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09/03/2016

For the week 8/29-9/2

[Posted 10:30 PM ET, Friday]

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

Edition 908

Washington and Wall Street

I cover the latest on the presidential election down below in depth.  This coming week look for a slew of new polls, which among other things will determine whether Libertarian candidate Gary Johnson gets on the debate stage for the first one, Sept. 26.  Highly unlikely, however, as he needs to average 15% in five national polls picked by the Commission on Presidential Debates and he’s nowhere near that number today.

Meanwhile, as Hurricane/Tropical Storm Hermine ruins holiday plans up and down the east coast, we can now say conclusively the Federal Reserve will not hike interest rates when it next meets Sept. 20-21.  I’ve been saying this all along but some uncertainty was injected into the debate out at Jackson Hole, Wyoming, when Chair Janet Yellen, Vice Chair Stanley Fischer and others hinted at action in a few weeks, which I have said would not happen because of the election.

[Barney Frank, the architect of the landmark 2010 Wall Street reform law, also said this week the Fed should not hike in September.  “What the Fed should do this close to the election is make no waves.”  Hey, for the first time ever, I agree with Barney!]

But the Fed was saying if we had a blockbuster jobs report on Friday for August, that could move the needle and, alas, the increase in nonfarm payrolls was less than expected, though a solid 151,000, with insignificant revisions to June and July that result in a three-month average of 232,000. 

The unemployment rate stayed at 4.9%, the underemployment rate, U6, was unchanged at 9.7%, and average hourly earnings rose just 0.1%, though still up 2.4% year-over-year.

In other important economic data for the week, personal income and consumption rose a solid 0.4% and 0.3%, respectively, in July while manufacturing data was weaker than expected.

The Chicago purchasing managers index for August was just 51.5 vs. an expectation of 54.0 (50 being the dividing line between growth and contraction), while the national ISM manufacturing figure for August was a disappointing 49.4, the first sub-50 reading since February.  The key new orders component was only 49.1.

July construction spending was unchanged, when a healthy increase was forecast, and factory orders for the month came in basically in line, up 1.9%.

As detailed below, auto sales for August, while still historically robust, were nonetheless down over year ago levels.

And on the real estate front, the S&P/Case-Shiller 20-city home price index for June (remember, this one lags a bit) was up 5.1% year-over-year, down from May’s 5.3% pace and continuing a trend.  Portland, Oregon was the hottest market, up 12.6% yoy, with Seattle up 11.0%.  But New York saw an increase of just 2.1%.

The Atlanta Fed’s GDPNow indicator is forecasting third-quarter GDP of 3.5%, annualized, a nice rebound over the 1.2% pace of the past year.

So add it all up and we’re doing OK, but the trends in manufacturing bear watching.

In the markets, August, by virtually every indicator, was historically dull, continuing a stretch that ran to 40 straight days by Friday without an up or down move of 1% for the S&P 500, the longest such run since July 2014.  Other indicators had August as the dullest in terms of volatility since 1928.

But September promises some fireworks, maybe at least by month’s end with an OPEC meeting (Sept. 26-28) and the first presidential debate, while the European Central Bank holds an important meeting next week, Thursday, and this weekend you have a G20 confab in China, in the eastern city of Hangzhou*.  Not that these folks are going to say anything earthshattering when it comes to the global economy, but you’ll have talks on the side, including between Chinese President Xi Jinping and President Obama, as well as between Obama and Turkish President Erdogan, that might have geopolitical implications in fairly short order.

*Hundreds of factories have been ordered shut in the Hangzhou region to make sure the air is clear for the leaders...which of course isn’t good for economic activity in the area.

Europe and Asia

Lots of data on the Eurozone, with the unemployment rate for July coming in at 10.1%, same as June, and down from 10.8% a year earlier, which isn’t that impressive.  Nonetheless, 10.1% is the lowest since July 2011.  [The rate in the overall European Union is 8.6%, the lowest since March 2009.]

Germany’s jobless rate is 4.2% as measured by Eurostat, though the German government calculates it differently, 6.1% for August, unchanged since May but a record low.

France, however, is at 10.3%, Italy 11.4%, Spain 19.6% and Greece 23.5% (May).

The youth rate for the euro area is still 21.1%, with 50.3% in Greece, 43.9% in Spain and 39.2% in Italy.

Markit reported the manufacturing PMI for the Eurozone in August was 51.7 vs. 52.0 in July.

Germany came in at 53.6, Spain 51.0, Italy 49.8 (20-month low), France 48.3, and Greece 50.4.

Chris Williamson, chief economist at IHS Markit:

“Eurozone manufacturers reported a wavering performance in August, with signs that growth could slow further in coming months.

“There is some suggestion of a Brexit impact and growth may wane further in September after new orders growth slipped to a one-and-a-half year low....

“Employment growth also eased to a five-month low, indicating an increased hesitancy to hire amid the heightened political uncertainty.  Once again, it’s also a worryingly mixed picture across the region.”

The manufacturing PMI in the UK, though, was 53.3 in August – a 10-month high – far greater than expected.  It seems factories were powered by their highest levels of export orders since July 2014 owing to the sharply lower exchange rate.  [The PMI was 48.3 in July, post-Brexit.]

A flash estimate on Eurozone inflation for August came in at 0.2% annualized, same as July. [Eurostat]

Euro Bits....

In Spain, tourism is up 11% in the first 7 months of the year, with international tourism up 10% as Spain gains from terror attacks in Turkey, Tunisia, Egypt and France.

The number of visitors to Egypt fell more than 46% year-on-year in the first quarter of 2016, while arrivals in Tunisia fell 18.7% in the period, after a 25% slide last year.

Turkey is expecting bookings for September to December to be down by 52% on the same period last year, while bookings to France are down by nearly 20%.

Separately, deflation still rules the day in Spain, -0.3% ann. for August, but an improvement from July’s -0.7%.

Italy’s retail sales for June were 0.8% year-over-year, hardly exciting.

The Eurobond market in August was the quietest in more than two decades, according to those in the know.  The yield on the 10-year German Bund is still negative, -0.05%.  But the aforementioned ECB meeting of Sept. 8 could provide some volatility as the board addresses a key issue.  Like lessening the restrictions on what it can buy because the Eurobond market just doesn’t have the supply the U.S. Treasury market does.  Of course this leads to other issues I’ve talked of for years.  In some cases the ECB could be buying total crapola.  Or as the French say, merde.

Along these lines, the ECB did say it was not taking any action on including Greece in its bond buying program as it awaits further clarity on the country’s debt sustainability.

Meanwhile, Russian President Putin said the euro area could one day shrink in size if its stronger members sought to band together, which would strengthen the euro...something Russia would like to see as 40 percent of its currency reserves are in euros. 

Putin is holding his first meeting with new British Prime Minister Theresa May in China this weekend; the two nations having a most prickly recent history.

Speaking of Ms. May, and the topic of Brexit, she told colleagues at the first meeting of the Cabinet following the summer break: “Brexit means Brexit [and] we’re going to make a success of it.”

May confirmed there would be no second referendum, as some Cabinet members have been calling for.  May added:

“We have the opportunity to forge a new positive role for the UK in the world; to make sure that we are that government and country that works for everyone.”

Ms. May’s Cabinet also concluded there was no need to hold a parliamentary vote before beginning the formal process of exiting the EU, though opponents of leaving are going to court to argue Parliament should hold a vote before triggering Article 50.

May continues to say Article 50 won’t be triggered before the end of the year. Only when Britain does will the two-year negotiating window begin.

Ms. May said the first of her red lines in negotiations will be an end to the free movement of people coming to the UK from the European Union, thus ending the right of EU citizens to settle freely in Britain, even if this comes at the cost of tariff-free access to the bloc’s single market.  French President Francois Hollande has repeatedly said that membership in the single market means accepting the right of EU citizens to move to Britain.

As for the opinion of other European leaders when it comes to Brexit, German Deputy Foreign Minister Michael Roth warned that the UK’s negotiations “will be very difficult” and, reiterating Hollande’s stance, that Britain won’t be allowed to “cherry pick” the best the bloc has to offer.

“If the British want full market access but want to limit the access of workers from Germany, France or Poland, they will find there is no a la carte cooperation in this direction,” Roth said, he being the government minister responsible for European affairs.

There is a key EU summit without Britain on Sept. 16 in the Slovak capital of Bratislava.

German Chancellor Merkel, in a week of shuttle diplomacy to get a feel of things before this gathering, said last weekend, “Britain’s exit isn’t just some event, but rather a deep watershed in the history of European Union integration.”

During her tour, Merkel faced pressures from the likes of Hungary and Poland to tighten barriers against migration.

Romania and Poland also want to make sure that a priority in negotiations with Britain is to ensure EU citizens living in the UK keep their jobs and rights after Brexit talks conclude.

Germany’s vice-chancellor Sigmar Gabriel said the EU would go “down the drain” if other states followed Britain’s lead. Gabriel, who is also economy minister in Germany’s governing coalition, said the world now regards Europe as an unstable continent.

“Brexit is bad but it won’t hurt us as much economically as some fear – it’s more of a psychological problem and it’s a huge problem politically,” he said.  [BBC]

[Separately, Gabriel said trade talks between the EU and the U.S. had “de facto failed.”  In 14 rounds of talks, the two sides had not agreed on a single common chapter out of 27 being discussed, he said.]

Speaking of political problems, while Sigmar Gabriel is referring primarily to right-wing, anti-EU movements in the likes of the Netherlands and France*, as well as Austria, Germany and others, today in Spain you have a political crisis of a different sort, the inability since last December to form a government, Spain having failed again this week, with a third general election in 12 months now a distinct possibility in December, with Christmas Day being talked about for the vote.

The problem for acting, and former, Prime Minister Mariano Rajoy is that he is too tarnished by a long series of corruption scandals involving his center-right People’s Party (PP), plus the austerity policies from his prior government that were enacted during a deep recession remain highly unpopular, even as Spain’s economy rebounded strongly.

Rajoy’s primary problem is getting the Socialists to either support him or abstain from voting so he and his party can cobble together a majority coalition.

Polls do show the people favoring the Socialists joining Rajoy rather than face another election.

*In France, National Front leader Marine Le Pen said this week, “As far as France’s best interest is concerned it’s ‘Everything but Hillary Clinton,’” she told CNN, in announcing her support for Donald Trump. 

Back to migration...the head of the German Federal Office of Migration and Refugees said he expects between 250,000 and 300,000 new arrivals in 2016, a sharp drop compared to the million who arrived last year.

But the number of migrants to the Greek islands has been rising rapidly again, from fewer than 50 a day in May and June to 460 on Monday, alone.  While this is far below the daily peaks of 6,800 last October, the problem is that unlike 2015, once these folks land in Greece they are stuck there as the borders north are being shut to new arrivals.  Greece can’t handle the 60,000 already in camps, let alone a new surge.

Italy has seen 116,000 arrive thus far this year, most from sub-Saharan Africa.  That compares with 154,000 for all of 2015.  The vast majority of these are stuck in Italy as well.  Did you see the pictures this week of hundreds of migrants camping out at the train station at beautiful Lake Como?  I’m sorry if this offends any of you, but I sure as hell wouldn’t want to have planned an expensive trip there, only to be faced with that. 

So it’s no surprise that Hungary is now talking of a second, massive fence along its border with Serbia to stop an influx of migrants in case an agreement with Turkey to contain them fails.  Prime Minister Viktor Orban said that if the policy changed and suddenly hundreds of thousands of migrants appeared all at once at Hungary’s borders, then, “if it doesn’t work with kind words, we’ll have to hold them back with force, and that we shall.”

Hungary is increasing the number of police it has patrolling its southern border to 47,000.

Finally, on a different topic, the largest European business lobby in China warned that the country’s market access barriers are “politically unsustainable” as Chinese investment continues to flood into the EU.

“There is a small, rocky pathway to China [for foreign investors] and an autobahn from China to Europe,” said Jorg Wuttke, head of the European Chamber of Commerce in China.  “The increasing wave of Chinese investment into Europe, while European investment in China drops, highlights the lack of reciprocal market access.”

Chinese investment in Europe surged 44% in 2015 to 20bn euro, but that has already been far exceeded this year.

For example, German robotics maker Kuka was acquired by China’s Midea.

“It is almost impossible to imagine in the current climate that a European company would be permitted to make a significant investment in an equally prominent Chinese company with advanced technological capabilities,” the chamber said.

No doubt this will be a topic at this weekend’s G20 meeting.

---

In China, the government’s official PMI on manufacturing for August was 50.4, up over July’s 49.9 and a 22-month high.  The Caixin private gauge was 50.0 vs. 50.6 in July.

The official reading on services was 53.5 vs. 53.9 in July.

Separately, China’s industrial firms saw profits grow at their fastest pace in four months in July, according to the National Bureau of Statistics, up 11%, aided by a pickup in sales and reduced costs.  The NBS’ He Ping hastened to add, “Although the growth in industrial profits has accelerated, we still haven’t seen an obvious pick-up in demand in the market.”

Total profits for the January-July period rose 6.9% from the same period a year earlier.

Profits in the mining sector plunged 77%, while manufacturing profits rose 12.8%.

In Japan, the manufacturing PMI came in at 49.5 in August vs. 49.3 the prior month. 

Retail sales for July rose 1.4% month-on-month, but are -0.2% year-over-year.

Household spending in July was -0.5%, yoy, the fifth consecutive month it has declined.

But the unemployment rate fell to 3.0% in July, the lowest in 21 years.

Bottom line, Japan needs wage growth, which has been nonexistent, and thus increased consumption.

India saw second-quarter GDP rise 7.1%, but this was down from the 7.9% annualized pace of the first quarter, according to the Central Statistics Office.  The forecast was 7.6%.  Some question India’s numbers, a la China’s, especially since India is now making a big deal of the fact (seeming fact) that it is growing faster than China.

The biggest boost to growth in the second quarter was electricity, up 9.4%.

India’s manufacturing PMI was 52.6 in August vs. 51.8 in July.

Taiwan’s manufacturing PMI was 51.8 last month vs. 51.0, the best in 18 months, while South Korea’s dropped to 48.6 vs. 50.1 in July.

Street Bytes

--How dull have the markets been?  The Dow Jones has not been up or down 1% for a week in seven weeks.  This time it was up 0.5% to 18491, while the S&P 500 was up the same, and Nasdaq rose 0.6%.  All three are one solid day away from record highs.

--U.S. Treasury Yields

6-mo. 0.45%  2-yr. 0.79%  10-yr. 1.60%  30-yr. 2.28%

The Fed’s preferred price gauge, the personal consumption expenditures index, is a component of the monthly consumption figures and core PCE remains at just 1.6%, below the Fed’s stated 2% target.

--Crude oil fell sharply this week, though August was the best month since April.  Government data showed a surprising weekly build in inventories and a smaller-than-expected drawdown in gasoline.

Normally this time of year you see drawdowns in crude oil, but for a second straight week there were strong builds.

OPEC meets Sept. 26-28 and the rise in oil prices for much of August was largely led by the belief there would be some sort of production freeze announced at this confab, which I’ve said is a lot of garbage because Saudi Arabia, the key player, continues to want to defend its market share over price, while Iran isn’t about to cut as it ramps up to its previous capacity following the lifting of sanctions.   Plus Iraq reached an agreement with the Kurds the other day to add more production.

That said, Vladimir Putin is saying this weekend that Russia wants to join a production freeze with the cartel.

--The European Competition Commissioner Margrethe Vestager said Apple paid just 0.005 percent tax in Ireland in 2014.  The European Commission ruled that Ireland illegally provided state aid to Apple by not collecting $14bn of taxes owed to it by the tech giant over a 10-year period.  Vestager said Apple had improperly routed taxable income to a subsidiary with no accountable head office.

The U.S. Treasury Department expressed disappointment in the ruling, saying retroactive tax assessments “are unfair, contrary to well-established legal principles and call into question the tax rules of the individual countries in the EU.”

The Treasury added the ruling “could threaten to undermine foreign investment, the business climate in Europe and the important spirit of economic partnership between the U.S. and the EU.”

Apple CEO Tim Cook said the EU is trying to replace Irish tax laws with what it wants.

Ireland’s tax collection agency, the Revenue Commissioners, said Apple hasn’t dodged a penny of lawfully calculated tax in Ireland.  Chairman Niall Cody said Apple’s profits “that are not generated by their Irish branches, such as profits from technology, design and marketing that are generated outside Ireland cannot be charged with Irish tax under Irish tax law.”

Irish Finance Minister Michael Noonan rejected the EC’s ruling and said Ireland would appeal the judgement, parliament voting to endorse it next week, insisting Ireland’s tax rules were transparent.  Noonan said:

“I disagree profoundly with the commission’s decision.  Our tax system is founded on the strict application of the law...without exception.”

Noonan accused EU regulators of trying to undermine the integrity of Ireland’s tax system and subverting its right as a sovereign state.  Friday, he said, “How could any foreign direct investor come into Europe if they thought the valid arrangements they made under law could be overturned a generation later and they be liable to pay back money.”

A successful appeal will take years, no doubt.

Irish opposition lawmakers initially wanted Dublin to take the money, but for the government, the country’s low corporate taxes are a cornerstone of its economic policy (and by week’s end, the opposition also favored an appeal).  Google and Facebook are among the bigger U.S. companies with growing presences there.  According to the U.S. Chamber of Commerce in Ireland, 700 U.S. companies employ 140,000 people on the Emerald Isle out of a total population of just over 4.6 million.

Tim Cook took off after Brussels in an interview with the Irish Independent, suggesting the accusations are “political crap,” and that Ireland is being “picked on” and is a pawn in a wider European Commission agenda to harmonize taxes across the EU.

“No one did anything wrong here and we need to stand together. Ireland is being picked on and this is unacceptable.”

“It’s total political crap,” he said.  “They just picked a number from I don’t know where.  In the year that the Commission says we paid that tax figure, we actually paid $400 million.  We believe that makes us the highest taxpayer in Ireland that year.”

Cook said Apple and Ireland had “played by the rules” and would win the case on appeal.  He noted that Apple now has 6,000 workers in Ireland.

“When I first came with the company in 1998 Apple wasn’t doing good.  Steve (Jobs) had just come back and we were on the verge of bankruptcy frankly, probably within weeks of it.

“I remember going to Ireland very shortly after I had joined the company and as I was travelling, although I didn’t tell people at the time, we sort of felt we had to close the site and I got there and started really understanding what we had there.

“The people of course is really what I’m talking about.

“Together Ireland and Apple are thriving, that’s the way I look at this relationship, it’s a 37-year-old marriage and like any marriage you go through a pothole here and there but we stuck together.”

Cook also described the EC ruling as “maddening and disappointing.”

“We’re subject to the statutory rate in Ireland of 12.5%; we paid $400 million in taxes in 2014.”

Earlier, Cook said: “Using the Commission’s theory, every company in Ireland and across Europe is suddenly at risk of being subjected to taxes under laws that never existed.”  [Sources: Bloomberg, Financial Times, Wall Street Journal, Irish Independent]

Editorial / Wall Street Journal

“Even by the usual Brussels standards of economic malpractice, Tuesday’s 13bn euro ($14.5 billion) tax assault on Apple is something to behold.  The European Commission decided that Dublin’s application of Irish tax law to an American company violated European antitrust rules.  Orwell would understand.

“At issue is how Ireland has taxed global companies with Irish subsidiaries.  Apple in the 1980s established two business units in Cork to manage global sales. These units held the rights to much of Apple’s intellectual property such as product designs.  In payment for those licenses, the units remitted large portions of their profits to the U.S. each year to fund research at Apple headquarters.

“The rest of the profits generally weren’t taxed under longstanding Irish law, since the money was earned overseas.  The money wasn’t taxable elsewhere since the laws of other countries held that it was up to Ireland to decide whether and how much to tax it.  In the case of America, the tax was deferred until Apple repatriated the profits. That’s it.  That’s the supposed tax evasion.  Apple paid all the taxes it owed under existing tax laws around the world, which is why it hasn’t been subject to enforcement proceedings by revenue authorities.

“Then again, this case isn’t about tax law.  It’s about tax politics, and in particular the bureaucratic and left-wing frustration that low-tax governments are using normal accounting principles to deny high-tax governments more revenue booty.

“Ireland has stood firm for years against continental pressure to abandon its competitive 12.5% corporate-tax rate. So having lost the debate over tax rates, Brussels now wants to use antitrust law to tell Ireland and other low-tax countries how to apply their own tax laws....

“As for the U.S., the Treasury Department pushed back against these tax cases, which it rightly views as a protectionist threat to the rule of law.  But it’s hard to believe that Brussels would have pulled this stunt if Treasury enjoyed the global respect it once did.  President Obama and Treasury Secretary Jack Lew have also contributed to the antibusiness political mood by assailing American companies for moving to low-tax countries.”

Separately, Tim Cook said that Apple had set aside “several billion dollars for extra taxes in the U.S. next year” as it plans to repatriate the offshore cash pile at the center of the row with Brussels, some or all of its $215bn in cash stashed around the world.

--Meanwhile, Apple competitor Samsung Electronics announced a global recall, and sales halt, of the large-screen smartphone Galaxy Note 7 that it recently launched because of faulty batteries that can catch fire.  The world’s largest smartphone maker will announce the results of an investigation and a plan to deal with it shortly, but supposedly there have been at least 35 cases where the phones exploded while recharging, which would be a bit disconcerting if you were fast asleep when this happened...or drinking beer watching football.

The timing is awful because Apple is unveiling its new iPhone model this coming week at its annual event.

--Speaking of explosions, a commercial SpaceX rocket exploded on Thursday during a prelaunch test at Florida’s Cape Canaveral Air Force Station.  The rocket was carrying a $258 million satellite that was part of a Facebook-led plan to beam Internet signals down to parts of Africa.

Facebook CEO Mark Zuckerberg was in Kenya at the time and wrote in a post that he was “deeply disappointed to hear that SpaceX’s launch failure destroyed our satellite that would have provided connectivity to so many entrepreneurs and everyone else across the continent.”

Clearly a reprimand of SpaceX founder Elon Musk, who is also CEO of Tesla Motors.  Musk wrote on Twitter, “Cause still unknown.  More soon,” but the accident occurred during fueling for a planned weekend launch.  The satellite itself was an Israeli model.

SpaceX and other launch companies have a heavy schedule of sending hundreds or even thousands of small satellites into space in coming years.  SpaceX has completed eight launches this year and had planned for an additional nine by year end but the launch pad itself was heavily damaged, thus putting the schedule in jeopardy.

As for Musk’s Tesla Motors Inc., it disclosed in a securities filing Wednesday that it owes its bondholders $422 million in the third quarter, and that it will raise additional money by the end of the year, which is needed for its proposed merger with home-solar company SolarCity, Elon Musk being chairman of both companies.

The thing is the filing indicated SolarCity’s cash was down to $146 million on June 30, from $421 million a year earlier.  When Musk first announced he was proposing to combine the two companies, it was viewed as a bailout of SolarCity.

Musk and his cousins, Lyndon and Peter Rive, the latter two Solar City’s CEO and technology chief, announced last week they were buying more than 80% of a $124 million SolarCity bond issue.  [Wall Street Journal]

Tesla shares finished the week at $197.75, down $22.25 from the previous Friday.

--U.S. auto sales came in less than a year ago for August, down 4.2%, for an annualized rate of 16.98 million vehicles, according to Autodata.  Analysts at Edmunds.com and Kelley Blue Book had projected an overall decline of 2.5% and 2.1%, respectively.  The industry has been near 2015’s record pace of 17.5 million vehicles most of the year, but it is looking more and more likely this was a peak.

Ford and General Motors reported declines of 9% and 5%, respectively, though Fiat Chrysler’s rose 3% year on year.

Toyota’s sales fell 5%, Nissan’s 6.5% and Honda’s 3.8%.  Volkswagen’s were down 9.1%.  But Subaru outperformed the industry, recording a sales increase of 14.7%.

Ford said, “We continue to see...the industry still running at historically high levels but down on 2015.  For 2017 we see vehicle sales strong but at a lower level than this year.”

As Ford put it, “we are just at a plateau.”

--In another example of the failure of the Affordable Care Act, Iowa approved premium increases this week of 19% to 43% for about 70,000 Iowans who buy their own policies, with the insurance commissioner telling USA TODAY, “The reality is, it’s all very justified, unfortunately.”

Nick Gerhart warned consumers in a rate hearing that if he rejected insurers’ proposed premium increases for 2017, the carriers would likely decline to sell policies in the state.

--Wal-Mart Stores Inc. announced it would cut 7,000 back-office jobs, mostly in accounting and invoicing positions at its stores around the country.

--Abercrombie’s shares cratered about 20% as the teen retailer posted its fourteenth straight quarterly sales drop, down 4.2% in its second quarter [July 31] year-on-year, plus it swung to a loss of $16.8 million, compared with a profit in the year ago period.  It didn’t help that the company said the second half would remain challenging.

--Singapore has a huge Zika crisis on its hand, with the number of confirmed cases exceeding 150 in the largest single outbreak of the virus in Asia.  At least two pregnant women were among those diagnosed with it as 24 new cases were discovered Wednesday alone, though about half the cases were foreigners, mainly from China, India and Bangladesh, among the hundreds of thousands of migrant workers in Singapore’s construction and marine industries. That said it is the only Asian country with an active transmission of the virus.

Zika is transmitted by the same Aedes mosquito that also spreads dengue – which Singapore has been battling to contain for years.

So in all seriousness, pregnant women are being advised by the U.S., Australia and others not to travel to Singapore.

The thing is, the Singapore Grand Prix takes place in two weeks and that typically attracts 40,000 overseas visitors.  Uh oh.

Meanwhile, Malaysia confirmed its first case the other day, a woman who had recently arrived from Singapore.

--Good  news out of Macau.  After 26 straight months of declining gaming revenue, gross revenue rose by 1.1% year-on-year in August, up from a contraction of 4.5% in July, according to figures released by the Gaming Inspection and Coordination Bureau.

The once white-hot former Portuguese colony has been suffering from the economic slowdown in the mainland and President Xi Jinping’s crackdown on corruption, and gross gaming revenue fell 34% last year, with another 13% decline forecast for 2016. 

But with new multi-billion dollar resorts being launched, casino owners are hoping (praying) that a wider range of customers will replace the revenue lost from the high rollers.  These same properties, though, may just cannibalize their existing ones.

--South Korea’s giant Hanjin Shipping Co.’s bankruptcy filing is rippling through the global supply chain, stalling delivery of goods as the company’s ships sit anchored off ports around the world.  There is concern Hanjin won’t be able to pay port and terminal fees and this comes at a time when retailers are gearing up for the holiday season.

Hanjin accounts for 3% of global shipping, according to data firm Alphaliner and the Los Angeles Times.

--The Department of Agriculture said U.S. farm incomes will hit their lowest point since 2009.  As I’ve written the past few weeks, record corn and soybean harvests are expected again this fall, which could push prices down even further.

As a result, net farm income will drop 11.5% this year over 2015, which is the third straight pay cut since record levels in 2013.  The situation would be worse except farmers have been cutting expenses, which of course isn’t good for the likes of Deere & Co. as it has previously said in announcing production cuts.

--Mylan Labs announced it would launch a generic version of EpiPen at half the price of the original, or $300 vs. $600, in an attempt to counter the backlash over the product’s steep price.  It cost about $100 in 2008.

Ironically, I saw a story today on NJ.com where a local man was stung by more than 20 bees and was found unconscious near his home.  Four police officers were credited with saving his life, with a captain saying “The victim was described as highly allergic and in cardiac arrest.”

The officers “used a defibrillator and administered two doses from an EpiPen.”

--United Parcel Service Inc.’s pilots ratified a new five-year labor contract that includes an immediate pay hike of 14.65 percent and 3 percent increase in annual wages through the span of the contract, plus a signing bonus of $60,000 for captains and of $40,000 for the first officers, along with enhanced pension benefits.  Good for them.

But come Jan. 1st, the cost of shipping with UPS will rise about 5%.  That’s called inflation, sports fans. 

--Campbell Soup Co. reported a smaller-than-expected fiscal fourth quarter profit, while guiding lower, and the shares fell about 5%.  It seems the company’s Bolthouse Farms unit was hit by “higher carrot costs and lower sales of carrots,” this being a key to Campbell’s fresh foods initiatives.

It probably wasn’t a good idea to hire Bugs Bunny as the chief of that division, Bugs not being known for being particularly energetic, nor respected.  He has been relieved of his duties and released into a Camden area field.

Overall, net sales dropped less than 1% as processed foods (the kind I eat) have seen decreasing demand from consumers.

--The Wall Street Journal reports that money has flowed out of European stock funds every week for more than six months, a record exceeding the previous mark set during the financial crisis.  With the bank sector struggling and the political landscape in a state of flux, there is little reason to believe this trend will reverse in the near future.

The Stoxx Europe 600 index was down 6.1% through August vs. the S&P 500’s gain of 6.2%.

--Shares in Salesforce.com, the business-software maker, slumped after the company issued disappointing guidance for the current quarter.

For the period ending July 31, Salesforce reported revenue of $2.04 billion, up 25% over a year ago, but just in line with expectations, while net income was in line as well.

--CBS’ “Sunday Morning” is a staple for the Trumbore family.  I picked it up in the 1990s, before Charles Kuralt retired, and I watch the first hour each week, before switching to my talk shows (or Premier League football).

So last Sunday, Charles Osgood formally announced what everyone knew...that he was hanging it up, Sept. 25, specifically, after 22 years.  We’ll miss him.

But I thought it was a foregone conclusion Jane Pauley was replacing him, which is fine with me, but then I saw that Anthony Mason and Lee Cowan are still being considered.  I’d go with Cowan, if he’s still in the running.

--I’m imagining it’s a bit of a tension convention at Fox News these days, what with former host Andrea Tantaros being the latest to slap a $30 million sexual harassment lawsuit on the network and former chief Roger Ailes.  A Fox lawyer said of her: “Tantaros is not a victim; she is an opportunist.”  For her part, Tantaros said Ailes often commented on her figure, sent word he wants her in dresses to see her legs, and asked for hugs and demoted her when she refused his advances, as reported by the New York Daily News’ Barbara Ross.

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey: ISIS announced that its No. 2, founding member, spokesman, and strategist Abu Mohammed al Adnani, had been killed, with Russia saying it had taken him out, a day after the Pentagon said it had in a “precision strike.” 

Russia’s Defense Ministry said Adnani was killed in Russian airstrikes near Aleppo.  A Pentagon spokesman, Peter Cook, said it had no evidence of Russia’s claims, asserting, “Russia has spent most of its time, its military campaign, supporting and propping up the Assad regime. It has not devoted much if any effort to targeting ISIL’s leadership.”

The Pentagon said it had targeted Adnani in a different area northeast of Aleppo.  Regardless, Adnani was ISIS’ most visible leader and he was in charge of overseas attacks, including in Europe.

Turkey swept ISIS militants and Kurdish YPG militia from an area of northern Syria, though the YPG as of week’s end hadn’t met Turkish demands to withdraw to the east of the Euphrates river, according to Turkish President Tayyip Erdogan.  [The YPG says it had complied.]

It’s been over a week since Turkey launched its offensive into Syria, saying it had a dual goal of expelling ISIS from the border, while ensuring the Kurds didn’t fill the void; Ankara not wanting any YPG success to spill over into the Kurdish insurgency in Turkey itself (orchestrated by the PKK).

But while Washington has backed Turkey’s moves against ISIS, it has been protesting its offensive against the Kurdish forces that the U.S. has been supporting.

Erdogan continues to say the YPG is an extension of the PKK.  He told reporters on Friday, “Nobody can expect us to allow a terror corridor on our southern border.”  He said he had sought the establishment of a “safe zone” in Syria but the idea had not received the backing of other world powers.  [Reuters]

Gee, sound familiar?  Like summer of 2012?

David Ignatius / Washington Post

“The U.S. military campaign to seize the Islamic State’s capital, Raqqa, may be delayed because of a nasty fight between Turkey and the Syrian Kurdish militia known as the YPG.

“Sadly, it’s a classic Middle East moment, when regional players’ mistrust of each other overwhelms their common interest in fighting the terrorist Islamic State. And, equally sadly, it’s a moment that illustrates the frailty of the United States’ Syrian policy, which has built its military plans on the treacherous fault line of Turkish-Kurdish enmity.

“In disentangling this story, let’s start with the Syrian Kurds.  U.S. military officials say they have consistently been the strongest force against the Islamic State... U.S. Special Operations forces trainers have developed a deep respect for the YPG – and why they saw this militia (and its umbrella group, the Syrian Democratic Forces) as the backbone of the coming campaign to take Raqqa.

“But the U.S. strategy always papered over a fatal weakness: Turkey regards the YPG as an affiliate of the Kurdistan Workers’ Party, or PKK, which it sees as a terrorist group.  Turkey held its nose and agreed to allow the United States to conduct bombing missions from Incirlik air base in support of the YPG, and to allow the group to assault Manbij starting in May.  But at some point, this shaky strategy was going to blow....

“How can the United States build a firmer foundation for finishing the campaign against the Islamic State? Washington must help build governance for a post-Islamic State world.  It should sponsor renewed peace talks between Turkey and the PKK.  And it should make clear to all that the only durable future is a federalism that can give Kurds, Sunnis, Shiites, Turkmen and other minorities a sense of ownership and control in Syria and Iraq.

“U.S. military power can’t save a house built on quicksand. Before we press on to evict the Islamic State from Raqqa, the United States needs to frame a clear understanding with the neighboring states about what comes next.”

In Iraq, the head of the U.S. military’s Central Command, General Joseph Votel, said Iraq was on track to retake the city of Mosul from ISIS by later this year, assuming Prime Minister Haider al-Abadi goes forward as planned.

Finally, Retired Marine Gen. James Mattis said of the chaos in the Middle East, writ large: “(The region) is experiencing the most turmoil since the end of the Ottoman Empire, and it’s getting worse.”  Yet U.S. influence in the region “is at its lowest ebb in 40 years,” he added.

“The problems that emanate from the Middle East can’t be contained in the Middle East,” Mattis said.  “We know that intellectually, but there’s a tendency to want to put a pillow over our heads.”  [New York Post]

The New York Times had an extensive piece on the Syrian War, interviewing experts, and the consensus is it can get much worse...truly genocidal.

Good luck, Trump or Clinton.

Iran: The Wall Street Journal opined on the nuclear deal:

“(We are) learning again that what the Obama Administration says Iran can do under the agreement, and what Iran is allowed to do, are almost never the same.

“The latest discrepancy was revealed Thursday in a report by David Albright and Andrea Stricker of the Institute for Science and International Security (ISIS), a think tank in Washington D.C. that specializes in nuclear issues. The agreement specifies that Iran is to limit its stockpile of reactor-grade, low-enriched uranium (LEU) to no more than 300 kilograms for 15 years.  Tehran shipped more than 11 tons of LEU to Russia last year, and the Administration has trumpeted the Islamic Republic’s supposed compliance with the deal as a way of justifying wider sanctions relief.

“But as Mr. Albright and Ms. Stricker note, Iran’s ‘compliance’ came about thanks to a series of secretive exemptions and loopholes that the Administration and the deal’s other signatories created for the mullahs sometime last year.  Had those exemptions and loopholes not been created out of thin air, the authors report, ‘some of Iran’s nuclear facilities would not have been in compliance’ with the deal....

“The White House has waved off the ISIS report by insisting it ‘did not and will not allow Iran to skirt’ its commitments. The non-denial would be more credible if the Administration hadn’t last year agreed to a secretive process in which Iran was allowed to inspect its own nuclear-related military facilities.

“It would also be more credible if Iran weren’t testing ballistic missiles thanks to another nuclear side-deal. That one was supposed to ban such tests for eight years but contained a semantic loophole that Iran claims makes it unenforceable.  Iran was also supposed to be subject to a five-year embargo on the purchase of major conventional weapons. Yet only last week it chose to deploy its newly acquired S-300 air defense system – purchased from Russia thanks to another U.N. loophole – to defend the Fordow underground nuclear facility*.  The deal was supposed to have rendered Fordow harmless by turning it into a science and technology center.”

*Iranian state television announced on Sunday that the S-300 system had been deployed there, with the commander of Iran’s air defense, General Farzad Esmaili, saying the protection of the facility is paramount “in all circumstances.”  [Jerusalem Post]

Yup, Obama will be passing off this issue to his successor as well, but you can be sure it will be a highlight of his presidency when he ticks off his “achievements” during his farewell address.  I’ll throw up while watching it.

Yemen: The U.N. now estimates 10,000 people have been killed in the 18-month-old civil war here, almost double earlier estimates of 6,000 cited by aid workers. The new figure is based on official information from medical facilities in the country, though some areas don’t have facilities and victims have been buried without any official record being made. Three million Yemenis have been displaced.  14 million of the 26 million total population need food aid.

Monday, at least 60 people were killed in a suicide car bomb attack on an army training camp in Yemen’s second city of Aden.  ISIS claimed responsibility.

Russia: There are two weeks until Russia’s parliamentary elections and a survey published Thursday by the independent Levada Center showed support for the ruling United Russia party has dropped from 57% to 50% in August compared to July among likely voters on Sept. 18.

In late 2010 and 2011, tens of thousands took to the streets after United Russia won 49% in what was seen as a rigged vote.  Ergo, look out.

Prime Minister Dmitry Medvedev, who heads up United Russia (Putin gave up the chairmanship of the party in 2012), is increasingly unpopular and it doesn’t help that when asked about the government’s recent decision not to index pension payments, he told reporters: “There’s no money. But you hang in there!”

So this week, Medvedev announced the government would hand out one-time payments of $75 in January 2017, rather than adjust pensions for inflation, calling it “absolutely fair.”

China: A senior official in the People’s Liberation Army met top Syrian officials in Damascus recently, promising increased military aid and training for government forces.  Rear Admiral Guan Youfei also met a senior Russian general, affirming the budding relationship between Beijing and Moscow in military affairs.   

The import of this visit is far more than taking a stance on Syria few have previously heard about.

As Charles Clover and Luna Lin write in the Financial Times:

“The visit...offers a stark demonstration of how a number of China’s longstanding foreign policy taboos are being rethought under President Xi Jinping.  For decades China has trumpeted its aversion to traditional realpolitik – including foreign military intervention, building foreign bases, developing spheres of influence, creating buffer zones and forging alliances – as outdated relics of colonialism....

“(Since) Xi assumed power in 2012, he has ushered in a new foreign policy....

“ ‘Since Xi became president, they no longer talk about keeping a low profile,’ says Paul Haenle, head of the Carnegie-Tsinghua Center in Beijing...

“As for the principle of non-interference abroad, (Haenle) says, ‘they insist they abide by it, but if you sat down for a few minutes you could think of 15 examples where they’re not doing that anymore.’”

For starters, you have the obvious example of land grabs in the South China Sea and assertive claims about the airspace over the East China Sea.  You also have a new naval base in Djibouti – its first foreign military base since withdrawing its forces from North Korea in 1958.

And there is growing support for a more assertive foreign policy in China’s journals and interviews with experts on standing up to the U.S. and Japan.

Also consider that Xi and Vladimir Putin have met 17 times since early 2013, with Russia and China holding a series of joint military exercises, including coordinated ship maneuvering in the East China Sea, with South China Sea exercises slated for later this month.

Meanwhile, Hong Kongers go to the polls on Sunday to choose candidates for the semiautonomous Legislative Council (Legco), the first major election snice the 2014 pro-democracy protests.  214 candidates are running for 35 seats.

The 2014 protests did not yield any concessions from Beijing over its plan to restrict elections for the city’s top leader.

Sunday, the goal of the pro-democracy candidates, who are competing against each other, is to win at least one third of the seats so they can block legislation.  Half of the total of 70 seats are not up for a vote as they are tied to various business and trade groups.  People with Communist Party ties dominate many of these constituencies, while in terms of Hong Kong’s top leader, he or she is currently hand-picked by a committee of pro-Beijing elites (mostly), with China’s government screening out unfriendly candidates.

North Korea: According to reports from South Korea, Kim Jong Un executed a vice premier for showing disrespect, while banishing two other top officials for ideological training.

Kim Yong Jin, the vice premier for education, was interrogated after slouching during a meeting in late June.  He was executed by a firing squad.

Seoul isn’t always right in its reports on who has been blown to bits and who hasn’t.  [Some reports had the official being blown up by an anti-aircraft gun.  Other reports said a second official was executed in the same fashion.]

Bottom line, drink a lot of coffee if you’re in a meeting with Kim Jong Un....and sit up straight!

Uzbekistan: The only president this country has had since becoming independent in 1991, Islam Karimov, died after suffering a stroke last weekend.  He had named no successor so an election will have to be held, but to say the nation (which lies between Kazakhstan and Turkmenistan and shares a small border with Afghanistan) is in a state of crisis as I write is a severe understatement.  All flights into the main airport were immediately canceled Friday.

Karimov, 78, led one of the most repressive regimes in the world, with thousands of opponents imprisoned and tortured. There is no freedom of speech here.

Uzbekistan is the strongest Central Asian state with the largest population (30 million) and the strongest military and security services, so any instability here can spread and thus Russia has a real interest in what transpires over the coming weeks and months.  Developing....

Philippines: Since new President Rodrigo Duterte launched his crackdown on the drug trade two months ago, about 2,000 suspected drug users and pushers have been killed.  Duterte, who is a wacko, promised a six-month campaign that would kill 100,000 drug users.  So many bodies would be dumped in Manila Bay that the “fish will grow fat,” he said.

The majority of the 2,000 victims thus far have died at the hands of vigilantes, with the victims’ generally poverty-stricken meth addicts or low-level peddlers.  According to the latest police figures this week, 1,051 have died at the hands of death squads, with the remainder killed in police operations, supposedly after resisting arrest.  [Financial Times]

Needless to say, the U.N. and various human rights groups have slammed Duterte for ignoring due process.  Approximately 700,000 drug abusers have turned themselves in, but they are placed in community rehab programs that are far from safe.  These aren’t exactly Cliffside Malibu, if you catch my drift.

But we learned late Friday, an explosion in Duterte’s home city of Davao killed 12 and wounded dozens more.  Duterte was in Davao but not near the site.  He has been waging an aggressive battle against jihadist group Abu Sayyaf, though no claim of responsibility as yet.  It could certainly also be related to his drug crackdown.

Brazil: On Monday, suspended President Dilma Rousseff defended herself against accusations of wrongdoing in testimony before her Senate impeachment trial, saying her accusers were trying to turn back the clock on social progress achieved during her and her predecessor’s terms in office.  Roussef said her enemies were using the charges as an excuse for a coup and that democracy was at risk.

Rousseff was accused of violating budget laws that made the country’s budget situation appear better than it was.

Two days later, Wednesday, the Senate voted overwhelmingly to remove Rousseff from office, convicted on a vote of 61 to 20 (54 of 81 being needed).

Vice President Michel Temer, who has his own issues involving corruption, takes over.

Venezuela, Bolivia and Ecuador have said they are recalling their ambassadors.

While a majority of Brazilians wanted Rousseff out, a majority also wanted to remove Temer.  He cannot run for president in 2018 because he has been convicted of breaking campaign finance rules and banned from running for office.  The two men behind him in line for the presidency have also been accused of corruption, while Rousseff has not.  [Though there is certainly evidence of it.]

Temer now has to turn around an economy in recession and he has advocated austerity measures, such as a lid on public spending, as well as changes to Brazil’s generous pension system, neither of which are popular with the people.

Both Temer and Rousseff have been part of the Petrobras scandal and that ongoing investigation.

Brazil’s GDP contracted at a 3.8% annualized rate in the second quarter, the ninth consecutive quarter of contraction, but this was better than the first quarter’s 5.4% year on year decline.  The jobless rate rose to 11.6% in the three months through July, up from 6.5% end of 2014.  Wages, discounted for inflation, fell 3% from the same months in 2015.

Venezuela: A massive demonstration was held in Caracas on Thursday, an estimated crowd of 500,000 calling for a recall election and the removal of President Nicolas Maduro.  The demonstrators also called for an end to socialism and the release of opposition leader Leopoldo Lopez as the economy has totally collapsed. 

Remember, the opposition won a majority of seats in the National Assembly in last year’s elections, but Maduro’s Supreme Court, packed with his supporters, has declared 24 laws passed by the Assembly to be illegal.

The military, as I’ve called for, needs to take him out as he clearly isn’t stepping down voluntarily.  First and foremost, Venezuelans need food and medicine.

Mexico:  Mexicans awakened Wednesday morning to the word Donald Trump was traveling to their country – the same man who called them rapists and drug traffickers – and to say they weren’t happy was an understatement.  Just what Enrique Pena Nieto was thinking has many strategists stumped. He is deeply unpopular as it is these days, and then he does this.  [He has a 23% approval rating, the lowest for any president there in 20 years.  A poll published in Reforma newspaper on Thursday also showed 85% of Mexicans disapproved of inviting Trump.]

I watched the press conference live and you could see how the president was trying so hard not to look like he was shaking his head in approval at anything Trump said, let alone smile.  He knew he screwed up, but once Trump accepted an invitation Pena Nieto clearly thought he would turn down (while Hillary instead would accept), he had to let the man come.

Amid the uproar, hours after Trump left Mexico City, Pena Nieto gave a television interview and angrily said:

“His policy stances could represent a huge threat to Mexico, and I am not prepared to keep my arms crossed and do nothing.  That risk, that threat, must be confronted.”  [BBC News]

Separately, Mexico’s federal policy chief was removed from office by Pena Nieto, amid allegations police killed at least 22 suspected members of a drug cartel.

Colombia: The people will be voting October 2 in a referendum on whether to back the deal the government cut with the Marxist rebels, FARC.  President Juan Manuel Santos says the accord must be approved because “there is no Plan B...Plan B is going back to war.”

But former president Alvaro Uribe says the deal should be turned down so a better one can be negotiated. 

Remember, part of the peace agreement is the admittance of FARC leaders into the legislature, rather than serving prison sentences for a war that killed more than 220,000 and displaced 7 million over its 50-year history.

Random Musings

--Polls....

A Monmouth University national poll has 46% of likely voters going for Hillary Clinton and 39% for Donald Trump, with 7% for Libertarian Gary Johnson, and 2% backing Jill Stein of the Green Party.  [43-36-8-2, among all registered voters.]

Earlier this month, shortly after the Democratic convention, Clinton held a 50-37 lead among likely voters; 46-34 among all registered voters in this one.

Among independents, Clinton receives 37% to Trump’s 32%.  Trump led 32-30 among this group in early August.

54% believe donors to the Clinton Foundation were given special treatment.

Clinton leads 90% to 5% among black, Hispanic, and Asian voters, while Trump leads by 9 points among white voters (48% to 39%).  In 2012, Barack Obama won non-white voters by 71 points, while Mitt Romney took the white vote by 15 points.

In a new Washington Post/ABC News survey, only 41% have a favorable impression of Clinton, while a record 56% have an unfavorable one; the worst image Clinton has had in her quarter-century in national public life.

At the same time, only 35% have a favorable impression of Trump, compared to 63% unfavorable.

But, if you look just at registered voters, Clinton’s image is as bad as Trump’s; 38% favorable, 59% unfavorable, compared to a 37/60 split for Trump.  [Bottom line, the two most unpopular major-party presidential nominees in modern U.S. history.]

Clinton’s favorable rating among Hispanics has dropped from 71% to 55% just since early August!

Clearly the adverse headlines about the Clinton Foundation and thousands of newly discovered emails are hurting the former secretary of state.  And Friday’s disclosure by the FBI of its interview notes with Clinton makes things even worse.

A USC Dornsife/L.A. Times national poll has Trump leading Clinton 45-42 as of Aug. 31.  A few weeks earlier it was 46-42 Clinton.

In Pennsylvania, Clinton leads in a Monmouth survey 48-40, with Democrat Katie McGinty leading Republican Pat Toomey by 4 points in a key Senate race.

--Donald Trump has spent the better part of a week waffling on his immigration policy, including a seeming softening of his position on deporting undocumented immigrants.

Last weekend, at the Iowa State Fair, Trump said he would strengthen the system of verifying the eligibility of workers and the tracking of visa holders, while reiterating his promise to cancel “unconstitutional orders” and “executive orders” relating to immigration.

But his proposals on the E-Verify front were central to legislation proposed by the Gang of Eight senators in 2013, and no different from those of rivals like Jeb Bush, or Mitt Romney.

Earlier, he said he might let some undocumented immigrants remain in the country legally, but no citizenship.

And then he said a few days later to CNN’s Anderson Cooper:

“There’s no path to legalization unless they leave the country.  When they come back in, then they can start paying taxes, but there is no path to legalization unless they leave the country and then come back.”

But he stayed mum on the topic of forcibly deporting millions who were not documented.

So then Trump brilliantly took up Mexican President Enrique Pena Nieto’s invitation for a private meeting (extended also to Hillary Clinton, who thus far has opted not to take Pena Nieto up on it), and Trump, appearing alongside the president after a discussion on the immigration topic and trade, looked presidential and his tone was moderate, saying on the issue of the wall that the two had not discussed who would pay for it.

But as Trump then flew to Phoenix for his big speech on immigration, he was ticked off to learn Pena Nieto went public in a tweet that he had told Trump during their private meeting that his country would refuse to pay for the wall.

Trump thought Pena Nieto had broken a deal to keep the question of paying for the wall off the table, so as the Wall Street Journal’s Monica Langley reported, “Trump hurriedly inserted a new sentence in his immigration speech, and he soon boomed out from the podium his traditional declaration that the wall would be paid for by Mexico – adding, ‘They don’t know it yet but they’re going to pay for the wall.’

“I had no choice,” Trump said in an interview Thursday, though he also said he liked the Mexican president “very much.”

Editorial / Wall Street Journal

“Ronald Reagan described America as ‘a city on a hill’ that people around the world aspire to reach.  Donald Trump offered a different vision in his immigration speech Wednesday night: A fortress surrounded by a wall with guards and sensory detectors and police to hunt down and expel anyone who makes it past the barriers.

“This isn’t the ‘softening’ immigration policy that Mr. Trump had been signaling for more than a week.  Perhaps he blinked amid criticism from supporters, or perhaps he has decided this is what he really believes.  Whatever the motive, the New Yorker’s 10-point plan came straight from the wish list of the most restrictionist corners of the political right.

“We understand that in a world of rising terror threats the U.S. needs border controls and immigrant vetting....

“But the businessman missed a chance to make a more reasonable case to honor the law without embracing mass deportation that is politically impossible and economically damaging.  ‘Anyone who has entered the United States illegally is subject to deportation,’ Mr. Trump said.  ‘And you can call it deported if you want.  The press doesn’t like that term.  You can call it whatever the hell you want.  They’re gone.’

“This presumably includes all 11 million people estimated to be here illegally, including those who have lived and worked in the U.S. for decades. It also presumably includes children born in the U.S. whose parents are illegal and thus lack documents through no fault of their own.

“Mr. Trump said that anyone who wants to gain legal status must first return to his native country and ‘will have to enter under the immigration caps or limits that will be established.’  That means waiting five or 10 years or more, depending on the country quotas, which would mean breaking up families.  These immigrants would have no incentive to declare themselves and become legal....

“Mr. Trump also pledges to ‘turn off the jobs and benefits magnet’ for immigrants. Yet he is offering no new legal ways to work in the U.S.  He can build the tallest wall in the world at the border, but as long as jobs exist to be filled, immigrants will come to fill them. Border enforcement without a guest-worker program is like drug enforcement without reducing drug use: It won’t work....

“Beyond the bad economics is the puzzle of Mr. Trump’s political strategy.  Wednesday’s immigration speech was an appeal to his core, mostly white, supporters who propelled him to the GOP nomination and whose votes he already has. It made little effort to expand his coalition to ethnic groups with large numbers of mostly legal immigrants.

“The Republican has closed the polling gap with Hillary Clinton but more because her favorable rating is falling again than any improvement in his standing.  Mr. Trump’s problem continues to be dreadful ratings among minorities, women and college-educated Republicans.  It’s revealing that the Clinton campaign almost seemed relieved when Mr. Trump didn’t use his speech to modify his anti-immigration rhetoric.”

--The Wall Street Journal had a piece on Friday chronicling a young Donald Trump’s maneuvering in Atlantic City, including a 1981 meeting he had with the FBI, who advised him there were easier ways to invest in A.C. casinos than dealing with the mob.

Trump went on to own four casinos there, but a Journal examination shows he dealt with numerous questionable figures, though today, Trump says while he might have dealt with people with questionable ties, he wasn’t aware of it at the time, calling himself “the cleanest guy there is.”

--Editorial / New York Times

“Does the new batch of previously undisclosed State Department emails prove that big-money donors to the Bill, Hillary & Chelsea Clinton Foundation got special favors from Mrs. Clinton while she was secretary of state?

“Not so far, but that the question arises yet again points to a need for major changes at the foundation now, before the November election....

“When Mrs. Clinton became secretary of state, the Obama administration tried to draw a line between the foundation, particularly its foreign-government sponsors, and her role.  The new emails underscore that this effort was at best partly successful.  ‘Pay-to-play’ charges by Donald Trump have not been proved.  But the emails and previous reporting suggest Mr. Trump has reason to say that while Mrs. Clinton was secretary, it was hard to tell where the foundation ended and the State Department began.

“Mrs. Clinton became involved in State Department deals and negotiations that also involved foundation donors or board members. She prompted multiple investigations with an arrangement that allowed Huma Abedin, her deputy chief of staff at the State Department and now vice chairwoman of her campaign, to be paid simultaneously by the State Department, the foundation and Teneo, a consulting firm run by Doug Band, the former adviser to Mr. Clinton who helped create the foundation – and who sent emails to Ms. Abedin seeking favors for foundation donors.

“The newly disclosed emails show that some foundation donors and friends, like Crown Prince Salman bin Hamad bin al-Khalifa of Bahrain, used foundation channels to seek access to Mrs. Clinton....

“Mr. Clinton has said he will resign from the board of the foundation and the CHAI (Clinton Health Access Initiative, a separate, affiliated nonprofit that has Bill and Chelsea Clinton on its board) if Mrs. Clinton wins the presidency. Simply closing the foundation, as even some Democrats recommend, could kill programs helping tens of thousands of people. While that’s unwarranted, the foundation could do much more to distance itself from the foreign and corporate money that risks tainting Mrs. Clinton’s campaign.  Its plans to restrict its funding sources only after the election will likely dog Mrs. Clinton.

“A wiser course would be to ban contributions from foreign and corporate entities now.  If Mrs. Clinton wins, Bill and Chelsea Clinton should both end their operational involvement in the foundation and its affiliates for the duration of her presidency...

“Mrs. Clinton has said she intends to give Mr. Clinton a role in her administration.  Cutting his foundation ties would demonstrate that he is giving any role he would have in the administration the priority it deserves....

“The Clinton Foundation has become a symbol of the Clintons’ laudable ambitions, but also of their tangled alliances and operational opacity.  If Mrs. Clinton wins, it could prove a target for her political adversaries.  Achieving true distance from the foundation is not only necessary to ensure its effectiveness, it is an ethical imperative for Mrs. Clinton.”

Speaking of Huma Abedin, she announced she had separated from her husband, former congressman and lifetime dirtball Anthony Weiner, after Weiner exchanged more suggestive images and messages with a woman while the couple’s young child was beside him.

--Ron Fournier / The Atlantic

“On one hand, there’s former Secretary of State Hillary Clinton, who oversaw ‘grossly inadequate’ security at a diplomatic facility in Benghazi, Libya, the site of a deadly September 11, 2012, terrorist attack.

“Misleading explanations by Clinton and other Obama administration officials fueled a congressional inquiry, which revealed her rogue email system, which led to an FBI investigation into her ‘extremely careless’ handling of U.S. secrets, which almost prompted a public-corruption investigation into pay-to-play allegations at the Clinton Foundation.  Only 11 percent of voters trust her.

“On the other hand, there’s wealthy celebrity Donald Trump....

“Who dismissed the service of Senator John McCain and other prisoners of war.  ‘I like people who weren’t captured.’

“Who responded to fair but tough questions from the Fox News debate moderator Megyn Kelly by saying she had ‘blood coming out of her, wherever.’

“Who bragged about his penis size...

“Who claimed ‘thousands and thousands’ of U.S. Muslims cheered the 9/11 attacks, which didn’t happen.

“Who called for a ‘total and complete shutdown of Muslims entering the United States’ and said, ‘I think Islam hates us.’

“Who thinks he’s politically invincible: ‘I could stand in the middle of Fifth Avenue and shoot somebody,’ he said, ‘and I wouldn’t lose any voters, okay?’....

“Who said Clinton would not get even 5 percent of the vote were she not a woman.

“Who said an Indiana judge was biased against him – and had no right to preside over a lawsuit against him – because the judge is Hispanic.

“Who responded to terrorist attacks in Orlando, Florida, and Brussels not with empathy or dignity, but with self-centered tweets....

“Who said that if he can’t prevent Clinton from winning the presidency and nominating Supreme Court justices, ‘Second Amendment people’ can stop her.

“Who said he was ‘softening’ his immigration stances just before he said he was ‘hardening’ them....

“On one hand, Clinton.  On the other hand, Trump.   That’s the unfortunate choice facing voters in a system rigged heavily in favor of the two major parties.

“But there’s no equivalence.

“On one hand, Benghazi and email and lies.

“On the other hand, mendacity, bigotry, bullyism, narcissism, sexism, selfishness, sociopathology, and a lack of understanding or interest in public policy – all to extremes unseen in modern presidential politics.

“I like to remind readers that there are other choices. While Green Party’s Jill Stein, Libertarian Gary Johnson, and independent Evan McMullin are unlikely to win, people should ignore partisans who say backing anybody other than Clinton or Trump is a wasted vote. That’s the duopoly protecting its selfish interest.  The only votes wasted are the ones not cast.

“On the other hand, Trump shouldn’t be president.”

--The debate moderators were announced.

Sept. 26...NBC’s Lester Holt
Oct. 9...ABC’s Martha Raddatz and CNN’s Anderson Cooper (town hall-style)
Oct. 19...Fox News’ Chris Wallace

Oct. 4...CBS’ Elaine Quijana (vice presidential)

--Editorial / New York Post

“President Obama’s top spokesman is complaining that his boss hasn’t gotten enough respect from the media – especially the folks at The New York Times.  But he couldn’t have picked a worse specific gripe.

“The Obama ‘achievement’ he demands the press admire is the one where even all the folks in the Obama-loving mainstream media agree the president’s been a total failure.

“Press Secretary Josh Earnest penned a letter to the Times complaining about media columnist Jim Rutenberg’s charge that, if elected, Hillary Clinton’s administration – like Obama’s – ‘would continue the tradition of being still more secretive than the one before it.’

“No way, cried Earnest.  After all, he wrote, Obama pledged to be ‘the most transparent president in history’ – a promise he insists the president has fulfilled.

“Uh-huh.  Try finding any reporter who covers Team Obama who’ll agree.

“This is the same administration that has denied the most Freedom of Information requests in history, stretching searches out for years, demanding outrageous fees and arguing in court that such requests should be ‘narrowly construed’ to limit them.

“It has prosecuted nine journalists over news leaks – more than all other presidents combined.

“And its officials boast about deliberately spreading false talking points to bolster Obama’s nuclear deal with Iran.

“All of which is why fully three years ago, the Committee to Protect Journalists, in a report by former Washington Post Executive Editor Leonard Downie, charged that ‘this administration’s war on leaks and other efforts to control information are the most aggressive I’ve seen since the Nixon administration.’”

--For the record, Democrat Rep. Debbie Wasserman Schultz (Fla.), and Republican Senators John McCain (Ariz.) and Marco Rubio (Fla.), were among the high-profile candidates to win their party primaries this week.

But while Wasserman Schultz will now handily win in November, Rubio and McCain face tough challenges from their Democrat opponents.  McCain also turned 80 this week, which is a legitimate issue.

Again, the Republicans are defending 24 Senate seats to the Democrats’ 10 this fall, with Democrats needing just five to regain control, which would have some of us fleeing to Guam and points south in Micronesia, like my beloved island of Yap, where you can sit around and drink beer allll day.

--Maryland Gov. Larry Hogan said he is issuing an executive order requiring Maryland public schools to begin after Labor Day starting next year.  It’s about allowing families’ summer vacations to last through August and benefit Maryland businesses in resort areas.  The school year must also conclude by June 15.

I’ve always gotten a kick out of how early the school year starts in most areas of the country, including colleges, save for the Northeast, where we begin after Labor Day, but don’t end until around June 20, depending on the number of snow days.

No doubt, many resort areas get screwed over the Labor Day weekend.  So I heartily agree with the Maryland governor.

--The number of shooting deaths in Chicago has surpassed the total for last year with four months still to go.  By Wednesday, 425 people had been fatally shot, accounting for 90% of the total murders in the city.  [471 murders overall.]  August saw the city record 90 murders, making it the most violent month in Chicago in more than two decades (June 1996, the height of the crack epidemic).  Police officials are blaming increased gang activity for the latest spike.

Baltimore hit 200 homicide victims this week, the fifth consecutive year of 200+ for this city, after recording 197 in all of 2011.  Last year, 344 people were killed here, the city’s highest per capita rate ever.

--San Francisco 49ers quarterback Colin Kaepernick injected himself into the news this week as he refused to stand for the national anthem at a preseason game last weekend, and then kneeled during the singing of the anthem on Thursday night in San Diego during the 49ers’ and Chargers’ preseason finale, it being San Diego’s annual “Salute to the Military.”  Needless to say, the boos rained down on Kaepernick and, as it turned out, a teammate, Eric Reid, who joined him in taking a knee.

Kaepernick is protesting what he says is racial oppression in the United States.  Thursday he said, “Yes, I’ll continue to sit. I’m going to continue to stand with the people that are being oppressed.  To me this is something that has to change.  When there’s significant change and I feel like that flag represents what it’s supposed to represent, this country is representing people the way that it’s supposed to, I’ll stand.”

Phil Mushnick / New York Post

“Dear Colin Kaepernick,

“For what it’s worth, I agree with you.  I’m also convinced blacks are America’s most oppressed race.  And I’m pleased you’re the latest pro athlete to exploit his or her status to take a stand, yours by sitting during the national anthem.

“But we disagree on who the oppressors are. You believe it’s White America, the America that helped do the once imponderable: elect a black President, and not once, but twice.

“I believe that the greatest oppressors of black Americans are black Americans. And they’re encouraged to continue by a say-what-you-want-to-hear leadership and messengers, from the President to a frightened media, politicians of every office, and activists, both black and white, empowered by their steady unwillingness to tell clear, present and sustaining truths in service of genuine for-the-better change.

“Consider that when a murder or murders of black men, women and children occur in a black neighborhood, its residents are conditioned to be uncooperative with cops and detectives – ‘snitches get stitches’ – in pursuit of the murderer or murderers lest they and their families suffer retaliatory harm, including murder.

“Now that, Colin, that’s oppression.  It’s a gangs-as-Gestapo mentality and reality that exists – and rules – within black communities throughout this country.

“Oppression?  Colin, you’re one lucky young man to have escaped another epidemic of black-on-black oppression. You were adopted by a man and a woman and raised in a presumably loving, nurturing household.  You were raised by two on-the-job parents.

“You beat another common, almost standard reality: black self-oppression....

“Colin, you cited the Black Lives Matter movement as one you support. But logical people of all races wonder why such a noble-titled movement assiduously avoids addressing, let alone protesting, the avalanche of daily and nightly murders of blacks by blacks in virtually every city in this country.”

Kaepernick said he was donating $1 million of his $11.9 million in guaranteed salary this season to charities that support racial equality.

--A study by researchers at Duke University confirms what we already knew.  As reported by the Wall Street Journal’s Sumathi Reddy, “When it comes to cognitive decline, there is a gradual loss of different functions. Speed of processing and working memory peak in the 20s and gradually start declining.”

Personally, I hit my peak when I was 12.

One professor involved in the study, Kathy Wild, notes that learning new information after 40 can be harder and tasks that require concentration should be done with minimal interruptions or distractions.  “Do just one thing until you’re done with it.”

Boy, I sure agree with this.  It hasn’t been easy doing this particular column at an age, err, over 40.  [I think Dr. Bortrum feels the same way with his work, he being over 40 as well.]

--Finally, after the excitement surrounding the discovery of potential earth-like planet Proxima b, an international team of scientists investigating deep space signals may have found signs of an advanced civilization in the solar system of a sun-sized star 95 light-years away.

Yes, something could be trying to signal us, or the Martians or Plutonians, for all we know.

Seth Shostak, a senior astronomer with the Search for Extraterrestrial Intelligence (SETI), said that if the signal did originate from a planet in the star’s solar system, it would “require an effort far, far beyond what we ourselves could do, and it’s hard to understand why anyone would want to target our solar system with a strong signal.”

I mean think about it.  As Shostak added: “This star system is so far away, they won’t have yet picked up any TV or radar that would tell them that we’re here.”

---

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

God bless America.

---

Gold $1328
Oil $44.20...down $3.09 on the week

Returns for the week 8/29-9/2

Dow Jones  +0.5%  [18491]
S&P 500  +0.5%  [2179]
S&P MidCap  +1.2%
Russell 2000  +1.1%
Nasdaq  +0.6%  [5249]

Returns for the period 1/1/16-9/2/16

Dow Jones  +6.1%
S&P 500  +6.7%
S&P MidCap  +12.9%
Russell 2000  +10.2%
Nasdaq  +4.8%

Bulls 55.9
Bears 20.6 [Source: Investors Intelligence]

Dr. Bortrum posted a new column.

Have a safe holiday weekend.  Don’t do anything stupid.

Brian Trumbore



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Week in Review

09/03/2016

For the week 8/29-9/2

[Posted 10:30 PM ET, Friday]

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

Edition 908

Washington and Wall Street

I cover the latest on the presidential election down below in depth.  This coming week look for a slew of new polls, which among other things will determine whether Libertarian candidate Gary Johnson gets on the debate stage for the first one, Sept. 26.  Highly unlikely, however, as he needs to average 15% in five national polls picked by the Commission on Presidential Debates and he’s nowhere near that number today.

Meanwhile, as Hurricane/Tropical Storm Hermine ruins holiday plans up and down the east coast, we can now say conclusively the Federal Reserve will not hike interest rates when it next meets Sept. 20-21.  I’ve been saying this all along but some uncertainty was injected into the debate out at Jackson Hole, Wyoming, when Chair Janet Yellen, Vice Chair Stanley Fischer and others hinted at action in a few weeks, which I have said would not happen because of the election.

[Barney Frank, the architect of the landmark 2010 Wall Street reform law, also said this week the Fed should not hike in September.  “What the Fed should do this close to the election is make no waves.”  Hey, for the first time ever, I agree with Barney!]

But the Fed was saying if we had a blockbuster jobs report on Friday for August, that could move the needle and, alas, the increase in nonfarm payrolls was less than expected, though a solid 151,000, with insignificant revisions to June and July that result in a three-month average of 232,000. 

The unemployment rate stayed at 4.9%, the underemployment rate, U6, was unchanged at 9.7%, and average hourly earnings rose just 0.1%, though still up 2.4% year-over-year.

In other important economic data for the week, personal income and consumption rose a solid 0.4% and 0.3%, respectively, in July while manufacturing data was weaker than expected.

The Chicago purchasing managers index for August was just 51.5 vs. an expectation of 54.0 (50 being the dividing line between growth and contraction), while the national ISM manufacturing figure for August was a disappointing 49.4, the first sub-50 reading since February.  The key new orders component was only 49.1.

July construction spending was unchanged, when a healthy increase was forecast, and factory orders for the month came in basically in line, up 1.9%.

As detailed below, auto sales for August, while still historically robust, were nonetheless down over year ago levels.

And on the real estate front, the S&P/Case-Shiller 20-city home price index for June (remember, this one lags a bit) was up 5.1% year-over-year, down from May’s 5.3% pace and continuing a trend.  Portland, Oregon was the hottest market, up 12.6% yoy, with Seattle up 11.0%.  But New York saw an increase of just 2.1%.

The Atlanta Fed’s GDPNow indicator is forecasting third-quarter GDP of 3.5%, annualized, a nice rebound over the 1.2% pace of the past year.

So add it all up and we’re doing OK, but the trends in manufacturing bear watching.

In the markets, August, by virtually every indicator, was historically dull, continuing a stretch that ran to 40 straight days by Friday without an up or down move of 1% for the S&P 500, the longest such run since July 2014.  Other indicators had August as the dullest in terms of volatility since 1928.

But September promises some fireworks, maybe at least by month’s end with an OPEC meeting (Sept. 26-28) and the first presidential debate, while the European Central Bank holds an important meeting next week, Thursday, and this weekend you have a G20 confab in China, in the eastern city of Hangzhou*.  Not that these folks are going to say anything earthshattering when it comes to the global economy, but you’ll have talks on the side, including between Chinese President Xi Jinping and President Obama, as well as between Obama and Turkish President Erdogan, that might have geopolitical implications in fairly short order.

*Hundreds of factories have been ordered shut in the Hangzhou region to make sure the air is clear for the leaders...which of course isn’t good for economic activity in the area.

Europe and Asia

Lots of data on the Eurozone, with the unemployment rate for July coming in at 10.1%, same as June, and down from 10.8% a year earlier, which isn’t that impressive.  Nonetheless, 10.1% is the lowest since July 2011.  [The rate in the overall European Union is 8.6%, the lowest since March 2009.]

Germany’s jobless rate is 4.2% as measured by Eurostat, though the German government calculates it differently, 6.1% for August, unchanged since May but a record low.

France, however, is at 10.3%, Italy 11.4%, Spain 19.6% and Greece 23.5% (May).

The youth rate for the euro area is still 21.1%, with 50.3% in Greece, 43.9% in Spain and 39.2% in Italy.

Markit reported the manufacturing PMI for the Eurozone in August was 51.7 vs. 52.0 in July.

Germany came in at 53.6, Spain 51.0, Italy 49.8 (20-month low), France 48.3, and Greece 50.4.

Chris Williamson, chief economist at IHS Markit:

“Eurozone manufacturers reported a wavering performance in August, with signs that growth could slow further in coming months.

“There is some suggestion of a Brexit impact and growth may wane further in September after new orders growth slipped to a one-and-a-half year low....

“Employment growth also eased to a five-month low, indicating an increased hesitancy to hire amid the heightened political uncertainty.  Once again, it’s also a worryingly mixed picture across the region.”

The manufacturing PMI in the UK, though, was 53.3 in August – a 10-month high – far greater than expected.  It seems factories were powered by their highest levels of export orders since July 2014 owing to the sharply lower exchange rate.  [The PMI was 48.3 in July, post-Brexit.]

A flash estimate on Eurozone inflation for August came in at 0.2% annualized, same as July. [Eurostat]

Euro Bits....

In Spain, tourism is up 11% in the first 7 months of the year, with international tourism up 10% as Spain gains from terror attacks in Turkey, Tunisia, Egypt and France.

The number of visitors to Egypt fell more than 46% year-on-year in the first quarter of 2016, while arrivals in Tunisia fell 18.7% in the period, after a 25% slide last year.

Turkey is expecting bookings for September to December to be down by 52% on the same period last year, while bookings to France are down by nearly 20%.

Separately, deflation still rules the day in Spain, -0.3% ann. for August, but an improvement from July’s -0.7%.

Italy’s retail sales for June were 0.8% year-over-year, hardly exciting.

The Eurobond market in August was the quietest in more than two decades, according to those in the know.  The yield on the 10-year German Bund is still negative, -0.05%.  But the aforementioned ECB meeting of Sept. 8 could provide some volatility as the board addresses a key issue.  Like lessening the restrictions on what it can buy because the Eurobond market just doesn’t have the supply the U.S. Treasury market does.  Of course this leads to other issues I’ve talked of for years.  In some cases the ECB could be buying total crapola.  Or as the French say, merde.

Along these lines, the ECB did say it was not taking any action on including Greece in its bond buying program as it awaits further clarity on the country’s debt sustainability.

Meanwhile, Russian President Putin said the euro area could one day shrink in size if its stronger members sought to band together, which would strengthen the euro...something Russia would like to see as 40 percent of its currency reserves are in euros. 

Putin is holding his first meeting with new British Prime Minister Theresa May in China this weekend; the two nations having a most prickly recent history.

Speaking of Ms. May, and the topic of Brexit, she told colleagues at the first meeting of the Cabinet following the summer break: “Brexit means Brexit [and] we’re going to make a success of it.”

May confirmed there would be no second referendum, as some Cabinet members have been calling for.  May added:

“We have the opportunity to forge a new positive role for the UK in the world; to make sure that we are that government and country that works for everyone.”

Ms. May’s Cabinet also concluded there was no need to hold a parliamentary vote before beginning the formal process of exiting the EU, though opponents of leaving are going to court to argue Parliament should hold a vote before triggering Article 50.

May continues to say Article 50 won’t be triggered before the end of the year. Only when Britain does will the two-year negotiating window begin.

Ms. May said the first of her red lines in negotiations will be an end to the free movement of people coming to the UK from the European Union, thus ending the right of EU citizens to settle freely in Britain, even if this comes at the cost of tariff-free access to the bloc’s single market.  French President Francois Hollande has repeatedly said that membership in the single market means accepting the right of EU citizens to move to Britain.

As for the opinion of other European leaders when it comes to Brexit, German Deputy Foreign Minister Michael Roth warned that the UK’s negotiations “will be very difficult” and, reiterating Hollande’s stance, that Britain won’t be allowed to “cherry pick” the best the bloc has to offer.

“If the British want full market access but want to limit the access of workers from Germany, France or Poland, they will find there is no a la carte cooperation in this direction,” Roth said, he being the government minister responsible for European affairs.

There is a key EU summit without Britain on Sept. 16 in the Slovak capital of Bratislava.

German Chancellor Merkel, in a week of shuttle diplomacy to get a feel of things before this gathering, said last weekend, “Britain’s exit isn’t just some event, but rather a deep watershed in the history of European Union integration.”

During her tour, Merkel faced pressures from the likes of Hungary and Poland to tighten barriers against migration.

Romania and Poland also want to make sure that a priority in negotiations with Britain is to ensure EU citizens living in the UK keep their jobs and rights after Brexit talks conclude.

Germany’s vice-chancellor Sigmar Gabriel said the EU would go “down the drain” if other states followed Britain’s lead. Gabriel, who is also economy minister in Germany’s governing coalition, said the world now regards Europe as an unstable continent.

“Brexit is bad but it won’t hurt us as much economically as some fear – it’s more of a psychological problem and it’s a huge problem politically,” he said.  [BBC]

[Separately, Gabriel said trade talks between the EU and the U.S. had “de facto failed.”  In 14 rounds of talks, the two sides had not agreed on a single common chapter out of 27 being discussed, he said.]

Speaking of political problems, while Sigmar Gabriel is referring primarily to right-wing, anti-EU movements in the likes of the Netherlands and France*, as well as Austria, Germany and others, today in Spain you have a political crisis of a different sort, the inability since last December to form a government, Spain having failed again this week, with a third general election in 12 months now a distinct possibility in December, with Christmas Day being talked about for the vote.

The problem for acting, and former, Prime Minister Mariano Rajoy is that he is too tarnished by a long series of corruption scandals involving his center-right People’s Party (PP), plus the austerity policies from his prior government that were enacted during a deep recession remain highly unpopular, even as Spain’s economy rebounded strongly.

Rajoy’s primary problem is getting the Socialists to either support him or abstain from voting so he and his party can cobble together a majority coalition.

Polls do show the people favoring the Socialists joining Rajoy rather than face another election.

*In France, National Front leader Marine Le Pen said this week, “As far as France’s best interest is concerned it’s ‘Everything but Hillary Clinton,’” she told CNN, in announcing her support for Donald Trump. 

Back to migration...the head of the German Federal Office of Migration and Refugees said he expects between 250,000 and 300,000 new arrivals in 2016, a sharp drop compared to the million who arrived last year.

But the number of migrants to the Greek islands has been rising rapidly again, from fewer than 50 a day in May and June to 460 on Monday, alone.  While this is far below the daily peaks of 6,800 last October, the problem is that unlike 2015, once these folks land in Greece they are stuck there as the borders north are being shut to new arrivals.  Greece can’t handle the 60,000 already in camps, let alone a new surge.

Italy has seen 116,000 arrive thus far this year, most from sub-Saharan Africa.  That compares with 154,000 for all of 2015.  The vast majority of these are stuck in Italy as well.  Did you see the pictures this week of hundreds of migrants camping out at the train station at beautiful Lake Como?  I’m sorry if this offends any of you, but I sure as hell wouldn’t want to have planned an expensive trip there, only to be faced with that. 

So it’s no surprise that Hungary is now talking of a second, massive fence along its border with Serbia to stop an influx of migrants in case an agreement with Turkey to contain them fails.  Prime Minister Viktor Orban said that if the policy changed and suddenly hundreds of thousands of migrants appeared all at once at Hungary’s borders, then, “if it doesn’t work with kind words, we’ll have to hold them back with force, and that we shall.”

Hungary is increasing the number of police it has patrolling its southern border to 47,000.

Finally, on a different topic, the largest European business lobby in China warned that the country’s market access barriers are “politically unsustainable” as Chinese investment continues to flood into the EU.

“There is a small, rocky pathway to China [for foreign investors] and an autobahn from China to Europe,” said Jorg Wuttke, head of the European Chamber of Commerce in China.  “The increasing wave of Chinese investment into Europe, while European investment in China drops, highlights the lack of reciprocal market access.”

Chinese investment in Europe surged 44% in 2015 to 20bn euro, but that has already been far exceeded this year.

For example, German robotics maker Kuka was acquired by China’s Midea.

“It is almost impossible to imagine in the current climate that a European company would be permitted to make a significant investment in an equally prominent Chinese company with advanced technological capabilities,” the chamber said.

No doubt this will be a topic at this weekend’s G20 meeting.

---

In China, the government’s official PMI on manufacturing for August was 50.4, up over July’s 49.9 and a 22-month high.  The Caixin private gauge was 50.0 vs. 50.6 in July.

The official reading on services was 53.5 vs. 53.9 in July.

Separately, China’s industrial firms saw profits grow at their fastest pace in four months in July, according to the National Bureau of Statistics, up 11%, aided by a pickup in sales and reduced costs.  The NBS’ He Ping hastened to add, “Although the growth in industrial profits has accelerated, we still haven’t seen an obvious pick-up in demand in the market.”

Total profits for the January-July period rose 6.9% from the same period a year earlier.

Profits in the mining sector plunged 77%, while manufacturing profits rose 12.8%.

In Japan, the manufacturing PMI came in at 49.5 in August vs. 49.3 the prior month. 

Retail sales for July rose 1.4% month-on-month, but are -0.2% year-over-year.

Household spending in July was -0.5%, yoy, the fifth consecutive month it has declined.

But the unemployment rate fell to 3.0% in July, the lowest in 21 years.

Bottom line, Japan needs wage growth, which has been nonexistent, and thus increased consumption.

India saw second-quarter GDP rise 7.1%, but this was down from the 7.9% annualized pace of the first quarter, according to the Central Statistics Office.  The forecast was 7.6%.  Some question India’s numbers, a la China’s, especially since India is now making a big deal of the fact (seeming fact) that it is growing faster than China.

The biggest boost to growth in the second quarter was electricity, up 9.4%.

India’s manufacturing PMI was 52.6 in August vs. 51.8 in July.

Taiwan’s manufacturing PMI was 51.8 last month vs. 51.0, the best in 18 months, while South Korea’s dropped to 48.6 vs. 50.1 in July.

Street Bytes

--How dull have the markets been?  The Dow Jones has not been up or down 1% for a week in seven weeks.  This time it was up 0.5% to 18491, while the S&P 500 was up the same, and Nasdaq rose 0.6%.  All three are one solid day away from record highs.

--U.S. Treasury Yields

6-mo. 0.45%  2-yr. 0.79%  10-yr. 1.60%  30-yr. 2.28%

The Fed’s preferred price gauge, the personal consumption expenditures index, is a component of the monthly consumption figures and core PCE remains at just 1.6%, below the Fed’s stated 2% target.

--Crude oil fell sharply this week, though August was the best month since April.  Government data showed a surprising weekly build in inventories and a smaller-than-expected drawdown in gasoline.

Normally this time of year you see drawdowns in crude oil, but for a second straight week there were strong builds.

OPEC meets Sept. 26-28 and the rise in oil prices for much of August was largely led by the belief there would be some sort of production freeze announced at this confab, which I’ve said is a lot of garbage because Saudi Arabia, the key player, continues to want to defend its market share over price, while Iran isn’t about to cut as it ramps up to its previous capacity following the lifting of sanctions.   Plus Iraq reached an agreement with the Kurds the other day to add more production.

That said, Vladimir Putin is saying this weekend that Russia wants to join a production freeze with the cartel.

--The European Competition Commissioner Margrethe Vestager said Apple paid just 0.005 percent tax in Ireland in 2014.  The European Commission ruled that Ireland illegally provided state aid to Apple by not collecting $14bn of taxes owed to it by the tech giant over a 10-year period.  Vestager said Apple had improperly routed taxable income to a subsidiary with no accountable head office.

The U.S. Treasury Department expressed disappointment in the ruling, saying retroactive tax assessments “are unfair, contrary to well-established legal principles and call into question the tax rules of the individual countries in the EU.”

The Treasury added the ruling “could threaten to undermine foreign investment, the business climate in Europe and the important spirit of economic partnership between the U.S. and the EU.”

Apple CEO Tim Cook said the EU is trying to replace Irish tax laws with what it wants.

Ireland’s tax collection agency, the Revenue Commissioners, said Apple hasn’t dodged a penny of lawfully calculated tax in Ireland.  Chairman Niall Cody said Apple’s profits “that are not generated by their Irish branches, such as profits from technology, design and marketing that are generated outside Ireland cannot be charged with Irish tax under Irish tax law.”

Irish Finance Minister Michael Noonan rejected the EC’s ruling and said Ireland would appeal the judgement, parliament voting to endorse it next week, insisting Ireland’s tax rules were transparent.  Noonan said:

“I disagree profoundly with the commission’s decision.  Our tax system is founded on the strict application of the law...without exception.”

Noonan accused EU regulators of trying to undermine the integrity of Ireland’s tax system and subverting its right as a sovereign state.  Friday, he said, “How could any foreign direct investor come into Europe if they thought the valid arrangements they made under law could be overturned a generation later and they be liable to pay back money.”

A successful appeal will take years, no doubt.

Irish opposition lawmakers initially wanted Dublin to take the money, but for the government, the country’s low corporate taxes are a cornerstone of its economic policy (and by week’s end, the opposition also favored an appeal).  Google and Facebook are among the bigger U.S. companies with growing presences there.  According to the U.S. Chamber of Commerce in Ireland, 700 U.S. companies employ 140,000 people on the Emerald Isle out of a total population of just over 4.6 million.

Tim Cook took off after Brussels in an interview with the Irish Independent, suggesting the accusations are “political crap,” and that Ireland is being “picked on” and is a pawn in a wider European Commission agenda to harmonize taxes across the EU.

“No one did anything wrong here and we need to stand together. Ireland is being picked on and this is unacceptable.”

“It’s total political crap,” he said.  “They just picked a number from I don’t know where.  In the year that the Commission says we paid that tax figure, we actually paid $400 million.  We believe that makes us the highest taxpayer in Ireland that year.”

Cook said Apple and Ireland had “played by the rules” and would win the case on appeal.  He noted that Apple now has 6,000 workers in Ireland.

“When I first came with the company in 1998 Apple wasn’t doing good.  Steve (Jobs) had just come back and we were on the verge of bankruptcy frankly, probably within weeks of it.

“I remember going to Ireland very shortly after I had joined the company and as I was travelling, although I didn’t tell people at the time, we sort of felt we had to close the site and I got there and started really understanding what we had there.

“The people of course is really what I’m talking about.

“Together Ireland and Apple are thriving, that’s the way I look at this relationship, it’s a 37-year-old marriage and like any marriage you go through a pothole here and there but we stuck together.”

Cook also described the EC ruling as “maddening and disappointing.”

“We’re subject to the statutory rate in Ireland of 12.5%; we paid $400 million in taxes in 2014.”

Earlier, Cook said: “Using the Commission’s theory, every company in Ireland and across Europe is suddenly at risk of being subjected to taxes under laws that never existed.”  [Sources: Bloomberg, Financial Times, Wall Street Journal, Irish Independent]

Editorial / Wall Street Journal

“Even by the usual Brussels standards of economic malpractice, Tuesday’s 13bn euro ($14.5 billion) tax assault on Apple is something to behold.  The European Commission decided that Dublin’s application of Irish tax law to an American company violated European antitrust rules.  Orwell would understand.

“At issue is how Ireland has taxed global companies with Irish subsidiaries.  Apple in the 1980s established two business units in Cork to manage global sales. These units held the rights to much of Apple’s intellectual property such as product designs.  In payment for those licenses, the units remitted large portions of their profits to the U.S. each year to fund research at Apple headquarters.

“The rest of the profits generally weren’t taxed under longstanding Irish law, since the money was earned overseas.  The money wasn’t taxable elsewhere since the laws of other countries held that it was up to Ireland to decide whether and how much to tax it.  In the case of America, the tax was deferred until Apple repatriated the profits. That’s it.  That’s the supposed tax evasion.  Apple paid all the taxes it owed under existing tax laws around the world, which is why it hasn’t been subject to enforcement proceedings by revenue authorities.

“Then again, this case isn’t about tax law.  It’s about tax politics, and in particular the bureaucratic and left-wing frustration that low-tax governments are using normal accounting principles to deny high-tax governments more revenue booty.

“Ireland has stood firm for years against continental pressure to abandon its competitive 12.5% corporate-tax rate. So having lost the debate over tax rates, Brussels now wants to use antitrust law to tell Ireland and other low-tax countries how to apply their own tax laws....

“As for the U.S., the Treasury Department pushed back against these tax cases, which it rightly views as a protectionist threat to the rule of law.  But it’s hard to believe that Brussels would have pulled this stunt if Treasury enjoyed the global respect it once did.  President Obama and Treasury Secretary Jack Lew have also contributed to the antibusiness political mood by assailing American companies for moving to low-tax countries.”

Separately, Tim Cook said that Apple had set aside “several billion dollars for extra taxes in the U.S. next year” as it plans to repatriate the offshore cash pile at the center of the row with Brussels, some or all of its $215bn in cash stashed around the world.

--Meanwhile, Apple competitor Samsung Electronics announced a global recall, and sales halt, of the large-screen smartphone Galaxy Note 7 that it recently launched because of faulty batteries that can catch fire.  The world’s largest smartphone maker will announce the results of an investigation and a plan to deal with it shortly, but supposedly there have been at least 35 cases where the phones exploded while recharging, which would be a bit disconcerting if you were fast asleep when this happened...or drinking beer watching football.

The timing is awful because Apple is unveiling its new iPhone model this coming week at its annual event.

--Speaking of explosions, a commercial SpaceX rocket exploded on Thursday during a prelaunch test at Florida’s Cape Canaveral Air Force Station.  The rocket was carrying a $258 million satellite that was part of a Facebook-led plan to beam Internet signals down to parts of Africa.

Facebook CEO Mark Zuckerberg was in Kenya at the time and wrote in a post that he was “deeply disappointed to hear that SpaceX’s launch failure destroyed our satellite that would have provided connectivity to so many entrepreneurs and everyone else across the continent.”

Clearly a reprimand of SpaceX founder Elon Musk, who is also CEO of Tesla Motors.  Musk wrote on Twitter, “Cause still unknown.  More soon,” but the accident occurred during fueling for a planned weekend launch.  The satellite itself was an Israeli model.

SpaceX and other launch companies have a heavy schedule of sending hundreds or even thousands of small satellites into space in coming years.  SpaceX has completed eight launches this year and had planned for an additional nine by year end but the launch pad itself was heavily damaged, thus putting the schedule in jeopardy.

As for Musk’s Tesla Motors Inc., it disclosed in a securities filing Wednesday that it owes its bondholders $422 million in the third quarter, and that it will raise additional money by the end of the year, which is needed for its proposed merger with home-solar company SolarCity, Elon Musk being chairman of both companies.

The thing is the filing indicated SolarCity’s cash was down to $146 million on June 30, from $421 million a year earlier.  When Musk first announced he was proposing to combine the two companies, it was viewed as a bailout of SolarCity.

Musk and his cousins, Lyndon and Peter Rive, the latter two Solar City’s CEO and technology chief, announced last week they were buying more than 80% of a $124 million SolarCity bond issue.  [Wall Street Journal]

Tesla shares finished the week at $197.75, down $22.25 from the previous Friday.

--U.S. auto sales came in less than a year ago for August, down 4.2%, for an annualized rate of 16.98 million vehicles, according to Autodata.  Analysts at Edmunds.com and Kelley Blue Book had projected an overall decline of 2.5% and 2.1%, respectively.  The industry has been near 2015’s record pace of 17.5 million vehicles most of the year, but it is looking more and more likely this was a peak.

Ford and General Motors reported declines of 9% and 5%, respectively, though Fiat Chrysler’s rose 3% year on year.

Toyota’s sales fell 5%, Nissan’s 6.5% and Honda’s 3.8%.  Volkswagen’s were down 9.1%.  But Subaru outperformed the industry, recording a sales increase of 14.7%.

Ford said, “We continue to see...the industry still running at historically high levels but down on 2015.  For 2017 we see vehicle sales strong but at a lower level than this year.”

As Ford put it, “we are just at a plateau.”

--In another example of the failure of the Affordable Care Act, Iowa approved premium increases this week of 19% to 43% for about 70,000 Iowans who buy their own policies, with the insurance commissioner telling USA TODAY, “The reality is, it’s all very justified, unfortunately.”

Nick Gerhart warned consumers in a rate hearing that if he rejected insurers’ proposed premium increases for 2017, the carriers would likely decline to sell policies in the state.

--Wal-Mart Stores Inc. announced it would cut 7,000 back-office jobs, mostly in accounting and invoicing positions at its stores around the country.

--Abercrombie’s shares cratered about 20% as the teen retailer posted its fourteenth straight quarterly sales drop, down 4.2% in its second quarter [July 31] year-on-year, plus it swung to a loss of $16.8 million, compared with a profit in the year ago period.  It didn’t help that the company said the second half would remain challenging.

--Singapore has a huge Zika crisis on its hand, with the number of confirmed cases exceeding 150 in the largest single outbreak of the virus in Asia.  At least two pregnant women were among those diagnosed with it as 24 new cases were discovered Wednesday alone, though about half the cases were foreigners, mainly from China, India and Bangladesh, among the hundreds of thousands of migrant workers in Singapore’s construction and marine industries. That said it is the only Asian country with an active transmission of the virus.

Zika is transmitted by the same Aedes mosquito that also spreads dengue – which Singapore has been battling to contain for years.

So in all seriousness, pregnant women are being advised by the U.S., Australia and others not to travel to Singapore.

The thing is, the Singapore Grand Prix takes place in two weeks and that typically attracts 40,000 overseas visitors.  Uh oh.

Meanwhile, Malaysia confirmed its first case the other day, a woman who had recently arrived from Singapore.

--Good  news out of Macau.  After 26 straight months of declining gaming revenue, gross revenue rose by 1.1% year-on-year in August, up from a contraction of 4.5% in July, according to figures released by the Gaming Inspection and Coordination Bureau.

The once white-hot former Portuguese colony has been suffering from the economic slowdown in the mainland and President Xi Jinping’s crackdown on corruption, and gross gaming revenue fell 34% last year, with another 13% decline forecast for 2016. 

But with new multi-billion dollar resorts being launched, casino owners are hoping (praying) that a wider range of customers will replace the revenue lost from the high rollers.  These same properties, though, may just cannibalize their existing ones.

--South Korea’s giant Hanjin Shipping Co.’s bankruptcy filing is rippling through the global supply chain, stalling delivery of goods as the company’s ships sit anchored off ports around the world.  There is concern Hanjin won’t be able to pay port and terminal fees and this comes at a time when retailers are gearing up for the holiday season.

Hanjin accounts for 3% of global shipping, according to data firm Alphaliner and the Los Angeles Times.

--The Department of Agriculture said U.S. farm incomes will hit their lowest point since 2009.  As I’ve written the past few weeks, record corn and soybean harvests are expected again this fall, which could push prices down even further.

As a result, net farm income will drop 11.5% this year over 2015, which is the third straight pay cut since record levels in 2013.  The situation would be worse except farmers have been cutting expenses, which of course isn’t good for the likes of Deere & Co. as it has previously said in announcing production cuts.

--Mylan Labs announced it would launch a generic version of EpiPen at half the price of the original, or $300 vs. $600, in an attempt to counter the backlash over the product’s steep price.  It cost about $100 in 2008.

Ironically, I saw a story today on NJ.com where a local man was stung by more than 20 bees and was found unconscious near his home.  Four police officers were credited with saving his life, with a captain saying “The victim was described as highly allergic and in cardiac arrest.”

The officers “used a defibrillator and administered two doses from an EpiPen.”

--United Parcel Service Inc.’s pilots ratified a new five-year labor contract that includes an immediate pay hike of 14.65 percent and 3 percent increase in annual wages through the span of the contract, plus a signing bonus of $60,000 for captains and of $40,000 for the first officers, along with enhanced pension benefits.  Good for them.

But come Jan. 1st, the cost of shipping with UPS will rise about 5%.  That’s called inflation, sports fans. 

--Campbell Soup Co. reported a smaller-than-expected fiscal fourth quarter profit, while guiding lower, and the shares fell about 5%.  It seems the company’s Bolthouse Farms unit was hit by “higher carrot costs and lower sales of carrots,” this being a key to Campbell’s fresh foods initiatives.

It probably wasn’t a good idea to hire Bugs Bunny as the chief of that division, Bugs not being known for being particularly energetic, nor respected.  He has been relieved of his duties and released into a Camden area field.

Overall, net sales dropped less than 1% as processed foods (the kind I eat) have seen decreasing demand from consumers.

--The Wall Street Journal reports that money has flowed out of European stock funds every week for more than six months, a record exceeding the previous mark set during the financial crisis.  With the bank sector struggling and the political landscape in a state of flux, there is little reason to believe this trend will reverse in the near future.

The Stoxx Europe 600 index was down 6.1% through August vs. the S&P 500’s gain of 6.2%.

--Shares in Salesforce.com, the business-software maker, slumped after the company issued disappointing guidance for the current quarter.

For the period ending July 31, Salesforce reported revenue of $2.04 billion, up 25% over a year ago, but just in line with expectations, while net income was in line as well.

--CBS’ “Sunday Morning” is a staple for the Trumbore family.  I picked it up in the 1990s, before Charles Kuralt retired, and I watch the first hour each week, before switching to my talk shows (or Premier League football).

So last Sunday, Charles Osgood formally announced what everyone knew...that he was hanging it up, Sept. 25, specifically, after 22 years.  We’ll miss him.

But I thought it was a foregone conclusion Jane Pauley was replacing him, which is fine with me, but then I saw that Anthony Mason and Lee Cowan are still being considered.  I’d go with Cowan, if he’s still in the running.

--I’m imagining it’s a bit of a tension convention at Fox News these days, what with former host Andrea Tantaros being the latest to slap a $30 million sexual harassment lawsuit on the network and former chief Roger Ailes.  A Fox lawyer said of her: “Tantaros is not a victim; she is an opportunist.”  For her part, Tantaros said Ailes often commented on her figure, sent word he wants her in dresses to see her legs, and asked for hugs and demoted her when she refused his advances, as reported by the New York Daily News’ Barbara Ross.

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey: ISIS announced that its No. 2, founding member, spokesman, and strategist Abu Mohammed al Adnani, had been killed, with Russia saying it had taken him out, a day after the Pentagon said it had in a “precision strike.” 

Russia’s Defense Ministry said Adnani was killed in Russian airstrikes near Aleppo.  A Pentagon spokesman, Peter Cook, said it had no evidence of Russia’s claims, asserting, “Russia has spent most of its time, its military campaign, supporting and propping up the Assad regime. It has not devoted much if any effort to targeting ISIL’s leadership.”

The Pentagon said it had targeted Adnani in a different area northeast of Aleppo.  Regardless, Adnani was ISIS’ most visible leader and he was in charge of overseas attacks, including in Europe.

Turkey swept ISIS militants and Kurdish YPG militia from an area of northern Syria, though the YPG as of week’s end hadn’t met Turkish demands to withdraw to the east of the Euphrates river, according to Turkish President Tayyip Erdogan.  [The YPG says it had complied.]

It’s been over a week since Turkey launched its offensive into Syria, saying it had a dual goal of expelling ISIS from the border, while ensuring the Kurds didn’t fill the void; Ankara not wanting any YPG success to spill over into the Kurdish insurgency in Turkey itself (orchestrated by the PKK).

But while Washington has backed Turkey’s moves against ISIS, it has been protesting its offensive against the Kurdish forces that the U.S. has been supporting.

Erdogan continues to say the YPG is an extension of the PKK.  He told reporters on Friday, “Nobody can expect us to allow a terror corridor on our southern border.”  He said he had sought the establishment of a “safe zone” in Syria but the idea had not received the backing of other world powers.  [Reuters]

Gee, sound familiar?  Like summer of 2012?

David Ignatius / Washington Post

“The U.S. military campaign to seize the Islamic State’s capital, Raqqa, may be delayed because of a nasty fight between Turkey and the Syrian Kurdish militia known as the YPG.

“Sadly, it’s a classic Middle East moment, when regional players’ mistrust of each other overwhelms their common interest in fighting the terrorist Islamic State. And, equally sadly, it’s a moment that illustrates the frailty of the United States’ Syrian policy, which has built its military plans on the treacherous fault line of Turkish-Kurdish enmity.

“In disentangling this story, let’s start with the Syrian Kurds.  U.S. military officials say they have consistently been the strongest force against the Islamic State... U.S. Special Operations forces trainers have developed a deep respect for the YPG – and why they saw this militia (and its umbrella group, the Syrian Democratic Forces) as the backbone of the coming campaign to take Raqqa.

“But the U.S. strategy always papered over a fatal weakness: Turkey regards the YPG as an affiliate of the Kurdistan Workers’ Party, or PKK, which it sees as a terrorist group.  Turkey held its nose and agreed to allow the United States to conduct bombing missions from Incirlik air base in support of the YPG, and to allow the group to assault Manbij starting in May.  But at some point, this shaky strategy was going to blow....

“How can the United States build a firmer foundation for finishing the campaign against the Islamic State? Washington must help build governance for a post-Islamic State world.  It should sponsor renewed peace talks between Turkey and the PKK.  And it should make clear to all that the only durable future is a federalism that can give Kurds, Sunnis, Shiites, Turkmen and other minorities a sense of ownership and control in Syria and Iraq.

“U.S. military power can’t save a house built on quicksand. Before we press on to evict the Islamic State from Raqqa, the United States needs to frame a clear understanding with the neighboring states about what comes next.”

In Iraq, the head of the U.S. military’s Central Command, General Joseph Votel, said Iraq was on track to retake the city of Mosul from ISIS by later this year, assuming Prime Minister Haider al-Abadi goes forward as planned.

Finally, Retired Marine Gen. James Mattis said of the chaos in the Middle East, writ large: “(The region) is experiencing the most turmoil since the end of the Ottoman Empire, and it’s getting worse.”  Yet U.S. influence in the region “is at its lowest ebb in 40 years,” he added.

“The problems that emanate from the Middle East can’t be contained in the Middle East,” Mattis said.  “We know that intellectually, but there’s a tendency to want to put a pillow over our heads.”  [New York Post]

The New York Times had an extensive piece on the Syrian War, interviewing experts, and the consensus is it can get much worse...truly genocidal.

Good luck, Trump or Clinton.

Iran: The Wall Street Journal opined on the nuclear deal:

“(We are) learning again that what the Obama Administration says Iran can do under the agreement, and what Iran is allowed to do, are almost never the same.

“The latest discrepancy was revealed Thursday in a report by David Albright and Andrea Stricker of the Institute for Science and International Security (ISIS), a think tank in Washington D.C. that specializes in nuclear issues. The agreement specifies that Iran is to limit its stockpile of reactor-grade, low-enriched uranium (LEU) to no more than 300 kilograms for 15 years.  Tehran shipped more than 11 tons of LEU to Russia last year, and the Administration has trumpeted the Islamic Republic’s supposed compliance with the deal as a way of justifying wider sanctions relief.

“But as Mr. Albright and Ms. Stricker note, Iran’s ‘compliance’ came about thanks to a series of secretive exemptions and loopholes that the Administration and the deal’s other signatories created for the mullahs sometime last year.  Had those exemptions and loopholes not been created out of thin air, the authors report, ‘some of Iran’s nuclear facilities would not have been in compliance’ with the deal....

“The White House has waved off the ISIS report by insisting it ‘did not and will not allow Iran to skirt’ its commitments. The non-denial would be more credible if the Administration hadn’t last year agreed to a secretive process in which Iran was allowed to inspect its own nuclear-related military facilities.

“It would also be more credible if Iran weren’t testing ballistic missiles thanks to another nuclear side-deal. That one was supposed to ban such tests for eight years but contained a semantic loophole that Iran claims makes it unenforceable.  Iran was also supposed to be subject to a five-year embargo on the purchase of major conventional weapons. Yet only last week it chose to deploy its newly acquired S-300 air defense system – purchased from Russia thanks to another U.N. loophole – to defend the Fordow underground nuclear facility*.  The deal was supposed to have rendered Fordow harmless by turning it into a science and technology center.”

*Iranian state television announced on Sunday that the S-300 system had been deployed there, with the commander of Iran’s air defense, General Farzad Esmaili, saying the protection of the facility is paramount “in all circumstances.”  [Jerusalem Post]

Yup, Obama will be passing off this issue to his successor as well, but you can be sure it will be a highlight of his presidency when he ticks off his “achievements” during his farewell address.  I’ll throw up while watching it.

Yemen: The U.N. now estimates 10,000 people have been killed in the 18-month-old civil war here, almost double earlier estimates of 6,000 cited by aid workers. The new figure is based on official information from medical facilities in the country, though some areas don’t have facilities and victims have been buried without any official record being made. Three million Yemenis have been displaced.  14 million of the 26 million total population need food aid.

Monday, at least 60 people were killed in a suicide car bomb attack on an army training camp in Yemen’s second city of Aden.  ISIS claimed responsibility.

Russia: There are two weeks until Russia’s parliamentary elections and a survey published Thursday by the independent Levada Center showed support for the ruling United Russia party has dropped from 57% to 50% in August compared to July among likely voters on Sept. 18.

In late 2010 and 2011, tens of thousands took to the streets after United Russia won 49% in what was seen as a rigged vote.  Ergo, look out.

Prime Minister Dmitry Medvedev, who heads up United Russia (Putin gave up the chairmanship of the party in 2012), is increasingly unpopular and it doesn’t help that when asked about the government’s recent decision not to index pension payments, he told reporters: “There’s no money. But you hang in there!”

So this week, Medvedev announced the government would hand out one-time payments of $75 in January 2017, rather than adjust pensions for inflation, calling it “absolutely fair.”

China: A senior official in the People’s Liberation Army met top Syrian officials in Damascus recently, promising increased military aid and training for government forces.  Rear Admiral Guan Youfei also met a senior Russian general, affirming the budding relationship between Beijing and Moscow in military affairs.   

The import of this visit is far more than taking a stance on Syria few have previously heard about.

As Charles Clover and Luna Lin write in the Financial Times:

“The visit...offers a stark demonstration of how a number of China’s longstanding foreign policy taboos are being rethought under President Xi Jinping.  For decades China has trumpeted its aversion to traditional realpolitik – including foreign military intervention, building foreign bases, developing spheres of influence, creating buffer zones and forging alliances – as outdated relics of colonialism....

“(Since) Xi assumed power in 2012, he has ushered in a new foreign policy....

“ ‘Since Xi became president, they no longer talk about keeping a low profile,’ says Paul Haenle, head of the Carnegie-Tsinghua Center in Beijing...

“As for the principle of non-interference abroad, (Haenle) says, ‘they insist they abide by it, but if you sat down for a few minutes you could think of 15 examples where they’re not doing that anymore.’”

For starters, you have the obvious example of land grabs in the South China Sea and assertive claims about the airspace over the East China Sea.  You also have a new naval base in Djibouti – its first foreign military base since withdrawing its forces from North Korea in 1958.

And there is growing support for a more assertive foreign policy in China’s journals and interviews with experts on standing up to the U.S. and Japan.

Also consider that Xi and Vladimir Putin have met 17 times since early 2013, with Russia and China holding a series of joint military exercises, including coordinated ship maneuvering in the East China Sea, with South China Sea exercises slated for later this month.

Meanwhile, Hong Kongers go to the polls on Sunday to choose candidates for the semiautonomous Legislative Council (Legco), the first major election snice the 2014 pro-democracy protests.  214 candidates are running for 35 seats.

The 2014 protests did not yield any concessions from Beijing over its plan to restrict elections for the city’s top leader.

Sunday, the goal of the pro-democracy candidates, who are competing against each other, is to win at least one third of the seats so they can block legislation.  Half of the total of 70 seats are not up for a vote as they are tied to various business and trade groups.  People with Communist Party ties dominate many of these constituencies, while in terms of Hong Kong’s top leader, he or she is currently hand-picked by a committee of pro-Beijing elites (mostly), with China’s government screening out unfriendly candidates.

North Korea: According to reports from South Korea, Kim Jong Un executed a vice premier for showing disrespect, while banishing two other top officials for ideological training.

Kim Yong Jin, the vice premier for education, was interrogated after slouching during a meeting in late June.  He was executed by a firing squad.

Seoul isn’t always right in its reports on who has been blown to bits and who hasn’t.  [Some reports had the official being blown up by an anti-aircraft gun.  Other reports said a second official was executed in the same fashion.]

Bottom line, drink a lot of coffee if you’re in a meeting with Kim Jong Un....and sit up straight!

Uzbekistan: The only president this country has had since becoming independent in 1991, Islam Karimov, died after suffering a stroke last weekend.  He had named no successor so an election will have to be held, but to say the nation (which lies between Kazakhstan and Turkmenistan and shares a small border with Afghanistan) is in a state of crisis as I write is a severe understatement.  All flights into the main airport were immediately canceled Friday.

Karimov, 78, led one of the most repressive regimes in the world, with thousands of opponents imprisoned and tortured. There is no freedom of speech here.

Uzbekistan is the strongest Central Asian state with the largest population (30 million) and the strongest military and security services, so any instability here can spread and thus Russia has a real interest in what transpires over the coming weeks and months.  Developing....

Philippines: Since new President Rodrigo Duterte launched his crackdown on the drug trade two months ago, about 2,000 suspected drug users and pushers have been killed.  Duterte, who is a wacko, promised a six-month campaign that would kill 100,000 drug users.  So many bodies would be dumped in Manila Bay that the “fish will grow fat,” he said.

The majority of the 2,000 victims thus far have died at the hands of vigilantes, with the victims’ generally poverty-stricken meth addicts or low-level peddlers.  According to the latest police figures this week, 1,051 have died at the hands of death squads, with the remainder killed in police operations, supposedly after resisting arrest.  [Financial Times]

Needless to say, the U.N. and various human rights groups have slammed Duterte for ignoring due process.  Approximately 700,000 drug abusers have turned themselves in, but they are placed in community rehab programs that are far from safe.  These aren’t exactly Cliffside Malibu, if you catch my drift.

But we learned late Friday, an explosion in Duterte’s home city of Davao killed 12 and wounded dozens more.  Duterte was in Davao but not near the site.  He has been waging an aggressive battle against jihadist group Abu Sayyaf, though no claim of responsibility as yet.  It could certainly also be related to his drug crackdown.

Brazil: On Monday, suspended President Dilma Rousseff defended herself against accusations of wrongdoing in testimony before her Senate impeachment trial, saying her accusers were trying to turn back the clock on social progress achieved during her and her predecessor’s terms in office.  Roussef said her enemies were using the charges as an excuse for a coup and that democracy was at risk.

Rousseff was accused of violating budget laws that made the country’s budget situation appear better than it was.

Two days later, Wednesday, the Senate voted overwhelmingly to remove Rousseff from office, convicted on a vote of 61 to 20 (54 of 81 being needed).

Vice President Michel Temer, who has his own issues involving corruption, takes over.

Venezuela, Bolivia and Ecuador have said they are recalling their ambassadors.

While a majority of Brazilians wanted Rousseff out, a majority also wanted to remove Temer.  He cannot run for president in 2018 because he has been convicted of breaking campaign finance rules and banned from running for office.  The two men behind him in line for the presidency have also been accused of corruption, while Rousseff has not.  [Though there is certainly evidence of it.]

Temer now has to turn around an economy in recession and he has advocated austerity measures, such as a lid on public spending, as well as changes to Brazil’s generous pension system, neither of which are popular with the people.

Both Temer and Rousseff have been part of the Petrobras scandal and that ongoing investigation.

Brazil’s GDP contracted at a 3.8% annualized rate in the second quarter, the ninth consecutive quarter of contraction, but this was better than the first quarter’s 5.4% year on year decline.  The jobless rate rose to 11.6% in the three months through July, up from 6.5% end of 2014.  Wages, discounted for inflation, fell 3% from the same months in 2015.

Venezuela: A massive demonstration was held in Caracas on Thursday, an estimated crowd of 500,000 calling for a recall election and the removal of President Nicolas Maduro.  The demonstrators also called for an end to socialism and the release of opposition leader Leopoldo Lopez as the economy has totally collapsed. 

Remember, the opposition won a majority of seats in the National Assembly in last year’s elections, but Maduro’s Supreme Court, packed with his supporters, has declared 24 laws passed by the Assembly to be illegal.

The military, as I’ve called for, needs to take him out as he clearly isn’t stepping down voluntarily.  First and foremost, Venezuelans need food and medicine.

Mexico:  Mexicans awakened Wednesday morning to the word Donald Trump was traveling to their country – the same man who called them rapists and drug traffickers – and to say they weren’t happy was an understatement.  Just what Enrique Pena Nieto was thinking has many strategists stumped. He is deeply unpopular as it is these days, and then he does this.  [He has a 23% approval rating, the lowest for any president there in 20 years.  A poll published in Reforma newspaper on Thursday also showed 85% of Mexicans disapproved of inviting Trump.]

I watched the press conference live and you could see how the president was trying so hard not to look like he was shaking his head in approval at anything Trump said, let alone smile.  He knew he screwed up, but once Trump accepted an invitation Pena Nieto clearly thought he would turn down (while Hillary instead would accept), he had to let the man come.

Amid the uproar, hours after Trump left Mexico City, Pena Nieto gave a television interview and angrily said:

“His policy stances could represent a huge threat to Mexico, and I am not prepared to keep my arms crossed and do nothing.  That risk, that threat, must be confronted.”  [BBC News]

Separately, Mexico’s federal policy chief was removed from office by Pena Nieto, amid allegations police killed at least 22 suspected members of a drug cartel.

Colombia: The people will be voting October 2 in a referendum on whether to back the deal the government cut with the Marxist rebels, FARC.  President Juan Manuel Santos says the accord must be approved because “there is no Plan B...Plan B is going back to war.”

But former president Alvaro Uribe says the deal should be turned down so a better one can be negotiated. 

Remember, part of the peace agreement is the admittance of FARC leaders into the legislature, rather than serving prison sentences for a war that killed more than 220,000 and displaced 7 million over its 50-year history.

Random Musings

--Polls....

A Monmouth University national poll has 46% of likely voters going for Hillary Clinton and 39% for Donald Trump, with 7% for Libertarian Gary Johnson, and 2% backing Jill Stein of the Green Party.  [43-36-8-2, among all registered voters.]

Earlier this month, shortly after the Democratic convention, Clinton held a 50-37 lead among likely voters; 46-34 among all registered voters in this one.

Among independents, Clinton receives 37% to Trump’s 32%.  Trump led 32-30 among this group in early August.

54% believe donors to the Clinton Foundation were given special treatment.

Clinton leads 90% to 5% among black, Hispanic, and Asian voters, while Trump leads by 9 points among white voters (48% to 39%).  In 2012, Barack Obama won non-white voters by 71 points, while Mitt Romney took the white vote by 15 points.

In a new Washington Post/ABC News survey, only 41% have a favorable impression of Clinton, while a record 56% have an unfavorable one; the worst image Clinton has had in her quarter-century in national public life.

At the same time, only 35% have a favorable impression of Trump, compared to 63% unfavorable.

But, if you look just at registered voters, Clinton’s image is as bad as Trump’s; 38% favorable, 59% unfavorable, compared to a 37/60 split for Trump.  [Bottom line, the two most unpopular major-party presidential nominees in modern U.S. history.]

Clinton’s favorable rating among Hispanics has dropped from 71% to 55% just since early August!

Clearly the adverse headlines about the Clinton Foundation and thousands of newly discovered emails are hurting the former secretary of state.  And Friday’s disclosure by the FBI of its interview notes with Clinton makes things even worse.

A USC Dornsife/L.A. Times national poll has Trump leading Clinton 45-42 as of Aug. 31.  A few weeks earlier it was 46-42 Clinton.

In Pennsylvania, Clinton leads in a Monmouth survey 48-40, with Democrat Katie McGinty leading Republican Pat Toomey by 4 points in a key Senate race.

--Donald Trump has spent the better part of a week waffling on his immigration policy, including a seeming softening of his position on deporting undocumented immigrants.

Last weekend, at the Iowa State Fair, Trump said he would strengthen the system of verifying the eligibility of workers and the tracking of visa holders, while reiterating his promise to cancel “unconstitutional orders” and “executive orders” relating to immigration.

But his proposals on the E-Verify front were central to legislation proposed by the Gang of Eight senators in 2013, and no different from those of rivals like Jeb Bush, or Mitt Romney.

Earlier, he said he might let some undocumented immigrants remain in the country legally, but no citizenship.

And then he said a few days later to CNN’s Anderson Cooper:

“There’s no path to legalization unless they leave the country.  When they come back in, then they can start paying taxes, but there is no path to legalization unless they leave the country and then come back.”

But he stayed mum on the topic of forcibly deporting millions who were not documented.

So then Trump brilliantly took up Mexican President Enrique Pena Nieto’s invitation for a private meeting (extended also to Hillary Clinton, who thus far has opted not to take Pena Nieto up on it), and Trump, appearing alongside the president after a discussion on the immigration topic and trade, looked presidential and his tone was moderate, saying on the issue of the wall that the two had not discussed who would pay for it.

But as Trump then flew to Phoenix for his big speech on immigration, he was ticked off to learn Pena Nieto went public in a tweet that he had told Trump during their private meeting that his country would refuse to pay for the wall.

Trump thought Pena Nieto had broken a deal to keep the question of paying for the wall off the table, so as the Wall Street Journal’s Monica Langley reported, “Trump hurriedly inserted a new sentence in his immigration speech, and he soon boomed out from the podium his traditional declaration that the wall would be paid for by Mexico – adding, ‘They don’t know it yet but they’re going to pay for the wall.’

“I had no choice,” Trump said in an interview Thursday, though he also said he liked the Mexican president “very much.”

Editorial / Wall Street Journal

“Ronald Reagan described America as ‘a city on a hill’ that people around the world aspire to reach.  Donald Trump offered a different vision in his immigration speech Wednesday night: A fortress surrounded by a wall with guards and sensory detectors and police to hunt down and expel anyone who makes it past the barriers.

“This isn’t the ‘softening’ immigration policy that Mr. Trump had been signaling for more than a week.  Perhaps he blinked amid criticism from supporters, or perhaps he has decided this is what he really believes.  Whatever the motive, the New Yorker’s 10-point plan came straight from the wish list of the most restrictionist corners of the political right.

“We understand that in a world of rising terror threats the U.S. needs border controls and immigrant vetting....

“But the businessman missed a chance to make a more reasonable case to honor the law without embracing mass deportation that is politically impossible and economically damaging.  ‘Anyone who has entered the United States illegally is subject to deportation,’ Mr. Trump said.  ‘And you can call it deported if you want.  The press doesn’t like that term.  You can call it whatever the hell you want.  They’re gone.’

“This presumably includes all 11 million people estimated to be here illegally, including those who have lived and worked in the U.S. for decades. It also presumably includes children born in the U.S. whose parents are illegal and thus lack documents through no fault of their own.

“Mr. Trump said that anyone who wants to gain legal status must first return to his native country and ‘will have to enter under the immigration caps or limits that will be established.’  That means waiting five or 10 years or more, depending on the country quotas, which would mean breaking up families.  These immigrants would have no incentive to declare themselves and become legal....

“Mr. Trump also pledges to ‘turn off the jobs and benefits magnet’ for immigrants. Yet he is offering no new legal ways to work in the U.S.  He can build the tallest wall in the world at the border, but as long as jobs exist to be filled, immigrants will come to fill them. Border enforcement without a guest-worker program is like drug enforcement without reducing drug use: It won’t work....

“Beyond the bad economics is the puzzle of Mr. Trump’s political strategy.  Wednesday’s immigration speech was an appeal to his core, mostly white, supporters who propelled him to the GOP nomination and whose votes he already has. It made little effort to expand his coalition to ethnic groups with large numbers of mostly legal immigrants.

“The Republican has closed the polling gap with Hillary Clinton but more because her favorable rating is falling again than any improvement in his standing.  Mr. Trump’s problem continues to be dreadful ratings among minorities, women and college-educated Republicans.  It’s revealing that the Clinton campaign almost seemed relieved when Mr. Trump didn’t use his speech to modify his anti-immigration rhetoric.”

--The Wall Street Journal had a piece on Friday chronicling a young Donald Trump’s maneuvering in Atlantic City, including a 1981 meeting he had with the FBI, who advised him there were easier ways to invest in A.C. casinos than dealing with the mob.

Trump went on to own four casinos there, but a Journal examination shows he dealt with numerous questionable figures, though today, Trump says while he might have dealt with people with questionable ties, he wasn’t aware of it at the time, calling himself “the cleanest guy there is.”

--Editorial / New York Times

“Does the new batch of previously undisclosed State Department emails prove that big-money donors to the Bill, Hillary & Chelsea Clinton Foundation got special favors from Mrs. Clinton while she was secretary of state?

“Not so far, but that the question arises yet again points to a need for major changes at the foundation now, before the November election....

“When Mrs. Clinton became secretary of state, the Obama administration tried to draw a line between the foundation, particularly its foreign-government sponsors, and her role.  The new emails underscore that this effort was at best partly successful.  ‘Pay-to-play’ charges by Donald Trump have not been proved.  But the emails and previous reporting suggest Mr. Trump has reason to say that while Mrs. Clinton was secretary, it was hard to tell where the foundation ended and the State Department began.

“Mrs. Clinton became involved in State Department deals and negotiations that also involved foundation donors or board members. She prompted multiple investigations with an arrangement that allowed Huma Abedin, her deputy chief of staff at the State Department and now vice chairwoman of her campaign, to be paid simultaneously by the State Department, the foundation and Teneo, a consulting firm run by Doug Band, the former adviser to Mr. Clinton who helped create the foundation – and who sent emails to Ms. Abedin seeking favors for foundation donors.

“The newly disclosed emails show that some foundation donors and friends, like Crown Prince Salman bin Hamad bin al-Khalifa of Bahrain, used foundation channels to seek access to Mrs. Clinton....

“Mr. Clinton has said he will resign from the board of the foundation and the CHAI (Clinton Health Access Initiative, a separate, affiliated nonprofit that has Bill and Chelsea Clinton on its board) if Mrs. Clinton wins the presidency. Simply closing the foundation, as even some Democrats recommend, could kill programs helping tens of thousands of people. While that’s unwarranted, the foundation could do much more to distance itself from the foreign and corporate money that risks tainting Mrs. Clinton’s campaign.  Its plans to restrict its funding sources only after the election will likely dog Mrs. Clinton.

“A wiser course would be to ban contributions from foreign and corporate entities now.  If Mrs. Clinton wins, Bill and Chelsea Clinton should both end their operational involvement in the foundation and its affiliates for the duration of her presidency...

“Mrs. Clinton has said she intends to give Mr. Clinton a role in her administration.  Cutting his foundation ties would demonstrate that he is giving any role he would have in the administration the priority it deserves....

“The Clinton Foundation has become a symbol of the Clintons’ laudable ambitions, but also of their tangled alliances and operational opacity.  If Mrs. Clinton wins, it could prove a target for her political adversaries.  Achieving true distance from the foundation is not only necessary to ensure its effectiveness, it is an ethical imperative for Mrs. Clinton.”

Speaking of Huma Abedin, she announced she had separated from her husband, former congressman and lifetime dirtball Anthony Weiner, after Weiner exchanged more suggestive images and messages with a woman while the couple’s young child was beside him.

--Ron Fournier / The Atlantic

“On one hand, there’s former Secretary of State Hillary Clinton, who oversaw ‘grossly inadequate’ security at a diplomatic facility in Benghazi, Libya, the site of a deadly September 11, 2012, terrorist attack.

“Misleading explanations by Clinton and other Obama administration officials fueled a congressional inquiry, which revealed her rogue email system, which led to an FBI investigation into her ‘extremely careless’ handling of U.S. secrets, which almost prompted a public-corruption investigation into pay-to-play allegations at the Clinton Foundation.  Only 11 percent of voters trust her.

“On the other hand, there’s wealthy celebrity Donald Trump....

“Who dismissed the service of Senator John McCain and other prisoners of war.  ‘I like people who weren’t captured.’

“Who responded to fair but tough questions from the Fox News debate moderator Megyn Kelly by saying she had ‘blood coming out of her, wherever.’

“Who bragged about his penis size...

“Who claimed ‘thousands and thousands’ of U.S. Muslims cheered the 9/11 attacks, which didn’t happen.

“Who called for a ‘total and complete shutdown of Muslims entering the United States’ and said, ‘I think Islam hates us.’

“Who thinks he’s politically invincible: ‘I could stand in the middle of Fifth Avenue and shoot somebody,’ he said, ‘and I wouldn’t lose any voters, okay?’....

“Who said Clinton would not get even 5 percent of the vote were she not a woman.

“Who said an Indiana judge was biased against him – and had no right to preside over a lawsuit against him – because the judge is Hispanic.

“Who responded to terrorist attacks in Orlando, Florida, and Brussels not with empathy or dignity, but with self-centered tweets....

“Who said that if he can’t prevent Clinton from winning the presidency and nominating Supreme Court justices, ‘Second Amendment people’ can stop her.

“Who said he was ‘softening’ his immigration stances just before he said he was ‘hardening’ them....

“On one hand, Clinton.  On the other hand, Trump.   That’s the unfortunate choice facing voters in a system rigged heavily in favor of the two major parties.

“But there’s no equivalence.

“On one hand, Benghazi and email and lies.

“On the other hand, mendacity, bigotry, bullyism, narcissism, sexism, selfishness, sociopathology, and a lack of understanding or interest in public policy – all to extremes unseen in modern presidential politics.

“I like to remind readers that there are other choices. While Green Party’s Jill Stein, Libertarian Gary Johnson, and independent Evan McMullin are unlikely to win, people should ignore partisans who say backing anybody other than Clinton or Trump is a wasted vote. That’s the duopoly protecting its selfish interest.  The only votes wasted are the ones not cast.

“On the other hand, Trump shouldn’t be president.”

--The debate moderators were announced.

Sept. 26...NBC’s Lester Holt
Oct. 9...ABC’s Martha Raddatz and CNN’s Anderson Cooper (town hall-style)
Oct. 19...Fox News’ Chris Wallace

Oct. 4...CBS’ Elaine Quijana (vice presidential)

--Editorial / New York Post

“President Obama’s top spokesman is complaining that his boss hasn’t gotten enough respect from the media – especially the folks at The New York Times.  But he couldn’t have picked a worse specific gripe.

“The Obama ‘achievement’ he demands the press admire is the one where even all the folks in the Obama-loving mainstream media agree the president’s been a total failure.

“Press Secretary Josh Earnest penned a letter to the Times complaining about media columnist Jim Rutenberg’s charge that, if elected, Hillary Clinton’s administration – like Obama’s – ‘would continue the tradition of being still more secretive than the one before it.’

“No way, cried Earnest.  After all, he wrote, Obama pledged to be ‘the most transparent president in history’ – a promise he insists the president has fulfilled.

“Uh-huh.  Try finding any reporter who covers Team Obama who’ll agree.

“This is the same administration that has denied the most Freedom of Information requests in history, stretching searches out for years, demanding outrageous fees and arguing in court that such requests should be ‘narrowly construed’ to limit them.

“It has prosecuted nine journalists over news leaks – more than all other presidents combined.

“And its officials boast about deliberately spreading false talking points to bolster Obama’s nuclear deal with Iran.

“All of which is why fully three years ago, the Committee to Protect Journalists, in a report by former Washington Post Executive Editor Leonard Downie, charged that ‘this administration’s war on leaks and other efforts to control information are the most aggressive I’ve seen since the Nixon administration.’”

--For the record, Democrat Rep. Debbie Wasserman Schultz (Fla.), and Republican Senators John McCain (Ariz.) and Marco Rubio (Fla.), were among the high-profile candidates to win their party primaries this week.

But while Wasserman Schultz will now handily win in November, Rubio and McCain face tough challenges from their Democrat opponents.  McCain also turned 80 this week, which is a legitimate issue.

Again, the Republicans are defending 24 Senate seats to the Democrats’ 10 this fall, with Democrats needing just five to regain control, which would have some of us fleeing to Guam and points south in Micronesia, like my beloved island of Yap, where you can sit around and drink beer allll day.

--Maryland Gov. Larry Hogan said he is issuing an executive order requiring Maryland public schools to begin after Labor Day starting next year.  It’s about allowing families’ summer vacations to last through August and benefit Maryland businesses in resort areas.  The school year must also conclude by June 15.

I’ve always gotten a kick out of how early the school year starts in most areas of the country, including colleges, save for the Northeast, where we begin after Labor Day, but don’t end until around June 20, depending on the number of snow days.

No doubt, many resort areas get screwed over the Labor Day weekend.  So I heartily agree with the Maryland governor.

--The number of shooting deaths in Chicago has surpassed the total for last year with four months still to go.  By Wednesday, 425 people had been fatally shot, accounting for 90% of the total murders in the city.  [471 murders overall.]  August saw the city record 90 murders, making it the most violent month in Chicago in more than two decades (June 1996, the height of the crack epidemic).  Police officials are blaming increased gang activity for the latest spike.

Baltimore hit 200 homicide victims this week, the fifth consecutive year of 200+ for this city, after recording 197 in all of 2011.  Last year, 344 people were killed here, the city’s highest per capita rate ever.

--San Francisco 49ers quarterback Colin Kaepernick injected himself into the news this week as he refused to stand for the national anthem at a preseason game last weekend, and then kneeled during the singing of the anthem on Thursday night in San Diego during the 49ers’ and Chargers’ preseason finale, it being San Diego’s annual “Salute to the Military.”  Needless to say, the boos rained down on Kaepernick and, as it turned out, a teammate, Eric Reid, who joined him in taking a knee.

Kaepernick is protesting what he says is racial oppression in the United States.  Thursday he said, “Yes, I’ll continue to sit. I’m going to continue to stand with the people that are being oppressed.  To me this is something that has to change.  When there’s significant change and I feel like that flag represents what it’s supposed to represent, this country is representing people the way that it’s supposed to, I’ll stand.”

Phil Mushnick / New York Post

“Dear Colin Kaepernick,

“For what it’s worth, I agree with you.  I’m also convinced blacks are America’s most oppressed race.  And I’m pleased you’re the latest pro athlete to exploit his or her status to take a stand, yours by sitting during the national anthem.

“But we disagree on who the oppressors are. You believe it’s White America, the America that helped do the once imponderable: elect a black President, and not once, but twice.

“I believe that the greatest oppressors of black Americans are black Americans. And they’re encouraged to continue by a say-what-you-want-to-hear leadership and messengers, from the President to a frightened media, politicians of every office, and activists, both black and white, empowered by their steady unwillingness to tell clear, present and sustaining truths in service of genuine for-the-better change.

“Consider that when a murder or murders of black men, women and children occur in a black neighborhood, its residents are conditioned to be uncooperative with cops and detectives – ‘snitches get stitches’ – in pursuit of the murderer or murderers lest they and their families suffer retaliatory harm, including murder.

“Now that, Colin, that’s oppression.  It’s a gangs-as-Gestapo mentality and reality that exists – and rules – within black communities throughout this country.

“Oppression?  Colin, you’re one lucky young man to have escaped another epidemic of black-on-black oppression. You were adopted by a man and a woman and raised in a presumably loving, nurturing household.  You were raised by two on-the-job parents.

“You beat another common, almost standard reality: black self-oppression....

“Colin, you cited the Black Lives Matter movement as one you support. But logical people of all races wonder why such a noble-titled movement assiduously avoids addressing, let alone protesting, the avalanche of daily and nightly murders of blacks by blacks in virtually every city in this country.”

Kaepernick said he was donating $1 million of his $11.9 million in guaranteed salary this season to charities that support racial equality.

--A study by researchers at Duke University confirms what we already knew.  As reported by the Wall Street Journal’s Sumathi Reddy, “When it comes to cognitive decline, there is a gradual loss of different functions. Speed of processing and working memory peak in the 20s and gradually start declining.”

Personally, I hit my peak when I was 12.

One professor involved in the study, Kathy Wild, notes that learning new information after 40 can be harder and tasks that require concentration should be done with minimal interruptions or distractions.  “Do just one thing until you’re done with it.”

Boy, I sure agree with this.  It hasn’t been easy doing this particular column at an age, err, over 40.  [I think Dr. Bortrum feels the same way with his work, he being over 40 as well.]

--Finally, after the excitement surrounding the discovery of potential earth-like planet Proxima b, an international team of scientists investigating deep space signals may have found signs of an advanced civilization in the solar system of a sun-sized star 95 light-years away.

Yes, something could be trying to signal us, or the Martians or Plutonians, for all we know.

Seth Shostak, a senior astronomer with the Search for Extraterrestrial Intelligence (SETI), said that if the signal did originate from a planet in the star’s solar system, it would “require an effort far, far beyond what we ourselves could do, and it’s hard to understand why anyone would want to target our solar system with a strong signal.”

I mean think about it.  As Shostak added: “This star system is so far away, they won’t have yet picked up any TV or radar that would tell them that we’re here.”

---

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

God bless America.

---

Gold $1328
Oil $44.20...down $3.09 on the week

Returns for the week 8/29-9/2

Dow Jones  +0.5%  [18491]
S&P 500  +0.5%  [2179]
S&P MidCap  +1.2%
Russell 2000  +1.1%
Nasdaq  +0.6%  [5249]

Returns for the period 1/1/16-9/2/16

Dow Jones  +6.1%
S&P 500  +6.7%
S&P MidCap  +12.9%
Russell 2000  +10.2%
Nasdaq  +4.8%

Bulls 55.9
Bears 20.6 [Source: Investors Intelligence]

Dr. Bortrum posted a new column.

Have a safe holiday weekend.  Don’t do anything stupid.

Brian Trumbore