Week in Review

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Week in Review

03/19/2016

For the week 3/14-3/18

[Posted 12:00 AM ET]

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.  Special thanks this week to Jack C.

Edition 884

Washington and Wall Street

The Federal Reserve’s Open Market Committee met this week and talk about confusion.  We’ve known since the Bernanke Fed and their failure to see the housing bubble that these guys are often useless when it comes to prognostications, but so help me, I don’t know what message Janet Yellen and her band of merry pranksters are attempting to send these days.

I’ve been writing for the better part of a year that we really aren’t that far off from the Fed’s 2% inflation target, pointing to wage growth in excess of that number for months now, while the core consumer price index has been at the 2% level.  Yes, two things.  First, in a real recovery you want wage growth of 4%, not 2% to 2.5% as in recent months, and, second, core CPI is not the Fed’s preferred barometer, though for crying out loud, whether you believe in how the CPI is calculated or not, since we were little tykes and, as in the case of yours truly, watching “Leave it to Beaver,” the CPI represented inflation or lack thereof.  Producer, or factory-gate, prices, on the other hand, are a solid reflection of potential corporate profits. [Pretty hard to grow them if you can’t raise prices.]

So anyway, this week, prior to the Fed’s latest on interest rates, we learned that the consumer price index for February came in as expected, -0.2%, but, ex-food and energy it was up 0.3%.  More importantly, year over year, while CPI is up just 1.0%, the core rate is up 2.3%, the highest rate since May 2012 and very near an eight-year high of 2.5%.

Even the PPI, while -0.2% for February, has a core rate of 1.2% year over year; inching up.

Wednesday afternoon, while the FOMC opted not to raise the benchmark funds rate, as expected, it slashed its forecast of future hikes in 2016 from four, per its December report, to just two and it was off to the races for the U.S. stock market...free money for longer, traders read, and the risk trade remained on for a fifth consecutive week, with both the Dow Jones and S&P 500 suddenly back in the black for 2016 after the tumult of the first six weeks of the year.

Thanks to an historic two-day plunge in the dollar because of the Fed’s dovish stance, commodities, including oil, continued their own rally.  In the case of crude, West Texas Intermediate hit $40 for the first time since early December, a huge percentage move off the February low of $26.00, though it finished the week at $39.44.

In its formal statement, the Fed offered some of the following:

“Economic activity has been expanding at a moderate pace despite the global economic and financial developments of recent months.  Household spending has been increasing at a moderate rate, and the housing sector has improved further; however, business fixed investment and net exports have been soft.  A range of recent indicators, including strong job gains, points to additional strengthening of the labor market.  Inflation picked up in recent months; however, it continued to run below the Committee’s 2 percent longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports.  Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance, in recent months.

“Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will continue to strengthen.  However, global economic and financial developments continue to pose risks. Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of declines in energy and import prices dissipate and the labor market strengthens further.”

Blah blah blah....yeah, but we’re already at 2 percent inflation!  [Even the Fed’s preferred indicator, the personal consumption expenditures price index, rose 1.7% in January on core.]

At her press conference after the rate decision was announced, Chair Yellen said “Caution is appropriate,” emphasizing a vulnerable economy and weak global growth.

Policy makers expect the funds rate to creep up to 0.875% by year-end, according to the median projection of 17 Fed officials released after the meeting, which could imply a hike in June, which has been anticipated, but then why is the dollar tanking?  If the economic data comes in solid the next two months, I can guarantee the dollar will reverse rather quickly knowing June is in play.

Here’s my bottom line.  The Fed foolishly reduced the number of expected hikes to two from four when they should have just kept their mouths shut until they see more data, which we can all appreciate, especially with commodities rallying anew (though I don’t believe this will stick).

Oh, the Fed got their beloved rally in stocks on their dovish stance, but it’s all smoke and mirrors, while savers continue to take it up the ass.

Yes, I know the Fed is concerned that it not move too fast in view of all the other central banks around the world going negative, but look what this has all gotten us?  Putrid growth.

Just a few other notes on the economy.  Retail sales for the month of February were -0.1%, with January revised down to -0.4% from +0.2%.  However, this is due almost solely to lower gasoline sales. If you take out gasoline, retail sales rose 0.2% in January, and if you take out gasoline and autos, the figure is up 0.3%.

Separately, industrial production for last month was weaker than expected, -0.5%, while housing starts in the month were stronger than forecast at a 1.18m annualized pace.

And I can’t help but mention the trailing price/earnings ratio on the S&P 500 these days, this being the only true measure of multiples, not ‘future’ earnings which drives me up the freakin’ wall because it is guesswork.  The P/E is 22.6...far higher than the historic norm.  This rally won’t last much longer.

Finally, if some economic indicators that President Obama is fond of touting are so good, why do most Americans still feel pretty lousy?

Deroy Murdock / New York Post

“By almost every economic measure, America is flat to falling.

“Obama certainly can boast about the unemployment rate.  From his Jan. 20, 2009, inauguration until last month that figure has fallen from 7.8 percent [Ed. it peaked at 10.0 Oct. ‘09] to 4.9 – down 37.2 percent.  But:

“The labor force participation rate over that period has slid from 65.7 percent to 62.9 (the lowest reading since March 1978) – 4.3 percent.

“On Obama’s watch, the percentage of Americans below the poverty line has grown, according to the most recent Census data, from 14.3 percent to 14.8 percent in 2014 – up 3.5 percent.

“Real median household income across that interval sank from $54,925 to $53,657 – down 2.3 percent.

“Food stamp participants soared in that time frame from 32,889,000 to 45,874,000 – up 39.5 percent.

“Meanwhile, from Obama’s arrival through the fourth quarter of 2015, the percentage of Americans who own homes sagged from 67.3 percent to 63.8 – down 5.2 percent.

“Gallup CEO Jim Clifton laments this chilling trend: ‘For the first time in 35 years, American business deaths now outnumber business births.’  As he observed in January, ‘Business startups outpaced business failures by about 100,000 per year until 2008.  But in the past six years, that number suddenly reversed, and the net number of U.S. startups versus closures is minus 70,000.’

“Clifton worries gravely that ‘entrepreneurship is now in decline for the first time since the U.S. government started measuring it...Small and medium-sized businesses are dying faster than they’re being born. So is free enterprise. And when free enterprise dies, America dies with it.’”

Plus, since the recession ended in the second quarter of 2009, real GDP has grown by just 2 percent a year.  Other post-1960 recoveries saw growth of 3.9 percent. The Reagan recovery had real growth at an annual rate of 4.7 percent.

And that’s why Americans today don’t feel so hot, Charlie Brown.

Europe and Asia

So about ten days ago, European Central Bank President Mario Draghi announced a new monetary easing package that he just knew would lead to a weaker euro, which is good for European manufacturers and their exports, only to see the euro rise instead and this week it continued to do so after the U.S. Fed announced its own dovish plans that weakened the dollar.

So as a result, European equities have been merely mixed since the ECB’s move, hardly what Draghi, and investors, counted on.

Separately, Eurostats, the EU’s statistical arm, reported industrial production in the eurozone in January was up a solid 2.1% over December, the best month in six years, while construction spending rose 3.6%.

Another look at euro area inflation for February pegged it at a -0.2% annualized rate, vs. a +0.3% pace in January, as Germany (-0.2%), France (-0.1%), Italy (-0.2%) and Spain (-1.0%) were all negative.

However, this is largely because of falling energy prices last month that have since reversed, even if just temporarily.

On the migration front, European Union leaders and Turkey finalized a deal to try to ease the crisis along the lines of the framework I discussed in last week’s review. 

Under the scheme which Turkey and all 28 EU members agreed to, from midnight Sunday, migrants arriving in Greece will be sent back to Turkey if their asylum claim is rejected.

In return, EU countries will resettle thousands of Syrian migrants living in Turkey.

For Turkey, the deal means massive aid ($6.6 billion before 2019) and a faster track on EU membership talks, which has been in a state of flux for a decade.

Up to 72,000 Syrian migrants living in Turkey would be settled in the EU, but to put this in perspective, since January 2015, over 1.1 million migrants and refugees have entered the EU by boat from Turkey to Greece, including more than 132,000 thus far in 2016.

At last word, 44,000 are now stuck in Greece as their route north, for instance through Macedonia, has been blocked.  Greek Interior Minister Panagiotis Kouroublis has compared conditions at the Idomeni camp, on the Macedonian border, to a Nazi concentration camp.

Refugee and human rights groups are highly skeptical the new deal abides by either EU or international rules on refugees and consider this...Turkey is home to 2.7 million Syrian refugees.  The numbers agreed upon in terms of settlement in the EU are obviously a drop in the bucket.

The migrant crisis has been particularly difficult for German Chancellor Angela Merkel, who suffered a dramatic setback in regional elections last weekend. 

The anti-immigration Alternative fur Deutschland party (AfD) beat forecasts in all three regions – scoring the biggest electoral success for the populist right since the rebirth of German democracy after WWII.  In Saxony-Anhalt, it recorded the best regional result of any German populist rightwing party since 1945 with 24% of the vote.  AfD won 15% in Baden-Wurttemberg and 13% in Rhineland-Palatinate.

Merkel’s CDU, by comparison, had 30% in Saxony-Anhalt, 30% in Baden-Wurttemberg, and 32% in Rhineland-Palatinate.  Her coalition partner, the SPD, took 13% in Baden, 36% in Rhineland, and 10.6% in Saxony.

The AfD’s co-leader, Frauke Petry, said: “We have fundamental problems in Germany which have led to this election result.”

Justice Minister Heiko Maas (SPD) said: “We must expose their stupid words with objective arguments.”

Merkel faces pressure from an increasingly discontented German public and neighbors such as Austria, that have openly challenged her open-borders policy by closing their own.

But all this said, Merkel’s overall approval rating is still 54%, a decline from last summer’s 67% but still high compared with other European leaders.  However....

Gideon Rachman / Financial Times

“By the standards of the rest of Europe (or the U.S.), German voters remained pretty steady – and the AfD are still a long way from power...

“Even in Saxony-Anhalt, the region where the AfD did best, the anti-immigration party attracted only 24 percent of the vote, which is far less than France’s National Front gets in its strongholds.

“Nonetheless, the big picture is that Ms. Merkel’s political position is becoming steadily weaker.  This time last year, the chancellor was at the peak of her power, but her authority is unravelling....

“The chancellor’s loss of authority in both Germany and Europe are feeding on each other.  Ms. Merkel’s failure to deliver a workable EU deal on refugees has eroded her support at home.  And now, with German voters beginning to turn against her, the chancellor’s authority will be further sapped at the European level.

“Ms. Merkel’s key partners are already beginning to unpick the EU-Turkey deal, with Francois Hollande, the French president, casting doubt on the idea that Turkey will swiftly gain visa-free access to Europe....

“Some of the criticism is unfair. Ms. Merkel was not responsible for the Syrian civil war or the resurgence of the Taliban in Afghanistan.  And the policies advocated by her critics – based on tougher frontier controls and numerical limits to the numbers of refugees – present serious problems of their own.

“As the barriers go up along the ‘Balkan route’ to Germany, those problems are likely to become more evident as the treatment of refugees becomes more brutal, and desperate people get trapped in Greece, destabilizing an already weakened country....

“(Merkel’s) position was made worse by the fact that she seemed to have lost her ability to look several moves ahead. She failed to see how Germany’s ‘welcome culture’ would spark a fresh surge of refugees.

“It is a partial defense of Ms. Merkel that, last summer, she was responding, under immense pressure, to a tragic and fast-moving situation. But we are now many months into the crisis and the chancellor still seems too willing to base her policy on comforting illusions rather than uncomfortable facts.

“In particular, the EU-Turkey deal...involves incredible leaps of faith.

“Why should the EU trust a government led by a volatile authoritarian like President Recep Tayyip Erdogan? And why should the Turks believe that the EU will give them visa-free access and a smoother path to membership when so many EU countries are clearly opposed to these ideas?

“If and when the deal collapses, Ms. Merkel’s dwindling authority will suffer another serious blow. It cannot afford too many more.”

Finally, an example of the chaos on the Greece/Macedonian border, up to 2,000 migrants broke through a border fence and crossed into Macedonian territory, Thursday, only to be rounded up and shipped back to the hellhole Idomeni camp.

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Turning to Asia, there was little economic data to report on.  In China, property prices in the top cities soared as much as 57 percent in the year to February, widening the gap with the country’s ailing smaller cities, according to the National Bureau of Statistics.

For example, prices of new residential buildings in Shenzhen rose 57 percent from a year earlier, but in the northern city of Dandong, part of the rust-belt area, prices dropped 3.9 percent.

Nationally, prices rose at an average annual rate of 2.8 percent, the biggest one-month rise since June 2014, according to a Financial Times review of government data.

Growth in property investment did accelerate in the first two months of 2016, breaking a two-year run of slowing growth.

So you have governments in Beijing and Shanghai concerned about housing-market bubbles all over again, while other cities still face a severe oversupply issue.

Overall, 32 of 70 cities covered in the government’s official survey posted annual price gains in February, up from 25 in January.

Separately, central bank governor Zhou Xiaochuan said during a press conference on the sidelines of the National People’s Congress that China would not rely as heavily on exports for economic growth this year as their contribution to the economy has been dwindling.

“Given such circumstances, it is not very useful to use exchange rates or other monetary policies to stimulate exports,” he said.

Assuming there are no “big disturbances or incidents at home or in global markets, China’s monetary policy will remain prudent, and we do not need to use [this] excessively to stimulate the economy,” he said.

In Japan, the Bank of Japan left monetary policy unchanged after cutting interest rates into negative territory in January.

Japanese department store sales improved in February compared to year ago levels, echoing comments by the BoJ that private consumption was showing signs of resiliency.  They rose 0.2 percent year over year last month, vs. a -1.9 percent contraction in January. Sales growth in Tokyo was particularly good, up 2.7 percent.

But when it comes to Japanese government bonds, the yield on the 10-year fell to an unprecedented -0.135 percent.  Heightened investor demand is exacerbating the already dwindling supply of bonds in the market.

Street Bytes

--Stocks rose a fifth consecutive week, with the Dow Jones +2.3% to 17602 and the S&P 500 +1.4% to 2049, both now up for the year, 1.0% and 0.3%, respectively.  Nasdaq, though, is still down, -4.2%, after a 1.0% advance for the past five days.

Both the Dow and S&P have risen about 12% from their Feb. 11 lows, which also marked the bottom in oil prices.

--U.S. Treasury Yields

6-mo.  0.43%  2-yr. 0.84%  10-yr.  1.87%  30-yr.  2.68%

--The national average gasoline price at the pump has jumped 18 of 20 days, as of midweek, to $1.94, so the cow/gas spread has narrowed.  Jimbo, I need your help on the milk front, and try to get an interview with a dairy cow if you can.

Prices typically rise this time of year as demand increases and refineries conduct seasonal maintenance.  [And California does whatever it does. Their average is $2.59.]

My local station of choice is still at $1.79, but not for long. 

Doh!  Spoke too soon.  $1.89 as of my last beer run.

--Shares in FedEx Corp. surged after the economic bellwether reported better than expected earnings for the quarter ended Feb. 29.

CEO Fred Smith said the strong performance was across all divisions, though revenue did decrease 1% from year ago levels, owing in part to unfavorable currency exchange rates.  U.S. domestic volume increased 2%, with FedEx Ground reporting revenues were up 30%.

--But another bellwether of sorts, Caterpillar, said it expects first-quarter results to come in below the Street’s expectations, though the company maintained its full-year forecast.

So normally, investors would punish Caterpillar, as they have when CAT warned in the past, but Thursday the shares rose as for now the Street figures a lot of the weakness, including globally, is already baked into the share price.

--Apple has moved some of its iCloud services on to the Google Cloud, a big win for Alphabet (Google’s parent) over Amazon Web Services.

Google is third in the race with Amazon and Microsoft’s Azure in cloud computing, but it has a new CEO, Diane Greene, overseeing the division, and she is, shall we say, aggressive.

Apple uses cloud services from Amazon and Microsoft, as well as its own data centers, and Apple could eventually take more of the services in-house, having announced plans to build three new data centers over the next two years, and some say the company is playing providers off each other in this highly competitive environment.

--Moody’s said lackluster market returns in 2015 and 2016 will put severe pressure on the health of U.S. public pension plans, forcing states and cities to fill the funding gaps.  This is certainly a big issue here in New Jersey, but some of the worst-funded schemes are teacher pension plans in Illinois and Kentucky, according to Moody’s.

Amin Rajan, a consultant, told the Financial Times, “[Public pension plan] deficits are going from abysmal to worse.  We are witnessing a slow-motion car crash.”

Even under Moody’s most optimistic scenario, where average returns totaled 5 percent, the collective funding gap would still widen by more than $200bn.  The ratings agency said the plans collectively have a deficit of $1.7tn today.

Olivia Mitchell, a professor at the Wharton School, said, “I do believe that U.S. cities and towns will continue to suffer, and there will be additional bankruptcies,” a la Detroit and Stockton, California.

So this means one thing...higher taxes at the state and local levels; or reductions in workforces, or cutting services.

--New Jersey residents did not have to face their first transit strike since 1983 when negotiations between NJ Transit and its workers bore fruit, with a deal granting workers about 21% in wage increases over 8 ½ years, though their health-care costs will increase.

Under the terms of the agreement, employees would pay about $130 or $160 a month for medical coverage, with deductibles ranging from $250 to $500, vs. the current $82 a month with no deductibles.  Good lord! What a deal.

--According to a study from the National Center for Atmospheric Research in Boulder, Colorado, summer weather may be warm enough to allow the mosquito carrying the Zika virus to spread as far north as New York and west to Los Angeles.

The Aedes aegypti mosquito (if you see one with spots in your house or car, you’re screwed) is the carrier and conditions will be favorable for it in the Southeastern U.S. and parts of Arizona in April.  By June, all 50 cities in the study have the potential for being home to at least some of the mosquitoes.

According to the Centers for Disease Control, the insect’s entire life-cycle lasts eight to 10 days.  To spread Zika, they have to bite someone with the virus.

--Chipotle plans to expand its burrito giveaway as part of its campaign to persuade people that its food is safe. The chain made plans to give away more than 20 million burritos via coupons or mobile offers.  I know I’m going to use mine.

Chipotle has to do something.  Tuesday it reported it expects a loss of $1 a share or more for the January-to-March quarter, its first loss since going public in 2006.  The free food giveaway could cost the company $66 million.

--William Ackman’s Pershing Square Capital Management LP sold down its disastrous bet on Valeant Pharmaceuticals International Inc., after the drug maker issued a dire forecast and warned it could face default on its debt because it hadn’t filed annual results in time.

Ackman doubled down on the stock last fall, even as questions about its accounting emerged and sent the stock tumbling on an initial swoon.

Picture, Valeant traded at $263.80 last Aug. 6 and it finished this week at $27.

As of Wednesday, Ackman’s year-to-date loss on the value of Pershing Square’s publicly traded portfolio was down 26% just this year.  Tuesday’s collapse in Valeant shares, from about $68 to $33, cost Pershing $766 million on paper that day alone.

As for the company, CEO Michael Pearson returned from a serious illness and he had to slash full-year profit targets for a second time in five months.  Pearson took over as chief executive in 2008 and it was his unconventional strategy of debt-fueled acquisitions, hard-charging sales tactics and steep price increases on its drugs that had the share price soaring.

The immediate issue today is a total lack of credibility.

--Oracle Corp. posted solid earnings for its last quarter, as the maker of business software beefs up its cloud offerings, where it had been late to the game.

Cloud revenue in the quarter ended Feb. 29 rose 40% to $735 million, though the company’s overall revenue slipped 3% to $9.01 billion, a bit less than expected.  With the impact of currency, however, revenue would have edged up 1%.

The shares rose as earnings per share were two cents better than the Street forecast.

--So you know how I’ve been writing how Apple will eventually be overwhelmed in China by Chinese made brands such as Huawei and Xiaomi?  As reported by the South China Morning Post, there were once about 500 Chinese smartphone brands two years ago but that number has now dwindled to close to 100, with Huawei, Xiaomi, Oppo and Vivo accounting for over 45 percent of the domestic market, up 10 percent from 2014, according to IDC.  This is just the beginning.

And I’m not even talking the politics of it all, re Apple.  I repeat...they’re toast.

--Washington’s entire Metro system was shut down for a full day in order to inspect the electrical cables or the boots that connect them to the third rails.  26 areas were identified where the cable was damaged or frayed.

The unprecedented shutdown came after a “jumper cable” electrical fire that was reminiscent of one last year that resulted in one death and injured scores.

--The Obama Administration reneged on a plan to sell oil and natural gas leases off the southeast Atlantic coast.  No longer will the feds have a sale planned for the waters between Virginia and Georgia in 2021.  The Administration said it would go ahead with three lease sales off Alaska and 10 in the Gulf of Mexico, but as the Wall Street Journal opined, “Don’t be surprised if those are eventually killed too.”

The withdrawal is a sucker punch to southeast U.S. politicians, who had welcomed oil and gas exploration as a boon to high-paying jobs and energy self-sufficiency.  That includes Virginia’s Democratic Gov. Terry McAuliffe, who tried to spin this as a “mere prudent pause.”

Unless a Republican wins the White House, drilling off the East Coast is dead.  The new mantra for the climate left is “keep it in the ground.”

--A Chinese firm, Anbang Insurance Group, which in 2014 bought New York’s Waldorf-Astoria hotel for $1.95 billion, made a $14 billion bid for Starwood Hotels and Resorts Worldwide Inc., which is a counter to the current plan to merge Starwood and Marriott International Inc. into the world’s largest hotel company.  Then on Friday, Anbang upped its bid, giving Marriott ten days to improve upon it if it chooses.  Should Starwood scrap the deal with Marriott, it would be required to pay a termination fee of $400m.

Last November, Marriott said it would acquire Starwood in a deal valued at about $12.2 billion. The new company would have 5,500 hotels and more than 1.1 million rooms in more than 100 countries.  Marriott owns the Ritz-Carlton and JW Marriott brands, while Starwood has St. Regis and Sheraton.

Initially, the Marriott-Starwood deal was to be completed by mid-2016.  Starwood’s board supported the Marriott deal but no longer.

Chinese companies have an incentive to make such moves as their own economy slows.  Diversification outside their home market is being encouraged by the government.

Just days before, Anbang agreed to buy U.S. luxury hotel owner Strategic Hotels & Resorts Inc. from Blackstone Group LP for about $6.5 billion including debt.

So who is Anbang?  It is loaded with insiders...relatives of Beijing’s power brokers, including the son of former premier Zhu Rongji.  One of the few things I agree with the Obama administration on was their decision not to use the Waldorf on the president’s trips to New York City for fear the rooms were tapped.  Of course they are.

--After an extraordinary three-year run that saw average office rents in Manhattan jump by 20%, and the median home price in the borough climb to a record-high $1.15 million from $800,000, there is a growing feeling the city is “overstuffed with high-end apartments,” as Crain’s New York Business’ Daniel Geiger put it.

One high-profile development in Brooklyn Heights is fetching a price 25% below the $300 million or more for which it was initially projected to sell.

The value of land sites in the city is down by 20% to 25% so far in 2016. Developers have been willing to pay record prices for land as long as the apartments they built fetched giant sums, but the average price of a luxury apartment fell 15% in the fourth quarter, according to the Corcoran Group.

--SeaWorld Entertainment Inc. is shutting down its killer whale shows and will eventually stop keeping the animals in captivity, bowing to criticism of its care of the animals depicted in the documentary “Blackfish.”

So the current generation of orcas will be the last in SeaWorld’s care, though one of them is pregnant.

SeaWorld has been struggling with declining attendance since the release of the 2013 film, but on Thursday the shares rose following the announcement.

SeaWorld is partnering with the Humane Society of the United States, which said it was happy with the company’s decision in taking steps to end “the era of captive displays of orcas” and continue its work to rescue and rehabilitate marine mammals.

--CBS is looking to sell one of its legacy brands: CBS Radio.  CBS was built on the back of its radio and television divisions, with CBS Radio still reaching an estimated 70 million consumers nationwide each week.  It has 117 radio stations in 26 markets.  [Meg James / Los Angeles Times]

--Sony Corp. agreed to pay $750 million for the Michael Jackson estate’s half of its joint venture Sony/ATV Music Publishing, which gives Sony full ownership of the music publishing company that represents the Beatles (and Bob Dylan and others).

Initially it was thought the Estate of Michael Jackson would reach a deal to buy out Sony’s stake, but it seems the purchase price from Sony proved too attractive, as reported by Ryan Faughnder of the Los Angeles Times.

Jackson paid $47.5 million for ATV Music, the publishing company that owned the Beatles catalog, in 1985.  In 1995, Jackson merged the business with Sony’s music publishing arm to form Sony/ATV.

--New Jersey’s richest resident, hedge fund king David Tepper, relocated his Appaloosa Management from New Jersey to Florida, which is free of personal income and estate taxes; a move that could save him hundreds of millions of dollars over time.

Florida has been pitching itself for hedge fund managers in the Northeast, some of whom face a 2017 deadline to pay taxes on billions of dollars in performance fees that they had kept offshore.

Tepper, as a Jersey resident, would have to pay the 9 percent state tax upon reporting his deferred compensation in 2017 on top of a federal tax rate of 39.6 percent, so moving to Florida could at least eliminate the 9 percent. [Bloomberg News]

--According to NASA, the global temperature took its greatest leap in 136 years of record-keeping in February, rising 2.4 degrees Fahrenheit (1.35 Celsius) above the 1951-1980 average.  It thus became the warmest February on record by a landslide.

In the Arctic, temperatures were a massive 6 degrees Celsius (almost 11 F.) above normal and sea ice was at a record low for the month.

Many experts are already saying 2016 will be the warmest on record, which wouldn’t be good for items like Zika.

But the present El Nino, which has been a big help in the rising temps, will wane and a La Nina event could kick in later this year, which should lead to a cooldown.

[It’s all relative, boys and girls.  Don’t put your beer outside on the deck in anticipation of this. Keep it in the fridge.]

--Denmark overtook Switzerland as the world’s happiest place, according to a report prepared by the Sustainable Development Solutions Network (SDSN) and the Earth Institute at Columbia University.

Iceland is third, followed by Norway, Finland, Canada, Netherlands, New Zealand, Australia, and Sweden.

The bottom 10 were Madagascar, Tanzania, Liberia, Guinea, Rwanda, Benin, Afghanistan, Togo, Syria and Burundi.

The United States came in at 13 (reasonable), the UK at 23, France at 32, and Italy at 50 (huh).

Professor Jeffrey Sachs, head of the SDSN and special advisor to UN Secretary General Ban Ki-moon, said: “There is a very strong message for my country, the United States, which is very rich, has gotten a lot richer over the last 50 years, but has gotten no happier.”  [Sachs is a Communist, but I digress.]

It’s true, our infrastructure sucks, my Dunkin’ Donuts is supposed to open at 5:00 a.m. and this one guy responsible never does before 5:12, my Mets/Jets/Knicks haven’t won it all in ages, my Wake Forest Demon Deacons are awful in basketball and football, I can’t afford veal cutlet every night, which was my life-long dream, and....

Foreign Affairs

Syria/Iraq/ISIS/Russia/Turkey: In a rather shocking move, Russian President Vladimir Putin announced on Monday he was ordering the withdrawal of most of Russia’s armed forces from Syria.

But Russia will retain an airbase outside the port city of Latakia and a naval station in Tartus, with Putin saying these bases would be protected by advanced air defenses.

The Russian air force has however continued to strike extremist targets since the announcement.

On Thursday, Putin said the military operation in Syria has cost approximately $484 million “and for the most part, was already included in the Defense Ministry’s 2015 budget for drills and military training,” as quoted by TASS.  Other estimates are higher.  [Moscow Times]

Putin did warn Russia would remain engaged in the war, and he promised additional support for the Syrian government.  He also named four Russians, including a military adviser, killed in action in Syria since Moscow launched its military intervention on Sept. 30.

But ISIS claimed the killing of five Russian troops in fighting near the ancient Syrian city of Palmyra, along with six members of the Syrian army and several members of Hizbullah.

The Syrian Observatory for Human Rights monitor said Russian advisers were near Palmyra, but could not confirm whether any Russian forces had been killed there in recent days.

According to the Observatory, a total of 1,799 Syrian civilians, including 431 children, have been killed in Russian air strikes. Another 1,276 ISIS members have also died, as have 1,567 rebels and fighters from the al-Qaeda-affiliated Al-Nusra Front, it added.

The Observatory accused Russia of being “a key accomplice in the killing of Syrian civilians, on a daily, continuous basis, using the fight against ISIS as an excuse.”  [AFP]

Meanwhile, Syria’s Kurds declared a federal region in areas under their control in the north of the country, a move rejected by both the government and opposition.

The announcement angered neighboring Turkey further and has complicated peace talks in Geneva.  An official in Ankara said: “Syria must remain as one without being weakened and the Syrian people must decide on its future in agreement and with a constitution.  Every unilateral initiative will harm Syria’s unity.” [Reuters]

The United States, the key backer of the Kurdish fighters in their battle against ISIS, also warned it would not recognize any self-ruled Kurdish region within Syria.

Kurdish parties already operate a system of three “autonomous administrations” in Syria’s north, stretching along the border with Turkey, with the Kurdish People’s Protection Units (YPG) clearing ISIS from most of the area.

But Turkey considers the YPG to be the Syrian affiliate of the Kurdistan Workers’ Party (PKK), an outlawed group that has been waging a decades-long insurgency against the government in Ankara. And so it was on Sunday that there was a third suicide bombing in Ankara in five months, this one claiming 37 lives.

Hours after it, Turkish jet fighters carried out a new wave of airstrikes on PKK sanctuaries in northern Iraq, with Ankara claiming it killed 67 Kurdish militants.

An offshoot of the PKK claimed responsibility for the suicide attack and said it was in response to attacks launched by Turkey on Kurds in the country’s southeast.

[Since last July, more than 340 members of Turkey’s security forces, at least 300 Kurdish militants, and more than 200 civilians have been killed, according to the International Crisis Group.]

In Iraq, ISIS launched two chemical attacks near the northern Iraqi city of Kirkuk, killing a three-year-old girl, wounding 600 and causing hundreds to flee, Iraqi officials said.

The U.S.-led coalition said the chemicals ISIS has used thus far include chlorine and a low-grade sulfur mustard which is not very potent.

Finally, at the Geneva talks, the Assad regime wants the opposition to agree to a national-unity government and leave the fate of Assad up to voters.  The opposition wants a transitional body that would strip him of his authority and eventually lead to his ouster.

Personally, Assad should be executed.  No trial necessary.

David Gardner / Financial Times

“Vladimir Putin is full of surprises.  His decision to withdraw Russia’s ‘basic forces’ from Syria was forecast by no one.  The Russian president’s courtiers will presumably be keeping him abreast of the many interpretations of his latest Syria gambit, no doubt emphasizing the sagacity and success of his bold intervention in the region. So what does the balance sheet look like?  And, in so far as it is possible to discern the motives of this most mercurial of leaders, what are they?

“When the Russian air force entered Syrian airspace last September, three of the president’s aims seemed clear.  The first was to salvage the crumbling regime of Bashar al-Assad. The second was to re-establish Russia as an important actor in the Middle East.  Mr. Putin, who mocks the U.S. and Europe for the fiascos of their regime-changing adventures from Iraq to Libya, also clearly intended to teach the West a lesson – and so relieve Western pressure resulting from his own intervention in Ukraine. The lesson turned out to be a Russia remake of ‘shock and awe.’

“From the outset Russian warplanes struck at Sunni rebels threatening Damascus and Mr. Assad’s coastal enclave in northwest Syria, rather than at ISIS jihadis – a declared target of the operation.  He used peace negotiations jointly chaired with the U.S. in Geneva as a smokescreen behind which to lay waste to any middle ground between the Assad regime and ISIS.  This showed up the West as too feckless to help Sunni rebels whom the U.S. and regional allies such as Saudi Arabia and Turkey had backed against the Assads.

“The regime regained ground.  More refugees swarmed to the Turkish border.  Mr. Putin’s Syria policy was doing double duty as his European policy, exacerbating the migrant crisis pulling the EU apart, and polarizing the politics of some of its member states.  A bonus for Mr. Putin was to add to the discomfiture of President Recep Tayyip Erdogan of Turkey, through whose territory runs the refugee road to Europe.  Having already contributed to the de facto partition of Syria by hardening the defenses of the Assad statelet, Mr. Putin then extended Russia’s complicit support to U.S.-backed Syrian Kurdish militia, whose fight against ISIS is enabling them to assemble a Kurdish entity below Turkey’s border, the dissolution of which is now Mr. Erdogan’s paramount aim....

“As some Russian jets start withdrawing, only Mr. Putin – the geopolitical puppeteer with a taste for intrigue – can know if this is the start of Syria’s endgame.”

Evelyn N. Farkas / Defense One

“It should now be clear to those hanging on to a shred of hope that Putin was never going to join the Western coalition against ISIS in Syria. The Kremlin’s objective was always to achieve a negotiated settlement through the Geneva Talks that allows Syrian President Bashar al-Assad to remain in power for some time and for Russia to retain its key influence over his government.  It was not to fight terrorism in Syria....

“Big questions remain: 1) How much military force will Russia withdraw and what assets will Russia leave in Syria? Will air operations continue?  2) Will Russia be prepared to deploy troops again if Assad begins to lose territory? 3) Will Assad (and Iran) compromise?  4) What are the implications for Ukraine?”

Editorial / Wall Street Journal

“The withdrawal may suck some wind from the sails of Mr. Assad, who has been ostentatiously promising to reconquer all of Syria.  That, too, suits Mr. Putin.  Like Ukraine, and Georgia, Syria could best serve his interests as a frozen conflict, where Russia can protect its strategic position in a divided country and exercise a veto over any permanent solution, while avoiding a long-term military commitment.  The United States and its allies will be left to carry on the fight against the Islamic State, which will be made considerably more difficult by the Assad regime’s survival. Thanks to Mr. Putin’s intervention, and the United States’ befuddled response to the Syrian crisis, it is not he but Mr. Obama who is left facing a quagmire.”

Ivo Daalder / Financial Times

“Keeping Mr. Assad in power – and maintaining Russia’s military presence in Syria – was always the primary reason for Russia’s intervention.

“But this ‘success,’ if we can call it that, has come at an amazing cost.  The Assad regime’s brutal tactics – ranging from dropping barrel bombs on civilian populations to using chemical weapons – have left close to half a million dead* and more than half the population of 22m Syrians displaced from their homes.  Yet, far from curtailing the atrocities, Russia’s five-month long intervention only intensified the violence, including the indiscriminate bombing of opposition forces and the denial of food and medicine to people in need.

“Assad remains in power – more securely now than before Russia’s intervention – but at an exceedingly high cost to the Syrian people, hundreds of thousands of whom have chosen to flee the country rather than stay....

“Mr. Putin’s Syrian adventure may have strengthened Moscow’s hand, at least temporarily.  But when it comes to Syria’s future, the Russian president’s declaration of ‘mission accomplished’ may be no more lasting than when a previous American president uttered those words months after the beginning of the Iraq war in May 2003.”

*Notice the death toll Mr. Daalder is using. I’m now using 400,000, but the vast majority of lazy press and officials are stuck on 250,000, which was an old figure from last summer, which itself was dated!

Philip Stephens / Financial Times

“Dwight D. Eisenhower left the White House in 1961 cautioning against the designs of the military-industrial complex assembled to confront the Soviet Union.  Barack Obama sees a real and present danger in a Washington foreign policy establishment inclined to set military intervention as the default option

“Mr. Obama likes to recall Eisenhower’s view of war as mankind’s ‘most tragic and stupid folly.’  He has resolutely resisted what his Republican predecessor once called a ‘recurring temptation to feel that some spectacular and costly action could become the miraculous solution to all current difficulties.’

“America got what it voted for in 2008. Mr. Obama won because he was not George W. Bush.  As a state senator in Illinois he had opposed the invasion of Iraq and campaigned to bring the troops home from the Middle East.  The aversion to war, the frustration with Arab allies, the diplomatic outreach to Iran, irritation with ‘freeriding’ Europeans and a reluctance to take on Russia’s Vladimir Putin over Ukraine, all fit the temperament of a leader intent on avoiding ‘stupid shit.’  The surprise is that so many were surprised by his refusal to be drawn into a fight with Bashar al-Assad of Syria.

“All this is charted by Jeffrey Goldberg in The Atlantic after a series of interviews with the president.  What stands out from Mr. Goldberg’s elegant essay is Mr. Obama’s unshakeable conviction that he is on the right side of history.  There is not the smallest smidgen of self-doubt.  Others (including White House aides) saw the failure to enforce a ‘red line’ on Mr. Assad’s use of chemical weapons as a big blow to U.S. power and prestige.  The president says simply: ‘I’m very proud of this moment.’

“Even leaders so obviously untroubled by self-doubt fret about their legacy.  Watching Syria burn cannot be comfortable.  Mr. Obama wants to be remembered instead for the remarkable diplomatic deal that has checked Iran’s nuclear program, for the opening to Cuba, for a pivot to Asia and for last December’s global deal on climate change....

“In truth, Mr. Obama’s critics have argued for something less than a rush to war in Syria – for safe zones and more help for the rebels rather than tens of thousands of boots on the ground. The costs of international inaction have been counted in hundreds of thousands killed and millions driven from their homes.  And yes, there has been a visible effect on America’s international standing. Mr. Obama’s answer to this catastrophe: ‘There are going to be times where we can do something about innocent people being killed but there are going to be times when we can’t.’....

[Ed. Obama had the chance in Aug. 2012 to do something about it, but it was “GM is alive, bin Laden dead.”  We had a presidential campaign, after all.  Screw the Syrian people.]

“The president is content to call himself a foreign policy realist – though he insists the hard-headed assessment of core national interests that keeps him out of the Middle East is leavened by the internationalism that has seen him at the center of the climate change talks.

“What is missing from the Obama doctrine is a strategic view of the role of U.S. leadership in sustaining global order.  Analysis drifts into an excuse for paralysis, but inaction carries as many dangers as intervention.  Mr. Obama’s realism bleeds into fatalism.  To observe that the U.S. cannot solve every problem in a disordered world should not be to conclude it is powerless.  Disorder is contagious and does not respect neat lines drawn around core national interests.

“As for Eisenhower, cautious he might have been about the rise of the military industrial complex, he was not a non-interventionist.  To the contrary, he was drafted to keep the Republican nomination out of the hands of Robert A. Taft – the isolationist who had argued that U.S. core interests did not extend to the defeat of Nazi Germany.”

Bret Stephens / Wall Street Journal

“Barack Obama – do you remember him? – will remain in office for another 311 days.  But not really. The president has left the presidency. The commander in chief is on sabbatical.  He spends his time hanging out at a festival in Austin.  And with the cast of ‘Hamilton,’ the musical. And with Justin, the tween sensation from Canada.

“In his place, an exact look-alike of Mr. Obama is giving interviews to Jeffrey Goldberg of The Atlantic, interviews that are so gratuitously damaging to long-standing U.S. alliances, international security and Mr. Obama’s reputation as a serious steward of the American interest that the words could not possibly have sprung from the lips of the president himself....

“(The interview of Obama is) a deep dive into a shallow mind.  Mr. Obama’s recipe for Sunni-Shiite harmony in the Middle East?  The two sides, says Mr. Obama, ‘need to find an effective way to share the neighborhood,’ sounding like Mr. Rogers. The explanation for the ‘show’ (the president’s words) in Libya?  ‘I had more faith in the Europeans,’ he says, sounding like my 12-year-old blaming her 6-year-old sister for chores not done. The recipe for better global governance? ‘If only everyone could be like the Scandinavians, this would all be easy,’ he says, sounding like – Barack Obama.

“Then there’s Mr. Obama the political theorist.  ‘Real power means you can get what you want without having to exert violence,’ the president says in connection to Vladimir Putin’s gambles in Ukraine and Syria.  That’s true, in a Yoda sort of way. But isn’t seizing foreign territory without anyone doing much to stop you also a form of ‘real power’?  Is dictatorial power fake because it depends on the threat of force?....

“As for current threats, Mr. Goldberg asks Mr. Obama what he would do if Mr. Putin made a move against Moldova, ‘another vulnerable post-Soviet state.’  Mr. Obama’s answer – ‘if it’s really important to somebody, and it’s not that important to us, they know that, and we know that’ – is of the April Glaspie school of diplomacy.  So long, Moldova.”

Iran: On Tuesday, an Iranian naval commander said his forces had retrieved thousands of pages of information from devices used by U.S. sailors who were briefly detained in January; the latest claim Iran has played up in the media to embarrass the United States.

Gen. Ali Razmjou said the information obtained from laptops, GPS devices and maps amounts to about 13,000 pages.  U.S. military officials have previously said that the only equipment taken was two digital Sim cards in satellite phones.

Editorial / Wall Street Journal

“The Obama Administration made many promises about its nuclear deal with Iran, and this week we’ve learned that another one turns out to be false.  Sanctioning Iran for violating its commitments really does depend on the acquiescence of those famously good global citizens, Russia and China.

“That’s the lesson from Russia’s refusal to go along with U.S. pressure to sanction Iran for its latest ballistic-missile tests. The Islamic Republic test-fired at least two missiles this month with ranges of some 1,200 miles and a payload capacity of up to one ton, which is more than enough to deliver a nuclear warhead. That’s an apparent violation of Security Council Resolution 2231, agreed to last year in connection to the deal, which ‘called upon’ Iran not to build or test nuclear-capable missiles for eight years.

“Iran never had any intention of honoring the resolution, and Moscow – which is in talks to sell Iran as much as $8 billion in advanced weapons [Ed. see 3/12 WIR] has no intention of enforcing it.  ‘A call is different from a ban so legally you cannot violate a call,’ Vitaly Churkin, Russia’s ambassador to the UN, explained this week.  Russia wields a veto on the Security Council, so Administration cajoling is futile.

“Such resistance makes nonsense of Administration promises that it didn’t need Russia’s cooperation to restore sanctions if Tehran cheats.  ‘Snapback sanctions’ was one of the main slogans by which wavering Democrats like New York’s Kristen Gillibrand were won over during last summer’s congressional debates. Another slogan – ‘unprecedented verification’ – amounted to a brief, one-time visit by UN inspectors to Iran’s military site at Parchin.

“It would be nice to think the next U.S. President could walk away from an agreement that Iran won’t honor and we cannot enforce. But it would take years to restore the global sanctions regime to what it was before the deal. Don’t expect Iran’s nuclear and missile programs to remain frozen in the meantime.”

This has been my exact point for months now in slamming those, like Sen. Ted Cruz, who say the U.S. can just rip up the deal.   Bull.  It’s too late!

North Korea: Pyongyang fired at least one ballistic missile Friday into waters off its east coast, after earlier test-firing short-range missiles and artillery into the sea as it continues to demonstrate its resolve to keep developing nuclear-tipped missiles in defiance of tightening international sanctions.

Friday’s missile flew 500 miles – the furthest a projectile has been fired since a long-range rocket launch last month.  [A second one apparently just went a few miles, meaning it probably exploded in the air.]

On Tuesday, North Korea’s state media said Kim Jong-un had ordered tests of a nuclear warhead and ballistic missiles capable of carrying warheads.

Meanwhile, University of Virginia student Otto Warmbier was given 15 years hard labor in North Korea for crimes against the state.

The offense? Stealing a propaganda sign from his hotel while visiting in January.

The state news agency KCNA has said Warmbier went to North Korea “to destroy the country’s unity” and that he had been “manipulated” by the U.S. government.

China: In his press conference connected to the conclusion of the National People’s Congress, Premier Li Keqiang said “I have confidence in a bright future for Hong Kong,” without commenting on the 2017 election of a new chief executive that could be explosive.

On the U.S. election, Li said the result would not affect Sino-U.S. relations, which “have always been moving forward.  I believe that is the underlying trend.”  Sino-U.S. trade ties had always been ‘win-win’ for both countries, the premier said.  “American businessmen know it very clearly in their hearts.”

Ha.

David Ignatius / Washington Post

“The Obama administration is moving toward what could be a dangerous showdown with China over the South China Sea.

“The confrontation has been building for the past three years, as China has constructed artificial islands off its southern coast and installed missiles and radar in disputed waters, despite U.S. warnings....

“What troubles the White House is that President Obama thought he was assured by President Xi Jinping in Washington in September that China would act with restraint in the South China Sea.  ‘China does not intend to pursue militarization,’ Xi said publicly in the Rose Garden.

“China’s recent moves appear to contradict these assurances....

“Obama cautioned in November against such provocative actions, telling an Asia-Pacific economic summit: ‘We agree on the need for bold steps to lower tensions, including pledging to halt further reclamation, new construction and militarization of disputed areas in the South China Sea.’

“China has largely ignored such warnings, and the administration’s problem now is how to assure Southeast Asian allies that it is not passive about the Chinese threat, while avoiding open military conflict....

“(The) White House has an intense interagency planning process underway to prepare for the looming confrontation. Options include an aggressive tit-for-tat strategy, in which the United States would help countries such as the Philippines and Vietnam build artificial islands of their own in disputed waters. The Philippines effectively took such a step in 1999 when it deliberately grounded a large vessel on a shoal in the Spratley Islands; it recently resupplied that vessel, while U.S. drones patrolled overhead.

“(Kurt) Campbell, (former assistant secretary of state for Asia), contends that the wisest course for the United States would be to work with other Southeast Asian nations to challenge Chinese claims. This might include planes and ships from Australia, Singapore, India and European countries, for example.

“ ‘You don’t want the Chinese to lose face,’ says Campbell.  ‘But you want their leadership to understand that if they continue along this path, they risk spiraling the relationship into a very negative place.’”

Yemen: The war that is receiving no attention has now taken more than 6,000 lives and a UN Human Rights official this week condemned the Saudi-led coalition for an air strike on a market that killed over 100 on Tuesday, making it one of the deadliest attacks in the war.

“These awful incidents continue to occur with unacceptable regularity,” said Zei Ra’ad Al Hussein of the UN.  There have also not been any investigations into them as promised earlier.  The UN is threatening a war crime investigation.

Ivory Coast: Editorial / Wall Street Journal

“Few days go by now without at least one mass-casualty terrorist attack somewhere in the world.  Two such attacks on Sunday, in the Ivory Coast and Turkey, killed (at least 53 combined).

“On Sunday afternoon gunmen raided Grand Bassam, a resort town in the Ivory Coast popular with wealthy locals and Westerners. The assault followed the template of other recent Islamist attacks in the region, with gunmen spraying fire at vacationers on the beach....

“Al Qaeda in the Islamic Maghreb claimed responsibility for the attack.

“Left unchecked in the Middle East, al Qaeda and Islamic State (ISIS) have expanded into Africa. An Islamist crescent stretches from the Horn of Africa to West Africa, and to compete for recruits Africa’s al Qaeda and ISIS affiliates are racing to out-do each other in savagery....

“Welcome to what is becoming the new global terrorist normal.”

France/Belgium: Raids in both Paris and Brussels, connected to the November Paris attacks that killed 130, resulted in one suspect being killed in a Brussels suburb on Thursday, and then on Friday, Belgian authorities arrested Salah Abdeslam in the Molenbeek district of Brussels, capturing the last remaining suspected assailant in the Paris massacre.

But while Abdeslam could provide valuable information, how was it he was able to evade capture for so long while apparently spending most of his time right under the noses of Belgian authorities in the capital?

Friday night, French President Hollande said the terrorist threat is far from over.  “We clearly see that these terrorist groups are still armed.”

Brazil: What a mess.  Large anti-government protests broke out after President Dilma Rousseff attempted to salvage her government by naming her predecessor, Luiz Lula da Silva, as chief of staff, which would shield da Silva from prosecution.

Rousseff said she was bringing Lula into the government on merit and not to shield him from a probe.  But a federal judge released phone recordings on Wednesday that suggest otherwise.  The conversation is between Rousseff and Lula, obtained through a police wiretap.   The judge blocked the appointment.

Prosecutors have sought a warrant for Lula’s arrest after charging him last week with money laundering and making false declarations.

Opposition politicians hailed the judge’s decision on Thursday as a triumph for Brazilian democracy, while the government vowed to appeal, blasting the order as part of a “coup” by the country’s elite.

And Brazil is hosting the Olympics?  Cancel the Games, now.

Argentina: The navy said it sank a Chinese-flagged boat that was fishing illegally in national waters.  The navy’s statement said the boat was intercepted off the coast of Puerto Madryn, adding that it did not heed warning calls and tried to ram an Argentine naval vessel.

Sailors then shot holes in the boat, causing it to sink, and four people on board were rescued and arrested.

Argentina said it was the first time in 15 years its navy had sunk a fishing vessel.

China’s government called for an investigation, as it added 28 others were rescued by a nearby Chinese vessel.

Cuba: President Obama begins his three-day visit here on Sunday, the first American president to do so since Calvin Coolidge almost 90 years ago.

Ahead of the trip, Cuba announced it would end a 10 percent tax on using U.S. dollars, but the Cuban government has not been as eager as the White House had hoped on finding ways to expand economic ties. 

Far more next time as we see, for example, if Obama is successful in meeting with any real dissidents.

Random Musings

Primary Results...Republicans

Florida: Donald Trump 46 percent, Marco Rubio 27 percent
Illinois: Trump 39, Ted Cruz 30
Missouri: Trump 40.92, Cruz 40.73
North Carolina: Trump 40, Cruz 37
Ohio: John Kasich 47, Trump 36

Delegates

Trump 661
Cruz 406
Rubio 169
Kasich 142

1,237 needed for nomination.  [Source: AP...these numbers change slightly based on the latest local calculations.]

Trump pulled off the biggie, Florida, which, like Ohio, was winner-take-all, 99 delegates; with the additional benefit of eliminating Marco Rubio.

But even with Kasich’s win in Ohio, that simply postpones the day when Ted Cruz can get Trump head-to-head

--Fox News canceled its upcoming Republican presidential debate after both Trump and Kasich backed out.  Kasich said he would only attend the event in Salt Lake City if Trump was there.   Trump said he wasn’t going and instead is giving a speech to the American Israel Public Affairs Committee (AIPAC) in Washington that should be interesting.

As for Rubio, his worst moment of the campaign was his awful performance in the debate before the New Hampshire primary that Gov. Chris Christie exploited, consigning Rubio to fifth place.  Rubio, by his own admission, also made a foolish mistake by going into the gutter with Trump.  It didn’t fit his positive campaign.

But as he said Tuesday night in announcing he was dropping out: “America’s in the middle of a real political storm, a real tsunami, and we should have seen this coming.”

Edward Luce / Financial Times

“So what happens now? The race is only likely to get uglier.  Next week Mr. Trump looks set to win the primary in Arizona, not least because the border state supports his call to wall off Mexico.

“Apart from a few relatively small primaries, the next big one is not until New York in mid-April. The long gap is likely to be filled by the beginnings of the general election campaign.

“At Mr. Trump’s victory event on Tuesday night, he was prominently flanked by Corey Lewandowski, his campaign manager, who is under investigation for allegedly assaulting a reporter at a rally last week. Another reporter was debarred from Mr. Trump’s event for publishing a negative article.

“If elected president, Mr. Trump has vowed to use the office to restrict the first amendment free speech rights of publications he deems hostile.  His campaign is offering something of a dress rehearsal for what that might be like. The same applies to protesters at his events, whom Mr. Trump has relished in singling out for mockery.

“There is a menacing edge to U.S. politics nowadays, which Mr. Trump has overtly stoked.  It has done him little harm so far – indeed, in some respects it seems to have helped buoy his support base.  Even if Mr. Trump wanted to cool things down, it would be quixotic to assume that he could.”

John Podhoretz / New York Post

“It’s possible Hillary Clinton clinched the November election Tuesday night – and not because of her victories, but because the Republican Party is likely to be hit by a maelstrom in a few months that will redound to her benefit.

“John Kasich’s victory in Ohio has made Donald Trump’s path to the Republican nomination vastly more complicated, despite the fact that Trump had yet another stunning night.

“It’s mathematically impossible for Kasich to win the nomination, but his appeal to Republican moderates might allow him to eat away at Trump here and there and thereby serve as a key factor in denying The Donald a victory on the first ballot at the GOP convention in July....

“Cruz didn’t have a good night, and it’s late in the process for a possible nominee to go through a multistate primary without winning a single one....

“So Trump continues to be strong but not quite strong enough. Cruz is in second but he isn’t gaining strength.  Kasich can’t win but can really gum up the works for Trump in various places. And so it may go henceforth. Which means chaos is coming.

“How so?  If Cruz doesn’t charge but Trump doesn’t build and Kasich takes a big one here and there, Trump will end the primary season short of the 1,237 delegates he would need to secure the nomination on the first ballot in Cleveland.”

But if Cruz doesn’t turn it on, and Kasich doesn’t win anywhere else, “Then Trump will likely end up 100 delegates away, or 75, or 50.  In that case, the Never Trumpers will not relent, especially if polling by July shows Hillary Clinton winning by 10 or 15 points.

“Trump will take neither scenario lying down.  And in the latter case, he will have an awfully strong point.

“And he would surely play his ‘I won fair and square even if I didn’t get 1,237’ card in the ugliest possible way.  If you think a guy who enjoys protesters getting punched at his rallies is not going to threaten riots, fist-fights and World Wrestling Entertainment behavior if he doesn’t get what he wants, you haven’t been watching.  [Ed. a day after Podhoretz wrote this, Trump did indeed threaten “there will be riots” if he doesn’t get the nomination even though he could be just a few delegates short.]

“If he doesn’t get the nomination, he’ll vow to block the GOP nominee. If he does, millions of Republicans will stay home.

“If the GOP convention descends into this kind of chaos, and a month later Hillary is coronated in a stately, sobering, beautifully stage-managed three days of joy, the contrast will be sobering.  The American people do not like chaos. The Trump disruption machine is on the way to crashing and burning the GOP.”

--George F. Will / Washington Post

“If Trump does become acquainted with gravity – no, not intellectual sobriety; nature’s downward tug – it will be for two reasons: The Republican Party, which together with the Democratic Party has framed the nation’s political debate since first running a presidential candidate 160 years ago, is not a flimsy dinghy to be effortlessly commandeered by pirates hostile to its purposes. And the lavish media exposure that has fertilized the growth of the weed of Trumpism in the garden of conservatism might still stunt its growth by causing his supporters to have second, or perhaps first, thoughts.  A steady diet of his self-adulation can be cloying; even an entertaining boor can become a bore.”

--Chris Cillizza of the Washington Post was the first one I saw to say Florida Gov. Rick Scott could be a good running mate for Trump, should this come to pass.  Cillizza wrote this before Scott formally endorsed Trump Thursday.  I like the call, though if Trump follows through on his initial thought of selecting an ‘insider,’ then of course John Kasich should be the heavy favorite.  It’s a no-brainer.

[I am not endorsing Trump...these are just random musings, sports fans.]

--A new Gallup Poll shows that more than three-quarters of Latinos – 77% - view Donald Trump unfavorably, compared with just 12% who have a favorable opinion.

This net favorability score, negative-65 percentage points, contrasts dramatically with all the other potential candidates in the field.  For example, Ted Cruz and John Kasich (as well as Marco Rubio before he dropped out) had net scores near zero among Latinos, meaning that the number with positive views of them are roughly the same as the number with negative views.

Hillary Clinton has a net positive, with 59% of Latinos having a favorable opinion and 26% a negative one.  [David Lauter / Los Angeles Times]

--Someone please tell Mitt Romney that we really don’t give a damn about what he thinks these days.

Primary Results...Democrats

Florida: Hillary Clinton 64 percent, Bernie Sanders 33 percent
Illinois: Clinton 50, Sanders 49
Missouri: Clinton 49.61, Sanders 49.37
North Carolina: Clinton 55, Sanders 41
Ohio: Clinton 56, Sanders 43

Delegates

Clinton 1,132 (1,599 w/superdelegates)
Sanders 818 (844 w/superdelegates)

2,383 needed for nomination.  [Source: AP]

So Hillary won all five but I was surprised more wasn’t made of the fact that Sanders easily could have picked off Illinois and Missouri.  But it was Hillary’s romps elsewhere that allowed her to gain about 120 delegates net over Sanders to increase her margin to over 300, non-superdelegates.

--Props to Monmouth University polling, which is often maligned, as these folks had Florida 44-27 Trump days before, and 40-35 Kasich in Ohio; while they had Clinton over Sanders in Ohio 54-40.  Darn good job.

Quinnipiac University, on the other hand, had Trump winning Florida 46-22, a 38-38 tie in Ohio, and Clinton defeating Sanders 51-46 in Ohio.  Not good.

--George Soros, following an 11-year hiatus, is spending big money again on the campaign, at least $13 million to support Hillary Clinton and other Democrats.

Soros, in forming a new group that has the goal of increasing voting by Latinos and immigrants, said in a statement recently: “The intense anti-immigrant and anti-Muslim rhetoric that has been fueled by the Republican primary is deeply offensive. There should be consequences for the outrageous statements and proposals that we’ve regularly heard from candidates Trump and Cruz.”

Soros last spent major bucks in the 2004 president election, a failed attempt to unseat George W. Bush.  It was then he backed MoveOn.org in a big way, though apparently he has not given them any funding since.

--Editorial / New York Post

“Here’s a novelty: Hillary Clinton told the truth.  Oops!

“ ‘We’re going to put a lot of coal miners and coal companies out of business,’ Clinton said Sunday night while boasting about her clean-energy program – and with a big smile on her face.

“In fact, this is standard Democratic policy: President Obama’s been throwing coal miners out of work for seven years now, aiming to deliver on his 2008 pledge to ‘bankrupt’ the coal industry.

“But most Dems have the sense to pretend they’re just protecting the environment – and bashing business, ‘natch.

“Fine.  Clinton quickly followed with a vow to dole out $30 billion for job retraining and to cover early-retirement costs for the workers she’ll get fired.

“But retrain for what?  Name a single working-class industry that the modern Democratic Party actually favors.  (And, no, ‘green jobs’ don’t count: They exist almost exclusively in liberal rhetoric.)

“In fact, if Clinton keeps up with the honesty, she’ll tell the voters of other industries she means to destroy – oil, for sure, and probably natural gas, too.  (Gov. Cuomo’s already led the way there with his ban on fracking.)  And, hey, aren’t those evil Koch brothers big in (ick!) manufacturing?

“No, coal’s not the perfect fuel – nothing is. But the industry has invested billions in getting cleaner – only to find Democrats (or their green masters) always raising the bar.

“To see how shameful the Democrat’s betrayal is, look to history: The coal-miners’ union, the United Mine Workers of America, has one of the nation’s proudest records on race.  Its founding constitution of 1890 barred discrimination based on race, religion or national origin.

“By 1900, some 20,000 black miners made the union about 20 percent African-American.  And the UMWA stuck by those ideals all the way up to fighting to end apartheid.

“Political commentary this year is full of sneers about what ignorant bigots working-class voters are. We’d suggest the biggest ignorance lies in the commentariat.”

--Testifying Wednesday on Capitol Hill, Army Chief of Staff Gen. Mark Milley said years of combat in Iraq and Afghanistan, constrained budgets and troop cuts have had a cumulative effect on the service.

Specifically, what Milley describes as a “great power war” against one or two of four countries – China, Russia, Iran and North Korea – would pose greater challenges.

So with this in mind, we learned this week that the U.S. Missile Defense Agency is forgoing tests meant to ensure a critical component of the nation’s missile defense system will work as intended.

The component at chief issue is the “alternate divert thruster,” which is necessary to intercept and destroy an enemy warhead traveling at supersonic speed.

According to a report from the Government Accountability Office (GAO), the missile agency “has made progress” toward fielding more interceptors.  But the report, dated Feb. 17, says the agency is “relying on a highly optimistic, aggressive schedule that overlaps development and testing with production activities, compromises reliability [and] extends risk to the warfighter.”

The thrusters being installed on 10 new interceptors, however, will not have undergone critical testing, government officials told the Los Angeles Times.

The missile agency was expected to expand the number of interceptors from 30 to 44 by the end of 2017.  Currently, there are four at Vandenberg Air Force Base in California, and 26 at Ft. Greely, Alaska.  All of the new interceptors are going to Ft. Greely.

--Morale in the New York City Police Department is at rock bottom, according to a police union survey.

The Patrolmen’s Benevolent Association online membership survey found that 87% of police officers believe the city is “less safe” since Mayor Bill de Blasio took over two years ago.

A stunning 96% of officers who responded said they feel the relationship between the NYPD and the public has worsened in recent years, with 70% saying it has “greatly worsened,” according to the poll handled by McLaughlin & Associates.

De Blasio’s people slammed the survey, noting that overall crime has dropped 5.8% over the last two years, while the City has moved to hire 1,300 new cops and outfit officers with new bulletproof vests, smart phones and tablets.

But Police Commissioner William Bratton said he wasn’t surprised at the results.

--As for the homicide rate nationwide, some cities continue to see spikes.  This year, Chicago has seen 109 murders through March 11, almost double last year’s total during the period.  Los Angeles has tallied 51 murders through March 9, a 21% increase from 2015.

Law-enforcement officials say the growing body count appears to be driven by renewed gang activity and surging violence linked to the drug trade.

But New York City had just 48 homicides this year through March 9, down from 64 in 2015.

Last year, 44 of the 65 largest police agencies, including New York City, Los Angeles and Chicago, reported increases in murders from 2014.  [Wall Street Journal]

--Pope Francis set the date and paved the way for Mother Teresa to be made a saint on Sept. 4.  Tens of thousands will descend on Rome to honor a woman who spent decades in Calcutta (now Kolkata) caring for the sick and homeless.

Mother Teresa actually began her life as a nun with the Loreto Sisters of Dublin.  She won the Nobel Peace Prize in 1979 and died on Sept. 5, 1997, aged 87.

She no doubt also would have picked Middle Tennessee State and Stephen F. Austin in her bracket.

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

God bless America.

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Gold $1255
Oil $39.44

Returns for the week 3/14-3/18

Dow Jones  +2.3%  [17602]
S&P 500  +1.4%  [2049]
S&P MidCap  +1.6%
Russell 2000  +1.3%
Nasdaq  +1.0%  [4795]

Returns for the period 1/1/16-3/18/16

Dow Jones  +1.0%
S&P 500  +0.3%
S&P MidCap  +2.2%
Russell 2000  -3.0%
Nasdaq  -4.2%

Bulls  44.4
Bears  30.3  [Source: Investors Intelligence]

Have a great week.  I appreciate your support.

Brian Trumbore

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