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02/13/2016

For the week 2/8-2/12

 [Posted 11:00 PM ET, Friday]

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Edition 879

Washington and Wall Street

It was another ugly, sloppy week in global financial markets.  Only China escaped the damage...because the nation, and their markets, shut down for the week due to the Lunar New Year holiday. 

Many bourses hit multi-year lows over concerns of slowing growth, a plunge in oil to its lowest level since 2003, and central bank policy that has led to negative interest rates in parts of Europe and Japan, with suddenly talk in the U.S. of same.

This week in her semi-annual congressional testimony, U.S. Federal Reserve Chair Janet Yellen said the Fed was taking another look at negative interest rates as a potential policy tool if the U.S. economy faltered.

“We had previously considered them and decided that they would not work well to foster accommodation back in 2010,” Yellen said during her second day of testimony.  “In light of the experience of European countries and others that have gone to negative rates, we’re taking a look at them again because we would want to be prepared in the event that we needed to do it for accommodation.”

Markets have seen how negative interest rates, which are supposed to force banks to lend, thus stimulating economic growth, haven’t worked!  Period.  End of discussion. 

But Yellen was forced to admit that when the Fed finally raised its benchmark funds rate for the first time in nearly a decade, the intent was to “gradually continue to raise rates – not to cut them.”

“A lot has happened since then,” she said.  “But I have not thought that a downturn sufficient to cause the next move to be a cut was a likely possibility, and we’ve not yet seen, I would say, a shift in the economic outlook that’s sufficient to make that highly likely.”

Of course negative rates hammer bank profitability, which I discuss further below.  For now, though, Senators pressed Yellen over whether negative rates would amount to a tax on savings...whether they would be passed through to at least small depositors.

And at a certain level the banks themselves would withdraw their cash from the Fed and hold it as currency instead.

On the issue of growth, Yellen said, “There is always some chance of a recession in any year, but the evidence suggests that expansions don’t die of old age,” so while the economy has been expanding since mid-2009, however haltingly, she indicated the Fed would delay any further rate increases, after last December talking about four of them in 2016, to see how the economy shook out in light of the global picture.  Fed policymakers were closely following developments, Yellen attempted to reassure us.

But, actually, what’s the concern?  The only significant economic data point of the week, retail sales for January, came in better than expected, with the ‘control group’ component up a solid 0.6% (ex-autos, gas, and other stuff), and the Atlanta Fed’s GDPNow indicator is pegging first quarter GDP at a respectable 2.7%, which would continue our pattern of a lousy quarter, followed by an okay one.

Also today, New York Fed President William Dudley said talk of negative interest rates was premature.

So relax.

Or maybe not.  Next week promises to be another interesting one. China goes back to work and the European Union has a critical summit, particularly with regards to the issue of Britain and its looming referendum on whether to stay in or exit the EU, “Brexit.”

But you know where my focus always is...geopolitics.  Forget talk of a ceasefire in Syria, this was the worst week in this five-year catastrophe, as I spell out below.  The situation in Aleppo is devastating and will only get worse.  Bashar al-Assad is now talking of taking back the entire country, bucked up by his dangerous friends in Moscow.  Iran is talking of enhanced ballistic missiles that would be capable of carrying nuclear warheads, while participating in the carnage in Syria, Yemen and elsewhere. 

Then there’s Kim Jong-un, the amazing wacko who has executed at least 80 in the leadership, including three of the top four generals.  He is rapidly building his nuclear weapons capability and the means by which to deliver them.

Chinese President Xi is another who is on an island all by himself, politically speaking, with huge issues on his plate.  He’s not a good guy...at all. He’s liable to do anything.  [He’s also liable to be sent packing with all the enemies he’s been making.]  A crisis in the South China Sea seems inevitable.

Meanwhile, I will not in the least be surprised to wake up one day and find someone else in charge in the Kremlin, but until that moment, Vladimir Putin remains dangerous because he is without doubt scared for both his position and his life. He constantly has to watch his back as his economy crumbles and disgruntled oligarchs lose $billions.  Russia needs sanctions relief.  Will he back down in Ukraine to get it?

And all the while ISIS slithers from country to country in the Middle East and now North Africa, shifting its bases, honing its skills.  Europe is just waiting for the next attack.  Or maybe it’s al-Qaeda.  They were probably involved in the attempt to take down an airliner in Somalia with a laptop bomb.  The next one, or two, will be more powerful.

So this dreadful start to the year in the financial markets is nothing compared to what lies in the shadows.  In my 1/9/16 column, I quoted Nassim Nicholas Taleb, the noted strategist who concerns himself with potential black swan events. 

“Terrorism is a problem we’re managing, but epidemics such as Ebola are patently not. The most worrisome fact of 2015 was the reaction to the threat of Ebola, with the media confusing a multiplicative disease with an ordinary one and shaming people for overreacting.  Cancer rates cannot quadruple from one month to the next; epidemics can.  We are clearly unprepared to deal with such threats.”

He didn’t know at the time the Zika virus was about to explode.  It’s not a mass killer, yet (though three deaths have now been tied to it), but there are already disturbing facets to it.  Are we prepared?  Are we prepared for any of the above?  Of course not.

Europe and Asia

There was little economic news this week in the eurozone, with the exception of the release of a flash estimate on fourth quarter growth.  According to the European Commission’s statistics arm, Eurostat, GDP rose 0.3% over the third quarter, the second quarter in a row at that level, with the economy growing 1.5% over the fourth quarter of 2014, matching forecasts.

But Italy’s recovery is dimming, with the eurozone’s third-largest economy seeing growth of just 0.1% in Q4, missing estimates of a 0.3% rise.  This is a further blow to Italy’s banks, which I’ll touch on in a minute.  Full-year growth in Italy was just 0.7%.

Add it up and the weak picture there makes it harder for Prime Minister Matteo Renzi to meet his fiscal goals – including a pledge to bring down the nation’s sky-high debt-to-GDP ratio for the first time in eight years, which could impact Italy’s budget talks with the EU.

Greece’s economy contracted 0.6%, following a 1.4% contraction in the third quarter, i.e., recession.

Germany grew 0.3%, in line with estimates.

Meanwhile, Sweden’s central bank moved its interest rates deeper into negative territory as it seeks to figure out a way to stimulate inflation (growth is actually solid at about 3.5%), but the Riksbank doesn’t seem to understand it has little influence over the forces affecting inflation.

What you did have in a big way was a flight to safety within the euro area this week.  Eurozone periphery bonds, shades of days of yore during the various Greek crises, were shunned.

For example, the yield on the German 10-year Bund fell this week from 0.29% last Friday to 0.18% through Thursday (before finishing the week at 0.26%), while Portugal’s 10-year rose from 3.11% to 4.06% (but then fell back to 3.69%, Friday) and Greece’s 10-year yield rose from 9.33% to 11.12%, Thursday, before finishing up the week at 11.03%.  Massive swings.

I keep asking myself, with talk of the European Central Bank adding more quantitative easing (asset purchases) in March at its next meeting, what will the ECB be buying?  Does the paper the ECB says it is buying physically exist?  Well?

But regarding the banks, the dismal performance of which thus far in 2016 has helped roil global markets, Germany’s biggest bank, Deutsche Bank, finally stabilized at week’s end when it announced it was launching a $5.4bn buyback of its own bonds in an attempt to reassure markets of its financial strength.

Deutsche shares had cratered 9.5 percent on Monday, as it was forced to issue an unscheduled announcement reassuring investors, and employees, that it had sufficient reserves to pay 350m euros in coupons on its debt due in April.

CEO John Cryan insisted the bank was “absolutely rock solid.”

The problem has been that no one seems to know what’s really on Deutsche Bank’s books, as Europe’s largest banks, as a rule, are far more opaque than their U.S. counterparts.  In this case, just what is Deutsche liable for?

The Euro Stoxx banks index recovered some on this news, but was still down about 8 percent this week and 28 percent for the year last I saw.

Editorial / The Economist

“For those who worry that a repeat of the crisis of 2007-08 is imminent, this week brought fresh omens.  Shares of big banks tumbled; despite a mid-week rally, American lenders are down by 19% this year, European ones by 24%. [Ed. these numbers are not Friday figures.]  The cost of insuring banks’ debts against default rose sharply, especially in Europe.  The boss of Deutsche Bank felt obliged to declare that the institution he runs is ‘absolutely rock solid’; Germany’s finance minister professed to have no concerns (thereby adding to the concerns).  This is not 2008: big banks are not about to topple. But there are reasons to worry, and many of them converge on one country.

“Start with the better news. Banks are more strongly capitalized than they were.  Even in Europe, where lenders have been slower than their American counterparts to raise capital, banks have plumped up their core equity cushions from an average of 9% in 2009 to 12.5% in 2015.  Managers at European banks are making a renewed effort to adjust to the post-crisis landscape.  New rules on everything from capital to liquidity are forcing them to change.  John Cryan, Deutsche’s newish co-chief executive, was brought in to trim its investment bank.  He is jettisoning whole divisions, and suspended the dividend this year and last.  Credit Suisse is undergoing similar surgery.  Just now, this is weighing on the banks’ share prices.  Yet, however painful for investors, the sensible goal is ultimately to create slimmer, safer, more profitable outfits.

“Also salutary, if painful, is how investors in bank debt are coming to understand that they bear greater risk than they did.  New European rules that came fully into force at the start of this year stipulate that troubled banks must deal with capital shortfalls by ‘bailing in’ holders of bank bonds before any call is made on the taxpayer.  The chance that bondholders might lose money suddenly seems more real.  The turmoil at Deutsche this week stemmed partly from fear that the bank might struggle to pay interest next year on a type of bond that is designed to act as a buffer in a crisis.*  There are some design flaws in the bail-in regime, but the possibility that European banks are at last repairing themselves at a cost to their investors is the silver lining to this week’s spasms.

“The clouds, alas, still loom.  One source of anxiety is the health of the world economy. The factors that spook markets more broadly – the slowdown in China, plunging commodity prices and indebted energy firms, political upheaval from Greece to New Hampshire – all weigh heavily on banks in particular.  Banks do well when the economies they serve are growing, and miserably when they are not....

“The receding prospect of higher interest rates leaves American banks with less hope of widening the margin between the rates they pay depositors and what they charge for loans.  In Japan, where bank shares have fallen by 24% this month, and Europe central banks have imposed negative rates, in effect levying a fee on some reserves – one that banks have not yet been able to pass on to depositors.  With the economic outlook growing gloomier, margins being squeezed and restructuring costs still hitting profits, investors have good reason to fret.

“Worse, some countries appear to have taken so long to deal with their banks that they will now struggle to clean them up at all.  The IMF reckons that the total amount of non-performing debt in Europe was around $1.13 trillion at the end of 2014.  Bail-in is an especially ugly prospect in countries where bank debt is owned not only by diversified financial institutions but also by local retail investors.  Under such conditions, politicians may find that they cannot force the cost of cleaning up balance-sheets on voters without causing uproar.”

*This is a reference to ‘coco bonds,’ contingent convertible bonds that transform from debt to equity when certain conditions are met, also known as additional tier 1 capital bonds.  Cocos pay a fixed coupon, but convert to equity or can be written off when losses force a bank’s capital below a certain threshold.  The issuer can also miss coupon payments and with this prospect no longer seemingly remote, it helped lead to the market anxiety as eurozone banks are loaded with them.

So we circle back to Italy, where non-performing loans make up 18% of their banks’ total lending, with retail investors owning about $225 billion of bank bonds!  Uh oh.  And you saw the GDP figures for Italy.

Prime Minister Renzi is in a major bind.  He had a plan to buy back bad debts from the banks, but any discount could be borne by retail investors, who were clobbered when four small banks went under last year.  To be continued....

On the migration front....

NATO announced it would deploy ships to the Aegean Sea in an attempt to stop smugglers moving migrants from Turkey to Greece, Secretary General Jens Stoltenberg said on Thursday.  The alliance will enhance its surveillance of the Turkish-Syrian border as well to more closely monitor the flow.

Officials emphasized that the patrols are targeting the smuggler, not on stopping refugees from trying to make the journey.

Separately, the European Union at its summit next week will call on countries at the bloc’s borders, see Italy and Greece, to refuse entry to people who have not made an asylum claim “despite having had the opportunity to do so.”  Greek Prime Minister Alexis Tsipras has said the EU’s demand it build more migrant processing centers risks making Greece a “black box” for refugees who will become trapped on their way to the heart of Europe as the other countries begin to slam the door.

The EU did agree to send 3bn euro in aid to Turkey to bolster its efforts to stem the flow.

Finally, as noted above, this is a big week for the UK and its negotiations with the European Union for better terms of membership.

Anne Applebaum / Washington Post

“If the British people vote in a referendum to end their country’s relationship in the European Union, the world will not end. The sky will not come crashing down to earth; the oceans will not submerge the land.  Or at least we think they won’t. Because in fact, we have absolutely no idea what will happen.

“This extra dollop of uncertainty in an uncertain world has been brought to us by the British prime minister, David Cameron, and the origins of the problem go back a few years. To quell the anti-European feelings in a part of his Conservative Party, and to ward off a challenge from the UK Independence Party, Cameron promised that if he were reelected in 2015 (which for a time looked unlikely), he would renegotiate the terms of membership and then hold a referendum on British membership of the EU.

“From the beginning, it was clear that the renegotiation would be nothing of the sort.  Britain is already exempt from the Schengen Agreement, which eliminated borders in much of Europe, and it isn’t a part of the euro currency or the banking union.  Because the rest of Europe is coping with an extraordinary tide of refugees, a political and military challenge from Russia, and the ongoing economic crisis in Greece, nobody was ever going to reopen discussion of the major treaties that govern Europe’s ‘single market,’ the continent-wide free-trade zone, of which Britain is in any case a major beneficiary.

“Instead, Cameron asked for, and has just received, a number of promises – Britain will not be forced to join a European political union, which isn’t happening anyway – plus an ugly little ‘opt-out’ from EU laws: Europeans working in Britain will receive fewer benefits than British citizens.  The response has been unsurprisingly negative.  ‘Tinkering with the small print,’ cried the Daily Mail.  An ‘establishment stitch-up,’ said a headline in the Daily Telegraph.  With that exercise out of the way, the referendum campaign was launched.  The vote may take place as soon as June.  Opinion polls show the result could go either way.

“What could happen if Britain votes to leave?  As I said: We don’t know.”

More on the topic next week following the summit.

Turning to Asia, we got a break with China being closed.  No economic data or stock market crashes.  The People’s Bank of China did say last Sunday that the world’s largest stockpile of foreign currency plunged by $99.5 billion last month, to $3.23 trillion, following a $107.9 billion plunge in December.

It’s been a rapid outflow since August, when the central bank unexpectedly devalued the yuan, an action that backfired, with investors selling the currency in big numbers, which forced the central bank to defend the currency with its reserves.

As for Japan, after instituting negative interest rates on some bank reserves the prior week, the yield on its 10-year bond hit zero on Tuesday, before closing Friday with a yield of 0.07%.

But the benchmark Nikkei stock index fell 11% on the week, its worst performance since 2008, and is now down 21% for the year, as steep as the losses on China’s main barometer.  In Japan, it’s the same story as in Europe and the U.S. ...the bank stocks were hammered over concerns about their profitability given negative rates.

Plus you had the perverse situation where the yen was strengthening even though the BoJ was going negative, the exact opposite of what is supposed to happen.  Why?  Well the yen is seen as a safe haven in the region regardless; certainly better than the Chinese yuan, let alone the currencies of the shaky emerging markets in Asia.  A strong yen hurts exports, and it was exports that had been propping up Japan, though it still continues its cycle of dipping in and out of recession.

In a nutshell, Abenomics, the economic policy of Prime Minister Shinzo Abe that was supposed to revitalize Japan after decades of stagnation, hasn’t worked.  It hasn’t because he never instituted his reform plan for structural overhaul, such as opening up the workforce to more women and foreign workers.

It’s just a mess, I tell ya!  Now who wants a Kirin?

Street Bytes

--Wall Street cut its losses with a 2% rally on Friday, 313 points in the Dow Jones, which still finished down 1.4% for the week to 15973.  The S&P 500 fell 0.8% and Nasdaq 0.6%.

Friday’s rally was helped by a rebound in oil prices and energy stocks, as well as big gains in the financial sector, after sickening losses thus far in 2016.  It helped that a certain CEO made a big purchase of his own stock on Thursday, a topic I address below.

For the record, across the pond, London’s FTSE index hit a 3 ½-year low this week before a gain on Friday, while the Euro Stoxx 600 hit its lowest level since 2013.

--U.S. Treasury Yields

6-mo. 0.38%  2-yr. 0.71%  10-yr. 1.75%  30-yr. 2.60%

The yield on the 10-year, intraday, traded below 1.60% early Friday, pre-market opening, before whipping back up to 1.75% on the heels of the equity rally, thus reversing the flight to safety trade.

--The average price for a gallon of gasoline in the U.S. this week was $1.74.

--The U.S. oil-rig count fell another 28 to 439, according to Baker Hughes Inc.  There are now about 66% fewer rigs of all kinds from a peak of 1,609 in October 2014 (including for natural gas).

--Oil prices on Friday rebounded from a 13-year low of around $26.00 to $29.44, but it was still down on the week.  Driving the rally was the hope OPEC might be headed towards a production cut, after a UAE energy minister said some members were ready to cooperate in order to reduce supply.  But no one seriously believes this.

--Stockpiles of crude at the key delivery hub of Cushing, Oklahoma, hit a record high this week, though overall U.S. inventories dropped, according to the Energy Information Administration.

The International Energy Agency warned that global stockpiles will continue to grow this year and that it “is very hard to see how oil prices can rise significantly in the short term.”

The IEA said output from OPEC is not expected to rise as strongly as it did in 2015, but powerful members of OPEC look set to pump hard.

The IEA said Iraqi output in January reached a new record and more increases could follow.  Iran is accelerating production, post-sanctions, and preliminary data suggests the Saudis are still increasing shipments.

--Anadarko Petroleum, one of the largest independent U.S. oil and gas production companies, became the latest in the sector to cut its dividend in response to the plunge in prices, reducing the quarterly payout by 81 percent from 27 cents to 5 cents per share, which saves the company about $450m per year.

--Rio Tinto, the Anglo-Australian miner, said it will pursue a more flexible dividend policy and is seeking to cut a further $3bn from its cap-ex budget over the next two years.

--AP Moller-Maersk, the Danish container shipping giant, is always a good bellwether for the global economy and it warned this year won’t be any better than the past year and that it expects underlying results to be “significantly lower.”

Maersk’s businesses range from shipping to oil and gas and profit in 2015 fell 82 percent as not only low crude prices, but weak trade and uncertainty over the future direction of the economy hurt.

Demand from emerging markets has been especially weak, plus you have an over-supply of vessels in the industry.  Everyone and their mother, seemingly, was ordering ships four years ago when future growth was expected to be much stronger, and now all those ships are being delivered.

Maersk has been cutting thousands of jobs.  Even cargo rats are being kicked out onto the streets.  [Though I should add Maersk’s rats are multi-lingual.]

---Symptomatic of the problems in the banking industry, shares in Credit Suisse Group AG plunged to a 27-year low amid doubts about CEO Tidjane Thiam’s restructuring plans.  [But on Friday, Norway’s sovereign wealth fund boosted its stake in CS.]

France’s Societe Generale SA was another missing fourth-quarter profit estimates.  Banks across Europe have reported a slump in trading revenue, hurt by the drop in energy prices.  And then you have slumping emerging markets and strict capital requirements.

Oh, and those record low interest rates.  Or as Thiam told investors on Wednesday, “It’s not a great time to be a bank.”

--But JPMorgan Chase & Co. chairman and CEO Jamie Dimon thought it was a good time to buy bank stocks, buying 500,000 of his own firm’s shares.  Regulatory filings show he paid about $26.6 million for the stock, at prices ranging from $53.14 to $53.30 each.  Shares in JPM finished the week at $57.45, for a cool $2 million+ profit for Mr. Dimon just on the new shares.  I’d ask him to buy me dinner but we don’t know each other.

--In a big blow to President Obama’s climate change agenda, the U.S. Supreme Court on Tuesday temporarily blocked the administration’s effort to regulate emissions from coal-fired power plants.

The 5-4 vote, with the court’s four liberal members dissenting, was unprecedented in that the Supreme Court had never granted a request to halt a regulation before review by a federal appeals court.

But the order will likely head back to the high court after an appeals court considers a challenge from 29 states, corporations and industry groups.

What it does is certainly signal where the Supremes will rule when they get it back, and it also calls into question the landmark Paris climate change pact from December.  President Obama back then pointed to his power plant rule as an example for other nations.

The regulation was initially issued last summer by the EPA and had called for the nation’s existing power plants to cut emissions by a third by 2030, while closing hundreds of heavily polluting coal-fired plants.

The states in opposition have economies that largely rely on coal mining or coal-fired plants.

--Shares in Tesla, which had tumbled to a two-year low, jumped late Wednesday after the electric carmaker predicted it would deliver more vehicles than expected this year, putting off the need to return to the capital markets to raise extra cash, though it reported a fourth-quarter loss of $320 million owing to heavy development costs on two new models.  Revenue rose 27% to $1.21 billion.

Tesla said it expected to deliver 80,000 to 90,000 vehicles this year, up from 75,000 to 80,000 as currently forecast.

It delivered 50,658 in 2015, which was fewer than predicted.

CEO Elon Musk admitted Tesla over-reached with its Model X, of which only 206 were delivered in the fourth quarter of last year as it’s been a slow ramp-up of production of the vehicle owing to manufacturing problems linked to the design.

Tesla said it would deliver 1,000 of the Model X a week by the second quarter.

--Elon Musk’s SolarCity had its biggest one-day decline on record this week after the solar panel maker reported fewer rooftop solar systems and issued disappointing guidance for the current quarter.  The shares fell nearly 30% on the news.

--Shares in Cisco Systems rallied after the networking equipment company reported better than expected results in the latest quarter despite weakening global demand.

Revenues were flat with a year earlier, but this beat the Street, as did earnings.

--Shares in Boeing Co. fell sharply as concerns about the company’s accounting method for its jetliners came into question.  Boeing uses a system called program accounting, which enables it to book anticipated future profits as part of current earnings, which is compliant with Generally Accepted Accounting Principles but rarely used.

So some investors and shareholders worry that Boeing has built long-term assumptions when the future is too uncertain.

Frankly, I did not know Boeing employed this but have long wondered, especially during times of uncertainty such as today, how Boeing can act as if those placing orders for their jetliners won’t then cancel them.

Critics of the accounting method say that Boeing is making arbitrary conclusions on the future, especially when the jets being booked aren’t even in production yet.

Back in 2002, Boeing paid $92.5 million to settle a class-action suit alleging it manipulated program accounting on the 777 jet to shield the timing of cost overruns and production problems.

--Walt Disney reported better than expected earnings fueled by success of Star Wars: The Force Awakens. 

CEO Bob Iger also said the ESPN unit had added new subscribers since the end of the quarter, which flies in the face of those who are citing cord-cutting concerns (though for the quarter it lost more).

But the Street really didn’t believe such talk and sent the shares down further.

Nonetheless, operating income at the movie studio was more than $1bn for the first time in the quarter, and operating income at the theme parks rose 23 percent to $860m.

Of the company’s four divisions, only media networks, which includes ESPN, reported lower operating income, though still had profits of $1.4bn.

Overall, Disney revenue rose 14 percent to $152.bn, with a record ‘net’ income of $2.88bn for the quarter.

The Force Awakens, by the way, crossed the $2-billion mark at the box office last week, becoming just the third film to reach that level.  Iger said global retail sales for Star Wars products exceeded $3 billion in the fiscal first quarter.

--Shares in Twitter hit an all-time low after the company reported its first quarter with no growth in users since it went public, 320 million, unchanged from the third quarter.  The company also forecast first-quarter revenue below analysts’ estimates.

The shares did rally back some on Friday as Visa took a stake in Twitter CEO Jack Dorsey’s other company, Square.

--Time to elevate the Zika virus to Street Bytes, as it will have an impact on economic activity for the foreseeable future.  Forget the few Americans who may be cancelling cruises or flights to the Caribbean, Ground Zero, Brazil, could take a massive financial hit on the Rio Olympics in August, even as the communications director for the Brazil Olympic Committee said this week, “Rio will welcome the world and its athletes to a very safe environment,” citing that August is part of Brazil’s winter and mosquitoes are scarce.  Good try, Mr. Minister.

This week scientists revealed they have detected the virus in saliva and urine, raising the question of whether Zika can be transmitted by means other than mosquitoes.

And a report in the journal JAMA Ophthalmology notes that researchers are finding some babies infected with Zika have eye abnormalities that threaten vision; such was the case in 10 of 29 newborns examined in Salvador, Brazil, that were presumed to have been infected with the virus.

But Zika is actually a small relative issue compared to the other problems plaguing Brazil, such as an economy in depression and a president, Dilma Rousseff, facing impeachment proceedings.

And as for the Games themselves, Brazil has made no headway in cleaning up the severely polluted venues that are to be used for the sailing and rowing events.  Long before Zika emerged as a threat, this would have been enough to keep me away.

Meanwhile, Zika is spreading rapidly across Venezuela and Colombia, both of which share a long border with Brazil.  And the Centers for Disease Control and Prevention says watch out Puerto Rico.

--From Liz Mak / South China Morning Post

“Computer virus researcher Kaspersky Lab issued a warning to financial institutions this week that bank-robbing Trojans and other malware launched by Russian hacking groups are making a comeback and may be deadlier than ever as they use more sophisticated malware to deploy APT-style attacks.

“An APT – advanced persistent threat – attack represents a set of hacking processes that is typically very hard to detect due to its covert nature and lengthy running time....

“The malware was built by Russian gangs with the known involvement of mainland Chinese and Ukrainian criminals.  Together, they infected hundreds of financial institutions in over 30 countries.

“Metel, the latest addition to the list of cyber threats targeting banks, enables criminals to gain control of a bank’s system handling money transactions by hijacking its call centers and support computers, through which they can roll back ATM transactions using automated sequences.

“This means the balance on clients’ debit cards remain unchanged regardless of the number of ATM transactions undertaken.”

Oh brother.

--The U.S. Postal Service posted its first quarterly profit since 2011, earning $307 million after a holiday delivery season that beat expectations.

The USPS focused on the season in an attempt to take business away from UPS and FedEx Corp. and the USPS, for the first time in recent years, delivered more packages than both of these rivals.

Letter carriers delivered about 660 million packages over the holidays, up from an initial forecast of 600 million, while UPS delivered 612 million, which was short of its forecast of 630 million.

--I can’t imagine what it must have felt like on Royal Caribbean’s Anthem of the Seas as the captain stupidly took the 4,000 passengers through a monster storm with hurricane-force winds on the way from Bayonne, N.J. to Port Canaveral, Florida.  The storm had been forecast for days, making the actions of the cruise liner even more inexplicable.

Royal Caribbean is the operator that advertises heavily (at least in the New York area) with those obnoxious commercials touting the on-board musical “We Will Rock You.”  A 2:30 p.m. performance of this was actually just starting when all hell broke loose and the captain ordered everyone back to their cabins.  I no doubt would have been throwing up watching the show.

--Burger King is adding hot dogs!  I’m there.

20 billion hot dogs are sold in the U.S. each year, by the way.

Foreign Affairs

Syria/ISIS/Russia/Turkey: Diplomats in Munich agreed Friday to work toward a temporary “cessation of hostilities” in Syria’s civil war within a week, but efforts to secure a lasting cease-fire fell short.  The U.S. had wanted an immediate cease-fire, while Russia proposed one to start on March 1.

So despite all the excitement on Thursday I’m not sure where things stand.  Foreign ministers from the International Syria Support Group sealed an agreement to “accelerate and expand” deliveries of humanitarian aid to besieged Syrian communities.

Secretary of State John Kerry, who on Thursday was trumpeting a cease-fire, had to admit Friday that if a cessation-of-hostilities agreement could be achieved, it would only be a “pause” in fighting.  And these are just “commitments on paper” only.

“The real test is whether or not all the parties honor those commitments and implement them,” he told reporters early Friday.

Prior to this, Russian Prime Minister Dmitry Medvedev said all powers must sit at the negotiating table to forge an end to the war “instead of unleashing a new world war.”

“The Americans and our Arab partners must think well: do they want a permanent war?”

This was in response to a proposal from Saudi Arabia to send in ground troops to Syria.

As for the humanitarian crisis, nothing of consequence will occur to alleviate the suffering without a real cease-fire.

Peace talks are now expected to resume around Feb. 25, but this aspect is a giant, tragic farce as the opposition is highly unlikely to participate, especially now that Syrian President Assad said in a rare interview on Thursday, released Friday, that he intends to retake “the whole country” from rebel forces, though he noted “the solution will take a long time and will incur a heavy price.”

Assad added he supported peace talks but said negotiations did not mean “we stop fighting terrorism.”  [AFP / BBC News]

Syrian forces continue to make major gains, with a campaign to encircle the rebel-held half of Aleppo, Syria’s largest city – that would represent a significant defeat for the rebels.

Russia accused the U.S. of bombing Aleppo and then blaming Russia.  A Defense Ministry spokesman said:

“At around 13:55 Moscow time on Wednesday, U.S. Air Force A-10 fighter jets entered Syrian airspace from Turkey and dropped bombs on Aleppo.”

Igor Konashenkov then said Pentagon spokesman Steven Warren alleged that Russian planes destroyed two hospitals in Aleppo, a claim Russia refutes.

The facts are that Russian airstrikes destroyed the two hospitals, leaving 50,000 without critical care, according to Col. Warren.

Yaroslav Trofimov / Wall Street Journal

“Defying U.S. predictions of a quagmire in Syria, Russia is achieving strategic victories there with this month’s Aleppo offensive. The question now is whether this is a turning point that hastens the five-year war’s end or the trigger for a counter-escalation that will drag other regional countries into the conflict.

“Few expect that Moscow’s main target – the moderate rebels backed by Turkey, Saudi Arabia and the U.S. – would now be forced to settle the conflict on the Kremlin’s, and Syrian President Bashar al-Assad’s, terms.

“ ‘Their victory in Aleppo is not the end of the war.  It’s the beginning of a new war,’ said Moncef Marzouki, who served in 2011-14 as the president of Tunisia, the nation that kicked off the Arab Spring, and who recently visited the Turkish-Syrian border.  ‘Now, everybody would intervene.’

“To be sure, Turkey and Saudi Arabia have few easy options to counter Russian military might in Syria.  But because of national pride – and internal politics – neither can really afford to have the rebel cause in which they have invested so much wiped out by Moscow and its Iranian allies.

“If only for that reason, the tone in Moscow is muted.

“ ‘It’s too early to speak about success,’ said Dmitri Trenin, director of the Carnegie Moscow Center and a former Russian army officer.  ‘The risk of escalation after Aleppo has grown.  We are getting pulled into an increasingly dangerous game – all of us, not just Russia, but also Turkey, and Saudi Arabia, and the U.S.’....

“Saudi Arabia has already spoken, in vague terms, about its readiness for a ground deployment in Syria [Ed. ditto UAE.].  While the Saudis say that their aim is to participate in the campaign against Islamic State under a U.S. umbrella, if Saudi troops are deployed to areas controlled by Sunni Arab rebels, they would in effect protect them from the Syrian regime.

“Turkey’s President Recep Tayyip Erdogan also raised the prospect of a ground-troop deployment in Syria this week, saying that he regretted not participating in the 2003 U.S.-led invasion of Iraq.

“ ‘We don’t want to make the same mistake in Syria as we made in Iraq,’ Mr. Erdogan said.

“While Turkey has already deployed long-range artillery along the border, any military incursion without U.S. involvement would carry the risk of a direct military confrontation with Moscow....

“The Turkish military is fully aware of the risks and is reluctant to embark on it without international cover.  Yet, for Mr. Erdogan – and the Saudis – watching the Syrian rebellion get pulverized isn’t an option, either.”

Josh Rogin / Bloomberg News

“In the days since the collapse of the Syria peace talks championed by Secretary of State John Kerry, the humanitarian catastrophe in northern Syria has grown, tens of thousands of new refugees were created and the Russian- and Iranian-backed killing of civilians has increased.

“These are all consequences of the flawed U.S. strategy, according to the lead negotiator for the Syrian opposition.

“Riyad Hijab was prime minister of Syria in 2012 under the dictator Bashara al-Assad; he became the highest-ranking defector from the regime when he switched sides and joined the rebels.  He’s now the leader of the High Negotiating Committee that represented the Syrian opposition at last week’s meetings in Geneva, which collapsed after two days....

“Hijab says that Kerry’s approach – to try to persuade Assad and Russia to negotiate while the offensive continues – has actually made things much worse.

“ ‘The administration is saying it is testing the good faith of the other side,’ Hijab told me in a phone interview on Monday.  ‘But when you are testing these things and it fails, the price that is being paid is horrendous death and the expansion of extremism and terrorism on the ground.’....

“In the eyes of the Syrian opposition, Russia and Iran are making a mockery of the peace process, and Kerry’s reluctance to acknowledge this is putting them in deadly harm....

“ ‘The failures of the negotiations end up lowering the credibility of the moderate opposition in front of the Syrian people,’ said Hijab.  ‘United States credibility is plummeting within the population of Syria but also in the region as a whole.’....

“Moscow wants the peace talks to fail, Hijab said.  He accused the Russian air force of using illegal cluster bombs indiscriminately against civilians.  (Human rights groups support those claims.)  ‘The situation has taken a horrible turn, specifically in terms of the scorched earth policy of the Russian aircraft and the way that they are bombing, literally destroying everything,’ he said....

“The next president, whether Democrat or Republican, will certainly make big changes to U.S. policy to Syria.  But over the next 11 months the situation can get much worse.  There’s a risk inherent in deepening America’s involvement, but Obama must weigh that against the many costs of diplomacy when it fails.”

German Chancellor Angela Merkel on Monday condemned Russia’s air strikes.

“We have been horrified by what has been caused in the way of human suffering for tens of thousands of people by bombing – bombing primarily from the Russian side,” she said.

The Kremlin called for a careful and responsible attitude when making statements about Syria and said there is no credible evidence to back up Merkel’s claims, which were also made by European Council President Donald Tusk on Tuesday.

Editorial / Washington Post

“An extraordinary new crisis is beginning to unfold in Syria, a country that already has suffered through some of the worst war crimes, humanitarian depredations and refugee flows in recent history.  Russia, Iran and the Syrian government are conducting a major offensive aimed at recapturing the city of Aleppo and the rebel-held territory that connects it to the border with Turkey....

“This campaign is being waged in open defiance of a UN Security Council resolution adopted in December, which required the Syrian government to provide humanitarian access to areas under siege and demanded an end to the shelling and bombing of civilian areas.  Russia, which voted for the resolution, is indiscriminately bombing civilian targets in the Aleppo area, using banned cluster munitions, according to Human Rights Watch.  Iranian commanders are on the ground, directing attacks by Shiite fighters from Lebanon, Iraq and Afghanistan.

“In the face of this onslaught, which promises to destroy any chance of an acceptable end to the Syrian civil war, the Obama administration has been a study in passivity and moral confusion.  President Obama is silent.  Secretary of State John F. Kerry has been reduced to reading the text of Resolution 2254 aloud, as if that would somehow compel a change in Russian behavior....

“Mr. Kerry conceded last week that Moscow might have lulled him with ‘talk for the sake of talk in order to continue the bombing,’ adding, ‘We will know that in the course of the next few days.’

“If he is honest, he will now acknowledge his error....

“It might still be possible to rescue the Syrian opposition and the hundreds of thousands of civilians at risk – but only if the United States and its allies act quickly to bolster rebel forces and create havens for refugees.  The alternative – to hope that Russia and Iran stumble, or suddenly embrace a truce – has already been proven a fantasy.”

Editorial / Wall Street Journal

“President Obama and John Kerry are lucky the presidential primaries are occupying Washington’s attention, because otherwise more people might notice the human and strategic catastrophe unfolding in Syria.  Even as the Secretary of State was touting his Syrian peace talks in Geneva last week, Bashar Assad, Russia and Iran were expanding their bloody siege against the opposition around Aleppo....

“The Syrian disaster is becoming so painfully obvious that even members of the pro-Obama national security establishment are calling for the President to drop his let-it-burn policy.  Veteran diplomats Nicholas Burns and James Jeffrey wrote last week in the Washington Post that the Syrian war ‘has metastasized into neighboring countries and the heart of Europe.  It could destabilize the Middle East for a generation.’  No kidding....

“In other Syria news, Mr. Kerry trumpeted U.S. contributions at a United Nations conference in London last week to drum up financial support for the refugees, who total an estimated 11 million during the civil war in addition to more than 250,000 dead.  The U.S. has pledged nearly $1 billion, and if nothing else perhaps the money can buy more coffins.”

Separately, 50,000 Syrian refugees are on the move towards the Turkish border at week’s end and that number could reach 1.5 million...1.5 million...if the city of Aleppo is completely razed.  It’s already bombed out, but the Syrian army and its allies, including Russia from the air, would leave this place totally destroyed.

Finally, I have been using a death toll in the Syrian war of 300,000, though it was clearly over that.  The UN, however, hasn’t updated its estimation of 250,000 since August 2015.  My figure of 300,000 came from various rights groups last fall, as well as common sense.

Well, Thursday, the Guardian newspaper, citing the Syrian Center for Policy Research, said the figure is 400,000 killed and another 70,000 dead due to a lack of basics such as clean water and healthcare.

Coupled with those injured in the conflict, that amounts to more than 11 percent of the population.

The SCPR calculates an estimated 1.9 million have been wounded going back to 2011 when the violence began.

Overall economic losses are estimated at $255 billion, the Guardian said.

Iran: The defense minister was quoted as saying this week that Iran would unveil an upgrade of its Emad ballistic missiles this year, which flies in the face of criticism from the United Nations and sanctions from the United States.

Iran also said it would start taking delivery of an advanced Russian S-300 surface-to-air missile defense system in the next two months, Hossein Dehghan added – a system that was blocked before the nuclear deal was completed.

Washington has said the Emad violates a UN resolution, and the U.S. imposed fresh sanctions last month against those Iranian businesses and individuals associated with the missile program.

The Emad, which Iran first tested in October, is designed to carry a nuclear warhead.

But Defense Minister Dehghan was quoted by the Fars news agency as saying: “The Emad missile is not a violation of the nuclear deal or any UN resolution since we will never use a nuclear warhead (on it).  It’s an allegation,” he said, adding that mass production would begin in the near future.  [Reuters / Daily Star]

Libya: ISIS, fearing Western air strikes, now appears to be leaving some of their bases in Libya and heading south, including to Niger and Chad, or the lawless Sahel region, which could then be used as a new springboard.

Niger and Chad are already dealing with militants loyal to Nigeria’s Boko Haram, as well as an al-Qaeda presence that came over from Mali when France intervened there. [Emma Farge / Reuters]

The U.S. estimates there are 5,000 ISIS fighters in Libya, double what they thought earlier.

North Korea: I went to post last week around midnight on Friday night and wrote that it seemed North Korea was moving up its ballistic missile test to as early as Sunday.  About five hours later, I began receiving my news wire alerts that, guess what, the test could indeed be Sunday.  How did I know when others seemingly didn’t?  I read a lot....and then make a judgement.

The ballistic missile carried a satellite that was first said to be in a wobbly orbit, but then the U.S. confirmed it had achieved a stable one, which regardless of whether the satellite is actually performing any duties is another achievement.

In response, the U.S. Senate unanimously passed tough new sanctions against Pyongyang on Wednesday for its flagrant violations of international law, including the testing of nuclear weapons and missile technology.  The House followed suit.

The measure is targeting the North’s ability to access funds needed for further development of both its nuclear and missile programs.

South Korea moved to close down the jointly run industrial complex in the border city of Kaesong, which shuts off a major source of income for the regime.  [Pyongyang said the move to close Kaesong was a “declaration of war.”]

Japan is also imposing new sanctions.

In his annual assessment of global threats delivered to Congress on Tuesday, Director of National Intelligence James R. Clapper said North Korea had expanded a uranium enrichment facility and restarted a plutonium reactor that could start recovering material for nuclear weapons in weeks or months.

Meanwhile, in Pyongyang, the chief of the Korean People’s Army General Staff, Gen. Ri Yong-gil, was apparently executed on corruption and other charges, according to South Korea’s Yonghap News Agency.

China: Related to the above, Beijing issued a strong rebuke to Seoul over the latter’s decision this week to restart missile defense talks with the United States, which would lead to the deployment of an anti-missile system, THAAD, developed by the U.S., that is meant to neutralize the threat from North Korea.

China objects because it doesn’t want to see systems such as this help unite South Korea, Japan and the U.S. in a military alliance.

The deployment of THAAD could severely compromise China’s air defense zone, and could be used against Chinese activity over the Taiwan Strait and in the South China Sea.

As for the North Korean missile test itself, China expressed “regret” over the North’s disregard for the international community’s objections.

“We hope all concerned parties remain cautious and do not take further action that could further escalate the [Korean] peninsula’s situation,” said a foreign ministry spokeswoman.

On a totally different issue, Britain has concluded missing Hong Kong bookseller Lee Po was “involuntarily removed” from the city, in “serious breach” of the Sino-British Joint Declaration signed three decades ago.

British Foreign Secretary Philip Hammond wrote in the UK’s latest semi-annual report on its former colony that the disappearance of Lee and his business associates “undermines the principle of ‘One Country, Two Systems,’ which assures Hong Kong residents of the protection of the Hong Kong legal system.”

On Tuesday, unrelated, Hong Kong riot police clashed with demonstrators after police tried to remove illegal street stalls set up for Lunar New Year celebrations, the worst violence since pro-democracy protests in 2014.  About 90 sustained injuries and 54 were arrested.  I don’t want to make too much of this...I’ll call it a one-off compared to 2014’s far more serious incidents.

Russia: The aforementioned James Clapper said in his Senate testimony on Tuesday that Russia is “paranoid” about NATO and is likely to continue “aggressive” actions this year to support its claim to great power status.

Clapper said Russia topped the list of “leading threat actors,” followed by China, Iran and North Korea, as published in the “Worldwide Threat Assessment.”

“Russia is assuming a more assertive cyber posture based on its willingness to target critical infrastructure systems and conduct espionage operations even when detected and under increased public scrutiny,” Clapper said in the report.

“I think the Russians are fundamentally paranoid about NATO.  They are greatly concerned about being contained.  And, of course, very, very concerned about missile defense, which would serve to neuter what is the essence of their claim to great power status – which is their nuclear arsenal.”

One area to watch is above the Arctic Circle, where Russia will continue to build up its military presence as it seeks international support for its continental shelf natural resources claims, according to the report.

Separately, last week I noted that Chechen leader Ramzan Kadyrov had posted an online video featuring Russian opposition leader Mikhail Kasyanov in the crosshairs of a sniper rifle.

Just days later, Kasyanov was targeted by a “physical attack” at a Moscow restaurant.

The attack, as reported in the Moscow Times, was seemingly more a threat rather than an attempt to inflict physical harm, but a group of about 10 attackers threw food and other objects at Kasyanov, while denouncing his political views, and then they fled in cars.

The police refused to do anything after Kasyanov filed a report calling for the attackers to be brought to justice.

Venezuela: Editorial / Washington Post

“The political drama in Venezuela, where a populist, authoritarian government is attempting to cling to power despite losing a legislative election by a landslide, tends to obscure a deeper crisis.  Though it is awash in oil, the country of 30 million people is facing an economic collapse and a humanitarian disaster.

“Venezuela already suffers from the world’s highest inflation rate – expected to rise from 275 percent to 720 percent this year – one of its higher murder rates and pervasive shortages of consumer goods, ranging from car parts to toilet paper.  Power outages and the lack of raw materials are forcing surviving factories and shops to close or limit opening hours.  According to a local survey cited by the Economist, the poverty rate is 76 percent, compared with 55 percent when Hugo Chavez, the late founder of the regime, took power in 1999.

“Worst of all, the country is running desperately short of food and medicine.... The chairman of the largest domestic food producer has said that if the government does not quickly seek aid to import food, it ‘will cause grave harm to ordinary Venezuelans.’”

And there is the debt.

“At current oil prices, Venezuela will earn less than $18 billion from exports this year, while it owes $10 billion in payments on the $120 billion in debt it has racked up.  That leaves $8 billion for imports, but even after contracting 20 percent, imports were $37 billion in 2015 – and Venezuela now imports most of its food.  Even with a debt default that the markets expect, it’s hard to see where additional hard currency will come from: The country broke relations with the International Monetary Fund almost a decade ago, has no ability to obtain private loans and has nearly exhausted its liquid reserves.  It already owes China, its latest benefactor, $50 billion.”

Friday, Venezuela’s highest court cleared the way for President Nicolas Maduro to enact economic emergency measures, overruling the new opposition-controlled legislature, which no doubt sets the stage for an explosive confrontation between the two.

Maduro now has the power for 60 days to force companies to increase production, to intervene in business, to speed up the purchase of essential imports and limit capital flows.

Random Musings

--New Hampshire results....

Republicans

Donald Trump 35 percent
John Kasich 16
Ted Cruz 12
Jeb Bush 11
Marco Rubio 10
Chris Christie 7

Democrats

Bernie Sanders 60
Hillary Clinton 38

The pollsters nailed the Sanders-Clinton race.  CNN/WMUR had it 61-30, while WSJ/NBC was at 58-38.

And as opposed to their failure in Iowa, all of the polls had Trump leading by double-digits here, but Rubio was in second at between 15 and 17 percent.  The Univ. of Massachusetts poll did have Trump receiving 36 percent.

[Actually, a Monmouth University survey that wasn’t available before I went to post last time, correctly had Kasich in second at 14% to Trump’s 30%.  So good for the much-maligned Monmouth gang.]

Rubio suffered because of his dreadful performance in last Saturday’s Republican presidential debate.

--Jonathan Easley and Niall Stanage / The Hill

“The Republican establishment has been plunged into disarray by Tuesday’s New Hampshire primary, which revitalized Donald Trump’s campaign and muddled the chances for a centrist alternative to emerge.

“The Granite State result is just about the worst possible one from the establishment’s perspective – ensuring the centrist vote will remain divided, with no candidate in that lane having momentum and a viable path to victory....

“Just as importantly, the primary delivered a heavy blow to Marco Rubio, stopping dead the momentum he had received from his strong third-place finish in last week’s Iowa caucuses.”

--Rubio’s loss was Kasich’s gain, as he put it all on the line in New Hampshire.  But as much as this has become my man in the race, we all wonder just where he goes from here.  The best he can possibly do in South Carolina is third, and this is a major longshot.

--As for Sanders’ big win, he spoke afterwards of the results from both Iowa and New Hampshire being “nothing short of the beginning of a political revolution.  We will all come together to say loudly and clearly that the government of our great nation belongs to all of us, not just a few wealthy campaign contributors.”

Sanders not only won the female vote in New Hampshire, he now has captured 84 and 85 percent of the youth vote (18-29) in Iowa and New Hampshire, respectively.

But now in South Carolina and Nevada, we’ll see if Sanders can make any inroads with Latinos and African Americans.

Meanwhile, so much for the impact of “Big Dog,” Bill Clinton.

--Gerald F. Seib / Wall Street Journal

“For years, plenty of players in the American political system have quietly wished that the outsize role of two small and quirky states – Iowa and New Hampshire – in picking presidential nominees could be reduced.

“Maybe this is the year that has come true.

“With the results now in from New Hampshire’s primary, what’s striking is how little those two states, the ones that often launch new front-runners and bring leaders crashing down to earth, have actually settled.

“Donald Trump won New Hampshire’s Republican primary in convincing fashion, and he leaves the state as the clear leader and with momentum.  Still, there’s no single alternative to him, but rather a muddle of four candidates just below who will battle on; the field is far from winnowed....

“On the Democratic side, Vermont Sen. Bernie Sanders won an impressive victory, one that will rattle plenty of party leaders who wanted former Secretary of State Hillary Clinton to cruise to the nomination unruffled and well financed.  But the race moves on to two states, Nevada and South Carolina, where his core supporters – white, well-educated liberals and young voters – fade in importance and give way to a large contingent of the Hispanic and African-American voters that figure to be her strength and his Achilles’ heel.

“So voters in states across America now have every reason to think they, too, will get a voice in deciding these nominations....

“Those who continue to doubt Mr. Trump’s strength will need to look long and hard at how even his support was across all kinds of demographic lines in New Hampshire.

“Exit polls showed he did well with moderates and conservatives, and, for someone whose ideology is mistrusted by many on the Republican right, he did surprisingly well among very conservative voters.  He did well among all age groups except, perhaps, the most elderly.

“He continues to do best among GOP voters with less than a college education, and soars among those who say immigration is their top issue, but what is most striking is the way his support spreads out across the GOP electorate.  And he will benefit as long as the non-Trump is divided among multiple challengers.

“Yet here is the problem for Mr. Trump, and the opening for those four candidates clustered just behind him: Once again in New Hampshire, he didn’t do as well among late-deciders than among those who made their minds up long ago.

“Many late-deciders indicated they broke for Mr. Kasich.... So in New Hampshire, as in Iowa, there were signs that the core of Trump voters are very loyal, but also hints that he may not have succeeded in expanding that core as the campaign wore on.”

--Editorial / Wall Street Journal

“Mrs. Clinton won the New Hampshire primary in 2008, but this year Democrats seem to have rejected her on personal and character grounds.  Mr. Sanders won nine of 10 voters in the exit polls who said that only Mr. Sanders or neither of the two candidates were ‘honest and trustworthy.’  The Clinton campaign has tried, as it always does, to plow through her email scandals by portraying them merely as Republican attacks.  But even many Democrats don’t believe her anymore.

“Mrs. Clinton now finds herself in a populist showdown she never anticipated and doesn’t play to her strengths. She’s best as a machine candidate of the unions, feminist volunteers and wealthy environmentalists.  Mr. Sanders is motivating the younger liberals who were also drawn to Mr. Obama and who are voting for the Vermonter by three or more to one.

“The Clinton campaign will console itself that the campaign now moves to states where the electorate will have more minorities and fewer gentry liberals....

“(Sanders’) great obstacle is that many Democrats still fear that a self-avowed socialist can’t win in November.  But that argument becomes less damaging as it becomes clearer that Mrs. Clinton has weaknesses that also could be fatal in the fall.  As Republicans get closer to nominating the mercurial Mr. Trump, more Democrats may also conclude that even Mr. Sanders could win so why not take a chance on their true heart?”

--Sanders and Clinton got together for another debate in Milwaukee on Thursday night and it was a largely wonky affair.  Hillary took care to mention Obama’s name 21 times and at the end pilloried Sanders for criticizing Obama in language she said a Republican might use.

Sanders stuck to his old populist themes that have worked so well thus far, tying Clinton to special interests that are responsible for an economy rigged against the middle class.

Clinton said Sanders’ agenda would expand the size of the federal government by 40%.  At the end she then questioned Sanders’ loyalty to Obama.

“Madame Secretary, that is a low blow,” Sanders said in response.

Charles Krauthammer / Washington Post

“The New Hampshire results have solidified the reigning cliché that the 2016 campaign is an anti-establishment revolt of both the left and the right. Largely overlooked, however, is the role played in setting the national mood by the seven-year legacy of the Obama presidency.

“Yes, you hear constant denunciations of institutions, parties, leaders, donors, lobbyists, influence peddlers.  But the starting point of the bipartisan critique is the social, economic and geopolitical wreckage all around us.  Bernie Sanders is careful never to blame President Obama directly, but his description of the America Obama leaves behind is devastating – a wasteland of stagnant wages, rising inequality, a sinking middle class, young people crushed by debt, the American Dream dying.

“Take away the Brooklyn accent and the Larry David mannerisms and you would have thought you were listening to a Republican candidate.  After all, who’s been in charge for the last seven years?”

Kimberley A. Strassel / Wall Street Journal

“Democrats awoke Wednesday with a thought usually reserved for Republicans: Hillary Clinton is a disaster. The marvel is that she fooled them for so long....

“What they saw in New Hampshire was a dour, 68-year-old woman, shouting at her audience in her best impression of emotion. They saw a gaunt former president, rambling to half-empty forums, grumping about his wife’s political opponent.   They saw the candidate’s surrogates try to snag the votes of young women by threatening them with eternal damnation.  They saw a campaign in disarray, dragging carload upon carload of ethical baggage. They saw that the empress has no (or very few) clothes....

“What she didn’t have was the interest of voters.  They’d had their eyes opened, and they chose to use their primary to highlight Mrs. Clinton’s many and obvious political weaknesses.  She may still be the favorite to hold her party’s banner, but the mantle of inevitability has been stripped away.”

--So does former New York City Mayor Michael Bloomberg run?  He has made it clear he is considering a third party candidacy, especially if Bernie Sanders and Donald Trump are their party’s respective candidates.

As Steve Schmidt, a Republican strategist who served as a senior adviser to Sen. John McCain during the 2008 campaign, told the Wall Street Journal, “There’s a big opening in the middle of the electorate, and Bloomberg is on point in that space.”

But what would Bloomberg run as?  He’s fiscally conservative, liberal on social issues, a major advocate of gun control, yet a law-and-order guy (see “stop and frisk”), and ostensibly a foreign policy hawk, though those who may know of Bloomberg, nationally, wouldn’t know anything about this last aspect.

In an interview with the Financial Times, Bloomberg said:

“I find the level of discourse and discussion distressingly banal and an outrage and an insult to the voters,” before adding that the U.S. public deserved “a lot better.”

In saying he was “looking at all the options,” Bloomberg said he would be willing to spend at least $1 billion of his own money and he’ll decide after the Super Tuesday results.

--For the record, here was the exchange that brought down Marco Rubio, but also marked the end of the Chris Christie campaign.

In Saturday’s debate, Christie told Rubio he had never been involved “in a consequential decision where you had to be held accountable.”

Rubio hit back, citing New Jersey’s credit downgrades under Christie’s leadership, before then asserting that Republicans were believing in a “fiction” if they assumed President Obama to be incompetent, rather than purposely changing the nature of the United States.

Christie shot back, accusing Rubio of doing “what Washington D.C., does. The drive-by shot...and then the memorized 25-second speech that is exactly what his advisers gave him.”

As all of us watched, Rubio then amazingly proved Christie’s point by again repeating the soundbite.

“There it is.  There it is.  The memorized 25-second speech. There it is, everybody,” said Christie.

But as much as it made Christie look good for a brief moment, it did nothing for him at the polls, while it proved deadly for Rubio, who after Tuesday’s results apologized for the debate performance and said “it will never happen again.”

--As for Christie, his poor performance wasn’t a surprise to yours truly.  As soon as he entered the race I told you he had nothing to run on, and obviously Bridgegate was a killer, long before the fatal emergence of Donald Trump, who stole Christie’s pathway to relevance in the campaign as the bombastic jerk.

--For the record Carly Fiorina and Jim Gilmore also dropped out on the Republican side.  Ben Carson should have done the same.

--David Brooks / New York Times

“As this primary season has gone along, a strange sensation has come over me: I miss Barack Obama.  Now, obviously I disagree with a lot of Obama’s policy decisions.  I’ve been disappointed by aspects of his presidency. I hope the next presidency is a philosophic departure.

“But over the course of this campaign it feels as if there’s been a decline in behavioral standards across the board.  Many of the traits of character and leadership that Obama possesses, and that maybe we have taken too much for granted, have suddenly gone missing or are in short supply.

“The first and most important of these is basic integrity. The Obama administration has been remarkably scandal-free. Think of the way Iran-contra or the Lewinsky scandals swallowed years from Reagan and Clinton.

“We’ve had very little of that from Obama.  He and his staff have generally behaved with basic rectitude.  Hillary Clinton is constantly having to hold these defensive press conferences when she’s trying to explain away some vaguely shady shortcut she’s taken, or decision she has made, but Obama has not had to do that....

“Second, a sense of basic humanity. Donald Trump has spent much of this campaign vowing to block Muslim immigration.  You can only say that if you treat Muslim Americans as an abstraction.  President Obama, meanwhile, went to a mosque, looked into people’s eyes and gave a wonderful speech reasserting their place as Americans....

“Third, a soundness in his decision-making process.  Over the years I have spoken to many members of this administration who were disappointed that the president didn’t take their advice.  But those disappointed staffers almost always felt that their views had been considered in depth.

“Obama’s basic approach is to promote his values as much as he can within the limits of the situation. Bernie Sanders, by contrast, has been so blinded by his values that the reality of the situation does not seem to penetrate his mind....

“To think you could pass Sanderscare through a polarized Washington and in a country deeply suspicious of government is to live in intellectual fairyland.  President Obama may have been too cautious, especially in the Middle East, but at least he’s able to grasp the reality of the situation....

“People are motivated to make wise choices more by hope and opportunity than by fear, cynicism, hatred and despair.  Unlike many current candidates, Obama has not appealed to those passions.

“No, Obama has not been temperamentally perfect.  Too often he’s been disdainful, aloof, resentful and insular.  But there is a tone of ugliness creeping across the world, as democracies retreat, as tribalism mounts, as suspiciousness and authoritarianism take center stage.

“Obama radiates an ethos of integrity, humanity, good manners and elegance that I’m beginning to miss, and that I suspect we will all miss a bit, regardless of who replaces him.”

Geezuz. Where to start? 

The above represents just about half of Brooks’ piece, but that one line, “President Obama may have been too cautious, especially in the Middle East, but at least he’s able to grasp the reality of the situation,” is the only line about this administration’s foreign policy.

What the hell has been Mr. Brooks been watching these last 7 years?  The total destruction of the Middle East under Obama’s watch.  Yes, it started under his predecessor but it’s been Obama’s lack of decisiveness, and the sickening 2012 campaign slogan “GM is alive and bin Laden dead,” while he ignored Syria when it could have been saved, which is where, as I’ve been chronicling, historians will excoriate his presidency!

An appropriate title for a book these days would be, “GM is alive and the Middle East is dead.”

The Middle East dying led to the refugee crisis that is inflicting countless disasters, and historic consequences on the European continent, in case Mr. Brooks isn’t aware.

Look, I hate the discourse of this presidential campaign, on both sides, and there are times I wonder just what I will do with my vote in November the way this thing is headed, but don’t give me this drivel about the civility of the Obama White House when the historical record shows that the world surrounding this presidency is not only worse since he took office, but it threatens to engulf us all in wars and terror of unimaginable destruction, not just in body counts, but in a crushing of the human spirit.

I have written for years of Bush 43 and Obama being two of the five worst presidents in our history, and it’s possible the one to follow will join them, so, no, Mr. Brooks, I will not miss Barack Obama.

--In what is being labeled a ‘cosmic breakthrough,’ scientists announced Thursday that, after decades of effort, they have succeeded in detecting gravitational waves from the violent merging of two black holes in deep space; confirmation of a key prediction of Albert Einstein’s General Theory of Relativity.

After years of trying to detect the merger, through two facilities in Livingston, La., and Hanford, Wash., the detectors received a signal on Sept. 14 that represented two black holes orbiting each other “at a furious pace at the very end” until the two became one.  [Washington Post]

Since Sept. 14, the signal has been going through a rigorous verification process and peer-review prior to the big announcement.

As to the consequences of this massive physics experiment, no one knows what they will be except that instead of astronomy being an exclusively visual enterprise, now gravitational waves can be used too.

I’m going to leave our own Dr. Bortrum to explain the discovery in greater detail when he posts his next column around March 1.

--Finally, astronaut Edgar Mitchell, the sixth man to walk on the Moon, died last weekend at the age of 85.  As part of the Apollo 14 mission in 1971 with Captain Alan Shepard (who famously hit the golf ball), Mitchell spent more than nine hours on the lunar surface conducting experiments.  Shepard and Mitchell brought back 94lbs of Moonrocks.

Mitchell told reporters in the days after the mission that he had experienced an “epiphany” in space and returned with “an overwhelming sense of oneness, of connectedness.”

Years later he wrote in his autobiography: “It occurred to me that the molecules of my body and the molecules of the spacecraft itself were manufactured long ago in the furnace of one of the ancient stars that burned in the heavens about me.”

In 1974, he described his lunar epiphany to the New York Times: “It was a sense of the Earth being in critical condition, a recognition of the massive insanity which had led man into deeper and deeper crises on the planet.

“Above all, I felt the need for a radical change in our culture.  I knew we were replete with untapped intuitive and psychic forces which we must utilize if we were to survive, forces that Western society had programmed us to disregard.”

In 2008, Mitchell claimed aliens had visited Earth and said he believed there was a government cover-up.

“I happen to have been privileged enough to be in on the fact that we’ve been visited on this planet and the UFO phenomena is real,” he said in a radio interview.

“It’s been well covered up by all our governments for the last 60 years or so, but slowly it’s leaked out and some of us have been privileged to have been briefed on some of it.”

NASA responded: “Dr. Mitchell is a great American, but we do not share his opinions on this issue.”

Mitchell used a then traditional route to becoming an astronaut, flying fighter jets for the Navy before becoming a test pilot.  Apollo 14 was his only spaceflight.  RIP.

---

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

God bless America.

---

Gold $1237...biggest weekly gain in 7 years; up $119 in two weeks.
Oil  $29.44

Returns for the week 2/8-2/12

Dow Jones  -1.4%  [15973]
S&P 500  -0.8%  [1864]
S&P MidCap  -1.4%
Russell 2000  -1.4%
Nasdaq  -0.6%  [4337]

Returns for the period 1/1/16-2/12/16

Dow Jones  -8.3%
S&P 500  -8.8%
S&P MidCap  -9.8%
Russell 2000  -14.4%
Nasdaq  -13.4%

Bulls  24.7...two important lows; 22.8 Nov. ’08; 26.4 Mar. ‘09
Bears  39.2...highest since fall 2011 [Source: Investors Intelligence]

Have a great week.  I appreciate your support.

And a belated Happy Birthday to my brother, who turned Jerry Kramer’s number this week.  I’m nearing Jack Lambert’s myself, which means the following 12 months I will be incredibly surly.

Brian Trumbore



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Week in Review

02/13/2016

For the week 2/8-2/12

 [Posted 11:00 PM ET, Friday]

Note: StocksandNews has substantial costs.  If you haven’t already done so, please click on the gofundme link or send a check to PO Box 990, New Providence, NJ  07974.  It is appreciated.

Edition 879

Washington and Wall Street

It was another ugly, sloppy week in global financial markets.  Only China escaped the damage...because the nation, and their markets, shut down for the week due to the Lunar New Year holiday. 

Many bourses hit multi-year lows over concerns of slowing growth, a plunge in oil to its lowest level since 2003, and central bank policy that has led to negative interest rates in parts of Europe and Japan, with suddenly talk in the U.S. of same.

This week in her semi-annual congressional testimony, U.S. Federal Reserve Chair Janet Yellen said the Fed was taking another look at negative interest rates as a potential policy tool if the U.S. economy faltered.

“We had previously considered them and decided that they would not work well to foster accommodation back in 2010,” Yellen said during her second day of testimony.  “In light of the experience of European countries and others that have gone to negative rates, we’re taking a look at them again because we would want to be prepared in the event that we needed to do it for accommodation.”

Markets have seen how negative interest rates, which are supposed to force banks to lend, thus stimulating economic growth, haven’t worked!  Period.  End of discussion. 

But Yellen was forced to admit that when the Fed finally raised its benchmark funds rate for the first time in nearly a decade, the intent was to “gradually continue to raise rates – not to cut them.”

“A lot has happened since then,” she said.  “But I have not thought that a downturn sufficient to cause the next move to be a cut was a likely possibility, and we’ve not yet seen, I would say, a shift in the economic outlook that’s sufficient to make that highly likely.”

Of course negative rates hammer bank profitability, which I discuss further below.  For now, though, Senators pressed Yellen over whether negative rates would amount to a tax on savings...whether they would be passed through to at least small depositors.

And at a certain level the banks themselves would withdraw their cash from the Fed and hold it as currency instead.

On the issue of growth, Yellen said, “There is always some chance of a recession in any year, but the evidence suggests that expansions don’t die of old age,” so while the economy has been expanding since mid-2009, however haltingly, she indicated the Fed would delay any further rate increases, after last December talking about four of them in 2016, to see how the economy shook out in light of the global picture.  Fed policymakers were closely following developments, Yellen attempted to reassure us.

But, actually, what’s the concern?  The only significant economic data point of the week, retail sales for January, came in better than expected, with the ‘control group’ component up a solid 0.6% (ex-autos, gas, and other stuff), and the Atlanta Fed’s GDPNow indicator is pegging first quarter GDP at a respectable 2.7%, which would continue our pattern of a lousy quarter, followed by an okay one.

Also today, New York Fed President William Dudley said talk of negative interest rates was premature.

So relax.

Or maybe not.  Next week promises to be another interesting one. China goes back to work and the European Union has a critical summit, particularly with regards to the issue of Britain and its looming referendum on whether to stay in or exit the EU, “Brexit.”

But you know where my focus always is...geopolitics.  Forget talk of a ceasefire in Syria, this was the worst week in this five-year catastrophe, as I spell out below.  The situation in Aleppo is devastating and will only get worse.  Bashar al-Assad is now talking of taking back the entire country, bucked up by his dangerous friends in Moscow.  Iran is talking of enhanced ballistic missiles that would be capable of carrying nuclear warheads, while participating in the carnage in Syria, Yemen and elsewhere. 

Then there’s Kim Jong-un, the amazing wacko who has executed at least 80 in the leadership, including three of the top four generals.  He is rapidly building his nuclear weapons capability and the means by which to deliver them.

Chinese President Xi is another who is on an island all by himself, politically speaking, with huge issues on his plate.  He’s not a good guy...at all. He’s liable to do anything.  [He’s also liable to be sent packing with all the enemies he’s been making.]  A crisis in the South China Sea seems inevitable.

Meanwhile, I will not in the least be surprised to wake up one day and find someone else in charge in the Kremlin, but until that moment, Vladimir Putin remains dangerous because he is without doubt scared for both his position and his life. He constantly has to watch his back as his economy crumbles and disgruntled oligarchs lose $billions.  Russia needs sanctions relief.  Will he back down in Ukraine to get it?

And all the while ISIS slithers from country to country in the Middle East and now North Africa, shifting its bases, honing its skills.  Europe is just waiting for the next attack.  Or maybe it’s al-Qaeda.  They were probably involved in the attempt to take down an airliner in Somalia with a laptop bomb.  The next one, or two, will be more powerful.

So this dreadful start to the year in the financial markets is nothing compared to what lies in the shadows.  In my 1/9/16 column, I quoted Nassim Nicholas Taleb, the noted strategist who concerns himself with potential black swan events. 

“Terrorism is a problem we’re managing, but epidemics such as Ebola are patently not. The most worrisome fact of 2015 was the reaction to the threat of Ebola, with the media confusing a multiplicative disease with an ordinary one and shaming people for overreacting.  Cancer rates cannot quadruple from one month to the next; epidemics can.  We are clearly unprepared to deal with such threats.”

He didn’t know at the time the Zika virus was about to explode.  It’s not a mass killer, yet (though three deaths have now been tied to it), but there are already disturbing facets to it.  Are we prepared?  Are we prepared for any of the above?  Of course not.

Europe and Asia

There was little economic news this week in the eurozone, with the exception of the release of a flash estimate on fourth quarter growth.  According to the European Commission’s statistics arm, Eurostat, GDP rose 0.3% over the third quarter, the second quarter in a row at that level, with the economy growing 1.5% over the fourth quarter of 2014, matching forecasts.

But Italy’s recovery is dimming, with the eurozone’s third-largest economy seeing growth of just 0.1% in Q4, missing estimates of a 0.3% rise.  This is a further blow to Italy’s banks, which I’ll touch on in a minute.  Full-year growth in Italy was just 0.7%.

Add it up and the weak picture there makes it harder for Prime Minister Matteo Renzi to meet his fiscal goals – including a pledge to bring down the nation’s sky-high debt-to-GDP ratio for the first time in eight years, which could impact Italy’s budget talks with the EU.

Greece’s economy contracted 0.6%, following a 1.4% contraction in the third quarter, i.e., recession.

Germany grew 0.3%, in line with estimates.

Meanwhile, Sweden’s central bank moved its interest rates deeper into negative territory as it seeks to figure out a way to stimulate inflation (growth is actually solid at about 3.5%), but the Riksbank doesn’t seem to understand it has little influence over the forces affecting inflation.

What you did have in a big way was a flight to safety within the euro area this week.  Eurozone periphery bonds, shades of days of yore during the various Greek crises, were shunned.

For example, the yield on the German 10-year Bund fell this week from 0.29% last Friday to 0.18% through Thursday (before finishing the week at 0.26%), while Portugal’s 10-year rose from 3.11% to 4.06% (but then fell back to 3.69%, Friday) and Greece’s 10-year yield rose from 9.33% to 11.12%, Thursday, before finishing up the week at 11.03%.  Massive swings.

I keep asking myself, with talk of the European Central Bank adding more quantitative easing (asset purchases) in March at its next meeting, what will the ECB be buying?  Does the paper the ECB says it is buying physically exist?  Well?

But regarding the banks, the dismal performance of which thus far in 2016 has helped roil global markets, Germany’s biggest bank, Deutsche Bank, finally stabilized at week’s end when it announced it was launching a $5.4bn buyback of its own bonds in an attempt to reassure markets of its financial strength.

Deutsche shares had cratered 9.5 percent on Monday, as it was forced to issue an unscheduled announcement reassuring investors, and employees, that it had sufficient reserves to pay 350m euros in coupons on its debt due in April.

CEO John Cryan insisted the bank was “absolutely rock solid.”

The problem has been that no one seems to know what’s really on Deutsche Bank’s books, as Europe’s largest banks, as a rule, are far more opaque than their U.S. counterparts.  In this case, just what is Deutsche liable for?

The Euro Stoxx banks index recovered some on this news, but was still down about 8 percent this week and 28 percent for the year last I saw.

Editorial / The Economist

“For those who worry that a repeat of the crisis of 2007-08 is imminent, this week brought fresh omens.  Shares of big banks tumbled; despite a mid-week rally, American lenders are down by 19% this year, European ones by 24%. [Ed. these numbers are not Friday figures.]  The cost of insuring banks’ debts against default rose sharply, especially in Europe.  The boss of Deutsche Bank felt obliged to declare that the institution he runs is ‘absolutely rock solid’; Germany’s finance minister professed to have no concerns (thereby adding to the concerns).  This is not 2008: big banks are not about to topple. But there are reasons to worry, and many of them converge on one country.

“Start with the better news. Banks are more strongly capitalized than they were.  Even in Europe, where lenders have been slower than their American counterparts to raise capital, banks have plumped up their core equity cushions from an average of 9% in 2009 to 12.5% in 2015.  Managers at European banks are making a renewed effort to adjust to the post-crisis landscape.  New rules on everything from capital to liquidity are forcing them to change.  John Cryan, Deutsche’s newish co-chief executive, was brought in to trim its investment bank.  He is jettisoning whole divisions, and suspended the dividend this year and last.  Credit Suisse is undergoing similar surgery.  Just now, this is weighing on the banks’ share prices.  Yet, however painful for investors, the sensible goal is ultimately to create slimmer, safer, more profitable outfits.

“Also salutary, if painful, is how investors in bank debt are coming to understand that they bear greater risk than they did.  New European rules that came fully into force at the start of this year stipulate that troubled banks must deal with capital shortfalls by ‘bailing in’ holders of bank bonds before any call is made on the taxpayer.  The chance that bondholders might lose money suddenly seems more real.  The turmoil at Deutsche this week stemmed partly from fear that the bank might struggle to pay interest next year on a type of bond that is designed to act as a buffer in a crisis.*  There are some design flaws in the bail-in regime, but the possibility that European banks are at last repairing themselves at a cost to their investors is the silver lining to this week’s spasms.

“The clouds, alas, still loom.  One source of anxiety is the health of the world economy. The factors that spook markets more broadly – the slowdown in China, plunging commodity prices and indebted energy firms, political upheaval from Greece to New Hampshire – all weigh heavily on banks in particular.  Banks do well when the economies they serve are growing, and miserably when they are not....

“The receding prospect of higher interest rates leaves American banks with less hope of widening the margin between the rates they pay depositors and what they charge for loans.  In Japan, where bank shares have fallen by 24% this month, and Europe central banks have imposed negative rates, in effect levying a fee on some reserves – one that banks have not yet been able to pass on to depositors.  With the economic outlook growing gloomier, margins being squeezed and restructuring costs still hitting profits, investors have good reason to fret.

“Worse, some countries appear to have taken so long to deal with their banks that they will now struggle to clean them up at all.  The IMF reckons that the total amount of non-performing debt in Europe was around $1.13 trillion at the end of 2014.  Bail-in is an especially ugly prospect in countries where bank debt is owned not only by diversified financial institutions but also by local retail investors.  Under such conditions, politicians may find that they cannot force the cost of cleaning up balance-sheets on voters without causing uproar.”

*This is a reference to ‘coco bonds,’ contingent convertible bonds that transform from debt to equity when certain conditions are met, also known as additional tier 1 capital bonds.  Cocos pay a fixed coupon, but convert to equity or can be written off when losses force a bank’s capital below a certain threshold.  The issuer can also miss coupon payments and with this prospect no longer seemingly remote, it helped lead to the market anxiety as eurozone banks are loaded with them.

So we circle back to Italy, where non-performing loans make up 18% of their banks’ total lending, with retail investors owning about $225 billion of bank bonds!  Uh oh.  And you saw the GDP figures for Italy.

Prime Minister Renzi is in a major bind.  He had a plan to buy back bad debts from the banks, but any discount could be borne by retail investors, who were clobbered when four small banks went under last year.  To be continued....

On the migration front....

NATO announced it would deploy ships to the Aegean Sea in an attempt to stop smugglers moving migrants from Turkey to Greece, Secretary General Jens Stoltenberg said on Thursday.  The alliance will enhance its surveillance of the Turkish-Syrian border as well to more closely monitor the flow.

Officials emphasized that the patrols are targeting the smuggler, not on stopping refugees from trying to make the journey.

Separately, the European Union at its summit next week will call on countries at the bloc’s borders, see Italy and Greece, to refuse entry to people who have not made an asylum claim “despite having had the opportunity to do so.”  Greek Prime Minister Alexis Tsipras has said the EU’s demand it build more migrant processing centers risks making Greece a “black box” for refugees who will become trapped on their way to the heart of Europe as the other countries begin to slam the door.

The EU did agree to send 3bn euro in aid to Turkey to bolster its efforts to stem the flow.

Finally, as noted above, this is a big week for the UK and its negotiations with the European Union for better terms of membership.

Anne Applebaum / Washington Post

“If the British people vote in a referendum to end their country’s relationship in the European Union, the world will not end. The sky will not come crashing down to earth; the oceans will not submerge the land.  Or at least we think they won’t. Because in fact, we have absolutely no idea what will happen.

“This extra dollop of uncertainty in an uncertain world has been brought to us by the British prime minister, David Cameron, and the origins of the problem go back a few years. To quell the anti-European feelings in a part of his Conservative Party, and to ward off a challenge from the UK Independence Party, Cameron promised that if he were reelected in 2015 (which for a time looked unlikely), he would renegotiate the terms of membership and then hold a referendum on British membership of the EU.

“From the beginning, it was clear that the renegotiation would be nothing of the sort.  Britain is already exempt from the Schengen Agreement, which eliminated borders in much of Europe, and it isn’t a part of the euro currency or the banking union.  Because the rest of Europe is coping with an extraordinary tide of refugees, a political and military challenge from Russia, and the ongoing economic crisis in Greece, nobody was ever going to reopen discussion of the major treaties that govern Europe’s ‘single market,’ the continent-wide free-trade zone, of which Britain is in any case a major beneficiary.

“Instead, Cameron asked for, and has just received, a number of promises – Britain will not be forced to join a European political union, which isn’t happening anyway – plus an ugly little ‘opt-out’ from EU laws: Europeans working in Britain will receive fewer benefits than British citizens.  The response has been unsurprisingly negative.  ‘Tinkering with the small print,’ cried the Daily Mail.  An ‘establishment stitch-up,’ said a headline in the Daily Telegraph.  With that exercise out of the way, the referendum campaign was launched.  The vote may take place as soon as June.  Opinion polls show the result could go either way.

“What could happen if Britain votes to leave?  As I said: We don’t know.”

More on the topic next week following the summit.

Turning to Asia, we got a break with China being closed.  No economic data or stock market crashes.  The People’s Bank of China did say last Sunday that the world’s largest stockpile of foreign currency plunged by $99.5 billion last month, to $3.23 trillion, following a $107.9 billion plunge in December.

It’s been a rapid outflow since August, when the central bank unexpectedly devalued the yuan, an action that backfired, with investors selling the currency in big numbers, which forced the central bank to defend the currency with its reserves.

As for Japan, after instituting negative interest rates on some bank reserves the prior week, the yield on its 10-year bond hit zero on Tuesday, before closing Friday with a yield of 0.07%.

But the benchmark Nikkei stock index fell 11% on the week, its worst performance since 2008, and is now down 21% for the year, as steep as the losses on China’s main barometer.  In Japan, it’s the same story as in Europe and the U.S. ...the bank stocks were hammered over concerns about their profitability given negative rates.

Plus you had the perverse situation where the yen was strengthening even though the BoJ was going negative, the exact opposite of what is supposed to happen.  Why?  Well the yen is seen as a safe haven in the region regardless; certainly better than the Chinese yuan, let alone the currencies of the shaky emerging markets in Asia.  A strong yen hurts exports, and it was exports that had been propping up Japan, though it still continues its cycle of dipping in and out of recession.

In a nutshell, Abenomics, the economic policy of Prime Minister Shinzo Abe that was supposed to revitalize Japan after decades of stagnation, hasn’t worked.  It hasn’t because he never instituted his reform plan for structural overhaul, such as opening up the workforce to more women and foreign workers.

It’s just a mess, I tell ya!  Now who wants a Kirin?

Street Bytes

--Wall Street cut its losses with a 2% rally on Friday, 313 points in the Dow Jones, which still finished down 1.4% for the week to 15973.  The S&P 500 fell 0.8% and Nasdaq 0.6%.

Friday’s rally was helped by a rebound in oil prices and energy stocks, as well as big gains in the financial sector, after sickening losses thus far in 2016.  It helped that a certain CEO made a big purchase of his own stock on Thursday, a topic I address below.

For the record, across the pond, London’s FTSE index hit a 3 ½-year low this week before a gain on Friday, while the Euro Stoxx 600 hit its lowest level since 2013.

--U.S. Treasury Yields

6-mo. 0.38%  2-yr. 0.71%  10-yr. 1.75%  30-yr. 2.60%

The yield on the 10-year, intraday, traded below 1.60% early Friday, pre-market opening, before whipping back up to 1.75% on the heels of the equity rally, thus reversing the flight to safety trade.

--The average price for a gallon of gasoline in the U.S. this week was $1.74.

--The U.S. oil-rig count fell another 28 to 439, according to Baker Hughes Inc.  There are now about 66% fewer rigs of all kinds from a peak of 1,609 in October 2014 (including for natural gas).

--Oil prices on Friday rebounded from a 13-year low of around $26.00 to $29.44, but it was still down on the week.  Driving the rally was the hope OPEC might be headed towards a production cut, after a UAE energy minister said some members were ready to cooperate in order to reduce supply.  But no one seriously believes this.

--Stockpiles of crude at the key delivery hub of Cushing, Oklahoma, hit a record high this week, though overall U.S. inventories dropped, according to the Energy Information Administration.

The International Energy Agency warned that global stockpiles will continue to grow this year and that it “is very hard to see how oil prices can rise significantly in the short term.”

The IEA said output from OPEC is not expected to rise as strongly as it did in 2015, but powerful members of OPEC look set to pump hard.

The IEA said Iraqi output in January reached a new record and more increases could follow.  Iran is accelerating production, post-sanctions, and preliminary data suggests the Saudis are still increasing shipments.

--Anadarko Petroleum, one of the largest independent U.S. oil and gas production companies, became the latest in the sector to cut its dividend in response to the plunge in prices, reducing the quarterly payout by 81 percent from 27 cents to 5 cents per share, which saves the company about $450m per year.

--Rio Tinto, the Anglo-Australian miner, said it will pursue a more flexible dividend policy and is seeking to cut a further $3bn from its cap-ex budget over the next two years.

--AP Moller-Maersk, the Danish container shipping giant, is always a good bellwether for the global economy and it warned this year won’t be any better than the past year and that it expects underlying results to be “significantly lower.”

Maersk’s businesses range from shipping to oil and gas and profit in 2015 fell 82 percent as not only low crude prices, but weak trade and uncertainty over the future direction of the economy hurt.

Demand from emerging markets has been especially weak, plus you have an over-supply of vessels in the industry.  Everyone and their mother, seemingly, was ordering ships four years ago when future growth was expected to be much stronger, and now all those ships are being delivered.

Maersk has been cutting thousands of jobs.  Even cargo rats are being kicked out onto the streets.  [Though I should add Maersk’s rats are multi-lingual.]

---Symptomatic of the problems in the banking industry, shares in Credit Suisse Group AG plunged to a 27-year low amid doubts about CEO Tidjane Thiam’s restructuring plans.  [But on Friday, Norway’s sovereign wealth fund boosted its stake in CS.]

France’s Societe Generale SA was another missing fourth-quarter profit estimates.  Banks across Europe have reported a slump in trading revenue, hurt by the drop in energy prices.  And then you have slumping emerging markets and strict capital requirements.

Oh, and those record low interest rates.  Or as Thiam told investors on Wednesday, “It’s not a great time to be a bank.”

--But JPMorgan Chase & Co. chairman and CEO Jamie Dimon thought it was a good time to buy bank stocks, buying 500,000 of his own firm’s shares.  Regulatory filings show he paid about $26.6 million for the stock, at prices ranging from $53.14 to $53.30 each.  Shares in JPM finished the week at $57.45, for a cool $2 million+ profit for Mr. Dimon just on the new shares.  I’d ask him to buy me dinner but we don’t know each other.

--In a big blow to President Obama’s climate change agenda, the U.S. Supreme Court on Tuesday temporarily blocked the administration’s effort to regulate emissions from coal-fired power plants.

The 5-4 vote, with the court’s four liberal members dissenting, was unprecedented in that the Supreme Court had never granted a request to halt a regulation before review by a federal appeals court.

But the order will likely head back to the high court after an appeals court considers a challenge from 29 states, corporations and industry groups.

What it does is certainly signal where the Supremes will rule when they get it back, and it also calls into question the landmark Paris climate change pact from December.  President Obama back then pointed to his power plant rule as an example for other nations.

The regulation was initially issued last summer by the EPA and had called for the nation’s existing power plants to cut emissions by a third by 2030, while closing hundreds of heavily polluting coal-fired plants.

The states in opposition have economies that largely rely on coal mining or coal-fired plants.

--Shares in Tesla, which had tumbled to a two-year low, jumped late Wednesday after the electric carmaker predicted it would deliver more vehicles than expected this year, putting off the need to return to the capital markets to raise extra cash, though it reported a fourth-quarter loss of $320 million owing to heavy development costs on two new models.  Revenue rose 27% to $1.21 billion.

Tesla said it expected to deliver 80,000 to 90,000 vehicles this year, up from 75,000 to 80,000 as currently forecast.

It delivered 50,658 in 2015, which was fewer than predicted.

CEO Elon Musk admitted Tesla over-reached with its Model X, of which only 206 were delivered in the fourth quarter of last year as it’s been a slow ramp-up of production of the vehicle owing to manufacturing problems linked to the design.

Tesla said it would deliver 1,000 of the Model X a week by the second quarter.

--Elon Musk’s SolarCity had its biggest one-day decline on record this week after the solar panel maker reported fewer rooftop solar systems and issued disappointing guidance for the current quarter.  The shares fell nearly 30% on the news.

--Shares in Cisco Systems rallied after the networking equipment company reported better than expected results in the latest quarter despite weakening global demand.

Revenues were flat with a year earlier, but this beat the Street, as did earnings.

--Shares in Boeing Co. fell sharply as concerns about the company’s accounting method for its jetliners came into question.  Boeing uses a system called program accounting, which enables it to book anticipated future profits as part of current earnings, which is compliant with Generally Accepted Accounting Principles but rarely used.

So some investors and shareholders worry that Boeing has built long-term assumptions when the future is too uncertain.

Frankly, I did not know Boeing employed this but have long wondered, especially during times of uncertainty such as today, how Boeing can act as if those placing orders for their jetliners won’t then cancel them.

Critics of the accounting method say that Boeing is making arbitrary conclusions on the future, especially when the jets being booked aren’t even in production yet.

Back in 2002, Boeing paid $92.5 million to settle a class-action suit alleging it manipulated program accounting on the 777 jet to shield the timing of cost overruns and production problems.

--Walt Disney reported better than expected earnings fueled by success of Star Wars: The Force Awakens. 

CEO Bob Iger also said the ESPN unit had added new subscribers since the end of the quarter, which flies in the face of those who are citing cord-cutting concerns (though for the quarter it lost more).

But the Street really didn’t believe such talk and sent the shares down further.

Nonetheless, operating income at the movie studio was more than $1bn for the first time in the quarter, and operating income at the theme parks rose 23 percent to $860m.

Of the company’s four divisions, only media networks, which includes ESPN, reported lower operating income, though still had profits of $1.4bn.

Overall, Disney revenue rose 14 percent to $152.bn, with a record ‘net’ income of $2.88bn for the quarter.

The Force Awakens, by the way, crossed the $2-billion mark at the box office last week, becoming just the third film to reach that level.  Iger said global retail sales for Star Wars products exceeded $3 billion in the fiscal first quarter.

--Shares in Twitter hit an all-time low after the company reported its first quarter with no growth in users since it went public, 320 million, unchanged from the third quarter.  The company also forecast first-quarter revenue below analysts’ estimates.

The shares did rally back some on Friday as Visa took a stake in Twitter CEO Jack Dorsey’s other company, Square.

--Time to elevate the Zika virus to Street Bytes, as it will have an impact on economic activity for the foreseeable future.  Forget the few Americans who may be cancelling cruises or flights to the Caribbean, Ground Zero, Brazil, could take a massive financial hit on the Rio Olympics in August, even as the communications director for the Brazil Olympic Committee said this week, “Rio will welcome the world and its athletes to a very safe environment,” citing that August is part of Brazil’s winter and mosquitoes are scarce.  Good try, Mr. Minister.

This week scientists revealed they have detected the virus in saliva and urine, raising the question of whether Zika can be transmitted by means other than mosquitoes.

And a report in the journal JAMA Ophthalmology notes that researchers are finding some babies infected with Zika have eye abnormalities that threaten vision; such was the case in 10 of 29 newborns examined in Salvador, Brazil, that were presumed to have been infected with the virus.

But Zika is actually a small relative issue compared to the other problems plaguing Brazil, such as an economy in depression and a president, Dilma Rousseff, facing impeachment proceedings.

And as for the Games themselves, Brazil has made no headway in cleaning up the severely polluted venues that are to be used for the sailing and rowing events.  Long before Zika emerged as a threat, this would have been enough to keep me away.

Meanwhile, Zika is spreading rapidly across Venezuela and Colombia, both of which share a long border with Brazil.  And the Centers for Disease Control and Prevention says watch out Puerto Rico.

--From Liz Mak / South China Morning Post

“Computer virus researcher Kaspersky Lab issued a warning to financial institutions this week that bank-robbing Trojans and other malware launched by Russian hacking groups are making a comeback and may be deadlier than ever as they use more sophisticated malware to deploy APT-style attacks.

“An APT – advanced persistent threat – attack represents a set of hacking processes that is typically very hard to detect due to its covert nature and lengthy running time....

“The malware was built by Russian gangs with the known involvement of mainland Chinese and Ukrainian criminals.  Together, they infected hundreds of financial institutions in over 30 countries.

“Metel, the latest addition to the list of cyber threats targeting banks, enables criminals to gain control of a bank’s system handling money transactions by hijacking its call centers and support computers, through which they can roll back ATM transactions using automated sequences.

“This means the balance on clients’ debit cards remain unchanged regardless of the number of ATM transactions undertaken.”

Oh brother.

--The U.S. Postal Service posted its first quarterly profit since 2011, earning $307 million after a holiday delivery season that beat expectations.

The USPS focused on the season in an attempt to take business away from UPS and FedEx Corp. and the USPS, for the first time in recent years, delivered more packages than both of these rivals.

Letter carriers delivered about 660 million packages over the holidays, up from an initial forecast of 600 million, while UPS delivered 612 million, which was short of its forecast of 630 million.

--I can’t imagine what it must have felt like on Royal Caribbean’s Anthem of the Seas as the captain stupidly took the 4,000 passengers through a monster storm with hurricane-force winds on the way from Bayonne, N.J. to Port Canaveral, Florida.  The storm had been forecast for days, making the actions of the cruise liner even more inexplicable.

Royal Caribbean is the operator that advertises heavily (at least in the New York area) with those obnoxious commercials touting the on-board musical “We Will Rock You.”  A 2:30 p.m. performance of this was actually just starting when all hell broke loose and the captain ordered everyone back to their cabins.  I no doubt would have been throwing up watching the show.

--Burger King is adding hot dogs!  I’m there.

20 billion hot dogs are sold in the U.S. each year, by the way.

Foreign Affairs

Syria/ISIS/Russia/Turkey: Diplomats in Munich agreed Friday to work toward a temporary “cessation of hostilities” in Syria’s civil war within a week, but efforts to secure a lasting cease-fire fell short.  The U.S. had wanted an immediate cease-fire, while Russia proposed one to start on March 1.

So despite all the excitement on Thursday I’m not sure where things stand.  Foreign ministers from the International Syria Support Group sealed an agreement to “accelerate and expand” deliveries of humanitarian aid to besieged Syrian communities.

Secretary of State John Kerry, who on Thursday was trumpeting a cease-fire, had to admit Friday that if a cessation-of-hostilities agreement could be achieved, it would only be a “pause” in fighting.  And these are just “commitments on paper” only.

“The real test is whether or not all the parties honor those commitments and implement them,” he told reporters early Friday.

Prior to this, Russian Prime Minister Dmitry Medvedev said all powers must sit at the negotiating table to forge an end to the war “instead of unleashing a new world war.”

“The Americans and our Arab partners must think well: do they want a permanent war?”

This was in response to a proposal from Saudi Arabia to send in ground troops to Syria.

As for the humanitarian crisis, nothing of consequence will occur to alleviate the suffering without a real cease-fire.

Peace talks are now expected to resume around Feb. 25, but this aspect is a giant, tragic farce as the opposition is highly unlikely to participate, especially now that Syrian President Assad said in a rare interview on Thursday, released Friday, that he intends to retake “the whole country” from rebel forces, though he noted “the solution will take a long time and will incur a heavy price.”

Assad added he supported peace talks but said negotiations did not mean “we stop fighting terrorism.”  [AFP / BBC News]

Syrian forces continue to make major gains, with a campaign to encircle the rebel-held half of Aleppo, Syria’s largest city – that would represent a significant defeat for the rebels.

Russia accused the U.S. of bombing Aleppo and then blaming Russia.  A Defense Ministry spokesman said:

“At around 13:55 Moscow time on Wednesday, U.S. Air Force A-10 fighter jets entered Syrian airspace from Turkey and dropped bombs on Aleppo.”

Igor Konashenkov then said Pentagon spokesman Steven Warren alleged that Russian planes destroyed two hospitals in Aleppo, a claim Russia refutes.

The facts are that Russian airstrikes destroyed the two hospitals, leaving 50,000 without critical care, according to Col. Warren.

Yaroslav Trofimov / Wall Street Journal

“Defying U.S. predictions of a quagmire in Syria, Russia is achieving strategic victories there with this month’s Aleppo offensive. The question now is whether this is a turning point that hastens the five-year war’s end or the trigger for a counter-escalation that will drag other regional countries into the conflict.

“Few expect that Moscow’s main target – the moderate rebels backed by Turkey, Saudi Arabia and the U.S. – would now be forced to settle the conflict on the Kremlin’s, and Syrian President Bashar al-Assad’s, terms.

“ ‘Their victory in Aleppo is not the end of the war.  It’s the beginning of a new war,’ said Moncef Marzouki, who served in 2011-14 as the president of Tunisia, the nation that kicked off the Arab Spring, and who recently visited the Turkish-Syrian border.  ‘Now, everybody would intervene.’

“To be sure, Turkey and Saudi Arabia have few easy options to counter Russian military might in Syria.  But because of national pride – and internal politics – neither can really afford to have the rebel cause in which they have invested so much wiped out by Moscow and its Iranian allies.

“If only for that reason, the tone in Moscow is muted.

“ ‘It’s too early to speak about success,’ said Dmitri Trenin, director of the Carnegie Moscow Center and a former Russian army officer.  ‘The risk of escalation after Aleppo has grown.  We are getting pulled into an increasingly dangerous game – all of us, not just Russia, but also Turkey, and Saudi Arabia, and the U.S.’....

“Saudi Arabia has already spoken, in vague terms, about its readiness for a ground deployment in Syria [Ed. ditto UAE.].  While the Saudis say that their aim is to participate in the campaign against Islamic State under a U.S. umbrella, if Saudi troops are deployed to areas controlled by Sunni Arab rebels, they would in effect protect them from the Syrian regime.

“Turkey’s President Recep Tayyip Erdogan also raised the prospect of a ground-troop deployment in Syria this week, saying that he regretted not participating in the 2003 U.S.-led invasion of Iraq.

“ ‘We don’t want to make the same mistake in Syria as we made in Iraq,’ Mr. Erdogan said.

“While Turkey has already deployed long-range artillery along the border, any military incursion without U.S. involvement would carry the risk of a direct military confrontation with Moscow....

“The Turkish military is fully aware of the risks and is reluctant to embark on it without international cover.  Yet, for Mr. Erdogan – and the Saudis – watching the Syrian rebellion get pulverized isn’t an option, either.”

Josh Rogin / Bloomberg News

“In the days since the collapse of the Syria peace talks championed by Secretary of State John Kerry, the humanitarian catastrophe in northern Syria has grown, tens of thousands of new refugees were created and the Russian- and Iranian-backed killing of civilians has increased.

“These are all consequences of the flawed U.S. strategy, according to the lead negotiator for the Syrian opposition.

“Riyad Hijab was prime minister of Syria in 2012 under the dictator Bashara al-Assad; he became the highest-ranking defector from the regime when he switched sides and joined the rebels.  He’s now the leader of the High Negotiating Committee that represented the Syrian opposition at last week’s meetings in Geneva, which collapsed after two days....

“Hijab says that Kerry’s approach – to try to persuade Assad and Russia to negotiate while the offensive continues – has actually made things much worse.

“ ‘The administration is saying it is testing the good faith of the other side,’ Hijab told me in a phone interview on Monday.  ‘But when you are testing these things and it fails, the price that is being paid is horrendous death and the expansion of extremism and terrorism on the ground.’....

“In the eyes of the Syrian opposition, Russia and Iran are making a mockery of the peace process, and Kerry’s reluctance to acknowledge this is putting them in deadly harm....

“ ‘The failures of the negotiations end up lowering the credibility of the moderate opposition in front of the Syrian people,’ said Hijab.  ‘United States credibility is plummeting within the population of Syria but also in the region as a whole.’....

“Moscow wants the peace talks to fail, Hijab said.  He accused the Russian air force of using illegal cluster bombs indiscriminately against civilians.  (Human rights groups support those claims.)  ‘The situation has taken a horrible turn, specifically in terms of the scorched earth policy of the Russian aircraft and the way that they are bombing, literally destroying everything,’ he said....

“The next president, whether Democrat or Republican, will certainly make big changes to U.S. policy to Syria.  But over the next 11 months the situation can get much worse.  There’s a risk inherent in deepening America’s involvement, but Obama must weigh that against the many costs of diplomacy when it fails.”

German Chancellor Angela Merkel on Monday condemned Russia’s air strikes.

“We have been horrified by what has been caused in the way of human suffering for tens of thousands of people by bombing – bombing primarily from the Russian side,” she said.

The Kremlin called for a careful and responsible attitude when making statements about Syria and said there is no credible evidence to back up Merkel’s claims, which were also made by European Council President Donald Tusk on Tuesday.

Editorial / Washington Post

“An extraordinary new crisis is beginning to unfold in Syria, a country that already has suffered through some of the worst war crimes, humanitarian depredations and refugee flows in recent history.  Russia, Iran and the Syrian government are conducting a major offensive aimed at recapturing the city of Aleppo and the rebel-held territory that connects it to the border with Turkey....

“This campaign is being waged in open defiance of a UN Security Council resolution adopted in December, which required the Syrian government to provide humanitarian access to areas under siege and demanded an end to the shelling and bombing of civilian areas.  Russia, which voted for the resolution, is indiscriminately bombing civilian targets in the Aleppo area, using banned cluster munitions, according to Human Rights Watch.  Iranian commanders are on the ground, directing attacks by Shiite fighters from Lebanon, Iraq and Afghanistan.

“In the face of this onslaught, which promises to destroy any chance of an acceptable end to the Syrian civil war, the Obama administration has been a study in passivity and moral confusion.  President Obama is silent.  Secretary of State John F. Kerry has been reduced to reading the text of Resolution 2254 aloud, as if that would somehow compel a change in Russian behavior....

“Mr. Kerry conceded last week that Moscow might have lulled him with ‘talk for the sake of talk in order to continue the bombing,’ adding, ‘We will know that in the course of the next few days.’

“If he is honest, he will now acknowledge his error....

“It might still be possible to rescue the Syrian opposition and the hundreds of thousands of civilians at risk – but only if the United States and its allies act quickly to bolster rebel forces and create havens for refugees.  The alternative – to hope that Russia and Iran stumble, or suddenly embrace a truce – has already been proven a fantasy.”

Editorial / Wall Street Journal

“President Obama and John Kerry are lucky the presidential primaries are occupying Washington’s attention, because otherwise more people might notice the human and strategic catastrophe unfolding in Syria.  Even as the Secretary of State was touting his Syrian peace talks in Geneva last week, Bashar Assad, Russia and Iran were expanding their bloody siege against the opposition around Aleppo....

“The Syrian disaster is becoming so painfully obvious that even members of the pro-Obama national security establishment are calling for the President to drop his let-it-burn policy.  Veteran diplomats Nicholas Burns and James Jeffrey wrote last week in the Washington Post that the Syrian war ‘has metastasized into neighboring countries and the heart of Europe.  It could destabilize the Middle East for a generation.’  No kidding....

“In other Syria news, Mr. Kerry trumpeted U.S. contributions at a United Nations conference in London last week to drum up financial support for the refugees, who total an estimated 11 million during the civil war in addition to more than 250,000 dead.  The U.S. has pledged nearly $1 billion, and if nothing else perhaps the money can buy more coffins.”

Separately, 50,000 Syrian refugees are on the move towards the Turkish border at week’s end and that number could reach 1.5 million...1.5 million...if the city of Aleppo is completely razed.  It’s already bombed out, but the Syrian army and its allies, including Russia from the air, would leave this place totally destroyed.

Finally, I have been using a death toll in the Syrian war of 300,000, though it was clearly over that.  The UN, however, hasn’t updated its estimation of 250,000 since August 2015.  My figure of 300,000 came from various rights groups last fall, as well as common sense.

Well, Thursday, the Guardian newspaper, citing the Syrian Center for Policy Research, said the figure is 400,000 killed and another 70,000 dead due to a lack of basics such as clean water and healthcare.

Coupled with those injured in the conflict, that amounts to more than 11 percent of the population.

The SCPR calculates an estimated 1.9 million have been wounded going back to 2011 when the violence began.

Overall economic losses are estimated at $255 billion, the Guardian said.

Iran: The defense minister was quoted as saying this week that Iran would unveil an upgrade of its Emad ballistic missiles this year, which flies in the face of criticism from the United Nations and sanctions from the United States.

Iran also said it would start taking delivery of an advanced Russian S-300 surface-to-air missile defense system in the next two months, Hossein Dehghan added – a system that was blocked before the nuclear deal was completed.

Washington has said the Emad violates a UN resolution, and the U.S. imposed fresh sanctions last month against those Iranian businesses and individuals associated with the missile program.

The Emad, which Iran first tested in October, is designed to carry a nuclear warhead.

But Defense Minister Dehghan was quoted by the Fars news agency as saying: “The Emad missile is not a violation of the nuclear deal or any UN resolution since we will never use a nuclear warhead (on it).  It’s an allegation,” he said, adding that mass production would begin in the near future.  [Reuters / Daily Star]

Libya: ISIS, fearing Western air strikes, now appears to be leaving some of their bases in Libya and heading south, including to Niger and Chad, or the lawless Sahel region, which could then be used as a new springboard.

Niger and Chad are already dealing with militants loyal to Nigeria’s Boko Haram, as well as an al-Qaeda presence that came over from Mali when France intervened there. [Emma Farge / Reuters]

The U.S. estimates there are 5,000 ISIS fighters in Libya, double what they thought earlier.

North Korea: I went to post last week around midnight on Friday night and wrote that it seemed North Korea was moving up its ballistic missile test to as early as Sunday.  About five hours later, I began receiving my news wire alerts that, guess what, the test could indeed be Sunday.  How did I know when others seemingly didn’t?  I read a lot....and then make a judgement.

The ballistic missile carried a satellite that was first said to be in a wobbly orbit, but then the U.S. confirmed it had achieved a stable one, which regardless of whether the satellite is actually performing any duties is another achievement.

In response, the U.S. Senate unanimously passed tough new sanctions against Pyongyang on Wednesday for its flagrant violations of international law, including the testing of nuclear weapons and missile technology.  The House followed suit.

The measure is targeting the North’s ability to access funds needed for further development of both its nuclear and missile programs.

South Korea moved to close down the jointly run industrial complex in the border city of Kaesong, which shuts off a major source of income for the regime.  [Pyongyang said the move to close Kaesong was a “declaration of war.”]

Japan is also imposing new sanctions.

In his annual assessment of global threats delivered to Congress on Tuesday, Director of National Intelligence James R. Clapper said North Korea had expanded a uranium enrichment facility and restarted a plutonium reactor that could start recovering material for nuclear weapons in weeks or months.

Meanwhile, in Pyongyang, the chief of the Korean People’s Army General Staff, Gen. Ri Yong-gil, was apparently executed on corruption and other charges, according to South Korea’s Yonghap News Agency.

China: Related to the above, Beijing issued a strong rebuke to Seoul over the latter’s decision this week to restart missile defense talks with the United States, which would lead to the deployment of an anti-missile system, THAAD, developed by the U.S., that is meant to neutralize the threat from North Korea.

China objects because it doesn’t want to see systems such as this help unite South Korea, Japan and the U.S. in a military alliance.

The deployment of THAAD could severely compromise China’s air defense zone, and could be used against Chinese activity over the Taiwan Strait and in the South China Sea.

As for the North Korean missile test itself, China expressed “regret” over the North’s disregard for the international community’s objections.

“We hope all concerned parties remain cautious and do not take further action that could further escalate the [Korean] peninsula’s situation,” said a foreign ministry spokeswoman.

On a totally different issue, Britain has concluded missing Hong Kong bookseller Lee Po was “involuntarily removed” from the city, in “serious breach” of the Sino-British Joint Declaration signed three decades ago.

British Foreign Secretary Philip Hammond wrote in the UK’s latest semi-annual report on its former colony that the disappearance of Lee and his business associates “undermines the principle of ‘One Country, Two Systems,’ which assures Hong Kong residents of the protection of the Hong Kong legal system.”

On Tuesday, unrelated, Hong Kong riot police clashed with demonstrators after police tried to remove illegal street stalls set up for Lunar New Year celebrations, the worst violence since pro-democracy protests in 2014.  About 90 sustained injuries and 54 were arrested.  I don’t want to make too much of this...I’ll call it a one-off compared to 2014’s far more serious incidents.

Russia: The aforementioned James Clapper said in his Senate testimony on Tuesday that Russia is “paranoid” about NATO and is likely to continue “aggressive” actions this year to support its claim to great power status.

Clapper said Russia topped the list of “leading threat actors,” followed by China, Iran and North Korea, as published in the “Worldwide Threat Assessment.”

“Russia is assuming a more assertive cyber posture based on its willingness to target critical infrastructure systems and conduct espionage operations even when detected and under increased public scrutiny,” Clapper said in the report.

“I think the Russians are fundamentally paranoid about NATO.  They are greatly concerned about being contained.  And, of course, very, very concerned about missile defense, which would serve to neuter what is the essence of their claim to great power status – which is their nuclear arsenal.”

One area to watch is above the Arctic Circle, where Russia will continue to build up its military presence as it seeks international support for its continental shelf natural resources claims, according to the report.

Separately, last week I noted that Chechen leader Ramzan Kadyrov had posted an online video featuring Russian opposition leader Mikhail Kasyanov in the crosshairs of a sniper rifle.

Just days later, Kasyanov was targeted by a “physical attack” at a Moscow restaurant.

The attack, as reported in the Moscow Times, was seemingly more a threat rather than an attempt to inflict physical harm, but a group of about 10 attackers threw food and other objects at Kasyanov, while denouncing his political views, and then they fled in cars.

The police refused to do anything after Kasyanov filed a report calling for the attackers to be brought to justice.

Venezuela: Editorial / Washington Post

“The political drama in Venezuela, where a populist, authoritarian government is attempting to cling to power despite losing a legislative election by a landslide, tends to obscure a deeper crisis.  Though it is awash in oil, the country of 30 million people is facing an economic collapse and a humanitarian disaster.

“Venezuela already suffers from the world’s highest inflation rate – expected to rise from 275 percent to 720 percent this year – one of its higher murder rates and pervasive shortages of consumer goods, ranging from car parts to toilet paper.  Power outages and the lack of raw materials are forcing surviving factories and shops to close or limit opening hours.  According to a local survey cited by the Economist, the poverty rate is 76 percent, compared with 55 percent when Hugo Chavez, the late founder of the regime, took power in 1999.

“Worst of all, the country is running desperately short of food and medicine.... The chairman of the largest domestic food producer has said that if the government does not quickly seek aid to import food, it ‘will cause grave harm to ordinary Venezuelans.’”

And there is the debt.

“At current oil prices, Venezuela will earn less than $18 billion from exports this year, while it owes $10 billion in payments on the $120 billion in debt it has racked up.  That leaves $8 billion for imports, but even after contracting 20 percent, imports were $37 billion in 2015 – and Venezuela now imports most of its food.  Even with a debt default that the markets expect, it’s hard to see where additional hard currency will come from: The country broke relations with the International Monetary Fund almost a decade ago, has no ability to obtain private loans and has nearly exhausted its liquid reserves.  It already owes China, its latest benefactor, $50 billion.”

Friday, Venezuela’s highest court cleared the way for President Nicolas Maduro to enact economic emergency measures, overruling the new opposition-controlled legislature, which no doubt sets the stage for an explosive confrontation between the two.

Maduro now has the power for 60 days to force companies to increase production, to intervene in business, to speed up the purchase of essential imports and limit capital flows.

Random Musings

--New Hampshire results....

Republicans

Donald Trump 35 percent
John Kasich 16
Ted Cruz 12
Jeb Bush 11
Marco Rubio 10
Chris Christie 7

Democrats

Bernie Sanders 60
Hillary Clinton 38

The pollsters nailed the Sanders-Clinton race.  CNN/WMUR had it 61-30, while WSJ/NBC was at 58-38.

And as opposed to their failure in Iowa, all of the polls had Trump leading by double-digits here, but Rubio was in second at between 15 and 17 percent.  The Univ. of Massachusetts poll did have Trump receiving 36 percent.

[Actually, a Monmouth University survey that wasn’t available before I went to post last time, correctly had Kasich in second at 14% to Trump’s 30%.  So good for the much-maligned Monmouth gang.]

Rubio suffered because of his dreadful performance in last Saturday’s Republican presidential debate.

--Jonathan Easley and Niall Stanage / The Hill

“The Republican establishment has been plunged into disarray by Tuesday’s New Hampshire primary, which revitalized Donald Trump’s campaign and muddled the chances for a centrist alternative to emerge.

“The Granite State result is just about the worst possible one from the establishment’s perspective – ensuring the centrist vote will remain divided, with no candidate in that lane having momentum and a viable path to victory....

“Just as importantly, the primary delivered a heavy blow to Marco Rubio, stopping dead the momentum he had received from his strong third-place finish in last week’s Iowa caucuses.”

--Rubio’s loss was Kasich’s gain, as he put it all on the line in New Hampshire.  But as much as this has become my man in the race, we all wonder just where he goes from here.  The best he can possibly do in South Carolina is third, and this is a major longshot.

--As for Sanders’ big win, he spoke afterwards of the results from both Iowa and New Hampshire being “nothing short of the beginning of a political revolution.  We will all come together to say loudly and clearly that the government of our great nation belongs to all of us, not just a few wealthy campaign contributors.”

Sanders not only won the female vote in New Hampshire, he now has captured 84 and 85 percent of the youth vote (18-29) in Iowa and New Hampshire, respectively.

But now in South Carolina and Nevada, we’ll see if Sanders can make any inroads with Latinos and African Americans.

Meanwhile, so much for the impact of “Big Dog,” Bill Clinton.

--Gerald F. Seib / Wall Street Journal

“For years, plenty of players in the American political system have quietly wished that the outsize role of two small and quirky states – Iowa and New Hampshire – in picking presidential nominees could be reduced.

“Maybe this is the year that has come true.

“With the results now in from New Hampshire’s primary, what’s striking is how little those two states, the ones that often launch new front-runners and bring leaders crashing down to earth, have actually settled.

“Donald Trump won New Hampshire’s Republican primary in convincing fashion, and he leaves the state as the clear leader and with momentum.  Still, there’s no single alternative to him, but rather a muddle of four candidates just below who will battle on; the field is far from winnowed....

“On the Democratic side, Vermont Sen. Bernie Sanders won an impressive victory, one that will rattle plenty of party leaders who wanted former Secretary of State Hillary Clinton to cruise to the nomination unruffled and well financed.  But the race moves on to two states, Nevada and South Carolina, where his core supporters – white, well-educated liberals and young voters – fade in importance and give way to a large contingent of the Hispanic and African-American voters that figure to be her strength and his Achilles’ heel.

“So voters in states across America now have every reason to think they, too, will get a voice in deciding these nominations....

“Those who continue to doubt Mr. Trump’s strength will need to look long and hard at how even his support was across all kinds of demographic lines in New Hampshire.

“Exit polls showed he did well with moderates and conservatives, and, for someone whose ideology is mistrusted by many on the Republican right, he did surprisingly well among very conservative voters.  He did well among all age groups except, perhaps, the most elderly.

“He continues to do best among GOP voters with less than a college education, and soars among those who say immigration is their top issue, but what is most striking is the way his support spreads out across the GOP electorate.  And he will benefit as long as the non-Trump is divided among multiple challengers.

“Yet here is the problem for Mr. Trump, and the opening for those four candidates clustered just behind him: Once again in New Hampshire, he didn’t do as well among late-deciders than among those who made their minds up long ago.

“Many late-deciders indicated they broke for Mr. Kasich.... So in New Hampshire, as in Iowa, there were signs that the core of Trump voters are very loyal, but also hints that he may not have succeeded in expanding that core as the campaign wore on.”

--Editorial / Wall Street Journal

“Mrs. Clinton won the New Hampshire primary in 2008, but this year Democrats seem to have rejected her on personal and character grounds.  Mr. Sanders won nine of 10 voters in the exit polls who said that only Mr. Sanders or neither of the two candidates were ‘honest and trustworthy.’  The Clinton campaign has tried, as it always does, to plow through her email scandals by portraying them merely as Republican attacks.  But even many Democrats don’t believe her anymore.

“Mrs. Clinton now finds herself in a populist showdown she never anticipated and doesn’t play to her strengths. She’s best as a machine candidate of the unions, feminist volunteers and wealthy environmentalists.  Mr. Sanders is motivating the younger liberals who were also drawn to Mr. Obama and who are voting for the Vermonter by three or more to one.

“The Clinton campaign will console itself that the campaign now moves to states where the electorate will have more minorities and fewer gentry liberals....

“(Sanders’) great obstacle is that many Democrats still fear that a self-avowed socialist can’t win in November.  But that argument becomes less damaging as it becomes clearer that Mrs. Clinton has weaknesses that also could be fatal in the fall.  As Republicans get closer to nominating the mercurial Mr. Trump, more Democrats may also conclude that even Mr. Sanders could win so why not take a chance on their true heart?”

--Sanders and Clinton got together for another debate in Milwaukee on Thursday night and it was a largely wonky affair.  Hillary took care to mention Obama’s name 21 times and at the end pilloried Sanders for criticizing Obama in language she said a Republican might use.

Sanders stuck to his old populist themes that have worked so well thus far, tying Clinton to special interests that are responsible for an economy rigged against the middle class.

Clinton said Sanders’ agenda would expand the size of the federal government by 40%.  At the end she then questioned Sanders’ loyalty to Obama.

“Madame Secretary, that is a low blow,” Sanders said in response.

Charles Krauthammer / Washington Post

“The New Hampshire results have solidified the reigning cliché that the 2016 campaign is an anti-establishment revolt of both the left and the right. Largely overlooked, however, is the role played in setting the national mood by the seven-year legacy of the Obama presidency.

“Yes, you hear constant denunciations of institutions, parties, leaders, donors, lobbyists, influence peddlers.  But the starting point of the bipartisan critique is the social, economic and geopolitical wreckage all around us.  Bernie Sanders is careful never to blame President Obama directly, but his description of the America Obama leaves behind is devastating – a wasteland of stagnant wages, rising inequality, a sinking middle class, young people crushed by debt, the American Dream dying.

“Take away the Brooklyn accent and the Larry David mannerisms and you would have thought you were listening to a Republican candidate.  After all, who’s been in charge for the last seven years?”

Kimberley A. Strassel / Wall Street Journal

“Democrats awoke Wednesday with a thought usually reserved for Republicans: Hillary Clinton is a disaster. The marvel is that she fooled them for so long....

“What they saw in New Hampshire was a dour, 68-year-old woman, shouting at her audience in her best impression of emotion. They saw a gaunt former president, rambling to half-empty forums, grumping about his wife’s political opponent.   They saw the candidate’s surrogates try to snag the votes of young women by threatening them with eternal damnation.  They saw a campaign in disarray, dragging carload upon carload of ethical baggage. They saw that the empress has no (or very few) clothes....

“What she didn’t have was the interest of voters.  They’d had their eyes opened, and they chose to use their primary to highlight Mrs. Clinton’s many and obvious political weaknesses.  She may still be the favorite to hold her party’s banner, but the mantle of inevitability has been stripped away.”

--So does former New York City Mayor Michael Bloomberg run?  He has made it clear he is considering a third party candidacy, especially if Bernie Sanders and Donald Trump are their party’s respective candidates.

As Steve Schmidt, a Republican strategist who served as a senior adviser to Sen. John McCain during the 2008 campaign, told the Wall Street Journal, “There’s a big opening in the middle of the electorate, and Bloomberg is on point in that space.”

But what would Bloomberg run as?  He’s fiscally conservative, liberal on social issues, a major advocate of gun control, yet a law-and-order guy (see “stop and frisk”), and ostensibly a foreign policy hawk, though those who may know of Bloomberg, nationally, wouldn’t know anything about this last aspect.

In an interview with the Financial Times, Bloomberg said:

“I find the level of discourse and discussion distressingly banal and an outrage and an insult to the voters,” before adding that the U.S. public deserved “a lot better.”

In saying he was “looking at all the options,” Bloomberg said he would be willing to spend at least $1 billion of his own money and he’ll decide after the Super Tuesday results.

--For the record, here was the exchange that brought down Marco Rubio, but also marked the end of the Chris Christie campaign.

In Saturday’s debate, Christie told Rubio he had never been involved “in a consequential decision where you had to be held accountable.”

Rubio hit back, citing New Jersey’s credit downgrades under Christie’s leadership, before then asserting that Republicans were believing in a “fiction” if they assumed President Obama to be incompetent, rather than purposely changing the nature of the United States.

Christie shot back, accusing Rubio of doing “what Washington D.C., does. The drive-by shot...and then the memorized 25-second speech that is exactly what his advisers gave him.”

As all of us watched, Rubio then amazingly proved Christie’s point by again repeating the soundbite.

“There it is.  There it is.  The memorized 25-second speech. There it is, everybody,” said Christie.

But as much as it made Christie look good for a brief moment, it did nothing for him at the polls, while it proved deadly for Rubio, who after Tuesday’s results apologized for the debate performance and said “it will never happen again.”

--As for Christie, his poor performance wasn’t a surprise to yours truly.  As soon as he entered the race I told you he had nothing to run on, and obviously Bridgegate was a killer, long before the fatal emergence of Donald Trump, who stole Christie’s pathway to relevance in the campaign as the bombastic jerk.

--For the record Carly Fiorina and Jim Gilmore also dropped out on the Republican side.  Ben Carson should have done the same.

--David Brooks / New York Times

“As this primary season has gone along, a strange sensation has come over me: I miss Barack Obama.  Now, obviously I disagree with a lot of Obama’s policy decisions.  I’ve been disappointed by aspects of his presidency. I hope the next presidency is a philosophic departure.

“But over the course of this campaign it feels as if there’s been a decline in behavioral standards across the board.  Many of the traits of character and leadership that Obama possesses, and that maybe we have taken too much for granted, have suddenly gone missing or are in short supply.

“The first and most important of these is basic integrity. The Obama administration has been remarkably scandal-free. Think of the way Iran-contra or the Lewinsky scandals swallowed years from Reagan and Clinton.

“We’ve had very little of that from Obama.  He and his staff have generally behaved with basic rectitude.  Hillary Clinton is constantly having to hold these defensive press conferences when she’s trying to explain away some vaguely shady shortcut she’s taken, or decision she has made, but Obama has not had to do that....

“Second, a sense of basic humanity. Donald Trump has spent much of this campaign vowing to block Muslim immigration.  You can only say that if you treat Muslim Americans as an abstraction.  President Obama, meanwhile, went to a mosque, looked into people’s eyes and gave a wonderful speech reasserting their place as Americans....

“Third, a soundness in his decision-making process.  Over the years I have spoken to many members of this administration who were disappointed that the president didn’t take their advice.  But those disappointed staffers almost always felt that their views had been considered in depth.

“Obama’s basic approach is to promote his values as much as he can within the limits of the situation. Bernie Sanders, by contrast, has been so blinded by his values that the reality of the situation does not seem to penetrate his mind....

“To think you could pass Sanderscare through a polarized Washington and in a country deeply suspicious of government is to live in intellectual fairyland.  President Obama may have been too cautious, especially in the Middle East, but at least he’s able to grasp the reality of the situation....

“People are motivated to make wise choices more by hope and opportunity than by fear, cynicism, hatred and despair.  Unlike many current candidates, Obama has not appealed to those passions.

“No, Obama has not been temperamentally perfect.  Too often he’s been disdainful, aloof, resentful and insular.  But there is a tone of ugliness creeping across the world, as democracies retreat, as tribalism mounts, as suspiciousness and authoritarianism take center stage.

“Obama radiates an ethos of integrity, humanity, good manners and elegance that I’m beginning to miss, and that I suspect we will all miss a bit, regardless of who replaces him.”

Geezuz. Where to start? 

The above represents just about half of Brooks’ piece, but that one line, “President Obama may have been too cautious, especially in the Middle East, but at least he’s able to grasp the reality of the situation,” is the only line about this administration’s foreign policy.

What the hell has been Mr. Brooks been watching these last 7 years?  The total destruction of the Middle East under Obama’s watch.  Yes, it started under his predecessor but it’s been Obama’s lack of decisiveness, and the sickening 2012 campaign slogan “GM is alive and bin Laden dead,” while he ignored Syria when it could have been saved, which is where, as I’ve been chronicling, historians will excoriate his presidency!

An appropriate title for a book these days would be, “GM is alive and the Middle East is dead.”

The Middle East dying led to the refugee crisis that is inflicting countless disasters, and historic consequences on the European continent, in case Mr. Brooks isn’t aware.

Look, I hate the discourse of this presidential campaign, on both sides, and there are times I wonder just what I will do with my vote in November the way this thing is headed, but don’t give me this drivel about the civility of the Obama White House when the historical record shows that the world surrounding this presidency is not only worse since he took office, but it threatens to engulf us all in wars and terror of unimaginable destruction, not just in body counts, but in a crushing of the human spirit.

I have written for years of Bush 43 and Obama being two of the five worst presidents in our history, and it’s possible the one to follow will join them, so, no, Mr. Brooks, I will not miss Barack Obama.

--In what is being labeled a ‘cosmic breakthrough,’ scientists announced Thursday that, after decades of effort, they have succeeded in detecting gravitational waves from the violent merging of two black holes in deep space; confirmation of a key prediction of Albert Einstein’s General Theory of Relativity.

After years of trying to detect the merger, through two facilities in Livingston, La., and Hanford, Wash., the detectors received a signal on Sept. 14 that represented two black holes orbiting each other “at a furious pace at the very end” until the two became one.  [Washington Post]

Since Sept. 14, the signal has been going through a rigorous verification process and peer-review prior to the big announcement.

As to the consequences of this massive physics experiment, no one knows what they will be except that instead of astronomy being an exclusively visual enterprise, now gravitational waves can be used too.

I’m going to leave our own Dr. Bortrum to explain the discovery in greater detail when he posts his next column around March 1.

--Finally, astronaut Edgar Mitchell, the sixth man to walk on the Moon, died last weekend at the age of 85.  As part of the Apollo 14 mission in 1971 with Captain Alan Shepard (who famously hit the golf ball), Mitchell spent more than nine hours on the lunar surface conducting experiments.  Shepard and Mitchell brought back 94lbs of Moonrocks.

Mitchell told reporters in the days after the mission that he had experienced an “epiphany” in space and returned with “an overwhelming sense of oneness, of connectedness.”

Years later he wrote in his autobiography: “It occurred to me that the molecules of my body and the molecules of the spacecraft itself were manufactured long ago in the furnace of one of the ancient stars that burned in the heavens about me.”

In 1974, he described his lunar epiphany to the New York Times: “It was a sense of the Earth being in critical condition, a recognition of the massive insanity which had led man into deeper and deeper crises on the planet.

“Above all, I felt the need for a radical change in our culture.  I knew we were replete with untapped intuitive and psychic forces which we must utilize if we were to survive, forces that Western society had programmed us to disregard.”

In 2008, Mitchell claimed aliens had visited Earth and said he believed there was a government cover-up.

“I happen to have been privileged enough to be in on the fact that we’ve been visited on this planet and the UFO phenomena is real,” he said in a radio interview.

“It’s been well covered up by all our governments for the last 60 years or so, but slowly it’s leaked out and some of us have been privileged to have been briefed on some of it.”

NASA responded: “Dr. Mitchell is a great American, but we do not share his opinions on this issue.”

Mitchell used a then traditional route to becoming an astronaut, flying fighter jets for the Navy before becoming a test pilot.  Apollo 14 was his only spaceflight.  RIP.

---

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

God bless America.

---

Gold $1237...biggest weekly gain in 7 years; up $119 in two weeks.
Oil  $29.44

Returns for the week 2/8-2/12

Dow Jones  -1.4%  [15973]
S&P 500  -0.8%  [1864]
S&P MidCap  -1.4%
Russell 2000  -1.4%
Nasdaq  -0.6%  [4337]

Returns for the period 1/1/16-2/12/16

Dow Jones  -8.3%
S&P 500  -8.8%
S&P MidCap  -9.8%
Russell 2000  -14.4%
Nasdaq  -13.4%

Bulls  24.7...two important lows; 22.8 Nov. ’08; 26.4 Mar. ‘09
Bears  39.2...highest since fall 2011 [Source: Investors Intelligence]

Have a great week.  I appreciate your support.

And a belated Happy Birthday to my brother, who turned Jerry Kramer’s number this week.  I’m nearing Jack Lambert’s myself, which means the following 12 months I will be incredibly surly.

Brian Trumbore