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08/13/2016

For the week 8/8-8/12

[Posted 11:30 PM ET, Friday]

Note: StocksandNews has significant ongoing costs.  Your support is appreciated.  Please click on the gofundme link or send a check to PO Box 990, New Providence, NJ 07974. Special thanks to Tim L. this week.

Edition 905

The World

Donald Trump was supposed to stay on message, an economic one this week, but we know he isn’t capable of this so he talked about Clinton and her eliminating the Second Amendment, as I describe below, though Clinton has never said she wants to do so and even if she did, does Trump know what’s really involved?  Like not just approval from two-thirds of Congress, but also approval by three-fourths of the nation’s state legislatures?  I’m guessing no.

And then he talked about Obama being “the founder of ISIS,” and he stayed with the theme, when if he had half a brain he’d keep hammering home that, yes, ISIS was formed under Obama’s watch.  That’s enough. 

[And can we stop this revisionist history that ISIS came from al-Qaeda in Iraq and thus it’s George W. Bush who is responsible?  No.  Al-Qaeda in Iraq was destroyed.  Yes, some old members, sitting in the dirt and sand, wondering what they would do with the rest of their lives, saw an opportunity when the U.S. took its forces out of Iraq, against the generals’ advice, shortly after Obama came into office.  But if the U.S. had kept a troop presence there, there is no ISIS.  And as for the “status of forces” agreement that we were having a problem with with Baghdad’s leadership, it’s Obama’s responsibility he didn’t seek to negotiate on it because this went against his campaign promise of withdrawing all the troops and now he has to deal with the judgment of history, which won’t be kind.  It’s all in these pages, folks.]

But while Trump was once again center-stage (when he should have stepped aside and let Hillary Clinton take her deserved fire over further revelations concerning emails and the Clinton Foundation), and as his poll numbers begin to plummet in key swing states, and as he seems to increasingly comment as if he knows he’s not going to win, which should drive his supporters nuts, the world around us gets scarier...read Russia and China.

As I detail below, Vladimir Putin has a history of acting around Olympics time and it appears today is no exception, witness his maneuvering in and around Ukraine, where he is ginning up a new crisis, as well as his increasing involvement in Syria.

Speaking of which, while I cover both Ukraine and Syria in great detail below (and the issues concerning China), I can’t help but note a letter from some of the last doctors remaining in the besieged Syrian city of Aleppo, to President Obama this week, urging him to intervene.

“We have seen no effort on behalf of the United States to lift the siege or even use its influence to push the parties to protect civilians,” the doctors wrote in the letter obtained by ABC News.  “Continued U.S. inaction to protect the civilians of Syria means that our plight is being willfully tolerated by those in the international corridors of power. The burden of responsibility for the crimes of the Syrian government and its Russian ally must therefore be shared by those, including the United States, who allow them to continue.”

A medical facility is attacked in Syria every 17 hours.  Two weeks ago, four newborn babies gasping for air suffocated to death after a blast cut the oxygen supply to their incubators, according to the doctors.

“At this rate, our medical services in Aleppo could be completely destroyed in a month, leaving 300,000 people to die,” the doctors wrote.

“Young children are sometimes brought into our emergency rooms so badly injured that we have to prioritize those with better chances, or simply don’t have the equipment to help them,” they wrote.  “We do not need tears or sympathy or even prayers, we need your action.  Prove that you are the friend of Syrians, not the friend of our killers.”

You wonder why I’ve written about August 2012 so often?  The doctors’ letter provides one answer.

This is on you, President Obama.  Summer of 2012 you were: “Bin Laden is dead.  GM is alive.”  You couldn’t be bothered with Turkish President Erdogan’s calls for a no-fly zone then that would have prevented so much of the ensuing carnage, let alone the rise of ISIS and the knock-on effects on Europe and around the world.  I will keep telling this story until I die.

President Obama, these doctors are telling you what I’ve known all along.  You have the blood of hundreds of thousands of innocents on your hands.  Hillary Clinton knows this.  She had a hand in it too.  Notice she doesn’t talk about any successes in Syria in her stump speeches.

Just don’t ask Donald Trump to begin to understand.

Election 2016 / Polls

--A Wall Street Journal/NBC News national poll of registered voters has Hillary Clinton leading Donald Trump 47-38.  Last month’s poll had it 46-41, Clinton.

A Washington Post/ABC News survey has Clinton with a 50-42 lead among registered voters, double the 4-point advantage she had on the eve of the Republican convention in mid-July.

In a four-way race, Clinton leads Trump 45-37, with Gary Johnson at 8% and Jill Stein at 4%.* 

A Bloomberg Politics national poll has Clinton with a six-point lead over Trump, 50-44.  She wins 94% of the Democratic vote, while Trump gets 87% of the Republican vote.

In a four-person race in this one, Clinton leads Trump 44-40, with Johnson at 9% and Stein 4%.

In a two-way race, Trump does best among white men with no college degree (76%), while Clinton does best with non-whites (66%), those in the Northeast (65%), and those under 35 (61%).

56% of likely voters say the U.S. is in a dark and dangerous place, a figure that includes 87% of Trump supporters.

But the Bloomberg survey also shows that among those younger than 35, just 46% say they’ll definitely vote in November; down from 60% in June.

A Reuters/Ipsos poll that had Clinton with only a 3-point lead late last week now shows her 7 points ahead, 42-35.

*As you know, to get on the first presidential debate stage, Sept. 26 at Hofstra University, Gary Johnson and Jill Stein need to be polling 15% nationally, which will be determined by averaging five surveys leading up to it, so really by early September.  At least that appears to be the deal.

Johnson is at around 9%, when taking a national average.  Frankly, I wish Stein would throw her support to the Libertarians, but that isn’t likely.  She has an incentive to get to 5% in November, at which point her Green Party would receive $millions in federal funds for 2020.

It will be a real shame if Johnson and Weld are not on the debate stage.  Weld, in particular, could kick some butt.  He still has major game.

But I don’t see it happening.

Or some of us could hold Trump and Clinton hostage until they allow Johnson in.  [Just kidding, Mr. Secret Service!]

--In Battleground state polling, a Wall Street Journal/NBC News/Marist survey has Clinton up 11 in Pennsylvania, while she has a 4-point lead in Iowa, and 5 points in Ohio. 

In a four-way contest, with Johnson and Stein, Clinton and Trump are tied in Iowa and her lead narrows slightly in Ohio and Pennsylvania.

A Quinnipiac University poll of battleground states has Clinton up 52-42 in Pennsylvania, 49-45 in Ohio and 46-45 in Florida.

When you add Gary Johnson and Jill Stein to the mix in these three, Johnson receives 7-8% and Stein gets 3% in each.

A Suffolk University poll in Iowa has Trump leading Clinton 41-40.

In a CBS Battleground tracker poll, Clinton opened up a 49-37 lead in Virginia, while Trump leads in Arizona 44-42 (which is too slight historically for a Republican).  In Nevada, Clinton leads 43-41

An Atlanta Journal Constitution survey has Clinton with a 7-point lead in Georgia.

A new series from NBC/Wall Street Journal/Marist released Friday had Clinton with big leads in the following: Colorado 46-32; Virginia 46-33; North Carolina 48-39; and Florida a little narrower at 44-39.

Separately, a Bloomberg Politics poll on Wednesday showed that 61% of voters had become less impressed by Trump’s business expertise over the course of the campaign, while only 31% had become more impressed.

Norm Ornstein of the American Enterprise Institute said the question of whether to repudiate Trump was a growing dilemma for Republican lawmakers.  “You have a lot of people who are scared to death about embracing him in a way that will alienate a slew of voters, or repudiating him in a way which will enrage his supporters,” Ornstein said.  [Financial Times]

I have lots on this week’s campaigning down below, but on Wednesday in Sunrise, Fla., Trump said President Obama was the founder of ISIS, and Hillary Clinton its co-founder. 

“In many respects, you know, they honor President Obama.  He’s the founder of ISIS.  He’s the founder of ISIS.  He’s the founder.  He founded ISIS,” Trump said.

“I would say the co-founder would be crooked Hillary Clinton,” he said Wednesday.

Trump also said the media were “disgusting” and “dishonest” for its coverage of his comments about Clinton and the Second Amendment, which I cover further below.

Monday he tweeted: “Many people are saying that the Iranians killed the scientist who helped the U.S. because of Hillary Clinton’s hacked emails.”

But the more he attacks the media, the more his most ardent supporters love him.  [It’s just that he has lost people like me.]

Hillary Clinton also had a rough week, with the disclosure of more emails showing contacts between the State Department and the Clinton Foundation while she was secretary of State.

Both candidates had interesting visitors in the background of their Florida campaign appearances.  The father of Pulse nightclub shooter Omar Mateen was seen sitting behind Clinton in Orlando, while disgraced Florida congressman Mark Foley sat behind Trump in Sunrise.  [Foley resigned from his House seat after allegations he had sent sexually suggestive emails to Congressional pages.]

Back to Trump, a Reuters/Ipsos poll notes that among registered voters, 44% want Trump to drop out.  19% of registered Republicans say he should, 70% believe he should stay in and 10% say they ‘don’t know.’

In the same above poll, 53% have an unfavorable view of Clinton, while 63% have an unfavorable view of Trump.

Wall Street

It was a slow week for economic news, though Friday provided two disappointing items that halted the Street’s record run for the Dow Jones and S&P 500, barely.  July retail sales came in unchanged, when a 0.4% gain had been expected, though June was revised up to a strong 0.8%, so average the two out if you want.  But ex-autos, the July number was -0.3% when +0.2% was forecast.  Anyway, not good and this led to second thoughts on some of the Big Box retailers who had rallied strongly during the week on the heels of not necessarily great earnings, but more the thought that they had finally bottomed, i.e., they beat a very low bar.

The other item was a report on July producer prices, which fell 0.4%, -0.3% on core, so year-over-year, the PPI is -0.2%, +0.7% ex-food and energy.  This isn’t good, sports fans.  We need some inflation.

Thursday, the Dow Jones, S&P 500 and Nasdaq all hit new highs the same day, the first time that happened since Dec. 31, 1999.

Of course back then Wall Street was about to top out and start a serious slide/crash as the tech bubble burst.

This time, we’re all told not to worry, even with stocks trading at historically frothy levels (to say the least), a trailing P/E on the S&P in excess of 25, and it’s not like the earnings outlook is that rosy.  What you’ll hear a lot of, though, is that the year-over-year comparisons will be easier over the coming quarters.

And you’re hearing a lot about stocks being the only game in town in a global era of historically low, in many cases, negative, interest rates.  So, what the hell...party on boys.  The Federal Reserve is not likely to move until December at the earliest and barring an external shock, the downside seems limited.

It’s just that the potential for an external shock is as high as it has ever been!

Europe

A flash estimate of growth in the Eurozone for the second quarter has it up 0.3%, up 1.6% year-over-year, as forecast.  Growth was 0.6% in the first quarter.

Germany’s growth rate slipped from 0.7% in the first quarter to 0.4% in the second, but this was double consensus and the year-over-year GDP pace of 3.1% is the strongest in five years, though this won’t hold up with weaker investment and Brexit looming.

Italy’s economy stagnated in the second quarter; a big blow to Prime Minister Matteo Renzi, whose government has been struggling to revive the country’s faltering recovery.  Italy now has a yoy growth rate of just 0.7%, while its debt pile rose to 2.25tr. euros.

Renzi is also having to deal with a banking crisis, while trying to maintain voter support ahead of a critical referendum in November on constitutional reform.  He has said he will resign if he loses the vote.

Portugal also disappointed with growth of just 0.2%, 0.8% yoy.

Earlier, France and Austria announced their economies ground to a half in Q2.

But Greece managed to exit its most recent recession with Q2 growth of 0.3%, though it is down 0.1% on an annual basis, but much stronger than the -1.8% fall predicted by economists.  Greece must have growth to reduce its debt load, now 180% of GDP.

Non-euro U.K. previously reported solid pre-Brexit growth of 0.6%.

But the Bank of England had an issue this week with its new quantitative easing, bond-buying program when it couldn’t find enough government bonds (gilts) to buy because a lot of institutions didn’t want to sell their paper; pension funds, for example, having to match future liabilities by holding the paper and they have to deal with growing deficits as yields fall, an issue that I’ve been pounding the table on but is now truly becoming a crisis.

The BoE later said it would be able to find the volume of bonds it planned on buying and with the European Central Bank and the Bank of Japan continuing to buy large amounts of sovereign paper, global benchmark yields keep hitting new, historic lows, like the U.K. 10-year finishing the week with a yield of 0.52%.  Pre-Brexit it was 1.37%.

Spain’s 10-year fell below 1.00% for the first time and is now at 0.92%, even though it’s been without a formal government all year!*  Italy, despite its humongous debt, banking crisis, and government uncertainty, has a 10-year at 1.04%.  France is 0.11%, and the German Bund is -0.11%.

But what have these low yields accomplished?  Not a heck of a lot, as the above GDP figures show you.  Andrew Sheets of Morgan Stanley told the Wall Street Journal, “People only borrow and spend more when they are confident about the future.  But by going negative, into uncharted territory, the policy actually undermines confidence.”

Japan, for one, is in a review process on the negative rates it has been running.

*Speaking of Spain, its political leaders took a small step towards ending the country’s deadlock, amid signs the centrist Ciudadanos party is ready to back conservative leader Mariano Rajoy for a second term in office.  Rajoy said, “The important thing is for Spain to have a government as early as possible,” though he declined to state the six conditions that Ciudadanos has given as a requirement for cooperation. Their party leader, Albert Rivera, had previously said he would never support Rajoy directly, but he described a possible deal as the “least bad option” for his party and Spain.

---

One huge early issue concerning Brexit involves the Hinkley Point nuclear project in the U.K. that was to be built with China’s help and France’s financing.  This was a pet project of former prime minister David Cameron, but new PM Theresa May has been lukewarm on it, at best.  May is concerned about Chinese involvement in a U.K. nuclear power station, with a former Business Secretary Sir Vince Cable telling the BBC that when he was in the Cabinet with the then home secretary, Mrs. May, she had been unhappy with what she regarded as the Cameron government’s “gung-ho” approach to doing deals with Beijing.

Nick Timothy, Mrs. May’s chief-of-staff and a longtime adviser, has also previously expressed concerns.  He has written that MI5 believed that Chinese intelligence services “continue to work against U.K. interests at home and abroad.”

I agree with Theresa May.  Why would you possibly allow a Chinese company, in this day and age, to construct a nuclear plant in your own country when you constantly have competing interests?!

As you can imagine, though, China is pissed, with its ambassador to the U.K., Liu Xiaoming, saying the delay in approving the plant had brought the two countries to a “crucial historical juncture.”

Liu hinted that “mutual trust” could be in jeopardy if the U.K. government decided not to approve it.

Last month, the French company financing most of the project, EDF, decided to go ahead with it, but then the May government said it wanted to wait until early autumn to review the project.  [BBC News]

This is a mess.  Thank David Cameron when you see him.

On the migration/terror fronts...the German government announced a series of proposals to tighten domestic security following a rash of attacks by refugees in recent weeks.  The proposed measures include expediting deportation procedures for convicted foreigners and rejected asylum applicants, as well as those believed to pose a risk to public security, to increased personnel and equipment upgrades for police and security agencies.

German Interior Minister Thomas de Maiziere said showing support for terrorism should be banned and dual-passport citizens who joined terror groups abroad should be stripped of their German citizenship.

“I take note of many citizens’ concerns that the high number of refugees might pose additional risk to Germany’s security,” said Mr. de Maiziere.  “We can’t deny that we have indications there are terrorists among refugees.”  [Wall Street Journal]

Speaking of which, it has come to light that two of the refugees who launched terror attacks in Germany last month were in contact with members of ISIS, including one with a Saudi phone number.  [Financial Times]

And as for the suicide bomber who blew himself up by a music festival, with the terrorist, Daleel, being the only death, investigators now believe the explosive went off prematurely, and that Daleel wanted to leave his backpack in a crowd and then detonate it remotely.

The recent terrorist attacks in Europe, including Turkey, have caused a sharp drop-off in demand from  North American travelers for Mediterranean cruises, Norwegian Cruise Line warned on Monday.

[But owing to Brexit and a cheaper currency, inbound flight reservations to the U.K. have been rising, up 8.6% from outside Europe in the first 28 days after the referendum.]

In Milan, Italy, the mayor there has warned the city may have to set up tents to house migrants as it is overwhelmed by over 3,300, most of the new arrivals from sub-Saharan Africa, particularly Nigeria.  Many of the migrants have been turned away at the borders of France, Austria and Switzerland, a “reflux” of people arriving in Milan from Como, near the Swiss border.

Italy has had to deal with over 93,000 migrants arriving by sea this year, slightly below the tally of the same period a year ago, but a city like Milan just wasn’t prepared and opposition lawmakers are pouncing on the mayor’s difficulties, with Matteo Renzi taking his share of the blame as well.

Nigeria is a massive issue on the migrant side for decades to come, by the way, as its population is just exploding.  Investment strategist Jeremy Grantham was one of the first to identify this looming powder keg.  They aren’t going to want to stay there.

Asia

In China, there was a slew of economic data.  July $-denominated exports were down 4.4% year-over-year compared with June’s -4.8% pace.  Imports fell 12.5% (-8.4% in June), both figures worse than expected.  Exports to the U.S. were down 2%, down 3.2% to the EU and down 5.2% to Japan.

July retail sales were up 10.2% year-over-year (compared to 10.6% in June), industrial production rose 6% (6.2% in June), while fixed asset investment increased 8.1% for the first seven months (9% first six...but up only 2.1% in the private sector).

On the inflation front, core CPI rose 1.8% yoy, with recent flood damage to key agricultural production putting upward pressure on future food prices.  A key metric, pork prices, rose 16.1% in the month and that’s good, given the importance of pork to the Chinese, a sign of strength.

Producer, or factory gate, prices fell 1.7% year-over-year, with the pace of decline decelerating, a seventh consecutive month of softening contraction.  [All of the preceding stats courtesy of the National Bureau of Statistics]

Put it all together and the trends aren’t great, especially fixed asset investment in the private sector, though there is hope at getting out of deflation on the producer price front.  The government continues to say not to worry.

Separately, vehicle sales rose at their fastest rate in 3 ½ years last month in year-on-year terms, but the figure of 1.85 million reported by the China Association of Automobile Manufacturing, up 23%, compares with the slow sales this time last year and could be a little deceiving.  Recall, last summer the Shanghai Composite stock index was in the midst of a crash. When viewed year-to-date, sales are up a little under 10% compared with the same period in 2015.

[Hong Kong reported second-quarter GDP rose a far better than expected 1.7% yoy.]

In Japan, a key metric with their economy, machine tool orders, plunged 19.6% year-over-year in July, after a 19.9% fall in June.  This is a good indicator of the manufacturing sector and global demand.

In Taiwan, encouragingly, July exports rose 1.2% year-over-year, the first gain in 18 months, with shipments to Japan up 10.2%, 3.4% to China, and 4.5% to Europe.  But they were down 7.3% to the U.S. yoy.

Street Bytes

--The three major averages edged up for the week, with Nasdaq’s winning streak now at seven, the longest since 2012 (I heard this on CNBC and double-checked it against my own database, which is rather phenomenal, frankly, after 17 years...all handwritten).  Nasdaq gained 0.2% to a record 5232, while the Dow added 0.2% to 18576, just shy of the record set a day earlier at 18613.  The S&P closed up two points to 2184, its record high now 2185.

--U.S. Treasury Yields

6-mo. 0.43%  2-yr. 0.71%  10-yr. 1.51%  30-yr. 2.23%

Bonds rallied a little on Friday on the heels of the poor economic news, but before their release, a survey of 62 economists by the Wall Street Journal found that 71% believe the Fed will next raise short-term rates at the Dec. 13-14 confab.

--The International Energy Agency said oil demand growth will weaken more than expected next year on a dimmer outlook for the global economy, though we’re talking a slowdown from 1.4m barrels a day this year to 1.2m b/d in 2017, which is still pretty robust.

The IEA nonetheless said slowing demand – led by the U.S., China and India – partly drove the slump in prices since June.  The global supply overhang was the biggest reason, however.

An increase in production from OPEC nations and those outside the cartel drove global oil supply up by 800,000 b/d in July, the IEA said.

OPEC crude oil output increased to 33.4m b/d last month – holding at an 8-year high, with record production from Saudi Arabia* and a jump in output from Iraq and Iran, which offset declines in Nigeria and elsewhere.

*Saudi production in July hit a record 10.67m barrels a day, up 123,000 b/d on June and surpassing the previous record of 10.56m from June last year.  The kingdom usually pumps more crude in the summer months to deal with an increase from domestic power companies seeking to satisfy demand for air-conditioning.

Non-OPEC production is forecast to drop by 900,000 b/d this year – led by the U.S. – before increasing by 300,000 b/d in 2017.

Wednesday, the U.S. Energy Information Administration reported an increase in commercial crude stocks, which rose 1.06m barrels in the week to 523.6m barrels.

Meanwhile, the EIA said it expected gasoline in the U.S. to fall below $2 a gallon on average in October and stay there through the winter.  Yippee!

It’s the same old story, record inventories, in this case of motor fuel.

The EIA also lowered its oil-price forecasts.  The agency now sees the U.S. averaging $41.16 a barrel this year and $51.58 a barrel in 2017, down from expectations of $43.47 and $52.15, respectively.

But...oil rallied at week’s end on the misguided hope the Saudis would reduce production in the coming months.

--What an awful week for Delta Air Lines, which, due to computer issues at its Atlanta hub, was forced to cancel about 1,000 flights Monday and another 680 Tuesday, with an additional 2,400 delayed; the spillover issues basically carrying through week’s end.

--Flight attendants at United Continental Holdings Inc. voted to approve a contract that will hike wages between 18 percent and 31 percent this September, the first labor contract to cover all 25,000 flight attendants from United and Continental since their 2010 merger.  Good for them.  And a win for new CEO Oscar Munoz, whose first goal has been peace with his unions.

--Macy’s announced it was closing 14% of its stores, 100, in early 2017 after a final Christmas shopping season as the retailer gives in to reality.  Department stores have been struggling mightily against online competition and off-price retailers.  Plus clothing sales are generally down.

But Macy’s reported better-than-expected revenue and profits, and the shares of Macy’s, Kohl’s and Nordstrom rose strongly, and then JC Penney joined in on the fun Friday.

Macy’s CEO Terry Lundgren said warm weather during the latest quarter boosted apparel sales and a smaller drop in tourist spending helped overall results.  “Over the past few months, we have been saying that a setback is a setup for a comeback, and we now believe we are set up well to proceed to a comeback.” Lundgren added: “We are encouraged by the distinct improvement in our sales and earnings trend in the second quarter.”

Macy’s same-stores fell 2% in the latest quarter, though this beat the Street; overall sales being down 5.7% in the first half.

The company said that while it is closing 100 stores, it will add new vendors to its existing ones.  

But Macy’s did not guide higher, opting to keep its current forecast for the full year.

--Kohl’s reported better-than-expected quarterly profit, helped by warm weather that boosted sales of summer clothes and accessories. Same-store sales fell 1.8%, down a second straight quarter, while earnings handily beat expectations.  Net sales were down 2%.

--Nordstrom saw net income fall more than 44% for the three months to end of July, though this was not as steep as expected and while revenue fell 1.3%, investors took heart from the slowing pace of its sales decline.  Same-store sales were down 1.2%, less than half the decline predicted.

Blake Nordstrom, the company’s co-president, said “our team has been actively addressing our inventory, expense and capital, and in the second quarter, made substantial progress by bringing down inventory in-line with sales.”

It’s that reduced inventory theme, expressed by Macy’s and Kohl’s as well, that has analysts and investors more optimistic about the upcoming holiday season, i.e., for starters less price-cutting, perhaps.

--One more...JC Penney reported net sales rose 1.5% to $2.9 billion in the quarter, with same-store sales rising 2.2%, though, granted, this is off a low base as it continues its comeback.

--SunPower Corp. warned of challenges in its power plant segment and said it would cut 1,200 jobs, or 15% of its workforce. The maker of solar panels and systems said aggressive pricing hurt its near-term economic returns.

--SolarCity Corp., which is being acquired by fellow Elon Musk company Tesla Motors Inc., reported a wider quarterly loss as operating expense climbed sharply.  The loss was $250.3 million, compared with $155.7 million a year earlier.

Revenue did rise 81%, far above expectations, to $185.8 million.

Musk is looking to combine the firms into a single integrated sustainable energy company – from home roof arrays to electric cars, and additional batteries that can store power for later use.

But Musk, who owns more than 20% of each company, is criticized for stretching himself, and his operations, too thin.

--Walt Disney Company announced it is making a $1 billion bet on video streaming as it faces stiff challenges in the traditional television business.  Disney announced it had concluded a deal to spend that amount for a 33 percent stake in BAMTech, Major League Baseball’s fast-growing streaming service whose infrastructure is also used by the NHL, WWE, HBO Now, the PGA and others.  CEO Robert Iger said the new service would be “complementary” to Disney’s ESPN and its traditional networks.

The BAMTech acquisition is part of Disney’s plan to build a Netflix-style streaming service.

Separately, Disney said Tuesday that operating profit for its cable division, which includes ESPN, Disney Channel and A&E Networks, totaled $2.37 billion in the most recent quarter, essentially flat from a year earlier.

Overall revenue for Disney was up 9 percent, with the biggest contributor to growth being Walt Disney Studios, primarily because of the blockbuster releases of “Captain America: Civil War,” “The Jungle Book” and “Finding Dory.”  Revenue at Disney’s theme park business also was strong, up 8 percent.

Mr. Iger said he has seen no impact on bookings at Walt Disney World in Florida over Zika concerns.

But ESPN remains a concern as it is down from 99 million subscribers in 2013 to just 89 million through June 2016, according to Nielsen.

--As rumored, Wal-Mart Stores Inc. agreed to buy e-commerce startup Jet.com for about $3.3 billion, giving the world’s largest retailer the resources for a stronger shopping website to compete with Amazon.com.

Jet.com, after one year, is processing an average of 25,000 orders a day and is adding 400,000 shoppers monthly.  I forgot the company is Hoboken, New Jersey based

--Russia’s economy shrank 0.6% in the second quarter from a year earlier after a decline of 1.2% in the previous three months, according to the Federal Statistics Service, better than forecast.

But consumer spending continues to be in the dumper, ditto oil prices, though other businesses appear to be snapping back to life

--Chinese e-commerce giant Alibaba saw its quarterly sales jump 59% year on year, the highest since its IPO.  The company now gets more from each dollar of mobile sales than from desktop.  Revenue was $4.84 billion in the three months to June 30.  The shares rose 5% in response.

But Alibaba faces a saturated online retail market in China, though most of its competitors are losing money.  The company didn’t comment on its earlier disclosure that the SEC was probing its accounting practices, related party transactions and data from its annual Singles’ Day shopping festival.

You know my opinion on BABA.  You’re on your own.

--The price of farmland in the Farm Belt fell in the second quarter, as reported by the Federal Reserve, with the continuing rout in global commodities that has been weighing on crop prices and farmers’ income.

Prices fell 1% from a year earlier in the Fed’s Chicago district, including Illinois and Iowa.  In the Kansas Fed district, which includes Kansas, Nebraska and western Missouri, irrigated farmland prices slid 5% compared with year-ago levels.

Despite a spring rally in agricultural markets, farmers are on track for their least prosperous year since 2002.  Good weather isn’t helping as it’s leading to record harvests.  [Bloated inventories driving down prices, boys and girls.]

Add it all up and farmers are increasingly having problems paying off their loans.  The Kansas City region said agricultural lenders reported more than 7% of farm loans in 2016 had “major or severe” repayment issues, up from an average of 3% between 2011 and 2013.  [Jesse Newman / Wall Street Journal]

--Speaking of agriculture, Brazil is warning the country could run out of corn by 2017, after a plunging currency led to a surge in exports and the latest harvest was damaged by drought.

Prices of corn are now surging, putting pressure on Brazil’s pork and poultry sectors.

But this could be good news for U.S. farmers in terms of working off their inventories.  Brazil’s shortage is leading the government to consider allowing imports of genetically modified corn from the U.S.

--Arianna Huffington, who transitioned from well-known conservative to outspoken liberal before helping reinvent journalism on the web, announced she was leaving the site she co-founded to launch a new health and wellness venture.

The move comes a year after the Huffington Post became part of Verizon Communications following its $4.4bn purchase of AOL, which acquired the Huffington Post in 2011 for $315 million.

Huffington’s new venture, Thrive Global, focuses in part on the benefits of a good night’s sleep.

--Sarah Ferris / The Hill

“The next president could be dealing with an ObamaCare insurer meltdown in their very first month.

“The incoming administration will take office just as the latest ObamaCare enrollment tally comes in, delivering a potentially crucial verdict about the still-shaky healthcare marketplaces.

“The fourth ObamaCare signup period begins about one week before Election Day, and it will end about one week before inauguration on Jan. 20.  After mounting complaints from big insurers about losing money this year, the results could serve as a kind of judgment day for ObamaCare, experts say....

“Already, many insurers this year are proposing substantial rate hikes with the hopes of making up for higher recent medical costs.  The average premium increase next year is about 9 percent, according to an analysis of 19 cities by Kaiser Family Foundation.  But some hikes are far higher: Blue Cross Blue Shield has proposed increases of 40 percent in Alabama and 60 percent in Texas.”

--Bill Miller, longtime money manager at Legg Mason, is leaving after 35 years.  Miller made his name in outperforming the S&P 500 for 15 straight years with his Legg Mason Value Trust, before his run of success came to a crashing end in 2005, ranking last among funds in his category in the five years before he relinquished management of the fund in 2012.  Assets in the fund dwindled from $21.5 billion at their peak in 2007 to little more than one-tenth of that.

Miller agreed to buy out Legg’s 50% stake in their joint venture, LMM LLC, which houses the funds he manages.  LMM, as a stand-alone, now will seek distribution arrangements that will keep its small funds from “getting lost in the shuffle,” as Miller put it.

I have to admit, way back when I was in the fund business, and largely responsible for trying to gain shelf space, I know what a tough job Mr. Miller now has; only it’s ten times tougher today as active managers continue to fall out of favor.

I also remember how much I couldn’t stand the guy as a competitor because of his success, the editor typed with a smile.  [I won’t say how I felt when he started to underperform.]

--The New York Post reports that Americans are eating less beef than they used to – about 1.2 fewer pounds per person per year since 2012, according to the USDA; tastes shifting to chicken.

Ergo, the days of the burger battles and the likes of Shake Shack, Smashburger and Five Guys on the premium side are over.  The sector is oversaturated, witness Shake Shack, which reported slowing same-store sales gains of just 4.5% this past quarter (not good for what is supposed to be a growth story), compared with 12.9% a year ago and 9.9% in the first quarter.

I didn’t realize Five Guys, the largest player in the better burger field, was up to 1,000 stores.  Good lord.  Smashburger, with 372 stores, is the second-largest, though it plans on opening 50 to 60 restaurants a year.

Then there is Florida-based BurgerFi, with 89 eateries and 175 in the pipeline.  It believes its VegeFi “is a game changer,” according to CEO Corey Winograd.  [I’d try that...once.]

Shake Shack, on the other hand, continues to target premium sites in major cities, saying it would add 18 this year.  Next week it opens its 100th store, of which 53 are in the U.S.

Shake Shack’s Chick’n Shack offering has become the chain’s third-most popular item, contributing 8.4 percent of total sales and higher check averages, according to CEO Randy Garutti.

--The average audience for NBC in the first five days of the Olympics was down nearly 20 percent from the London Games, with viewership among people ages 18 to 34 falling 32 percent.

But NBCUniversal argues some of the prime-time viewers are going to Bravo and NBCSN, and streaming events online.

On Tuesday night, for example, 33.4 million were watching in prime time on NBC, more than five million fewer than those who watched the comparable night in London.  But another 2.3 million were watching on cable and the equivalent of 404,000 streaming live video and earlier events.  The total of 36.1 million was still below 38.8 million four years earlier.

--Fox News executives have replaced ousted chairman and CEO Roger Ailes with Bill Shine and Jack Abernethy (sic...had to check this like three times because every story has it spelled differently), two long-serving Fox execs (Shine with Fox News since its launch in 1996), both reporting to Rupert Murdoch.  Shine, who will oversee all programming aspects of the network, including talent management, should be a popular pick among the staff.  Abernethy will be the numbers guy.

--Finally, on one of my favorite topics, fish fraud, Larry Olmsted had a piece in the Wall Street Journal.  It was the environmental group Oceana that conducted a large study of the issue three years ago, which found that one out of three fish were mislabeled, in violation of FDA regulations, and the results were even worse in New York, Los Angeles and Boston; the poster child being red snapper, the most faked species.

One noted seafood distributor in Philadelphia told Olmsted: “Quite frankly, I could take three different fish, cut them into inch-square pieces and lay them next to each other, and very few people in the world could tell them apart.”

“Red snapper has very high value, and once it is filleted, you can’t tell it from many other fish like farmed tilapia.  It’s the same for grouper, another high-fraud fish,” said another expert, this one from New York.

What’s the moral to the story?  If you buy tilapia, it probably is tilapia.

One more, along the lines of the above.  With a surge in interest in gold coins, Stephanie Yang of the Journal had a piece on all the fraud in that business.

“Counterfeit gold is nearly as old as the precious metal itself.  But dealers worry that this year’s powerful rise in gold prices is attracting new crowds looking to profit by peddling fake gold.

“At the same time, making and selling counterfeit gold coins and bars has never been easier, industry executives say.”

One clue. If you buy a gold bar and it starts melting in your hand, it’s probably chocolate.

Gold-coin sales for the second quarter were up 72% from the same period a year earlier, according to GFMS, a unit of Thomson Reuters.

Foreign Affairs

Iraq/Syria/ISIS/Russia: It’s all about Aleppo these days, Syria’s biggest city before the war and commercial hub, which has been ravaged, obliterated, with an estimated 250,000 civilians facing a humanitarian catastrophe, in the words of the United Nations.  Fighting has increased in intensity, with rebel forces last weekend breaking a siege that had prohibited food deliveries for three weeks.  Then a whopping seven trucks of fruits and vegetables got in.  Seven trucks for 250,000.

Many of the estimated rebel force of 10,000 come from Jabhat Fateh al-Sham (JFS), which until recently was known as the Nusra Front and affiliated with al-Qaeda.  The Syrian Observatory for Human Rights monitoring group says more than 120 civilians have been killed since early August.  Another 700 fighters from both sides have been killed since the start of the offensive about two weeks ago.

The beleaguered Syrian army has been increasingly reliant on air support from Russia, and on recruits from Hizbullah on the ground.  Reinforcements poured in from both sides in what is being called the “great battle of Aleppo.”

Syria’s defense ministry said it would halt fire for three hours each day to allow aid to reach the besieged, but the U.N. said that is insufficient.  Instead, it is calling for 48-hour weekly pauses for aid deliveries, warning that civilians are at grave risk from water shortages and disease, with one report saying water and power has now been cut off for 2 million, as the two sides in the conflict cut each other’s supply routes.

More than 10 hospitals have been bombed in Aleppo in the past month, as alluded to above in my opening.

Russian airstrikes on the ISIS bastion of Raqqa in northern Syria Thursday killed at least 30 people, including civilians, according to the Syrian Observatory, as Russia becomes ever more deeply involved. 

In Iraq, as ISIS loses territory, with its capital of Mosul under threat of being taken by year end by Iraqi forces, with U.S. help, Islamic State is increasingly adopting the playbook of its predecessor, al-Qaeda in Iraq, with its attacks on civilians in Baghdad and other strategic cities as an easy way to maintain legitimacy and sustain the narrative. 

So Iraqi Prime Minister Haider al-Abadi has been forced to increase troop levels in Baghdad, with almost half of all combat troops now based in the capital.

But as the Washington Post’s Liz Sly reports, while the defeat of Islamic State’s self-proclaimed caliphate in Iraq is a distinct possibility, “so too are new problems – and potentially new conflicts.  For the past two years, Kurdish Peshmerga, Iraqi Army forces, Shiite militias and some Sunni ones have largely overlooked long-standing differences to confront the menace posed to them.  But their feuds and grievances – over vital issues such as the distribution of power, land, money and oil – have not been resolved.”

On a different issue, I cover Iraq’s heat in detail below, but with temperatures climbing above 120 degrees, there is once again frustration over Baghdad’s decrepit electrical system, which sees constant, unexpected power outages every day.  One soldier told the Wall Street Journal, “This heat wave is like a weapon of mass destruction.”

Separately, a House Republican task force has concluded that key military intelligence was manipulated to paint an unrealistically optimistic picture of the United States’ fight against ISIS in both Iraq and Syria.

The report found that final intelligence assessments from the Pentagon’s Central Command (CENTCOM) differed from the on-the-ground conclusions, according to a leader of the task force, Rep. Mike Pompeo (R-Kan.).

“There’s enormous evidence this information from talented career professionals inside the analytic arm at CENTOM accurately depicted what was going on on the ground,” Pompeo said on CBS’ “This Morning.”  “But when it got to very senior levels, that information was changed.”

Supposedly, the task force did not find evidence that orders to manipulate intelligence were directed from the White House, but the politicization of military intelligence could be an explosive issue for the administration.  As Julian Hattem of The Hill summarized:

“President Obama rose to office in large part because of his staunch opposition to the war in Iraq, which was built upon faulty intelligence about Baghdad acquiring weapons of mass destruction.  For his administration to have fallen into the same trap would be deeply embarrassing and could undermine its claims about the international fight against ISIS and other extremists.”

Russia/Turkey: Turkey said on Wednesday the European Union was fueled by anti-Turkish sentiment and hostility to President Recep Tayyip Erdogan and was making grave mistakes in its response to the failed coup, which was costing it the trust of ordinary Turks.  Erdogan and many Turks don’t understand the Europeans displeasure over the crackdown that has followed the abortive putsch, while seeming to show indifference to the actions that night that resulted in 240 deaths.

“Unfortunately, the EU is making some serious mistakes.  They have failed the test following the coup attempt... Their issue is anti-Turkey and anti-Erdogan sentiment,” Foreign Minister Mevlut Cavusoglu told the state-run Anadolu Agency.  “We have worked very hard toward EU (membership) these past 15 years.  We never begged, but we worked very hard. ...Now two out of three people are saying we should stop talks with the EU.” [Reuters]

Reminder...more than 60,000 people in the military, judiciary, civil service and education sectors have been detained, fired, suspended, or placed on investigation.

Some Europeans, and officials in Washington, are concerned Erdogan is using the coup to further tighten his grip, which of course he is, even as Turkish officials dismiss such claims.

Western allies are also watching the sudden chumminess between Erdogan and Vladimir Putin, as Erdogan’s first post-coup trip was to St. Petersburgh to meet with Vlad the Impaler.

Separately, one of Erdogan’s domestic targets this week was the banks, who he is saying shouldn’t be charging high interest in the aftermath of the coup plot, promising to take action against lenders who “go the wrong way.”  He is equating high interest rates with treason.

Worrisomely, reports that two-thirds of the Turkish people support Erdogan are probably accurate.  Dissent is disappearing.  The opposition seems to be melting away.  Many blame the U.S. for the coup, which is being trumpeted by government media, while also pinning the blame on Fethullah Gulen, the imam living in self-imposed exile in Pennsylvania.  Erdogan continues to call for Gulen’s extradition.

In a speech Wednesday that was broadcast live on state television, Erdogan said: “I’m calling on the United States: What kind of strategic partners are we that you can still host someone whose extradition I have asked for?” 

And:

“This coup attempt has actors inside Turkey, but its script was written outside. Unfortunately, the West is supporting terrorism and stands by coup plotters.”  [Washington Post]

On arriving in St. Petersburgh, Erdogan said:

“My dear friend Vladimir and I have a joint position...to show the rest of the world that we will be behaving as friendly countries towards one another.”

Only a few months ago, Moscow accused Erdogan of having links to ISIS.  Now, Moscow has agreed to gradually lift sanctions off Turkish businesses, allow the resumptions of flights to Turkish resorts (popular for Russians), and lift a ban on Turkish imports by year end.

Erdogan, in turn, agreed to go ahead with the stalled Turkish Stream gas pipeline project.

But what Putin really wants is Turkey’s help in Syria, Erdogan being vehemently anti-Assad.  The above successes by rebel forces in Aleppo could not have come without military aid through nearby Turkey (financed largely by the Saudis), and Putin wants that stopped.   But Erdogan is not about to suddenly back Assad as the country’s legitimate ruler.

Putin’s longer term goal of course is to have Turkey abandon NATO for an alliance with Russia. Shorter-term, he would love to see Erdogan deny the U.S. access to the Incirlik air base, from which the U.S. is launching strikes against ISIS.

Editorial / Wall Street Journal

“No one plays a mediocre hand better than Mr. Putin, and Mr. Erdogan can help the Russian’s Mideast power play...Putin would like to drive a larger wedge between Mr. Erdogan and the U.S. to reduce America’s ability to shape regional events.  Over the long term Mr. Putin wants to weaken Turkey’s attachment to NATO, which has been firming up its ability to defend Eastern Europe after Russia’s depredations in Ukraine.

“This Putin play comes as Mr. Erdogan and his government are fanning anti-American sentiment in Turkey in the wake of the recent failed military coup....

“It’s not beyond Mr. Erdogan to use this episode as an excuse to cooperate more closely with Russia or block U.S. anti-Islamic State bombing missions from the NATO base at Incirlik.  NATO was concerned enough by the Putin-Erdogan meeting that it issued a highly unusual statement Wednesday praising Turkey’s contributions.  ‘Turkey takes full part in the Alliance’s consensus-based decisions as we confront the biggest security challenges in a generation,’ said the statement, adding that the Turks make ‘substantial contributions’ to NATO’s joint military efforts.

“All of this shows the extent to which the Middle East is up for grabs in the wake of President Obama’s eight-year retreat.  His withdrawal from Iraq and abdication in Syria created a vacuum that Mr. Putin is filling to Russia’s strategic benefit.  Mr. Obama has responded by bending U.S. policy in Syria further toward Russia’s desires.  Such is the diminished U.S. influence that the next U.S. President will inherit.”

Anne Applebaum / Washington Post

“Dictators who fear their enemies also look for allies.  But they don’t want allies who will criticize what they are doing, either out loud or by example.  And so, in the wake of the failed coup and the successful crackdown, Erdogan naturally sought out the company of Vladimir Putin, the Russian president.  In St. Petersburg this week, the settings at a luncheon for the two men included porcelain plates decorated with their portraits.

“At least until now, Putin’s model of suppression has differed from Erdogan’s strategy. Instead of mass arrests, he has used targeted violence.  To intimidate journalists, he ensures that one is occasionally murdered; to scare oligarchs, he locked up one of them for a decade.  He controls the economy through a system of cronyism and kickbacks on a breathtaking scale.

“But like Erdogan, Putin needs company. Both men share a paranoid fear of the enemies they can’t see.  Both men know that a large portion of their population dislikes them.  Both men know that the academics and intellectuals arrested in Ankara or under siege in Moscow will always oppose them, even if they are forcibly silenced.  Both men know that the biggest threats to their personal power are the ideas and causes that those people represent: not merely democracy but rule of law, judicial independence, media freedom, human rights.

“Both were also nearly at war with one another just a few months ago...

“Geostrategic, military and even historical calculations should make Turkey and Russia antagonists.  But their meeting illustrated something that many Western politicians and ‘realist’ thinkers find difficult to understand: That ideas and ideology sooner or later trump ‘interests.’  If Turkey were still a democracy, Erdogan would be looking to his Western allies to help him push back against Russia.  But contact with the West also means contact with Western ideas.  Dependence on the West means dependence on states that believe in the legal norms which Erdogan wants to repress, states that might support the people Erdogan wants to lock up....

“We can argue that the nature of the regimes we support shouldn’t matter, that cold-eyed calculation should determine our foreign policy.  But when it really matters, dictators choose other dictators over everything else.  Democrats should take note."

Libya: Pro-government forces battled to clear ISIS from its main Libyan stronghold of Sirte, with ISIS losing its headquarters.  ISIS fighters, though, still control several areas of the Mediterranean city.

The Washington Post reported Tuesday that U.S. commandos are operating from a position on the outskirts of Sirte, the first time they have directly supported Libyan forces in the anti-ISIS fight.  British troops are alongside.

Italian Prime Minister Matteo Renzi is facing heat for reportedly sending Italian troops without approval from parliament.  He has refused to confirm or deny the reports dozens of special forces are there.

France already admitted it had troops in Libya, saying three of its soldiers had been killed.

Russia/Ukraine: Ukrainian President Petro Poroshenko said on Thursday he had instructed all military units near Crimea and in the easterly Donbass region to be at the highest level of combat readiness, following Russian allegations of a Ukrainian incursion into Crimea.

President Putin accused Kiev on Wednesday of using terrorist tactics to try to provoke a new conflict and destabilize Crimea, which Moscow annexed from Ukraine in 2014.  Putin pledged to take counter-measures against Ukraine, with Kiev claiming the accusations are false and that Russia is looking to escalate hostilities.  Putin could then demand better terms in the peace process, or to inflame national passions at home ahead of Russian parliamentary elections next month.

Poroshenko said Russia is increasing military activity in northern Crimea with heavier fighting in eastern Ukraine.  “These troops are coming with more modern equipment and there are air assault units,” he told a news briefing in Kiev.

Russia says it caught Ukrainian infiltrators on the border between Crimea and Ukraine last weekend and that one of its soldiers and an FSB security service employee were killed.  Kiev denies the events ever happened.

Talks on Ukraine, scheduled for an upcoming G20 summit in China, have been scuppered, Putin calling them “pointless.”

It seems Putin is clearly trying to tear up the Minsk peace process. 

Geoff Pyatt, U.S. ambassador to Ukraine, said the U.S. government had seen no evidence to corroborate Russian claims of a Crimean incursion.  Pyatt added this is “not the first” such misinformation from Russia, aimed at diverting attention away from its own actions.  The EU also says there has been no official confirmation of Russia’s claims.

Putin has used the Olympics often as a cover for his actions, knowing attention is focused elsewhere, while many world leaders are vacationing in August.  The annexation of Crimea came just after Russia hosted the Sochi Olympics, and Russia sent troops into Georgia during the Beijing Olympics in 2008.

Anders Aslund, a senior fellow at the Atlantic Council, added: “The Berlin Wall was initiated in August 1961, the invasion of Czechoslovakia occurred in August 1968, and the Moscow coup took place in August 1991.”  [Bloomberg]

Editorial / Wall Street Journal

“Vladimir Putin is a master at pressing his geopolitical advantage when he senses complacency in the West.  That’s the meaning of his latest tantrum over Crimea, the Ukrainian peninsula Moscow invaded and illegally annexed in 2014.

“The Russian strongman on Wednesday accused Kiev of sending special forces to Crimea to destabilize the occupied Ukrainian territory ahead of Russian parliamentary elections next month. His spy agency, the FSB, said one of its men and a Russian regular had been killed in clashes with the Ukrainians over the weekend.  The Kremlin also claims to have arrested several Ukrainian would-be infiltrators, including an intelligence officer.

“The Russian leader then used the episode as an excuse to pull out of peace talks aimed at de-escalating the Russia-instigated conflict in eastern Ukraine....

“Kiev denies the allegations, which bear the hallmarks of Russian disinformation, not least because there is no plausible evidence....

“An assault by Russia-backed forces into eastern Ukraine would lay bare the failure of Western diplomacy that mostly restrains Ukrainian self-defense.  Mr. Putin started a war in Georgia in the waning days of the George W. Bush administration eight years ago, and he may want to stir more trouble while Barack Obama is heading out the door.  The next U.S. President needs to revisit Mr. Obama’s refusal to sell Kiev the lethal weapons it needs to defend itself against the Kremlin’s aggression.”

Editorial / Washington Post

“President Vladimir Putin is again playing with fire.  This time, it may be a summer bluff, or it may be a pretext to escalation of war with Ukraine.  Either way, it reflects Mr. Putin’s determination to deceive and subvert whenever it suits his goals, at home and abroad, taking advantage of a distracted United States and Europe....

“We’ve seen this movie before.  Mr. Putin’s troops stealthily took over predominantly Russian-speaking Crimea with their ‘little green men,’ soldiers without insignia; he has never confessed to Russia’s true role in instigating and executing the Donbass insurrection nor the shootdown of a Malaysian civilian jetliner.  His military campaign in Syria has been carried out with similar disinformation and insouciance....

“Why spark a new battle, now? The seizure of Crimea was hugely popular at home, and Mr. Putin may be hoping for a lift before the Sept. 18 parliamentary elections, perhaps distracting Russians from the economic troubles brought on in part by Western sanctions.

“Mr. Putin may also calculate that – with the United States distracted by a presidential campaign, Europe preoccupied with Brexit and the migration crisis, and the world watching the 2016 Olympic Games in Rio – this might be a window of opportunity to act without fear of a serious response.  After all, Russia repeatedly spurns U.S. requests to cooperate in Syria, and the Obama administration simply responds with more requests....

“In 2014, President Obama and Secretary of State John F. Kerry urged Mr. Putin to take an ‘off ramp’ from a deeper war in Ukraine.  But Mr. Putin pays no heed to traffic directions.  The United States and Europe can ill afford complacency and illusions about Russia.”

One other item from Moscow...Putin made a surprise change in dumping longtime chief-of-staff, Sergei Ivanov, with Putin since Dec. 2011, for Anton Vaino, 44, as Putin seeks younger blood.  Vaino has been deputy chief-of-staff since May 2012.

As one Russian expert, Igor Bunin, told Bloomberg, “Putin is czar so he needs a team of younger people that are 100 percent his, that haven’t had any authority in their lives other than him.  Ivanov (63) knows not only Putin but knew Leonid Brezhnev as well and is a broad-minded person.  And this created some discomfort for Putin.”

In 2007, Ivanov was seen as a potential successor to Putin.

Afghanistan: I’ve been a longtime fan of Abdullah Abdullah, the country’s current ‘chief executive,’ though I admit to not following the politics of this place closely recently.  Abdullah lost out to President Ashraf Ghani back in 2014 in a sham election; Ghani then bringing Abdullah into a power-sharing arrangement.  It worked initially.

But Thursday, Abdullah angrily denounced Ghani as unfit to govern, Abdullah saying he had struggled to achieve much progress with Ghani during the two years of their government on the issue of electoral reform.

Abdullah was also to have an equal say in government appointments, but Ghani, according to Abdullah, has been making decisions unilaterally and has failed to consult with him, one of the main conditions behind the power sharing arrangement.

Unless Ghani makes amends quickly, this could be disastrous for the Afghan people, as in a civil war, both having tribal power bases, with the Taliban in the middle of things.

Pakistan: A faction of the Pakistani Taliban took credit for a horrific suicide bombing at a hospital in the city of Quetta that killed at least 70.  The attacker targeted a crowd that had gathered as the body of a prominent lawyer, murdered earlier in the day, was being brought in.  Lawyers and journalists were among the victims.

This same Taliban faction was responsible for the suicide bombing of a park during Easter celebrations last year that also killed over 70.

China: David Feith / Wall Street Journal

“Beijing has a consistent explanation for the rising tensions in the South China Sea: It’s America’s fault. As Chinese leaders tell it, their country is the victim of a U.S. bullying campaign designed to keep China down by uniting Asian states against it.  For proof they cite episodes such as the recent United Nations arbitration case filed by the Philippines and cheered by the U.S., Japan, Vietnam and others, which ended last month in a rebuke of China’s aggressive maritime claims and practices, including building artificial islands in international waters and harassing foreign ships.

“An arch villain in China’s narrative is Adm. Harry Harris, the commander of U.S. military forces in the Pacific, who last year had the gumption to warn that Beijing is building a ‘Great Wall of Sand’ in the South China Sea.  The four-star former reconnaissance flight officer also happens to be the son of an American father and a Japanese mother, a fact oft-noted by Chinese state media as proof of malign intent.  ‘To understand the American’s sudden upgraded offensive in the South China Sea,’ Xinhua has said, ‘it is simply impossible to ignore Admiral Harris’ blood, background, political inclination and values.’

“Such racial innuendo is merely one illustration of China’s harsh anti-American propaganda. But in his first interview since last month’s landmark U.N. arbitration verdict, the 60-year-old admiral is consistently conciliatory, taking no victory lap and finding the bright side of several trouble spots.  As the Obama era winds down, top U.S. leaders are still holding out hope that China will mellow as it rises and integrate peacefully into the global order....

“ ‘It’s on China not to be isolated,’ says Adm. Harris.  ‘It’s on them to conduct themselves in ways that aren’t threatening, that aren’t bullying, that aren’t heavy-handed with smaller countries.’

“Which raises a basic question: At what point is it prudent to conclude that China is committed to the path of bullying and revanchism?  After all, its top diplomat boasted in 2010 that ‘China is a big country and other countries are small countries, and that’s just a fact,’ and its posture has hardened since.”

On the topic of South Korea installing a U.S. missile defense shield that I discussed last week, THAAD (Terminal High Altitude Area Defense), the Sydney Morning Herald’s Peter Hartcher notes some of the following:

“(Since South Korea President Park Geun-hye) committed South Korea to installing the system, effective in the second half of next year, China has reacted furiously.  Its ambassador to Seoul said that the relationship between the two countries could be ‘destroyed in an instant’ if it went ahead with THAAD.  China’s foreign affairs minister Wang Yi said that ‘we will not accept why they made a deployment exceeding the need.’  In other words, China demands to be the arbiter of South Korea’s defense needs.

“In truth, China is worried that if South Korea has THAAD, it will make it immune not only to North Korean missiles but also to the coercive possibility of Chinese missiles. So when (North Korea’s) Kim fired his missiles last Wednesday [Aug. 3], what did China do?

“Beijing not only failed to criticize his destabilizing behavior, it also intervened at an emergency meeting of the U.N. Security Council to prevent criticism of Kim for breaching a U.N. Security Council resolution.  At the same time, Beijing last week started to punish South Korea for defying China.

“In staccato, planned appearances in China by South Korean actors and singers were abruptly cancelled.  The share price of South Korean entertainment firms fell by 5 to 25 percent on Friday [Aug. 5] in response.  At the same time, planned mass company trips to South Korea for Chinese workers were cancelled, aimed at damaging the South Korean tourist sector.

“These are undeclared Chinese economic sanctions against South Korea for acting in its own defense.  Unfortunately, this is just the latest piece in the emerging picture of China as the great neighborhood bully.

“Beijing is hitting out at countries that defy it – the running tally of countries subject to Chinese bullying now includes the Philippines, Vietnam and Indonesia in the South China Sea, Japan in the East China Sea and South Korea on the Asian landmass.

“North Korea is a deeply troubling rogue state, but we already knew that. The new and disturbing source of regional bullying is a much bigger and more serious power – China.  ‘This  shows China’s true face,’ a South Korean official told me on condition of anonymity.  ‘If it can happen once it can happen again – Koreans will now think twice about future investment in China.’

“This is an emerging pattern that is troubling every capital across the Asia-Pacific and beyond.”

So, friends, read the above and what is another obvious conclusion given what I’ve been writing the past few years in particular.  The likes of Apple don’t stand a chance on the mainland.

Finally, two retired commanders of the People’s Liberation Army are believed to have been taken away for possible ‘violations of party discipline,’ a euphemism for corruption, sources told the South China Morning Post, as the ongoing power shake-up in the PLA under President Xi Jinping continues.

Japan: 82-year-old Emperor Akihito made his second-ever televised address to the public and said he fears age and deteriorating health mean he is finding it difficult to continue in his role.  He wants to abdicate, but didn’t come out and say that since it’s not that easy.

Akihito has been on the throne since the death of his father, Hirohito, in 1989.  If he were to abdicate, it would be the first time a Japanese emperor did so since Emperor Kokaku in 1817.

Current law, though, insists emperors must serve until they die.

Akihito’s eldest son, 56-year-old Crown Prince Naruhito, is first in line, followed by a younger brother.  Women are not allowed to inherit the throne.

Parliament would have to approve any change in the laws to allow Akihito to step down.  85% of the Japanese people say abdication should be allowed.

Thailand: A coordinated wave of explosions hit cities in Thailand on Friday, killing at least four and wounding dozens more, including 10 foreigners in the seaside resort town of Hua Hin.

While there was no initial claim of responsibility, some think the timing and scope suggest they were carried out by opponents of the ruling junta, which last weekend organized a successful referendum on a constitution that critics say will bolster the military’s power for years to come.

Other blasts occurred in Phuket, Trang and Surat Thani.  It seems the bombs were planted in potted plants and then set off by mobile phone.

Philippines: President Rodrigo Duterte acknowledged abuses have occurred in his war on illegal drugs, which has left more than 400 people dead in a month and alarmed rights activists, but refused to back down from a shoot-to-kill order for drug suspects.

Duterte, a real piece of work, also publicly linked more than 150 judges, mayors, lawmakers, police and military personnel to illegal substances Sunday, ordering them to surrender for investigation as he ratcheted up his war on what he calls a “pandemic.”

“All military and police who are attached to these people, I’m giving you 24 hours to report to your mother unit or I will whack you.  I’ll dismiss you from the service,” Duterte said.

Human rights groups and the dominant Roman Catholic Church have expressed outrage at some of the president’s tactics.

“There is no due process in my mouth,” he added.  “You can’t stop me and I’m not afraid even if you say that I can end up in jail.”

He could end up far worse off than that.

Australia: Talk about a debacle, the Australian Bureau of Statistics had to cancel a national census when it was discovered the website used was the victim of an “entirely predictable” event, as Prime Minister Malcolm Turnbull raged.  IBM had received a $10 million contract to host and manage the website, and as Turnbull said, should have been better prepared.

“The denial of service attacks were completely predictable [and] should have been repelled readily.”

Brazil: The Senate voted early on Wednesday to indict President Dilma Rousseff on charges of breaking budget laws and put her on trial in an impeachment process. The vote was 59-21 against the suspended leftist leader.  A two-thirds vote is now required to convict Rousseff.  If so, interim President Michel Temer would serve out the rest of her term through 2018.

So, watching the Olympics, who wants to go to Rio?  There are so many stories getting buried.  Bad ones.  Heck, I had to read in a Chinese paper that their journalists were boarding a bus when a gunfight broke out and six were killed!  [Not any of them, thankfully.]  I didn’t see that anywhere else.  Nope, you can have Rio.  I’ll take Manhattan.

Random Musings

--Trump

Thomas L. Friedman / New York Times

“And that, ladies and gentlemen, is how Israeli Prime Yitzhak Rabin got assassinated.

“His right-wing opponents just kept delegitimizing him as a ‘traitor’ and ‘a Nazi’ for wanting to make peace with the Palestinians and give back part of the Land of Israel.  Of course, all is fair in politics, right?  And they had God on their side, right?  They weren’t actually telling anyone to assassinate Rabin. That would be horrible.

“But there are always people down the line who don’t hear the caveats. They just hear the big message: The man is illegitimate, the man is a threat to the nation, the man is the equivalent of a Nazi war criminal. Well, you know what we do with people like that, don’t you?  We kill them.

“And that’s what the Jewish extremist Yigal Amir did to Rabin. Why not?  He thought he had permission from a whole segment of Israel’s political class.

“In September, I wrote a column warning that Donald Trump’s language toward immigrants could end up inciting just this kind of violence.  I never in my wildest dreams, though, thought he’d actually – in his usual coy, twisted way – suggest that Hillary Clinton was so intent on taking away the Second Amendment right to bear arms that maybe Second Amendment enthusiasts could do something to stop her. Exactly what?  Oh, Trump left that hanging.

“ ‘Hillary wants to abolish, essentially abolish, the Second Amendment,’ Trump said at a rally in Wilmington, N.C., on Tuesday.  ‘By the way, and if she gets to pick her judges, nothing you can do, folks.  Although the Second Amendment people, maybe there is, I don’t know.’....

“What he said was ambiguous – slightly menacing, but with just enough plausible deniability that, of course, he was not suggesting an assassination....

“(Trump) knows what he is doing, and it is so dangerous in today’s world....

“People are playing with fire here, and there is no bigger flamethrower than Donald Trump.  Forget politics; he is a disgusting human being.  His children should be ashamed of him.  I only pray that he is not simply defeated, but that he loses all 50 states so that the message goes out across the land – unambiguously, loud and clear: The likes of you should never come this way again.”

Editorial / Washington Post

“The day after Mr. Trump delivered a relatively restrained speech on economic policy, the candidate once again trampled on Republican hopes that he would suddenly disguise himself as an acceptable politician.

“ ‘You aren’t just responsible for what you say,’ Gen. Michael Hayden, a former CIA director, said in response to Mr. Trump’s remark.  ‘You’re responsible for what people hear.’....

“By seeming to encourage armed insurrection against a Hillary Clinton administration, Mr. Trump has recklessly magnified the danger of his previous claim that the election is being ‘rigged’ against him.

“And encouraging armed resistance against the federal government is not the most worrisome of possible meanings.  Other listeners assumed that Mr. Trump was encouraging supporters to train their weapons on Ms. Clinton herself.

“As is often the case, Mr. Trump was incoherent enough to permit more than one plausible interpretation of his words. If he had not so often celebrated violence and wielded dark innuendo against political opponents, minority groups, journalists and others, it would be easier to give him the benefit of the doubt in this case.

“Unfortunately, a spokesman’s after-the-fact explanation did not clear the bar of plausibility.  ‘Donald Trump was obviously talking about American voters who are passionate about their Second Amendment rights and advocating they use that power at the ballot box,’ the spokesman said.  No; Mr. Trump was talking about what would happen if Ms. Clinton were elected.

“If Mr. Trump were not a major-party presidential nominee, his comment Tuesday might have earned him a stern visit from the Secret Service.  Instead, it will simply be added to the ever-growing list of Mr. Trump’s disqualifiers – and to the ever-growing burden of Republican leaders who continue to insist that their candidate is suitable to serve.”

Joe Scarborough / Washington Post

“The Muslim ban, the David Duke denial, the ‘Mexican’ judge flap, the draft dodger denigrating John McCain’s military service, the son of privilege attacking an immigrant Gold Star mother and the constant revisionism and lying about past political positions taken are but a few of the lowlights that have punctuated Donald Trump’s chaotic chase for the presidency.

“Any one of these offenses would have disqualified any other candidate for president.  But the Republican nominee remained competitive against a historically weak Democratic nominee on the promise of bringing radical change and dramatic disruption to Washington.

“That appears to be changing.  Post-convention polls show Trump falling behind by double digits both nationally and in must-win swing states like Pennsylvania, New Hampshire and Virginia.

“And the political ride will only get rockier for Trump in the coming days after he suggested that one way to keep a conservative Supreme Court after Hillary Clinton got elected would be to assassinate her or federal judges.  Trump and his supporters have been scrambling wildly all day to explain away the inexplicable, but they can stop wasting their time.  The GOP nominee was clearly suggesting that some of the ‘Second Amendment people’ among his supporters could kill his Democratic opponent were she to be elected.

“The presidential candidate that House Speaker Paul Ryan endorsed tried to explain away his suggestion of an assassination by telling Sean Hannity his comments were meant to unite supporters before the election.  It’s too bad for Trump and his supporters that his comments related to what Hillary Clinton would do after being elected and nominating Supreme Court justices that gun owners would not like....

“Paul Ryan and every Republican leader should revoke their endorsement of Donald Trump.  At this point, what else could Trump do that would be worse than implying the positive impact of a political assassination?

“The Republican Party needs to start examining quickly their options for removing the Republican nominee.

“A bloody line has been crossed that cannot be ignored.  At long last, Donald Trump has left the Republican Party few options but to act decisively and get this political train wreck off the tracks before something terrible happens.”

David Brooks / New York Times

“Trump insults Paul Ryan, undermines NATO and raises the specter of nuclear war. Advisers can’t control Trump’s brain because Trump can’t control it himself.

“He also cannot be contained because he lacks the inner equipment that makes decent behavior possible.  So many of our daily social interactions depend on a basic capacity for empathy. But Trump displays an absence of this quality.

“He looks at the grieving mother of a war hero and is unable to recognize her pain.  He hears a crying baby and is unable to recognize the infant’s emotion or the mother’s discomfort. He is told of women being sexually harassed at Fox News and is unable to recognize their trauma.

“The same blindness that makes him impervious to global outrage makes it impossible for him to make empathetic connection.  Fear is his only bond.

“Some people compare Trump to the great authoritarians of history, but that’s wrong. They were generally disciplined men with grandiose plans.  Trump is underdeveloped and unregulated.

“He is a slave to his own pride, compelled by a childlike impulse to lash out at anything that threatens his fragile identity.  He appears to have no ability to experience reverence, which is the foundation for any capacity to admire or serve anything bigger than self, to want to learn about anything beyond self, to want to know and deeply honor the people around you.”

--Among the Republicans who refuse to support or have outright repudiated Donald Trump are Senators Susan Collins (Maine), Jeff Flake (Ariz.), Lindsey Graham (S.C.), Dean Heller (Nev.), Mark Kirk (Ill.), and Ben Sasse (Neb.).

Sen. Susan Collins / Washington Post

“I will not be voting for Donald Trump for president.  This is not a decision I make lightly, for I am a lifelong Republican.  But Donald Trump does not reflect historical Republican values nor the inclusive approach to governing that is critical to healing the divisions in our country.

“When the primary season started, it soon became apparent that, much like Sen. Bernie Sanders, Mr. Trump was connecting with many Americans who felt that their voices were not being heard in Washington and who were tired of political correctness.  But rejecting the conventions of political correctness is different from showing complete disregard for common decency.  Mr. Trump did not stop with shedding the stilted campaign dialogue that often frustrates voters. Instead, he opted for a constant stream of denigrating comments, including demeaning Sen. John McCain’s heroic military service and repeatedly insulting Fox News host Megyn Kelly.

“With the passage of time, I have become increasingly dismayed by his constant stream of cruel comments and his inability to admit error or apologize.  But it was his attacks directed at people who could not respond on an equal footing – either because they do not share his power or stature or because professional responsibility precluded them from engaging at such a level – that revealed Mr. Trump as unworthy of being our president.

“My conclusion about Mr. Trump’s unsuitability for office is based on his disregard for the precept of treating others with respect, an idea that should transcend politics.  Instead, he opts to mock the vulnerable and inflame prejudices by attacking ethnic and religious minorities....

“I am also deeply concerned that Mr. Trump’s lack of self-restraint and his barrage of ill-informed comments would make an already perilous world even more so.  It is reckless for a presidential candidate to publicly raise doubts about honoring treaty commitments with our allies.  Mr. Trump’s tendency to lash out when challenged further escalates the possibility of disputes spinning dangerously out of control.

“I had hoped that we would see a ‘new’ Donald Trump as a general-election candidate – one who would focus on jobs and the economy, tone down his rhetoric, develop more thoughtful policies and, yes, apologize for ill-tempered rants.  But the unpleasant reality that I have had to accept is that there will be no ‘new’ Donald Trump, just the same candidate who will slash and burn and trample anything and anyone he perceives as being in his way or an easy scapegoat.  Regrettably, his essential character appears to be fixed, and he seems incapable of change or growth.”

--Fifty former national security officials, all of whom served under Republican presidents from Richard Nixon to George W. Bush, signed a letter calling Donald Trump unqualified to be president while warning that, if elected, “he would be the most reckless President in American history.”

The letter added that Trump “lacks the character, values and experience” to be president and that he would be dangerous “and would put at risk our country’s national security and well-being....

“He lacks self-control and acts impetuously.  He cannot tolerate personal criticism.  He has alarmed our closest allies with his erratic behavior. All of these are dangerous qualities in an individual who aspires to be President and Commander-in-Chief, with command of the U.S. nuclear arsenal.”

Among the signatories were Michael Chertoff, Tom Ridge, Michael Hayden, John Negroponte and Robert Zoellick.

--Trump unveiled his economic plan on Monday, promising the biggest “tax revolution” since Ronald Reagan, pledging to cut taxes across the board and change the laws to stem the tide of U.S. corporations moving their headquarters overseas.

Trump promised a top corporate tax rate of 15%, down from the current maximum of 35 percent; plus a one-time levy of 10% on the $trillions in U.S. corporate profits parked overseas.  He also promised to “cut regulations massively.”

The bulk of the plan was fairly Republican boilerplate, which was fine, but then he shot off his mouth on other topics and, once again, message lost.

--House Speaker Ryan handily won his Republican primary on Tuesday against Paul Nehlen, winning over 80% of the vote.

--Clinton

Editorial / Wall Street Journal

“Funny how the word ‘email’ continues to haunt Hillary Clinton even as she dismisses every new revelation as ‘old news.’  The latest new-old news comes in the release by Judicial Watch of 44 emails from her personal server that Mrs. Clinton failed to turn over in the batch she told the State Department included everything that was work-related. The emails paint a picture of top Clinton aides at State eager to do favors for Clinton Foundation donors.

“At the heart of these documents is the glaring conflict of interest that Mrs. Clinton carried into the State Department – and then spread to those around her.  Only months after the Clinton Foundation agreed to ethics protocols designed to keep Mrs. Clinton’s department from mixing State with foundation business, these new emails show her two closest aides – Huma Abedin and Cheryl Mills – doing the bidding of Clinton Foundation executive Doug Band.

“On April 22, 2009, Mr. Band emailed Ms. Abedin and Ms. Mills to say it’s ‘important to take care of [name redacted].  The subject line reads: ‘Fw: A favor.’  Far from suggesting the favor was inappropriate, Ms. Abedin responded that the person was on State’s ‘radar,’ and that ‘personnel has been sending him options.’  Shouldn’t Americans know who this person was and why he was so important to Mr. Band?

“The ties among Mrs. Clinton, the Clinton Foundation and State would become more incestuous. Two years after Mr. Band sent this email, he founded Teneo, a consulting firm.  Ms. Abedin would soon draw a paycheck from Teneo at the same time she was also working for both State and the Clinton Foundation.

“Another 2009 email has Mr. Band telling Ms. Abedin and Ms. Mills that ‘We need Gilbert chagoury [sic] to speak to the substance person re lebanon [sic].’  Within hours, Ms. Abedin replies that the ‘substance person’ is Jeff Feltman – the Assistant Secretary of State for Near Eastern Affairs and former U.S. ambassador to Lebanon.  A follow up email from Mr. Band urges her to call him ‘now.’

“The email doesn’t spell out what Mr. Chagoury wanted from the ambassador, but let your imagination run. Mr. Chagoury is a Lebanese-Nigerian whose family businesses thrived under Gen. Sani Abacha, the military dictator who ruled Nigeria for years.  According to a 2001 British court decision, the Nigerian government agreed not to prosecute Mr. Chagoury and unfreeze his Swiss bank accounts if he paid back millions it claimed had been stolen.

“In the 1990s, after Mr. Chagrouy made donations to a progressive nonprofit group, he was invited to a White House holiday dinner with President Clinton.  He also had a meeting on U.S.-Nigeria relations with high-level Clinton Administration officials.

"Turns out – non-surprise – Mr. Chagoury has donated at least $1 million to the Clinton Foundation while pledging $1 billion to the Clinton Global Initiative.  In 2003 Mr. Chagoury paid Mr. Clinton $100,000 for a speech in the Caribbean.  The question is whose interests was State serving when it tried to hook him up with our ambassador to Lebanon?....

“The Clinton campaign believes the media are so committed to defeating Donald Trump that they’ll play down this sleazy business – and maybe that’s right.  But Judicial Watch’s Tom Fitton says more emails are coming from his freedom-of-information litigation.  And Julian Assange at WikiLeaks – which made public the hacked Democratic National Committee emails showing how the DNC favored Mrs. Clinton over rival Bernie Sanders – says he’ll release more emails involving the Clinton Foundation.”

Separately, Julian Hattem / The Hill:

“In another message...the chairman of Morgan Stanley Asia sent Clinton a copy of testimony he was due to provide to Congress, and asked to help with her work ‘in any way I can.’  The next day, Clinton asked Abedin about ‘connecting’ with him in Beijing, either at the ‘embassy or other event.’....

“ ‘In the law, you know, one is allowed to draw an adverse inference when a witness or a party destroys evidence. And given some of the corruption we have seen in both the Clinton Foundation and in the government under Hillary Clinton, I think it’s reasonable for Americans to draw an adverse inference,’ Sen. Tom Cotton (R-Ark.) said on Fox News on Tuesday.

“ ‘She set up an email server specifically to avoid public scrutiny and that the controversy between her email on one hand, and the Clinton Foundation on the other, are not two distinct controversies.

“ ‘Those are the same controversy.’”

In the above-mentioned Bloomberg Politics poll, more than half of likely voters say they are bothered a lot by the Clinton foundation accepting money from foreign governments when she was secretary of state, while a quarter of likely voters said the issue didn’t bother them at all.

Michael Gerson / Washington Post

“One of the most unintentionally revealing moments of Hillary Clinton’s campaign so far came during her recent, unconvincing explanation of the email affair: ‘I may have short-circuited it and for that I, ah, you know, will try to clarify.’

“Most of the resulting ridicule has focused on the ‘short-circuited’ portion of the statement, which seems a particularly gentle euphemism for prevarication.  But it is the latter portion of her quote that exposes a serious political disability: an ingrained, almost automatic recourse to guile.

“The moment really should be watched in order to be properly appreciated.  Clinton launches her sentence with ‘I may have short-circuited it and for that...’  If this were an SAT question, the natural completion would be ‘...and for that I sincerely apologize.’  Clinton looks as though she is headed in that direction, but stops herself.  The result: ‘...and for that I, ah, you know, will try to clarify.’

“Then she proceeds with the opposite of clarification: ‘I have acknowledged repeatedly that using two email accounts was a mistake.  And I take responsibility for that.  But I do think...having him [FBI Director James B. Comey] say that my answers to the FBI were truthful and then, I should quickly add, what I said was consistent with what I had said publicly.  And that’s really sort of, in my view, trying to tie both ends together.’

“The complexity of Clintonian knots is one reason that only 34 percent of Americans in a recent poll judge her ‘honest and trustworthy.’  In the email scandal, we have seen deceptions used to cover deceptions; then a minimalist apology, filled with caveats, which themselves must be revised; and then a fuller apology, long after it appears cynical and forced.

“It is amazing how many problems are caused, in politics and in life, by the inability to sincerely apologize....

“When Clinton mouths the words ‘I am sorry’ and surrounds them with a thick cloud of self-justification, we are convinced only that she regrets being caught.  Rather than making her look vulnerable and human, it makes her seem devious and supremely political. Does anyone really believe the Clinton way of politics has changed?

“This is the American emergency: an acute shortage of public integrity at the highest level of our politics.”

--Clinton released her tax return for 2015 and it showed she and her husband, Bubba, earned adjusted gross income of $10.6 million in 2015 and paid $3.6 million in federal income taxes, or an effective tax rate of 34.2 percent, while donating 9.8 percent of their adjusted gross to charity – including a $1 million gift to the Clinton Family Foundation, which no doubt goes into Chelsea’s pockets, mused the editor.

So Mrs. Clinton is once again trying to goad Donald Trump into releasing his returns, though he shows zero signs of doing so prior to the election.

Previously, the Clintons released their returns for 2007 through 2014 and they showed the couple made $139.1 million – much of it from paid speeches.

The $10 million in income for 2015, though, $6 million for Bill, $4 million for her, may make it a tad bit harder for them to appeal to the rest of us schmucks, especially seeing as how neither did anything of value for their coin.

--Kevin Lilley / Military Times

“Are younger service members – so-called ‘millennials,’ born in 1980 or later – soft?

“Are they too reliant on technology?  Are they buried so deep in social media that face-to-face communication becomes impossible?  Are they too busy questioning orders to follow them?

“It’s not uncommon to hear such complaints from members of the Old Guard, some of whom are quick to stereotype the new breed as too desperate for praise and too ill-disciplined.

“Across the services, leaders certainly are scrambling to adapt to the millennial mindset, even as the generation is taking over.

“—The Army is looking to expand the role of drill sergeants and insert them back into Advanced Individual Training.  This means new soldiers will have more time with tough-talking soldiers, beyond basic.  Why?

“ ‘The problem that we do have is that right now the generation we have coming in is not as disciplined as we would like them to be,’ said Command Sgt. Maj. Michael Gragg, the senior enlisted soldier for the Center for Initial Military Training, earlier this year.  ‘So we have to provide them with discipline over a longer period of time.’....

“—While recruiting in the short term has not suffered, leaders have warned of a looming crisis.

“In the 1990s, almost half of young Americans had parents with some military experience.  Today that has dropped to about 15 percent, said Stephanie Miller, the Pentagon’s director of accessions policy, in an interview earlier this year.

“This military-civilian disconnect does create this particular challenge for us,’ Miller said.

“Social media also is creating new complexities for recruiters.  Years ago, a successful strategy entailed some television ads and sending recruiters out to high schools for face-to-face conversations.

“Now, that’s changed as prospective recruits spend endless hours connected to smartphones.

“ ‘It is difficult to be able to get their attention in a world where social media and so many other different types of activities are pulling at their attention,’ Miller said.”

Separately, an editorial in Military Times (same as Army Times, which is where I found this), notes in part:

“Those darn millennials.

“You listened to your elders and showed them respect, but these youngsters seem to constantly get in your grill and challenge you.

“While you busted your butt and humbly moved up the ranks, these troops demand praise and expect to be rewarded at every turn.  They want to be honored just because they show up, which just makes you want to throw up....

“Here’s the deal with millennials. Yes, they incessantly ask, ‘Why?’  But, like you, they recognize systemic problems in the military machine, like its rigidity and bloat.  But unlike the generations before them, they’re not wired to quietly endure a broken system – they want to fix it.  Properly supervised, that can be turned to a leader’s advantage.”

--Hugh Naylor of the Washington Post had a story on the extreme heat in the Middle East this summer.

“Parts of the United Arab Emirates and Iran experienced a heat index that soared to 140 degrees in July, and Jeddah, Saudi Arabia, recorded an all-time high temperature of nearly 126 degrees.  Southern Morocco’s relatively cooler climate suddenly sizzled last month, with temperatures surging to highs between 109 and 116 degrees....

“Temperatures in Kuwait and Iraq startled observers.  On July 22, the mercury climbed to 129 degrees in the southern Iraqi city of Basra.  A day earlier, it reached 129.2 in Mitribah, Kuwait.  If confirmed by the World Meteorological Organization, the two temperatures would be the hottest ever recorded in the Eastern Hemisphere.

“Stepping outside is like ‘walking into a fire,’ said Zainab Guman, a 26-year-old university student who lives in Basra.  ‘It’s like everything on your body – your skin, your eyes, your nose – starts to burn,’ she said....

“Climate scientists say this shouldn’t be surprising.

“A study published by the journal Nature Climate Change in October predicted that heat waves in parts of the Persian Gulf could threaten human survival toward the end of the century....

“The region’s governments are generally not prepared to deal with rapidly growing populations and climactic shifts....

“The United Nations predicts that the combined population of 22 Arab countries will grow from about 400 million to nearly 600 million by 2050.”

This will place tremendous stresses on countries that already face acute water crises, for example.

--Kathleen Parker / Washington Post, as part of her essay on HBO’s John Oliver and his defense of newspapers, had this hilarious anecdote of Sam Zell (especially if you know who the irascible Zell is).

“(Zell), erstwhile owner of the Tribune Co., summed up the sad trajectory of the nation’s interests and, perhaps, our future while speaking to Orlando Sentinel staffers in 2008.  When he said he wanted to increase revenues by giving readers what they want, a female voice objected, ‘What readers want are puppy dogs.’  Zell exploded, calling her comment the sort of ‘journalistic arrogance of deciding that puppies don’t count... Hopefully we get to the point where our revenue is so significant that we can do puppies and Iraq, okay?  [Expletive] you.’

“Yes, he said that.

“Moral of the story: If you don’t subscribe to a newspaper, you don’t get to complain about the sorry state of journalism – and puppies you shall have.”

--Some of you no doubt saw the “60 Minutes” story last week on the heroin epidemic in the country. In the following days I saw a Wall Street Journal story that started out:

“Fatal drug overdoses across New York City jumped 66% from 2010 to 2015, with heroin’s deadly role growing year by year, according to a study released Tuesday by the city Department of Health and Mental Hygiene.

“In 2015, 937 New Yorkers unintentionally overdosed compared with 541 in 2010.  Heroin was involved in 556, or 59%, of the fatal overdoses in 2015.”

Here in New Jersey, Hunterdon County is a beautiful spot in the state, very rural, and the county prosecutor announced this week that there were three fatal heroin overdoses between July 26 and Aug. 3.  Two men age 42 and 49, and a 26-year-old woman.

So far in Hunterdon, “28 overdoses have been reported to police to date this year, compared to 40 for all of 2015.  Of those, nine were fatal compared to 12 overdose fatalities in all of 2015 and eight in 2014.”  [NJ.com]

It’s just very sad and a true crisis.

--Lastly, I include this tragic story in the hope it may save one of your loved ones lives someday.  Last Saturday in Rouen, France, a fast-moving fire in the basement of a bar killed 13 people.  Do you know how it started?  It was a birthday party and the person holding the lit cake tripped as he/she was carrying it and the candles set soundproofing tiles on fire that quickly exploded into an inferno.

My point is, in any small nightclub space, please tell your kids to check for exits as soon as they enter the room. 

In this case, the initial reports said it might have been a possible gas explosion; another reason to ‘wait 24 hours.’  Those who escaped then told the truth.  The space was far too packed, illegally.

So, on that cheery note....

---

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

God bless America.

---

Gold $1341...unchanged on the week, a rarity.
Oil $44.69...best performance since April, up $2.71.

Returns for the week 8/8-8/12

Dow Jones  +0.2%  [18576]
S&P 500  +0.05%  [2184]
S&P MidCap  -0.3%
Russell 2000  -1.5%
Nasdaq  +0.2%  [5232...new high]

Returns for the period 1/1/16-8/12/16

Dow Jones  +6.6%
S&P 500  +6.9% 
S&P MidCap  +11.4%
Russell 2000  +8.3%
Nasdaq  +4.5% 

Bulls  54.3
Bears  20.9  [Source: Investors Intelligence]

Have a great week.  Stay cool this weekend if you live in the northeast.  Our thoughts and prayers to those on the Gulf Coast dealing with the awful flooding.

Brian Trumbore



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Week in Review

08/13/2016

For the week 8/8-8/12

[Posted 11:30 PM ET, Friday]

Note: StocksandNews has significant ongoing costs.  Your support is appreciated.  Please click on the gofundme link or send a check to PO Box 990, New Providence, NJ 07974. Special thanks to Tim L. this week.

Edition 905

The World

Donald Trump was supposed to stay on message, an economic one this week, but we know he isn’t capable of this so he talked about Clinton and her eliminating the Second Amendment, as I describe below, though Clinton has never said she wants to do so and even if she did, does Trump know what’s really involved?  Like not just approval from two-thirds of Congress, but also approval by three-fourths of the nation’s state legislatures?  I’m guessing no.

And then he talked about Obama being “the founder of ISIS,” and he stayed with the theme, when if he had half a brain he’d keep hammering home that, yes, ISIS was formed under Obama’s watch.  That’s enough. 

[And can we stop this revisionist history that ISIS came from al-Qaeda in Iraq and thus it’s George W. Bush who is responsible?  No.  Al-Qaeda in Iraq was destroyed.  Yes, some old members, sitting in the dirt and sand, wondering what they would do with the rest of their lives, saw an opportunity when the U.S. took its forces out of Iraq, against the generals’ advice, shortly after Obama came into office.  But if the U.S. had kept a troop presence there, there is no ISIS.  And as for the “status of forces” agreement that we were having a problem with with Baghdad’s leadership, it’s Obama’s responsibility he didn’t seek to negotiate on it because this went against his campaign promise of withdrawing all the troops and now he has to deal with the judgment of history, which won’t be kind.  It’s all in these pages, folks.]

But while Trump was once again center-stage (when he should have stepped aside and let Hillary Clinton take her deserved fire over further revelations concerning emails and the Clinton Foundation), and as his poll numbers begin to plummet in key swing states, and as he seems to increasingly comment as if he knows he’s not going to win, which should drive his supporters nuts, the world around us gets scarier...read Russia and China.

As I detail below, Vladimir Putin has a history of acting around Olympics time and it appears today is no exception, witness his maneuvering in and around Ukraine, where he is ginning up a new crisis, as well as his increasing involvement in Syria.

Speaking of which, while I cover both Ukraine and Syria in great detail below (and the issues concerning China), I can’t help but note a letter from some of the last doctors remaining in the besieged Syrian city of Aleppo, to President Obama this week, urging him to intervene.

“We have seen no effort on behalf of the United States to lift the siege or even use its influence to push the parties to protect civilians,” the doctors wrote in the letter obtained by ABC News.  “Continued U.S. inaction to protect the civilians of Syria means that our plight is being willfully tolerated by those in the international corridors of power. The burden of responsibility for the crimes of the Syrian government and its Russian ally must therefore be shared by those, including the United States, who allow them to continue.”

A medical facility is attacked in Syria every 17 hours.  Two weeks ago, four newborn babies gasping for air suffocated to death after a blast cut the oxygen supply to their incubators, according to the doctors.

“At this rate, our medical services in Aleppo could be completely destroyed in a month, leaving 300,000 people to die,” the doctors wrote.

“Young children are sometimes brought into our emergency rooms so badly injured that we have to prioritize those with better chances, or simply don’t have the equipment to help them,” they wrote.  “We do not need tears or sympathy or even prayers, we need your action.  Prove that you are the friend of Syrians, not the friend of our killers.”

You wonder why I’ve written about August 2012 so often?  The doctors’ letter provides one answer.

This is on you, President Obama.  Summer of 2012 you were: “Bin Laden is dead.  GM is alive.”  You couldn’t be bothered with Turkish President Erdogan’s calls for a no-fly zone then that would have prevented so much of the ensuing carnage, let alone the rise of ISIS and the knock-on effects on Europe and around the world.  I will keep telling this story until I die.

President Obama, these doctors are telling you what I’ve known all along.  You have the blood of hundreds of thousands of innocents on your hands.  Hillary Clinton knows this.  She had a hand in it too.  Notice she doesn’t talk about any successes in Syria in her stump speeches.

Just don’t ask Donald Trump to begin to understand.

Election 2016 / Polls

--A Wall Street Journal/NBC News national poll of registered voters has Hillary Clinton leading Donald Trump 47-38.  Last month’s poll had it 46-41, Clinton.

A Washington Post/ABC News survey has Clinton with a 50-42 lead among registered voters, double the 4-point advantage she had on the eve of the Republican convention in mid-July.

In a four-way race, Clinton leads Trump 45-37, with Gary Johnson at 8% and Jill Stein at 4%.* 

A Bloomberg Politics national poll has Clinton with a six-point lead over Trump, 50-44.  She wins 94% of the Democratic vote, while Trump gets 87% of the Republican vote.

In a four-person race in this one, Clinton leads Trump 44-40, with Johnson at 9% and Stein 4%.

In a two-way race, Trump does best among white men with no college degree (76%), while Clinton does best with non-whites (66%), those in the Northeast (65%), and those under 35 (61%).

56% of likely voters say the U.S. is in a dark and dangerous place, a figure that includes 87% of Trump supporters.

But the Bloomberg survey also shows that among those younger than 35, just 46% say they’ll definitely vote in November; down from 60% in June.

A Reuters/Ipsos poll that had Clinton with only a 3-point lead late last week now shows her 7 points ahead, 42-35.

*As you know, to get on the first presidential debate stage, Sept. 26 at Hofstra University, Gary Johnson and Jill Stein need to be polling 15% nationally, which will be determined by averaging five surveys leading up to it, so really by early September.  At least that appears to be the deal.

Johnson is at around 9%, when taking a national average.  Frankly, I wish Stein would throw her support to the Libertarians, but that isn’t likely.  She has an incentive to get to 5% in November, at which point her Green Party would receive $millions in federal funds for 2020.

It will be a real shame if Johnson and Weld are not on the debate stage.  Weld, in particular, could kick some butt.  He still has major game.

But I don’t see it happening.

Or some of us could hold Trump and Clinton hostage until they allow Johnson in.  [Just kidding, Mr. Secret Service!]

--In Battleground state polling, a Wall Street Journal/NBC News/Marist survey has Clinton up 11 in Pennsylvania, while she has a 4-point lead in Iowa, and 5 points in Ohio. 

In a four-way contest, with Johnson and Stein, Clinton and Trump are tied in Iowa and her lead narrows slightly in Ohio and Pennsylvania.

A Quinnipiac University poll of battleground states has Clinton up 52-42 in Pennsylvania, 49-45 in Ohio and 46-45 in Florida.

When you add Gary Johnson and Jill Stein to the mix in these three, Johnson receives 7-8% and Stein gets 3% in each.

A Suffolk University poll in Iowa has Trump leading Clinton 41-40.

In a CBS Battleground tracker poll, Clinton opened up a 49-37 lead in Virginia, while Trump leads in Arizona 44-42 (which is too slight historically for a Republican).  In Nevada, Clinton leads 43-41

An Atlanta Journal Constitution survey has Clinton with a 7-point lead in Georgia.

A new series from NBC/Wall Street Journal/Marist released Friday had Clinton with big leads in the following: Colorado 46-32; Virginia 46-33; North Carolina 48-39; and Florida a little narrower at 44-39.

Separately, a Bloomberg Politics poll on Wednesday showed that 61% of voters had become less impressed by Trump’s business expertise over the course of the campaign, while only 31% had become more impressed.

Norm Ornstein of the American Enterprise Institute said the question of whether to repudiate Trump was a growing dilemma for Republican lawmakers.  “You have a lot of people who are scared to death about embracing him in a way that will alienate a slew of voters, or repudiating him in a way which will enrage his supporters,” Ornstein said.  [Financial Times]

I have lots on this week’s campaigning down below, but on Wednesday in Sunrise, Fla., Trump said President Obama was the founder of ISIS, and Hillary Clinton its co-founder. 

“In many respects, you know, they honor President Obama.  He’s the founder of ISIS.  He’s the founder of ISIS.  He’s the founder.  He founded ISIS,” Trump said.

“I would say the co-founder would be crooked Hillary Clinton,” he said Wednesday.

Trump also said the media were “disgusting” and “dishonest” for its coverage of his comments about Clinton and the Second Amendment, which I cover further below.

Monday he tweeted: “Many people are saying that the Iranians killed the scientist who helped the U.S. because of Hillary Clinton’s hacked emails.”

But the more he attacks the media, the more his most ardent supporters love him.  [It’s just that he has lost people like me.]

Hillary Clinton also had a rough week, with the disclosure of more emails showing contacts between the State Department and the Clinton Foundation while she was secretary of State.

Both candidates had interesting visitors in the background of their Florida campaign appearances.  The father of Pulse nightclub shooter Omar Mateen was seen sitting behind Clinton in Orlando, while disgraced Florida congressman Mark Foley sat behind Trump in Sunrise.  [Foley resigned from his House seat after allegations he had sent sexually suggestive emails to Congressional pages.]

Back to Trump, a Reuters/Ipsos poll notes that among registered voters, 44% want Trump to drop out.  19% of registered Republicans say he should, 70% believe he should stay in and 10% say they ‘don’t know.’

In the same above poll, 53% have an unfavorable view of Clinton, while 63% have an unfavorable view of Trump.

Wall Street

It was a slow week for economic news, though Friday provided two disappointing items that halted the Street’s record run for the Dow Jones and S&P 500, barely.  July retail sales came in unchanged, when a 0.4% gain had been expected, though June was revised up to a strong 0.8%, so average the two out if you want.  But ex-autos, the July number was -0.3% when +0.2% was forecast.  Anyway, not good and this led to second thoughts on some of the Big Box retailers who had rallied strongly during the week on the heels of not necessarily great earnings, but more the thought that they had finally bottomed, i.e., they beat a very low bar.

The other item was a report on July producer prices, which fell 0.4%, -0.3% on core, so year-over-year, the PPI is -0.2%, +0.7% ex-food and energy.  This isn’t good, sports fans.  We need some inflation.

Thursday, the Dow Jones, S&P 500 and Nasdaq all hit new highs the same day, the first time that happened since Dec. 31, 1999.

Of course back then Wall Street was about to top out and start a serious slide/crash as the tech bubble burst.

This time, we’re all told not to worry, even with stocks trading at historically frothy levels (to say the least), a trailing P/E on the S&P in excess of 25, and it’s not like the earnings outlook is that rosy.  What you’ll hear a lot of, though, is that the year-over-year comparisons will be easier over the coming quarters.

And you’re hearing a lot about stocks being the only game in town in a global era of historically low, in many cases, negative, interest rates.  So, what the hell...party on boys.  The Federal Reserve is not likely to move until December at the earliest and barring an external shock, the downside seems limited.

It’s just that the potential for an external shock is as high as it has ever been!

Europe

A flash estimate of growth in the Eurozone for the second quarter has it up 0.3%, up 1.6% year-over-year, as forecast.  Growth was 0.6% in the first quarter.

Germany’s growth rate slipped from 0.7% in the first quarter to 0.4% in the second, but this was double consensus and the year-over-year GDP pace of 3.1% is the strongest in five years, though this won’t hold up with weaker investment and Brexit looming.

Italy’s economy stagnated in the second quarter; a big blow to Prime Minister Matteo Renzi, whose government has been struggling to revive the country’s faltering recovery.  Italy now has a yoy growth rate of just 0.7%, while its debt pile rose to 2.25tr. euros.

Renzi is also having to deal with a banking crisis, while trying to maintain voter support ahead of a critical referendum in November on constitutional reform.  He has said he will resign if he loses the vote.

Portugal also disappointed with growth of just 0.2%, 0.8% yoy.

Earlier, France and Austria announced their economies ground to a half in Q2.

But Greece managed to exit its most recent recession with Q2 growth of 0.3%, though it is down 0.1% on an annual basis, but much stronger than the -1.8% fall predicted by economists.  Greece must have growth to reduce its debt load, now 180% of GDP.

Non-euro U.K. previously reported solid pre-Brexit growth of 0.6%.

But the Bank of England had an issue this week with its new quantitative easing, bond-buying program when it couldn’t find enough government bonds (gilts) to buy because a lot of institutions didn’t want to sell their paper; pension funds, for example, having to match future liabilities by holding the paper and they have to deal with growing deficits as yields fall, an issue that I’ve been pounding the table on but is now truly becoming a crisis.

The BoE later said it would be able to find the volume of bonds it planned on buying and with the European Central Bank and the Bank of Japan continuing to buy large amounts of sovereign paper, global benchmark yields keep hitting new, historic lows, like the U.K. 10-year finishing the week with a yield of 0.52%.  Pre-Brexit it was 1.37%.

Spain’s 10-year fell below 1.00% for the first time and is now at 0.92%, even though it’s been without a formal government all year!*  Italy, despite its humongous debt, banking crisis, and government uncertainty, has a 10-year at 1.04%.  France is 0.11%, and the German Bund is -0.11%.

But what have these low yields accomplished?  Not a heck of a lot, as the above GDP figures show you.  Andrew Sheets of Morgan Stanley told the Wall Street Journal, “People only borrow and spend more when they are confident about the future.  But by going negative, into uncharted territory, the policy actually undermines confidence.”

Japan, for one, is in a review process on the negative rates it has been running.

*Speaking of Spain, its political leaders took a small step towards ending the country’s deadlock, amid signs the centrist Ciudadanos party is ready to back conservative leader Mariano Rajoy for a second term in office.  Rajoy said, “The important thing is for Spain to have a government as early as possible,” though he declined to state the six conditions that Ciudadanos has given as a requirement for cooperation. Their party leader, Albert Rivera, had previously said he would never support Rajoy directly, but he described a possible deal as the “least bad option” for his party and Spain.

---

One huge early issue concerning Brexit involves the Hinkley Point nuclear project in the U.K. that was to be built with China’s help and France’s financing.  This was a pet project of former prime minister David Cameron, but new PM Theresa May has been lukewarm on it, at best.  May is concerned about Chinese involvement in a U.K. nuclear power station, with a former Business Secretary Sir Vince Cable telling the BBC that when he was in the Cabinet with the then home secretary, Mrs. May, she had been unhappy with what she regarded as the Cameron government’s “gung-ho” approach to doing deals with Beijing.

Nick Timothy, Mrs. May’s chief-of-staff and a longtime adviser, has also previously expressed concerns.  He has written that MI5 believed that Chinese intelligence services “continue to work against U.K. interests at home and abroad.”

I agree with Theresa May.  Why would you possibly allow a Chinese company, in this day and age, to construct a nuclear plant in your own country when you constantly have competing interests?!

As you can imagine, though, China is pissed, with its ambassador to the U.K., Liu Xiaoming, saying the delay in approving the plant had brought the two countries to a “crucial historical juncture.”

Liu hinted that “mutual trust” could be in jeopardy if the U.K. government decided not to approve it.

Last month, the French company financing most of the project, EDF, decided to go ahead with it, but then the May government said it wanted to wait until early autumn to review the project.  [BBC News]

This is a mess.  Thank David Cameron when you see him.

On the migration/terror fronts...the German government announced a series of proposals to tighten domestic security following a rash of attacks by refugees in recent weeks.  The proposed measures include expediting deportation procedures for convicted foreigners and rejected asylum applicants, as well as those believed to pose a risk to public security, to increased personnel and equipment upgrades for police and security agencies.

German Interior Minister Thomas de Maiziere said showing support for terrorism should be banned and dual-passport citizens who joined terror groups abroad should be stripped of their German citizenship.

“I take note of many citizens’ concerns that the high number of refugees might pose additional risk to Germany’s security,” said Mr. de Maiziere.  “We can’t deny that we have indications there are terrorists among refugees.”  [Wall Street Journal]

Speaking of which, it has come to light that two of the refugees who launched terror attacks in Germany last month were in contact with members of ISIS, including one with a Saudi phone number.  [Financial Times]

And as for the suicide bomber who blew himself up by a music festival, with the terrorist, Daleel, being the only death, investigators now believe the explosive went off prematurely, and that Daleel wanted to leave his backpack in a crowd and then detonate it remotely.

The recent terrorist attacks in Europe, including Turkey, have caused a sharp drop-off in demand from  North American travelers for Mediterranean cruises, Norwegian Cruise Line warned on Monday.

[But owing to Brexit and a cheaper currency, inbound flight reservations to the U.K. have been rising, up 8.6% from outside Europe in the first 28 days after the referendum.]

In Milan, Italy, the mayor there has warned the city may have to set up tents to house migrants as it is overwhelmed by over 3,300, most of the new arrivals from sub-Saharan Africa, particularly Nigeria.  Many of the migrants have been turned away at the borders of France, Austria and Switzerland, a “reflux” of people arriving in Milan from Como, near the Swiss border.

Italy has had to deal with over 93,000 migrants arriving by sea this year, slightly below the tally of the same period a year ago, but a city like Milan just wasn’t prepared and opposition lawmakers are pouncing on the mayor’s difficulties, with Matteo Renzi taking his share of the blame as well.

Nigeria is a massive issue on the migrant side for decades to come, by the way, as its population is just exploding.  Investment strategist Jeremy Grantham was one of the first to identify this looming powder keg.  They aren’t going to want to stay there.

Asia

In China, there was a slew of economic data.  July $-denominated exports were down 4.4% year-over-year compared with June’s -4.8% pace.  Imports fell 12.5% (-8.4% in June), both figures worse than expected.  Exports to the U.S. were down 2%, down 3.2% to the EU and down 5.2% to Japan.

July retail sales were up 10.2% year-over-year (compared to 10.6% in June), industrial production rose 6% (6.2% in June), while fixed asset investment increased 8.1% for the first seven months (9% first six...but up only 2.1% in the private sector).

On the inflation front, core CPI rose 1.8% yoy, with recent flood damage to key agricultural production putting upward pressure on future food prices.  A key metric, pork prices, rose 16.1% in the month and that’s good, given the importance of pork to the Chinese, a sign of strength.

Producer, or factory gate, prices fell 1.7% year-over-year, with the pace of decline decelerating, a seventh consecutive month of softening contraction.  [All of the preceding stats courtesy of the National Bureau of Statistics]

Put it all together and the trends aren’t great, especially fixed asset investment in the private sector, though there is hope at getting out of deflation on the producer price front.  The government continues to say not to worry.

Separately, vehicle sales rose at their fastest rate in 3 ½ years last month in year-on-year terms, but the figure of 1.85 million reported by the China Association of Automobile Manufacturing, up 23%, compares with the slow sales this time last year and could be a little deceiving.  Recall, last summer the Shanghai Composite stock index was in the midst of a crash. When viewed year-to-date, sales are up a little under 10% compared with the same period in 2015.

[Hong Kong reported second-quarter GDP rose a far better than expected 1.7% yoy.]

In Japan, a key metric with their economy, machine tool orders, plunged 19.6% year-over-year in July, after a 19.9% fall in June.  This is a good indicator of the manufacturing sector and global demand.

In Taiwan, encouragingly, July exports rose 1.2% year-over-year, the first gain in 18 months, with shipments to Japan up 10.2%, 3.4% to China, and 4.5% to Europe.  But they were down 7.3% to the U.S. yoy.

Street Bytes

--The three major averages edged up for the week, with Nasdaq’s winning streak now at seven, the longest since 2012 (I heard this on CNBC and double-checked it against my own database, which is rather phenomenal, frankly, after 17 years...all handwritten).  Nasdaq gained 0.2% to a record 5232, while the Dow added 0.2% to 18576, just shy of the record set a day earlier at 18613.  The S&P closed up two points to 2184, its record high now 2185.

--U.S. Treasury Yields

6-mo. 0.43%  2-yr. 0.71%  10-yr. 1.51%  30-yr. 2.23%

Bonds rallied a little on Friday on the heels of the poor economic news, but before their release, a survey of 62 economists by the Wall Street Journal found that 71% believe the Fed will next raise short-term rates at the Dec. 13-14 confab.

--The International Energy Agency said oil demand growth will weaken more than expected next year on a dimmer outlook for the global economy, though we’re talking a slowdown from 1.4m barrels a day this year to 1.2m b/d in 2017, which is still pretty robust.

The IEA nonetheless said slowing demand – led by the U.S., China and India – partly drove the slump in prices since June.  The global supply overhang was the biggest reason, however.

An increase in production from OPEC nations and those outside the cartel drove global oil supply up by 800,000 b/d in July, the IEA said.

OPEC crude oil output increased to 33.4m b/d last month – holding at an 8-year high, with record production from Saudi Arabia* and a jump in output from Iraq and Iran, which offset declines in Nigeria and elsewhere.

*Saudi production in July hit a record 10.67m barrels a day, up 123,000 b/d on June and surpassing the previous record of 10.56m from June last year.  The kingdom usually pumps more crude in the summer months to deal with an increase from domestic power companies seeking to satisfy demand for air-conditioning.

Non-OPEC production is forecast to drop by 900,000 b/d this year – led by the U.S. – before increasing by 300,000 b/d in 2017.

Wednesday, the U.S. Energy Information Administration reported an increase in commercial crude stocks, which rose 1.06m barrels in the week to 523.6m barrels.

Meanwhile, the EIA said it expected gasoline in the U.S. to fall below $2 a gallon on average in October and stay there through the winter.  Yippee!

It’s the same old story, record inventories, in this case of motor fuel.

The EIA also lowered its oil-price forecasts.  The agency now sees the U.S. averaging $41.16 a barrel this year and $51.58 a barrel in 2017, down from expectations of $43.47 and $52.15, respectively.

But...oil rallied at week’s end on the misguided hope the Saudis would reduce production in the coming months.

--What an awful week for Delta Air Lines, which, due to computer issues at its Atlanta hub, was forced to cancel about 1,000 flights Monday and another 680 Tuesday, with an additional 2,400 delayed; the spillover issues basically carrying through week’s end.

--Flight attendants at United Continental Holdings Inc. voted to approve a contract that will hike wages between 18 percent and 31 percent this September, the first labor contract to cover all 25,000 flight attendants from United and Continental since their 2010 merger.  Good for them.  And a win for new CEO Oscar Munoz, whose first goal has been peace with his unions.

--Macy’s announced it was closing 14% of its stores, 100, in early 2017 after a final Christmas shopping season as the retailer gives in to reality.  Department stores have been struggling mightily against online competition and off-price retailers.  Plus clothing sales are generally down.

But Macy’s reported better-than-expected revenue and profits, and the shares of Macy’s, Kohl’s and Nordstrom rose strongly, and then JC Penney joined in on the fun Friday.

Macy’s CEO Terry Lundgren said warm weather during the latest quarter boosted apparel sales and a smaller drop in tourist spending helped overall results.  “Over the past few months, we have been saying that a setback is a setup for a comeback, and we now believe we are set up well to proceed to a comeback.” Lundgren added: “We are encouraged by the distinct improvement in our sales and earnings trend in the second quarter.”

Macy’s same-stores fell 2% in the latest quarter, though this beat the Street; overall sales being down 5.7% in the first half.

The company said that while it is closing 100 stores, it will add new vendors to its existing ones.  

But Macy’s did not guide higher, opting to keep its current forecast for the full year.

--Kohl’s reported better-than-expected quarterly profit, helped by warm weather that boosted sales of summer clothes and accessories. Same-store sales fell 1.8%, down a second straight quarter, while earnings handily beat expectations.  Net sales were down 2%.

--Nordstrom saw net income fall more than 44% for the three months to end of July, though this was not as steep as expected and while revenue fell 1.3%, investors took heart from the slowing pace of its sales decline.  Same-store sales were down 1.2%, less than half the decline predicted.

Blake Nordstrom, the company’s co-president, said “our team has been actively addressing our inventory, expense and capital, and in the second quarter, made substantial progress by bringing down inventory in-line with sales.”

It’s that reduced inventory theme, expressed by Macy’s and Kohl’s as well, that has analysts and investors more optimistic about the upcoming holiday season, i.e., for starters less price-cutting, perhaps.

--One more...JC Penney reported net sales rose 1.5% to $2.9 billion in the quarter, with same-store sales rising 2.2%, though, granted, this is off a low base as it continues its comeback.

--SunPower Corp. warned of challenges in its power plant segment and said it would cut 1,200 jobs, or 15% of its workforce. The maker of solar panels and systems said aggressive pricing hurt its near-term economic returns.

--SolarCity Corp., which is being acquired by fellow Elon Musk company Tesla Motors Inc., reported a wider quarterly loss as operating expense climbed sharply.  The loss was $250.3 million, compared with $155.7 million a year earlier.

Revenue did rise 81%, far above expectations, to $185.8 million.

Musk is looking to combine the firms into a single integrated sustainable energy company – from home roof arrays to electric cars, and additional batteries that can store power for later use.

But Musk, who owns more than 20% of each company, is criticized for stretching himself, and his operations, too thin.

--Walt Disney Company announced it is making a $1 billion bet on video streaming as it faces stiff challenges in the traditional television business.  Disney announced it had concluded a deal to spend that amount for a 33 percent stake in BAMTech, Major League Baseball’s fast-growing streaming service whose infrastructure is also used by the NHL, WWE, HBO Now, the PGA and others.  CEO Robert Iger said the new service would be “complementary” to Disney’s ESPN and its traditional networks.

The BAMTech acquisition is part of Disney’s plan to build a Netflix-style streaming service.

Separately, Disney said Tuesday that operating profit for its cable division, which includes ESPN, Disney Channel and A&E Networks, totaled $2.37 billion in the most recent quarter, essentially flat from a year earlier.

Overall revenue for Disney was up 9 percent, with the biggest contributor to growth being Walt Disney Studios, primarily because of the blockbuster releases of “Captain America: Civil War,” “The Jungle Book” and “Finding Dory.”  Revenue at Disney’s theme park business also was strong, up 8 percent.

Mr. Iger said he has seen no impact on bookings at Walt Disney World in Florida over Zika concerns.

But ESPN remains a concern as it is down from 99 million subscribers in 2013 to just 89 million through June 2016, according to Nielsen.

--As rumored, Wal-Mart Stores Inc. agreed to buy e-commerce startup Jet.com for about $3.3 billion, giving the world’s largest retailer the resources for a stronger shopping website to compete with Amazon.com.

Jet.com, after one year, is processing an average of 25,000 orders a day and is adding 400,000 shoppers monthly.  I forgot the company is Hoboken, New Jersey based

--Russia’s economy shrank 0.6% in the second quarter from a year earlier after a decline of 1.2% in the previous three months, according to the Federal Statistics Service, better than forecast.

But consumer spending continues to be in the dumper, ditto oil prices, though other businesses appear to be snapping back to life

--Chinese e-commerce giant Alibaba saw its quarterly sales jump 59% year on year, the highest since its IPO.  The company now gets more from each dollar of mobile sales than from desktop.  Revenue was $4.84 billion in the three months to June 30.  The shares rose 5% in response.

But Alibaba faces a saturated online retail market in China, though most of its competitors are losing money.  The company didn’t comment on its earlier disclosure that the SEC was probing its accounting practices, related party transactions and data from its annual Singles’ Day shopping festival.

You know my opinion on BABA.  You’re on your own.

--The price of farmland in the Farm Belt fell in the second quarter, as reported by the Federal Reserve, with the continuing rout in global commodities that has been weighing on crop prices and farmers’ income.

Prices fell 1% from a year earlier in the Fed’s Chicago district, including Illinois and Iowa.  In the Kansas Fed district, which includes Kansas, Nebraska and western Missouri, irrigated farmland prices slid 5% compared with year-ago levels.

Despite a spring rally in agricultural markets, farmers are on track for their least prosperous year since 2002.  Good weather isn’t helping as it’s leading to record harvests.  [Bloated inventories driving down prices, boys and girls.]

Add it all up and farmers are increasingly having problems paying off their loans.  The Kansas City region said agricultural lenders reported more than 7% of farm loans in 2016 had “major or severe” repayment issues, up from an average of 3% between 2011 and 2013.  [Jesse Newman / Wall Street Journal]

--Speaking of agriculture, Brazil is warning the country could run out of corn by 2017, after a plunging currency led to a surge in exports and the latest harvest was damaged by drought.

Prices of corn are now surging, putting pressure on Brazil’s pork and poultry sectors.

But this could be good news for U.S. farmers in terms of working off their inventories.  Brazil’s shortage is leading the government to consider allowing imports of genetically modified corn from the U.S.

--Arianna Huffington, who transitioned from well-known conservative to outspoken liberal before helping reinvent journalism on the web, announced she was leaving the site she co-founded to launch a new health and wellness venture.

The move comes a year after the Huffington Post became part of Verizon Communications following its $4.4bn purchase of AOL, which acquired the Huffington Post in 2011 for $315 million.

Huffington’s new venture, Thrive Global, focuses in part on the benefits of a good night’s sleep.

--Sarah Ferris / The Hill

“The next president could be dealing with an ObamaCare insurer meltdown in their very first month.

“The incoming administration will take office just as the latest ObamaCare enrollment tally comes in, delivering a potentially crucial verdict about the still-shaky healthcare marketplaces.

“The fourth ObamaCare signup period begins about one week before Election Day, and it will end about one week before inauguration on Jan. 20.  After mounting complaints from big insurers about losing money this year, the results could serve as a kind of judgment day for ObamaCare, experts say....

“Already, many insurers this year are proposing substantial rate hikes with the hopes of making up for higher recent medical costs.  The average premium increase next year is about 9 percent, according to an analysis of 19 cities by Kaiser Family Foundation.  But some hikes are far higher: Blue Cross Blue Shield has proposed increases of 40 percent in Alabama and 60 percent in Texas.”

--Bill Miller, longtime money manager at Legg Mason, is leaving after 35 years.  Miller made his name in outperforming the S&P 500 for 15 straight years with his Legg Mason Value Trust, before his run of success came to a crashing end in 2005, ranking last among funds in his category in the five years before he relinquished management of the fund in 2012.  Assets in the fund dwindled from $21.5 billion at their peak in 2007 to little more than one-tenth of that.

Miller agreed to buy out Legg’s 50% stake in their joint venture, LMM LLC, which houses the funds he manages.  LMM, as a stand-alone, now will seek distribution arrangements that will keep its small funds from “getting lost in the shuffle,” as Miller put it.

I have to admit, way back when I was in the fund business, and largely responsible for trying to gain shelf space, I know what a tough job Mr. Miller now has; only it’s ten times tougher today as active managers continue to fall out of favor.

I also remember how much I couldn’t stand the guy as a competitor because of his success, the editor typed with a smile.  [I won’t say how I felt when he started to underperform.]

--The New York Post reports that Americans are eating less beef than they used to – about 1.2 fewer pounds per person per year since 2012, according to the USDA; tastes shifting to chicken.

Ergo, the days of the burger battles and the likes of Shake Shack, Smashburger and Five Guys on the premium side are over.  The sector is oversaturated, witness Shake Shack, which reported slowing same-store sales gains of just 4.5% this past quarter (not good for what is supposed to be a growth story), compared with 12.9% a year ago and 9.9% in the first quarter.

I didn’t realize Five Guys, the largest player in the better burger field, was up to 1,000 stores.  Good lord.  Smashburger, with 372 stores, is the second-largest, though it plans on opening 50 to 60 restaurants a year.

Then there is Florida-based BurgerFi, with 89 eateries and 175 in the pipeline.  It believes its VegeFi “is a game changer,” according to CEO Corey Winograd.  [I’d try that...once.]

Shake Shack, on the other hand, continues to target premium sites in major cities, saying it would add 18 this year.  Next week it opens its 100th store, of which 53 are in the U.S.

Shake Shack’s Chick’n Shack offering has become the chain’s third-most popular item, contributing 8.4 percent of total sales and higher check averages, according to CEO Randy Garutti.

--The average audience for NBC in the first five days of the Olympics was down nearly 20 percent from the London Games, with viewership among people ages 18 to 34 falling 32 percent.

But NBCUniversal argues some of the prime-time viewers are going to Bravo and NBCSN, and streaming events online.

On Tuesday night, for example, 33.4 million were watching in prime time on NBC, more than five million fewer than those who watched the comparable night in London.  But another 2.3 million were watching on cable and the equivalent of 404,000 streaming live video and earlier events.  The total of 36.1 million was still below 38.8 million four years earlier.

--Fox News executives have replaced ousted chairman and CEO Roger Ailes with Bill Shine and Jack Abernethy (sic...had to check this like three times because every story has it spelled differently), two long-serving Fox execs (Shine with Fox News since its launch in 1996), both reporting to Rupert Murdoch.  Shine, who will oversee all programming aspects of the network, including talent management, should be a popular pick among the staff.  Abernethy will be the numbers guy.

--Finally, on one of my favorite topics, fish fraud, Larry Olmsted had a piece in the Wall Street Journal.  It was the environmental group Oceana that conducted a large study of the issue three years ago, which found that one out of three fish were mislabeled, in violation of FDA regulations, and the results were even worse in New York, Los Angeles and Boston; the poster child being red snapper, the most faked species.

One noted seafood distributor in Philadelphia told Olmsted: “Quite frankly, I could take three different fish, cut them into inch-square pieces and lay them next to each other, and very few people in the world could tell them apart.”

“Red snapper has very high value, and once it is filleted, you can’t tell it from many other fish like farmed tilapia.  It’s the same for grouper, another high-fraud fish,” said another expert, this one from New York.

What’s the moral to the story?  If you buy tilapia, it probably is tilapia.

One more, along the lines of the above.  With a surge in interest in gold coins, Stephanie Yang of the Journal had a piece on all the fraud in that business.

“Counterfeit gold is nearly as old as the precious metal itself.  But dealers worry that this year’s powerful rise in gold prices is attracting new crowds looking to profit by peddling fake gold.

“At the same time, making and selling counterfeit gold coins and bars has never been easier, industry executives say.”

One clue. If you buy a gold bar and it starts melting in your hand, it’s probably chocolate.

Gold-coin sales for the second quarter were up 72% from the same period a year earlier, according to GFMS, a unit of Thomson Reuters.

Foreign Affairs

Iraq/Syria/ISIS/Russia: It’s all about Aleppo these days, Syria’s biggest city before the war and commercial hub, which has been ravaged, obliterated, with an estimated 250,000 civilians facing a humanitarian catastrophe, in the words of the United Nations.  Fighting has increased in intensity, with rebel forces last weekend breaking a siege that had prohibited food deliveries for three weeks.  Then a whopping seven trucks of fruits and vegetables got in.  Seven trucks for 250,000.

Many of the estimated rebel force of 10,000 come from Jabhat Fateh al-Sham (JFS), which until recently was known as the Nusra Front and affiliated with al-Qaeda.  The Syrian Observatory for Human Rights monitoring group says more than 120 civilians have been killed since early August.  Another 700 fighters from both sides have been killed since the start of the offensive about two weeks ago.

The beleaguered Syrian army has been increasingly reliant on air support from Russia, and on recruits from Hizbullah on the ground.  Reinforcements poured in from both sides in what is being called the “great battle of Aleppo.”

Syria’s defense ministry said it would halt fire for three hours each day to allow aid to reach the besieged, but the U.N. said that is insufficient.  Instead, it is calling for 48-hour weekly pauses for aid deliveries, warning that civilians are at grave risk from water shortages and disease, with one report saying water and power has now been cut off for 2 million, as the two sides in the conflict cut each other’s supply routes.

More than 10 hospitals have been bombed in Aleppo in the past month, as alluded to above in my opening.

Russian airstrikes on the ISIS bastion of Raqqa in northern Syria Thursday killed at least 30 people, including civilians, according to the Syrian Observatory, as Russia becomes ever more deeply involved. 

In Iraq, as ISIS loses territory, with its capital of Mosul under threat of being taken by year end by Iraqi forces, with U.S. help, Islamic State is increasingly adopting the playbook of its predecessor, al-Qaeda in Iraq, with its attacks on civilians in Baghdad and other strategic cities as an easy way to maintain legitimacy and sustain the narrative. 

So Iraqi Prime Minister Haider al-Abadi has been forced to increase troop levels in Baghdad, with almost half of all combat troops now based in the capital.

But as the Washington Post’s Liz Sly reports, while the defeat of Islamic State’s self-proclaimed caliphate in Iraq is a distinct possibility, “so too are new problems – and potentially new conflicts.  For the past two years, Kurdish Peshmerga, Iraqi Army forces, Shiite militias and some Sunni ones have largely overlooked long-standing differences to confront the menace posed to them.  But their feuds and grievances – over vital issues such as the distribution of power, land, money and oil – have not been resolved.”

On a different issue, I cover Iraq’s heat in detail below, but with temperatures climbing above 120 degrees, there is once again frustration over Baghdad’s decrepit electrical system, which sees constant, unexpected power outages every day.  One soldier told the Wall Street Journal, “This heat wave is like a weapon of mass destruction.”

Separately, a House Republican task force has concluded that key military intelligence was manipulated to paint an unrealistically optimistic picture of the United States’ fight against ISIS in both Iraq and Syria.

The report found that final intelligence assessments from the Pentagon’s Central Command (CENTCOM) differed from the on-the-ground conclusions, according to a leader of the task force, Rep. Mike Pompeo (R-Kan.).

“There’s enormous evidence this information from talented career professionals inside the analytic arm at CENTOM accurately depicted what was going on on the ground,” Pompeo said on CBS’ “This Morning.”  “But when it got to very senior levels, that information was changed.”

Supposedly, the task force did not find evidence that orders to manipulate intelligence were directed from the White House, but the politicization of military intelligence could be an explosive issue for the administration.  As Julian Hattem of The Hill summarized:

“President Obama rose to office in large part because of his staunch opposition to the war in Iraq, which was built upon faulty intelligence about Baghdad acquiring weapons of mass destruction.  For his administration to have fallen into the same trap would be deeply embarrassing and could undermine its claims about the international fight against ISIS and other extremists.”

Russia/Turkey: Turkey said on Wednesday the European Union was fueled by anti-Turkish sentiment and hostility to President Recep Tayyip Erdogan and was making grave mistakes in its response to the failed coup, which was costing it the trust of ordinary Turks.  Erdogan and many Turks don’t understand the Europeans displeasure over the crackdown that has followed the abortive putsch, while seeming to show indifference to the actions that night that resulted in 240 deaths.

“Unfortunately, the EU is making some serious mistakes.  They have failed the test following the coup attempt... Their issue is anti-Turkey and anti-Erdogan sentiment,” Foreign Minister Mevlut Cavusoglu told the state-run Anadolu Agency.  “We have worked very hard toward EU (membership) these past 15 years.  We never begged, but we worked very hard. ...Now two out of three people are saying we should stop talks with the EU.” [Reuters]

Reminder...more than 60,000 people in the military, judiciary, civil service and education sectors have been detained, fired, suspended, or placed on investigation.

Some Europeans, and officials in Washington, are concerned Erdogan is using the coup to further tighten his grip, which of course he is, even as Turkish officials dismiss such claims.

Western allies are also watching the sudden chumminess between Erdogan and Vladimir Putin, as Erdogan’s first post-coup trip was to St. Petersburgh to meet with Vlad the Impaler.

Separately, one of Erdogan’s domestic targets this week was the banks, who he is saying shouldn’t be charging high interest in the aftermath of the coup plot, promising to take action against lenders who “go the wrong way.”  He is equating high interest rates with treason.

Worrisomely, reports that two-thirds of the Turkish people support Erdogan are probably accurate.  Dissent is disappearing.  The opposition seems to be melting away.  Many blame the U.S. for the coup, which is being trumpeted by government media, while also pinning the blame on Fethullah Gulen, the imam living in self-imposed exile in Pennsylvania.  Erdogan continues to call for Gulen’s extradition.

In a speech Wednesday that was broadcast live on state television, Erdogan said: “I’m calling on the United States: What kind of strategic partners are we that you can still host someone whose extradition I have asked for?” 

And:

“This coup attempt has actors inside Turkey, but its script was written outside. Unfortunately, the West is supporting terrorism and stands by coup plotters.”  [Washington Post]

On arriving in St. Petersburgh, Erdogan said:

“My dear friend Vladimir and I have a joint position...to show the rest of the world that we will be behaving as friendly countries towards one another.”

Only a few months ago, Moscow accused Erdogan of having links to ISIS.  Now, Moscow has agreed to gradually lift sanctions off Turkish businesses, allow the resumptions of flights to Turkish resorts (popular for Russians), and lift a ban on Turkish imports by year end.

Erdogan, in turn, agreed to go ahead with the stalled Turkish Stream gas pipeline project.

But what Putin really wants is Turkey’s help in Syria, Erdogan being vehemently anti-Assad.  The above successes by rebel forces in Aleppo could not have come without military aid through nearby Turkey (financed largely by the Saudis), and Putin wants that stopped.   But Erdogan is not about to suddenly back Assad as the country’s legitimate ruler.

Putin’s longer term goal of course is to have Turkey abandon NATO for an alliance with Russia. Shorter-term, he would love to see Erdogan deny the U.S. access to the Incirlik air base, from which the U.S. is launching strikes against ISIS.

Editorial / Wall Street Journal

“No one plays a mediocre hand better than Mr. Putin, and Mr. Erdogan can help the Russian’s Mideast power play...Putin would like to drive a larger wedge between Mr. Erdogan and the U.S. to reduce America’s ability to shape regional events.  Over the long term Mr. Putin wants to weaken Turkey’s attachment to NATO, which has been firming up its ability to defend Eastern Europe after Russia’s depredations in Ukraine.

“This Putin play comes as Mr. Erdogan and his government are fanning anti-American sentiment in Turkey in the wake of the recent failed military coup....

“It’s not beyond Mr. Erdogan to use this episode as an excuse to cooperate more closely with Russia or block U.S. anti-Islamic State bombing missions from the NATO base at Incirlik.  NATO was concerned enough by the Putin-Erdogan meeting that it issued a highly unusual statement Wednesday praising Turkey’s contributions.  ‘Turkey takes full part in the Alliance’s consensus-based decisions as we confront the biggest security challenges in a generation,’ said the statement, adding that the Turks make ‘substantial contributions’ to NATO’s joint military efforts.

“All of this shows the extent to which the Middle East is up for grabs in the wake of President Obama’s eight-year retreat.  His withdrawal from Iraq and abdication in Syria created a vacuum that Mr. Putin is filling to Russia’s strategic benefit.  Mr. Obama has responded by bending U.S. policy in Syria further toward Russia’s desires.  Such is the diminished U.S. influence that the next U.S. President will inherit.”

Anne Applebaum / Washington Post

“Dictators who fear their enemies also look for allies.  But they don’t want allies who will criticize what they are doing, either out loud or by example.  And so, in the wake of the failed coup and the successful crackdown, Erdogan naturally sought out the company of Vladimir Putin, the Russian president.  In St. Petersburg this week, the settings at a luncheon for the two men included porcelain plates decorated with their portraits.

“At least until now, Putin’s model of suppression has differed from Erdogan’s strategy. Instead of mass arrests, he has used targeted violence.  To intimidate journalists, he ensures that one is occasionally murdered; to scare oligarchs, he locked up one of them for a decade.  He controls the economy through a system of cronyism and kickbacks on a breathtaking scale.

“But like Erdogan, Putin needs company. Both men share a paranoid fear of the enemies they can’t see.  Both men know that a large portion of their population dislikes them.  Both men know that the academics and intellectuals arrested in Ankara or under siege in Moscow will always oppose them, even if they are forcibly silenced.  Both men know that the biggest threats to their personal power are the ideas and causes that those people represent: not merely democracy but rule of law, judicial independence, media freedom, human rights.

“Both were also nearly at war with one another just a few months ago...

“Geostrategic, military and even historical calculations should make Turkey and Russia antagonists.  But their meeting illustrated something that many Western politicians and ‘realist’ thinkers find difficult to understand: That ideas and ideology sooner or later trump ‘interests.’  If Turkey were still a democracy, Erdogan would be looking to his Western allies to help him push back against Russia.  But contact with the West also means contact with Western ideas.  Dependence on the West means dependence on states that believe in the legal norms which Erdogan wants to repress, states that might support the people Erdogan wants to lock up....

“We can argue that the nature of the regimes we support shouldn’t matter, that cold-eyed calculation should determine our foreign policy.  But when it really matters, dictators choose other dictators over everything else.  Democrats should take note."

Libya: Pro-government forces battled to clear ISIS from its main Libyan stronghold of Sirte, with ISIS losing its headquarters.  ISIS fighters, though, still control several areas of the Mediterranean city.

The Washington Post reported Tuesday that U.S. commandos are operating from a position on the outskirts of Sirte, the first time they have directly supported Libyan forces in the anti-ISIS fight.  British troops are alongside.

Italian Prime Minister Matteo Renzi is facing heat for reportedly sending Italian troops without approval from parliament.  He has refused to confirm or deny the reports dozens of special forces are there.

France already admitted it had troops in Libya, saying three of its soldiers had been killed.

Russia/Ukraine: Ukrainian President Petro Poroshenko said on Thursday he had instructed all military units near Crimea and in the easterly Donbass region to be at the highest level of combat readiness, following Russian allegations of a Ukrainian incursion into Crimea.

President Putin accused Kiev on Wednesday of using terrorist tactics to try to provoke a new conflict and destabilize Crimea, which Moscow annexed from Ukraine in 2014.  Putin pledged to take counter-measures against Ukraine, with Kiev claiming the accusations are false and that Russia is looking to escalate hostilities.  Putin could then demand better terms in the peace process, or to inflame national passions at home ahead of Russian parliamentary elections next month.

Poroshenko said Russia is increasing military activity in northern Crimea with heavier fighting in eastern Ukraine.  “These troops are coming with more modern equipment and there are air assault units,” he told a news briefing in Kiev.

Russia says it caught Ukrainian infiltrators on the border between Crimea and Ukraine last weekend and that one of its soldiers and an FSB security service employee were killed.  Kiev denies the events ever happened.

Talks on Ukraine, scheduled for an upcoming G20 summit in China, have been scuppered, Putin calling them “pointless.”

It seems Putin is clearly trying to tear up the Minsk peace process. 

Geoff Pyatt, U.S. ambassador to Ukraine, said the U.S. government had seen no evidence to corroborate Russian claims of a Crimean incursion.  Pyatt added this is “not the first” such misinformation from Russia, aimed at diverting attention away from its own actions.  The EU also says there has been no official confirmation of Russia’s claims.

Putin has used the Olympics often as a cover for his actions, knowing attention is focused elsewhere, while many world leaders are vacationing in August.  The annexation of Crimea came just after Russia hosted the Sochi Olympics, and Russia sent troops into Georgia during the Beijing Olympics in 2008.

Anders Aslund, a senior fellow at the Atlantic Council, added: “The Berlin Wall was initiated in August 1961, the invasion of Czechoslovakia occurred in August 1968, and the Moscow coup took place in August 1991.”  [Bloomberg]

Editorial / Wall Street Journal

“Vladimir Putin is a master at pressing his geopolitical advantage when he senses complacency in the West.  That’s the meaning of his latest tantrum over Crimea, the Ukrainian peninsula Moscow invaded and illegally annexed in 2014.

“The Russian strongman on Wednesday accused Kiev of sending special forces to Crimea to destabilize the occupied Ukrainian territory ahead of Russian parliamentary elections next month. His spy agency, the FSB, said one of its men and a Russian regular had been killed in clashes with the Ukrainians over the weekend.  The Kremlin also claims to have arrested several Ukrainian would-be infiltrators, including an intelligence officer.

“The Russian leader then used the episode as an excuse to pull out of peace talks aimed at de-escalating the Russia-instigated conflict in eastern Ukraine....

“Kiev denies the allegations, which bear the hallmarks of Russian disinformation, not least because there is no plausible evidence....

“An assault by Russia-backed forces into eastern Ukraine would lay bare the failure of Western diplomacy that mostly restrains Ukrainian self-defense.  Mr. Putin started a war in Georgia in the waning days of the George W. Bush administration eight years ago, and he may want to stir more trouble while Barack Obama is heading out the door.  The next U.S. President needs to revisit Mr. Obama’s refusal to sell Kiev the lethal weapons it needs to defend itself against the Kremlin’s aggression.”

Editorial / Washington Post

“President Vladimir Putin is again playing with fire.  This time, it may be a summer bluff, or it may be a pretext to escalation of war with Ukraine.  Either way, it reflects Mr. Putin’s determination to deceive and subvert whenever it suits his goals, at home and abroad, taking advantage of a distracted United States and Europe....

“We’ve seen this movie before.  Mr. Putin’s troops stealthily took over predominantly Russian-speaking Crimea with their ‘little green men,’ soldiers without insignia; he has never confessed to Russia’s true role in instigating and executing the Donbass insurrection nor the shootdown of a Malaysian civilian jetliner.  His military campaign in Syria has been carried out with similar disinformation and insouciance....

“Why spark a new battle, now? The seizure of Crimea was hugely popular at home, and Mr. Putin may be hoping for a lift before the Sept. 18 parliamentary elections, perhaps distracting Russians from the economic troubles brought on in part by Western sanctions.

“Mr. Putin may also calculate that – with the United States distracted by a presidential campaign, Europe preoccupied with Brexit and the migration crisis, and the world watching the 2016 Olympic Games in Rio – this might be a window of opportunity to act without fear of a serious response.  After all, Russia repeatedly spurns U.S. requests to cooperate in Syria, and the Obama administration simply responds with more requests....

“In 2014, President Obama and Secretary of State John F. Kerry urged Mr. Putin to take an ‘off ramp’ from a deeper war in Ukraine.  But Mr. Putin pays no heed to traffic directions.  The United States and Europe can ill afford complacency and illusions about Russia.”

One other item from Moscow...Putin made a surprise change in dumping longtime chief-of-staff, Sergei Ivanov, with Putin since Dec. 2011, for Anton Vaino, 44, as Putin seeks younger blood.  Vaino has been deputy chief-of-staff since May 2012.

As one Russian expert, Igor Bunin, told Bloomberg, “Putin is czar so he needs a team of younger people that are 100 percent his, that haven’t had any authority in their lives other than him.  Ivanov (63) knows not only Putin but knew Leonid Brezhnev as well and is a broad-minded person.  And this created some discomfort for Putin.”

In 2007, Ivanov was seen as a potential successor to Putin.

Afghanistan: I’ve been a longtime fan of Abdullah Abdullah, the country’s current ‘chief executive,’ though I admit to not following the politics of this place closely recently.  Abdullah lost out to President Ashraf Ghani back in 2014 in a sham election; Ghani then bringing Abdullah into a power-sharing arrangement.  It worked initially.

But Thursday, Abdullah angrily denounced Ghani as unfit to govern, Abdullah saying he had struggled to achieve much progress with Ghani during the two years of their government on the issue of electoral reform.

Abdullah was also to have an equal say in government appointments, but Ghani, according to Abdullah, has been making decisions unilaterally and has failed to consult with him, one of the main conditions behind the power sharing arrangement.

Unless Ghani makes amends quickly, this could be disastrous for the Afghan people, as in a civil war, both having tribal power bases, with the Taliban in the middle of things.

Pakistan: A faction of the Pakistani Taliban took credit for a horrific suicide bombing at a hospital in the city of Quetta that killed at least 70.  The attacker targeted a crowd that had gathered as the body of a prominent lawyer, murdered earlier in the day, was being brought in.  Lawyers and journalists were among the victims.

This same Taliban faction was responsible for the suicide bombing of a park during Easter celebrations last year that also killed over 70.

China: David Feith / Wall Street Journal

“Beijing has a consistent explanation for the rising tensions in the South China Sea: It’s America’s fault. As Chinese leaders tell it, their country is the victim of a U.S. bullying campaign designed to keep China down by uniting Asian states against it.  For proof they cite episodes such as the recent United Nations arbitration case filed by the Philippines and cheered by the U.S., Japan, Vietnam and others, which ended last month in a rebuke of China’s aggressive maritime claims and practices, including building artificial islands in international waters and harassing foreign ships.

“An arch villain in China’s narrative is Adm. Harry Harris, the commander of U.S. military forces in the Pacific, who last year had the gumption to warn that Beijing is building a ‘Great Wall of Sand’ in the South China Sea.  The four-star former reconnaissance flight officer also happens to be the son of an American father and a Japanese mother, a fact oft-noted by Chinese state media as proof of malign intent.  ‘To understand the American’s sudden upgraded offensive in the South China Sea,’ Xinhua has said, ‘it is simply impossible to ignore Admiral Harris’ blood, background, political inclination and values.’

“Such racial innuendo is merely one illustration of China’s harsh anti-American propaganda. But in his first interview since last month’s landmark U.N. arbitration verdict, the 60-year-old admiral is consistently conciliatory, taking no victory lap and finding the bright side of several trouble spots.  As the Obama era winds down, top U.S. leaders are still holding out hope that China will mellow as it rises and integrate peacefully into the global order....

“ ‘It’s on China not to be isolated,’ says Adm. Harris.  ‘It’s on them to conduct themselves in ways that aren’t threatening, that aren’t bullying, that aren’t heavy-handed with smaller countries.’

“Which raises a basic question: At what point is it prudent to conclude that China is committed to the path of bullying and revanchism?  After all, its top diplomat boasted in 2010 that ‘China is a big country and other countries are small countries, and that’s just a fact,’ and its posture has hardened since.”

On the topic of South Korea installing a U.S. missile defense shield that I discussed last week, THAAD (Terminal High Altitude Area Defense), the Sydney Morning Herald’s Peter Hartcher notes some of the following:

“(Since South Korea President Park Geun-hye) committed South Korea to installing the system, effective in the second half of next year, China has reacted furiously.  Its ambassador to Seoul said that the relationship between the two countries could be ‘destroyed in an instant’ if it went ahead with THAAD.  China’s foreign affairs minister Wang Yi said that ‘we will not accept why they made a deployment exceeding the need.’  In other words, China demands to be the arbiter of South Korea’s defense needs.

“In truth, China is worried that if South Korea has THAAD, it will make it immune not only to North Korean missiles but also to the coercive possibility of Chinese missiles. So when (North Korea’s) Kim fired his missiles last Wednesday [Aug. 3], what did China do?

“Beijing not only failed to criticize his destabilizing behavior, it also intervened at an emergency meeting of the U.N. Security Council to prevent criticism of Kim for breaching a U.N. Security Council resolution.  At the same time, Beijing last week started to punish South Korea for defying China.

“In staccato, planned appearances in China by South Korean actors and singers were abruptly cancelled.  The share price of South Korean entertainment firms fell by 5 to 25 percent on Friday [Aug. 5] in response.  At the same time, planned mass company trips to South Korea for Chinese workers were cancelled, aimed at damaging the South Korean tourist sector.

“These are undeclared Chinese economic sanctions against South Korea for acting in its own defense.  Unfortunately, this is just the latest piece in the emerging picture of China as the great neighborhood bully.

“Beijing is hitting out at countries that defy it – the running tally of countries subject to Chinese bullying now includes the Philippines, Vietnam and Indonesia in the South China Sea, Japan in the East China Sea and South Korea on the Asian landmass.

“North Korea is a deeply troubling rogue state, but we already knew that. The new and disturbing source of regional bullying is a much bigger and more serious power – China.  ‘This  shows China’s true face,’ a South Korean official told me on condition of anonymity.  ‘If it can happen once it can happen again – Koreans will now think twice about future investment in China.’

“This is an emerging pattern that is troubling every capital across the Asia-Pacific and beyond.”

So, friends, read the above and what is another obvious conclusion given what I’ve been writing the past few years in particular.  The likes of Apple don’t stand a chance on the mainland.

Finally, two retired commanders of the People’s Liberation Army are believed to have been taken away for possible ‘violations of party discipline,’ a euphemism for corruption, sources told the South China Morning Post, as the ongoing power shake-up in the PLA under President Xi Jinping continues.

Japan: 82-year-old Emperor Akihito made his second-ever televised address to the public and said he fears age and deteriorating health mean he is finding it difficult to continue in his role.  He wants to abdicate, but didn’t come out and say that since it’s not that easy.

Akihito has been on the throne since the death of his father, Hirohito, in 1989.  If he were to abdicate, it would be the first time a Japanese emperor did so since Emperor Kokaku in 1817.

Current law, though, insists emperors must serve until they die.

Akihito’s eldest son, 56-year-old Crown Prince Naruhito, is first in line, followed by a younger brother.  Women are not allowed to inherit the throne.

Parliament would have to approve any change in the laws to allow Akihito to step down.  85% of the Japanese people say abdication should be allowed.

Thailand: A coordinated wave of explosions hit cities in Thailand on Friday, killing at least four and wounding dozens more, including 10 foreigners in the seaside resort town of Hua Hin.

While there was no initial claim of responsibility, some think the timing and scope suggest they were carried out by opponents of the ruling junta, which last weekend organized a successful referendum on a constitution that critics say will bolster the military’s power for years to come.

Other blasts occurred in Phuket, Trang and Surat Thani.  It seems the bombs were planted in potted plants and then set off by mobile phone.

Philippines: President Rodrigo Duterte acknowledged abuses have occurred in his war on illegal drugs, which has left more than 400 people dead in a month and alarmed rights activists, but refused to back down from a shoot-to-kill order for drug suspects.

Duterte, a real piece of work, also publicly linked more than 150 judges, mayors, lawmakers, police and military personnel to illegal substances Sunday, ordering them to surrender for investigation as he ratcheted up his war on what he calls a “pandemic.”

“All military and police who are attached to these people, I’m giving you 24 hours to report to your mother unit or I will whack you.  I’ll dismiss you from the service,” Duterte said.

Human rights groups and the dominant Roman Catholic Church have expressed outrage at some of the president’s tactics.

“There is no due process in my mouth,” he added.  “You can’t stop me and I’m not afraid even if you say that I can end up in jail.”

He could end up far worse off than that.

Australia: Talk about a debacle, the Australian Bureau of Statistics had to cancel a national census when it was discovered the website used was the victim of an “entirely predictable” event, as Prime Minister Malcolm Turnbull raged.  IBM had received a $10 million contract to host and manage the website, and as Turnbull said, should have been better prepared.

“The denial of service attacks were completely predictable [and] should have been repelled readily.”

Brazil: The Senate voted early on Wednesday to indict President Dilma Rousseff on charges of breaking budget laws and put her on trial in an impeachment process. The vote was 59-21 against the suspended leftist leader.  A two-thirds vote is now required to convict Rousseff.  If so, interim President Michel Temer would serve out the rest of her term through 2018.

So, watching the Olympics, who wants to go to Rio?  There are so many stories getting buried.  Bad ones.  Heck, I had to read in a Chinese paper that their journalists were boarding a bus when a gunfight broke out and six were killed!  [Not any of them, thankfully.]  I didn’t see that anywhere else.  Nope, you can have Rio.  I’ll take Manhattan.

Random Musings

--Trump

Thomas L. Friedman / New York Times

“And that, ladies and gentlemen, is how Israeli Prime Yitzhak Rabin got assassinated.

“His right-wing opponents just kept delegitimizing him as a ‘traitor’ and ‘a Nazi’ for wanting to make peace with the Palestinians and give back part of the Land of Israel.  Of course, all is fair in politics, right?  And they had God on their side, right?  They weren’t actually telling anyone to assassinate Rabin. That would be horrible.

“But there are always people down the line who don’t hear the caveats. They just hear the big message: The man is illegitimate, the man is a threat to the nation, the man is the equivalent of a Nazi war criminal. Well, you know what we do with people like that, don’t you?  We kill them.

“And that’s what the Jewish extremist Yigal Amir did to Rabin. Why not?  He thought he had permission from a whole segment of Israel’s political class.

“In September, I wrote a column warning that Donald Trump’s language toward immigrants could end up inciting just this kind of violence.  I never in my wildest dreams, though, thought he’d actually – in his usual coy, twisted way – suggest that Hillary Clinton was so intent on taking away the Second Amendment right to bear arms that maybe Second Amendment enthusiasts could do something to stop her. Exactly what?  Oh, Trump left that hanging.

“ ‘Hillary wants to abolish, essentially abolish, the Second Amendment,’ Trump said at a rally in Wilmington, N.C., on Tuesday.  ‘By the way, and if she gets to pick her judges, nothing you can do, folks.  Although the Second Amendment people, maybe there is, I don’t know.’....

“What he said was ambiguous – slightly menacing, but with just enough plausible deniability that, of course, he was not suggesting an assassination....

“(Trump) knows what he is doing, and it is so dangerous in today’s world....

“People are playing with fire here, and there is no bigger flamethrower than Donald Trump.  Forget politics; he is a disgusting human being.  His children should be ashamed of him.  I only pray that he is not simply defeated, but that he loses all 50 states so that the message goes out across the land – unambiguously, loud and clear: The likes of you should never come this way again.”

Editorial / Washington Post

“The day after Mr. Trump delivered a relatively restrained speech on economic policy, the candidate once again trampled on Republican hopes that he would suddenly disguise himself as an acceptable politician.

“ ‘You aren’t just responsible for what you say,’ Gen. Michael Hayden, a former CIA director, said in response to Mr. Trump’s remark.  ‘You’re responsible for what people hear.’....

“By seeming to encourage armed insurrection against a Hillary Clinton administration, Mr. Trump has recklessly magnified the danger of his previous claim that the election is being ‘rigged’ against him.

“And encouraging armed resistance against the federal government is not the most worrisome of possible meanings.  Other listeners assumed that Mr. Trump was encouraging supporters to train their weapons on Ms. Clinton herself.

“As is often the case, Mr. Trump was incoherent enough to permit more than one plausible interpretation of his words. If he had not so often celebrated violence and wielded dark innuendo against political opponents, minority groups, journalists and others, it would be easier to give him the benefit of the doubt in this case.

“Unfortunately, a spokesman’s after-the-fact explanation did not clear the bar of plausibility.  ‘Donald Trump was obviously talking about American voters who are passionate about their Second Amendment rights and advocating they use that power at the ballot box,’ the spokesman said.  No; Mr. Trump was talking about what would happen if Ms. Clinton were elected.

“If Mr. Trump were not a major-party presidential nominee, his comment Tuesday might have earned him a stern visit from the Secret Service.  Instead, it will simply be added to the ever-growing list of Mr. Trump’s disqualifiers – and to the ever-growing burden of Republican leaders who continue to insist that their candidate is suitable to serve.”

Joe Scarborough / Washington Post

“The Muslim ban, the David Duke denial, the ‘Mexican’ judge flap, the draft dodger denigrating John McCain’s military service, the son of privilege attacking an immigrant Gold Star mother and the constant revisionism and lying about past political positions taken are but a few of the lowlights that have punctuated Donald Trump’s chaotic chase for the presidency.

“Any one of these offenses would have disqualified any other candidate for president.  But the Republican nominee remained competitive against a historically weak Democratic nominee on the promise of bringing radical change and dramatic disruption to Washington.

“That appears to be changing.  Post-convention polls show Trump falling behind by double digits both nationally and in must-win swing states like Pennsylvania, New Hampshire and Virginia.

“And the political ride will only get rockier for Trump in the coming days after he suggested that one way to keep a conservative Supreme Court after Hillary Clinton got elected would be to assassinate her or federal judges.  Trump and his supporters have been scrambling wildly all day to explain away the inexplicable, but they can stop wasting their time.  The GOP nominee was clearly suggesting that some of the ‘Second Amendment people’ among his supporters could kill his Democratic opponent were she to be elected.

“The presidential candidate that House Speaker Paul Ryan endorsed tried to explain away his suggestion of an assassination by telling Sean Hannity his comments were meant to unite supporters before the election.  It’s too bad for Trump and his supporters that his comments related to what Hillary Clinton would do after being elected and nominating Supreme Court justices that gun owners would not like....

“Paul Ryan and every Republican leader should revoke their endorsement of Donald Trump.  At this point, what else could Trump do that would be worse than implying the positive impact of a political assassination?

“The Republican Party needs to start examining quickly their options for removing the Republican nominee.

“A bloody line has been crossed that cannot be ignored.  At long last, Donald Trump has left the Republican Party few options but to act decisively and get this political train wreck off the tracks before something terrible happens.”

David Brooks / New York Times

“Trump insults Paul Ryan, undermines NATO and raises the specter of nuclear war. Advisers can’t control Trump’s brain because Trump can’t control it himself.

“He also cannot be contained because he lacks the inner equipment that makes decent behavior possible.  So many of our daily social interactions depend on a basic capacity for empathy. But Trump displays an absence of this quality.

“He looks at the grieving mother of a war hero and is unable to recognize her pain.  He hears a crying baby and is unable to recognize the infant’s emotion or the mother’s discomfort. He is told of women being sexually harassed at Fox News and is unable to recognize their trauma.

“The same blindness that makes him impervious to global outrage makes it impossible for him to make empathetic connection.  Fear is his only bond.

“Some people compare Trump to the great authoritarians of history, but that’s wrong. They were generally disciplined men with grandiose plans.  Trump is underdeveloped and unregulated.

“He is a slave to his own pride, compelled by a childlike impulse to lash out at anything that threatens his fragile identity.  He appears to have no ability to experience reverence, which is the foundation for any capacity to admire or serve anything bigger than self, to want to learn about anything beyond self, to want to know and deeply honor the people around you.”

--Among the Republicans who refuse to support or have outright repudiated Donald Trump are Senators Susan Collins (Maine), Jeff Flake (Ariz.), Lindsey Graham (S.C.), Dean Heller (Nev.), Mark Kirk (Ill.), and Ben Sasse (Neb.).

Sen. Susan Collins / Washington Post

“I will not be voting for Donald Trump for president.  This is not a decision I make lightly, for I am a lifelong Republican.  But Donald Trump does not reflect historical Republican values nor the inclusive approach to governing that is critical to healing the divisions in our country.

“When the primary season started, it soon became apparent that, much like Sen. Bernie Sanders, Mr. Trump was connecting with many Americans who felt that their voices were not being heard in Washington and who were tired of political correctness.  But rejecting the conventions of political correctness is different from showing complete disregard for common decency.  Mr. Trump did not stop with shedding the stilted campaign dialogue that often frustrates voters. Instead, he opted for a constant stream of denigrating comments, including demeaning Sen. John McCain’s heroic military service and repeatedly insulting Fox News host Megyn Kelly.

“With the passage of time, I have become increasingly dismayed by his constant stream of cruel comments and his inability to admit error or apologize.  But it was his attacks directed at people who could not respond on an equal footing – either because they do not share his power or stature or because professional responsibility precluded them from engaging at such a level – that revealed Mr. Trump as unworthy of being our president.

“My conclusion about Mr. Trump’s unsuitability for office is based on his disregard for the precept of treating others with respect, an idea that should transcend politics.  Instead, he opts to mock the vulnerable and inflame prejudices by attacking ethnic and religious minorities....

“I am also deeply concerned that Mr. Trump’s lack of self-restraint and his barrage of ill-informed comments would make an already perilous world even more so.  It is reckless for a presidential candidate to publicly raise doubts about honoring treaty commitments with our allies.  Mr. Trump’s tendency to lash out when challenged further escalates the possibility of disputes spinning dangerously out of control.

“I had hoped that we would see a ‘new’ Donald Trump as a general-election candidate – one who would focus on jobs and the economy, tone down his rhetoric, develop more thoughtful policies and, yes, apologize for ill-tempered rants.  But the unpleasant reality that I have had to accept is that there will be no ‘new’ Donald Trump, just the same candidate who will slash and burn and trample anything and anyone he perceives as being in his way or an easy scapegoat.  Regrettably, his essential character appears to be fixed, and he seems incapable of change or growth.”

--Fifty former national security officials, all of whom served under Republican presidents from Richard Nixon to George W. Bush, signed a letter calling Donald Trump unqualified to be president while warning that, if elected, “he would be the most reckless President in American history.”

The letter added that Trump “lacks the character, values and experience” to be president and that he would be dangerous “and would put at risk our country’s national security and well-being....

“He lacks self-control and acts impetuously.  He cannot tolerate personal criticism.  He has alarmed our closest allies with his erratic behavior. All of these are dangerous qualities in an individual who aspires to be President and Commander-in-Chief, with command of the U.S. nuclear arsenal.”

Among the signatories were Michael Chertoff, Tom Ridge, Michael Hayden, John Negroponte and Robert Zoellick.

--Trump unveiled his economic plan on Monday, promising the biggest “tax revolution” since Ronald Reagan, pledging to cut taxes across the board and change the laws to stem the tide of U.S. corporations moving their headquarters overseas.

Trump promised a top corporate tax rate of 15%, down from the current maximum of 35 percent; plus a one-time levy of 10% on the $trillions in U.S. corporate profits parked overseas.  He also promised to “cut regulations massively.”

The bulk of the plan was fairly Republican boilerplate, which was fine, but then he shot off his mouth on other topics and, once again, message lost.

--House Speaker Ryan handily won his Republican primary on Tuesday against Paul Nehlen, winning over 80% of the vote.

--Clinton

Editorial / Wall Street Journal

“Funny how the word ‘email’ continues to haunt Hillary Clinton even as she dismisses every new revelation as ‘old news.’  The latest new-old news comes in the release by Judicial Watch of 44 emails from her personal server that Mrs. Clinton failed to turn over in the batch she told the State Department included everything that was work-related. The emails paint a picture of top Clinton aides at State eager to do favors for Clinton Foundation donors.

“At the heart of these documents is the glaring conflict of interest that Mrs. Clinton carried into the State Department – and then spread to those around her.  Only months after the Clinton Foundation agreed to ethics protocols designed to keep Mrs. Clinton’s department from mixing State with foundation business, these new emails show her two closest aides – Huma Abedin and Cheryl Mills – doing the bidding of Clinton Foundation executive Doug Band.

“On April 22, 2009, Mr. Band emailed Ms. Abedin and Ms. Mills to say it’s ‘important to take care of [name redacted].  The subject line reads: ‘Fw: A favor.’  Far from suggesting the favor was inappropriate, Ms. Abedin responded that the person was on State’s ‘radar,’ and that ‘personnel has been sending him options.’  Shouldn’t Americans know who this person was and why he was so important to Mr. Band?

“The ties among Mrs. Clinton, the Clinton Foundation and State would become more incestuous. Two years after Mr. Band sent this email, he founded Teneo, a consulting firm.  Ms. Abedin would soon draw a paycheck from Teneo at the same time she was also working for both State and the Clinton Foundation.

“Another 2009 email has Mr. Band telling Ms. Abedin and Ms. Mills that ‘We need Gilbert chagoury [sic] to speak to the substance person re lebanon [sic].’  Within hours, Ms. Abedin replies that the ‘substance person’ is Jeff Feltman – the Assistant Secretary of State for Near Eastern Affairs and former U.S. ambassador to Lebanon.  A follow up email from Mr. Band urges her to call him ‘now.’

“The email doesn’t spell out what Mr. Chagoury wanted from the ambassador, but let your imagination run. Mr. Chagoury is a Lebanese-Nigerian whose family businesses thrived under Gen. Sani Abacha, the military dictator who ruled Nigeria for years.  According to a 2001 British court decision, the Nigerian government agreed not to prosecute Mr. Chagoury and unfreeze his Swiss bank accounts if he paid back millions it claimed had been stolen.

“In the 1990s, after Mr. Chagrouy made donations to a progressive nonprofit group, he was invited to a White House holiday dinner with President Clinton.  He also had a meeting on U.S.-Nigeria relations with high-level Clinton Administration officials.

"Turns out – non-surprise – Mr. Chagoury has donated at least $1 million to the Clinton Foundation while pledging $1 billion to the Clinton Global Initiative.  In 2003 Mr. Chagoury paid Mr. Clinton $100,000 for a speech in the Caribbean.  The question is whose interests was State serving when it tried to hook him up with our ambassador to Lebanon?....

“The Clinton campaign believes the media are so committed to defeating Donald Trump that they’ll play down this sleazy business – and maybe that’s right.  But Judicial Watch’s Tom Fitton says more emails are coming from his freedom-of-information litigation.  And Julian Assange at WikiLeaks – which made public the hacked Democratic National Committee emails showing how the DNC favored Mrs. Clinton over rival Bernie Sanders – says he’ll release more emails involving the Clinton Foundation.”

Separately, Julian Hattem / The Hill:

“In another message...the chairman of Morgan Stanley Asia sent Clinton a copy of testimony he was due to provide to Congress, and asked to help with her work ‘in any way I can.’  The next day, Clinton asked Abedin about ‘connecting’ with him in Beijing, either at the ‘embassy or other event.’....

“ ‘In the law, you know, one is allowed to draw an adverse inference when a witness or a party destroys evidence. And given some of the corruption we have seen in both the Clinton Foundation and in the government under Hillary Clinton, I think it’s reasonable for Americans to draw an adverse inference,’ Sen. Tom Cotton (R-Ark.) said on Fox News on Tuesday.

“ ‘She set up an email server specifically to avoid public scrutiny and that the controversy between her email on one hand, and the Clinton Foundation on the other, are not two distinct controversies.

“ ‘Those are the same controversy.’”

In the above-mentioned Bloomberg Politics poll, more than half of likely voters say they are bothered a lot by the Clinton foundation accepting money from foreign governments when she was secretary of state, while a quarter of likely voters said the issue didn’t bother them at all.

Michael Gerson / Washington Post

“One of the most unintentionally revealing moments of Hillary Clinton’s campaign so far came during her recent, unconvincing explanation of the email affair: ‘I may have short-circuited it and for that I, ah, you know, will try to clarify.’

“Most of the resulting ridicule has focused on the ‘short-circuited’ portion of the statement, which seems a particularly gentle euphemism for prevarication.  But it is the latter portion of her quote that exposes a serious political disability: an ingrained, almost automatic recourse to guile.

“The moment really should be watched in order to be properly appreciated.  Clinton launches her sentence with ‘I may have short-circuited it and for that...’  If this were an SAT question, the natural completion would be ‘...and for that I sincerely apologize.’  Clinton looks as though she is headed in that direction, but stops herself.  The result: ‘...and for that I, ah, you know, will try to clarify.’

“Then she proceeds with the opposite of clarification: ‘I have acknowledged repeatedly that using two email accounts was a mistake.  And I take responsibility for that.  But I do think...having him [FBI Director James B. Comey] say that my answers to the FBI were truthful and then, I should quickly add, what I said was consistent with what I had said publicly.  And that’s really sort of, in my view, trying to tie both ends together.’

“The complexity of Clintonian knots is one reason that only 34 percent of Americans in a recent poll judge her ‘honest and trustworthy.’  In the email scandal, we have seen deceptions used to cover deceptions; then a minimalist apology, filled with caveats, which themselves must be revised; and then a fuller apology, long after it appears cynical and forced.

“It is amazing how many problems are caused, in politics and in life, by the inability to sincerely apologize....

“When Clinton mouths the words ‘I am sorry’ and surrounds them with a thick cloud of self-justification, we are convinced only that she regrets being caught.  Rather than making her look vulnerable and human, it makes her seem devious and supremely political. Does anyone really believe the Clinton way of politics has changed?

“This is the American emergency: an acute shortage of public integrity at the highest level of our politics.”

--Clinton released her tax return for 2015 and it showed she and her husband, Bubba, earned adjusted gross income of $10.6 million in 2015 and paid $3.6 million in federal income taxes, or an effective tax rate of 34.2 percent, while donating 9.8 percent of their adjusted gross to charity – including a $1 million gift to the Clinton Family Foundation, which no doubt goes into Chelsea’s pockets, mused the editor.

So Mrs. Clinton is once again trying to goad Donald Trump into releasing his returns, though he shows zero signs of doing so prior to the election.

Previously, the Clintons released their returns for 2007 through 2014 and they showed the couple made $139.1 million – much of it from paid speeches.

The $10 million in income for 2015, though, $6 million for Bill, $4 million for her, may make it a tad bit harder for them to appeal to the rest of us schmucks, especially seeing as how neither did anything of value for their coin.

--Kevin Lilley / Military Times

“Are younger service members – so-called ‘millennials,’ born in 1980 or later – soft?

“Are they too reliant on technology?  Are they buried so deep in social media that face-to-face communication becomes impossible?  Are they too busy questioning orders to follow them?

“It’s not uncommon to hear such complaints from members of the Old Guard, some of whom are quick to stereotype the new breed as too desperate for praise and too ill-disciplined.

“Across the services, leaders certainly are scrambling to adapt to the millennial mindset, even as the generation is taking over.

“—The Army is looking to expand the role of drill sergeants and insert them back into Advanced Individual Training.  This means new soldiers will have more time with tough-talking soldiers, beyond basic.  Why?

“ ‘The problem that we do have is that right now the generation we have coming in is not as disciplined as we would like them to be,’ said Command Sgt. Maj. Michael Gragg, the senior enlisted soldier for the Center for Initial Military Training, earlier this year.  ‘So we have to provide them with discipline over a longer period of time.’....

“—While recruiting in the short term has not suffered, leaders have warned of a looming crisis.

“In the 1990s, almost half of young Americans had parents with some military experience.  Today that has dropped to about 15 percent, said Stephanie Miller, the Pentagon’s director of accessions policy, in an interview earlier this year.

“This military-civilian disconnect does create this particular challenge for us,’ Miller said.

“Social media also is creating new complexities for recruiters.  Years ago, a successful strategy entailed some television ads and sending recruiters out to high schools for face-to-face conversations.

“Now, that’s changed as prospective recruits spend endless hours connected to smartphones.

“ ‘It is difficult to be able to get their attention in a world where social media and so many other different types of activities are pulling at their attention,’ Miller said.”

Separately, an editorial in Military Times (same as Army Times, which is where I found this), notes in part:

“Those darn millennials.

“You listened to your elders and showed them respect, but these youngsters seem to constantly get in your grill and challenge you.

“While you busted your butt and humbly moved up the ranks, these troops demand praise and expect to be rewarded at every turn.  They want to be honored just because they show up, which just makes you want to throw up....

“Here’s the deal with millennials. Yes, they incessantly ask, ‘Why?’  But, like you, they recognize systemic problems in the military machine, like its rigidity and bloat.  But unlike the generations before them, they’re not wired to quietly endure a broken system – they want to fix it.  Properly supervised, that can be turned to a leader’s advantage.”

--Hugh Naylor of the Washington Post had a story on the extreme heat in the Middle East this summer.

“Parts of the United Arab Emirates and Iran experienced a heat index that soared to 140 degrees in July, and Jeddah, Saudi Arabia, recorded an all-time high temperature of nearly 126 degrees.  Southern Morocco’s relatively cooler climate suddenly sizzled last month, with temperatures surging to highs between 109 and 116 degrees....

“Temperatures in Kuwait and Iraq startled observers.  On July 22, the mercury climbed to 129 degrees in the southern Iraqi city of Basra.  A day earlier, it reached 129.2 in Mitribah, Kuwait.  If confirmed by the World Meteorological Organization, the two temperatures would be the hottest ever recorded in the Eastern Hemisphere.

“Stepping outside is like ‘walking into a fire,’ said Zainab Guman, a 26-year-old university student who lives in Basra.  ‘It’s like everything on your body – your skin, your eyes, your nose – starts to burn,’ she said....

“Climate scientists say this shouldn’t be surprising.

“A study published by the journal Nature Climate Change in October predicted that heat waves in parts of the Persian Gulf could threaten human survival toward the end of the century....

“The region’s governments are generally not prepared to deal with rapidly growing populations and climactic shifts....

“The United Nations predicts that the combined population of 22 Arab countries will grow from about 400 million to nearly 600 million by 2050.”

This will place tremendous stresses on countries that already face acute water crises, for example.

--Kathleen Parker / Washington Post, as part of her essay on HBO’s John Oliver and his defense of newspapers, had this hilarious anecdote of Sam Zell (especially if you know who the irascible Zell is).

“(Zell), erstwhile owner of the Tribune Co., summed up the sad trajectory of the nation’s interests and, perhaps, our future while speaking to Orlando Sentinel staffers in 2008.  When he said he wanted to increase revenues by giving readers what they want, a female voice objected, ‘What readers want are puppy dogs.’  Zell exploded, calling her comment the sort of ‘journalistic arrogance of deciding that puppies don’t count... Hopefully we get to the point where our revenue is so significant that we can do puppies and Iraq, okay?  [Expletive] you.’

“Yes, he said that.

“Moral of the story: If you don’t subscribe to a newspaper, you don’t get to complain about the sorry state of journalism – and puppies you shall have.”

--Some of you no doubt saw the “60 Minutes” story last week on the heroin epidemic in the country. In the following days I saw a Wall Street Journal story that started out:

“Fatal drug overdoses across New York City jumped 66% from 2010 to 2015, with heroin’s deadly role growing year by year, according to a study released Tuesday by the city Department of Health and Mental Hygiene.

“In 2015, 937 New Yorkers unintentionally overdosed compared with 541 in 2010.  Heroin was involved in 556, or 59%, of the fatal overdoses in 2015.”

Here in New Jersey, Hunterdon County is a beautiful spot in the state, very rural, and the county prosecutor announced this week that there were three fatal heroin overdoses between July 26 and Aug. 3.  Two men age 42 and 49, and a 26-year-old woman.

So far in Hunterdon, “28 overdoses have been reported to police to date this year, compared to 40 for all of 2015.  Of those, nine were fatal compared to 12 overdose fatalities in all of 2015 and eight in 2014.”  [NJ.com]

It’s just very sad and a true crisis.

--Lastly, I include this tragic story in the hope it may save one of your loved ones lives someday.  Last Saturday in Rouen, France, a fast-moving fire in the basement of a bar killed 13 people.  Do you know how it started?  It was a birthday party and the person holding the lit cake tripped as he/she was carrying it and the candles set soundproofing tiles on fire that quickly exploded into an inferno.

My point is, in any small nightclub space, please tell your kids to check for exits as soon as they enter the room. 

In this case, the initial reports said it might have been a possible gas explosion; another reason to ‘wait 24 hours.’  Those who escaped then told the truth.  The space was far too packed, illegally.

So, on that cheery note....

---

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

God bless America.

---

Gold $1341...unchanged on the week, a rarity.
Oil $44.69...best performance since April, up $2.71.

Returns for the week 8/8-8/12

Dow Jones  +0.2%  [18576]
S&P 500  +0.05%  [2184]
S&P MidCap  -0.3%
Russell 2000  -1.5%
Nasdaq  +0.2%  [5232...new high]

Returns for the period 1/1/16-8/12/16

Dow Jones  +6.6%
S&P 500  +6.9% 
S&P MidCap  +11.4%
Russell 2000  +8.3%
Nasdaq  +4.5% 

Bulls  54.3
Bears  20.9  [Source: Investors Intelligence]

Have a great week.  Stay cool this weekend if you live in the northeast.  Our thoughts and prayers to those on the Gulf Coast dealing with the awful flooding.

Brian Trumbore