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Week in Review

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03/26/2016

For the week 3/21-3/25

[Posted 11:00 PM ET, Friday]

Note: StocksandNews has substantial costs (having recently done my taxes, $2,700 for subscriptions alone).  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’s greatly appreciated.  Special thanks this week to Dan C.

Edition 885

Washington and Wall Street

At his press conference in Argentina on Wednesday, President Obama was asked, “What was your dream when you got elected? And were you able to realize it?”

Obama: “I ran for office because I believe deeply in the American people, and that our politics did not fully reflect all the values and the talents and the goodness of the American people....

“And I wrote down a list of things I wanted to do, and I keep it at my desk.  And I won’t say that I’ve gotten 100 percent done, but we’ve gotten a lot done.  It is indisputable that the economy is much stronger now than when I came into office.  We’ve created over 14 million new jobs. We’ve cut our fiscal deficits by two-thirds. We have provided new health insurance to 20 million people who didn’t have it before. We have not only reduced the acceleration of our carbon footprint, but we helped lead the way to gain a global agreement on climate change.

“On the international front, Cuba is just one example of the work we’ve done. The Iran nuclear deal that took away that threat from the world, but also gave Iran an opportunity now to rejoin the community of nations.  The work that we’ve done in Afghanistan – ending a war, but now giving them the opportunity to secure their own future.  Work in remote places like Burma, where what had been a 40-year military junta is now on the brink of a new era of democracy. So I think our values – the values that I felt best represented America – has also been reflected in our foreign policy.

“And one of the things I learned after seven and a half years in office is that – and I’ve used this metaphor before – we’re like a relay runner.  We take a baton. And sometimes when we take the baton, we’re behind in the race.  And we don’t always choose the circumstances when we get the baton. The question is, for our leg of the race, did we advance the causes we care about? Did our team gain ground against the challenges that we care about? And on that front, I believe we have achieved that.

“But we still have a lot of work to do. There are a lot of people in America who are still looking for more opportunity.  I certainly have not been successful in getting the two parties to work together more cooperatively.  And the tone of our politics is not – doesn’t reflect, I think, what’s best in us. There are still major challenges.  ISIL is still killing people.  North Korea still has a nuclear weapons program. Middle East peace has not been achieved.

“So if I were satisfied now, then I would be blind to the many challenges we face.  I can say with confidence that the work we’ve done has made both America and I think the world stronger and better. And I feel pretty good about the fact that I can look back and say that I operated with honesty and integrity and don’t feel as if I said things I didn’t believe or acted in ways that would make me ashamed. And that I think counts for something, as well.”  [Source: whitehouse.gov]

In case you wondered what President Obama’s last address to the American people will sound like next January, this is your preview.

So there you have it.  He is quite satisfied with himself, of course, as he always has been.  He has actually left the world “stronger and better.”  He really believes that.  There are probably 40% of so of Americans who believe this as well.  That’s depressing.

Obama believes he is going down as one of the great presidents of all time.  I, on the other hand, believe he is easily one of the five worst, and as the decades pass, with the foreign policy mess he is leaving behind he’ll be bottom three.

After our latest round of terrorism in Europe this week, and with far more on the way, with far deadlier consequences, I cannot help but repeat what I’ve been writing since the summer of 2012.  Historians will look back on the opportunity he missed in Syria, and how he cared far more about an election (“GM is alive...bin Laden dead”) than the future of the Middle East, and thus Europe and much of the rest of the world, and they’ll kill him for it.

I plowed through Jeffrey Goldberg’s voluminous essay in the April 2016 issue of The Atlantic, thoughts and interviews with the president, and for all of Goldberg’s excellent work, he focuses more on 2013 and Bashar al-Assad’s gassing of his own civilians, after which Obama didn’t bomb Syrian government targets in retaliation for crossing his red line, which indeed sunk Obama’s credibility around the world.

But Goldberg doesn’t say anything about the summer of 2012 when Turkish President Erdogan, John McCain, Lindsey Graham, and others, including yours truly, were screaming for a no-fly zone in northern Syria to protect Syrians from an increasingly vicious dictator.  There was little risk.  There was no Russia.  Assad wouldn’t have dared shoot one of our planes down.

There were ‘just’ 23,000 dead then in the Syrian civil war, with about 260,000 refugees, and this was a time when Erdogan was acting like a moderate and could have been pulled permanently into our sphere.  It’s called diplomacy.

But Obama failed to grab the opportunity because of the election, and his wanting to be the anti-Bush, and the world, particularly the Middle East and Europe, has now reaped the whirlwind. It has been changed forever for the worse.

What Obama failed to do will go down in history as one of the single worst mistakes ever made by a Western leader.  380,000+ more dead since, just in Syria; millions of Syrian refugees, many of whom are flooding Europe, millions more displaced; the full emergence of ISIS; instability across the entire Middle East and north Africa; and the likes of Vladimir Putin and Xi Jinping realizing the U.S. under Barack Obama was a country that could be toyed with.

I’ve said countless times, the last year in particular with regards to Syria and efforts at a peace agreement, and then in the aftermath of the Iran nuclear deal, where about eight years ago I pointed out that all you needed to know in terms of Iranian intentions was their reluctance to let inspectors onto a single military base, Parchin, that in both instances it was already “over.”

It’s too late.  If at times you wonder from my writing why I’m not screaming more after a particular incident or terror attack, it’s because of just that.

It’s too late.  It’s over.

I’m glad the Pentagon made the announcement today that the No. 2 figure in ISIS, al-Qaduli, was killed in a Special Ops mission (though we had hoped to take him alive).  This is one case where I won’t be cynical about ‘another leader’ exiting the theater.  This one matters.  It’s also highly encouraging that we obviously have  some ‘insiders’ providing the intelligence that has been so sorely lacking.

But it’s too late.  Tens of thousands of Muslims are being radicalized around the world.  Europe has obviously become Ground Zero.  [Germany is toast.]

The United States under President Obama had a prime opportunity in 2012 and he blew it.

But he’ll look at himself in the mirror on his last day in office and no doubt he’ll kind of smirk and think, ‘I did a terrific job.  I left the world and America stronger.’ 

I, on the other hand, will be seething.

I’m old enough to have seen more than my share of presidents exit the stage.  For some I’ve shed a tear.  For this one...you don’t want to know what is in my heart.

---

Just a few notes on the economy and the markets.  With Wall Street closed on Friday, it was easy to miss that the government nonetheless released its final revision to fourth-quarter GDP, up 1.4% from the prior estimate of 1.0%, so with 2015 in the books, it looks like this.

2015 GDP (seasonally adjusted at annual rates)

Q1... 0.6%
Q2... 3.9
Q3... 2.0
Q4... 1.4

Or the same 2% we’ve been cranking out since the end of the Great Recession.  It should have been a lot higher.

[The Atlanta Fed’s GDPNow indicator currently has first-quarter GDP pegged at just 1.4% as well.]

On the housing front, existing home sales for February came in far less than expected and down 7.1% to a seasonally adjusted annual rate of 5.08m, with the median home price at $210,800, or up 4.4% year over year.

New home sales for the month were at 512,000 ann., owing to a 38.5% surge in the West.  But for the first two months, new home sales are running below 2015’s pace.

February’s durable goods report (big ticket items) was below expectations, -2.8%, -1.0% ex-(volatile) transportation.

But a slew of Fed speakers decided that just a week after their Open Market Committee meeting, where, through Chair Janet Yellen, they told the world they were going to hike interest rates just two more times in 2016, not the four they were targeting back in December, the jerks would start talking about hiking the benchmark funds rate as early as their April 26-27 confab.

For crying out loud, we all love transparency but this was beyond asinine.

Now I just wrote last week that inflation is actually at the Fed’s targeted 2% already, if you look at core CPI, for example, but how can at least five Fed governors suddenly change their mind in the span of a week?  The likes of San Francisco Fed President John Williams, Atlanta’s Dennis Lockhart, and St. Louis Fed President James Bullard, among others, decided that prospects for inflation actually aren’t that bad and that inflation and employment targets could exceed their targets sooner than later so they might have to act shortly.

I mean I actually think they’re right, but it was just last week I called them a band of idiots and here they go out and prove it within days!  Gee, thanks, guys, but you’re hardly the kind of leaders we’re looking for when it comes to the control of monetary policy.  Helter skelter comes more to mind.

A lot of us would just like the members of the Fed to shut up and let Chair Yellen be the sole spokesperson.  Give her your input behind the scenes, like it used to be.

Europe and Asia

Just last Saturday, Belgium’s Interior Minister, Jan Jambon, said the country was on high alert for a possible revenge attack following the capture of 26-year-old Salah Abdeslam in a flat in Brussels on Friday.  “We know that stopping one cell can...push others into action.  We are aware of it in this case,” he said.

ISIS suicide bombers then hit Brussels airport and a metro train Tuesday, killing at least 31 and wounding up to 300 in the worst such attack in Belgian history.

Editorial / Wall Street Journal

“Authorities warned for months that Brussels was likely to be the target of an Islamist terrorist attack, but that didn’t lessen the shock when it happened Tuesday morning....

“The attacks follow Friday’s arrest in Brussels of Salah Abdeslam, an alleged ringleader of November’s Islamic State-inspired terror attacks in Paris, and Islamic State claimed responsibility for the Brussels bombings....

“The immediate temptation will be to point to Belgium’s many and well-known policing failures, and authorities deserve the heat.  Multiple local and federal police departments with ineffective coordination struggle to track terror cells, or other organized crime.  After Abdeslam’s capture, at least one Belgian official over the weekend professed surprise the terrorist was still in Belgium – the government thought he was long gone.

“Belgium, like many other European countries, has allowed to develop what amounts to a parallel Islamist society.  Multiple raids in the Molenbeek neighborhood of Brussels have uncovered large stockpiles of weapons, and Belgian officials said this weekend they were surprised by the number of people from whom Abdeslam received support as a fugitive.

“But Tuesday’s Brussels attacks, and Paris and San Bernardino, Calif., before, are mainly an indictment of Western foreign-policy failures in Syria.  Terrorists linked to Islamic State...are perpetrating one large attack after another in the West.  Islamist attacks large and small around the world have become a daily occurrence.

“In part this is because the perception that Islamic State is winning increases its appeal among Western-born potential followers....

“Islamic State also is exploiting the instability it creates, especially through refugee flows....Germany’s domestic intelligence chief, Hans-Georg Maassen, said (last month) that officials across Europe have ‘seen repeatedly that terrorists are being smuggled in, camouflaged as refugees.’

“Europe seems determined to keep treating this as a political problem, or at least as anything other than a call to bolster military efforts in Syria.

“There’s a role for policing in a counterterror strategy, but also a limit....Until the West is prepared to fight this terrorist threat at the source, Tuesday’s victims in Brussels won’t be the last.”

By Friday, Belgian police had arrested at least nine people and Germany two in investigations into the suicide bombings, while authorities in France said they had thwarted a plot “that was at an advanced stage.”

Most of those arrested in both Belgium and Germany were said to be part of the broader Abdeslam cell.

At least two men suspected of taking part in the attacks were still at large at last word; one from the metro station, the other, the man in white, at the airport.

We learned this week that one of Tuesday’s bombers, Ibrahim el-Bakraoui, a Belgian national, had been arrested last year by Turkish police near the Syrian border on suspicion of belonging to ISIS.  He was deported to the Netherlands* but freed because “Belgium wasn’t able to make the terrorism connection,” according to Turkish President Erdogan.

Turkey said it warned both Belgium and the Netherlands that Ibrahim was a “foreign terrorist fighter.”

*As a citizen of an EU country, he had a choice as to where to be deported within the EU and apparently selected the Netherlands.

Ibrahim’s bother, Khalid, was wanted on international and European arrest warrants issued last December in conjunction with the Paris attacks in November, but Belgian prosecutors said neither brother had known prior links to terrorism.

And then when Abdeslam was arrested he was questioned for only an hour, even though Khalid’s name was on the lease of an apartment where Abdeslam’s fingerprints were found.

The Belgian government acknowledged it mishandled Turkey’s warnings about Ibrahim El Bakraoui. But at least three of the suicide bombers, including Najim Laachraoui, the second airport suicide bomber, and bomb maker, were known to Belgian authorities for their ties to Paris.

We also learned that brothers Khalid and Ibrahim were originally considering an attack on a nuclear site in Belgium, but the arrest of Abdeslam may have forced them to switch targets in the Belgian capital.

A 10-hour video from a camera hidden in front of a nuclear official’s house was found in December, yet there doesn’t seem to have been any follow-up even though the brothers were connected to the camera.

Separately, the Associated Press reported it has learned at least 400 fighters have been trained by ISIS to target Europe in deadly waves of attacks, deploying interlocking terror cells like the ones that struck Paris and Brussels.

Abdeslam was said to have entered Europe in a multinational group of 90 fighters, who scattered “more or less everywhere.”

Jonathan Marcus / BBC News

“(The) problems of a fragmenting Middle East are fast-becoming Europe’s problems too.

“Whether it be terrorism, the tide of migration, Libya’s future, Iran’s nuclear policies, or the problematic relationship with Turkey, the wider Middle East is now intruding into the European consciousness on a day-to-day basis.

“In some ways, this is a reversion to a long-standing historical norm.

“Think back to the colonial era, when France, Italy and Great Britain controlled huge swathes of territory in the Middle East....

“Indeed, the map of the Middle East so much under threat today was largely set by these same European powers after the Great War.

“In the past, terrorism too has battered on Europe’s doors.

“The struggle for Algerian independence in the late-1950s brought terror attacks against French targets.

“And a generation later, in the 1990s, Algerian extremists again attacked France, both to highlight their own campaign and to exact revenge against what was seen as the former colonial oppressor.

“But what is happening today seems fundamentally different.

“In part, the nature of the Middle East’s crisis is more severe.

“While geography may be immutable, in tangible ways the proximity of the region to Europe has increased.

“And the varied forces of globalization have at one and the same time increased the attractiveness of the European economic area and highlighted the deficiencies of much of the Arab world.

“A globalized culture has served to reduce distance as a factor in world affairs....

“The refugee crisis raises even deeper questions about Europe’s values and the nature of the wider society the European Union countries are seeking to establish.

“Indeed, problems that in many cases have their roots abroad are now having a significant impact on domestic politics, too.

“Think of the rise of populist parties in Scandinavia, the strength of the National Front in France or the gains made by the far-right at the recent regional elections in Germany.

“This, in truth, is a problem from hell.

“The certainties that informed policy throughout the Cold War and that appeared to triumph at its close are no more.

“History didn’t end.  It returned to bite the Europeans on the backside.”

David Ignatius / Washington Post

“Europe is facing a security threat that’s unprecedented in its modern history, at a time when its common currency, border security and intelligence-sharing are all under severe stress.  If Europe were a stock, a pragmatic investor would sell it, despite the sunk cost and sentimental attachment. Without radical restructuring, it’s an enterprise headed for failure.

“The European Union needs to reinvent its security system.  It needs to break the stovepipes that prevent sharing information, enforcing borders and protecting citizens.  In the months before Tuesday’s terrorist attacks in Brussels, ‘the system was blinking red,’ as George Tenet, the former CIA director, famously described the period before Sept. 11, 2001.  Yet Belgium (like pre-9/11 America) couldn’t connect the dots. 

“The jihadist wave rolling back toward Europe is dizzying: U.S. intelligence agencies estimate that more than 38,000 foreign fighters have traveled to Iraq and Syria since 2012. At least 5,000 of them came from Europe, including 1,700 from France, 760 from Britain, 760 from Germany and 470 from Belgium, according to official data collected by the Soufan Group, a security consulting firm.  Relative to its population, Belgium spawned the largest number of these fighters.

“Belgian authorities couldn’t find Salah Abdeslam for more than 120 days – until they finally nabbed him Friday a few blocks from where he grew up in the Arab enclave of Molenbeek. He was hiding in plain sight. But Belgium’s failure was cooked into the system: The jihadists move stealthily, and the Belgians didn’t collect or share enough of the intelligence that was there.  Authorities had allowed Molenbeek to become a haven – more dangerous to Belgium than even the jihadists’ sanctuaries in Syria, Iraq and Libya.

“Americans, who are less exposed to this threat, may smugly imagine they can wall themselves off. But the Islamic State’s rampage is more an American failure than a European one. The United States formed a global coalition to ‘degrade and ultimately destroy’ the Islamic State back in September 2014.  This strategy hasn’t worked; the Islamic State’s domain has shrunk in Iraq and Syria but expanded elsewhere.

“The failure of the U.S.-led coalition to contain the jihadists has left a fragile Europe exposed to terrorism and social upheaval. President Obama hopes that history will affirm his prudent policy, but this view is surely harder to maintain after the Paris and Brussels attacks.”

As to the migration angle....

From last Sunday, March 20, migrants who arrive on Greek islands will be returned to Turkey.  The first transfers are likely to take place in early April, because each migrant has to be registered, given a chance to file for asylum, have his case heard and possibly file an appeal before being sent back to Turkey.

Nearly 50,000 migrants are stuck on the Greek mainland at camps, in Paraeus and on Greece’s northern border with Macedonia.  More than 10,000 have been living in awful conditions in the Idomeni camp on the Macedonian border, after west Balkan countries sealed their borders last month to cut the flow of migrants making their way to Germany and northern Europe.

Mike Hookem, defense spokesman for the UK Independence Party (UKIP), which is campaigning for “Brexit” from the European Union, noted: “The head of Europol said in February that 5,000 jihadists are at large in the EU having slipped in from Syria.  There are 94 returned jihadists currently living in Molenbeek, Brussels. This fact alone should alert people to the fact that open borders are putting the lives of European citizens at risk,” he explained.

The 1995 Schengen Agreement has enabled free, passport-less movement between countries within the EU.  There are currently 26 nations who operate under these laws, but now the entire agreement is in jeopardy.

UKIP leader Nigel Farage summed it up: “I’m very upset by events in Brussels today and even more depressed for the future.”

Tony Barber / Financial Times

“As elsewhere in Europe, the problem in Belgium is not so much fiery sermons preached at mosques as the radicalizing effect of conflicts in the Middle East and North Africa, the temptations of online fanaticism, poor integration of Muslim communities and inadequate police and security measures.  Molenbeek, a district of Brussels that is densely populated with North African immigrants, acquired global notoriety as a sanctuary for jihadis after the Paris attacks but it was a breeding ground for trouble long before that.”

Separately, Poland’s prime minister on Wednesday appeared to suspend the country’s earlier commitment to accept refugees under a resettlement proposal adopted last year by EU members.

“I’ll say very clear,” said Prime Minister Beata Szydlo, “(following the Brussels attacks), I see no possibility for migrants to arrive in Poland at this time.”

Szydlo’s government, which came to power in November, has opposed the EU’s plan for migrants but had said it would honor the deal.

In a speech on Wednesday, Szydlo said the terrorists who struck Brussels “made a mockery of the agreement.”

“Perhaps it’s time to bang a fist on the table and say ‘enough of terrorism.’  Our children and countries are in danger and we’re all beginning to be afraid. Europe mustn’t be afraid.  We must say enough,” she said.  [Martin Sobczyk / Wall Street Journal]

I stand behind Poland and, before this, Hungary, when the latter was the first to take what seemed to be harsh steps against the migrants but today looks more than prescient.

---

On the economic front, Markit (which announced this week it is merging with IHS in a mammoth $13bn combination of data and analytics’ providers) released its flash estimates for eurozone manufacturing and service activity and the comp PMI for the euro area was 53.7 in March vs. 53.0 in February (50 being the dividing line between growth and contraction).  Services was 54.0 vs. 53.3; manufacturing 51.4 vs. 51.2.

The flash readings look at just France and Germany, individually, and France’s manufacturing reading was 49.6, a 7-mo. low, while services came in at 51.2 vs. 49.2.

Germany’s manufacturing PMI was 50.4 vs. 50.5; services 55.5 vs. 55.3 for February.

Chris Williamson, Chief Economist at Markit:

“The eurozone saw renewed signs of life at the start of spring. The March PMI showed a welcome end to the worrying slowdown trend seen in the first two months of the year, putting the region on course for a 0.3% expansion of GDP in the first quarter [Ed. quarter over quarter]/  The German economy looks to have expanded by 0.4% in the first quarter, but France remains close to stagnation despite seeing a return to growth in March.”

But Williamson adds: “Deflationary pressures remain stubbornly widespread as a lack of demand led to further discounting in March. 

“The upturn in March nevertheless hopefully provides a springboard for recent additional stimulus from the ECB to help boost growth further in the second quarter and into the summer.”

As for non-euro UK, sterling dropped, an indirect effect of the attacks on Brussels which has many linking the two, as in the attacks might increase the likelihood voters in Britain will opt to leave the European Union in June.

Gideon Rachman / Financial Times

“The British debate about Brexit, at the moment, reminds me of the discussions I heard in the U.S., late last year, about Donald Trump.  Back then the opinion polls said that Mr. Trump was well ahead in the race.  But the conventional wisdom in Washington was that he would never win the Republican presidential nomination. Everybody told me that, once voters focused on the race, Mr. Trump’s lead would crumble.

“In Britain today, there is a similar unwillingness among mainstream political analysts to believe the warning signs from the opinion polls.  Several recent polls have shown small majorities in favor of the UK leaving Europe when the country holds its referendum on June 23.  But most political pundits I speak to still think it is pretty unlikely that Britain will really vote to leave.  When it comes to both Mr. Trump and Brexit, the political establishments in Washington and London find it hard to believe the public will ultimately make a choice that the establishment regards as self-evidently stupid.

“However in Britain, as in the U.S., politics has taken a populist and unpredictable turn. The financial crisis and its aftermath have undermined faith in the judgment of elites.  High levels of immigration and fear of terrorism have increased the temptation to try and pull up the drawbridge and retreat behind national frontiers.”

President Obama is heading to London next month and is expected to make a strong statement in support of Britain remaining in the EU.  It will be interesting to see how well this is received.

In Asia, little economic news.  Chinese Premier Li Keqiang reiterated growth is a top priority.

But in Japan, the government lowered its assessment of the economy for the first time in five months due to weakness in consumer spending.

The Cabinet Office offered in its monthly economic report on Wednesday: “Japan’s economy remains on track for recovery, but more weak spots in the economy can be seen....

“There are downside risks, including the slowing down of emerging economies.  We need to also pay attention to financial overseas markets.”

The government is launching a new $27 billion stimulus package this month.

Japan’s economy shrank an annualized 1.1 percent in the fourth quarter, with most expecting some rebound in the current quarter.

Separately, headline inflation rose 0.3 percent year on year in February, in line with expectations and up from zero in January.  But core inflation, ex-food and energy, rose 0.8 percent, up 0.1 from January’s reading.

Japan’s flash manufacturing PMI for March was just 49.1 vs. 50.1 in February.

Street Bytes

--After a big five-week rally, stocks took a breather for this holiday-shortened, terror-filled week, with the Dow Jones losing just 0.5% to 17515, the S&P 500 falling 0.7% and Nasdaq off 0.5%.

The Dow remains in positive territory for the year, though just barely at +0.5%, while the S&P is now down 0.4% and Nasdaq nearly 5%.

There’s no mystery why the markets haven’t reacted more severely to largescale terror incidents...there just haven’t been any immediate follow-on attacks.  When that inevitable day comes... especially something like a simultaneous attack on airliners in Europe and the U.S. or Canada, investors will cower.

On a different topic, as we approach the end of the quarter we face another earnings season.  One facet of the fourth-quarter GDP report did not exactly bode well given the GDP forecast for Q1.

Last quarter, corporate profits, after tax and other adjustments, fell at an 8.1% pace over the third quarter; the largest quarterly decline since the first quarter of 2011.  On a year over year basis, corporate profits declined 3.6% in the fourth quarter. 

At least consumer spending in Q4 was up 2.4%, and for all of 2015 advanced 3.1%, the best pace since 2005.  [Wall Street Journal]

--U.S. Treasury Yields

6-mo. 0.45%  2-yr. 0.87%  10-yr. 1.90%  30-yr. 2.67%

The bond market was virtually unchanged on the week.

--CNBC conducted a rather startling study when it comes to the government’s reports on gross domestic product.  When the figures are revised years later as part of a regular, more detailed look at output once all the real data becomes available, the error margin is a full 1.3 percentage points.

So, for example, the margin of error for a report showing GDP is 2.0% is really 3.3% to 0.7%.  Those are huge differences and critically important ones for both CEOs and policymakers.  We (government) must get better at this game.

--The average nationwide price of gas at the pump hit $2.00 this week, the highest since January and up 31 cents in one month, though still 42 cents below year ago levels.

The price should continue to rise well into the spring before the summer driving season, which looks to be at record levels and will work off some of our record inventories (which rose 3Xs more than expected this past week).

To our friends in California, congratulations on continuing to lead the nation with an average price of $2.73!  As they used to say on “Hee Haw”...Saa-luute!

While the price of West Texas Intermediate has climbed from $26 to about $40 ($39.46 at weeks’ end), many oil and gas companies aren’t profitable. Linn Energy, a major Houston-based energy company, is on the verge of bankruptcy, having stopped meeting its debt payments, while Denver-based Emerald Oil filed for Chapter 11 this week.

If oil were to rise a few more dollars, many companies may complete unfinished wells and possibly drill new ones, pressuring prices anew.

On a related noted, the number of U.S. oil rigs declined to the lowest level since November 2009 this week, down 15 to 372, according to data from Baker Hughes.  The peak was 1,609 counted in October 2014.

OPEC is slated to discuss a production freeze on April 17 in Qatar, but it’s doubtful Iran, still ramping up post-sanctions being lifted, will comply.

--Federal prosecutors announced Monday that an outside party had come forward with a technology that might unlock the iPhone used by one of the San Bernardino terrorists without Apple’s cooperation.  As the Los Angeles Times’ David Pierson put it, “the tech giant could have reason to view it as a major victory – and a major risk.

“What would be worse for a company that has insisted privacy is core to its identity – and whose marquee device is among the safest on the market?  Caving to government pressure and writing its own decryption software, or conceding its phones are not as secure as some believed.”

The same day, Apple unveiled its newest iPhone and CEO Tim Cook said, “We need to decide, as a nation, how much power the government should have over our data and our privacy.”

Pierson: “But, if the government’s new lead is successful, customers will need to decide whether they’ll keep buying a product that, though advertised as virtually airtight, could be hackable.  Apple’s showdown with the FBI provides no bigger stage to put that consumer loyalty to a test.”

James Lewis, a cybersecurity expert and a senior fellow at the Center for Strategic and International Studies in Washington, said, “Whenever people tell me something is unhackable, I think about how the Titanic was unsinkable.  Apple should have quietly complied since now it has the worst of both worlds.”

Gotta agree with Mr. Lewis.

David Cowan, a partner at Bessemer Venture Partners in charge of the firm’s cybersecurity investments, said: “Apple is refusing to publicly acknowledge vulnerabilities in their phones. Despite the veneer of security, the data on our iPhones can be stolen by Apple and others.”

Apple is reportedly working on even tougher security tools for its products.

Meanwhile, everyone is trying to find out who the third-party is that can supposedly hack into the phone.

As for the new product launch, Apple announced it will be coming out with an iPhone SE, which is smaller than its iPhone 6s and iPhone 6s Plus offerings, though on the inside, it’s just as powerful.  It will have the same 4-inch screen as the older iPhone 5s.  The release date is March 31 and pre-orders began on Thursday. 

The iPhone SE will be less expensive than the 6S and 6S Plus, starting at $399.

If Apple is targeting its key China market with a cheaper model, it could have a tough time as the Chinese consumer has loads of budget options, with domestic brands Huawei and Xiaomi offering devices that rival Apple at deep discounts. 

Only one in five Chinese iPhone buyers last year, for example, chose 4-inch devices, with the rest opting for larger, pricier iPhones, according to market research firm Gartner.  [Wall Street Journal]

--Nike’s profit rose 20% in its fiscal third quarter, but the company missed revenue expectations and reported a slight slowdown in orders.  The shares fell in response.

Revenue rose about 8% to $8.03 billion, missing the Street’s forecast of $8.2bn.

While orders for shoes and other apparel to be delivered from March through July were 12% higher than in the same period last year, there were signs of a slight slowdown in North America.

--Facebook founder Mark Zuckerberg has been visiting China, in the hope eventually Facebook will be unblocked there.

Chinese social media users took to popular microblog Sina Weibo to mock some of the coverage of Zuckerberg’s visit, like his activities of jogging through “hazy” Beijing’s Tiananmen Square, visiting the Great Wall and meeting China’s propaganda chief Liu Yunshan.  But on Sina Weibo’s ‘Breaking News’ link, the question was asked: “Will Facebook this time successfully enter the Chinese market?”  [South China Morning Post]

Earlier this year, Beijing introduced new rules on online publication, which analysts say places further curbs on foreign internet businesses trying to operate in China.

Online content publishers are supposed to “promote core socialist values.”

Zuckerberg’s one-on-one meeting with Liu Yunshan is significant in that Liu is a senior member of the Politburo, but despite the smiles exchanged between the two, there is no sign Beijing intends to open a gap in its Great Firewall to let Facebook in.  The government has only been getting stricter.

Some Chinese dissidents have been unhappy over Zuckerberg’s charm offensive, with a prominent critic, Hu Jia, accusing him of “brown-nosing” a government that denies its citizens the right to freedom of expression.  [Irish Independent]

--Credit Suisse’s trading revenue fell 40 to 45 percent in the first quarter, which is a massive decline, with global markets boss Tim O’Hara telling analysts the fall was “mostly driven by lower client activity” in things like credit and emerging markets.  The Swiss banking giant then announced that 2,000 jobs will be cut in the division, which are in addition to 4,000 job cuts announced just last month as the bank attempts to reduce annual costs by $820m.

CEO Tidjane Thiam, who took over last July after six years leading UK-based insurer Prudential, is off to a rocky start.

--China’s Anbang Insurance Group had agreed to pay $6.5bn for Strategic Hotels & Resorts, and then $13.2bn for Starwood Hotels & Resorts a day later, but on Monday, Marriott International, which initially made an offer for Starwood, upped its offer to $13.6bn, which was accepted by Starwood.

However, Anbang’s recent attempted buying spree may be thrown into doubt altogether by Chinese regulators, thus preventing Anbang from trying to outbid Marriott again, as Caixin, a well-respected Chinese financial magazine, reported Tuesday that the China Insurance Regulatory Commission could invoke a rule that restricts domestic insurance companies from investing more than 15 percent of their total assets abroad.  [Don Weinland / Financial Times]

So regarding Starwood and Marriott, they will now proceed with creating the world’s largest hotel operator, Starwood owning brands such as Sheraton, Westin and St. Regis.

Lastly, I’m not sure what Chinese regulators will do with Anbang’s proposal for Strategic Hotels & Resorts, an owner of 16 luxury properties, having an agreement with Blackstone Group LP.  Last year Anbang purchased the Waldorf Astoria hotel for $1.95bn.

--According to the New York Post, Goldman Sachs is among a handful of firms that the Justice Department has in its crosshairs over alleged bid-rigging in the U.S. Treasury bond market. 

European authorities have opened up their own investigation.

In November, Goldman disclosed in a regulatory filing it was being probed, but now the investigation appears to be focusing on the investment bank after investigators obtained key emails and chats.

--The recent $81 million heist from a Bangladesh Central Bank account at the New York Fed is drawing attention from Congress, and for good reason.  Rep. Carolyn Maloney (Dem – N.Y.), in calling for a probe, said: “We need a thorough investigation to determine how these criminals were able to manipulate the system so that banks and financial institutions can institute standards that will prevent hackers and cyber criminals from siphoning money out of accounts like those held at the New York Fed again.”  [Reuters]

Robert J. Samuelson / Washington Post

“It’s a big story that has stayed beneath the radar of most American media.... The theft surely qualifies as one of the biggest cyber heists ever.  It’s also a reminder that the world’s financial systems remain vulnerable to cyberattacks from groups or countries more interested in making war – disrupting societies – than money....

“What is known is that the scheme’s ambition far exceeded the $81 million that was transferred to the Philippines.  The original goal was apparently about $1 billion to be conveyed through 35 separate transfers.  Most of those transfers were never made.

“Why?  By one press version, doubts emerged when a word was misspelled on one transfer document.  (The word ‘foundation’ was spelled ‘fandation.’)  By another story, the fact that so much money was going to private accounts stirred suspicions. It’s unclear whether someone at the New York Fed stopped the transfers and, if not, who did.  Nor is it clear whether another $20 million was sent to Sri Lanka and the transaction was reversed, or whether the money was never sent....

“Among (cybersecurity firm, FireEye’s) early findings, according to the Wall Street Journal, (the) hackers may have penetrated the central bank’s computer system for several weeks before the transfers occurred.  Possibly, 32 computers were compromised.  This may explain how the access codes were obtained.

“Whatever the final story, there are larger lessons.  For starters, the New York Fed’s sweeping denial of responsibility is beside the point.  Whatever the Fed’s direct involvement, it failed to spot a phony transaction before the funds were sent.  Why was this?  Can screening be improved?

“What’s ultimately at stake is a stable global financial system.  Financial networks depend on trust that what’s deposited won’t vanish, and that transactions are legitimate and not falsified....If criminals could to this to Bangladesh Bank, what could organized terrorists or hostile states do to advanced nations’ financial networks?

“The theft confirms that most electronic networks are no stronger than their weakest links.”

--J. Michael Pearson, embattled CEO of Valeant Pharmaceuticals, announced he was stepping down, a stunning fall from grace.

The company said that activist investor William Ackman, the billionaire whose Pershing Square Capital management is Valeant’s second-biggest shareholder, would join the board.  Additionally, Valeant said it would restate some of its earnings, while former CFO, Howard Schiller, was asked to resign from the board, with Valeant accusing him of “improper conduct.”

Valeant shares closed the week at $31, down from its high of $263.

--Sherwin-Williams Co. has agreed to buy Valspar Corp. for more than $9 billion, creating a paint behemoth, with the former looking to gain better access to big-box retailers like Lowe’s, where Valspar already has a significant presence.

No word on whether the Valspar lizards would be part of any cost-cutting initiatives.  I imagine you can send your recipes to Sherwin-Williams.

--The Rockefeller Family Fund, which is comprised of descendants of John D. Rockefeller, sold their stake in Exxon Mobil Corp. while announcing they would dump all other fossil-fuel related investments as part of their funded campaign against global warming, the foundation (and associated Rockefeller family funds) backing InsideClimate News.

Of course Exxon traces its roots to the 1880s and John D. Rockefeller’s integration of refineries and Pennsylvania oilfields.

A spokesman for Exxon said in a statement: “It’s not surprising that they’re divesting from the company since they’re already funding a conspiracy against us.”

--For air travelers, the crash of the FlyDubai jet in Russia’s Rostov-on-Don during “poor weather conditions” was more than a bit disturbing.  The plane circled 40 to 50 minutes attempting to land (another report said two hours).

One initial story said pilot fatigue may have been a factor, and one can see that happening under such stressful conditions. The winds were near hurricane strength, according to the governor of the Rostov region.

All 55 passengers and 7 crew were killed.  [44 of the 55 passengers were from Russia, 8 from Ukraine.]

--New York City’s growth rate in population slowed last year, according to census figures released this week, with the city adding 55,200 people in the year before July 2015, for a population of 8.55 million, or up 0.6% for the 12 months. 

Upstate New York, on the other hand, lost 16,600 people.  Only six of 52 upstate counties added people over the year.

--Tensions between Yahoo and activist hedge fund Starboard Value ratcheted up further as Starboard made good on its months-old threat to try to unseat Yahoo’s entire board, after Yahoo surprised Starboard when it filled two vacancies on its board without consulting them.

With this going on, Yahoo continues to explore a potential sale of its core business.

--Playboy Enterprises Inc. is exploring a sale.  Just last October, Playboy announced it would stop showing nudity starting with the March 2016 issue, with pornography so readily available to anyone with an Internet connection.  In January, the company said it was looking to sell the Playboy Mansion for $200 million.

Instead, Playboy is focusing on licensing its brand, and has begun by selling the rights to use the Playboy bunny logo on a variety of merchandise.

Playboy was taken private in a 2011 buyout led by founder Hugh Hefner but has struggled with declining readership of its print magazine.

The Wall Street Journal believes Playboy could fetch $500 million in a sale.

--Roger Agnelli, the Brazilian banker who turned Vale SA into the world’s No. 1 iron ore producer, died last Saturday in a private plane crash.

Agnelli, his wife and two children were among seven killed when their turboprop slammed into two homes minutes after taking off from an airport outside Sao Paulo.  They were heading to a wedding ceremony in Rio de Janeiro.

Agnelli became the CEO of Vale in 2001 and helped make the company Brazil’s No. 1 exporter.  He owed his success to accurately predicting the rise of China as a major minerals consumer, which turned Vale into a global powerhouse.

In a Harvard Business Review ranking of the world’s best-performing CEOs published in February 2013, Agnelli came in fourth, behind only Apple’s Steve Jobs, Amazon.com’s Jeff Bezos and Samsung Group’s Yun Jong-Yong.  Agnelli was 56.

--Andy Grove died.  He was 79.  The legendary former CEO and chairman of Intel steered the company from memory chips to microprocessors, increasing revenues more than tenfold and creating the “Intel Inside” brand.

Brian Krzanich, current Intel chief executive, said, “Andy made the impossible happen, time and again, and inspired generations of technologists, entrepreneurs and business leaders.”

Editorial / Wall Street Journal

“(Grove) is the latest of many business giants who are dying with less recognition than they deserve for creating America’s post-World War II prosperity....

“(Intel) drove the innovation that led to the new age of individual computing.

“This was a tremendous business and management achievement for which Grove was named TIME magazine’s Man of the Year in 1997.  Grove’s appearance on TIME’s cover symbolized an era when CEOs were admired for creating jobs and wealth that benefitted everyone. Americans – even some in the media – took pride in U.S. companies that led the world. Now the media elevate politicians and reality-show celebrities, and the country isn’t better for it.

“Having fled Hungary after the failed anti-Soviet uprising of 1956, Grove is also an example of the many immigrants who have driven American capitalism from its earliest decades.  Alexander Graham Bell came from Scotland before founding what became AT&T. Robert Goizueta, who ran Coca-Cola during its glory years, immigrated from Cuba.  Google co-founder Sergey Brin is from Russia.  They show how the U.S. shortchanges itself by indulging bursts of nativist exclusion....

“Grove once told us he loved reading Peter Drucker on management, and he wrote one of the better business memoirs, ‘Only the Paranoid Survive.’  That’s good advice for those who want to avoid complacency, in business or life, from a man who more than repaid America for the great opportunity it offered him.”

Michael S. Malone / Wall Street Journal

“More than the careers of Steve Jobs or David Packard or Mark Zuckerberg, Andy Grove’s was the ultimate Silicon Valley story.  No one traveled further in a single lifetime – from Hungarian refugee to the head of one of the world’s most valuable manufacturing companies.  No one was more central to the making of the Valley – from the fabled Fairchild Semiconductor in the 1960s, to the founding of Intel in 1968, to the trade war against Japan in the 1980s, to the tech revolution’s globalization.  His decision to take Intel Corp. out of memory chips in 1985 and bet everything on microprocessors – now the heart of every important electronics device, from cellphones to supercomputers – has reshaped the modern world....

“If you worked with him, for him or, worst of all, competed with him, you knew that in the end, Andy would win.” 

--Lastly, according to data released this week by the Brewers Association, there were 4,269 operating breweries in the country at the end of 2015, surpassing the previous record “logged all the way back in 1873 when a lack of transportation and refrigeration meant breweries had to be local.”  [Anne Riley / Bloomberg]

2,397 of the total are microbreweries.  According to Bart Watson, chief economist at the Brewers Association (I want that position), all breweries together provided about 122,000 jobs last year, up 6,000 year on year.

I don’t think I would have liked living in the 1870s.  I need my beer cold (except for an occasional Guinness, which is served colder these days anyway), plus I need clean bathrooms and those were few and hard to find in those post-Civil War times. 

And that’s a memo...Charles Krauthammer is here....Charles, so where am I wrong?

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey: The U.S. and Russia held four hours of talks in Moscow on Thursday on the progress of the cease-fire in Syria, while promising to support peace talks in Geneva, but the two sides remain divided on the fate of Syrian President Bashar al-Assad. The U.S. says Assad must go as part of any final peace agreement, while the Kremlin says Assad is the only mainstay against chaos.

By some measures the cease-fire is holding, by others it isn’t.  Syrian government forces have been moving into the ISIS stronghold at Palmyra*, which ISIS overran last May, with Russia coordinating supporting airstrikes, but there have still been attacks on rebel forces that are neither ISIS or al-Qaeda-linked Nusra Front, which goes against the cease-fire agreement. 

*The Britain-based Syrian Observatory for Human Rights said ISIS killed 26 Syrian soldiers outside Palmyra on Monday.  Russia announced on Thursday that a Russian soldier had been killed in the Palmyra operation.

President Putin was a bit magnanimous on Thursday: “We are aware that the groundwork we have on Syria has only been possible thanks to the position of the political – supreme political leadership of the United States, specifically the position of President Obama. And I really hope that today’s visit will help us reconcile positions on or help make progress on both Syria and Ukraine.”  [Wall Street Journal]

The Iraqi army said Thursday its troops and allied militias had begun the long-awaited offensive to retake the second city of Mosul, ISIS’ capital in Iraq. 

Four outlying villages have been taken but there is a long ways to go before Iraqi forces will be in a position to attempt to take Mosul itself.

The U.S. has been providing air support, training and military advisers and it should be assumed there is a sizable number of the latter coordinating the Mosul campaign.

There is no doubt ISIS will make it difficult, given all the time it has had to prepare defenses, but I wonder how many have been melting away, heading west, such as to Libya.

It’s important for the Iraqi forces to work deliberately and cut off supply lines first, which they apparently have been doing for months now.

[Kurdish militias are doing the same in ISIS’ declared capital of Raqqa, Syria, before launching a full assault on it.  Purported Russian airstrikes on the city killed at least 55 this week, mostly civilians, according to the Syrian Observatory.]

A U.S. Marine was killed last Saturday in northern Iraq by ISIS rocket fire.

In Turkey, there was another terror attack, this one by ISIS on a major shopping and tourist district in central Istanbul last Saturday, killing five.  It was the fourth suicide bombing in Turkey just this year (two in Ankara, two in Istanbul, resulting in more than 80 deaths), with others blamed on the outlawed Kurdistan Workers Party (PKK).

Turkey is taking it from all sides these days.  It’s critical tourism industry is a victim, with bookings for this summer already down 40% from last year; hotel occupancy rates plunging by more than half, according to industry figures.

Tourism, aside from accounting for more than 4% of Turkey’s GDP, employs more than one million people, or about 7% of the working population, according to government data.  [Wall Street Journal]

Yaroslav Trofimov / Wall Street Journal

“When European Islamists started streaming into Syria and Iraq a few years ago, some European counterterrorism officials viewed it as a blessing in disguise. Better to have them pulverized on a Middle Eastern battlefield, they argued, than dispersed and plotting mischief at home.

“Today, that battlefield has become more dangerous than ever for Islamic State, which is being buffeted by U.S.-backed military campaigns in Syria and Iraq.  While Islamic State isn’t facing imminent collapse, one consequence of this battering is that trained and battle-hardened foreign fighters from Europe are more likely to head back to home ground.

“That is the alarming paradox of the U.S.-led campaign against the radical group: In the months and even years ahead, an Islamic State faced with defeat in a conventional war may pose a far greater danger to the West than when it was focused on conquering villages in the Euphrates river valley or the hill country of Aleppo.

“ ‘It’s going to get worse before it gets better,’ said Bruno Tertrais, senior fellow at the Foundation for Strategic Research in Paris and a former policy adviser at the French Defense Ministry.

“ ‘If you manage to deflate Islamic State’s narrative of inevitable expansion, this would eventually reduce its attractiveness, at least for some recruits. But in the short term, as it finds itself in difficulty on one field, it will try attacking another,’ Mr. Tertrais said....

“ ‘The frequency and magnitude of these operations is increasing as refugees are flooding Europe and elsewhere, and as [Islamic State] recruits and brainwashes people already in Europe,’ said Ayad Allawi, the former Iraqi prime minister who heads a major parliamentary bloc.  ‘This will have to be dealt with at the source, and the source is here in the greater Middle East.’”

Nicholas Burns / Financial Times

“Through all the successes and failures of America’s global strategy since the end of the Cold War, we have understood what works. We know, for example, that American diplomacy is most often effective when it is backed by a strong military and the willingness to threaten force when necessary.

“This is why Mr. Obama’s defense of his decision to pull back from striking Syrian military targets in 2013, after having drawn a ‘red line’ against Bashar al-Assad’s use of chemical weapons, is so troubling.  He adamantly rejects the notion that his restraint diminished U.S. credibility in the region.

“However much Mr. Obama may believe the old rules do not apply, it is an ancient truth that a great power has to back up its threats if it wishes to be respected by its friends and feared by its adversaries.

“If Mr. Obama did not intend to honor his red-line threat, he should never had made it. The result was inevitable – American credibility is undeniably diminished in the Middle East while that of Vladimir Putin’s Russia has been enhanced.

“We also know that America’s vast network of alliances and security partnerships in Europe and Asia is a key element of its global strength. That is why the president’s criticism of two of America’s closest allies, Britain and France, as ‘free riders’ [Ed. in Jeffrey Goldberg’s Atlantic piece] in their prosecution of NATO’s Libya campaign in 2011 was so counter-productive.

“Americans sometimes forget that the U.S. military accounts for roughly 75 percent of all NATO defense spending.  It may not be fair but NATO has always been a U.S.-led alliance. The real mistake in Libya was Mr. Obama’s decision to allow the U.S. to take a secondary role in an important NATO mission for the first time in its history.

“U.S. presidents have also learnt that it almost never works to embarrass a friend publicly. Mr. Obama’s remarks about the Saudi royal family were inappropriate.  He should have directed his darts not at America’s friends but at its true adversaries – Iran, Hizbullah, the Syrian government and Russia.”

Jackson Diehl / Washington Post

“When President Obama chose to sidestep military action in Syria in 2013 and then struck a deal to dispose of most of the regime’s chemical weapons, it seemed possible to me that he had stumbled into a tactical victory...

“I changed my mind after I heard from dozens of foreign ministers and other senior officials of U.S. allies as they visited Washington in the months and years that followed.  Japanese, South Koreans, Singaporeans and even Indians confided that they were convinced that Obama’s failure to use force against the regime of Bashar al-Assad was directly responsible for China’s subsequent burst of aggression in territorial disputes in the East China Sea and South China Sea.

“Poles, Lithuanians and French drew a line between the backdown and Vladimir Putin’s invasion of Ukraine. As for the Sunni Arabs, Turks and Israelis, it is an article of faith that Obama’s decision accelerated the catastrophe that Syria, and much of the rest of the Middle East, has become.  They have an obvious point: Hundreds of thousands are dead, the European Union is in danger of crumbling under an onslaught of refugees, and the Islamic State and Assad remain unvanquished.  Who would not call this a bad outcome?

“Obama, it turns out.  By far the most startling disclosure in the president’s interviews with the Atlantic’s Jeffrey Goldberg is his judgement of his Syria decision: ‘I’m very proud of this moment,’ he said.  The words ring with defensive arrogance.  But they also suggest that Obama remains, to this day, fundamentally clueless – or in denial – about the consequences of what historians will surely regard as one of his most fateful errors.”

Yup, I’m not alone.

Iran: Editorial / Wall Street Journal

“The Treasury Department on Thursday blacklisted two Iranian companies for supporting Iran’s ballistic-missile program, as well as British businesses it said were helping the country’s Revolutionary Guards. This is good news, but it would be better if President Obama would endorse an even tougher sanctions bill now moving in the Senate.

“The nuclear deal with Iran is barely six months old, and the Islamic Republic has repeatedly fired missiles intended to carry an atomic warhead. The Iran Ballistic Missile Sanctions Act of 2016, introduced this month by New Hampshire Republican Kelly Ayotte, targets firms that help Tehran acquire dual-use technologies or otherwise support its missile program.  A parallel bill sponsored by Sen. Mark Kirk and 15 other Republicans, including Majority Leader Mitch McConnell, targets Iran’s destabilizing actions in the region and human-rights violations at home....

“As the Foundation for Defense of Democracies notes in a recent report, Tehran’s ballistic-missile program is deeply intertwined with Iran’s legitimate economy, including the automotive, energy, construction and mining industries.  Countering the missiles, the FDD says, requires ‘economic sanctions against all sectors involved in their development.’

“The Ayotte-Kirk U.S. sanctions are a good start, since the path to international sanctions is closed for now.  Iranian negotiators succeeded in excluding limits on ballistic missiles from the nuclear deal itself, but United Nations Security Resolution 2231 ‘calls upon’ Tehran not to build or test missiles for eight years.  Iran has used that weak language as a legal loophole, and Russia has made clear it will use its veto to stop any UN sanctions....

“Unilateral U.S. sanctions are a weak substitute for binding international sanctions.  But the effort sends a message that the nuclear deal isn’t a license for Iran’s regional imperialism.”

Israel: Hizbullah leader Hassan Nasrallah threatened on Monday that if a future war breaks out with Israel, he will strike all targets in the Jewish state “without any limits.”

“If the Israeli army escalates its aggression against Lebanon, Hizbullah will strike all the strategic targets in the occupied Palestinian territories, including the nuclear facilities,” a Hizbullah-linked TV station quoted Nasrallah as saying in an interview.

Yemen: The U.S. struck a training camp belonging to al-Qaeda in the Arabian Peninsula (AQAP), killing dozens of fighters, according to the Pentagon, though it was not clear if civilians were also killed.  This comes two weeks after the U.S. killed a reported 150 al-Shabaab fighters gathered at a meeting in Somalia.

North Korea: Pyongyang announced on Thursday that it had successfully tested a new rocket engine that would significantly bolster its missile capabilities, and South Korea called on its people to heighten vigilance against possible terrorist attacks by the North.

The significance of this new test is it’s a solid-fuel rocket engine, according to the state-run Korean Central News Agency.

Most of the North’s missiles are believed to rely on liquid fuel.  A solid fuel rocket shortens the time needed to prepare for the launch of a missile and increases the ground mobility of the missile system, which would reduce the South’s ability to detect a pending attack.

The North also threatened to conduct another nuclear test and to test ballistic missiles capable of carrying nuclear warheads. It also cautioned its rockets were ready to reduce the office of South Korean President Park Geun-hye to “a sea of flames and ashes.”

Pyongyang also talked of “units behind enemy lines to be deployed in the operational theater of the southern part of Korea,” which Seoul takes to mean terrorist attacks.

There are indeed thousands of North Korean agents in Seoul alone; this has long been a fact.

President Park “called for a strengthened vigilance across the country,” according to her press secretary on Thursday.

Parliamentary elections in South Korea are slated for April 13.  It certainly would surprise no one if the North did something to disrupt them given the increased tensions between the two sides.

China: President Xi Jinping will discuss the North Korean nuclear crisis with Barack Obama during his visit to the U.S. next week as well as cyber security and the South China Sea, China’s Foreign Ministry said on Thursday.  Xi is attending a nuclear security summit in Washington from March 31 to April 1.

Regarding the South China Sea, the U.S. and the Philippines announced last weekend that there will be five new military bases where American forces will have access under a new defense pact, including one facing disputed islands there.

Separately, 20 people have been detained in China following the publication of a letter calling on President Xi to resign, the BBC learned.

The letter was posted earlier this month on a state-backed website Wujie News.  Although quickly deleted, a cached version can still be found online.

Of course in any democratic country in the world, this is nothing.

“Dear Comrade Xi Jinping, we are loyal Communist Party members,” the letter begins, and then cuts to the chase.

“We write this letter asking you to resign from all party and state leadership positions.”

A prominent columnist, Jia Jia, was reported to have been detained in connection with the letter, but his friends say all he did was enquire about it after seeing it online.

Note to President Xi.  You should resign.

Separately, the Hong Kong bookseller at the center of the missing booksellers’ mystery suddenly returned home.

Lee Po urged the media not to follow him anymore.

“I have already said what I wanted to say. Today I just want to tell everyone that I hope you can leave me and my family alone. Don’t push me that much,” he said, smiling.

“I want to forget the past and start afresh.  I am starting another page in my life.”

Lee said he was allowed to travel freely between Hong Kong and the mainland.

Lee added, “I heard that people had got into trouble for their [banned books] business.  I was afraid.  But after I went [to the mainland] and solved all the problems this time, I can finally feel at ease now.”

Lee was then escorted by a man who refused to identify himself and taken away in a car.

Between October and December last year, five associates of Lee’s bookstore and another publishing house disappeared, one after another, under mysterious circumstances.

Two of Lee’s associates returned earlier this month.

Lee did tell a Beijing media source he would never run a bookstore business again.  [South China Morning Post]

Russia: A Russian court sentenced captured Ukrainian helicopter pilot Nadia Savchenko to 22 years for complicity to murder on Tuesday, drawing international condemnation and comparisons to Soviet show trials.

Savchenko fought with a far-right volunteer battalion against pro-Russian separatists in the Lugansk border region and the court upheld prosecutors’ claims she directed artillery fire that killed two Russian journalists in eastern Ukraine in 2014.

Savchenko has become a cause celebre in Ukraine as the West lobbies for her release.  Her defiance in the courtroom has earned her the status of a national hero, honored in Ukraine as a “Joan of Arc” figure; another victim in the undeclared war that has now claimed more than 9,000 lives.

Savchenko has threatened to starve herself to death if she is not returned to Ukraine.

Ukrainian President Petro Poroshenko said publicly after the verdict he was ready to trade two Russian officers, captured in eastern Ukraine, for Savchenko.

Go Nadia!

Brazil: Protesters continue to demand President Dilma Rousseff be removed from office and former President Lula da Silva be sent to prison.  [Other protesters defend the pair.]

It is chaos in the country these days and it is all coming to a head with each new revelation from the massive corruption probe involving a multibillion-dollar kickback scheme at the state-run oil company, Petrobras.

Cuba: Karen DeYoung and Juliet Eilperin / Washington Post

“In an extraordinary news conference Monday afternoon, President Obama and Cuban President Raul Castro sparred over human rights, the Guantanamo prison and their views of their own countries and the world, even as both hailed Obama’s historic visit here as a new step in normalizing relations.

“The event was marked by a jarring juxtaposition of diplomatic formality and public jousting, as Castro responded to questions from American reporters by either ignoring them or dismissing them as misguided.  At one point, he challenged a U.S. journalist to ‘give me a name’ of any alleged political prisoner here....

“Castro called on the United States to abandon the territory it occupies with a military base at Guantanamo Bay, on Cuba’s southwestern tip, and to remove the U.S. embargo against Cuba.  He said relations would never be fully normal until both were accomplished.”

The next day we had the Brussels terror attacks and Obama’s public appearance of nonchalance as he very briefly mentioned Brussels prior to a scheduled speech, attended a baseball game, and then took off for Argentina for meetings with Argentine President Mauricio Macri.

Asked about the Islamic State threat on Wednesday at a news conference in Buenos Aires, Obama said:

“Even as we are systematic and ruthless and focused in going after them, disrupting their networks, getting their leaders, rolling up their operations, it is very important for us to not respond with fear. We send a message to those that might be inspired by them to say, you are not going to change our values of liberty, and openness, and the respect of all people.”

Editorial / Wall Street Journal

“Cuban dissidents were grateful for a two-hour audience with President Obama at the U.S. Embassy in Havana on Tuesday....

“But if the Cuban opposition had any expectations that the U.S. President would intervene on their behalf to free political prisoners, they have so far been disappointed.  During a joint press conference with President Obama in Havana on Monday, a journalist asked Raul Castro why he won’t release Cuba’s political prisoners.  Mr. Castro countered: ‘After this meeting is over, you can give me a list of political prisoners, and if we have those political prisoners, they will be released before tonight ends.’

“The Castros have claimed for decades that there are no political prisoners in Cuba, though there have been tens of thousands.... Mr. Obama asked Elizardo Sanchez, the head of the Cuban Commission for Human Rights and National Reconciliation, for his organization’s list. The Cuban handed him 89 names. After the meeting Mr. Obama joined Raul Castro at a baseball game.

“The White House isn’t saying what happened to the list.  A spokesman referred us to comments from deputy national security adviser Ben Rhodes, who said in a Tuesday press briefing that he has ‘shared many such lists with the Cuban government over the course of my two and a half years now of dealing with them.’

“But that was before Mr. Castro publicly offered to release the prisoners if he was presented with names. That Mr. Obama apparently did not take him up on it won’t go unnoticed by the dissidents or the regime.”

Charles Krauthammer / Washington Post

“The split screen told the story: on one side, images of the terror bombing in Brussels; on the other, Barack Obama doing the wave with Raul Castro at a baseball game in Havana.

“On one side, the real world of rising global terrorism.  On the other, the Obama fantasy world in which romancing a geopolitically insignificant Cuba – without an ounce of democracy or human rights yielded in return – is considered a seminal achievement of American diplomacy.

“Cuba wasn’t so much a legacy trip as a vanity trip, vindicating the dorm-room enthusiasms of one’s student days when the Sandinistas were cool, revolution was king and every other friend had a dog named Che.

“When Brussels intervened, some argued that Obama should have cut short his trip and come back home.  I disagree.  You don’t let three suicide bombers control the itinerary of the American president.  Moreover, Obama’s next stop, Argentina, is actually important and had just elected a friendly government that broke from its long and corrupt Peronist past.

“Nonetheless, Obama could have done without the baseball.  What kind of message does it send to be yukking it up with Raul even as Belgian authorities are picking body parts off the floor of the Brussels airport?

“Obama came into office believing that we had vastly exaggerated the threat of terrorism and allowed it to pervert both our values and our foreign policy.  He declared a unilateral end to the global war on terror and has downplayed the threat ever since. He frequently reminds aides, reports Jeffrey Goldberg of the Atlantic, that more Americans die annually of bathtub accidents.

“It’s now been seven years.  The real world has stubbornly refused to accommodate Obama’s pacific dreams. The Islamic State has grown from JV team to worldwide threat, operating from Libya to Afghanistan, Sinai to Belgium.  It is well into the infiltration phase of its European campaign, with 500 trained and hardened cadres in place among the estimated 5,000 jihadists returned from the Middle East.  The increasing tempo and sophistication of its operations suggest that it may be poised for a continent-wide guerrilla campaign.

“In the face of this, Obama remains inert, unmoved, displaying a neglect and insouciance that borders on denial.  His nonreaction to the Belgian massacre...left the world stunned as it was after the Paris massacre, when Obama did nothing.  Worse, at his now notorious November news conference in Turkey, his only show of passion regarding Paris was to berate Islamophobes....

“Whatever the reason, (Obama) seems genuinely unmoved by a menace the rest of the world views, correctly, with horror and increasing apprehension.  He’s been in office seven years, yet seems utterly fixed on his campaign promises and pre-presidential obsessions: shutting down Gitmo, rapprochement with Iran, engagement with tyrants (hence Havana), making the oceans recede (hence the Paris climate trip).  Next we’ll see yet another useless Washington ‘summit’ on yet another Obama idee fixe: eliminating nuclear materials.

“With the world on fire, the American president goes on ideological holiday.”

My take on the trip and Obama’s response to Brussels?  I understand what he did, including attending the baseball game.  The United States wasn’t attacked directly, or of course he would have flown home and done Argentina later.

As for doing the tango, it’s not fair to go after the president on that.  Instead, Obama’s aides should have told their Argentinian counterparts, ‘Don’t ask him or Michelle to participate given Brussels.’  They had to have known (or should have) this was part of the state dinner.

But back to Cuba, the whole diplomatic effort is a fraud unless the Castro regime gives back something in return...and they haven’t. 

Random Musings

Tuesday Election Results...Republicans

Arizona: Donald Trump 47%, Ted Cruz 25%, John Kasich 10%
Utah: Cruz 69%, Kasich 17%, Trump 14%

Delegates: Trump 739, Cruz 465, Kasich 143 [1,237 needed for nomination]

[Source: Associated Press]

--A Bloomberg Politics national poll shows 63 percent of those who have voted in this year’s Republican primaries and caucuses, or plan to do so, back the billionaire’s view of the nominating process and think the person with the most delegates should win, even if he lacks a majority.

But if he emerges as the nominee, the survey has Trump being viewed unfavorably by 68 percent of Americans – well above the 53 percent who feel that way about Hillary Clinton.  For Trump, it’s actually a 13-point spike up from November 2015.

It’s also possible Trump is tarnishing the party’s brand.  60 percent of Americans view the GOP unfavorably, while the Democratic Party is viewed negatively by 43 percent.

The Bloomberg national poll has Trump leading among Republicans with 40%, Cruz next at 31% and Kasich 25%.

Clinton beats Trump in general-election tests, 54 percent to 36 percent; while besting Cruz 51-42.  Kasich, though, beats Clinton head-to-head, 47-43.

Tuesday Results...Democrats

Arizona: Hillary Clinton 58%, Bernie Sanders 40%
Idaho: Sanders 78%, Clinton 21%
Utah: Sanders 79%, Sanders 20%

Delegates (pledged): Clinton 1223, Sanders 920.  Including superdelegates: Clinton 1691, Sanders 949

[Source: AP]

--In more hypothetical matchups, the news is not good for Donald Trump.

A Fox News national poll finds John Kasich besting Clinton 51-40, while Cruz is preferred by three percentage points, 47-44.

But Clinton tops Trump 49-38.

Almost half of all voters (49 percent) would feel “scared” if Trump were to win the White House, while 33 percent say the same about Clinton.

Among GOP primary voters, Trump leads Cruz only 41-38, with Kasich at 17 percent.  Evangelicals give Trump a slight edge, 43-39 over Cruz.

In a Quinnipiac University National poll, Trump garners 43 percent of Republican voters to 29 percent for Cruz and 16 percent for Kasich.

Clinton leads Bernie Sanders 50-38.

But Clinton tops Trump 46-40 and Cruz 45-42 in this one.

Sanders beats Trump 52-38 and Cruz 50-39.

A CNN/ORC poll has Clinton defeating Trump 56-42.

A Monmouth University National poll has Trump at 41 percent of GOP partisans and leaners, with Cruz at 29 percent and Kasich 18.  Women, incidentally, are divided – 35% for Cruz, 31% for Trump, and 19% for Kasich, ditto college graduates.  Men back Trump at 50 percent, compared to 23 for Cruz, 18 for Kasich.

Among Democrats, Hillary Clinton is favored over Sanders by a 55-37 margin in the Monmouth survey.

--By the way, while Trump loves to talk about the polls and how “I beat Hillary in many of the polls taken, and each week I get better and I haven’t even started on her yet,” the fact is that since Jan 1 of this year, “Trump has led in only five of 39 polls, including two of the 16 that used live callers.”  [Washington Post]

--According to an analysis released Thursday by the University of Virginia, Trump will secure the 1,237 delegates needed for the nomination, but just barely – at 1,239 – after California voters decide how to allocate their 172 delegates on June 7.

The latest Public Policy Polling survey shows Trump ahead in California with 38 percent, to Ted Cruz’ 27 and Kasich’s 14.

Trump, according to UVA’s “Crystal Ball” report, would secure the nomination with impressive performances in Wisconsin on April 5, New York on April 19 and then CA.

--Damian Paletta / Wall Street Journal

“The deadly terror attacks in Brussels abruptly refocused the agenda of the presidential race Tuesday....

“Republican front-runner Donald Trump, who won Tuesday’s Arizona primary, suggested the attacks, for which Islamic State claimed responsibility, vindicated his aggressive rhetoric about Muslims and others. He also called for new laws that would allow torture when interrogating terror suspects.  Leading Democratic candidate Hillary Clinton, who won her party’s primary in Arizona, reiterated her experience as secretary of state and adopted her own tough tone by suggesting Europeans need to do more to control their borders.

“It was Republican Sen. Ted Cruz who offered the starkest new plan, suggesting police in the U.S. should more aggressively police Muslim communities.  ‘We need to empower law enforcement to patrol and secure Muslim neighborhoods before they become radicalized,’ Mr. Cruz said.”

--Daniel Henninger / Wall Street Journal

“It is true that the Brussels bombings raise questions about whether Donald Trump, John Kasich, Ted Cruz or yes, Hillary Clinton, would best be able to lead the world against Islamic terror.  But the effect of the bombing on the presidential race has no meaning without first addressing our man in Havana and America’s twice-elected president, Barack Obama.  Unless the campus left succeeds in its effort to tell its professors what they are allowed to think, future historians will have to account for the rise of Islamic State – in Iraq, Syria, Libya, Paris, Brussels, San Bernardino and its future bomb sites – during the years Barack Obama held office. Either there is some connection, or it has been mere coincidence.

“The U.S. is in a tumultuous political moment, and it is important to understand Mr. Obama’s role. The tendency in our hyper-personalized politics is to attribute policy to the idiosyncrasies of one person, in this case ‘Obama.’

“Mr. Obama, for all his self-referencing, is an important transitional figure in the Democratic Party.  He represents an unmistakable departure from the robust internationalism of FDR, Truman, Kennedy, Johnson and Bill Clinton.  Obama Democrats are the New Left progrssives who challenged their party’s establishment in the streets of Chicago in 1968, the most pivotal year in the modern history of the Democratic Party.

“Notice that Mr. Obama said in Cuba, ‘I have come to bury the last remnant of the Cold War.’  Across the 40 years of the Cold War, which the American left dismissed as ‘wasteful military spending,’ the holder of the office Mr. Obama occupies now was called ‘the leader of the free world.’  As he departs office, President Obama is the leader of...what?....

“Operating out of the new Democratic Party’s anti-Cold-War model, the Obama presidency has extended the hand of mutual understanding (a doubter would call it accommodation) to a succession of revolutionary leaders: Iran’s Supreme Leader Ayatollah Ali Khamenei, Russian President Vladimir Putin, Syria’s Bashar Assad, and the Castros, who now seem to arrest and beat up dissidents out of reflexive habit.

“The now-manifest, deadly flaw in the progressive Obama foreign policy is that uncontained revolutionary ideologies today are nearly always centrifugal, overrunning national borders – Islamic State into Europe, Iran across the whole of the Middle East, Putinized Russia into Ukraine and Syria.  China’s presumably civilized Communist revolution is spreading across Hong Kong into the South China Sea.

“The Brussels bombing surfaced two worldviews in its bloody wake, Mr. Obama’s and that of Belgian Prime Minister Charles Michel. Mr. Obama said he never considered canceling his attendance at the baseball game in Havana, because as the AP reported, it is Mr. Obama’s view that as long as people refuse to disrupt their lives because of terrorism, ‘we’re going to be OK.’

“Describing the attacks in Brussels as ‘the most brutal barbarity,’ Mr. Michel said: ‘We are confronted with enemies who want to fight against our freedoms.  We have to act to protect our way of life.’....

“In the past, Europe argued it was exhausted by two world wars and found solace in a welfare system that goes by this bitterly ironic description: cradle to grave.  Digging too many graves again, leaders in Europe and elsewhere look willing to follow America’s lead. But will they?

“Imagine Donald Trump, Ted Cruz, John Kasich or Hillary Clinton persuading these national leaders to follow the U.S.’s lead.  Which one of these four are they likely to believe and follow?  This is one vote the U.S. electorate had better get right.”

Holman W. Jenkins, Jr. / Wall Street Journal

“Trumpism offers nothing for Americans who are flocking to it as much in response to cultural anxieties as economic ones.

“A trade war with China will not bring back low-skilled, high-wage manufacturing jobs. On the contrary, Chinese workers themselves are being turfed out of their own factories by automation.

“Building a wall at the southern border won’t hold back cultural changes in America from the fact that Hispanics are a fast-growing economic and cultural bloc. At the risk of putting ideas in his head, Donald Trump would have to increase the white birthrate and even then probably wouldn’t change the emergence of an unfamiliar yet familiarly dynamic new America.

“Mr. Trump may well benefit politically from Tuesday’s terrorist attacks in Belgium.  In the long run, we will be thanking our lucky stars that we get our cultural renewal from largely Catholic immigrants from the south rather than the Islamic proto-majorities that, in the lifetimes of many of us, will fundamentally alter the character not just of the European Union (if it survives) but Russia....

“Globalization will experience hiccups, as will the cultural evolution of the United States.  But Mr. Trump and Trumpism aren’t a solution to anything.

“True, some Americans have never been able to recapture the standard of living that their now-vanished factory job once gave them.  But false promises won’t help these people. Faster economic growth would help them; rearranging social programs that have contributed to the woeful decline in the readiness of people to move in search of a job would help....

“Voters are better at signaling dissatisfaction than thinking clearly about solutions.  Democracy’s great virtue is not the wisdom of voters’ every judgment but the fact that an election is always coming, so voters can react against choices that are not working.

“The problem is matching the candidate who can capture the public’s imagination with the policies that will actually improve conditions.  Obama, in his 2008 race, fulfilled the first condition.  Trump fulfills the first condition.

“Sadly, this year the two parties are converging on candidates who, in their different ways, appear unlikely to channel voter dissatisfaction into productive policies, though we should not rule out a pleasant surprise.  Bracing up America’s internal dynamism and prosperity is surely an urgent need.   Most of all, it’s needed so America can remain a bulwark in an increasingly dangerous and chaotic world.”

--Jonah Goldberg / New York Post

“Nominating Donald Trump will wreck the Republican Party as we know it.  Not nominating Trump will wreck the Republican Party as we know it. The sooner everyone recognizes this fact, the better.

“Denial has been Trump’s greatest ally. Republicans and commentators didn’t believe he would run  They didn’t believe he could be an attractive candidate to rational people, no matter how angry with ‘the establishment’ voters said they were....

“Over the weekend, Republican National Committee Chairman Reince Priebus showed the first public signs of acceptance about what’s in store for the party.  He finally acknowledged that the Republican nominee was probably going to be determined on the convention floor in Cleveland....

“Trump’s response to this floor-fight talk was to vomit up the usual word salad.

“ ‘All I can say is this, I don’t know what’s going to happen,’ Trump told ABC’s ‘This Week.’  ‘But I will say this, you’re going to have a lot of very unhappy people if I’m denied the nomination. And I think, frankly, for the Republicans to disenfranchise all those people because if that happens, they’re not voting and the Republicans lose.’

“Even through the syntactical fog, Trump’s point is clear: If he can’t reach 1,237, he should get the nomination anyway. Because he’s Trump. If that doesn’t happen, his supporters will stay home, defect from the party, riot – or all three.

“And he’s right.  Not about deserving the nomination even if he doesn’t have the delegates... (He’s) right that if he’s denied the nomination, many – not all, but many – of his supporters will bolt from the convention and the party.

“Left out of Trump’s unsubtle threat: Many anti-Trump Republicans will desert the convention and the party if he’s not denied the nomination.

“There are only three possible ways to avoid a calamitous walkout. Ted Cruz can win the nomination outright before the convention. That’s very unlikely given that he’d need to win roughly 80 percent of all the remaining delegates.

“Second, Trump could reveal he has a hidden reservoir of magnanimity and patriotism, and rally his faithful to the consensus nominee.  Stop laughing.

“Third, the delegates could pick someone sufficiently attractive that Trump followers get over their understandable bitterness and support that candidate despite Trump’s objections. Who would that be?  Certainly not Mitt Romney.  Maybe a reanimated Ronald Reagan. Or Batman?  I have no idea....

“But only when we accept that a terrible diagnosis is real is it possible to think intelligently about our options.

“To wit: This ends in tears no matter what. Get over it and pick a side.”

Personally, I kind of like the idea of Gandalf running the show.

Michael Goodwin / New York Post

“More than half the states have voted and the presidential candidates are entering the home stretch of the nominating gantlet.  But up to now, they have been ignoring a mighty special interest: events.

“Events have a vote, as the terrorist attacks that rocked Brussels reminded us. The bloody strike at the heart of Europe, not far from the headquarters of the European Union and NATO, delivered a powerful punch that could reshape the race for the White House.

“In the instant aftermath, there is little doubt that Republicans in general, and Donald Trump in particular, will get a boost.  After all, Trump has been the most aggressive of all the surviving candidates, calling for a temporary ban on Muslims, tougher border controls and stepped-up interrogation techniques of enemy detainees.  In January, he actually singled out Brussels as a potential problem, calling it a ‘hellhole’ because of the large number of unassimilated Muslims.

“He was ridiculed, of course, but events now make him look prophetic while Democrats are stuck defending a failed status quo. Hillary Clinton’s comments yesterday reflected the trap, as she tried to talk tough without actually saying anything that would challenge current White House policies: ‘Today’s attacks will only strengthen our resolve to stand together as allies and defeat terrorism and radical jihadism around the world.’

“She might have added, ‘Blah, blah blah.’

“As for President Obama...safe from voters for the rest of his life, he was content to mouth a few platitudes about sympathy and solidarity with Brussels, then stick to his script in Cuba as if nothing had happened.  His boast that ‘I have come to bury the last remnant of the Cold War’ seemed especially hollow, given the gory images of mangled bodies emerging from the scene....

“No less than a former member of Obama’s team, Michael Morell, who twice served as acting CIA director, told CBS that (ISIL) now controls ‘more territory today around the world than they did at any time.’

“ ‘So I would say they’re winning, right?  They’re winning,’ Morell said.

“Obama’s mantra has been that America was war-weary, and he would be rewarded for shrinking the nation’s military footprint.  While there was some truth to his idea, I have always believed most Americans are not so much war-weary as they are tired of losing wars. And they certainly are tired of living in fear.

“If true, then the next president will likely be the candidate who can convince the most voters that he or she can make the nation safe and a winner again. Think of it as a national security primary, with events in Brussels offering a clear contrast of the candidates’ strengths and weaknesses.

“So far, it’s advantage Trump.”

--Michael Wilner / The Jerusalem Post

“Donald J. Trump, real estate tycoon and frontrunner for the Republican presidential nomination, offered an unusually detailed policy speech on Israel and the Middle East at the American Israel Public Affairs Committee’s annual policy conference on Monday night.

“The speech was a departure from his typical speechifying: Trump used a teleprompter, from which he read crisp remarks on the complexities of the threats facing the Jewish state. He spoke extensively of Israel’s willingness to resume negotiations with the Palestinians without preconditions, and its opposition to a political framework for a two-state solution imposed by the United Nations Security Council.  He delineated between the nuclear deal reached with Iran last summer and preexisting international laws on its ballistic missile work, and detailed how he, as president, would address both threats.

“Trump repeatedly received standing ovations, and few audience members were seen leaving the massive stadium hall despite a planned protest of the controversial candidate....

“Trump said his ‘number one priority’ is to dismantle the Joint Comprehensive Plan of Action – the former name for the nuclear deal with Iran. He will do so, he said, by aggressively policing the deal, and not by ‘ripping it to shreds on day one’ in the Oval Office as his primary rival, Texas Senator Ted Cruz, vowed to do in his own speech to AIPAC on Monday night.”

As you know nothing else pisses me off more these days than Sen. Cruz talking about “ripping the catastrophic Iran nuclear deal to shreds,” as he tells every single audience he speaks to, with his supporters roaring their approval when you can’t rip the freakin' thing up!!!

So each time I hear it I take to Twitter to remind the few who might read it that’s it’s too late.  There are five other signatories to the damn thing and we’re screwed.  Ditto Israel.

--Former Florida governor Jeb Bush endorsed Ted Cruz.  As Derrick Coleman would have said, “Whoopty-damn-do.”  [Unless you’re telling me Bush’s old donor network will now flock to the senator.]

--No, I’m not getting into the candidates’ wives fiasco.

--Editorial / Bloomberg News

“What should we make of House Speaker Paul Ryan’s speech in the Capitol on Wednesday?  Ryan, who has spent his career positioning himself as the Republican Party’s ideas leader, devoted most of his remarks not to policy but to politics.

“In the most poignant moment, Ryan uttered something you don’t hear often from politicians – ‘I was wrong’ – when he apologized for having rhetorically divided the nation into ‘makers’ and ‘takers.’

“ ‘I shouldn’t castigate a large group of Americans to make a point,’ Ryan acknowledged.

“Such comments are rare in politics, and suggest admirable resources of integrity and a capacity for growth. But Ryan works within the context of a congressional party that appears determined to bury him in dysfunction and reaction, and he continues to cling to policies that offer no way out of the  rubble.

“Having promised a return to regular legislative order in the House of Representatives, and a season of big policy ideas, Ryan has been stymied by the same anti-government Republicans who undermined his predecessor, John Boehner. The House is about to leave for recess with no apparent progress on meeting an April 15 deadline for approving a federal budget.

“The vision Ryan sketched Wednesday was nonetheless uplifting.  In a ‘confident America,’ he said, ‘we aren’t afraid to disagree with each other. We don’t lock ourselves in an echo chamber, where we take comfort in the dogmas and opinions we already hold.’

“Yet Ryan leads a party that’s trapped, especially in the House, in precisely the kind of ideological lockdown he describes....

“With extremists in his party, including Ted Cruz, massed on one front, and Donald Trump positioned on another, Ryan occupies perilous ground.  Yet he seemed confident of finding a way out.  ‘Instead of playing to your anxieties, we can appeal to your aspirations,’ Ryan said with perhaps unreasonable sunniness.  ‘Instead of playing the identity politics of ‘our base’ and ‘their base,’ we unite people around ideas and principles.’”

Not this year, sports fans.

--I’m very close to saying I’m going third party come November.  I won’t care if I’m throwing my vote away.  I’ve done it before.  I have the right to do so.  

--Former Bosnian Serb leader Radovan Karadzic has been convicted of genocide and war crimes over the 1992-95 war, and sentenced to 40 years in prison.

UN judges in The Hague found Karadzic guilty of 10 charges, including genocide over the 1995 Srebrenica massacre, where Bosnian Serb forces massacred more than 7,000 Bosnian Muslim men and boys.

He was also found guilty of crimes against humanity related to the campaign of terror in the city of Sarajevo that left nearly 12,000 dead.

More than 100,000 died in the Bosnian war.

Gen. Ratko Mladic, who commanded Bosnian Serb forces, is awaiting his own verdict at The Hague.

--The Justice Department unsealed an indictment against seven Iranians believed to have been working on behalf of the Iranian government and described as “experienced computer hackers” in relation to a coordinated campaign of cyberattacks from 2011 to 2013 on dozens of U.S. banks and  a New York dam.

--As reported by USA TODAY, “Federal authorities Wednesday announced the arrests of more than 8,000 violent fugitives, including 559 wanted for murder, in the past six weeks as part of an operation aimed at combating persistent crime in 12 cities.

“In Baltimore alone, 148 fugitives were swept up, including 23 murder suspects in the effort led by the U.S. Marshals Service, known as Operation Violence Reduction 12....

“Also among the most serious offenders were 648 gang members and 846 suspected sex offenders....

“(Deputy director of the U.S. Marshals Service, David) Harlow described the federal operation as having produced ‘tremendous results,’ but local law enforcement’s record of pursuing fugitives has been uneven at best.

“A 2014 USA TODAY investigation found that police and prosecutors allowed tens of thousands of wanted felons – including more than 3,300 people accused of sexual assaults, robberies and homicides – to escape justice merely by crossing a state border.”

--Finally, I was watching Jake Tapper’s show on CNN the other day and Republican Sen. Ron Johnson (Wis.) made a real point of calling for “an increase in canine units” to fight terror, saying there is nothing better when it comes to sniffing out bombs.

I think we all know this (elephants are also great in this regard, in all seriousness, though not real practical), but there was something very cool about watching a United States senator, kind of out of nowhere, become impassioned on the topic.

You see how prevalent dogs are in the Brussels anti-terror operation.  And you all know how invaluable they’ve been in the Iraq and Afghanistan theatres for our servicemen and women.

Let’s face it.  ‘Man’ can really suck.  So God sent us dogs and their unconditional love to provide some stability and in times of war, or natural disaster, protection and hope. 

---

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

Pray for Europe.

God bless America.

---

Gold $1217
Oil $39.46

Returns for the week 3/21-3/25

Dow Jones  -0.5%  [17515]
S&P 500  -0.7%  [2035]
S&P MidCap  -1.1%
Russell 2000  -2.0%
Nasdaq  -0.5%  [4773]

Returns for the period 1/1/16-3/25/16

Dow Jones  +0.5%
S&P 500  -0.4%
S&P MidCap  +1.1%
Russell 2000  -5.0%
Nasdaq  -4.7%

Bulls 47.4
Bears 27.8 [Source: Investors Intelligence...]

Thank you for your support.

Happy Easter!

Brian Trumbore



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Week in Review

03/26/2016

For the week 3/21-3/25

[Posted 11:00 PM ET, Friday]

Note: StocksandNews has substantial costs (having recently done my taxes, $2,700 for subscriptions alone).  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’s greatly appreciated.  Special thanks this week to Dan C.

Edition 885

Washington and Wall Street

At his press conference in Argentina on Wednesday, President Obama was asked, “What was your dream when you got elected? And were you able to realize it?”

Obama: “I ran for office because I believe deeply in the American people, and that our politics did not fully reflect all the values and the talents and the goodness of the American people....

“And I wrote down a list of things I wanted to do, and I keep it at my desk.  And I won’t say that I’ve gotten 100 percent done, but we’ve gotten a lot done.  It is indisputable that the economy is much stronger now than when I came into office.  We’ve created over 14 million new jobs. We’ve cut our fiscal deficits by two-thirds. We have provided new health insurance to 20 million people who didn’t have it before. We have not only reduced the acceleration of our carbon footprint, but we helped lead the way to gain a global agreement on climate change.

“On the international front, Cuba is just one example of the work we’ve done. The Iran nuclear deal that took away that threat from the world, but also gave Iran an opportunity now to rejoin the community of nations.  The work that we’ve done in Afghanistan – ending a war, but now giving them the opportunity to secure their own future.  Work in remote places like Burma, where what had been a 40-year military junta is now on the brink of a new era of democracy. So I think our values – the values that I felt best represented America – has also been reflected in our foreign policy.

“And one of the things I learned after seven and a half years in office is that – and I’ve used this metaphor before – we’re like a relay runner.  We take a baton. And sometimes when we take the baton, we’re behind in the race.  And we don’t always choose the circumstances when we get the baton. The question is, for our leg of the race, did we advance the causes we care about? Did our team gain ground against the challenges that we care about? And on that front, I believe we have achieved that.

“But we still have a lot of work to do. There are a lot of people in America who are still looking for more opportunity.  I certainly have not been successful in getting the two parties to work together more cooperatively.  And the tone of our politics is not – doesn’t reflect, I think, what’s best in us. There are still major challenges.  ISIL is still killing people.  North Korea still has a nuclear weapons program. Middle East peace has not been achieved.

“So if I were satisfied now, then I would be blind to the many challenges we face.  I can say with confidence that the work we’ve done has made both America and I think the world stronger and better. And I feel pretty good about the fact that I can look back and say that I operated with honesty and integrity and don’t feel as if I said things I didn’t believe or acted in ways that would make me ashamed. And that I think counts for something, as well.”  [Source: whitehouse.gov]

In case you wondered what President Obama’s last address to the American people will sound like next January, this is your preview.

So there you have it.  He is quite satisfied with himself, of course, as he always has been.  He has actually left the world “stronger and better.”  He really believes that.  There are probably 40% of so of Americans who believe this as well.  That’s depressing.

Obama believes he is going down as one of the great presidents of all time.  I, on the other hand, believe he is easily one of the five worst, and as the decades pass, with the foreign policy mess he is leaving behind he’ll be bottom three.

After our latest round of terrorism in Europe this week, and with far more on the way, with far deadlier consequences, I cannot help but repeat what I’ve been writing since the summer of 2012.  Historians will look back on the opportunity he missed in Syria, and how he cared far more about an election (“GM is alive...bin Laden dead”) than the future of the Middle East, and thus Europe and much of the rest of the world, and they’ll kill him for it.

I plowed through Jeffrey Goldberg’s voluminous essay in the April 2016 issue of The Atlantic, thoughts and interviews with the president, and for all of Goldberg’s excellent work, he focuses more on 2013 and Bashar al-Assad’s gassing of his own civilians, after which Obama didn’t bomb Syrian government targets in retaliation for crossing his red line, which indeed sunk Obama’s credibility around the world.

But Goldberg doesn’t say anything about the summer of 2012 when Turkish President Erdogan, John McCain, Lindsey Graham, and others, including yours truly, were screaming for a no-fly zone in northern Syria to protect Syrians from an increasingly vicious dictator.  There was little risk.  There was no Russia.  Assad wouldn’t have dared shoot one of our planes down.

There were ‘just’ 23,000 dead then in the Syrian civil war, with about 260,000 refugees, and this was a time when Erdogan was acting like a moderate and could have been pulled permanently into our sphere.  It’s called diplomacy.

But Obama failed to grab the opportunity because of the election, and his wanting to be the anti-Bush, and the world, particularly the Middle East and Europe, has now reaped the whirlwind. It has been changed forever for the worse.

What Obama failed to do will go down in history as one of the single worst mistakes ever made by a Western leader.  380,000+ more dead since, just in Syria; millions of Syrian refugees, many of whom are flooding Europe, millions more displaced; the full emergence of ISIS; instability across the entire Middle East and north Africa; and the likes of Vladimir Putin and Xi Jinping realizing the U.S. under Barack Obama was a country that could be toyed with.

I’ve said countless times, the last year in particular with regards to Syria and efforts at a peace agreement, and then in the aftermath of the Iran nuclear deal, where about eight years ago I pointed out that all you needed to know in terms of Iranian intentions was their reluctance to let inspectors onto a single military base, Parchin, that in both instances it was already “over.”

It’s too late.  If at times you wonder from my writing why I’m not screaming more after a particular incident or terror attack, it’s because of just that.

It’s too late.  It’s over.

I’m glad the Pentagon made the announcement today that the No. 2 figure in ISIS, al-Qaduli, was killed in a Special Ops mission (though we had hoped to take him alive).  This is one case where I won’t be cynical about ‘another leader’ exiting the theater.  This one matters.  It’s also highly encouraging that we obviously have  some ‘insiders’ providing the intelligence that has been so sorely lacking.

But it’s too late.  Tens of thousands of Muslims are being radicalized around the world.  Europe has obviously become Ground Zero.  [Germany is toast.]

The United States under President Obama had a prime opportunity in 2012 and he blew it.

But he’ll look at himself in the mirror on his last day in office and no doubt he’ll kind of smirk and think, ‘I did a terrific job.  I left the world and America stronger.’ 

I, on the other hand, will be seething.

I’m old enough to have seen more than my share of presidents exit the stage.  For some I’ve shed a tear.  For this one...you don’t want to know what is in my heart.

---

Just a few notes on the economy and the markets.  With Wall Street closed on Friday, it was easy to miss that the government nonetheless released its final revision to fourth-quarter GDP, up 1.4% from the prior estimate of 1.0%, so with 2015 in the books, it looks like this.

2015 GDP (seasonally adjusted at annual rates)

Q1... 0.6%
Q2... 3.9
Q3... 2.0
Q4... 1.4

Or the same 2% we’ve been cranking out since the end of the Great Recession.  It should have been a lot higher.

[The Atlanta Fed’s GDPNow indicator currently has first-quarter GDP pegged at just 1.4% as well.]

On the housing front, existing home sales for February came in far less than expected and down 7.1% to a seasonally adjusted annual rate of 5.08m, with the median home price at $210,800, or up 4.4% year over year.

New home sales for the month were at 512,000 ann., owing to a 38.5% surge in the West.  But for the first two months, new home sales are running below 2015’s pace.

February’s durable goods report (big ticket items) was below expectations, -2.8%, -1.0% ex-(volatile) transportation.

But a slew of Fed speakers decided that just a week after their Open Market Committee meeting, where, through Chair Janet Yellen, they told the world they were going to hike interest rates just two more times in 2016, not the four they were targeting back in December, the jerks would start talking about hiking the benchmark funds rate as early as their April 26-27 confab.

For crying out loud, we all love transparency but this was beyond asinine.

Now I just wrote last week that inflation is actually at the Fed’s targeted 2% already, if you look at core CPI, for example, but how can at least five Fed governors suddenly change their mind in the span of a week?  The likes of San Francisco Fed President John Williams, Atlanta’s Dennis Lockhart, and St. Louis Fed President James Bullard, among others, decided that prospects for inflation actually aren’t that bad and that inflation and employment targets could exceed their targets sooner than later so they might have to act shortly.

I mean I actually think they’re right, but it was just last week I called them a band of idiots and here they go out and prove it within days!  Gee, thanks, guys, but you’re hardly the kind of leaders we’re looking for when it comes to the control of monetary policy.  Helter skelter comes more to mind.

A lot of us would just like the members of the Fed to shut up and let Chair Yellen be the sole spokesperson.  Give her your input behind the scenes, like it used to be.

Europe and Asia

Just last Saturday, Belgium’s Interior Minister, Jan Jambon, said the country was on high alert for a possible revenge attack following the capture of 26-year-old Salah Abdeslam in a flat in Brussels on Friday.  “We know that stopping one cell can...push others into action.  We are aware of it in this case,” he said.

ISIS suicide bombers then hit Brussels airport and a metro train Tuesday, killing at least 31 and wounding up to 300 in the worst such attack in Belgian history.

Editorial / Wall Street Journal

“Authorities warned for months that Brussels was likely to be the target of an Islamist terrorist attack, but that didn’t lessen the shock when it happened Tuesday morning....

“The attacks follow Friday’s arrest in Brussels of Salah Abdeslam, an alleged ringleader of November’s Islamic State-inspired terror attacks in Paris, and Islamic State claimed responsibility for the Brussels bombings....

“The immediate temptation will be to point to Belgium’s many and well-known policing failures, and authorities deserve the heat.  Multiple local and federal police departments with ineffective coordination struggle to track terror cells, or other organized crime.  After Abdeslam’s capture, at least one Belgian official over the weekend professed surprise the terrorist was still in Belgium – the government thought he was long gone.

“Belgium, like many other European countries, has allowed to develop what amounts to a parallel Islamist society.  Multiple raids in the Molenbeek neighborhood of Brussels have uncovered large stockpiles of weapons, and Belgian officials said this weekend they were surprised by the number of people from whom Abdeslam received support as a fugitive.

“But Tuesday’s Brussels attacks, and Paris and San Bernardino, Calif., before, are mainly an indictment of Western foreign-policy failures in Syria.  Terrorists linked to Islamic State...are perpetrating one large attack after another in the West.  Islamist attacks large and small around the world have become a daily occurrence.

“In part this is because the perception that Islamic State is winning increases its appeal among Western-born potential followers....

“Islamic State also is exploiting the instability it creates, especially through refugee flows....Germany’s domestic intelligence chief, Hans-Georg Maassen, said (last month) that officials across Europe have ‘seen repeatedly that terrorists are being smuggled in, camouflaged as refugees.’

“Europe seems determined to keep treating this as a political problem, or at least as anything other than a call to bolster military efforts in Syria.

“There’s a role for policing in a counterterror strategy, but also a limit....Until the West is prepared to fight this terrorist threat at the source, Tuesday’s victims in Brussels won’t be the last.”

By Friday, Belgian police had arrested at least nine people and Germany two in investigations into the suicide bombings, while authorities in France said they had thwarted a plot “that was at an advanced stage.”

Most of those arrested in both Belgium and Germany were said to be part of the broader Abdeslam cell.

At least two men suspected of taking part in the attacks were still at large at last word; one from the metro station, the other, the man in white, at the airport.

We learned this week that one of Tuesday’s bombers, Ibrahim el-Bakraoui, a Belgian national, had been arrested last year by Turkish police near the Syrian border on suspicion of belonging to ISIS.  He was deported to the Netherlands* but freed because “Belgium wasn’t able to make the terrorism connection,” according to Turkish President Erdogan.

Turkey said it warned both Belgium and the Netherlands that Ibrahim was a “foreign terrorist fighter.”

*As a citizen of an EU country, he had a choice as to where to be deported within the EU and apparently selected the Netherlands.

Ibrahim’s bother, Khalid, was wanted on international and European arrest warrants issued last December in conjunction with the Paris attacks in November, but Belgian prosecutors said neither brother had known prior links to terrorism.

And then when Abdeslam was arrested he was questioned for only an hour, even though Khalid’s name was on the lease of an apartment where Abdeslam’s fingerprints were found.

The Belgian government acknowledged it mishandled Turkey’s warnings about Ibrahim El Bakraoui. But at least three of the suicide bombers, including Najim Laachraoui, the second airport suicide bomber, and bomb maker, were known to Belgian authorities for their ties to Paris.

We also learned that brothers Khalid and Ibrahim were originally considering an attack on a nuclear site in Belgium, but the arrest of Abdeslam may have forced them to switch targets in the Belgian capital.

A 10-hour video from a camera hidden in front of a nuclear official’s house was found in December, yet there doesn’t seem to have been any follow-up even though the brothers were connected to the camera.

Separately, the Associated Press reported it has learned at least 400 fighters have been trained by ISIS to target Europe in deadly waves of attacks, deploying interlocking terror cells like the ones that struck Paris and Brussels.

Abdeslam was said to have entered Europe in a multinational group of 90 fighters, who scattered “more or less everywhere.”

Jonathan Marcus / BBC News

“(The) problems of a fragmenting Middle East are fast-becoming Europe’s problems too.

“Whether it be terrorism, the tide of migration, Libya’s future, Iran’s nuclear policies, or the problematic relationship with Turkey, the wider Middle East is now intruding into the European consciousness on a day-to-day basis.

“In some ways, this is a reversion to a long-standing historical norm.

“Think back to the colonial era, when France, Italy and Great Britain controlled huge swathes of territory in the Middle East....

“Indeed, the map of the Middle East so much under threat today was largely set by these same European powers after the Great War.

“In the past, terrorism too has battered on Europe’s doors.

“The struggle for Algerian independence in the late-1950s brought terror attacks against French targets.

“And a generation later, in the 1990s, Algerian extremists again attacked France, both to highlight their own campaign and to exact revenge against what was seen as the former colonial oppressor.

“But what is happening today seems fundamentally different.

“In part, the nature of the Middle East’s crisis is more severe.

“While geography may be immutable, in tangible ways the proximity of the region to Europe has increased.

“And the varied forces of globalization have at one and the same time increased the attractiveness of the European economic area and highlighted the deficiencies of much of the Arab world.

“A globalized culture has served to reduce distance as a factor in world affairs....

“The refugee crisis raises even deeper questions about Europe’s values and the nature of the wider society the European Union countries are seeking to establish.

“Indeed, problems that in many cases have their roots abroad are now having a significant impact on domestic politics, too.

“Think of the rise of populist parties in Scandinavia, the strength of the National Front in France or the gains made by the far-right at the recent regional elections in Germany.

“This, in truth, is a problem from hell.

“The certainties that informed policy throughout the Cold War and that appeared to triumph at its close are no more.

“History didn’t end.  It returned to bite the Europeans on the backside.”

David Ignatius / Washington Post

“Europe is facing a security threat that’s unprecedented in its modern history, at a time when its common currency, border security and intelligence-sharing are all under severe stress.  If Europe were a stock, a pragmatic investor would sell it, despite the sunk cost and sentimental attachment. Without radical restructuring, it’s an enterprise headed for failure.

“The European Union needs to reinvent its security system.  It needs to break the stovepipes that prevent sharing information, enforcing borders and protecting citizens.  In the months before Tuesday’s terrorist attacks in Brussels, ‘the system was blinking red,’ as George Tenet, the former CIA director, famously described the period before Sept. 11, 2001.  Yet Belgium (like pre-9/11 America) couldn’t connect the dots. 

“The jihadist wave rolling back toward Europe is dizzying: U.S. intelligence agencies estimate that more than 38,000 foreign fighters have traveled to Iraq and Syria since 2012. At least 5,000 of them came from Europe, including 1,700 from France, 760 from Britain, 760 from Germany and 470 from Belgium, according to official data collected by the Soufan Group, a security consulting firm.  Relative to its population, Belgium spawned the largest number of these fighters.

“Belgian authorities couldn’t find Salah Abdeslam for more than 120 days – until they finally nabbed him Friday a few blocks from where he grew up in the Arab enclave of Molenbeek. He was hiding in plain sight. But Belgium’s failure was cooked into the system: The jihadists move stealthily, and the Belgians didn’t collect or share enough of the intelligence that was there.  Authorities had allowed Molenbeek to become a haven – more dangerous to Belgium than even the jihadists’ sanctuaries in Syria, Iraq and Libya.

“Americans, who are less exposed to this threat, may smugly imagine they can wall themselves off. But the Islamic State’s rampage is more an American failure than a European one. The United States formed a global coalition to ‘degrade and ultimately destroy’ the Islamic State back in September 2014.  This strategy hasn’t worked; the Islamic State’s domain has shrunk in Iraq and Syria but expanded elsewhere.

“The failure of the U.S.-led coalition to contain the jihadists has left a fragile Europe exposed to terrorism and social upheaval. President Obama hopes that history will affirm his prudent policy, but this view is surely harder to maintain after the Paris and Brussels attacks.”

As to the migration angle....

From last Sunday, March 20, migrants who arrive on Greek islands will be returned to Turkey.  The first transfers are likely to take place in early April, because each migrant has to be registered, given a chance to file for asylum, have his case heard and possibly file an appeal before being sent back to Turkey.

Nearly 50,000 migrants are stuck on the Greek mainland at camps, in Paraeus and on Greece’s northern border with Macedonia.  More than 10,000 have been living in awful conditions in the Idomeni camp on the Macedonian border, after west Balkan countries sealed their borders last month to cut the flow of migrants making their way to Germany and northern Europe.

Mike Hookem, defense spokesman for the UK Independence Party (UKIP), which is campaigning for “Brexit” from the European Union, noted: “The head of Europol said in February that 5,000 jihadists are at large in the EU having slipped in from Syria.  There are 94 returned jihadists currently living in Molenbeek, Brussels. This fact alone should alert people to the fact that open borders are putting the lives of European citizens at risk,” he explained.

The 1995 Schengen Agreement has enabled free, passport-less movement between countries within the EU.  There are currently 26 nations who operate under these laws, but now the entire agreement is in jeopardy.

UKIP leader Nigel Farage summed it up: “I’m very upset by events in Brussels today and even more depressed for the future.”

Tony Barber / Financial Times

“As elsewhere in Europe, the problem in Belgium is not so much fiery sermons preached at mosques as the radicalizing effect of conflicts in the Middle East and North Africa, the temptations of online fanaticism, poor integration of Muslim communities and inadequate police and security measures.  Molenbeek, a district of Brussels that is densely populated with North African immigrants, acquired global notoriety as a sanctuary for jihadis after the Paris attacks but it was a breeding ground for trouble long before that.”

Separately, Poland’s prime minister on Wednesday appeared to suspend the country’s earlier commitment to accept refugees under a resettlement proposal adopted last year by EU members.

“I’ll say very clear,” said Prime Minister Beata Szydlo, “(following the Brussels attacks), I see no possibility for migrants to arrive in Poland at this time.”

Szydlo’s government, which came to power in November, has opposed the EU’s plan for migrants but had said it would honor the deal.

In a speech on Wednesday, Szydlo said the terrorists who struck Brussels “made a mockery of the agreement.”

“Perhaps it’s time to bang a fist on the table and say ‘enough of terrorism.’  Our children and countries are in danger and we’re all beginning to be afraid. Europe mustn’t be afraid.  We must say enough,” she said.  [Martin Sobczyk / Wall Street Journal]

I stand behind Poland and, before this, Hungary, when the latter was the first to take what seemed to be harsh steps against the migrants but today looks more than prescient.

---

On the economic front, Markit (which announced this week it is merging with IHS in a mammoth $13bn combination of data and analytics’ providers) released its flash estimates for eurozone manufacturing and service activity and the comp PMI for the euro area was 53.7 in March vs. 53.0 in February (50 being the dividing line between growth and contraction).  Services was 54.0 vs. 53.3; manufacturing 51.4 vs. 51.2.

The flash readings look at just France and Germany, individually, and France’s manufacturing reading was 49.6, a 7-mo. low, while services came in at 51.2 vs. 49.2.

Germany’s manufacturing PMI was 50.4 vs. 50.5; services 55.5 vs. 55.3 for February.

Chris Williamson, Chief Economist at Markit:

“The eurozone saw renewed signs of life at the start of spring. The March PMI showed a welcome end to the worrying slowdown trend seen in the first two months of the year, putting the region on course for a 0.3% expansion of GDP in the first quarter [Ed. quarter over quarter]/  The German economy looks to have expanded by 0.4% in the first quarter, but France remains close to stagnation despite seeing a return to growth in March.”

But Williamson adds: “Deflationary pressures remain stubbornly widespread as a lack of demand led to further discounting in March. 

“The upturn in March nevertheless hopefully provides a springboard for recent additional stimulus from the ECB to help boost growth further in the second quarter and into the summer.”

As for non-euro UK, sterling dropped, an indirect effect of the attacks on Brussels which has many linking the two, as in the attacks might increase the likelihood voters in Britain will opt to leave the European Union in June.

Gideon Rachman / Financial Times

“The British debate about Brexit, at the moment, reminds me of the discussions I heard in the U.S., late last year, about Donald Trump.  Back then the opinion polls said that Mr. Trump was well ahead in the race.  But the conventional wisdom in Washington was that he would never win the Republican presidential nomination. Everybody told me that, once voters focused on the race, Mr. Trump’s lead would crumble.

“In Britain today, there is a similar unwillingness among mainstream political analysts to believe the warning signs from the opinion polls.  Several recent polls have shown small majorities in favor of the UK leaving Europe when the country holds its referendum on June 23.  But most political pundits I speak to still think it is pretty unlikely that Britain will really vote to leave.  When it comes to both Mr. Trump and Brexit, the political establishments in Washington and London find it hard to believe the public will ultimately make a choice that the establishment regards as self-evidently stupid.

“However in Britain, as in the U.S., politics has taken a populist and unpredictable turn. The financial crisis and its aftermath have undermined faith in the judgment of elites.  High levels of immigration and fear of terrorism have increased the temptation to try and pull up the drawbridge and retreat behind national frontiers.”

President Obama is heading to London next month and is expected to make a strong statement in support of Britain remaining in the EU.  It will be interesting to see how well this is received.

In Asia, little economic news.  Chinese Premier Li Keqiang reiterated growth is a top priority.

But in Japan, the government lowered its assessment of the economy for the first time in five months due to weakness in consumer spending.

The Cabinet Office offered in its monthly economic report on Wednesday: “Japan’s economy remains on track for recovery, but more weak spots in the economy can be seen....

“There are downside risks, including the slowing down of emerging economies.  We need to also pay attention to financial overseas markets.”

The government is launching a new $27 billion stimulus package this month.

Japan’s economy shrank an annualized 1.1 percent in the fourth quarter, with most expecting some rebound in the current quarter.

Separately, headline inflation rose 0.3 percent year on year in February, in line with expectations and up from zero in January.  But core inflation, ex-food and energy, rose 0.8 percent, up 0.1 from January’s reading.

Japan’s flash manufacturing PMI for March was just 49.1 vs. 50.1 in February.

Street Bytes

--After a big five-week rally, stocks took a breather for this holiday-shortened, terror-filled week, with the Dow Jones losing just 0.5% to 17515, the S&P 500 falling 0.7% and Nasdaq off 0.5%.

The Dow remains in positive territory for the year, though just barely at +0.5%, while the S&P is now down 0.4% and Nasdaq nearly 5%.

There’s no mystery why the markets haven’t reacted more severely to largescale terror incidents...there just haven’t been any immediate follow-on attacks.  When that inevitable day comes... especially something like a simultaneous attack on airliners in Europe and the U.S. or Canada, investors will cower.

On a different topic, as we approach the end of the quarter we face another earnings season.  One facet of the fourth-quarter GDP report did not exactly bode well given the GDP forecast for Q1.

Last quarter, corporate profits, after tax and other adjustments, fell at an 8.1% pace over the third quarter; the largest quarterly decline since the first quarter of 2011.  On a year over year basis, corporate profits declined 3.6% in the fourth quarter. 

At least consumer spending in Q4 was up 2.4%, and for all of 2015 advanced 3.1%, the best pace since 2005.  [Wall Street Journal]

--U.S. Treasury Yields

6-mo. 0.45%  2-yr. 0.87%  10-yr. 1.90%  30-yr. 2.67%

The bond market was virtually unchanged on the week.

--CNBC conducted a rather startling study when it comes to the government’s reports on gross domestic product.  When the figures are revised years later as part of a regular, more detailed look at output once all the real data becomes available, the error margin is a full 1.3 percentage points.

So, for example, the margin of error for a report showing GDP is 2.0% is really 3.3% to 0.7%.  Those are huge differences and critically important ones for both CEOs and policymakers.  We (government) must get better at this game.

--The average nationwide price of gas at the pump hit $2.00 this week, the highest since January and up 31 cents in one month, though still 42 cents below year ago levels.

The price should continue to rise well into the spring before the summer driving season, which looks to be at record levels and will work off some of our record inventories (which rose 3Xs more than expected this past week).

To our friends in California, congratulations on continuing to lead the nation with an average price of $2.73!  As they used to say on “Hee Haw”...Saa-luute!

While the price of West Texas Intermediate has climbed from $26 to about $40 ($39.46 at weeks’ end), many oil and gas companies aren’t profitable. Linn Energy, a major Houston-based energy company, is on the verge of bankruptcy, having stopped meeting its debt payments, while Denver-based Emerald Oil filed for Chapter 11 this week.

If oil were to rise a few more dollars, many companies may complete unfinished wells and possibly drill new ones, pressuring prices anew.

On a related noted, the number of U.S. oil rigs declined to the lowest level since November 2009 this week, down 15 to 372, according to data from Baker Hughes.  The peak was 1,609 counted in October 2014.

OPEC is slated to discuss a production freeze on April 17 in Qatar, but it’s doubtful Iran, still ramping up post-sanctions being lifted, will comply.

--Federal prosecutors announced Monday that an outside party had come forward with a technology that might unlock the iPhone used by one of the San Bernardino terrorists without Apple’s cooperation.  As the Los Angeles Times’ David Pierson put it, “the tech giant could have reason to view it as a major victory – and a major risk.

“What would be worse for a company that has insisted privacy is core to its identity – and whose marquee device is among the safest on the market?  Caving to government pressure and writing its own decryption software, or conceding its phones are not as secure as some believed.”

The same day, Apple unveiled its newest iPhone and CEO Tim Cook said, “We need to decide, as a nation, how much power the government should have over our data and our privacy.”

Pierson: “But, if the government’s new lead is successful, customers will need to decide whether they’ll keep buying a product that, though advertised as virtually airtight, could be hackable.  Apple’s showdown with the FBI provides no bigger stage to put that consumer loyalty to a test.”

James Lewis, a cybersecurity expert and a senior fellow at the Center for Strategic and International Studies in Washington, said, “Whenever people tell me something is unhackable, I think about how the Titanic was unsinkable.  Apple should have quietly complied since now it has the worst of both worlds.”

Gotta agree with Mr. Lewis.

David Cowan, a partner at Bessemer Venture Partners in charge of the firm’s cybersecurity investments, said: “Apple is refusing to publicly acknowledge vulnerabilities in their phones. Despite the veneer of security, the data on our iPhones can be stolen by Apple and others.”

Apple is reportedly working on even tougher security tools for its products.

Meanwhile, everyone is trying to find out who the third-party is that can supposedly hack into the phone.

As for the new product launch, Apple announced it will be coming out with an iPhone SE, which is smaller than its iPhone 6s and iPhone 6s Plus offerings, though on the inside, it’s just as powerful.  It will have the same 4-inch screen as the older iPhone 5s.  The release date is March 31 and pre-orders began on Thursday. 

The iPhone SE will be less expensive than the 6S and 6S Plus, starting at $399.

If Apple is targeting its key China market with a cheaper model, it could have a tough time as the Chinese consumer has loads of budget options, with domestic brands Huawei and Xiaomi offering devices that rival Apple at deep discounts. 

Only one in five Chinese iPhone buyers last year, for example, chose 4-inch devices, with the rest opting for larger, pricier iPhones, according to market research firm Gartner.  [Wall Street Journal]

--Nike’s profit rose 20% in its fiscal third quarter, but the company missed revenue expectations and reported a slight slowdown in orders.  The shares fell in response.

Revenue rose about 8% to $8.03 billion, missing the Street’s forecast of $8.2bn.

While orders for shoes and other apparel to be delivered from March through July were 12% higher than in the same period last year, there were signs of a slight slowdown in North America.

--Facebook founder Mark Zuckerberg has been visiting China, in the hope eventually Facebook will be unblocked there.

Chinese social media users took to popular microblog Sina Weibo to mock some of the coverage of Zuckerberg’s visit, like his activities of jogging through “hazy” Beijing’s Tiananmen Square, visiting the Great Wall and meeting China’s propaganda chief Liu Yunshan.  But on Sina Weibo’s ‘Breaking News’ link, the question was asked: “Will Facebook this time successfully enter the Chinese market?”  [South China Morning Post]

Earlier this year, Beijing introduced new rules on online publication, which analysts say places further curbs on foreign internet businesses trying to operate in China.

Online content publishers are supposed to “promote core socialist values.”

Zuckerberg’s one-on-one meeting with Liu Yunshan is significant in that Liu is a senior member of the Politburo, but despite the smiles exchanged between the two, there is no sign Beijing intends to open a gap in its Great Firewall to let Facebook in.  The government has only been getting stricter.

Some Chinese dissidents have been unhappy over Zuckerberg’s charm offensive, with a prominent critic, Hu Jia, accusing him of “brown-nosing” a government that denies its citizens the right to freedom of expression.  [Irish Independent]

--Credit Suisse’s trading revenue fell 40 to 45 percent in the first quarter, which is a massive decline, with global markets boss Tim O’Hara telling analysts the fall was “mostly driven by lower client activity” in things like credit and emerging markets.  The Swiss banking giant then announced that 2,000 jobs will be cut in the division, which are in addition to 4,000 job cuts announced just last month as the bank attempts to reduce annual costs by $820m.

CEO Tidjane Thiam, who took over last July after six years leading UK-based insurer Prudential, is off to a rocky start.

--China’s Anbang Insurance Group had agreed to pay $6.5bn for Strategic Hotels & Resorts, and then $13.2bn for Starwood Hotels & Resorts a day later, but on Monday, Marriott International, which initially made an offer for Starwood, upped its offer to $13.6bn, which was accepted by Starwood.

However, Anbang’s recent attempted buying spree may be thrown into doubt altogether by Chinese regulators, thus preventing Anbang from trying to outbid Marriott again, as Caixin, a well-respected Chinese financial magazine, reported Tuesday that the China Insurance Regulatory Commission could invoke a rule that restricts domestic insurance companies from investing more than 15 percent of their total assets abroad.  [Don Weinland / Financial Times]

So regarding Starwood and Marriott, they will now proceed with creating the world’s largest hotel operator, Starwood owning brands such as Sheraton, Westin and St. Regis.

Lastly, I’m not sure what Chinese regulators will do with Anbang’s proposal for Strategic Hotels & Resorts, an owner of 16 luxury properties, having an agreement with Blackstone Group LP.  Last year Anbang purchased the Waldorf Astoria hotel for $1.95bn.

--According to the New York Post, Goldman Sachs is among a handful of firms that the Justice Department has in its crosshairs over alleged bid-rigging in the U.S. Treasury bond market. 

European authorities have opened up their own investigation.

In November, Goldman disclosed in a regulatory filing it was being probed, but now the investigation appears to be focusing on the investment bank after investigators obtained key emails and chats.

--The recent $81 million heist from a Bangladesh Central Bank account at the New York Fed is drawing attention from Congress, and for good reason.  Rep. Carolyn Maloney (Dem – N.Y.), in calling for a probe, said: “We need a thorough investigation to determine how these criminals were able to manipulate the system so that banks and financial institutions can institute standards that will prevent hackers and cyber criminals from siphoning money out of accounts like those held at the New York Fed again.”  [Reuters]

Robert J. Samuelson / Washington Post

“It’s a big story that has stayed beneath the radar of most American media.... The theft surely qualifies as one of the biggest cyber heists ever.  It’s also a reminder that the world’s financial systems remain vulnerable to cyberattacks from groups or countries more interested in making war – disrupting societies – than money....

“What is known is that the scheme’s ambition far exceeded the $81 million that was transferred to the Philippines.  The original goal was apparently about $1 billion to be conveyed through 35 separate transfers.  Most of those transfers were never made.

“Why?  By one press version, doubts emerged when a word was misspelled on one transfer document.  (The word ‘foundation’ was spelled ‘fandation.’)  By another story, the fact that so much money was going to private accounts stirred suspicions. It’s unclear whether someone at the New York Fed stopped the transfers and, if not, who did.  Nor is it clear whether another $20 million was sent to Sri Lanka and the transaction was reversed, or whether the money was never sent....

“Among (cybersecurity firm, FireEye’s) early findings, according to the Wall Street Journal, (the) hackers may have penetrated the central bank’s computer system for several weeks before the transfers occurred.  Possibly, 32 computers were compromised.  This may explain how the access codes were obtained.

“Whatever the final story, there are larger lessons.  For starters, the New York Fed’s sweeping denial of responsibility is beside the point.  Whatever the Fed’s direct involvement, it failed to spot a phony transaction before the funds were sent.  Why was this?  Can screening be improved?

“What’s ultimately at stake is a stable global financial system.  Financial networks depend on trust that what’s deposited won’t vanish, and that transactions are legitimate and not falsified....If criminals could to this to Bangladesh Bank, what could organized terrorists or hostile states do to advanced nations’ financial networks?

“The theft confirms that most electronic networks are no stronger than their weakest links.”

--J. Michael Pearson, embattled CEO of Valeant Pharmaceuticals, announced he was stepping down, a stunning fall from grace.

The company said that activist investor William Ackman, the billionaire whose Pershing Square Capital management is Valeant’s second-biggest shareholder, would join the board.  Additionally, Valeant said it would restate some of its earnings, while former CFO, Howard Schiller, was asked to resign from the board, with Valeant accusing him of “improper conduct.”

Valeant shares closed the week at $31, down from its high of $263.

--Sherwin-Williams Co. has agreed to buy Valspar Corp. for more than $9 billion, creating a paint behemoth, with the former looking to gain better access to big-box retailers like Lowe’s, where Valspar already has a significant presence.

No word on whether the Valspar lizards would be part of any cost-cutting initiatives.  I imagine you can send your recipes to Sherwin-Williams.

--The Rockefeller Family Fund, which is comprised of descendants of John D. Rockefeller, sold their stake in Exxon Mobil Corp. while announcing they would dump all other fossil-fuel related investments as part of their funded campaign against global warming, the foundation (and associated Rockefeller family funds) backing InsideClimate News.

Of course Exxon traces its roots to the 1880s and John D. Rockefeller’s integration of refineries and Pennsylvania oilfields.

A spokesman for Exxon said in a statement: “It’s not surprising that they’re divesting from the company since they’re already funding a conspiracy against us.”

--For air travelers, the crash of the FlyDubai jet in Russia’s Rostov-on-Don during “poor weather conditions” was more than a bit disturbing.  The plane circled 40 to 50 minutes attempting to land (another report said two hours).

One initial story said pilot fatigue may have been a factor, and one can see that happening under such stressful conditions. The winds were near hurricane strength, according to the governor of the Rostov region.

All 55 passengers and 7 crew were killed.  [44 of the 55 passengers were from Russia, 8 from Ukraine.]

--New York City’s growth rate in population slowed last year, according to census figures released this week, with the city adding 55,200 people in the year before July 2015, for a population of 8.55 million, or up 0.6% for the 12 months. 

Upstate New York, on the other hand, lost 16,600 people.  Only six of 52 upstate counties added people over the year.

--Tensions between Yahoo and activist hedge fund Starboard Value ratcheted up further as Starboard made good on its months-old threat to try to unseat Yahoo’s entire board, after Yahoo surprised Starboard when it filled two vacancies on its board without consulting them.

With this going on, Yahoo continues to explore a potential sale of its core business.

--Playboy Enterprises Inc. is exploring a sale.  Just last October, Playboy announced it would stop showing nudity starting with the March 2016 issue, with pornography so readily available to anyone with an Internet connection.  In January, the company said it was looking to sell the Playboy Mansion for $200 million.

Instead, Playboy is focusing on licensing its brand, and has begun by selling the rights to use the Playboy bunny logo on a variety of merchandise.

Playboy was taken private in a 2011 buyout led by founder Hugh Hefner but has struggled with declining readership of its print magazine.

The Wall Street Journal believes Playboy could fetch $500 million in a sale.

--Roger Agnelli, the Brazilian banker who turned Vale SA into the world’s No. 1 iron ore producer, died last Saturday in a private plane crash.

Agnelli, his wife and two children were among seven killed when their turboprop slammed into two homes minutes after taking off from an airport outside Sao Paulo.  They were heading to a wedding ceremony in Rio de Janeiro.

Agnelli became the CEO of Vale in 2001 and helped make the company Brazil’s No. 1 exporter.  He owed his success to accurately predicting the rise of China as a major minerals consumer, which turned Vale into a global powerhouse.

In a Harvard Business Review ranking of the world’s best-performing CEOs published in February 2013, Agnelli came in fourth, behind only Apple’s Steve Jobs, Amazon.com’s Jeff Bezos and Samsung Group’s Yun Jong-Yong.  Agnelli was 56.

--Andy Grove died.  He was 79.  The legendary former CEO and chairman of Intel steered the company from memory chips to microprocessors, increasing revenues more than tenfold and creating the “Intel Inside” brand.

Brian Krzanich, current Intel chief executive, said, “Andy made the impossible happen, time and again, and inspired generations of technologists, entrepreneurs and business leaders.”

Editorial / Wall Street Journal

“(Grove) is the latest of many business giants who are dying with less recognition than they deserve for creating America’s post-World War II prosperity....

“(Intel) drove the innovation that led to the new age of individual computing.

“This was a tremendous business and management achievement for which Grove was named TIME magazine’s Man of the Year in 1997.  Grove’s appearance on TIME’s cover symbolized an era when CEOs were admired for creating jobs and wealth that benefitted everyone. Americans – even some in the media – took pride in U.S. companies that led the world. Now the media elevate politicians and reality-show celebrities, and the country isn’t better for it.

“Having fled Hungary after the failed anti-Soviet uprising of 1956, Grove is also an example of the many immigrants who have driven American capitalism from its earliest decades.  Alexander Graham Bell came from Scotland before founding what became AT&T. Robert Goizueta, who ran Coca-Cola during its glory years, immigrated from Cuba.  Google co-founder Sergey Brin is from Russia.  They show how the U.S. shortchanges itself by indulging bursts of nativist exclusion....

“Grove once told us he loved reading Peter Drucker on management, and he wrote one of the better business memoirs, ‘Only the Paranoid Survive.’  That’s good advice for those who want to avoid complacency, in business or life, from a man who more than repaid America for the great opportunity it offered him.”

Michael S. Malone / Wall Street Journal

“More than the careers of Steve Jobs or David Packard or Mark Zuckerberg, Andy Grove’s was the ultimate Silicon Valley story.  No one traveled further in a single lifetime – from Hungarian refugee to the head of one of the world’s most valuable manufacturing companies.  No one was more central to the making of the Valley – from the fabled Fairchild Semiconductor in the 1960s, to the founding of Intel in 1968, to the trade war against Japan in the 1980s, to the tech revolution’s globalization.  His decision to take Intel Corp. out of memory chips in 1985 and bet everything on microprocessors – now the heart of every important electronics device, from cellphones to supercomputers – has reshaped the modern world....

“If you worked with him, for him or, worst of all, competed with him, you knew that in the end, Andy would win.” 

--Lastly, according to data released this week by the Brewers Association, there were 4,269 operating breweries in the country at the end of 2015, surpassing the previous record “logged all the way back in 1873 when a lack of transportation and refrigeration meant breweries had to be local.”  [Anne Riley / Bloomberg]

2,397 of the total are microbreweries.  According to Bart Watson, chief economist at the Brewers Association (I want that position), all breweries together provided about 122,000 jobs last year, up 6,000 year on year.

I don’t think I would have liked living in the 1870s.  I need my beer cold (except for an occasional Guinness, which is served colder these days anyway), plus I need clean bathrooms and those were few and hard to find in those post-Civil War times. 

And that’s a memo...Charles Krauthammer is here....Charles, so where am I wrong?

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey: The U.S. and Russia held four hours of talks in Moscow on Thursday on the progress of the cease-fire in Syria, while promising to support peace talks in Geneva, but the two sides remain divided on the fate of Syrian President Bashar al-Assad. The U.S. says Assad must go as part of any final peace agreement, while the Kremlin says Assad is the only mainstay against chaos.

By some measures the cease-fire is holding, by others it isn’t.  Syrian government forces have been moving into the ISIS stronghold at Palmyra*, which ISIS overran last May, with Russia coordinating supporting airstrikes, but there have still been attacks on rebel forces that are neither ISIS or al-Qaeda-linked Nusra Front, which goes against the cease-fire agreement. 

*The Britain-based Syrian Observatory for Human Rights said ISIS killed 26 Syrian soldiers outside Palmyra on Monday.  Russia announced on Thursday that a Russian soldier had been killed in the Palmyra operation.

President Putin was a bit magnanimous on Thursday: “We are aware that the groundwork we have on Syria has only been possible thanks to the position of the political – supreme political leadership of the United States, specifically the position of President Obama. And I really hope that today’s visit will help us reconcile positions on or help make progress on both Syria and Ukraine.”  [Wall Street Journal]

The Iraqi army said Thursday its troops and allied militias had begun the long-awaited offensive to retake the second city of Mosul, ISIS’ capital in Iraq. 

Four outlying villages have been taken but there is a long ways to go before Iraqi forces will be in a position to attempt to take Mosul itself.

The U.S. has been providing air support, training and military advisers and it should be assumed there is a sizable number of the latter coordinating the Mosul campaign.

There is no doubt ISIS will make it difficult, given all the time it has had to prepare defenses, but I wonder how many have been melting away, heading west, such as to Libya.

It’s important for the Iraqi forces to work deliberately and cut off supply lines first, which they apparently have been doing for months now.

[Kurdish militias are doing the same in ISIS’ declared capital of Raqqa, Syria, before launching a full assault on it.  Purported Russian airstrikes on the city killed at least 55 this week, mostly civilians, according to the Syrian Observatory.]

A U.S. Marine was killed last Saturday in northern Iraq by ISIS rocket fire.

In Turkey, there was another terror attack, this one by ISIS on a major shopping and tourist district in central Istanbul last Saturday, killing five.  It was the fourth suicide bombing in Turkey just this year (two in Ankara, two in Istanbul, resulting in more than 80 deaths), with others blamed on the outlawed Kurdistan Workers Party (PKK).

Turkey is taking it from all sides these days.  It’s critical tourism industry is a victim, with bookings for this summer already down 40% from last year; hotel occupancy rates plunging by more than half, according to industry figures.

Tourism, aside from accounting for more than 4% of Turkey’s GDP, employs more than one million people, or about 7% of the working population, according to government data.  [Wall Street Journal]

Yaroslav Trofimov / Wall Street Journal

“When European Islamists started streaming into Syria and Iraq a few years ago, some European counterterrorism officials viewed it as a blessing in disguise. Better to have them pulverized on a Middle Eastern battlefield, they argued, than dispersed and plotting mischief at home.

“Today, that battlefield has become more dangerous than ever for Islamic State, which is being buffeted by U.S.-backed military campaigns in Syria and Iraq.  While Islamic State isn’t facing imminent collapse, one consequence of this battering is that trained and battle-hardened foreign fighters from Europe are more likely to head back to home ground.

“That is the alarming paradox of the U.S.-led campaign against the radical group: In the months and even years ahead, an Islamic State faced with defeat in a conventional war may pose a far greater danger to the West than when it was focused on conquering villages in the Euphrates river valley or the hill country of Aleppo.

“ ‘It’s going to get worse before it gets better,’ said Bruno Tertrais, senior fellow at the Foundation for Strategic Research in Paris and a former policy adviser at the French Defense Ministry.

“ ‘If you manage to deflate Islamic State’s narrative of inevitable expansion, this would eventually reduce its attractiveness, at least for some recruits. But in the short term, as it finds itself in difficulty on one field, it will try attacking another,’ Mr. Tertrais said....

“ ‘The frequency and magnitude of these operations is increasing as refugees are flooding Europe and elsewhere, and as [Islamic State] recruits and brainwashes people already in Europe,’ said Ayad Allawi, the former Iraqi prime minister who heads a major parliamentary bloc.  ‘This will have to be dealt with at the source, and the source is here in the greater Middle East.’”

Nicholas Burns / Financial Times

“Through all the successes and failures of America’s global strategy since the end of the Cold War, we have understood what works. We know, for example, that American diplomacy is most often effective when it is backed by a strong military and the willingness to threaten force when necessary.

“This is why Mr. Obama’s defense of his decision to pull back from striking Syrian military targets in 2013, after having drawn a ‘red line’ against Bashar al-Assad’s use of chemical weapons, is so troubling.  He adamantly rejects the notion that his restraint diminished U.S. credibility in the region.

“However much Mr. Obama may believe the old rules do not apply, it is an ancient truth that a great power has to back up its threats if it wishes to be respected by its friends and feared by its adversaries.

“If Mr. Obama did not intend to honor his red-line threat, he should never had made it. The result was inevitable – American credibility is undeniably diminished in the Middle East while that of Vladimir Putin’s Russia has been enhanced.

“We also know that America’s vast network of alliances and security partnerships in Europe and Asia is a key element of its global strength. That is why the president’s criticism of two of America’s closest allies, Britain and France, as ‘free riders’ [Ed. in Jeffrey Goldberg’s Atlantic piece] in their prosecution of NATO’s Libya campaign in 2011 was so counter-productive.

“Americans sometimes forget that the U.S. military accounts for roughly 75 percent of all NATO defense spending.  It may not be fair but NATO has always been a U.S.-led alliance. The real mistake in Libya was Mr. Obama’s decision to allow the U.S. to take a secondary role in an important NATO mission for the first time in its history.

“U.S. presidents have also learnt that it almost never works to embarrass a friend publicly. Mr. Obama’s remarks about the Saudi royal family were inappropriate.  He should have directed his darts not at America’s friends but at its true adversaries – Iran, Hizbullah, the Syrian government and Russia.”

Jackson Diehl / Washington Post

“When President Obama chose to sidestep military action in Syria in 2013 and then struck a deal to dispose of most of the regime’s chemical weapons, it seemed possible to me that he had stumbled into a tactical victory...

“I changed my mind after I heard from dozens of foreign ministers and other senior officials of U.S. allies as they visited Washington in the months and years that followed.  Japanese, South Koreans, Singaporeans and even Indians confided that they were convinced that Obama’s failure to use force against the regime of Bashar al-Assad was directly responsible for China’s subsequent burst of aggression in territorial disputes in the East China Sea and South China Sea.

“Poles, Lithuanians and French drew a line between the backdown and Vladimir Putin’s invasion of Ukraine. As for the Sunni Arabs, Turks and Israelis, it is an article of faith that Obama’s decision accelerated the catastrophe that Syria, and much of the rest of the Middle East, has become.  They have an obvious point: Hundreds of thousands are dead, the European Union is in danger of crumbling under an onslaught of refugees, and the Islamic State and Assad remain unvanquished.  Who would not call this a bad outcome?

“Obama, it turns out.  By far the most startling disclosure in the president’s interviews with the Atlantic’s Jeffrey Goldberg is his judgement of his Syria decision: ‘I’m very proud of this moment,’ he said.  The words ring with defensive arrogance.  But they also suggest that Obama remains, to this day, fundamentally clueless – or in denial – about the consequences of what historians will surely regard as one of his most fateful errors.”

Yup, I’m not alone.

Iran: Editorial / Wall Street Journal

“The Treasury Department on Thursday blacklisted two Iranian companies for supporting Iran’s ballistic-missile program, as well as British businesses it said were helping the country’s Revolutionary Guards. This is good news, but it would be better if President Obama would endorse an even tougher sanctions bill now moving in the Senate.

“The nuclear deal with Iran is barely six months old, and the Islamic Republic has repeatedly fired missiles intended to carry an atomic warhead. The Iran Ballistic Missile Sanctions Act of 2016, introduced this month by New Hampshire Republican Kelly Ayotte, targets firms that help Tehran acquire dual-use technologies or otherwise support its missile program.  A parallel bill sponsored by Sen. Mark Kirk and 15 other Republicans, including Majority Leader Mitch McConnell, targets Iran’s destabilizing actions in the region and human-rights violations at home....

“As the Foundation for Defense of Democracies notes in a recent report, Tehran’s ballistic-missile program is deeply intertwined with Iran’s legitimate economy, including the automotive, energy, construction and mining industries.  Countering the missiles, the FDD says, requires ‘economic sanctions against all sectors involved in their development.’

“The Ayotte-Kirk U.S. sanctions are a good start, since the path to international sanctions is closed for now.  Iranian negotiators succeeded in excluding limits on ballistic missiles from the nuclear deal itself, but United Nations Security Resolution 2231 ‘calls upon’ Tehran not to build or test missiles for eight years.  Iran has used that weak language as a legal loophole, and Russia has made clear it will use its veto to stop any UN sanctions....

“Unilateral U.S. sanctions are a weak substitute for binding international sanctions.  But the effort sends a message that the nuclear deal isn’t a license for Iran’s regional imperialism.”

Israel: Hizbullah leader Hassan Nasrallah threatened on Monday that if a future war breaks out with Israel, he will strike all targets in the Jewish state “without any limits.”

“If the Israeli army escalates its aggression against Lebanon, Hizbullah will strike all the strategic targets in the occupied Palestinian territories, including the nuclear facilities,” a Hizbullah-linked TV station quoted Nasrallah as saying in an interview.

Yemen: The U.S. struck a training camp belonging to al-Qaeda in the Arabian Peninsula (AQAP), killing dozens of fighters, according to the Pentagon, though it was not clear if civilians were also killed.  This comes two weeks after the U.S. killed a reported 150 al-Shabaab fighters gathered at a meeting in Somalia.

North Korea: Pyongyang announced on Thursday that it had successfully tested a new rocket engine that would significantly bolster its missile capabilities, and South Korea called on its people to heighten vigilance against possible terrorist attacks by the North.

The significance of this new test is it’s a solid-fuel rocket engine, according to the state-run Korean Central News Agency.

Most of the North’s missiles are believed to rely on liquid fuel.  A solid fuel rocket shortens the time needed to prepare for the launch of a missile and increases the ground mobility of the missile system, which would reduce the South’s ability to detect a pending attack.

The North also threatened to conduct another nuclear test and to test ballistic missiles capable of carrying nuclear warheads. It also cautioned its rockets were ready to reduce the office of South Korean President Park Geun-hye to “a sea of flames and ashes.”

Pyongyang also talked of “units behind enemy lines to be deployed in the operational theater of the southern part of Korea,” which Seoul takes to mean terrorist attacks.

There are indeed thousands of North Korean agents in Seoul alone; this has long been a fact.

President Park “called for a strengthened vigilance across the country,” according to her press secretary on Thursday.

Parliamentary elections in South Korea are slated for April 13.  It certainly would surprise no one if the North did something to disrupt them given the increased tensions between the two sides.

China: President Xi Jinping will discuss the North Korean nuclear crisis with Barack Obama during his visit to the U.S. next week as well as cyber security and the South China Sea, China’s Foreign Ministry said on Thursday.  Xi is attending a nuclear security summit in Washington from March 31 to April 1.

Regarding the South China Sea, the U.S. and the Philippines announced last weekend that there will be five new military bases where American forces will have access under a new defense pact, including one facing disputed islands there.

Separately, 20 people have been detained in China following the publication of a letter calling on President Xi to resign, the BBC learned.

The letter was posted earlier this month on a state-backed website Wujie News.  Although quickly deleted, a cached version can still be found online.

Of course in any democratic country in the world, this is nothing.

“Dear Comrade Xi Jinping, we are loyal Communist Party members,” the letter begins, and then cuts to the chase.

“We write this letter asking you to resign from all party and state leadership positions.”

A prominent columnist, Jia Jia, was reported to have been detained in connection with the letter, but his friends say all he did was enquire about it after seeing it online.

Note to President Xi.  You should resign.

Separately, the Hong Kong bookseller at the center of the missing booksellers’ mystery suddenly returned home.

Lee Po urged the media not to follow him anymore.

“I have already said what I wanted to say. Today I just want to tell everyone that I hope you can leave me and my family alone. Don’t push me that much,” he said, smiling.

“I want to forget the past and start afresh.  I am starting another page in my life.”

Lee said he was allowed to travel freely between Hong Kong and the mainland.

Lee added, “I heard that people had got into trouble for their [banned books] business.  I was afraid.  But after I went [to the mainland] and solved all the problems this time, I can finally feel at ease now.”

Lee was then escorted by a man who refused to identify himself and taken away in a car.

Between October and December last year, five associates of Lee’s bookstore and another publishing house disappeared, one after another, under mysterious circumstances.

Two of Lee’s associates returned earlier this month.

Lee did tell a Beijing media source he would never run a bookstore business again.  [South China Morning Post]

Russia: A Russian court sentenced captured Ukrainian helicopter pilot Nadia Savchenko to 22 years for complicity to murder on Tuesday, drawing international condemnation and comparisons to Soviet show trials.

Savchenko fought with a far-right volunteer battalion against pro-Russian separatists in the Lugansk border region and the court upheld prosecutors’ claims she directed artillery fire that killed two Russian journalists in eastern Ukraine in 2014.

Savchenko has become a cause celebre in Ukraine as the West lobbies for her release.  Her defiance in the courtroom has earned her the status of a national hero, honored in Ukraine as a “Joan of Arc” figure; another victim in the undeclared war that has now claimed more than 9,000 lives.

Savchenko has threatened to starve herself to death if she is not returned to Ukraine.

Ukrainian President Petro Poroshenko said publicly after the verdict he was ready to trade two Russian officers, captured in eastern Ukraine, for Savchenko.

Go Nadia!

Brazil: Protesters continue to demand President Dilma Rousseff be removed from office and former President Lula da Silva be sent to prison.  [Other protesters defend the pair.]

It is chaos in the country these days and it is all coming to a head with each new revelation from the massive corruption probe involving a multibillion-dollar kickback scheme at the state-run oil company, Petrobras.

Cuba: Karen DeYoung and Juliet Eilperin / Washington Post

“In an extraordinary news conference Monday afternoon, President Obama and Cuban President Raul Castro sparred over human rights, the Guantanamo prison and their views of their own countries and the world, even as both hailed Obama’s historic visit here as a new step in normalizing relations.

“The event was marked by a jarring juxtaposition of diplomatic formality and public jousting, as Castro responded to questions from American reporters by either ignoring them or dismissing them as misguided.  At one point, he challenged a U.S. journalist to ‘give me a name’ of any alleged political prisoner here....

“Castro called on the United States to abandon the territory it occupies with a military base at Guantanamo Bay, on Cuba’s southwestern tip, and to remove the U.S. embargo against Cuba.  He said relations would never be fully normal until both were accomplished.”

The next day we had the Brussels terror attacks and Obama’s public appearance of nonchalance as he very briefly mentioned Brussels prior to a scheduled speech, attended a baseball game, and then took off for Argentina for meetings with Argentine President Mauricio Macri.

Asked about the Islamic State threat on Wednesday at a news conference in Buenos Aires, Obama said:

“Even as we are systematic and ruthless and focused in going after them, disrupting their networks, getting their leaders, rolling up their operations, it is very important for us to not respond with fear. We send a message to those that might be inspired by them to say, you are not going to change our values of liberty, and openness, and the respect of all people.”

Editorial / Wall Street Journal

“Cuban dissidents were grateful for a two-hour audience with President Obama at the U.S. Embassy in Havana on Tuesday....

“But if the Cuban opposition had any expectations that the U.S. President would intervene on their behalf to free political prisoners, they have so far been disappointed.  During a joint press conference with President Obama in Havana on Monday, a journalist asked Raul Castro why he won’t release Cuba’s political prisoners.  Mr. Castro countered: ‘After this meeting is over, you can give me a list of political prisoners, and if we have those political prisoners, they will be released before tonight ends.’

“The Castros have claimed for decades that there are no political prisoners in Cuba, though there have been tens of thousands.... Mr. Obama asked Elizardo Sanchez, the head of the Cuban Commission for Human Rights and National Reconciliation, for his organization’s list. The Cuban handed him 89 names. After the meeting Mr. Obama joined Raul Castro at a baseball game.

“The White House isn’t saying what happened to the list.  A spokesman referred us to comments from deputy national security adviser Ben Rhodes, who said in a Tuesday press briefing that he has ‘shared many such lists with the Cuban government over the course of my two and a half years now of dealing with them.’

“But that was before Mr. Castro publicly offered to release the prisoners if he was presented with names. That Mr. Obama apparently did not take him up on it won’t go unnoticed by the dissidents or the regime.”

Charles Krauthammer / Washington Post

“The split screen told the story: on one side, images of the terror bombing in Brussels; on the other, Barack Obama doing the wave with Raul Castro at a baseball game in Havana.

“On one side, the real world of rising global terrorism.  On the other, the Obama fantasy world in which romancing a geopolitically insignificant Cuba – without an ounce of democracy or human rights yielded in return – is considered a seminal achievement of American diplomacy.

“Cuba wasn’t so much a legacy trip as a vanity trip, vindicating the dorm-room enthusiasms of one’s student days when the Sandinistas were cool, revolution was king and every other friend had a dog named Che.

“When Brussels intervened, some argued that Obama should have cut short his trip and come back home.  I disagree.  You don’t let three suicide bombers control the itinerary of the American president.  Moreover, Obama’s next stop, Argentina, is actually important and had just elected a friendly government that broke from its long and corrupt Peronist past.

“Nonetheless, Obama could have done without the baseball.  What kind of message does it send to be yukking it up with Raul even as Belgian authorities are picking body parts off the floor of the Brussels airport?

“Obama came into office believing that we had vastly exaggerated the threat of terrorism and allowed it to pervert both our values and our foreign policy.  He declared a unilateral end to the global war on terror and has downplayed the threat ever since. He frequently reminds aides, reports Jeffrey Goldberg of the Atlantic, that more Americans die annually of bathtub accidents.

“It’s now been seven years.  The real world has stubbornly refused to accommodate Obama’s pacific dreams. The Islamic State has grown from JV team to worldwide threat, operating from Libya to Afghanistan, Sinai to Belgium.  It is well into the infiltration phase of its European campaign, with 500 trained and hardened cadres in place among the estimated 5,000 jihadists returned from the Middle East.  The increasing tempo and sophistication of its operations suggest that it may be poised for a continent-wide guerrilla campaign.

“In the face of this, Obama remains inert, unmoved, displaying a neglect and insouciance that borders on denial.  His nonreaction to the Belgian massacre...left the world stunned as it was after the Paris massacre, when Obama did nothing.  Worse, at his now notorious November news conference in Turkey, his only show of passion regarding Paris was to berate Islamophobes....

“Whatever the reason, (Obama) seems genuinely unmoved by a menace the rest of the world views, correctly, with horror and increasing apprehension.  He’s been in office seven years, yet seems utterly fixed on his campaign promises and pre-presidential obsessions: shutting down Gitmo, rapprochement with Iran, engagement with tyrants (hence Havana), making the oceans recede (hence the Paris climate trip).  Next we’ll see yet another useless Washington ‘summit’ on yet another Obama idee fixe: eliminating nuclear materials.

“With the world on fire, the American president goes on ideological holiday.”

My take on the trip and Obama’s response to Brussels?  I understand what he did, including attending the baseball game.  The United States wasn’t attacked directly, or of course he would have flown home and done Argentina later.

As for doing the tango, it’s not fair to go after the president on that.  Instead, Obama’s aides should have told their Argentinian counterparts, ‘Don’t ask him or Michelle to participate given Brussels.’  They had to have known (or should have) this was part of the state dinner.

But back to Cuba, the whole diplomatic effort is a fraud unless the Castro regime gives back something in return...and they haven’t. 

Random Musings

Tuesday Election Results...Republicans

Arizona: Donald Trump 47%, Ted Cruz 25%, John Kasich 10%
Utah: Cruz 69%, Kasich 17%, Trump 14%

Delegates: Trump 739, Cruz 465, Kasich 143 [1,237 needed for nomination]

[Source: Associated Press]

--A Bloomberg Politics national poll shows 63 percent of those who have voted in this year’s Republican primaries and caucuses, or plan to do so, back the billionaire’s view of the nominating process and think the person with the most delegates should win, even if he lacks a majority.

But if he emerges as the nominee, the survey has Trump being viewed unfavorably by 68 percent of Americans – well above the 53 percent who feel that way about Hillary Clinton.  For Trump, it’s actually a 13-point spike up from November 2015.

It’s also possible Trump is tarnishing the party’s brand.  60 percent of Americans view the GOP unfavorably, while the Democratic Party is viewed negatively by 43 percent.

The Bloomberg national poll has Trump leading among Republicans with 40%, Cruz next at 31% and Kasich 25%.

Clinton beats Trump in general-election tests, 54 percent to 36 percent; while besting Cruz 51-42.  Kasich, though, beats Clinton head-to-head, 47-43.

Tuesday Results...Democrats

Arizona: Hillary Clinton 58%, Bernie Sanders 40%
Idaho: Sanders 78%, Clinton 21%
Utah: Sanders 79%, Sanders 20%

Delegates (pledged): Clinton 1223, Sanders 920.  Including superdelegates: Clinton 1691, Sanders 949

[Source: AP]

--In more hypothetical matchups, the news is not good for Donald Trump.

A Fox News national poll finds John Kasich besting Clinton 51-40, while Cruz is preferred by three percentage points, 47-44.

But Clinton tops Trump 49-38.

Almost half of all voters (49 percent) would feel “scared” if Trump were to win the White House, while 33 percent say the same about Clinton.

Among GOP primary voters, Trump leads Cruz only 41-38, with Kasich at 17 percent.  Evangelicals give Trump a slight edge, 43-39 over Cruz.

In a Quinnipiac University National poll, Trump garners 43 percent of Republican voters to 29 percent for Cruz and 16 percent for Kasich.

Clinton leads Bernie Sanders 50-38.

But Clinton tops Trump 46-40 and Cruz 45-42 in this one.

Sanders beats Trump 52-38 and Cruz 50-39.

A CNN/ORC poll has Clinton defeating Trump 56-42.

A Monmouth University National poll has Trump at 41 percent of GOP partisans and leaners, with Cruz at 29 percent and Kasich 18.  Women, incidentally, are divided – 35% for Cruz, 31% for Trump, and 19% for Kasich, ditto college graduates.  Men back Trump at 50 percent, compared to 23 for Cruz, 18 for Kasich.

Among Democrats, Hillary Clinton is favored over Sanders by a 55-37 margin in the Monmouth survey.

--By the way, while Trump loves to talk about the polls and how “I beat Hillary in many of the polls taken, and each week I get better and I haven’t even started on her yet,” the fact is that since Jan 1 of this year, “Trump has led in only five of 39 polls, including two of the 16 that used live callers.”  [Washington Post]

--According to an analysis released Thursday by the University of Virginia, Trump will secure the 1,237 delegates needed for the nomination, but just barely – at 1,239 – after California voters decide how to allocate their 172 delegates on June 7.

The latest Public Policy Polling survey shows Trump ahead in California with 38 percent, to Ted Cruz’ 27 and Kasich’s 14.

Trump, according to UVA’s “Crystal Ball” report, would secure the nomination with impressive performances in Wisconsin on April 5, New York on April 19 and then CA.

--Damian Paletta / Wall Street Journal

“The deadly terror attacks in Brussels abruptly refocused the agenda of the presidential race Tuesday....

“Republican front-runner Donald Trump, who won Tuesday’s Arizona primary, suggested the attacks, for which Islamic State claimed responsibility, vindicated his aggressive rhetoric about Muslims and others. He also called for new laws that would allow torture when interrogating terror suspects.  Leading Democratic candidate Hillary Clinton, who won her party’s primary in Arizona, reiterated her experience as secretary of state and adopted her own tough tone by suggesting Europeans need to do more to control their borders.

“It was Republican Sen. Ted Cruz who offered the starkest new plan, suggesting police in the U.S. should more aggressively police Muslim communities.  ‘We need to empower law enforcement to patrol and secure Muslim neighborhoods before they become radicalized,’ Mr. Cruz said.”

--Daniel Henninger / Wall Street Journal

“It is true that the Brussels bombings raise questions about whether Donald Trump, John Kasich, Ted Cruz or yes, Hillary Clinton, would best be able to lead the world against Islamic terror.  But the effect of the bombing on the presidential race has no meaning without first addressing our man in Havana and America’s twice-elected president, Barack Obama.  Unless the campus left succeeds in its effort to tell its professors what they are allowed to think, future historians will have to account for the rise of Islamic State – in Iraq, Syria, Libya, Paris, Brussels, San Bernardino and its future bomb sites – during the years Barack Obama held office. Either there is some connection, or it has been mere coincidence.

“The U.S. is in a tumultuous political moment, and it is important to understand Mr. Obama’s role. The tendency in our hyper-personalized politics is to attribute policy to the idiosyncrasies of one person, in this case ‘Obama.’

“Mr. Obama, for all his self-referencing, is an important transitional figure in the Democratic Party.  He represents an unmistakable departure from the robust internationalism of FDR, Truman, Kennedy, Johnson and Bill Clinton.  Obama Democrats are the New Left progrssives who challenged their party’s establishment in the streets of Chicago in 1968, the most pivotal year in the modern history of the Democratic Party.

“Notice that Mr. Obama said in Cuba, ‘I have come to bury the last remnant of the Cold War.’  Across the 40 years of the Cold War, which the American left dismissed as ‘wasteful military spending,’ the holder of the office Mr. Obama occupies now was called ‘the leader of the free world.’  As he departs office, President Obama is the leader of...what?....

“Operating out of the new Democratic Party’s anti-Cold-War model, the Obama presidency has extended the hand of mutual understanding (a doubter would call it accommodation) to a succession of revolutionary leaders: Iran’s Supreme Leader Ayatollah Ali Khamenei, Russian President Vladimir Putin, Syria’s Bashar Assad, and the Castros, who now seem to arrest and beat up dissidents out of reflexive habit.

“The now-manifest, deadly flaw in the progressive Obama foreign policy is that uncontained revolutionary ideologies today are nearly always centrifugal, overrunning national borders – Islamic State into Europe, Iran across the whole of the Middle East, Putinized Russia into Ukraine and Syria.  China’s presumably civilized Communist revolution is spreading across Hong Kong into the South China Sea.

“The Brussels bombing surfaced two worldviews in its bloody wake, Mr. Obama’s and that of Belgian Prime Minister Charles Michel. Mr. Obama said he never considered canceling his attendance at the baseball game in Havana, because as the AP reported, it is Mr. Obama’s view that as long as people refuse to disrupt their lives because of terrorism, ‘we’re going to be OK.’

“Describing the attacks in Brussels as ‘the most brutal barbarity,’ Mr. Michel said: ‘We are confronted with enemies who want to fight against our freedoms.  We have to act to protect our way of life.’....

“In the past, Europe argued it was exhausted by two world wars and found solace in a welfare system that goes by this bitterly ironic description: cradle to grave.  Digging too many graves again, leaders in Europe and elsewhere look willing to follow America’s lead. But will they?

“Imagine Donald Trump, Ted Cruz, John Kasich or Hillary Clinton persuading these national leaders to follow the U.S.’s lead.  Which one of these four are they likely to believe and follow?  This is one vote the U.S. electorate had better get right.”

Holman W. Jenkins, Jr. / Wall Street Journal

“Trumpism offers nothing for Americans who are flocking to it as much in response to cultural anxieties as economic ones.

“A trade war with China will not bring back low-skilled, high-wage manufacturing jobs. On the contrary, Chinese workers themselves are being turfed out of their own factories by automation.

“Building a wall at the southern border won’t hold back cultural changes in America from the fact that Hispanics are a fast-growing economic and cultural bloc. At the risk of putting ideas in his head, Donald Trump would have to increase the white birthrate and even then probably wouldn’t change the emergence of an unfamiliar yet familiarly dynamic new America.

“Mr. Trump may well benefit politically from Tuesday’s terrorist attacks in Belgium.  In the long run, we will be thanking our lucky stars that we get our cultural renewal from largely Catholic immigrants from the south rather than the Islamic proto-majorities that, in the lifetimes of many of us, will fundamentally alter the character not just of the European Union (if it survives) but Russia....

“Globalization will experience hiccups, as will the cultural evolution of the United States.  But Mr. Trump and Trumpism aren’t a solution to anything.

“True, some Americans have never been able to recapture the standard of living that their now-vanished factory job once gave them.  But false promises won’t help these people. Faster economic growth would help them; rearranging social programs that have contributed to the woeful decline in the readiness of people to move in search of a job would help....

“Voters are better at signaling dissatisfaction than thinking clearly about solutions.  Democracy’s great virtue is not the wisdom of voters’ every judgment but the fact that an election is always coming, so voters can react against choices that are not working.

“The problem is matching the candidate who can capture the public’s imagination with the policies that will actually improve conditions.  Obama, in his 2008 race, fulfilled the first condition.  Trump fulfills the first condition.

“Sadly, this year the two parties are converging on candidates who, in their different ways, appear unlikely to channel voter dissatisfaction into productive policies, though we should not rule out a pleasant surprise.  Bracing up America’s internal dynamism and prosperity is surely an urgent need.   Most of all, it’s needed so America can remain a bulwark in an increasingly dangerous and chaotic world.”

--Jonah Goldberg / New York Post

“Nominating Donald Trump will wreck the Republican Party as we know it.  Not nominating Trump will wreck the Republican Party as we know it. The sooner everyone recognizes this fact, the better.

“Denial has been Trump’s greatest ally. Republicans and commentators didn’t believe he would run  They didn’t believe he could be an attractive candidate to rational people, no matter how angry with ‘the establishment’ voters said they were....

“Over the weekend, Republican National Committee Chairman Reince Priebus showed the first public signs of acceptance about what’s in store for the party.  He finally acknowledged that the Republican nominee was probably going to be determined on the convention floor in Cleveland....

“Trump’s response to this floor-fight talk was to vomit up the usual word salad.

“ ‘All I can say is this, I don’t know what’s going to happen,’ Trump told ABC’s ‘This Week.’  ‘But I will say this, you’re going to have a lot of very unhappy people if I’m denied the nomination. And I think, frankly, for the Republicans to disenfranchise all those people because if that happens, they’re not voting and the Republicans lose.’

“Even through the syntactical fog, Trump’s point is clear: If he can’t reach 1,237, he should get the nomination anyway. Because he’s Trump. If that doesn’t happen, his supporters will stay home, defect from the party, riot – or all three.

“And he’s right.  Not about deserving the nomination even if he doesn’t have the delegates... (He’s) right that if he’s denied the nomination, many – not all, but many – of his supporters will bolt from the convention and the party.

“Left out of Trump’s unsubtle threat: Many anti-Trump Republicans will desert the convention and the party if he’s not denied the nomination.

“There are only three possible ways to avoid a calamitous walkout. Ted Cruz can win the nomination outright before the convention. That’s very unlikely given that he’d need to win roughly 80 percent of all the remaining delegates.

“Second, Trump could reveal he has a hidden reservoir of magnanimity and patriotism, and rally his faithful to the consensus nominee.  Stop laughing.

“Third, the delegates could pick someone sufficiently attractive that Trump followers get over their understandable bitterness and support that candidate despite Trump’s objections. Who would that be?  Certainly not Mitt Romney.  Maybe a reanimated Ronald Reagan. Or Batman?  I have no idea....

“But only when we accept that a terrible diagnosis is real is it possible to think intelligently about our options.

“To wit: This ends in tears no matter what. Get over it and pick a side.”

Personally, I kind of like the idea of Gandalf running the show.

Michael Goodwin / New York Post

“More than half the states have voted and the presidential candidates are entering the home stretch of the nominating gantlet.  But up to now, they have been ignoring a mighty special interest: events.

“Events have a vote, as the terrorist attacks that rocked Brussels reminded us. The bloody strike at the heart of Europe, not far from the headquarters of the European Union and NATO, delivered a powerful punch that could reshape the race for the White House.

“In the instant aftermath, there is little doubt that Republicans in general, and Donald Trump in particular, will get a boost.  After all, Trump has been the most aggressive of all the surviving candidates, calling for a temporary ban on Muslims, tougher border controls and stepped-up interrogation techniques of enemy detainees.  In January, he actually singled out Brussels as a potential problem, calling it a ‘hellhole’ because of the large number of unassimilated Muslims.

“He was ridiculed, of course, but events now make him look prophetic while Democrats are stuck defending a failed status quo. Hillary Clinton’s comments yesterday reflected the trap, as she tried to talk tough without actually saying anything that would challenge current White House policies: ‘Today’s attacks will only strengthen our resolve to stand together as allies and defeat terrorism and radical jihadism around the world.’

“She might have added, ‘Blah, blah blah.’

“As for President Obama...safe from voters for the rest of his life, he was content to mouth a few platitudes about sympathy and solidarity with Brussels, then stick to his script in Cuba as if nothing had happened.  His boast that ‘I have come to bury the last remnant of the Cold War’ seemed especially hollow, given the gory images of mangled bodies emerging from the scene....

“No less than a former member of Obama’s team, Michael Morell, who twice served as acting CIA director, told CBS that (ISIL) now controls ‘more territory today around the world than they did at any time.’

“ ‘So I would say they’re winning, right?  They’re winning,’ Morell said.

“Obama’s mantra has been that America was war-weary, and he would be rewarded for shrinking the nation’s military footprint.  While there was some truth to his idea, I have always believed most Americans are not so much war-weary as they are tired of losing wars. And they certainly are tired of living in fear.

“If true, then the next president will likely be the candidate who can convince the most voters that he or she can make the nation safe and a winner again. Think of it as a national security primary, with events in Brussels offering a clear contrast of the candidates’ strengths and weaknesses.

“So far, it’s advantage Trump.”

--Michael Wilner / The Jerusalem Post

“Donald J. Trump, real estate tycoon and frontrunner for the Republican presidential nomination, offered an unusually detailed policy speech on Israel and the Middle East at the American Israel Public Affairs Committee’s annual policy conference on Monday night.

“The speech was a departure from his typical speechifying: Trump used a teleprompter, from which he read crisp remarks on the complexities of the threats facing the Jewish state. He spoke extensively of Israel’s willingness to resume negotiations with the Palestinians without preconditions, and its opposition to a political framework for a two-state solution imposed by the United Nations Security Council.  He delineated between the nuclear deal reached with Iran last summer and preexisting international laws on its ballistic missile work, and detailed how he, as president, would address both threats.

“Trump repeatedly received standing ovations, and few audience members were seen leaving the massive stadium hall despite a planned protest of the controversial candidate....

“Trump said his ‘number one priority’ is to dismantle the Joint Comprehensive Plan of Action – the former name for the nuclear deal with Iran. He will do so, he said, by aggressively policing the deal, and not by ‘ripping it to shreds on day one’ in the Oval Office as his primary rival, Texas Senator Ted Cruz, vowed to do in his own speech to AIPAC on Monday night.”

As you know nothing else pisses me off more these days than Sen. Cruz talking about “ripping the catastrophic Iran nuclear deal to shreds,” as he tells every single audience he speaks to, with his supporters roaring their approval when you can’t rip the freakin' thing up!!!

So each time I hear it I take to Twitter to remind the few who might read it that’s it’s too late.  There are five other signatories to the damn thing and we’re screwed.  Ditto Israel.

--Former Florida governor Jeb Bush endorsed Ted Cruz.  As Derrick Coleman would have said, “Whoopty-damn-do.”  [Unless you’re telling me Bush’s old donor network will now flock to the senator.]

--No, I’m not getting into the candidates’ wives fiasco.

--Editorial / Bloomberg News

“What should we make of House Speaker Paul Ryan’s speech in the Capitol on Wednesday?  Ryan, who has spent his career positioning himself as the Republican Party’s ideas leader, devoted most of his remarks not to policy but to politics.

“In the most poignant moment, Ryan uttered something you don’t hear often from politicians – ‘I was wrong’ – when he apologized for having rhetorically divided the nation into ‘makers’ and ‘takers.’

“ ‘I shouldn’t castigate a large group of Americans to make a point,’ Ryan acknowledged.

“Such comments are rare in politics, and suggest admirable resources of integrity and a capacity for growth. But Ryan works within the context of a congressional party that appears determined to bury him in dysfunction and reaction, and he continues to cling to policies that offer no way out of the  rubble.

“Having promised a return to regular legislative order in the House of Representatives, and a season of big policy ideas, Ryan has been stymied by the same anti-government Republicans who undermined his predecessor, John Boehner. The House is about to leave for recess with no apparent progress on meeting an April 15 deadline for approving a federal budget.

“The vision Ryan sketched Wednesday was nonetheless uplifting.  In a ‘confident America,’ he said, ‘we aren’t afraid to disagree with each other. We don’t lock ourselves in an echo chamber, where we take comfort in the dogmas and opinions we already hold.’

“Yet Ryan leads a party that’s trapped, especially in the House, in precisely the kind of ideological lockdown he describes....

“With extremists in his party, including Ted Cruz, massed on one front, and Donald Trump positioned on another, Ryan occupies perilous ground.  Yet he seemed confident of finding a way out.  ‘Instead of playing to your anxieties, we can appeal to your aspirations,’ Ryan said with perhaps unreasonable sunniness.  ‘Instead of playing the identity politics of ‘our base’ and ‘their base,’ we unite people around ideas and principles.’”

Not this year, sports fans.

--I’m very close to saying I’m going third party come November.  I won’t care if I’m throwing my vote away.  I’ve done it before.  I have the right to do so.  

--Former Bosnian Serb leader Radovan Karadzic has been convicted of genocide and war crimes over the 1992-95 war, and sentenced to 40 years in prison.

UN judges in The Hague found Karadzic guilty of 10 charges, including genocide over the 1995 Srebrenica massacre, where Bosnian Serb forces massacred more than 7,000 Bosnian Muslim men and boys.

He was also found guilty of crimes against humanity related to the campaign of terror in the city of Sarajevo that left nearly 12,000 dead.

More than 100,000 died in the Bosnian war.

Gen. Ratko Mladic, who commanded Bosnian Serb forces, is awaiting his own verdict at The Hague.

--The Justice Department unsealed an indictment against seven Iranians believed to have been working on behalf of the Iranian government and described as “experienced computer hackers” in relation to a coordinated campaign of cyberattacks from 2011 to 2013 on dozens of U.S. banks and  a New York dam.

--As reported by USA TODAY, “Federal authorities Wednesday announced the arrests of more than 8,000 violent fugitives, including 559 wanted for murder, in the past six weeks as part of an operation aimed at combating persistent crime in 12 cities.

“In Baltimore alone, 148 fugitives were swept up, including 23 murder suspects in the effort led by the U.S. Marshals Service, known as Operation Violence Reduction 12....

“Also among the most serious offenders were 648 gang members and 846 suspected sex offenders....

“(Deputy director of the U.S. Marshals Service, David) Harlow described the federal operation as having produced ‘tremendous results,’ but local law enforcement’s record of pursuing fugitives has been uneven at best.

“A 2014 USA TODAY investigation found that police and prosecutors allowed tens of thousands of wanted felons – including more than 3,300 people accused of sexual assaults, robberies and homicides – to escape justice merely by crossing a state border.”

--Finally, I was watching Jake Tapper’s show on CNN the other day and Republican Sen. Ron Johnson (Wis.) made a real point of calling for “an increase in canine units” to fight terror, saying there is nothing better when it comes to sniffing out bombs.

I think we all know this (elephants are also great in this regard, in all seriousness, though not real practical), but there was something very cool about watching a United States senator, kind of out of nowhere, become impassioned on the topic.

You see how prevalent dogs are in the Brussels anti-terror operation.  And you all know how invaluable they’ve been in the Iraq and Afghanistan theatres for our servicemen and women.

Let’s face it.  ‘Man’ can really suck.  So God sent us dogs and their unconditional love to provide some stability and in times of war, or natural disaster, protection and hope. 

---

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

Pray for Europe.

God bless America.

---

Gold $1217
Oil $39.46

Returns for the week 3/21-3/25

Dow Jones  -0.5%  [17515]
S&P 500  -0.7%  [2035]
S&P MidCap  -1.1%
Russell 2000  -2.0%
Nasdaq  -0.5%  [4773]

Returns for the period 1/1/16-3/25/16

Dow Jones  +0.5%
S&P 500  -0.4%
S&P MidCap  +1.1%
Russell 2000  -5.0%
Nasdaq  -4.7%

Bulls 47.4
Bears 27.8 [Source: Investors Intelligence...]

Thank you for your support.

Happy Easter!

Brian Trumbore