the group’s stronghold in Raqqa. Fallon told the Financial Times that the new strategy could bring the risk of higher civilian casualties, but the time was right to bring more pressure to bear on “the head of the snake.”

In other news on this front....

The UN said at least 18,800 Iraqi civilians have been killed between January 1, 2014 and October 31, 2015, with 3.2 million displaced internally over the same period...both staggering.  ISIS is blamed for most of this. Plus the UN says the 18,800 figure could be much higher.

900 children have been abducted in the IS-held northern city of Mosul, to be indoctrinated and given military training.

The oldest Christian monastery in Iraq has been reduced to rubble by ISIL, St. Elijah’s Monastery that stood as a place of worship, including for U.S. troops, for 1,400 years.  This was in Mosul, another example of Christian history being leveled.

In Diyala, near Baghdad, “severe ethnic cleansing of Sunni citizens by Shiite militias backed by Iran” has been taking place, according to the Jerusalem Post.  Tribal leaders and human rights activists in the region are demanding the international community intervene immediately to stop the atrocities.  The militias killed a reporter and a photographer attempting to cover the story.

Iran: As expected, the international sanctions on Iran that strangled its economy over the past decade were largely lifted on Saturday after the UN said Tehran had dismantled significant elements of its nuclear program, thus fulfilling its end of the agreement signed last year.  The news came just hours after the announcement of a surprise prisoner swap, including Washington Post reporter Jason Rezaian.

The sanctions relief allows Iran to re-enter the global economy.

U.S. Secretary of State John Kerry, dreams of a Nobel Peace Prize dancing in his head, said: “We are really reminded once again this evening of diplomacy’s power to tackle significant challenges.”

But Washington’s closest allies in the region are less than ecstatic, especially Saudi Arabia (see op-ed below).

Tehran has continued to challenge the U.S. and its allies, even as the nuclear deal was about to be implemented, whether it was test-firing ballistic missiles or detaining 10 American sailors whose boats had entered Iranian waters.

Iran now has access to more than $50 billion in frozen assets and oil revenue (the $100-$150bn figure being bandied about does not include Iran’s obligations, including to the likes of China, but $50bn, net, is just a starting point and a still most significant one as Iran can now sell as much oil as it likes).

The U.S. embargo on trade with Iran remains in place, though the export of foodstuffs to the country will be allowed.  For months, though, business leaders from Europe and Asia have already been cutting deals, eyeing the opportunities in a nation of 77 million.

As for the implementation itself, Iran had almost 20,000 centrifuges, used to enrich uranium, and under the Joint Comprehensive Plan of Action (JCPOA), it had to mothball all but 5,060 of the oldest and least efficient of these at Natanz for 10 years.

Iran’s uranium stockpile was reduced by 98% for 15 years and it must keep its level of enrichment on what is left at 3.67%, well below weapons grade.

Iran had been building a heavy-water nuclear reactor near the town of Arak, the spent fuel from which could have contained plutonium suitable for a nuclear bomb.  But Iran has agreed not to commission or fuel the reactor.

The International Atomic Energy Agency’s inspectors will continuously monitor Iran’s declared nuclear sites and verify no fissile material is moved to any secret locations.

For the next 15 years, Iran will have 24 days to comply with any IAEA access request, as well, but this is a sham, not only because 24 days is enough time to move any suspicious material around, but if Iran refused access, an eight-member Joint Commission – including Iran – would rule on the issue.  This process could take additional weeks and months.

The U.S. claims Iran, with its drastically reduced uranium stockpile and the mothballed centrifuges cannot “break-out” and rush to make a bomb for at least a year.

Iran has also agreed not to engage in activities, including research and development, that could lead to a bomb.

The U.S. did then impose fresh sanctions on Iranian companies and individuals over its recent ballistic missile test, once the Americans were released in the prisoner exchange. An Iranian foreign ministry spokesman said: “The U.S. sanctions against Iran’s ballistic missile program...have no legal or moral legitimacy.”

Speaking Sunday, President Obama said of the implementation of the nuke accord:

“This is a good day because once again we’re seeing what’s possible with international diplomacy.  For decades, our differences meant our governments almost never spoke – ultimately, that did not advance America’s interests.”

The deal meant “Iran will not get its hands on a nuclear bomb,” he said.

Obama said the U.S. would “remain steadfast in opposing Iran’s destabilizing behavior elsewhere – such as its missile tests.”  He insisted that the accord also provides no room for its ruling clerics to cheat.  “If they try to build a bomb covertly, we will catch them,” he said.

But this is bulls---.

Israeli Prime Minister Benjamin Netanyahu said:

“Israel will continue to monitor Iran’s negative activities and will take all necessary measures to maintain its security and defend itself.”  The Prime Minister’s Office, in a statement, warned that “Iran has not abandoned its aspirations to acquire nuclear weapons and continues to destabilize the Middle East and spread terrorism throughout the world.”

Charles Krauthammer / Washington Post

“Give President Obama credit.  His Iran nuclear deal may be disastrous but the packaging was brilliant. The near-simultaneous prisoner exchange was meant to distract from last Saturday’s official implementation of the sanctions-lifting deal. And it did.  The Republicans concentrated almost all their fire on the swap sideshow....

“Republicans say: We shouldn’t negotiate with terror states.  But we do and we should. How else do you get hostages back? And yes, of course negotiating encourages further hostage taking. But there is always something to be gained by kidnapping Americans. This swap does not affect that truth one way or the other.

“And here, we didn’t give away much. The seven released Iranians, none of whom has blood on his hands, were sanctions busters (and a hacker), and sanctions are essentially over now. The slate is clean.

“But how unfair, say the critics.  We released prisoners duly convicted in a court of law. Iran released perfectly innocent, unjustly jailed hostages.

“Yes, and so what?  That’s just another way of saying we have the rule of law, they don’t....

“The real story of Saturday, Jan. 16, 2016 – ‘Implementation Day’ of the Iran deal – was that it marked a historic inflection point in the geopolitics of the Middle East.  In a stroke, Iran shed almost four decades of rogue-state status and was declared a citizen of good standing of the international community, open to trade, investment and diplomacy.  This, without giving up, or even promising to change, its policy of subversion and aggression. This, without having forfeited its status as the world’s greatest purveyor of terrorism.

“Overnight, it went not just from pariah to player but from pariah to dominant regional power, flush with $100 billion in unfrozen assets and virtually free of international sanctions....

“On Saturday, the Iranian transport minister announced the purchase of 114 Airbuses from Europe. This inaugurates a rush of deals binding European companies to Iran, thoroughly undermining Obama’s pipe dream of ‘snapback sanctions’ if Iran cheats.

“Cash-rich, reconnected with global banking and commerce, and facing an Arab world collapsed into a miasma of raging civil wars, Iran has instantly become the dominant power of the Middle East.  Not to worry, argued the administration. The nuclear opening will temper Iranian adventurism and empower Iranian moderates.

“The opposite is happening....

“Look at what the mullahs are doing at home. Within hours of ‘implementation,’ the regime disqualified 2,967 of roughly 3,000 moderate candidates from even running in parliamentary elections next month. And just to make sure we got the point, the supreme leader, Ayatollah Ali Khamenei, reiterated that Iranian policy – aggressively interventionist and immutably anti-American – continues unchanged.

“In 1938, the morning after Munich, Europe woke up to Germany as the continent’s dominant power. Last Sunday, the Middle East woke up to Iran as the regional hegemon, with a hand – often predominant – in the future of Syria, Yemen, Iraq, the Gulf Arab states and, in time, in the very survival of Israel.

“And we’re arguing over an asymmetric hostage swap.”

Regarding the upcoming election, Feb. 27, and the candidates that have been disqualified, reformists say barely 1% had been approved.  They hold only a few of the 290 seats in parliament.  President Rohani said the disqualification news “wasn’t very satisfactory,” adding he was trying to get a reversal.

Meanwhile U.S. intelligence agencies investigating the kidnapping of three Americans in Baghdad last week are focusing on three Islamic groups closely aligned with Iran.  The three Americans were employed with a small company doing work for General Dynamics under a contract with the U.S. Army.  Sources told Reuters on Thursday they did not think the Iranian government was directly involved, but we’ll see.

Benny Avni / New York Post

“(Even) as the plane that carried the finally free Americans from Iran to Switzerland landed, a new kidnapping crisis was brewing in Iraq.

“Three American citizens were taken and, according to credible reports, transferred by their captors to Iraq’s Sadr City, ruled by an Iranian-backed Shiite militia headed by the ruthless Muqtada al-Sadr.

“Iraqis tell a dark story: The two men and one woman were partying late into the night at an area in south Baghdad that one Iraqi source described as its ‘red light district.’  The source speculated that while partying, the three apparently made the crucial mistake of bragging that they have American passports.

“That turned them into a commodity. Despite looking and dressing as the locals do, and even though they spoke with perfect Iraqi accents, the three became valuable.

“Such details, widely disseminated to Iraqi-based reporters, must be taken with a grain of salt. The Shiite-heavy Iraqi government is embarrassed by the kidnapping, and would gladly blame the victims for their plight....

“(Even) if there was no direct order from Tehran, the kidnappers must have believed that their Iranian patrons would be pleased.  Perhaps inspired by recent footage of Iranian naval commandos holding at gunpoint the crews of two U.S. Navy boats, they thought someone in Tehran would handsomely compensate them. The Great Satan bows again.

“Whatever the reality is, the new kidnapping situation won’t be resolved without Tehran’s involvement.”

Adel Bin Ahmed Al-Jubeir (Saudi foreign minister) / New York Times

“The world is watching Iran for signs of change, hoping it will evolve from a rogue revolutionary state into a respectable member of the international community.  But Iran, rather than confronting the isolation it has created for itself, opts to obscure tis dangerous sectarian and expansionist policies, as well as its support for terrorism, by leveling unsubstantiated charges against the Kingdom of Saudi Arabia....

“Superficially, Iran may appear to have changed.  We acknowledge Iran’s initial actions regarding the agreement to suspend its program to develop a nuclear weapon.  Certainly, we know that a large segment of the Iranian population wants greater openness internally and better relations with neighboring countries and the world.  But the government does not.

“The Iranian government’s behavior has been consistent since the 1979 revolution. The constitution that Iran adopted states the objective of exporting the revolution.  As a consequence, Iran has supported violent extremist groups, including Hizbullah in Lebanon, the Houthis in Yemen and sectarian militias in Iraq.  Iran or its proxies have been blamed for terrorist attacks around the world, including the bombings of the United States Marine barracks in Beirut in 1983 and the Khobar Towers in Saudi Arabia in 1996, and the assassinations in the Mykonos restaurant in Berlin in 1992.  And by some estimates Iranian-backed forces have killed over 1,100 American troops in Iraq since 2003.

“Iran uses attacks on diplomatic sites as an instrument of its foreign policy. The 1979 takeover of the American Embassy in Tehran was only the beginning.  Since then, embassies of Britain, Denmark, Kuwait, France, Russia and Saudi Arabia have been attacked in Iran or abroad by Iranian proxies. Foreign diplomats and domestic political opponents have been assassinated around the world....

“Iran is the single-most-belligerent-actor in the region, and its actions display both a commitment to regional hegemony and a deeply held view that conciliatory gestures signal weakness either on Iran’s part or on the part of its adversaries.

“In that vein, Iran tested a ballistic missile on Oct. 10, just months after reaching an agreement on its nuclear program, in violation of United Nations Security Council resolutions. In December, an Iranian military ship fired a missile near American and French vessels in international waters. Even since signing the nuclear accord, the supreme leader of Iran, Ayatollah Ali Khamenei, has defended the country’s ubiquitous slogan ‘Death to America.’

“Saudi Arabia will not allow Iran to undermine our security or the security of our allies. We will push back against attempts to do so.”

Russia: In a sensational 300-page report, British Judge Robert Owen said he is certain former Russian agent Alexander Litvinenko was given tea laced with a fatal dose of polonium-210 at a London hotel in November 2006.  Owen also said there is a “strong probability” that the FSB security service directed the killing, and the operation was “probably approved” by Vladimir Putin.

Litvinenko, a former FSB agent, fled to Britain in 2000 and became a vocal critic of Russia’s security service and of Putin, whom he accused of links to organized crime.  Owen said that thus “there were powerful motives for organizations and individuals within the Russian state to take action against Mr. Litvinenko, including killing him.”

But Owen’s reports also claimed that there was a “personal dimension to the antagonism” between Litvinenko and Putin which “culminated in [an] allegation of pedophilia in 2006.”

He says Putin had destroyed videotapes which showed him “making sex with some underage boys.”

Litvinenko published an article on a website in July 2006, months before his death, that cited an incident I distinctly remember; a time when Putin stopped and chatted with tourists in the Kremlin and stooped to speak to a four or five-year-old boy, whereupon Putin “kneeled, lifted the boy’s T-shirt and kissed his stomach.”

Litvinenko wrote: “The world public is shocked. Nobody can understand why the Russian president did such a strange thing as kissing the stomach of an unfamiliar small boy.

“The explanation may be found if we look carefully at the so-called ‘blank spots’ in Putin’s biography.”

Litvinenko said then that once Putin became the FSB director, “he began to seek and destroy any compromising materials collected against him by the secret services over earlier years...among other things, Putin found videotapes in the FSB Internal Security directorate, which showed him making sex with some underage boys.”

Well, I’d say Mr. Putin had “powerful motives,” as Judge Owen put it, to then kill Litvinenko.

Alexander Yakovenko, the Russian ambassador in the UK, said Russia would not accept any decisions reached in secret and based on evidence not tested in open court.

According to the BBC, the conclusions of the inquiry were stronger than most expected in pointing the finger at Putin personally.  “The evidence behind that seems to have come from secret intelligence heard in closed session.” [Daily Telegraph]

So now there is real pressure on the Cameron government to take action.  Without it, people will conclude Russians got away with what has been described as an act of terrorism on the streets of London.  Nuclear terrorism, at that, polonium coming only from nuclear sites.

Editorial / Wall Street Journal

“In exile Litvinenko published a book accusing the Russian leader of having staged terrorist bombings in Moscow in 1999 as a pretext to reignite the war in Chechnya.  [Ed. I wrote that in this space in 1999, months before the late-William Safire famously did.]  Litvinenko also likely cooperated with British intelligence.  In July 2006 Russian legislators enacted a law authorizing the government to target state enemies abroad.  An unofficial Kremlin hit list began circulating in Russian circles. Litvinenko’s name was on it....

“For years London slow-pedaled a formal investigation, though the polonium could easily have poisoned hundreds of innocent bystanders.  Home Secretary Theresa May conceded in 2013 that Britain’s ‘international relations’ have been ‘a factor in the government’s decision-making.’  Mr. Owen’s special inquiry was launched in summer 2014, days after Russian-backed rebels shot down Malaysia Airlines Flight 17 over Ukraine....

“Donald Trump could (stand) to read the Owen findings.  ‘In all fairness to Putin, you’re saying he killed people,’ the presidential candidate said last month.  ‘I haven’t seen that.  I don’t know that he has.’

“The real nature of Mr. Putin and his regime were apparent long before Litvinenko’s death.  With Mr. Owen’s report, not even Mr. Trump can have any excuse for turning a blind eye.”

David Satter / Wall Street Journal

“It is now imperative not only for the West but for the future of Russia that the Litvinenko inquiry set a precedent for the objective international review of the cases of political terrorism in Russia. These include the bloody sieges at Moscow’s Dubrovka theatre in 2002 and at a school in Beslan in 2004, the assassinations of journalists and opposition leaders and, above all, the deadly 1999 apartment bombings that helped bring Mr. Putin to power....

“The bombings [Ed. which killed 300] were used to justify a second Chechen war, directed by Mr. Putin, who was then prime minister, and helped him win the presidency in 2000. His first official act was to pardon Yeltsin for any crimes committed in office.  An unexploded bomb was discovered in the basement of a building in Ryazan.  The persons who planted it turned out to be not Chechen terrorists but agents of Russia’s intelligence service, the FSB.

“Four Russian citizens who tried to investigate the apartment bombings were murdered. These were the Duma deputies Sergei Ushenkov and Yuri Shchekochikhin, investigative reporter Anna Politkovskaya, and Alexander Litvinenko....

“The truth about Russia’s recent history is knowable, but not through the controlled institutions of the Russian state.  Examining the many crimes of the Yeltsin and Putin eras is therefore an international obligation.  Such an effort may spare the West from uninformed policy but its real value is the help it can give to the Russian people, who cannot begin to build a better future without freeing themselves from a carapace of lies.”

Then there is Chechen strongman Ramzan Kadyrov, who I have called “one of the worst people on the planet” numerous times. What has transpired in the past week is more than troubling.

Editorial / Washington Post

“One way to think about Russia today is not to focus solely on President Vladimir Putin but rather on his system. In the absence of democracy and rule of law, Mr. Putin’s realm is held together by powerful clans that depend on him and deliver what he needs.  Some loyal businessmen and industrialists make up one part; the military and security services another; there are also bands of loyal politicians and bureaucrats.  Among them all, hardly anyone holds a candle to Ramzan Kadyrov, the leader of Chechnya and Mr. Putin’s most aggressive attack dog....

“Mr. Kadyrov was installed as the Kremlin’s overlord of the internal republic, and he has performed with a special devotion to brutality. Torture and illegal detention have been rampant.  Mr. Kadyrov assembled his own formidable security forces.  He calls himself ‘a patriot, a foot soldier of the president of Russia, Vladimir Putin.’  Russian authorities have prosecuted Chechens with links to Mr. Kadyrov for the murder of opposition leader Boris Nemtsov last year, although they have not traced the crime to Mr. Kadyrov personally.

“Now, the attack dog seems to be unleashed. Mr. Kadyrov has written an article published in the daily Izvestia that pours scorn on the ‘non-systemic opposition’ to Mr. Putin and suggests it be punished. The term ‘systemic opposition’ in Russia usually refers to the toadies and sycophants who support Mr. Putin.  Mr. Kadyrov’s sights are on everyone else who criticizes the president – and he named names, including prominent opposition figure Alexei Navalny and (various journalists).  In the article, Mr. Kadyrov declares that ‘there is a very good psychiatric hospital’ in Chechnya where ‘we will not be stingy with injections’ to these critics.  ‘When they are prescribed one injection, we can give two.’  He says the opposition is a ‘pack of jackals,’ ‘bunch of traitors,’ ‘Western lackeys,’ ‘enemies of the people,’ ‘haters of Russia,’ people who are trying ‘to destroy our country and undermine its constitutional order.’  Stalin would recognize the language. Mr. Kadyrov’s chief of staff drove the point home with a photo posted on social media of the Chechen leader holding back a massive Caucasian Shepherd dog named Tarzan, saying the beast’s ‘teeth itch.’....

“(Kadyrov’s) words and deeds speak volumes about Mr. Putin’s rule.  The Russian president seems to be unwilling or unable to restrain his attack dog, perhaps with the expectation that the threats will intimidate and frighten the opposition, just as Nemtsov’s murder did.  Mr. Putin has created a state based on the rule of the wolves, and they are running ever-more wild.”

Former oligarch Mikhail Khodorkovsky, in exile in Switzerland, said of Kadyrov’s rantings, “It’s a message to all of those who don’t agree with what’s happening.  The authorities are afraid and they decided to frighten society.”

The Kremlin is concerned that opposition groups will capitalize on the current dire economic situation and spearhead unrest.

The situation in Russia is very tense.  It can blow at any moment.  [I’m guessing a massive metro bombing starts it all.]

China / Taiwan: Taiwan’s voters handed the long-ruling Nationalists (KMT) an historic defeat last weekend, kicking the party of Chiang Kai-shek out as Tsai Ing-wen and her Democratic Progressive Party proclaimed a “new era” was dawning; Tsai being elected with 56% of the vote, becoming not only Taiwan’s first female president but also trouncing National Party candidate Eric Chu, who only received 31%.  The DPP also won an absolute majority with 68 seats in the 113-seat legislature, giving her administration a far stronger policy-making lever over the next four years.

The KMT had emphasized the pursuit of closer trade and tourism ties with the mainland under incumbent President Ma Ying-jeou, who could not run after eight years in office.

But Beijing views Tsai and her party as being committed to Taiwan independence, though this week, in her first news conference, Tsai said citizens expect “a government that can lead this country into the next generation and a government that is steadfast in protecting this country’s sovereignty.”  But she said when it came to the mainland, she would “work toward maintaining the status quo” to bring “peace and stability across the Taiwan Strait in order to bring the greatest benefits and well-being to the Taiwanese people.”  [Julie Makinen / Los Angeles Times]

But she also warned: “Our democratic system, national identity and international space must be respected.  Any forms of suppression will harm the stability of cross-strait relations.”

Tsai doesn’t take office until May and for now it’s too early to know how Beijing will react.

I have argued this could easily be a major flashpoint this year, but for now Beijing is taking a wait and see attitude, though the official Xinhua news agency warned any moves towards independence were like a “poison” that would cause Taiwan to perish.

“If there is no peace and stability in the Taiwan Strait, Taiwan’s new authority will find the sufferings of the people it wishes to resolve on the economy, livelihood and its youth will be as useless as looking for fish in a tree,” it said.  [South China Morning Post]

China’s foreign ministry, in a statement post-election, said:

“There is only one China in the world, the mainland and Taiwan both belong to one China and China’s sovereignty and territorial integrity will not brook being broken up.

“The results of the Taiwan region election does not change this basic fact and the consensus of the international community.”

Notice the use of the word ‘region.’

The key is going to be Taiwan’s youth and how far they push Tsai.

[In almost comical fashion, president-elect Tsai’s Facebook page was hit with 40,000 people leaving comments attacking any suggestion that the island should declare itself an independent state.  What was comical is that they all appeared to come from mainland China “as they used simplified Chinese characters rather than the traditional form of text used in Taiwan,” as reported by Sidney Leng of the SCMP.]

Meanwhile, the Financial Times reported that China has stepped up its construction of runways in the South China Sea since President Xi Jinping’s visit to Washington in September, which tells you everything.

Xi told President Obama China was not going to militarize the islands, but that is exactly what they are doing in building runways that can accommodate long-range bombers as a way of projecting power in the western Pacific.

Separately, Washington believes China has hacked the secrets behind the Pentagon’s robotics research, specifically from a contractor, QinetiQ, said to be the inspiration for gadget-maker “Q” in the James Bond movie franchise, as reported by Aliya Sternstein of Defense One.  There are real concerns China is gaining an advantage in the robotics race.

North Korea: Pyongyang announced Friday the arrest of a U.S. university student for what it said were “hostile” acts orchestrated by the U.S. government.  The student is a sophomore at the University of Virginia who has been accused of entering the country under the guise of a tourist and plotting to undermine North Korean unity with “the tacit connivance of the U.S. government and under its manipulation,” the North’s official Korean Central News Agency reported.  What a crock.

Israel: A Palestinian terrorist entered an Israeli home inside a West Bank settlement and stabbed a mother to death in front of her teenage daughter, the first such fatal attack inside a settlement since March 2011.  That’s the very definition of terror.  The attacker fled and I have not seen as yet if he was captured or killed.

Pakistan: The Taliban claimed responsibility for a horrific attack on a university in Pakistan’s troubled northern region, killing at least 20.  The four attackers were killed, though there were stories there were at least ten attackers.  It was similar to a massacre at an army school in Peshawar in December 2014 that killed at least 130 children.

Taliban leader Khalifa Umar Mansoor, who claimed responsibility for Wednesday’s attack, was the mastermind of the Peshawar attack as well.

But a spokesman for the main Taliban faction in Pakistan later disowned the group behind the attack, describing the assault as “un-Islamic.”

Afghanistan: Seven people were killed by a Taliban car bomb in Kabul targeting staff of one of Afghanistan’s largest television networks.  The Taliban claimed responsibility.

The Taliban’s renewed insurgency is just growing in scope.

Somalia: More than 20 people were killed in an attack on a beachfront restaurant in the capital of Mogadishu, with security forces eventually ending the deadly siege on Friday.  Al-Qaeda linked al-Shabab was responsible, with its gunmen entering the restaurant from the beach.

Burkina Faso: An attack on a hotel and restaurant popular with foreigners  here killed at least 28, including one American missionary, as an Al-Qaeda affiliate claimed responsibility, AQIM; this after another Al Qaeda affiliate, Al Mourabitoun, launched a similar attack on a Radisson hotel in the Malian capital, Bamako, that killed 20, including an American aid worker.

Venezuela: This hellhole is on the verge of total collapse, though in some respects it already has.  Inflation has surged to 141.5 percent for the year ending September 2015, as the central bank released its first inflation figures in more than a year.  Growth contracted 7.1 percent during the third quarter as the price of oil, the main export and lifeline, collapsed.

The government declared an economic emergency with the central bank using its numbers to blame the country’s woes on an “economic war” coming from right-wing sectors of society.

President Nicolas Maduro’s declaration of a 60-day nationwide emergency gives him sweeping powers that fly in the face of the newly elected opposition in the National Assembly that holds a majority, thus the decree is an attempt to bypass their own power.

But...on Friday, the IMF released a report that said prices in the country rose 275 percent last year, and could top 700...700... percent this year.  The IMF also claims the economy contracted by 10 percent in 2015.  So the opposition rejected Maduro’s request for emergency powers and we’ll see what happens next.

Random Musings

--The polls....

In a Monmouth University national poll, Donald Trump leads the pack at 36%, down slightly from his Monmouth poll-high of 41% in December, but he is still double the support of his nearest rival, Ted Cruz, who is at 17%.  Marco Rubio takes third at 11%, followed by Ben Carson (8%) and Jeb Bush (5%).

A new NBC News/Wall Street Journal national poll has Hillary Clinton with a 59-34 lead over Bernie Sanders.

The above-mentioned Monmouth University poll has Clinton with a 52-37 lead over Sanders, which is a significant narrowing from December when Clinton led 59-26 in the same survey.

A national CNN Poll of Polls has Trump at 34%, Cruz 20%, Rubio 12%, Carson 10% and the rest of the field at 4% or less.

The same poll has Clinton topping Sanders 54-36, a slight decline from December when the same analysis had Clinton ahead 56-31.

The Iowa CNN Poll of Polls has Cruz ahead of Trump 27-25, with Rubio at 14% and Carson at 10%.

But a new CNN/ORC survey had Trump leading Cruz 37-26 in Iowa, with Rubio at 14% and Carson at just 6%.

The Iowa CNN Poll of Polls survey found Clinton and Sanders deadlocked at 45% each.

But the CNN/ORC survey has Sanders leading Clinton 51-43.

In a CNN/WMUR poll of likely Republican primary voters in New Hampshire, Trump leads with 34%, Cruz is at 14%, Rubio and Bush 10%, and then Chris Christie, John Kasich and Rand Paul at 6% each.  [This is bad news in particular for Christie, who needs to finish third, and was in the December poll.]

An American Research Group survey released Tuesday had Trump leading Kasich in New Hampshire just 27-20, but this one has been dismissed by many.

On the Democratic side, Sanders’ lead over Clinton in the Granite State is a whopping 27 points, 60% to 33%, according to the CNN/WMUR survey.  The poll, mostly conducted before Sunday’s Democratic debate, shows Bernie jumping 10 points since a late-November/early-December count had it 50-40.

--I watched some of the Democratic debate on Sunday and I would agree with Hillary Clinton that Bernie Sanders’ “Medicare for all” plan that would cost $1.38 trillion a year (according to Sanders) was “unserious,” while Sanders was right to say Clinton was too friendly with Wall Street:

“Can you really reform Wall Street when they are spending millions and millions of dollars on campaign contributions and when they are providing speaker fees to individuals?” the Bernmeister asked, while then speaking specifically of the hundreds of thousands Hillary has received from Goldman Sachs for speaking fees.

--Meanwhile, Donald Trump received the endorsement of Sarah Palin, perceived to be a blow to Ted Cruz in Iowa, and she proceeded to give a rambling, inarticulate 20-minute speech reintroducing America to one of the true idiots of the past 100 years.

Ms. Palin, immediately after her first appearance with Trump, was then embroiled in controversy as her 26-year-old son, who served in Iraq, was charged with domestic violence, punching his girlfriend in the face and threatening her with an assault rifle (allegedly).  So at the first rally where she commented on the ‘elephant in the room,’ as she herself put it, she said:

“My son, like so many others, they come back a bit different, they come back hardened, they come back wondering if there is that respect for what it is that their fellow soldiers and airmen and every other member of the military so sacrificially have given to this country.

“It starts from the top.  It comes from our own President, when they have to look at him and wonder – do you know what we go through, do you know what we’re trying to do to secure America and to secure the freedoms that have been bequeathed us?”

Ah, Sarah?  I’m all for the men and women who protect our freedoms, and I realize some come home with issues, but you never, ever, punch a woman in the face.

--Ted Cruz suffered another blow (maybe) when Iowa Gov. Terry Branstad (Rep.) said voters should oppose Cruz when they turn out to caucus next month, owing to his opposition to ethanol subsidies.

Cruz, to his credit, says he favors a five-year phase-out of the Renewable Fuel Standard, which mandates the amount of ethanol refiners mix into their gasoline supply.

--Meanwhile, we have Hillary and her server.

Editorial / Wall Street Journal

“When Team Clinton warns of a vast right-wing conspiracy, it’s a sure sign of political distress.  Hillary Clinton’s accusation that even an independent federal watchdog is conspiring against her is another sign that her email problems are escalating.

“The Clinton attack is a response to a Jan. 14 letter from the intelligence community’s inspector general, Charles McCullough, to Congress’ intelligence committees.  Mr. McCullough said he has received sworn declarations from the intelligence community that former Secretary of State Clinton’s private email server contained intelligence about the government’s most important secrets.  Reviewers have found ‘several dozen emails’ containing information deemed to be at ‘confidential, secret, and top secret/sap’ levels.

“The SAP – special access program – reference in particular is ringing Washington alarms.  A SAP usually refers to a highly covert technology program, often weaponry.  Knowledge of these programs is usually restricted to small groups of people on a need-to-know basis.

“NBC News first reported that the SAP reference on Mrs. Clinton’s server is so sensitive that Mr. McCullough had to get special clearance before he could even view the intelligence-community declarations.  Later on Wednesday NBC quoted ‘senior U.S. officials’ as saying that the information was ‘innocuous’ chatter about U.S. military drone strikes.

“This quote looks like an attempt at political damage control because the SAP news undermines Mrs. Clinton’s previous claim that the emails on her server weren’t classified ‘at the time.’...

“This is (also) probably why Mrs. Clinton’s campaign decided to smear Mr. McCullough as a partisan....

“As it happens, President Obama nominated Mr. McCullough to be the nation’s first IG of the intelligence community after a lifetime in law enforcement and intelligence.  The Senate confirmed him unanimously....

“Mrs. Clinton put U.S. secrets at risk for the selfish political purpose of hiding her correspondence from public view.  She should be held accountable.”

Former U.S. Attorney General Michael B. Mukasey / Wall Street Journal

“While the State Department and intelligence agencies finish picking through messages recovered from the private email server Hillary Clinton used to conduct public business as secretary of state, the contents of the periodic document dumps have become increasingly sensitive....

“As the number of disclosed classified messages from Mrs. Clinton’s server has climbed above 1,300, her explanations have come to look increasingly improvisational and contrived. Recall that last summer...she insisted that, ‘I did not send classified information and I did not receive any material that was marked or designated classified, which is the way you know that something is.’

“When asked whether she had her server ‘wiped,’ she assumed an air of grandmotherly befuddlement: ‘What, like with a cloth or something?’ she said.  ‘I don’t know how it works digitally at all.’

“The current news, reported in the Journal and elsewhere, is that her server contained information at the highest level of classification, known as SAP, or Special Access Program.  This is a level so high that even the inspector general for the intelligence community who reported the discovery did not initially have clearance to examine it....

“The FBI’s criminal investigation of messages on the server initially related solely to Mrs. Clinton’s possibly unlawful mishandling of classified information. The investigation has now metastasized to include ‘the possible intersection of Clinton Foundation donations, the dispensation of State Department contracts and whether regular processes were followed’ as Fox News’ Catherine Herridge reported Jan. 19, quoting an intelligence source.

“Which is to say, the FBI wants to know whether those messages, combined with other evidence, show that donors to the Clinton Foundation received special consideration in their dealings with the agency Mrs. Clinton headed.

“Whatever the findings from that part of the probe, intelligence-community investigators believe it is nearly certain that Mrs. Clinton’s server was hacked, possibly by the Chinese or the Russians.  This raises the distinct possibility that she would be subject to blackmail in connection with those transactions and whatever else was on that server by people with hostile intent against this country.

“No criminality can be charged against Mrs. Clinton in connection with any of this absent proof that she had what the law regards as a guilty state of mind – a standard that may differ from one statute to another, depending on what criminal act is charged.

“Yet – from her direction that classification rules be disregarded, to the presence on her personal email server of information at the highest level of classification, to her repeated falsehoods of a sort that juries are told every day may be treated as evidence of guilty knowledge – it is nearly impossible to draw any conclusion other than that she knew enough to support a conviction at the least for mishandling classified information.”

--Speaking of NBC News, the Republican National Committee has decided to shift its February Super Tuesday debate (Feb. 25) from NBC to CNN, a big blow to NBC News and its journalists. This all goes back to the disastrous CNBC debate on Oct. 28 in Boulder, Co., where the anchors could not have been more amateurish.

--It was very sad to see a volunteer for Ben Carson’s Iowa campaign die in an auto accident there.

--The Supreme Court has agreed to review President Obama’s executive orders to allow up to 5 million immigrants to “come out of the shadows” and work legally in the United States.

The justices said they would consider undoing lower court rulings that blocked the plan from taking effect in an election year, with a decision likely by late June, ahead of both parties’ presidential nominating conventions.

--The National Oceanic and Atmospheric Administration and NASA jointly announced that 2015 was the warmest year on record for the planet.  The average temperature across global land and ocean surfaces was 1.62 degrees Fahrenheit (0.90 Celsius) above the 20th-century average.  Including 2015, 15 of the 16 warmest years in NOAA’s 136-year climate record (since 1880) have occurred since 2000.

According to the World Glacier Monitoring Service, glaciers are losing mass at a rate “without precedent,” while Arctic sea ice is declining dramatically.  [Antarctic sea ice has been increasing, though, which could be related to changing winds, but the decline in the Arctic sea ice is occurring twice as fast as the Antarctic’s gains.]

For the 48 contiguous U.S. states, 2015 was the second-warmest year on record, with an average temperature about 2.4 F. above the 20th-century average; the 19th consecutive year that the annual average U.S. temperature exceed the 20th-century average, according to NOAA.

2015 was the second-hottest on record in Europe and the warmest on record for Asia and South America.

As for Africa, it is supposed to be hot.  [Just a little global warming humor there, kids.]

--The FBI said murders rose 6.2% in the first half of 2015, according to preliminary crime data, this as police chiefs from around the country had warned about a surge in recent months. FBI Director James Comey has said an increase is potentially due to the “Ferguson effect” and the reluctance of police to engage with suspects.

--What’s this?  New York City Mayor Bill de Blasio’s approval ratings have risen to 50% in a new Quinnipiac University poll of registered voters?  Why, by gosh it is true...up from 45% in the same poll in October.

And by a margin of 48% to 44%, respondents said the mayor deserved re-election.

Still, just 28% of white voters have a favorable opinion of de Blasio, while 81% of black voters give him high marks, according to Quinnipiac.

I’ll say this as a fairly close observer of the New York political scene.  The mayor has been less offensive in recent weeks.

[Quinnipiac’s men’s hockey team is ranked No. 1 in the nation, by the way....just sayin’.]

--I’m a supporter of Britain and the royal family, but I never saw anything more idiotic than the debate in the House of Commons over whether to ban Donald Trump for his call to ban Muslims from the U.S.

One of the MP’s said a ban would be justified on the grounds of ‘religious harmony.’  Just picture that this debate was taking place at the very same time (within 48 hours, literally) of the above noted comments by Prime Minister David Cameron on the serious issues his country faces from the Islamist threat.

To further my point, London announced this week it was arming 3,000 more police to deal with it.

Plus Britain doesn’t do anything with some of their own radical clerics who spew hate 24/7.

--I’m boycotting the Oscars telecast...I’ll be watching HBO’s new series, “Vinyl,” instead.  But on a serious level, blacks and Hispanics do have a point when it comes to the Academy of Motion Picture Arts and Sciences not exactly being inclusive.

For the second year in a row, all of the actors nominated for Oscars are white, though as Dexter Thomas pointed out in the Los Angeles Times, “People of color represent only 37% of the U.S. population, but bought 46% of all movie tickets in 2014.”

Latinos held only 4.2% of speaking roles in the top 100 films of 2012, yet they are the most avid moviegoers in the country.

According to the last survey of those who vote for the Oscar nominations, conducted by the L.A. Times in 2012, 94% of the voting body was white, and 77% male.

Actually, I’ll watch Chris Rock’s opening monologue...that will be ‘can’t miss,’ especially for his fans, which include myself.

[And we learned at week’s end that the Academy approved a sweeping series of changes designed to diversify its membership.]

--More on the Zika virus front, which I highlighted three weeks before the Centers for Disease Control and Prevention did.  On Tuesday, the CDC laid out guidelines for caring for pregnant women who might have been exposed to Zika, the mosquito-borne infection that can cause brain damage in a developing fetus.  Last Saturday, health officials confirmed the birth of the first baby born with microcephaly in the United States attributed to the virus; the child having been born in Hawaii to a mother who had become ill with Zika while living in Brazil last May.

Last weekend, the CDC recommended pregnant women postpone travel to 14 countries and territories in the Americas where Zika virus is circulating, including Brazil, as well as Mexico, Haiti, and Puerto Rico.  [Friday this alert was expanded to include other countries.]

Brazil reported this week it is up to 3,893 cases since October, an increase from 3,500 in the prior week’s report.

While there is no treatment for microcephaly, early detection might offer some women the option of terminating their pregnancies or to have specialists on hand during delivery, said Dr. Laura Riley, president of the Society for Maternal-Fetal Medicine.  [Julie Steenhuysen / Reuters]

And one more...the New York Times reported at week’s end that Zika may be causing another serious health crisis in Brazil: “hundreds of cases of a rare syndrome in which patients can be almost completely paralyzed for weeks....the potentially life-threatening Guillain-Barre syndrome, in which a person’s immune system attacks part of the nervous system, leaving some patients unable to move and dependent on life support.”

In the part of Brazil hardest hit by the Zika virus, “hundreds of cases” of Guillain-Barre are being reported.

I am most familiar with Guillain-Barre as a family member contracted it years ago, but he fought back and had a total recovery, which made him a bit of a legend in a certain local rehab facility.  I know it scared the hell out of me when I first saw his condition. 

--Professor Stephen Hawking, answering audience questions at the BBC’s Reith Lectures, said that further progress in science and technology will create “new ways things can go wrong.”

But he says that assuming humanity eventually establishes colonies on other worlds, it will be able to survive.

“Although the chance of a disaster to planet Earth in a given year may be quite low, it adds up over time, and becomes a near certainty in the next thousand or ten thousand years.”

At which point the audience, staring at this strange man, screamed in unison, “Well that’s really going out on a limb, Professor!”

OK, they didn’t actually do this, but had I been in the audience I would have shouted it out.

Here’s my deal...there will be a major disaster, either nuclear war between at least two countries (which could be precipitated by a bio-terror or cyber event) or a global pandemic of some kind in the next twenty years.

Which means the clock is ticking on my Mets and Jets...and at the end of the day that’s all that matters to moi.

---

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

God bless America.

---

Gold $1097
Oil $32.19

Returns for the week 1/18-1/22

Dow Jones  +0.7%  [16093]
S&P 500  +1.4%  [1906]
S&P MidCap  +1.4%
Russell 2000  +1.3%
Nasdaq  +2.3%  [4591]

Returns for the period 1/1/16-1/22/16

Dow Jones  -7.6%
S&P 500  -6.7%
S&P MidCap  -7.9%
Russell 2000  -10.1%
Nasdaq  -8.3%

Bulls 26.8
Bears 36.1 [Source: Investors Intelligence]

Have a great week.  If you are in the line of the storm, hope you have enough beer and Chex Mix on hand.  I think I do.

Brian Trumbore

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