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12/05/2015

For the week 11/30-12/4

[Posted: 11:30 PM ET, Friday]

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Edition 869

San Bernardino

We learned Friday that the FBI is now treating the massacre of 14 innocents (21 injured) at a holiday luncheon on Wednesday in San Bernardino, California “as an act of terrorism.” The woman who helped carry out the shooting, Tashfeen Malik, 27, had pledged allegiance to the Islamic State in a Facebook posting.

As of now the act was inspired by ISIS, but not directed by the organization and it is significant that while ISIS praised the attack, it did not claim responsibility.  That makes it worse.  It was home-grown terrorism.  Ms. Malik’s husband, U.S.-born Syed Rizwan Farook, may have been radicalized by Tashfeen.

She was born in Pakistan, and traveled on a Pakistani passport, but grew up in Saudi Arabia.  She had returned to Pakistan for college, living in a district known for being a center of support for extremist jihadist groups, including Lashkar-e-Taiba. 

Farook, 28, apparently met Tashfeen online and then brought her back with him following a trip to Saudi Arabia for the Hajj.  Thus far, the FBI has uncovered evidence he had contact with five individuals on whom the agency had previously opened investigations for possible terrorist activities, including associates of Somalia’s al-Shabaab and the Nusra Front, the al-Qaeda wing in Syria.

As to the motive it is unclear, but this was the deadliest mass shooting in the country in nearly three years.  It’s very possible, though, that the heroic actions of the San Bernardino police staved off a second attack, given the arsenal Tashfeen and Syed had in their home.

Separately, the Wall Street Journal is reporting Friday night that the terror network behind the Paris-attacks has links to people in the U.K., some of Moroccan heritage, based in the Birmingham area.

Belgian officials said Friday they were now looking for four suspects in connection with Paris, up from two.

Another attack is inevitable.  Depending on the scope and the body count, that will determine the reaction in global financial markets and the impact on economies from Los Angeles to Berlin, from Miami to Stockholm.

Washington and Wall Street

If there was any remaining doubt the Federal Reserve is preparing to hike interest rates at its Dec. 15-16 meeting, it was dispelled with the release of Friday’s employment report for November, which showed non-farm payrolls increased a solid 211,000, a little better than expected, while the October number was revised upwards from 271,000 to 298,000, and September’s from 137,000 to 145,000. 

The unemployment rate was unchanged at 5.0%, while average hourly earnings rose 0.2%, 2.3% year-over-year, slightly less than October’s 2.5% pace but further evidence the labor market is strengthening.

Earlier, in a speech in Washington on Wednesday, Fed  Chair Janet Yellen said, “The U.S. economy has recovered substantially since the Great Recession.  The economy has come a long way toward the FOMC’s objectives of maximum employment and price stability.”

She also said her inflation outlook had been “bolstered” by the strength in the jobs market, including a pickup in wage growth.

Additionally, dangers from abroad had diminished since September, when the Fed had its eye on China and volatile markets worldwide.

But she reiterated that as the Fed begins to normalize rates, any increases will be incremental, adding:

“When the Committee begins to normalize the stance of policy, doing so will be a testament to how far our economy has come in recovering from the effects of the financial crisis and the Great Recession.  In that sense, it is a day that I expect we all are looking forward to.”

Federal Reserve Bank of Atlanta President Dennis Lockhart chimed in that he favors raising interest rates this month.

“Absent information that drastically changes the economic picture and outlook, I feel the case for liftoff is compelling,” he said.  “I think the economy is closing in on full employment.  The trend in wage growth has been weak for some time, but it may be picking up.”

For all the happy talk expressed by Yellen, though, and the confidence exhibited by Lockhart, some of the other economic data points were less than robust.  The November Chicago Purchasing Managers Index came in at just 48.7, 50 being the dividing line between growth and contraction, far below expectations and well off the prior month’s 56.2.  Then the national ISM reading on manufacturing for last month was posted, 48.6, representing the first contraction since the end of 2012 and the weakest number since June 2009  The ISM was 53.5 back in June.

Even the ISM services reading for November, 55.9, was a big comedown from October’s 59.1.

But looking at manufacturing, the two PMIs certainly buttress the argument that it is in recession, though strong auto sales, as discussed below, speak otherwise.  And October readings on construction spending, up 1.0%, and factory orders, up 1.5%, were solid.

The Atlanta Fed’s GDPNow indicator, however, weighed the poor manufacturing PMIs and the fourth quarter outlook for GDP was lowered to 1.4% from a recent 2.3% forecast.

As for the critical Thanksgiving weekend and retail sales, Adobe, which tracks 4,500 U.S. retail websites, said online sales rose 22% on Thanksgiving Day over 2014, while they were up about 15% for Black Friday.  18% for Thursday and Friday combined.  Cyber Monday sales were estimated to have risen 12%, though IBM pegged it at a more robust 18%.  Remember, for all the hoopla, online sales are still just 7% to 8% of total U.S. retailers’ sales.

That said, Retail Metrics said it saw sales decline 1.5% over Thursday and Friday at major retailers, with foot traffic down, while forecasting the same folks will have seen a decline of 0.9% for the month.

ShopperTrak said sales at bricks and mortar stores fell 10.4% for Nov. 26-29 vs. 2014.

Bottom line, the National Retail Federation still expects sales, both online and in stores, to be up 3.7% for November and December vs. year ago levels.  Gallup sees total holiday sales increasing 5.1% to 5.8%.

Down in Washington, House Speaker Paul Ryan warned a bill to fund government is still an uncertainty with current funding slated to expire after Dec. 11.  Democrats and Republicans are negotiating but if talks go past the deadline that will require a short-term continuing resolution to avoid a shutdown.

Overall spending in the bill is already set at $1.1 trillion, but the problems are over how it is divvied up.  So it’s a major test of Speaker Ryan’s leadership.

But Ryan passed one test, that being passage of a five-year, $305 billion U.S. highway funding bill by a 359-65 vote, with the measure also reviving the U.S. Export-Import Bank.  The Senate passed the legislation 83-16 and President Obama will sign it.

This will be the first long-term highway bill in years, brining stability, for once, to state and local planners’ ability to commit resources to their transportation needs.  It should also be a boon to the likes of Caterpillar Inc., the world’s largest maker of construction equipment.

Europe and Asia

The big global economic story of the week has been the looming divergence in monetary policy between the Federal Reserve and the European Central Bank.

ECB President Mario Draghi and his board extended their policy of unprecedented monetary easing, pledging to continue its 60bn euro a month bond buying program for another six months until March 2017 “or beyond.”  Draghi reiterated later that the ECB will continue to do what it takes to stoke the economy and get inflation up to the targeted 2%.

At the same time, the ECB cut a key interest rate to a historic low of minus 0.3% and pledged to buy more assets with the proceeds of its existing bond purchases.

But the markets tanked, Thursday, as investors wanted more; deeper rate cuts and more monthly bond purchases.  One problem with this last point.   There is only so much quality paper available for the ECB to purchase, so they are going to be heading way down on the credit scale over time, into “crapola” territory.

The sell-off also reflected that investors had bet too heavily on expectations of more aggressive expansion, loading up on dollar assets in anticipation of further stimulus.

The euro was expected to continue to weaken to eventual parity with the dollar, but instead rose from 1.054 to over 1.09, a massive move in one session, before falling some on Friday to 1.085, as Draghi gave a speech in New York wherein he tried to clarify his position that the ECB will do everything necessary and has all the tools to accomplish its goal of price stability.

The combination of measures taken, said Draghi today, “was not a package meant to address market expectations.  It was meant to address the reaching of our objectives.”

Eurozone government bonds saw their yields surge on word the monthly purchase limit wasn’t being increased.  The 10-year German bund, for example, saw its yield rise from 0.47% to 0.66% just on Thursday, while the yield on the Italian 10-year soared (in percentage terms) from 1.38% to 1.64%.

---

On the data front, Markit released PMIs for manufacturing and the eurozone figure for November was 52.8 vs. 52.3 in October, the 29th straight month over 50.

Germany was at 52.9 vs. 52.1 in October, France was unchanged at 50.6, Italy was 54.9 vs. 54.1, Spain was 53.1 vs. 51.3 and Greece was 48.1, an 8-month high.

Germany’s PMI for services was 55.6; 51.0 in France.

The composite PMI for the EA 19 was 54.2 last month vs. 53.9 in October.

Two others...Ireland’s PMI for manufacturing was 53.3 for November, which is actually a 21-month low, but its services reading was a stupendous 63.6, the highest since June 2006 (transport and leisure leading the way).

Non-euro U.K. had a manufacturing PMI of 52.7 vs. 55.2, but the decline isn’t worrisome, while the services reading was a robust 55.9, up from 54.9.

On the employment front, Eurostat released data for October and the eurozone jobless rate was 10.7% vs. 10.8% in September and 11.5%, Oct. 2014; or over twice the unemployment rate in the U.S.  Still a lot of work to do here.

Germany had the lowest at 4.5% (though the government officially pegs it at 6.3%, which is still the lowest since reunification). France was at 10.8%, actually up from a year ago, which isn’t good for President Hollande. 

Italy’s declined from 13.0% in Oct. 2014 to 11.5%.  Spain’s has fallen from 23.9% to 21.6%, Ireland’s is all the way down to 8.9% from 10.7% a year earlier, while Greece is at 24.6% (Aug.).

On the youth unemployment front, the news in some countries remains distressing.  Spain’s rate is 47.7%, Italy’s 39.8% and Greece’s 47.9% (Aug.).

A focus of Mario Draghi’s, inflation, is still running at just 0.1% (annualized) for the eurozone, according to a flash estimate out of Eurostat for last month.

Eurostat also reported retail trade rose 2.5% in October year-over-year for the eurozone.

Speaking of retail sales, Greece’s were down 5.2% in September from year ago levels.

Chris Williamson, Chief Economist at Markit:

“The euro area’s manufacturing recovery continued to build momentum in November, with factory output and new orders both showing the largest monthly gains for one-and-a-half years.

“It’s by no means a spectacular pace of expansion, however, broadly consistent with 2% annualized growth, and there are also few signs of underlying inflationary pressures picking up. Average prices charged by manufacturers fell for the third month running and average input costs continued to drop sharply.

“It would be wrong to get too gloomy about these data: the manufacturing sector is steadily reviving, and importantly generating jobs at an increased rate.  But with growth remaining modest, prices falling and manufacturing still some 10% smaller than its pre-crisis peak, the scene is set for the ECB to unleash further stimulus at its December meeting to ensure momentum continues to build.”  [Which is what Draghi set out to do days later.]

Finally, on the migration issue, the EU warned Greece it faces suspension from the Schengen passport-free travel zone unless it overhauls its response to the crisis.

Greece has been overwhelmed by more than 700,000 migrants crossing its borders this year, and yet it has refused assistance from the EU’s border agency, Frontex, which wants to help Greece not just with humanitarian aid, but also reforming its system for registering refugees, a critical item, especially post-Paris attacks.  Greece, though, has been loath to give up any sovereignty.

Eastern European leaders have become Greece’s harshest critic, with Robert Fico, the prime minister of Slovakia, saying “it is high time” to evict Greece from Schengen.  “We cannot tolerate one of the member countries openly refusing to fulfil its obligations to protect the Schengen borders,” he said.

But by weeks’ end, Greece agreed to take steps to better handle the flow, including accepting assistance from Frontex so that it can register the migrants seeking to head toward Northern Europe via neighboring Macedonia.  Border guards from other EU countries will now be employed on this frontier.

Separately, the Wall Street Journal had a terrific, albeit disturbing, piece by Anton Troianovski and Ruth Bender concerning the threat posed by refugees streaming into Europe, in particular Germany.

“The Paris attacks have raised fears of terrorists slipping into Europe by posing as refugees.  But in Germany, the top migrant destination, security officials have another worry:  Local extremists will recruit the newcomers to join the Islamist cause once they arrive.

“German authorities warn that migrants seeking out Arabic-language mosques in search of the familiar are increasingly ending up at those attended by Islamist radicals.  In interviews, security officials from Berlin to the southwest German state of Saarland said they have registered a sharp rise in the number of asylum-seekers attending mosques they believed attracted extremists.”

One other item on the migration front.  ‘Net’ migration to the U.K. rose to a new record high of 336,000 in the year to June 2015, as immigration jumped while the flow of emigrants out of the U.K. slowed, according to the Office for National Statistics.

In 2010, Prime Minister David Cameron said he would reduce net immigration to “tens of thousands.”

Turning to Asia, in China, the Caixin (formerly HSBC) PMI for manufacturing in November came in at 48.6 vs. 48.3 in October, while the service sector reading was 50.5 vs. 49.9.

The government’s official reading on manufacturing was 49.6 vs. 49.8 in October, while the services PMI was 53.6 vs. 53.1.

Reminder, the Caixin survey is of small- to mid-size private businesses, while the government tends to focus on large, state-run enterprises.

Add all the figures together and you can see the picture is still murky, though there are signs of stability in manufacturing, while the readings on the service sector are somewhat encouraging.

Meanwhile, the International Monetary Fund approved the inclusion of the Chinese yuan (renminbi) among its Special Drawing Rights (SDR) currencies, joining the U.S. dollar, euro, Japanese yen and British pound in the basket the IMF uses as an international reserve asset.

The Chinese currency will have a weight of 10.92 percent, versus the dollar’s 41.73 percent and 30.93 percent for the euro.  The yuan will be above the yen at 8.33 percent and the British pound’s 8.09 percent.

The move is seen as recognition of China’s financial and economic progress after years of reform.

The People’s Bank of China said the move, which was backed by countries including the U.S., Britain and Japan, showed the international community expected China to play a bigger role in the world economy.

Joining the SDR will in the long run boost foreign holdings of the yuan, but it is currently under pressure from a stronger U.S. dollar and tepid growth prospects.

In Japan, the November PMI for manufacturing was 52.6 vs. 52.4 in October.  The service sector reading was 51.6 vs. 52.2.

Factory output was up 1.4% in October over September, less than expected, while retail sales for the month rose 1.8%, year-over-year, which was better than forecast.

A few other manufacturing PMIs of note, courtesy of Markit.

South Korea: 49.1 in November, unchanged from the prior month.  Taiwan: 49.5 vs. 47.8, which perhaps reflects stability in China as well. 

India’s PMI was 50.3 vs. 50.7, while GDP in the third quarter was an annualized 7.4% vs. 7.0% in the second quarter, thus making it the world’s fastest growing large economy.

I comment on Brazil, which is in a depression, down below.

Street Bytes

--After a volatile week, with declines in the Dow Jones of 158 and 250 points, and advances of 168 and 370, when it was all over the Dow rose 0.3% to 17847.  The S&P 500 added a point, 0.1%, while Nasdaq was up 0.3%.

Friday’s gain of 370 points that brought the week back into the black was fueled by the strong jobs report and Draghi’s comments that the ECB was open to further stimulus measures.

--U.S. Treasury Yields

6-mo. 0.47%  2-yr. 0.94%  10-yr. 2.27%  30-yr. 3.01%

The 12/31/14 yield on the 10-year was 2.17%, in case you forgot.

--Morgan Stanley is slashing its fixed-income department by 25% in the coming weeks, as first reported by Bloomberg.  The investment bank had earlier reported a 42% decline in fixed-income and commodity trading revenue for the quarter ended in September.  Goldman Sachs reported a 33% decline in the same areas.

--Oil prices slipped to a six-year low ahead of a key OPEC meeting.  Saudi Arabia said it would “listen” to weaker members’ calls to cut output to shore up prices, but it is unlikely the others would voluntarily do so.

It doesn’t help the United States continues to report record inventories, even as Iraq and Saudi Arabia have been pumping out record levels of their own, while Iran is preparing to increase its export when sanctions are lifted.

Tankers filled with crude are stacked up at ports around the world, often with no storage space available.  In the U.S. and Europe, it doesn’t help that winter (loosely speaking) has started off on the mild side, crimping heating oil demand.

So then Friday, OPEC announced it was keeping production at 31.5 million barrels a day, which is more than their previous ‘official’ daily output target of 30 million barrels that has consistently been breached for the last 1 ½ years.  Now they are at least acknowledging what they are actually producing.

The market reacted negatively, with West Texas trading below $40 before closing the week at $40.14.

Separately, gasoline futures in the U.S. rose as the Obama administration (EPA) moved to increase the use of ethanol next year.  Traders are concerned oil refiners and fuel merchants will pass on the costs involved in meeting the mandates.

--November was another strong month for U.S. auto sales, up 1.4% over the same month last year, with Fiat-Chrysler’s up 3%, while GM’s rose 1.5% and Ford’s were flat, though F-Series truck sales rose 10%.

Toyota’s sales climbed 3.4%, Nissan’s rose 3.8%, and Honda’s fell 5.2%.

Overall, U.S. new-car sales are on track to challenge the 17.35 million sales peak reached in 2000; 15.82 million having been sold through November.

In terms of profitability, both U.S. and foreign car makers are reaping the benefits of strong sales of light trucks and SUVs, with Ford’s average transaction price, for example, rising 11% compared with a year ago owing to sales in the category.

Volkswagen’s U.S. sales, by the way, fell 25% in November amid the emissions scandal that forced the suspension of sales of diesel vehicles.

VW’s U.K. car sales plunged 20% year-on-year in November, after a decline of 9.8% in October.  VW’s market share there fell from 9.4% to 7.2%.

--Yahoo’s board met this week to decide whether to sell off the web businesses – including its search engine and news sites.  One of the major issues, it seems, is Katie Couric’s massive $10 million salary, which isn’t helping CEO Marissa Mayer’s cause any.  One source told Bloomberg, “(Couric) does great work, but (potential investors want to know) are they selling (ads) against it and is there a road to profitability? There’s not.  Any way you slice it, investors are going to look at (her salary) and say, ‘This isn’t going to be something you’re going to be able to accommodate in the budget.’”

Nonetheless, some media and private-equity firms are interested in Yahoo’s core business.  Yahoo’s properties attract more than 200 million monthly visitors in the U.S. each month.

On the other hand, when it comes to a key business like desktop display advertising, Yahoo has been eclipsed by Facebook and Google, with Yahoo expected to pull in 4.4% of the $58 billion digital advertising market in 2015, according to research firm eMarketer, a figure that’s been declining.  [Wall Street Journal]

Yahoo’s main value to shareholders lies in its stakes in Alibaba and Yahoo Japan, which is controlled by the Japanese investment firm SoftBank.  Take these two out and the rest is not worth a lot.

--Donald L. Blankenship, one of the most prominent American coal executives of his time, was convicted Thursday on a federal charge of conspiring to violate mine safety after 29 workers were killed at the Upper Big Branch mine in 2010.   Blankenship, the former CEO of the Massey Energy Company, will appeal.

Investigators said the deaths occurred after flammable gases that had been allowed to accumulate in the mine exploded.  Prosecutors built their case around Blankenship’s supposed pursuit of profit at the expense of safety for the workers.  He was paid nearly $18 million in 2009, as jurors were told of his demands for production reports from the mine every 30 minutes, even on weekends.

--Sears Holdings Corp. announced sales dropped 20% amid store closings and weaker demand for clothing and consumer electronics.  The operator of both Sears and Kmart department stores  reported same-store sales declined 7.5% at Kmart and 9.6% at Sears U.S. stores for the quarter ended Oct. 31.

Sears Holdings now has 1,687 stores, down from 2,249 a year earlier.

--Shares in Chipotle Mexican Grill plunged anew after the U.S. Centers for Disease Control and Prevention reported seven new cases of E. coli in Illinois, Maryland and Pennsylvania, none of which had previously been affected by the outbreak.  So that makes a total of nine states and 52 cases; 20 resulting in hospitalization.

After the close on Friday, the company announced earnings results would be adversely impacted by the recent news; far more so than investors anticipated.

--2015 became the biggest year ever for mergers and acquisitions this week, with global M&A volume up to $4.304 trillion, according to Dealogic, exceeding 2007’s total of $4.296 trillion.

Pfizer’s roughly $160bn merger with Allergan is the largest of the year, while you also had the Anheuser-Busch InBev $108bn acquisition of SABMiller and Dell Inc.’s $67bn deal with EMC Corp.

Speaking of the AB InBev deal, the brewer plans to sell two of SABMiller’s best-known brands, Grolsch (with the coolest bottle in the world) and Peroni, to satisfy European regulators, though no deal has been struck as yet.

SABMiller also owns Miller Genuine Draft and Pilsner Urquell, the latter normally my European premium of choice when hosting family Christmas Day.  [I serve lasagna and gobs of shrimp, in case you’re wondering.]

--Deere & Co. said it plans to lay off about 220 employees in February as weak crop prices continue to hammer farm-equipment sales. The cuts will take place at a Moline, Ill. plant.  In its most recent quarter, Deere reported a 20% decline in revenue.

--Facebook CEO Mark Zuckerberg penned an open letter announcing the birth of his first child – a girl named Max – and his plan to donate 99% of his Facebook shares, currently worth about $45 billion.  Zuckerberg hopes the contributions will “advance human potential and promote equality for all children,” whatever that means.

A filing by the CEO said he and wife Priscilla Chan will give away no more than $1 billion a year for the first three years of the commitment as he launches the Chan Zuckerberg Initiative.

Zuckerberg wrote, “I will continue to serve as Facebook’s CEO for many, many years to come, but these issues are too important to wait until you or we are older to begin this work.”

What issues?  I just want to defeat ISIS and be able to drink in a bar without fear of it being shot up.

--Casino revenue in Macau continued to plummet, down 32.3% year-on-year in November, after a 28.4% decline in October, amid the ongoing Chinese government push to reduce corruption, which has hit the high-roller segment hard.

Last year saw casino revenues fall for the first time since records began in 2002.  As a result of the crackdown, Macau’s GDP fell a whopping 24.2% in the third quarter.  [Bloomberg]

--Broadway sold a record number of tickets for the week ended Nov. 29, making it the best-attended Thanksgiving week in recorded history, according to the Broadway League.

Last week brought in $33.8 million across 38 shows, which was actually down a smidge from last year ($34 million) but 288,018 tickets were sold vs. 284,569. 

“Wicked,” “The Lion King” and “Aladdin” were the top grossers (family-friendly, you see), while “Hamilton” was fourth.  [Pia Catton / Wall Street Journal]

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey: Russian President Vladimir Putin warned, ominously, of dire consequences for Russian-Turkish relations as a result of the downing of a Russian fighter jet by Turkey. 

In his annual state of the nation speech on Thursday, Putin said, “We’ll remind them of what they did, more than once. They’ll regret it.  We know what to do.”

“If someone thinks they can commit a heinous war crime, kill our people and get away with it, suffering nothing but a ban on tomato imports, or a few restrictions in construction or other industries, they’re delusional.

“Allah only knows, I suppose, why they did it.  And probably, Allah has decided to punish the ruling clique in Turkey by taking their mind and reason.”

Russia halted Turkish food imports, told tour operators to stop offering travel packages to Turkey, and placed restrictions on Turkish companies operating in Russia.  In addition, talks on the construction of a multi-billion-dollar gas pipeline to Turkey have been halted.

For his part, Turkish President Recep Erdogan has refused Putin’s demands to apologize.  But in response to Russia’s moves, Turkey is considering slashing its imports of Russian liquefied petroleum gas (LPG) as much as 25% next year, which would hit a key Russian export.  LPG in Turkey is used in households and to power about 40% of the nation’s automobiles.  [U.S. LPG exporters could make up for the shortfall.]

The above is just part of the story amid growing tensions between Russia and Turkey.

Russia’s defense ministry accused the family of President Erdogan of being directly involved in the trade of petroleum with ISIS.  Deputy Defense Minister Antonov said Turkey was the biggest buyer of “stolen” oil from Syria and Iraq.

Erdogan replied that Russia had no right to “slander” Turkey with such claims.

But Russia, in a rare move, invited journalists and military attaches to view satellite images and video footage that purported to show tanker trucks with oil crossing from IS-held territory into Turkey, though no evidence was presented of any direct involvement by Erdogan.

Meanwhile, after a heated debate, the British parliament voted to have the U.K. join the U.S., France and Russia in bombing ISIS targets in Syria.  Within hours after approval, Britain struck oil fields used by the militants.

In the debate, Prime Minister David Cameron called on MPs to “answer the call from our allies” and take action against the “woman-raping, Muslim-murdering, medieval monsters” of IS, who he warned were “plotting to kill us and to radicalize our children right now.”

Cameron posed a simple question: “Do we work with our allies to degrade and destroy this threat and do we go after these terrorists in their heartlands from where they are plotting to kill British people, or do we sit back and wait for them to attack us?”

The vote ended up being 397 to 223.

The German parliament voted to support the coalition fighting ISIS with military aid by a 445 to 146 margin.  Jets will be provided (for reconnaissance), a naval frigate, and 1,200 soldiers that will serve in non-combat roles.

Separately, U.S. Defense Secretary Ash Carter said the U.S. is boosting its campaigns in both Iraq and Syria by deploying additional special operations forces, some of whom will aggressively target ISIS leaders, such as leader Baghdadi.

Carter said, “We are gathering momentum on the battlefield in Syria and Iraq.”

Carter said he is also urging Turkey to close its border with Syria to limit the mobility of foreign fighters to return to Europe and elsewhere to launch attacks.  Turkey has said it will do so but the U.S. and others must first create a safe zone in Syria to protect refugees. It is also estimated Turkey would need to commit up to 30,000 troops to cordon off a 60-mile stretch of frontier where ISIS fighters have been moving in and out.

Want an idea of how many displaced people there are in Syria, with the total now over 7.6 million?  In an area of Homs called Waer, there were 300,000 living there when the conflict began in 2011. Today there are 75,000.  [Daily Star]

In Iraq, Sunni tribal fighters are set to join an assault to dislodge ISIS from Ramadi, the capital of Anbar province, but their effectiveness is in question.  The mission will be to hold ground already cleared by U.S.-led coalition airstrikes and Iraq’s military.  It is hoped that if successful, this will help rally more Sunnis to fight Islamic State.  The credibility of the Shiite-led Iraqi government is a major issue.

These are the same Sunnis in Anbar that the U.S. worked with during the so-called Awakening movement against al-Qaeda in Iraq in 2005 to 2007, a key element of the U.S. surge.

But once U.S. troops left, the Shiite-dominated government in Baghdad failed to keep its promises and instead arrested thousands of Sunnis on questionable charges, so now the United States has to win back their allegiance.

Philip Stephens / Financial Times

“One way of looking at the fighting in Syria is an uprising of the majority Sunni against the Alawite, or quasi-Shia, regime of Bashar al-Assad.  This is the obverse, you could say, of what happened in Iraq: the fanatics of the self-styled Islamic State have prospered with the support of Iraqi Sunnis dispossessed by the toppling of Saddam Hussein.

“The dividing lines on the ground are important.  But, as in 17th-century Europe [Ed. Stephens is referring to the “Thirty Years War”], what has kept the fires burning has been the involvement of outside powers.  Syria has become the arena for the long-simmering regional contest between (Sunni) Saudi Arabia and the Gulf allies on one side, and (Shia) Iran on the other. Russia sees a vital national interest in sustaining the regime in Damascus; Turkey in overthrowing it.

“Recep Tayyip Erdogan, Turkish president, talks about the enemies of Mr. Assad as his ‘Sunni brothers.’  But the shooting down of a Russian jet by Turkish warplanes patrolling the Syrian border has little to do with rival versions of Islam.  Ankara’s fear is the emergence of a powerful Kurdish entity in northern Syria and Iraq – a concern that explains its dangerous ambivalence towards ISIS.  Russia, like the U.S. and Europe, sees ISIS as a serious threat, but does not want to risk losing its Mediterranean naval base.

“For Tehran, the preservation of the Assad regime is part of a strategy that has seen Iran push its influence deep into the Arab world.  Saudi Arabia and the Gulf monarchies want to counter what they fear is Iranian encirclement.  These Sunni states also want to see ISIS defeated, but not at the price of a victory for Tehran....

“For the U.S. and its allies, the overarching interest is the re-establishment of regional stability and the defeat of the ISIS jihadists.  But this is a conflict that defies partial solutions....

“The Gordian knot is the struggle between Iran and Saudi Arabia, but a settlement would also have to acknowledge Russia’s interests and Turkey’s fears.  Impossible, many will say.  Maybe.  But until it happens, today’s Syria will live the horrors of 17th-century Germany; and ISIS will continue to find a safe haven for its twisted credo.”

Iran: The Obama administration has said it expects to begin lifting sanctions on Iran as early as January following a U.N. report that Tehran does not appear to have engaged in atomic-weapons activity.  But the International Atomic Energy Agency said Iran had pursued a program in secret until 2009.

Despite the mixed message, the IAEA’s board is expected to vote later to formally close its decade-long probe of Iran’s suspected past weapons work, which allows the U.S. to lift the sanctions.

A senior U.S. official working on the implementation of the Iran deal told the Wall Street Journal, “Iran has provided what [the IAEA] says was sufficient.  We had not expected a full confession [by Iran], nor did we need one.”

Some Republicans in Congress, however, are not happy.  “The IAEA’s report is dangerously incomplete and should be rejected by the IAEA Board of Governors,” said Rep. Mike Pompeo (R., Kan.), while Sen. Mark Kirk (R., Ill.), said, “The only clear point is that Iran stonewalled inspectors.”

Once sanctions are lifted, Iran is eligible for around $100 billion in Iranian oil revenue that is held overseas under the sanctions regime.

As for the military base called Parchin, which I have written of for years and years, the IAEA said in its report that Tehran had aggressively sanitized the site in recent months.  Iran has long been suspected of conducting tests related to a nuclear weapon there.  [Laurence Norman and Jay Solomon / Wall Street Journal]

Yemen: The Journal reported Friday that “Al Qaeda fighters have made fresh gains in southern Yemen in recent days, as the militant group takes advantage of the country’s eight-month civil war and breakdown of central government authority in a bid to seize territory and extend its influence.”  Score another for the bad guys.

China: It was ironic that as the climate change summit was convening in Paris (see below) the people of Beijing were suffering from some of the worst smog to hit the city in years; six days of choking, deadly pollution that was finally dispersed by strong winds.

At one point readings of the tiny poisonous PM2.5 particles reached into the high 600s micrograms per cubic meter, as compared with the World Health Organization safe level of 25.  Some suburban neighborhoods had readings in the 900s.

China still depends on coal for more than 60 percent of its power despite huge investments by the government in solar, wind and other renewable energy.  Part of the problem was November was unusually cold, which led to soaring power demand, ergo, coal.

Meanwhile, China denied entry to a 25-year-old Miss World contestant, Anastasia Lin.  The pageant is taking place in Hainan Island, China.

Lin, who is representing Canada, is an actor and follower of the spiritual practice of Falun Gong, which is banned in China.  Last May, she used the occasion of her crowning as Miss Canada to speak out for human rights and religious freedom.

Lin was born in China and her father still lives there.  He has been under pressure since his daughter’s achievement.

In a telephone conversation with the Washington Post from Hong Kong, Ms. Lin speculated that the regime “wants to use me as an example to other overseas Chinese who want to speak up, including journalists and scholars.”

Editorial / Washington Post

“(We) also think the regime feels genuinely threatened by anyone who doesn’t toe its line.  President Xi Jinping and his Politburo say they want market-oriented reform, but simultaneously they are tightening the screws on civil society, Internet debate, the media, independent churches or anything else that might challenge the Communist Party.  In the short run, that hurts people such as Ms. Lin and internal critics who more and more are winding up in prison. In the long run, it can only hurt China itself, as the regime becomes more and more brittle, isolated and afraid.”

North Korea: As reported by Reuters, Pyongyang appeared to conduct a submarine-launched ballistic missile (SLBM) test on Saturday but it failed.  A South Korean government source was quoted as saying the launch appeared to be a misfire, with no identification of a missile taking flight.

Back in May, an SLBM was apparently launched, fueling alarm in Seoul and Washington about possible advances by North Korea in its military capabilities, though many are questioning the authenticity of photographs released by Pyongyang.

France: The first round of voting in regional elections where the National Front (FN) is looking to make historic gains takes place Sunday.  FN leader Marine Le Pen is a seeming lock to prevail in the depressed Nord-Pas-de-Calais-Picardie region, while her 25-year-old niece, Marion Marechal-Le Pen, looks set to win in the southeastern Provence-Alpes-Cotes-d’Azur region.  Much more on this as the vote develops.

Brazil: The story here is awful.  The nation is in the midst of its deepest contraction since the Great Depression in the 1930s, with GDP in the third quarter falling 4.5% vs. a year earlier, the biggest decline in 20 years of data collection.  Inflation is running at 10%, you have a massive corruption scandal involving state oil company Petrobras, political gridlock and now a motion (petition) for impeachment has been filed against President Dilma Rousseff, who has an approval rating of 10%.

The petition accuses Rousseff of “crimes of responsibility” for her government’s handling of its 2014 budget, in which Brazil’s public accounts watchdog alleged she used accounting tricks to plug gaps in state finances.

This whole impeachment process seems to be a most lengthy one.

And did you hear Brazil is hosting the Olympics next summer?  I said from day one after the country won the 2016 bid that it was a big mistake and there hasn’t been any positive news since.

Of course the Olympics is an idea whose time has come and gone.  I’ve long advocated a focus on the various world championships, such as for track and field, instead. 

But for Brazil, amid their depression and the need to cut the federal budget, you have the huge costs associated with holding the Games, let alone the severe water pollution, but that’s for a different column of mine.

Venezuela: There is a parliamentary election on Sunday here, a big one, with polls showing the ruling United Socialist Party could lose its majority, so one wonders just how free and fair the vote will be.

Venezuela is a true basket case, with triple-digit inflation, chronic food shortages and a broad collapse in state institutions that once helped the poor.

According to a study conducted by a consortium of Venezuelan university professors, 76% of the people are now living in poverty, the highest level since 1975.  During Hugo Chavez’s tenure, the peak was 55% and the low 21%.

If the election results aren’t deemed credible, look for massive protests that the government would then put down violently.  Just my guess.

Nigeria: Cameroon reported its army, backed by a regional task force, killed at least 100 members of Boko Haram and freed 900 people the militant Islamist group had been holding hostage.

Cameroon is part of an 8,700-strong regional task force comprising troops from Nigeria, Chad, Niger and Benin that has a goal of destroying Boko Haram, which has threatened to expand beyond its base in Nigeria.

Some are questioning just how big the operation was, but let’s hope the story is true.

Random Musings

--Daniel Henninger / Wall Street Journal

“We are near the end of the seventh year of Barack Obama’s presidency, and by any measure the United States is a fractured nation.  Its people are more divided politically than any time in recent memory.  Personally, many are anxious, angry or just down.

“Whatever Mr. Obama promised in that famous first Inaugural Address, any sense of a nation united and raised up is gone.  This isn’t normal second-term blues.  It’s a sense of bust.

“The formal measure of all this appeared last week with the release of the Pew Research poll, whose headline message is that trust in government is kaput. Forget the old joke about the government coming to ‘help.’  There’s a darker version now: We’re the government, and we’re here to screw you.

“In a normal presidential transition year, voters would be excited at the mere prospect of new leadership.  Instead, the American people are grasping for straw men.

“Donald Trump declared for the presidency in June.  The New York City prankster travels from state to state opening the nation’s political fire hydrants, and no one seems able to stop the result: years of pent-up political and cultural contempt pouring into the streets....

“Hope and change was the promise.  What happened?....

“America and the world failed because they didn’t do what Barack Obama told them to do.  For seven years, he has been instructing everyone on the ‘right thing to do.’  If Mr. Obama seems down these days, it is because so many – from John Boehner to Vladimir Putin to the man in the street – persisted in doing the wrong thing.

“Iran’s ayatollahs got the Obama message, though, and that deal is the legacy....

“Liberals think the right is gloating at Mr. Obama’s end-of-term difficulties. No one is gloating. The nation is either furious (the right) or depressed (the left) at eight wasted, wheel-spinning years whose main achievement is ObamaCare – a morass....

“Mr. Obama has repeatedly mocked institutions he didn’t control and abused the powers of those he did.  Almost always, the ridicule and condescension came in front of cheering audiences.  It’s hardly a surprise that Donald Trump is exploiting and expanding the loss of public faith.  Mr. Obama spent seven years softening up Mr. Trump’s audiences for him.

“We may get a third Obama term after all.”

Robert M. Gates / Washington Post

“The next president will face major domestic problems, as well as the challenges posed by Iran, Russia, China, North Korea, terrorism and a Middle East in turmoil. What kind of qualities should we be looking for in a new chief executive?  Based on my experience working for eight presidents, of both political parties, here is my take:

“We need a president who understands the system of government bequeathed to us by the Founders – and grasps the reality that with power divided among three branches of government, building coalitions and making compromises are the only ways anything lasting can get done.....

“Our next leader needs to speak truthfully to the American people ‘Spinning’ has been a part of the political process since ancient Greece, but as mistrustful as most Americans are today of political leaders, the new president must speak candidly and honestly to the people....

“The next president must be resolute.  He or she must be very cautious about drawing red lines in foreign policy, but other leaders must know that crossing a red line drawn by the president of the United States will have serious – even fatal – consequences.  The public, members of Congress and foreign leaders alike must know that the president’s word is his or her bond, and that promises and commitments will be kept and threats will be carried out....

“Our new leader must be a problem-solver.... (The) paralysis within Congress and between Congress and the White House under the past two presidents has been harming the country and putting our future at risk.  No wonder so many Americans are pessimistic about the direction of the country....

“We need a president who is restrained.  Restrained to respect the prerogatives of the other branches of government.  Restrained in rhetoric, avoiding unrealistic promises, exaggerated claims of success and dire consequences if his or her initiatives are not adopted exactly as proposed....

“Finally, the most important quality for our next leader at this juncture in our history: The new president must be a true unifier of Americans.... We must hope that the president we elect next year will again and again remind all Americans of our common destiny, and that our fate as a nation and as a people is bound up with one another.  Our new leader should appeal, in President Abraham Lincoln’s words, to ‘the better angels of our nature.’”

--At the United Nations climate summit in Paris, President Obama said during a news conference, “I’m optimistic.  I think we’re going to solve it.  The issue is going to be the pace and how much damage is done before we’re fully able to apply the brakes.”

Editorial / Wall Street Journal

“The running melodrama of the world climate-change talks reassembled in Paris this week, and word from the worthies is that this time the 196 nations are poised for a momentous breakthrough. Well, not quite.  The politicians want a deal so badly that they’ll accept anything that can pass as one, but it won’t amount to much.

“Not that you’d know this from the grandiose rhetoric.  President Obama called it an historical ‘turning point,’ the ‘moment we finally determined we would save our planet.’  French President Francois Hollande declared: ‘Never have the stakes of an international meeting been so high, since what is at stake is the future of the planet, the future of life.’  And Pope Francis chimed in that ‘if I may use a strong word I would say that we are at the edge of suicide.’  The theme is Apocalypse Right Now.

“The last climate talks collapsed in 2009 amid differences between rich and developing nations. The International Energy Agency estimates developing countries will emit 70% of world CO2 by 2030 and contribute 170% of emissions increases between now and then.  Without their participation in a deal, atmospheric CO2 will continue to accumulate whatever the U.S. does.

“The problem is that countries like China (the No. 1 emitter) and India (No. 3) won’t undermine their economic growth or stop eradicating desperate poverty to assuage Western neuralgia. World-wide, some 1.3 billion people still live without electricity.  So the negotiators simply gave up the pretense of trying to agree to a legally binding agreement.

“Instead, countries will volunteer their own random carbon emissions-reduction targets and the actions they may or may not take to meet them, with no global goals....

“Moreover, nothing that emerges from Paris will have a discernible effect on world temperatures. Researchers at the Massachusetts Institute of Technology studied the (Intended Nationally Determined Contributions / carbon emissions-reduction targets) that have been released so far and concluded that temperatures in 2100 will rise 3.7 degrees Celsius if they are followed to the letter.  Then again, these are the same scientific models that predicted much higher temperatures than we’ve had....

“The world has warmed modestly in the last 35 years, nearly all of that before the last 15.  It may or may not warm more in the future, and the effects could be helpful in some places, harmful in others.

“The best insurance is not to force-feed windmills on India, or hand more power to government mandarins who will parcel out how much carbon each country can emit.  The remedy is faster economic growth so richer societies are better able to adapt to whatever happens. If Bill Gates wants to spend his billions looking for non-carbon energy solutions, great.  It’s his money, and innovation is essential to energy progress.  The talks in Paris are beside the point.”

Mitch McConnell / Washington Post

“When the American people voted to strip his party of congressional control, he was frustrated... So he decided to impose a similarly regressive energy policy, his so-called Clean Power Plan, by executive fiat.  Obama’s Harvard Law School mentor, Professor Laurence Tribe, has likened this to ‘burning the Constitution.’

“While the president has tried his best to dress this ideological attack on the middle class as ‘climate policy,’ in reality it could increase emissions by offshoring American manufacturing to countries that lack our environmental standards.

“What his power plan will do is unfairly punish Americans who can least afford it.....

“Predictably, the president’s attack on the middle class – one that won’t even meaningfully affect global carbon emissions – has received loud applause from wealthy left-wingers who just want to pat themselves on the back for ‘doing something.’  Lost jobs or higher energy bills may be a mere trifle for some on the left, but it’s a different story for a senior citizen on a fixed income or for a working mom who struggles paycheck to paycheck....

“Let’s not forget that just a few months ago the administration unveiled what it hailed as a landmark carbon-reduction deal with China.  The deal bound the hands of American workers without asking much of China in return.  It turns out China cheated and underreported its annual coal consumption by 600 million tons, a single revision equivalent to 70 percent of the coal used in our country in a year.

“Just think about the scale of that for a moment.”

China cheated?  I’m shocked!!!  The people in the Chinese Communist Party are so sincere, such good people.  I’ve met some.  [Really.]  How can this be?  I am so disappointed. 

-- A few presidential polls this week....

A national Reuters / Ipsos survey shows Donald Trump at 31%, down from 43%, while Ben Carson is second at 15%, followed by Marco Rubio and Ted Cruz, each with 8%.  Jeb Bush is next at 7%.

A more widely followed Quinnipiac University national survey has Trump at 27%, with Rubio in second at 17%, followed by Cruz and Carson at 16% each.  Then it’s all the way down to Bush in fifth at 5%.

But a CNN/ORC poll, released Friday, has Trump with a staggering 20-point lead, 36% to 16% for Cruz, 14% for Carson, and 12% for Rubio.  Jeb Bush is down to 3% in this one.

On the Democratic side, in the aforementioned Reuters/Ipsos poll, Hillary Clinton is at 51% vs. Bernie Sanders’ 42%. 

But in the Quinnipiac University survey, Clinton leads Sanders 60% to 30%.  I believe this one over the other.

--Donald Trump, in a speech in Manassas, Virginia this week, talked of his base.

“I used to call it a silent majority.  It’s not a silent majority; it’s really become a noisy majority.”

The next Republican debate is Dec. 15 on CNN.  It will be must-watch television, for sure.  Some of the candidates have to go after Trump to have a shot at surviving Iowa and New Hampshire.  Of course if the move backfires, some of the same candidates should really drop out before then.

--Jonah Goldberg / New York Post

“A little over a year ago, when Ben Carson was gearing up to run for president, I questioned in this space whether he was ready for what lay ahead.

“We now have our answer: No.

“Carson had a great number of things going for him: his amazing life story, charm, professional accomplishments, eloquence and courage.  I had only one major concern: ‘While he speaks eloquently and passionately about the importance of doing homework in his own life and for children everywhere, it’s not obvious he’s taken those lessons to heart when it comes to politics.’

“It’s now obvious that he hasn’t....

“ ‘I know a lot more than I knew,’ Carson said when asked on PBS about his foreign policy deficit.  ‘A year from now, I will know a lot more than I know now.’  That kind of answer doesn’t cut it when Americans feel threatened.  That’s why he’s been sliding in a number of polls since the Paris attacks....

“Of course, politics isn’t brain surgery. But it does require a certain foundation that only experience and homework can provide. If you’re waiting until you run for president to get up to speed, it is too late.  Wisconsin Gov. Scott Walker learned that the hard way this year.  He simply wasn’t prepared to discuss policies outside his comfort zone.

“Carson’s has been an all-too-familiar tale in GOP presidential politics in recent years.  Sarah Palin, Herman Cain, former Texas Gov. Rick Perry (in 2008, not in 2012) – all squandered opportunities by not being adequately prepared to leverage their popularity and potential....

“Doing your homework...is easy.  I don’t mean it doesn’t require effort; it most certainly does.  But there’s no trick to it: Read books, talk to experts, think things through when you have the time and resources to do so.

“If Carson had consulted common sense, he would have known that.”

I was with a very learned friend from Wake Forest the other day and we had a lot of time in the car while going to and from a Wake-Rutgers basketball game, so as is our wont, we had a discussion re the election.  We’re both Republicans, and really have no idea who we’d vote for today, but when it comes to Ben Carson we were in agreement.  How can such a successful surgeon be such an idiot when it comes to foreign policy?

[I saw Dr. Carson’s comments after his trip to Jordan and some of them were flat out moronic and showed zero knowledge of the subject matter.  He can have my advice for a hefty price, and I can save him, but we’re learning he doesn’t even listen to his aides.]

--U.S. Defense Secretary Ashton Carter announced Thursday that all U.S. military jobs will open to women, including combat roles previously reserved for men.  So not only could women fill infantry slots but also special ops forces.

“Our force of the future must continue to benefit from the best people America has to offer.  In the 21st century, that requires drawing strength from the broadest possible pool of talent. This includes women.”

The Marine Corps commandant asked for exceptions, but Carter concluded “There will be no exceptions.”

Marine Gen. Joseph Dunford – now chairman of the Joint Chiefs of Staff and former Marine Corps commandant – was not present at the press conference where Carter announced his decision.

A study of special operations leadership, obtained by Defense One, revealed that “85 percent of survey participants opposed letting women into their specialty, and 71 percent opposed women in their unit.”

According to RAND Corporation, which conducted the survey, “the dominant perspective across the focus groups was that women should not be integrated into special operations forces units and specialties, with potential impact on mission effectiveness and their continued ability to function as a highly performing team central to participants’ concerns.”

--According to a Gallup poll released before Thanksgiving, 84% of Republicans disapprove of taking in Syrian refugees, compared with 40% of Democrats.  Separately, the Pew Research Center estimates Muslims make up less than 1% of the U.S. population.  [Associated Press]

Just giving some facts and numbers for the archives.

--Chicago Mayor Rahm Emanuel fired the city’s police superintendent, Garry McCarthy, on Tuesday, after the debacle surrounding the shooting of Laquan McDonald, 17, by Officer Jason Van Dyke.  As I noted last week, it was truly disgraceful that it took police, and the mayor and his administration, a year to release the damning video.  Chicago’s PD is immensely corrupt.  Ditto Emanuel, who clearly didn’t want the video released during a highly charged reelection campaign.

--Former New York Assembly speaker Sheldon Silver (D) was convicted on seven counts of fraud, extortion and money laundering.  Silver was speaker for more than 20 years, a titan, to some.  An unmitigated dirtball to others. 

Silver was immediately expelled from the Legislature, to which he was elected in 1976.

So major kudos to Manhattan U.S. Attorney Preet Bharara, who I’ve praised before, as he goes after what he labels a “caldron of corruption” in Albany.  He also went after Republican state Sen. Dean Skelos, whose trial is ongoing. 

[Bharara, though, recently stumbled in his ‘insider trading’ cases against Wall Street...but his overall record of achievement is terrific.]

--South Africa’s top appeals court upgraded Oscar Pistorius’ manslaughter conviction to murder, sending “Blade Runner” back to jail for killing his girlfriend, Reeva Steenkamp, on Valentine’s Day 2013.  It is expected Pistorius will receive between 15 and 20 years for murder, minus time served.

At the original trial in September last year, the judge ruled the state failed to prove intent and he was placed under house arrest, which was then criticized when Pistorius was seen around town.

--Only two hurricanes formed in the Atlantic basin this year, the quietest hurricane season in more than two decades; most experts believing that while the Atlantic was warmer than average, El Nino impacted the development of storms in the east, particularly in terms of wind sheer.

But Hurricane Joaquin in October, while never making landfall in the southeast, did a number in terms of massive, deadly flooding in parts of North and South Carolina.

Looking at next year’s names for Atlantic storms that develop, I don’t like the sounds of Fiona and Gaston.

--Buffalo hasn’t had any measurable snow this season, at least at the airport; the latest it has gone without measurable snow since record-keeping began in 1899.  And warmer than normal temperatures are in the forecast through at least Dec. 16, according to the U.S. Climate Prediction Center.  Rochester, though, about 75 miles east of Buffalo, has had 8.4 inches thus far.

---

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

God bless America....and the victims of San Bernardino.

---

Gold $1086
Oil $40.14

Returns for the week 11/30-12/4

Dow Jones  +0.3%  [17847]
S&P 500  +0.1%  [2091]
S&P MidCap  -1.3%
Russell 2000  -1.6%
Nasdaq  +0.3%  [5142]

Returns for the period 1/1/15-12/4/15

Dow Jones  +0.1%
S&P 500  +1.6%
S&P MidCap  -0.2%
Russell 2000  -1.8%
Nasdaq  +8.6%

Bulls  41.2
Bears  26.8  [Source: Investors Intelligence]

*Dr. Bortrum posted a new column.

Happy Birthday, Mom!  [Sonny Jurgensen Xs 10...a biggie.]

And Happy Hanukkah.

*Next week is one of the few times I will admit to ‘mailing it in’...my annual half-marathon down in Kiawah, S.C.  I’ll post something, but with lots of down time due to travel (and a few hours of fun, Friday...the race is Saturday, not fun...) let’s just say I’m hoping for a light news week.

Brian Trumbore



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Week in Review

12/05/2015

For the week 11/30-12/4

[Posted: 11:30 PM ET, Friday]

Note: If you haven’t already done so, please click on the gofundme link above, or send a check to PO Box 990, New Providence, NJ 07974.

Edition 869

San Bernardino

We learned Friday that the FBI is now treating the massacre of 14 innocents (21 injured) at a holiday luncheon on Wednesday in San Bernardino, California “as an act of terrorism.” The woman who helped carry out the shooting, Tashfeen Malik, 27, had pledged allegiance to the Islamic State in a Facebook posting.

As of now the act was inspired by ISIS, but not directed by the organization and it is significant that while ISIS praised the attack, it did not claim responsibility.  That makes it worse.  It was home-grown terrorism.  Ms. Malik’s husband, U.S.-born Syed Rizwan Farook, may have been radicalized by Tashfeen.

She was born in Pakistan, and traveled on a Pakistani passport, but grew up in Saudi Arabia.  She had returned to Pakistan for college, living in a district known for being a center of support for extremist jihadist groups, including Lashkar-e-Taiba. 

Farook, 28, apparently met Tashfeen online and then brought her back with him following a trip to Saudi Arabia for the Hajj.  Thus far, the FBI has uncovered evidence he had contact with five individuals on whom the agency had previously opened investigations for possible terrorist activities, including associates of Somalia’s al-Shabaab and the Nusra Front, the al-Qaeda wing in Syria.

As to the motive it is unclear, but this was the deadliest mass shooting in the country in nearly three years.  It’s very possible, though, that the heroic actions of the San Bernardino police staved off a second attack, given the arsenal Tashfeen and Syed had in their home.

Separately, the Wall Street Journal is reporting Friday night that the terror network behind the Paris-attacks has links to people in the U.K., some of Moroccan heritage, based in the Birmingham area.

Belgian officials said Friday they were now looking for four suspects in connection with Paris, up from two.

Another attack is inevitable.  Depending on the scope and the body count, that will determine the reaction in global financial markets and the impact on economies from Los Angeles to Berlin, from Miami to Stockholm.

Washington and Wall Street

If there was any remaining doubt the Federal Reserve is preparing to hike interest rates at its Dec. 15-16 meeting, it was dispelled with the release of Friday’s employment report for November, which showed non-farm payrolls increased a solid 211,000, a little better than expected, while the October number was revised upwards from 271,000 to 298,000, and September’s from 137,000 to 145,000. 

The unemployment rate was unchanged at 5.0%, while average hourly earnings rose 0.2%, 2.3% year-over-year, slightly less than October’s 2.5% pace but further evidence the labor market is strengthening.

Earlier, in a speech in Washington on Wednesday, Fed  Chair Janet Yellen said, “The U.S. economy has recovered substantially since the Great Recession.  The economy has come a long way toward the FOMC’s objectives of maximum employment and price stability.”

She also said her inflation outlook had been “bolstered” by the strength in the jobs market, including a pickup in wage growth.

Additionally, dangers from abroad had diminished since September, when the Fed had its eye on China and volatile markets worldwide.

But she reiterated that as the Fed begins to normalize rates, any increases will be incremental, adding:

“When the Committee begins to normalize the stance of policy, doing so will be a testament to how far our economy has come in recovering from the effects of the financial crisis and the Great Recession.  In that sense, it is a day that I expect we all are looking forward to.”

Federal Reserve Bank of Atlanta President Dennis Lockhart chimed in that he favors raising interest rates this month.

“Absent information that drastically changes the economic picture and outlook, I feel the case for liftoff is compelling,” he said.  “I think the economy is closing in on full employment.  The trend in wage growth has been weak for some time, but it may be picking up.”

For all the happy talk expressed by Yellen, though, and the confidence exhibited by Lockhart, some of the other economic data points were less than robust.  The November Chicago Purchasing Managers Index came in at just 48.7, 50 being the dividing line between growth and contraction, far below expectations and well off the prior month’s 56.2.  Then the national ISM reading on manufacturing for last month was posted, 48.6, representing the first contraction since the end of 2012 and the weakest number since June 2009  The ISM was 53.5 back in June.

Even the ISM services reading for November, 55.9, was a big comedown from October’s 59.1.

But looking at manufacturing, the two PMIs certainly buttress the argument that it is in recession, though strong auto sales, as discussed below, speak otherwise.  And October readings on construction spending, up 1.0%, and factory orders, up 1.5%, were solid.

The Atlanta Fed’s GDPNow indicator, however, weighed the poor manufacturing PMIs and the fourth quarter outlook for GDP was lowered to 1.4% from a recent 2.3% forecast.

As for the critical Thanksgiving weekend and retail sales, Adobe, which tracks 4,500 U.S. retail websites, said online sales rose 22% on Thanksgiving Day over 2014, while they were up about 15% for Black Friday.  18% for Thursday and Friday combined.  Cyber Monday sales were estimated to have risen 12%, though IBM pegged it at a more robust 18%.  Remember, for all the hoopla, online sales are still just 7% to 8% of total U.S. retailers’ sales.

That said, Retail Metrics said it saw sales decline 1.5% over Thursday and Friday at major retailers, with foot traffic down, while forecasting the same folks will have seen a decline of 0.9% for the month.

ShopperTrak said sales at bricks and mortar stores fell 10.4% for Nov. 26-29 vs. 2014.

Bottom line, the National Retail Federation still expects sales, both online and in stores, to be up 3.7% for November and December vs. year ago levels.  Gallup sees total holiday sales increasing 5.1% to 5.8%.

Down in Washington, House Speaker Paul Ryan warned a bill to fund government is still an uncertainty with current funding slated to expire after Dec. 11.  Democrats and Republicans are negotiating but if talks go past the deadline that will require a short-term continuing resolution to avoid a shutdown.

Overall spending in the bill is already set at $1.1 trillion, but the problems are over how it is divvied up.  So it’s a major test of Speaker Ryan’s leadership.

But Ryan passed one test, that being passage of a five-year, $305 billion U.S. highway funding bill by a 359-65 vote, with the measure also reviving the U.S. Export-Import Bank.  The Senate passed the legislation 83-16 and President Obama will sign it.

This will be the first long-term highway bill in years, brining stability, for once, to state and local planners’ ability to commit resources to their transportation needs.  It should also be a boon to the likes of Caterpillar Inc., the world’s largest maker of construction equipment.

Europe and Asia

The big global economic story of the week has been the looming divergence in monetary policy between the Federal Reserve and the European Central Bank.

ECB President Mario Draghi and his board extended their policy of unprecedented monetary easing, pledging to continue its 60bn euro a month bond buying program for another six months until March 2017 “or beyond.”  Draghi reiterated later that the ECB will continue to do what it takes to stoke the economy and get inflation up to the targeted 2%.

At the same time, the ECB cut a key interest rate to a historic low of minus 0.3% and pledged to buy more assets with the proceeds of its existing bond purchases.

But the markets tanked, Thursday, as investors wanted more; deeper rate cuts and more monthly bond purchases.  One problem with this last point.   There is only so much quality paper available for the ECB to purchase, so they are going to be heading way down on the credit scale over time, into “crapola” territory.

The sell-off also reflected that investors had bet too heavily on expectations of more aggressive expansion, loading up on dollar assets in anticipation of further stimulus.

The euro was expected to continue to weaken to eventual parity with the dollar, but instead rose from 1.054 to over 1.09, a massive move in one session, before falling some on Friday to 1.085, as Draghi gave a speech in New York wherein he tried to clarify his position that the ECB will do everything necessary and has all the tools to accomplish its goal of price stability.

The combination of measures taken, said Draghi today, “was not a package meant to address market expectations.  It was meant to address the reaching of our objectives.”

Eurozone government bonds saw their yields surge on word the monthly purchase limit wasn’t being increased.  The 10-year German bund, for example, saw its yield rise from 0.47% to 0.66% just on Thursday, while the yield on the Italian 10-year soared (in percentage terms) from 1.38% to 1.64%.

---

On the data front, Markit released PMIs for manufacturing and the eurozone figure for November was 52.8 vs. 52.3 in October, the 29th straight month over 50.

Germany was at 52.9 vs. 52.1 in October, France was unchanged at 50.6, Italy was 54.9 vs. 54.1, Spain was 53.1 vs. 51.3 and Greece was 48.1, an 8-month high.

Germany’s PMI for services was 55.6; 51.0 in France.

The composite PMI for the EA 19 was 54.2 last month vs. 53.9 in October.

Two others...Ireland’s PMI for manufacturing was 53.3 for November, which is actually a 21-month low, but its services reading was a stupendous 63.6, the highest since June 2006 (transport and leisure leading the way).

Non-euro U.K. had a manufacturing PMI of 52.7 vs. 55.2, but the decline isn’t worrisome, while the services reading was a robust 55.9, up from 54.9.

On the employment front, Eurostat released data for October and the eurozone jobless rate was 10.7% vs. 10.8% in September and 11.5%, Oct. 2014; or over twice the unemployment rate in the U.S.  Still a lot of work to do here.

Germany had the lowest at 4.5% (though the government officially pegs it at 6.3%, which is still the lowest since reunification). France was at 10.8%, actually up from a year ago, which isn’t good for President Hollande. 

Italy’s declined from 13.0% in Oct. 2014 to 11.5%.  Spain’s has fallen from 23.9% to 21.6%, Ireland’s is all the way down to 8.9% from 10.7% a year earlier, while Greece is at 24.6% (Aug.).

On the youth unemployment front, the news in some countries remains distressing.  Spain’s rate is 47.7%, Italy’s 39.8% and Greece’s 47.9% (Aug.).

A focus of Mario Draghi’s, inflation, is still running at just 0.1% (annualized) for the eurozone, according to a flash estimate out of Eurostat for last month.

Eurostat also reported retail trade rose 2.5% in October year-over-year for the eurozone.

Speaking of retail sales, Greece’s were down 5.2% in September from year ago levels.

Chris Williamson, Chief Economist at Markit:

“The euro area’s manufacturing recovery continued to build momentum in November, with factory output and new orders both showing the largest monthly gains for one-and-a-half years.

“It’s by no means a spectacular pace of expansion, however, broadly consistent with 2% annualized growth, and there are also few signs of underlying inflationary pressures picking up. Average prices charged by manufacturers fell for the third month running and average input costs continued to drop sharply.

“It would be wrong to get too gloomy about these data: the manufacturing sector is steadily reviving, and importantly generating jobs at an increased rate.  But with growth remaining modest, prices falling and manufacturing still some 10% smaller than its pre-crisis peak, the scene is set for the ECB to unleash further stimulus at its December meeting to ensure momentum continues to build.”  [Which is what Draghi set out to do days later.]

Finally, on the migration issue, the EU warned Greece it faces suspension from the Schengen passport-free travel zone unless it overhauls its response to the crisis.

Greece has been overwhelmed by more than 700,000 migrants crossing its borders this year, and yet it has refused assistance from the EU’s border agency, Frontex, which wants to help Greece not just with humanitarian aid, but also reforming its system for registering refugees, a critical item, especially post-Paris attacks.  Greece, though, has been loath to give up any sovereignty.

Eastern European leaders have become Greece’s harshest critic, with Robert Fico, the prime minister of Slovakia, saying “it is high time” to evict Greece from Schengen.  “We cannot tolerate one of the member countries openly refusing to fulfil its obligations to protect the Schengen borders,” he said.

But by weeks’ end, Greece agreed to take steps to better handle the flow, including accepting assistance from Frontex so that it can register the migrants seeking to head toward Northern Europe via neighboring Macedonia.  Border guards from other EU countries will now be employed on this frontier.

Separately, the Wall Street Journal had a terrific, albeit disturbing, piece by Anton Troianovski and Ruth Bender concerning the threat posed by refugees streaming into Europe, in particular Germany.

“The Paris attacks have raised fears of terrorists slipping into Europe by posing as refugees.  But in Germany, the top migrant destination, security officials have another worry:  Local extremists will recruit the newcomers to join the Islamist cause once they arrive.

“German authorities warn that migrants seeking out Arabic-language mosques in search of the familiar are increasingly ending up at those attended by Islamist radicals.  In interviews, security officials from Berlin to the southwest German state of Saarland said they have registered a sharp rise in the number of asylum-seekers attending mosques they believed attracted extremists.”

One other item on the migration front.  ‘Net’ migration to the U.K. rose to a new record high of 336,000 in the year to June 2015, as immigration jumped while the flow of emigrants out of the U.K. slowed, according to the Office for National Statistics.

In 2010, Prime Minister David Cameron said he would reduce net immigration to “tens of thousands.”

Turning to Asia, in China, the Caixin (formerly HSBC) PMI for manufacturing in November came in at 48.6 vs. 48.3 in October, while the service sector reading was 50.5 vs. 49.9.

The government’s official reading on manufacturing was 49.6 vs. 49.8 in October, while the services PMI was 53.6 vs. 53.1.

Reminder, the Caixin survey is of small- to mid-size private businesses, while the government tends to focus on large, state-run enterprises.

Add all the figures together and you can see the picture is still murky, though there are signs of stability in manufacturing, while the readings on the service sector are somewhat encouraging.

Meanwhile, the International Monetary Fund approved the inclusion of the Chinese yuan (renminbi) among its Special Drawing Rights (SDR) currencies, joining the U.S. dollar, euro, Japanese yen and British pound in the basket the IMF uses as an international reserve asset.

The Chinese currency will have a weight of 10.92 percent, versus the dollar’s 41.73 percent and 30.93 percent for the euro.  The yuan will be above the yen at 8.33 percent and the British pound’s 8.09 percent.

The move is seen as recognition of China’s financial and economic progress after years of reform.

The People’s Bank of China said the move, which was backed by countries including the U.S., Britain and Japan, showed the international community expected China to play a bigger role in the world economy.

Joining the SDR will in the long run boost foreign holdings of the yuan, but it is currently under pressure from a stronger U.S. dollar and tepid growth prospects.

In Japan, the November PMI for manufacturing was 52.6 vs. 52.4 in October.  The service sector reading was 51.6 vs. 52.2.

Factory output was up 1.4% in October over September, less than expected, while retail sales for the month rose 1.8%, year-over-year, which was better than forecast.

A few other manufacturing PMIs of note, courtesy of Markit.

South Korea: 49.1 in November, unchanged from the prior month.  Taiwan: 49.5 vs. 47.8, which perhaps reflects stability in China as well. 

India’s PMI was 50.3 vs. 50.7, while GDP in the third quarter was an annualized 7.4% vs. 7.0% in the second quarter, thus making it the world’s fastest growing large economy.

I comment on Brazil, which is in a depression, down below.

Street Bytes

--After a volatile week, with declines in the Dow Jones of 158 and 250 points, and advances of 168 and 370, when it was all over the Dow rose 0.3% to 17847.  The S&P 500 added a point, 0.1%, while Nasdaq was up 0.3%.

Friday’s gain of 370 points that brought the week back into the black was fueled by the strong jobs report and Draghi’s comments that the ECB was open to further stimulus measures.

--U.S. Treasury Yields

6-mo. 0.47%  2-yr. 0.94%  10-yr. 2.27%  30-yr. 3.01%

The 12/31/14 yield on the 10-year was 2.17%, in case you forgot.

--Morgan Stanley is slashing its fixed-income department by 25% in the coming weeks, as first reported by Bloomberg.  The investment bank had earlier reported a 42% decline in fixed-income and commodity trading revenue for the quarter ended in September.  Goldman Sachs reported a 33% decline in the same areas.

--Oil prices slipped to a six-year low ahead of a key OPEC meeting.  Saudi Arabia said it would “listen” to weaker members’ calls to cut output to shore up prices, but it is unlikely the others would voluntarily do so.

It doesn’t help the United States continues to report record inventories, even as Iraq and Saudi Arabia have been pumping out record levels of their own, while Iran is preparing to increase its export when sanctions are lifted.

Tankers filled with crude are stacked up at ports around the world, often with no storage space available.  In the U.S. and Europe, it doesn’t help that winter (loosely speaking) has started off on the mild side, crimping heating oil demand.

So then Friday, OPEC announced it was keeping production at 31.5 million barrels a day, which is more than their previous ‘official’ daily output target of 30 million barrels that has consistently been breached for the last 1 ½ years.  Now they are at least acknowledging what they are actually producing.

The market reacted negatively, with West Texas trading below $40 before closing the week at $40.14.

Separately, gasoline futures in the U.S. rose as the Obama administration (EPA) moved to increase the use of ethanol next year.  Traders are concerned oil refiners and fuel merchants will pass on the costs involved in meeting the mandates.

--November was another strong month for U.S. auto sales, up 1.4% over the same month last year, with Fiat-Chrysler’s up 3%, while GM’s rose 1.5% and Ford’s were flat, though F-Series truck sales rose 10%.

Toyota’s sales climbed 3.4%, Nissan’s rose 3.8%, and Honda’s fell 5.2%.

Overall, U.S. new-car sales are on track to challenge the 17.35 million sales peak reached in 2000; 15.82 million having been sold through November.

In terms of profitability, both U.S. and foreign car makers are reaping the benefits of strong sales of light trucks and SUVs, with Ford’s average transaction price, for example, rising 11% compared with a year ago owing to sales in the category.

Volkswagen’s U.S. sales, by the way, fell 25% in November amid the emissions scandal that forced the suspension of sales of diesel vehicles.

VW’s U.K. car sales plunged 20% year-on-year in November, after a decline of 9.8% in October.  VW’s market share there fell from 9.4% to 7.2%.

--Yahoo’s board met this week to decide whether to sell off the web businesses – including its search engine and news sites.  One of the major issues, it seems, is Katie Couric’s massive $10 million salary, which isn’t helping CEO Marissa Mayer’s cause any.  One source told Bloomberg, “(Couric) does great work, but (potential investors want to know) are they selling (ads) against it and is there a road to profitability? There’s not.  Any way you slice it, investors are going to look at (her salary) and say, ‘This isn’t going to be something you’re going to be able to accommodate in the budget.’”

Nonetheless, some media and private-equity firms are interested in Yahoo’s core business.  Yahoo’s properties attract more than 200 million monthly visitors in the U.S. each month.

On the other hand, when it comes to a key business like desktop display advertising, Yahoo has been eclipsed by Facebook and Google, with Yahoo expected to pull in 4.4% of the $58 billion digital advertising market in 2015, according to research firm eMarketer, a figure that’s been declining.  [Wall Street Journal]

Yahoo’s main value to shareholders lies in its stakes in Alibaba and Yahoo Japan, which is controlled by the Japanese investment firm SoftBank.  Take these two out and the rest is not worth a lot.

--Donald L. Blankenship, one of the most prominent American coal executives of his time, was convicted Thursday on a federal charge of conspiring to violate mine safety after 29 workers were killed at the Upper Big Branch mine in 2010.   Blankenship, the former CEO of the Massey Energy Company, will appeal.

Investigators said the deaths occurred after flammable gases that had been allowed to accumulate in the mine exploded.  Prosecutors built their case around Blankenship’s supposed pursuit of profit at the expense of safety for the workers.  He was paid nearly $18 million in 2009, as jurors were told of his demands for production reports from the mine every 30 minutes, even on weekends.

--Sears Holdings Corp. announced sales dropped 20% amid store closings and weaker demand for clothing and consumer electronics.  The operator of both Sears and Kmart department stores  reported same-store sales declined 7.5% at Kmart and 9.6% at Sears U.S. stores for the quarter ended Oct. 31.

Sears Holdings now has 1,687 stores, down from 2,249 a year earlier.

--Shares in Chipotle Mexican Grill plunged anew after the U.S. Centers for Disease Control and Prevention reported seven new cases of E. coli in Illinois, Maryland and Pennsylvania, none of which had previously been affected by the outbreak.  So that makes a total of nine states and 52 cases; 20 resulting in hospitalization.

After the close on Friday, the company announced earnings results would be adversely impacted by the recent news; far more so than investors anticipated.

--2015 became the biggest year ever for mergers and acquisitions this week, with global M&A volume up to $4.304 trillion, according to Dealogic, exceeding 2007’s total of $4.296 trillion.

Pfizer’s roughly $160bn merger with Allergan is the largest of the year, while you also had the Anheuser-Busch InBev $108bn acquisition of SABMiller and Dell Inc.’s $67bn deal with EMC Corp.

Speaking of the AB InBev deal, the brewer plans to sell two of SABMiller’s best-known brands, Grolsch (with the coolest bottle in the world) and Peroni, to satisfy European regulators, though no deal has been struck as yet.

SABMiller also owns Miller Genuine Draft and Pilsner Urquell, the latter normally my European premium of choice when hosting family Christmas Day.  [I serve lasagna and gobs of shrimp, in case you’re wondering.]

--Deere & Co. said it plans to lay off about 220 employees in February as weak crop prices continue to hammer farm-equipment sales. The cuts will take place at a Moline, Ill. plant.  In its most recent quarter, Deere reported a 20% decline in revenue.

--Facebook CEO Mark Zuckerberg penned an open letter announcing the birth of his first child – a girl named Max – and his plan to donate 99% of his Facebook shares, currently worth about $45 billion.  Zuckerberg hopes the contributions will “advance human potential and promote equality for all children,” whatever that means.

A filing by the CEO said he and wife Priscilla Chan will give away no more than $1 billion a year for the first three years of the commitment as he launches the Chan Zuckerberg Initiative.

Zuckerberg wrote, “I will continue to serve as Facebook’s CEO for many, many years to come, but these issues are too important to wait until you or we are older to begin this work.”

What issues?  I just want to defeat ISIS and be able to drink in a bar without fear of it being shot up.

--Casino revenue in Macau continued to plummet, down 32.3% year-on-year in November, after a 28.4% decline in October, amid the ongoing Chinese government push to reduce corruption, which has hit the high-roller segment hard.

Last year saw casino revenues fall for the first time since records began in 2002.  As a result of the crackdown, Macau’s GDP fell a whopping 24.2% in the third quarter.  [Bloomberg]

--Broadway sold a record number of tickets for the week ended Nov. 29, making it the best-attended Thanksgiving week in recorded history, according to the Broadway League.

Last week brought in $33.8 million across 38 shows, which was actually down a smidge from last year ($34 million) but 288,018 tickets were sold vs. 284,569. 

“Wicked,” “The Lion King” and “Aladdin” were the top grossers (family-friendly, you see), while “Hamilton” was fourth.  [Pia Catton / Wall Street Journal]

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey: Russian President Vladimir Putin warned, ominously, of dire consequences for Russian-Turkish relations as a result of the downing of a Russian fighter jet by Turkey. 

In his annual state of the nation speech on Thursday, Putin said, “We’ll remind them of what they did, more than once. They’ll regret it.  We know what to do.”

“If someone thinks they can commit a heinous war crime, kill our people and get away with it, suffering nothing but a ban on tomato imports, or a few restrictions in construction or other industries, they’re delusional.

“Allah only knows, I suppose, why they did it.  And probably, Allah has decided to punish the ruling clique in Turkey by taking their mind and reason.”

Russia halted Turkish food imports, told tour operators to stop offering travel packages to Turkey, and placed restrictions on Turkish companies operating in Russia.  In addition, talks on the construction of a multi-billion-dollar gas pipeline to Turkey have been halted.

For his part, Turkish President Recep Erdogan has refused Putin’s demands to apologize.  But in response to Russia’s moves, Turkey is considering slashing its imports of Russian liquefied petroleum gas (LPG) as much as 25% next year, which would hit a key Russian export.  LPG in Turkey is used in households and to power about 40% of the nation’s automobiles.  [U.S. LPG exporters could make up for the shortfall.]

The above is just part of the story amid growing tensions between Russia and Turkey.

Russia’s defense ministry accused the family of President Erdogan of being directly involved in the trade of petroleum with ISIS.  Deputy Defense Minister Antonov said Turkey was the biggest buyer of “stolen” oil from Syria and Iraq.

Erdogan replied that Russia had no right to “slander” Turkey with such claims.

But Russia, in a rare move, invited journalists and military attaches to view satellite images and video footage that purported to show tanker trucks with oil crossing from IS-held territory into Turkey, though no evidence was presented of any direct involvement by Erdogan.

Meanwhile, after a heated debate, the British parliament voted to have the U.K. join the U.S., France and Russia in bombing ISIS targets in Syria.  Within hours after approval, Britain struck oil fields used by the militants.

In the debate, Prime Minister David Cameron called on MPs to “answer the call from our allies” and take action against the “woman-raping, Muslim-murdering, medieval monsters” of IS, who he warned were “plotting to kill us and to radicalize our children right now.”

Cameron posed a simple question: “Do we work with our allies to degrade and destroy this threat and do we go after these terrorists in their heartlands from where they are plotting to kill British people, or do we sit back and wait for them to attack us?”

The vote ended up being 397 to 223.

The German parliament voted to support the coalition fighting ISIS with military aid by a 445 to 146 margin.  Jets will be provided (for reconnaissance), a naval frigate, and 1,200 soldiers that will serve in non-combat roles.

Separately, U.S. Defense Secretary Ash Carter said the U.S. is boosting its campaigns in both Iraq and Syria by deploying additional special operations forces, some of whom will aggressively target ISIS leaders, such as leader Baghdadi.

Carter said, “We are gathering momentum on the battlefield in Syria and Iraq.”

Carter said he is also urging Turkey to close its border with Syria to limit the mobility of foreign fighters to return to Europe and elsewhere to launch attacks.  Turkey has said it will do so but the U.S. and others must first create a safe zone in Syria to protect refugees. It is also estimated Turkey would need to commit up to 30,000 troops to cordon off a 60-mile stretch of frontier where ISIS fighters have been moving in and out.

Want an idea of how many displaced people there are in Syria, with the total now over 7.6 million?  In an area of Homs called Waer, there were 300,000 living there when the conflict began in 2011. Today there are 75,000.  [Daily Star]

In Iraq, Sunni tribal fighters are set to join an assault to dislodge ISIS from Ramadi, the capital of Anbar province, but their effectiveness is in question.  The mission will be to hold ground already cleared by U.S.-led coalition airstrikes and Iraq’s military.  It is hoped that if successful, this will help rally more Sunnis to fight Islamic State.  The credibility of the Shiite-led Iraqi government is a major issue.

These are the same Sunnis in Anbar that the U.S. worked with during the so-called Awakening movement against al-Qaeda in Iraq in 2005 to 2007, a key element of the U.S. surge.

But once U.S. troops left, the Shiite-dominated government in Baghdad failed to keep its promises and instead arrested thousands of Sunnis on questionable charges, so now the United States has to win back their allegiance.

Philip Stephens / Financial Times

“One way of looking at the fighting in Syria is an uprising of the majority Sunni against the Alawite, or quasi-Shia, regime of Bashar al-Assad.  This is the obverse, you could say, of what happened in Iraq: the fanatics of the self-styled Islamic State have prospered with the support of Iraqi Sunnis dispossessed by the toppling of Saddam Hussein.

“The dividing lines on the ground are important.  But, as in 17th-century Europe [Ed. Stephens is referring to the “Thirty Years War”], what has kept the fires burning has been the involvement of outside powers.  Syria has become the arena for the long-simmering regional contest between (Sunni) Saudi Arabia and the Gulf allies on one side, and (Shia) Iran on the other. Russia sees a vital national interest in sustaining the regime in Damascus; Turkey in overthrowing it.

“Recep Tayyip Erdogan, Turkish president, talks about the enemies of Mr. Assad as his ‘Sunni brothers.’  But the shooting down of a Russian jet by Turkish warplanes patrolling the Syrian border has little to do with rival versions of Islam.  Ankara’s fear is the emergence of a powerful Kurdish entity in northern Syria and Iraq – a concern that explains its dangerous ambivalence towards ISIS.  Russia, like the U.S. and Europe, sees ISIS as a serious threat, but does not want to risk losing its Mediterranean naval base.

“For Tehran, the preservation of the Assad regime is part of a strategy that has seen Iran push its influence deep into the Arab world.  Saudi Arabia and the Gulf monarchies want to counter what they fear is Iranian encirclement.  These Sunni states also want to see ISIS defeated, but not at the price of a victory for Tehran....

“For the U.S. and its allies, the overarching interest is the re-establishment of regional stability and the defeat of the ISIS jihadists.  But this is a conflict that defies partial solutions....

“The Gordian knot is the struggle between Iran and Saudi Arabia, but a settlement would also have to acknowledge Russia’s interests and Turkey’s fears.  Impossible, many will say.  Maybe.  But until it happens, today’s Syria will live the horrors of 17th-century Germany; and ISIS will continue to find a safe haven for its twisted credo.”

Iran: The Obama administration has said it expects to begin lifting sanctions on Iran as early as January following a U.N. report that Tehran does not appear to have engaged in atomic-weapons activity.  But the International Atomic Energy Agency said Iran had pursued a program in secret until 2009.

Despite the mixed message, the IAEA’s board is expected to vote later to formally close its decade-long probe of Iran’s suspected past weapons work, which allows the U.S. to lift the sanctions.

A senior U.S. official working on the implementation of the Iran deal told the Wall Street Journal, “Iran has provided what [the IAEA] says was sufficient.  We had not expected a full confession [by Iran], nor did we need one.”

Some Republicans in Congress, however, are not happy.  “The IAEA’s report is dangerously incomplete and should be rejected by the IAEA Board of Governors,” said Rep. Mike Pompeo (R., Kan.), while Sen. Mark Kirk (R., Ill.), said, “The only clear point is that Iran stonewalled inspectors.”

Once sanctions are lifted, Iran is eligible for around $100 billion in Iranian oil revenue that is held overseas under the sanctions regime.

As for the military base called Parchin, which I have written of for years and years, the IAEA said in its report that Tehran had aggressively sanitized the site in recent months.  Iran has long been suspected of conducting tests related to a nuclear weapon there.  [Laurence Norman and Jay Solomon / Wall Street Journal]

Yemen: The Journal reported Friday that “Al Qaeda fighters have made fresh gains in southern Yemen in recent days, as the militant group takes advantage of the country’s eight-month civil war and breakdown of central government authority in a bid to seize territory and extend its influence.”  Score another for the bad guys.

China: It was ironic that as the climate change summit was convening in Paris (see below) the people of Beijing were suffering from some of the worst smog to hit the city in years; six days of choking, deadly pollution that was finally dispersed by strong winds.

At one point readings of the tiny poisonous PM2.5 particles reached into the high 600s micrograms per cubic meter, as compared with the World Health Organization safe level of 25.  Some suburban neighborhoods had readings in the 900s.

China still depends on coal for more than 60 percent of its power despite huge investments by the government in solar, wind and other renewable energy.  Part of the problem was November was unusually cold, which led to soaring power demand, ergo, coal.

Meanwhile, China denied entry to a 25-year-old Miss World contestant, Anastasia Lin.  The pageant is taking place in Hainan Island, China.

Lin, who is representing Canada, is an actor and follower of the spiritual practice of Falun Gong, which is banned in China.  Last May, she used the occasion of her crowning as Miss Canada to speak out for human rights and religious freedom.

Lin was born in China and her father still lives there.  He has been under pressure since his daughter’s achievement.

In a telephone conversation with the Washington Post from Hong Kong, Ms. Lin speculated that the regime “wants to use me as an example to other overseas Chinese who want to speak up, including journalists and scholars.”

Editorial / Washington Post

“(We) also think the regime feels genuinely threatened by anyone who doesn’t toe its line.  President Xi Jinping and his Politburo say they want market-oriented reform, but simultaneously they are tightening the screws on civil society, Internet debate, the media, independent churches or anything else that might challenge the Communist Party.  In the short run, that hurts people such as Ms. Lin and internal critics who more and more are winding up in prison. In the long run, it can only hurt China itself, as the regime becomes more and more brittle, isolated and afraid.”

North Korea: As reported by Reuters, Pyongyang appeared to conduct a submarine-launched ballistic missile (SLBM) test on Saturday but it failed.  A South Korean government source was quoted as saying the launch appeared to be a misfire, with no identification of a missile taking flight.

Back in May, an SLBM was apparently launched, fueling alarm in Seoul and Washington about possible advances by North Korea in its military capabilities, though many are questioning the authenticity of photographs released by Pyongyang.

France: The first round of voting in regional elections where the National Front (FN) is looking to make historic gains takes place Sunday.  FN leader Marine Le Pen is a seeming lock to prevail in the depressed Nord-Pas-de-Calais-Picardie region, while her 25-year-old niece, Marion Marechal-Le Pen, looks set to win in the southeastern Provence-Alpes-Cotes-d’Azur region.  Much more on this as the vote develops.

Brazil: The story here is awful.  The nation is in the midst of its deepest contraction since the Great Depression in the 1930s, with GDP in the third quarter falling 4.5% vs. a year earlier, the biggest decline in 20 years of data collection.  Inflation is running at 10%, you have a massive corruption scandal involving state oil company Petrobras, political gridlock and now a motion (petition) for impeachment has been filed against President Dilma Rousseff, who has an approval rating of 10%.

The petition accuses Rousseff of “crimes of responsibility” for her government’s handling of its 2014 budget, in which Brazil’s public accounts watchdog alleged she used accounting tricks to plug gaps in state finances.

This whole impeachment process seems to be a most lengthy one.

And did you hear Brazil is hosting the Olympics next summer?  I said from day one after the country won the 2016 bid that it was a big mistake and there hasn’t been any positive news since.

Of course the Olympics is an idea whose time has come and gone.  I’ve long advocated a focus on the various world championships, such as for track and field, instead. 

But for Brazil, amid their depression and the need to cut the federal budget, you have the huge costs associated with holding the Games, let alone the severe water pollution, but that’s for a different column of mine.

Venezuela: There is a parliamentary election on Sunday here, a big one, with polls showing the ruling United Socialist Party could lose its majority, so one wonders just how free and fair the vote will be.

Venezuela is a true basket case, with triple-digit inflation, chronic food shortages and a broad collapse in state institutions that once helped the poor.

According to a study conducted by a consortium of Venezuelan university professors, 76% of the people are now living in poverty, the highest level since 1975.  During Hugo Chavez’s tenure, the peak was 55% and the low 21%.

If the election results aren’t deemed credible, look for massive protests that the government would then put down violently.  Just my guess.

Nigeria: Cameroon reported its army, backed by a regional task force, killed at least 100 members of Boko Haram and freed 900 people the militant Islamist group had been holding hostage.

Cameroon is part of an 8,700-strong regional task force comprising troops from Nigeria, Chad, Niger and Benin that has a goal of destroying Boko Haram, which has threatened to expand beyond its base in Nigeria.

Some are questioning just how big the operation was, but let’s hope the story is true.

Random Musings

--Daniel Henninger / Wall Street Journal

“We are near the end of the seventh year of Barack Obama’s presidency, and by any measure the United States is a fractured nation.  Its people are more divided politically than any time in recent memory.  Personally, many are anxious, angry or just down.

“Whatever Mr. Obama promised in that famous first Inaugural Address, any sense of a nation united and raised up is gone.  This isn’t normal second-term blues.  It’s a sense of bust.

“The formal measure of all this appeared last week with the release of the Pew Research poll, whose headline message is that trust in government is kaput. Forget the old joke about the government coming to ‘help.’  There’s a darker version now: We’re the government, and we’re here to screw you.

“In a normal presidential transition year, voters would be excited at the mere prospect of new leadership.  Instead, the American people are grasping for straw men.

“Donald Trump declared for the presidency in June.  The New York City prankster travels from state to state opening the nation’s political fire hydrants, and no one seems able to stop the result: years of pent-up political and cultural contempt pouring into the streets....

“Hope and change was the promise.  What happened?....

“America and the world failed because they didn’t do what Barack Obama told them to do.  For seven years, he has been instructing everyone on the ‘right thing to do.’  If Mr. Obama seems down these days, it is because so many – from John Boehner to Vladimir Putin to the man in the street – persisted in doing the wrong thing.

“Iran’s ayatollahs got the Obama message, though, and that deal is the legacy....

“Liberals think the right is gloating at Mr. Obama’s end-of-term difficulties. No one is gloating. The nation is either furious (the right) or depressed (the left) at eight wasted, wheel-spinning years whose main achievement is ObamaCare – a morass....

“Mr. Obama has repeatedly mocked institutions he didn’t control and abused the powers of those he did.  Almost always, the ridicule and condescension came in front of cheering audiences.  It’s hardly a surprise that Donald Trump is exploiting and expanding the loss of public faith.  Mr. Obama spent seven years softening up Mr. Trump’s audiences for him.

“We may get a third Obama term after all.”

Robert M. Gates / Washington Post

“The next president will face major domestic problems, as well as the challenges posed by Iran, Russia, China, North Korea, terrorism and a Middle East in turmoil. What kind of qualities should we be looking for in a new chief executive?  Based on my experience working for eight presidents, of both political parties, here is my take:

“We need a president who understands the system of government bequeathed to us by the Founders – and grasps the reality that with power divided among three branches of government, building coalitions and making compromises are the only ways anything lasting can get done.....

“Our next leader needs to speak truthfully to the American people ‘Spinning’ has been a part of the political process since ancient Greece, but as mistrustful as most Americans are today of political leaders, the new president must speak candidly and honestly to the people....

“The next president must be resolute.  He or she must be very cautious about drawing red lines in foreign policy, but other leaders must know that crossing a red line drawn by the president of the United States will have serious – even fatal – consequences.  The public, members of Congress and foreign leaders alike must know that the president’s word is his or her bond, and that promises and commitments will be kept and threats will be carried out....

“Our new leader must be a problem-solver.... (The) paralysis within Congress and between Congress and the White House under the past two presidents has been harming the country and putting our future at risk.  No wonder so many Americans are pessimistic about the direction of the country....

“We need a president who is restrained.  Restrained to respect the prerogatives of the other branches of government.  Restrained in rhetoric, avoiding unrealistic promises, exaggerated claims of success and dire consequences if his or her initiatives are not adopted exactly as proposed....

“Finally, the most important quality for our next leader at this juncture in our history: The new president must be a true unifier of Americans.... We must hope that the president we elect next year will again and again remind all Americans of our common destiny, and that our fate as a nation and as a people is bound up with one another.  Our new leader should appeal, in President Abraham Lincoln’s words, to ‘the better angels of our nature.’”

--At the United Nations climate summit in Paris, President Obama said during a news conference, “I’m optimistic.  I think we’re going to solve it.  The issue is going to be the pace and how much damage is done before we’re fully able to apply the brakes.”

Editorial / Wall Street Journal

“The running melodrama of the world climate-change talks reassembled in Paris this week, and word from the worthies is that this time the 196 nations are poised for a momentous breakthrough. Well, not quite.  The politicians want a deal so badly that they’ll accept anything that can pass as one, but it won’t amount to much.

“Not that you’d know this from the grandiose rhetoric.  President Obama called it an historical ‘turning point,’ the ‘moment we finally determined we would save our planet.’  French President Francois Hollande declared: ‘Never have the stakes of an international meeting been so high, since what is at stake is the future of the planet, the future of life.’  And Pope Francis chimed in that ‘if I may use a strong word I would say that we are at the edge of suicide.’  The theme is Apocalypse Right Now.

“The last climate talks collapsed in 2009 amid differences between rich and developing nations. The International Energy Agency estimates developing countries will emit 70% of world CO2 by 2030 and contribute 170% of emissions increases between now and then.  Without their participation in a deal, atmospheric CO2 will continue to accumulate whatever the U.S. does.

“The problem is that countries like China (the No. 1 emitter) and India (No. 3) won’t undermine their economic growth or stop eradicating desperate poverty to assuage Western neuralgia. World-wide, some 1.3 billion people still live without electricity.  So the negotiators simply gave up the pretense of trying to agree to a legally binding agreement.

“Instead, countries will volunteer their own random carbon emissions-reduction targets and the actions they may or may not take to meet them, with no global goals....

“Moreover, nothing that emerges from Paris will have a discernible effect on world temperatures. Researchers at the Massachusetts Institute of Technology studied the (Intended Nationally Determined Contributions / carbon emissions-reduction targets) that have been released so far and concluded that temperatures in 2100 will rise 3.7 degrees Celsius if they are followed to the letter.  Then again, these are the same scientific models that predicted much higher temperatures than we’ve had....

“The world has warmed modestly in the last 35 years, nearly all of that before the last 15.  It may or may not warm more in the future, and the effects could be helpful in some places, harmful in others.

“The best insurance is not to force-feed windmills on India, or hand more power to government mandarins who will parcel out how much carbon each country can emit.  The remedy is faster economic growth so richer societies are better able to adapt to whatever happens. If Bill Gates wants to spend his billions looking for non-carbon energy solutions, great.  It’s his money, and innovation is essential to energy progress.  The talks in Paris are beside the point.”

Mitch McConnell / Washington Post

“When the American people voted to strip his party of congressional control, he was frustrated... So he decided to impose a similarly regressive energy policy, his so-called Clean Power Plan, by executive fiat.  Obama’s Harvard Law School mentor, Professor Laurence Tribe, has likened this to ‘burning the Constitution.’

“While the president has tried his best to dress this ideological attack on the middle class as ‘climate policy,’ in reality it could increase emissions by offshoring American manufacturing to countries that lack our environmental standards.

“What his power plan will do is unfairly punish Americans who can least afford it.....

“Predictably, the president’s attack on the middle class – one that won’t even meaningfully affect global carbon emissions – has received loud applause from wealthy left-wingers who just want to pat themselves on the back for ‘doing something.’  Lost jobs or higher energy bills may be a mere trifle for some on the left, but it’s a different story for a senior citizen on a fixed income or for a working mom who struggles paycheck to paycheck....

“Let’s not forget that just a few months ago the administration unveiled what it hailed as a landmark carbon-reduction deal with China.  The deal bound the hands of American workers without asking much of China in return.  It turns out China cheated and underreported its annual coal consumption by 600 million tons, a single revision equivalent to 70 percent of the coal used in our country in a year.

“Just think about the scale of that for a moment.”

China cheated?  I’m shocked!!!  The people in the Chinese Communist Party are so sincere, such good people.  I’ve met some.  [Really.]  How can this be?  I am so disappointed. 

-- A few presidential polls this week....

A national Reuters / Ipsos survey shows Donald Trump at 31%, down from 43%, while Ben Carson is second at 15%, followed by Marco Rubio and Ted Cruz, each with 8%.  Jeb Bush is next at 7%.

A more widely followed Quinnipiac University national survey has Trump at 27%, with Rubio in second at 17%, followed by Cruz and Carson at 16% each.  Then it’s all the way down to Bush in fifth at 5%.

But a CNN/ORC poll, released Friday, has Trump with a staggering 20-point lead, 36% to 16% for Cruz, 14% for Carson, and 12% for Rubio.  Jeb Bush is down to 3% in this one.

On the Democratic side, in the aforementioned Reuters/Ipsos poll, Hillary Clinton is at 51% vs. Bernie Sanders’ 42%. 

But in the Quinnipiac University survey, Clinton leads Sanders 60% to 30%.  I believe this one over the other.

--Donald Trump, in a speech in Manassas, Virginia this week, talked of his base.

“I used to call it a silent majority.  It’s not a silent majority; it’s really become a noisy majority.”

The next Republican debate is Dec. 15 on CNN.  It will be must-watch television, for sure.  Some of the candidates have to go after Trump to have a shot at surviving Iowa and New Hampshire.  Of course if the move backfires, some of the same candidates should really drop out before then.

--Jonah Goldberg / New York Post

“A little over a year ago, when Ben Carson was gearing up to run for president, I questioned in this space whether he was ready for what lay ahead.

“We now have our answer: No.

“Carson had a great number of things going for him: his amazing life story, charm, professional accomplishments, eloquence and courage.  I had only one major concern: ‘While he speaks eloquently and passionately about the importance of doing homework in his own life and for children everywhere, it’s not obvious he’s taken those lessons to heart when it comes to politics.’

“It’s now obvious that he hasn’t....

“ ‘I know a lot more than I knew,’ Carson said when asked on PBS about his foreign policy deficit.  ‘A year from now, I will know a lot more than I know now.’  That kind of answer doesn’t cut it when Americans feel threatened.  That’s why he’s been sliding in a number of polls since the Paris attacks....

“Of course, politics isn’t brain surgery. But it does require a certain foundation that only experience and homework can provide. If you’re waiting until you run for president to get up to speed, it is too late.  Wisconsin Gov. Scott Walker learned that the hard way this year.  He simply wasn’t prepared to discuss policies outside his comfort zone.

“Carson’s has been an all-too-familiar tale in GOP presidential politics in recent years.  Sarah Palin, Herman Cain, former Texas Gov. Rick Perry (in 2008, not in 2012) – all squandered opportunities by not being adequately prepared to leverage their popularity and potential....

“Doing your homework...is easy.  I don’t mean it doesn’t require effort; it most certainly does.  But there’s no trick to it: Read books, talk to experts, think things through when you have the time and resources to do so.

“If Carson had consulted common sense, he would have known that.”

I was with a very learned friend from Wake Forest the other day and we had a lot of time in the car while going to and from a Wake-Rutgers basketball game, so as is our wont, we had a discussion re the election.  We’re both Republicans, and really have no idea who we’d vote for today, but when it comes to Ben Carson we were in agreement.  How can such a successful surgeon be such an idiot when it comes to foreign policy?

[I saw Dr. Carson’s comments after his trip to Jordan and some of them were flat out moronic and showed zero knowledge of the subject matter.  He can have my advice for a hefty price, and I can save him, but we’re learning he doesn’t even listen to his aides.]

--U.S. Defense Secretary Ashton Carter announced Thursday that all U.S. military jobs will open to women, including combat roles previously reserved for men.  So not only could women fill infantry slots but also special ops forces.

“Our force of the future must continue to benefit from the best people America has to offer.  In the 21st century, that requires drawing strength from the broadest possible pool of talent. This includes women.”

The Marine Corps commandant asked for exceptions, but Carter concluded “There will be no exceptions.”

Marine Gen. Joseph Dunford – now chairman of the Joint Chiefs of Staff and former Marine Corps commandant – was not present at the press conference where Carter announced his decision.

A study of special operations leadership, obtained by Defense One, revealed that “85 percent of survey participants opposed letting women into their specialty, and 71 percent opposed women in their unit.”

According to RAND Corporation, which conducted the survey, “the dominant perspective across the focus groups was that women should not be integrated into special operations forces units and specialties, with potential impact on mission effectiveness and their continued ability to function as a highly performing team central to participants’ concerns.”

--According to a Gallup poll released before Thanksgiving, 84% of Republicans disapprove of taking in Syrian refugees, compared with 40% of Democrats.  Separately, the Pew Research Center estimates Muslims make up less than 1% of the U.S. population.  [Associated Press]

Just giving some facts and numbers for the archives.

--Chicago Mayor Rahm Emanuel fired the city’s police superintendent, Garry McCarthy, on Tuesday, after the debacle surrounding the shooting of Laquan McDonald, 17, by Officer Jason Van Dyke.  As I noted last week, it was truly disgraceful that it took police, and the mayor and his administration, a year to release the damning video.  Chicago’s PD is immensely corrupt.  Ditto Emanuel, who clearly didn’t want the video released during a highly charged reelection campaign.

--Former New York Assembly speaker Sheldon Silver (D) was convicted on seven counts of fraud, extortion and money laundering.  Silver was speaker for more than 20 years, a titan, to some.  An unmitigated dirtball to others. 

Silver was immediately expelled from the Legislature, to which he was elected in 1976.

So major kudos to Manhattan U.S. Attorney Preet Bharara, who I’ve praised before, as he goes after what he labels a “caldron of corruption” in Albany.  He also went after Republican state Sen. Dean Skelos, whose trial is ongoing. 

[Bharara, though, recently stumbled in his ‘insider trading’ cases against Wall Street...but his overall record of achievement is terrific.]

--South Africa’s top appeals court upgraded Oscar Pistorius’ manslaughter conviction to murder, sending “Blade Runner” back to jail for killing his girlfriend, Reeva Steenkamp, on Valentine’s Day 2013.  It is expected Pistorius will receive between 15 and 20 years for murder, minus time served.

At the original trial in September last year, the judge ruled the state failed to prove intent and he was placed under house arrest, which was then criticized when Pistorius was seen around town.

--Only two hurricanes formed in the Atlantic basin this year, the quietest hurricane season in more than two decades; most experts believing that while the Atlantic was warmer than average, El Nino impacted the development of storms in the east, particularly in terms of wind sheer.

But Hurricane Joaquin in October, while never making landfall in the southeast, did a number in terms of massive, deadly flooding in parts of North and South Carolina.

Looking at next year’s names for Atlantic storms that develop, I don’t like the sounds of Fiona and Gaston.

--Buffalo hasn’t had any measurable snow this season, at least at the airport; the latest it has gone without measurable snow since record-keeping began in 1899.  And warmer than normal temperatures are in the forecast through at least Dec. 16, according to the U.S. Climate Prediction Center.  Rochester, though, about 75 miles east of Buffalo, has had 8.4 inches thus far.

---

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

God bless America....and the victims of San Bernardino.

---

Gold $1086
Oil $40.14

Returns for the week 11/30-12/4

Dow Jones  +0.3%  [17847]
S&P 500  +0.1%  [2091]
S&P MidCap  -1.3%
Russell 2000  -1.6%
Nasdaq  +0.3%  [5142]

Returns for the period 1/1/15-12/4/15

Dow Jones  +0.1%
S&P 500  +1.6%
S&P MidCap  -0.2%
Russell 2000  -1.8%
Nasdaq  +8.6%

Bulls  41.2
Bears  26.8  [Source: Investors Intelligence]

*Dr. Bortrum posted a new column.

Happy Birthday, Mom!  [Sonny Jurgensen Xs 10...a biggie.]

And Happy Hanukkah.

*Next week is one of the few times I will admit to ‘mailing it in’...my annual half-marathon down in Kiawah, S.C.  I’ll post something, but with lots of down time due to travel (and a few hours of fun, Friday...the race is Saturday, not fun...) let’s just say I’m hoping for a light news week.

Brian Trumbore