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09/24/2016

For the week 9/19-9/23

[Posted 11:00 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 Lin D.R. (who slipped me a check at my high school reunion last weekend, which was funny, and appreciated).

Edition 911

Washington and Wall Street

Between the bombings in New York and New Jersey and a mass stabbing in Minnesota, attention was refocused in the presidential race on terrorism and national security.  And we had some depressing rioting in Charlotte, N.C., that resulted from a cop shooting.  [I’m the wait 24 hours guy...evidence is still being developed on this one.  As for the Tulsa shooting, for the record the female white cop was charged with manslaughter.]

But then there was President Obama, giving his final address to the U.N. General Assembly, as the nation also prepares to watch the first presidential debate on Monday, prelude to which I cover below but no doubt will dominate the beginning of this column next week.

As for the current occupant of the Oval Office, his speech on Tuesday was a dry run for his farewell address to the nation next January.  I watched it all and was sickened, knowing what his true legacy is, but also knowing how some, such as Mr. Ignatius below, understand what an incredible failure this man has been, yet still feel compelled to issue platitudes, which I have largely edited out of the following.  Platitudes?  For leaving us a world within years of total collapse and disorder?  Are you kidding me?

David Ignatius / Washington Post

“What a moment for President Obama to deliver his valedictory address to the United Nations on Tuesday – defending the liberal international order at a time when it’s under severe stress around the world.

“Obama’s speech was preceded by some sickening reminders of how global security is fraying: The day before, a Syrian, or perhaps Russian, airstrike had ravaged a U.N. aid convoy trying to relieve Aleppo; over the weekend, a suspected lone-wolf terrorist had tried to slaughter innocents in the New York area; three days before, errant American bombs had incinerated a camp of Syrian soldiers and, in the process, torched a fragile cease-fire.  [Ed. not entirely accurate.]

“Amid this disordered world, Obama displayed his sterling assets: his idealism, moral clarity and calm intellect.  But those good qualities seemed unequal this past week to containing the bad forces that are loose in the world.  As this gifted but sometimes vexed leader prepares to leave office, the world seems more disordered than when he arrived.  He has been a creature of light at a time when the world has been darkening....

“Obama didn’t talk much about the hard power that would be necessary to roll back recent gains for the autocrats and restore a liberal global order. Such a policy – let’s call it ‘Obama Heavy’ – would be the challenge for a President Hillary Clinton, if she can get past the finish line first in November.

“Obama will leave behind the right ideas for restoration of an American-led order but sadly, also, the inescapable fact of its decline during his presidency.”

Anders Fogh Rasmussen / Wall Street Journal

“Barely had I been seated before Vladimir Putin told me that NATO – the organization that I then headed – no longer had any purpose and should be disbanded.  ‘After the end of the Cold War, we dissolved the Warsaw Pact,’ he said. ‘Similarly, you should dissolve NATO.  That is a relic from the Cold War.’

“During my visit to Moscow in December 2009, I sensed that President Putin was challenging the world order that the U.S. created so successfully after World War II.  Beginning in 2014, he invaded Ukraine and launched a military action in Syria.

“From my former positions as prime minister of Denmark and secretary-general of NATO, I know how important American leadership is. We desperately need a U.S. president who is able and willing to lead the free world and counter autocrats like President Putin.  A president who will lead from the front, not from behind.

“The world needs such a policeman if freedom and prosperity are to prevail against the forces of oppression, and the only capable, reliable and desirable candidate for the position is the United States.  The presidential elections thus come at a pivotal point in history.

“The Middle East is torn by war.  In North Africa, Libya has collapsed and become a breeding ground for terrorists.  In Eastern Europe, a resurgent Russia has brutally attacked and grabbed land by force from Ukraine.  China is flexing its muscles against its neighbors – and the rogue state of North Korea is threatening a nuclear attack.

“In this world of interconnections, it has become a cliché to talk about the ‘global village.’  But right now, the village is burning, and the neighbors are fighting in the light of the flames.  Just as we need a policeman to restore order; we need a firefighter to put out the flames of conflict, and a kind of mayor, smart and sensible, to lead the rebuilding.

“Only America can play all these roles, because of all world powers, America alone has the credibility to shape sustainable solutions to these challenges....

“The Obama administration’s reluctance to lead the world has had serious consequences, and none is graver than the behavior of Mr. Putin.  While Europe and the U.S. slept, he launched a ruthless military operation in support of the Assad regime in Syria and tried to present Russia as a global power challenging the U.S. in importance.  In Europe, he is trying to carve out a sphere of influence and establish Russia as a regional power capable of diminishing American influence.

“These are only a few examples of what is now at stake as autocrats, terrorists and rogue states challenge America’s leadership of the international rules-based order – which was created after World War II and which secured for the world an unprecedented period of peace, progress and prosperity.

“The next president must acknowledge this inheritance.  American isolationism will not make the U.S. and other freedom-loving countries safer and more prosperous, it will make them less so and unleash a plague of dictators and other oppressors.  Above all, American isolationism will threaten the future of the rules-based international world order that has brought freedom and prosperity to so many people.”

---

Turning to Wall Street, it was all about the Federal Reserve (and the Bank of Japan), as both affirmed their commitments to monetary easing, which led to a global rally in stocks, and bonds.

The Federal Reserve on Wednesday left rates unchanged, as your editor long expected, and appeared to pave the way for a hike in December, which I concur with, though my point has long been they wouldn’t move in September because of the election (their protestations to the contrary that they are not political being total B.S.), and then at some point between now and December, the Fed will get caught with its pants down amid a mini-inflation scare, which will roil the markets.  I stand by this long-held belief as well.

Wednesday, Chair Janet Yellen told a press conference after the Fed’s two-day meeting, “The economy has a little more room to run than might have been previously thought,” explaining the decision to hold the line on rates.  “That’s good news.”

But Yellen also made clear the central bank intends to raise rates this year.  “I would expect to see that, if we continue on the current course of labor market improvement and there are no major new risks that develop.”

[The formal Fed statement read in part: “The committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives.”]

However, this time there were three voting members of the Federal Open Market Committee who dissented – the first time that’s happened since December 2014; the three seeking an immediate hike.  [The vote was 7-3 overall.]

One of the three, Eric Rosengren, said in a note on Friday that given the “progress” the U.S. economy has made and the potential side effects of low rates, the case for a rate rise has “become even more compelling.”

In addressing prospects for a 4.5% jobless rate by 2019, Rosengren offered:

“Unemployment this low may well have the desirable effect of bringing more workers into the labor force – but, unfortunately, only temporarily.  Historical experience suggests it also risks overheating the economy, the effects of which include heightened pressure on inflation and potentially increasing financial-market imbalances.”

But the FOMC, in opting to put off a rate increase, also scaled back the number of hikes it expects next year to just two from three.

Yellen said the Fed wasn’t concerned that easy monetary policy was fueling bubbles.  “In general, I would not say that asset valuations are out of line with historical norms,” she said.

Policymakers also lowered their estimate of GDP in the long run to just 1.8% from 2%, while trimming their calculation of the long-run federal funds rate to 2.9% from June’s 3%, in contrast to the current 0.25%-0.50% band.

I thought one of the better questions at the press conference was, paraphrasing, ‘How can you forecast a Fed funds rate of 3%, longer term, from the current 0.25%, when you are saying growth remains at the same putrid pace we have today, 2%ish?’  As in, what would cause you to move rates higher if, one assumes, in this slow-growth environment you are forecasting, inflation remains tame?

I don’t think inflation will remain tame, and thus I’m probably in the camp we see a little stronger growth, but it’s just funny how full of merde the Fed is.  

Separately, there were two data points on the housing market this week of note: August housing starts came in at 1.142 million, annualized, less than expected, ditto August existing home sales at 5.31 million, the lowest annualized pace since February. The median existing home price was $240,200, up 5.1% year on year.  Rising prices and tight inventories seem to be holding buyers back but it’s not really worrisome.

Finally, there could be a budget showdown this week to fund the government beyond the Sept. 30 deadline for the fiscal year.  Congress must pass a spending measure to keep the government open and the Senate passed a bill with funding to fight Zika, but it lacks other provisions the White House wants.  We should assume a deal is reached to keep things going until early December.

Europe and Asia

A flash reading on the Eurozone economy for September, as put out by IHS Markit, showed that the composite PMI (manufacturing and services) is 52.6 vs. 52.9 in August (50 being the dividing line between growth and contraction), a 20-month low, with the services reading at 52.1 vs. 52.8 (a 21-month low) and manufacturing at 52.6 vs. 51.7 last month (3-month high).

Economist Rob Dobson of IHS Markit:

“The Eurozone economy ended the third quarter on a disappointing note, with its rate of expansion easing to a 20-month low in September. While the underlying picture remains one of sluggish growth of close to 0.3% over the quarter as a whole, it also remains clear that the economic upturn is still fragile and failing to achieve any real traction.  Job creation is wavering as a result, with employment rising at the slowest pace since April.”

The flash readings in France were a bit encouraging with services at 54.1 vs. 52.3 in August, a 15-month high, though manufacturing was still contracting at 49.5 vs. 48.3.

[A revised look at second-quarter GDP in France has it at -0.1%, after earlier readings suggested it was flat, with year-on-year growth at 1.3%, instead of 1.4%.  GDP is expected to rebound a bit in the third quarter.]

Germany’s flash services PMI was 50.6 vs. 51.7, a 39-month low, while manufacturing came in at 54.3 vs. 53.6 last month.

As for Brexit, which is looking like February in terms of when Britain may start the two-year negotiating window, the scale of disruption in the City of London has been shown to be 5,500 U.K.-registered companies that rely on “passports” to do business in other European countries.

More than 8,000 financial services companies based in the EU or the European Economic Area also rely on single-market passports to do business in Britain.

Passporting allows financial services companies licensed in one EU state to provide services across the bloc, rather than having to gain licenses in each individual country.

The U.K. accounts for 40% of Europe’s assets under management and 60% of its capital markets business, according to a report from the British Bankers’ Association and the Financial Times.

*A Bloomberg News interview with London Stock Exchange Group Plc CEO Xavier Rolet talked of a potential job loss of 100,000 if ‘clearing’ operations left the U.K.  [Risk management, compliance, middle office, back-office, etc.]

So this is one big issue that will be part of the Brexit negotiations.  But the biggest one, certainly at least politically, is the U.K.’s wish for immigration curbs, while maintaining free-market access, and as many in the Eastern bloc, for instance (Czech Republic, Hungary, Poland and Slovakia...the Visegrad Four) are saying, there is zero chance the U.K. can clinch a deal with both.

“There is no way whatsoever for the U.K. to have the cake and eat it at the same time,” said Czech State Secretary for EU Affairs Tomas Prouza, his country’s top Brexit negotiator.  His opinions are echoed throughout the region.

There are more than one million Eastern European workers in the U.K., exercising EU residence rights, yet British Prime Minister Theresa May wants more control over them, curbing the free movement principles that the EU insists are integral to the single market.

Others are saying that “cherry-picking” certain elements for Britain just isn’t in the cards without freedom of movement.

Prouza said the final package must address four elements: access to the internal market, passporting to let British-based financial institutions do business on the continent, payments into the EU budget, and free movement of labor for EU citizens to the U.K.

Eurobits....

--German Chancellor Angela Merkel’s party was dealt another blow in a regional election, this time in Berlin last weekend as the anti-immigration Alternative for Germany extended its challenge to the political establishment. 

The Social Democrats, Merkel’s junior coalition partner in the national government, claimed first with just under 22%, while Merkel’s Christian Democratic Union came in second at less than 18%, with each party losing about 5 percentage points of support.  The Alternative for Germany, AfG, took about 14%, putting it just behind the anti-capitalist Left party (16.5%) and the Green Party (also 16.5%).

After the results rolled in, Merkel admitted she wished she could turn back the clock on her refugee policy, “so that I could better prepare myself and the whole government and all those in positions of responsibility for the situation that caught us unprepared in the late summer of 2015,” admitting she underestimated the scale of the integration challenge.

But she also argued the decision to offer such a warm welcome to refugees was “absolutely right” and that it had come after years of ineffectual responses to the continent’s issues.

Merkel said Germany “for a long time had insufficient control [of its borders.]  We have learnt from history. Nobody, including me, wants a repeat of this situation.”

The chancellor does have some breathing space now, with the next three regional elections not until the spring, but she needs to tell her party at its annual conference in December whether or not she is running for a fourth term next fall.

--The IMF is applying more pressure on eurozone governments to take bolder action to alleviate Greece’s debt burden, saying the measures currently on the table don’t go far enough to address the country’s chronic problems.  At the same time, the IMF is calling on the Greeks to further reform its tax and pension systems, but Greece is currently struggling to meet the conditions of the latest injection of bailout funds, and needs to do a better job of it, soon, before another 2.8bn euro of rescue cash is released this autumn.

--Air France’s shares hit their lowest level in four years on Tuesday after the airline said it expected a further decline in bookings in the coming months as a result of the terror attacks, as well as a cabin crew strike.  The CEO said he expected bookings to be down 10% the balance of the year, with the biggest drop in demand coming from China, Japan and the United States.

--According to a survey conducted by the European Jewish Association and the Rabbinical Center of Europe, 70% of European Jews will not go to synagogue on Rosh Hashanah or Yom Kippur, many due to increased anti-Semitism across the continent.

While the focus of the extreme right has been the perceived Islamic threat, Jewish leaders warn of the impact on their communities of growing nationalism and xenophobia.

On the migration front, the number of first time asylum seekers in the EU was up slightly in the second quarter, 306,000, up 6% compared with the first quarter’s pace of 287,000.

Syrians remained the main citizenship of people seeking to become registered at 90,500, ahead of Afghans at 50,300 and Iraqis, 34,300.  So the three account for almost 60% of all first time applicants.  [Eurostat]

In the second quarter, Germany registered 187,000 of the first time applicants, or 61% of the EU total, followed by Italy (27,000) and France (17,800).

Back to the problems faced by Chancellor Merkel, according to the country’s Federal Statistical Office, 21% of Germany’s population has a migrant background, 17.1 million, as the results of the 2015 micro-census show many of the new arrivals can’t speak the language or lack basic schooling...the very integration problems that scare the heck out of German intelligence officials, for one.  They can be easily radicalized.

Lastly, French authorities dismantled a makeshift migrant camp in Paris, with 2,000, mostly from Sudan, Afghanistan and Eritrea, having set up tents in north Paris near the city’s main railway station, which links Paris to the coastal town of Calais, where there are larger migrant camps that are being dismantled.  What a freakin’ nightmare.

Turning to Asia....

The Bank of Japan is keeping its negative interest rate policy unchanged at minus 0.1% for its benchmark short rate, but also announced it was going to begin targeting long-term bond yields, rather than the typical act of a central bank of focusing solely on the short end of the yield curve, though since the financial crisis, central banks have been using programs like quantitative easing (QE) to influence long rates.

The BOJ, following its “comprehensive assessment” of its policies, has now decided to target 10-year bonds, JGBs, that are currently at -0.05% but have traded with a yield as low as -0.30%, at zero.

The BOJ is attempting to engineer a steeper yield curve to improve the profitability of banks, but this is also an admission that BOJ Gov. Haruhiko Kuroda’s policy of negative interest rates hasn’t been working; Japan’s biggest problem being deflation, and/or total stagnation, when it desperately needs some of the inverse.

At least now the BOJ has finally given up on setting a timetable for an inflation target of 2%.

What Japan needs more than anything, though, is true economic reform, including regulatory relief.

Separately, Japan’s exports fell 9.6% year-on-year in August, but this was better than July’s 14% contraction.

Imports contracted at a 17.3% pace last month, an improvement from the previous month’s 24.7% fall.

Some improvement in both numbers was to be expected, seeing as July’s figures were the worst since 2009.

Machine tool orders, a key proxy for capital spending in Japan, dropped 8.4% year on year in August, a thirteenth straight month of declines.

And retail sales at department stores fell 6% yoy, having slipped 0.1% in July, according to industry data.

The flash reading for the manufacturing sector in Japan in September did improve to 50.3 vs. 49.5 in August, the first month of expansion since February.  The manufacturing sector has been hampered by sluggish growth, a rising yen (bad for exports) and the effects of the two major earthquakes in the spring, affecting one of the main manufacturing regions on the island of Kyushu.

There are signs manufacturers are more optimistic about the rest of the year with some goods producers taking on more workers.

In China, August new home prices came in up 9.2% year over year (vs. 7.9% in July), with prices on the month up in 64 of 70 cities, according to the National Bureau of Statistics, an improvement from 51 of 70 the prior month.  [62 of 70 in yearly terms.]

Prices were up 36.8% in the tech hub of Shenzhen (40.9% in July, so ‘cooling off’), but when you add in Beijing (up 23.5% yoy) and Shanghai (31.2%), it’s clear all three are way overheated and it’s unsustainable.

So on a related topic, bad debts in the Chinese banking system are 10 times higher than officially admitted, Fitch Ratings warns, with the costs of recovery potentially reaching a third of GDP within two years if authorities don’t address the crisis.

Fitch said the rate of non-performing loans has reached 15 to 21 percent and is rising fast.

It would cost up to $2.1 trillion to clean up the toxic mess even if the state started today, with government bearing the lion’s share of it. 

Official estimates put the percentage of NPLs at just 1.8 percent.

Street Bytes

--Stocks rose a second straight week, with Nasdaq hitting new highs on Wednesday and Thursday, before a drop on Friday.  Nasdaq finished up 1.2% to 5305, its new high now being 5339, while the Dow advanced 0.8% and the S&P 500 1.2%.

--U.S. Treasury Yields

6-mo. 0.39%  2-yr. 0.75%  10-yr. 1.62%  30-yr. 2.35%

Jon Sindreu of the Wall Street Journal reported that last year, the central banks of eight large developed economies “remitted about $149 billion to their respective governments, more than triple the $40 billion they sent along in 2005,” according to a Journal analysis of central-bank data.

Since the financial crisis, the central banks have been buying trillions of dollars (yen, euro, etc.) of bonds and lending to commercial banks as part of the effort to lower interest rates and spark growth.

But this means the central banks are collecting interest on their lending and on government bonds purchased.

The U.S. Federal Reserve sent $117.2 billion in 2015 to the Treasury, which compares with $21.5 billion in 2005.

--Yahoo announced on Thursday that information associated with at least 500 million user accounts was stolen by a “state-sponsored actor,” read Russia, in late 2014, but the company didn’t confirm this rather important information until this week.  If you haven’t changed your password since 2014, do so immediately, and you should change your security questions and answers.  [Example...  Q: Who is your favorite pitcher?  A: Tom Seaver.  For San Diego fans...Randy Jones.]

Account information stolen may have included names, email addresses, telephone numbers, dates of birth, and passwords.

Yahoo’s ongoing investigation has concluded no credit-card or bank account data was stolen, noting it doesn’t store such information on the affected network.

But when did Yahoo really learn of the breach?  The Financial Times reports CEO Marissa Mayer knew of it in July.  Other reports say Yahoo knew in 2014.

What makes this an even bigger deal than the largest breach in history is that it will no doubt lower the $4.8 billion price that Verizon Communications agreed to pay to acquire Yahoo this summer.

--Not a good time on Tuesday for Wells Fargo CEO John Stumpf during his grilling on Capitol Hill, as Sen. Elizabeth Warren went after him with a vengeance:

“This is about accountability. You should resign.  You should give back the money,” said the Massachusetts Democrat and outspoken critic of Wall Street.  “You should be criminally investigated.”

In prepared remarks, Stumpf said he was “deeply sorry.”

But while Wells has fired 5,300 employees tied to the scandal, no high-level executives have walked the plank.  [Good pay-for-view potential if you included alligators.]

Warren called out Stumpf for “gutless leadership” during the ‘scam,’ to which Stumpf shot back, “It was not a scam.”

But Republican Sen. Pat Toomey (Penn.) told Stumpf, “This isn’t cross-selling. This is fraud.”

In actuality, the scope of the problem was very small and resulted in just $2.6 million in fees – which didn’t rise to the level of a material public disclosure.

Yet you also have the case of Carrie Tolstedt, the executive who stands to receive $125 million in cash and prizes after retiring as the head of the Wells Fargo retail bank division responsible for the sales practices that have hit the bank’s reputation to the tune of $tens of $billions.

Republican Sen. Bob Corker (Tenn.) said it would amount to “malpractice” if Wells did not dock some of Tolstedt’s pay.

Democratic Sen. Bob Menendez (N.J.) called it “despicable” that Wells Fargo has “laid the blame on low-paid retail bank employees” when the company’s culture really was to blame.

--Mylan CEO Heather Bresch was also grilled on Capitol Hill, telling the House Committee on Oversight and Government Reform that Mylan makes only $50 in profit on each of the company’s life-saving EpiPens, the emergency allergy shot.

But the EpiPen has gone from $100 for a two-pack a few years ago to more than $600 today.  [The price of a six-pack of Coors Light, on the other hand, has risen from $5.50 to $6.50 over the same time period, but I digress, recognizing this was totally inappropriate.]

Democratic Representative Elijah Cummings (Md.) said, “They raised the prices to get filthy rich at the expense of our constituents,” in addressing Bresch’s $18 million in compensation last year, which she described as “in the middle” of pay packages for the industry, though surveys place her near the top.

Bresch’s father is Democratic Sen. Joe Manchin of West Virginia.

Bresch emphasized EpiPen’s uniqueness, noting that “fewer than 1 million of the 43 million people at risk had access to an epinephrine auto-injector” before Mylan launched a nationwide access-and-awareness campaign for the brand.

But she claimed the market offered alternatives to EpiPens – even though Mylan’s market share tops 90 percent after paying for a no-compete to block a potential rival.

--The big oil companies continue to slash their capital spending plans.  Petrobras announced it was cutting it 25% to the lowest level in a decade.  Yes, it’s heavily indebted and in the midst of a scandal, but still meaningful.

[Friday, Petrobras announced it struck a deal to sell a controlling stake in its natural gas pipeline unit with a Canadian consortium of investors for $5.2bn, which will help it pay down some of its humongous debt load.]

French oil and gas giant Total is looking to cut capital spending by $2 billion, as part of an overall effort to save $4bn by 2018.

The price of crude was rising this week on the, once again, false premise, an upcoming OPEC meeting (in this case next week in Algiers), would produce an agreement on a production cut, but no freakin’ way, boys and girls, and while the price finished the week up $1.40 at $44.59 on West Texas Int., it had been above $46 the day before.

--Home builder Lennar Corp. posted third-quarter results that beat the Street. CEO Stuart Miller said “the housing market’s recovery has continued to progress on a slow, steady and sometimes, choppy path.”

The number of deliveries rose 7% for the third quarter from a year before as the average price of a delivered home increased 3.7% to $363,000.

The company’s results were hit by its Houston segment, whose large energy sector has been in a dive.

Fellow builder KB Home also reported continued growth with total revenue increasing 8%, with an 11% increase in deliveries and a 2% rise in average selling prices.

--Southern California home sales hit a 10-year high in August, according to CoreLogic, up 10% over last year, with the region’s median price at $465,000, up 6.2% year over year.

--Home goods retailer Bed Bath & Beyond reported disappointing same-store sales for its second quarter, -1.2%, which compared with +0.7% in the year ago period.  Earnings per share also fell short of the Street’s expectations.  The stock fell about 5% on the news.

--FedEx Corp. shares rose sharply as the company handily beat analyst estimates in its fiscal first quarter, while predicting another record shipping season over the holidays, lifted by e-commerce.

Revenue in the quarter ended Aug. 31 rose to $14.7 billion from $12.3 billion a year earlier, aided by the acquisition of Dutch parcel delivery company TNT.  Net income rose to $715 million from $692 million in the year-earlier quarter.

The company did say, however, that it would hire ‘only’ 50,000 seasonal workers for the holiday shopping season, after hiring 55,000 last year, but this is because of increased automation.

If you’re a robot, your future looks good.  Just continue to update your software and try and improve your people skills as you’ll still need to interact with us humans at some point.  Remember, we can always remove your brain.

--According to the World Trade Organization, the EU has failed to eliminate billions of dollars in illegal aid to Airbus, in the latest chapter in a 12-year battle between the European aircraft maker and rival Boeing.

But the WTO rejected Washington’s claims the likes of France and Germany illegally supported Airbus’ newest long haul passenger jet, the A350XWB.

Nonetheless, a big victory for the U.S. and Boeing.  Mike Froman, the U.S. trade representative, said: “This report is a sweeping victory for the United States and its aerospace workers.  We have long maintained that EU aircraft subsidies have cost American companies tens of billions of dollars in lost revenue, which this report clearly proves.”

The EU is expected to appeal the decision.

--Commerzbank is considering cutting thousands of jobs, as many as 5,000, as Germany’s second-biggest lender prepares to unveil a new strategy to deal with flagging profitability. [All European banks are undergoing similar reviews.]

--A Chinese driver was killed in a crash while using Tesla’s Autopilot technology, four months before a similar fatal accident in Florida, according to a lawsuit filed by the victim’s father.  Tesla denies the Autopilot was to blame.

--Shares in Twitter soared 21% on Friday on a report by CNBC’s David Faber that the company could receive a bid for sale, with the suitors including Salesforce and Google.  [But the stock, at $22.50, is still shy of its IPO price of $26 about three years earlier.]

--Apple Inc. has approached British Formula One team owner McLaren Technology Group for a strategic investment or a potential buyout, according to the Financial Times.  If Apple is serious about getting into the car business, this is one move that make eminent sense.

More importantly in the near term, shares in Apple hit a speed bump this week amid signs initial sales of its iPhone 7 are not as strong as we were led to believe.   Specifically, research firm GfK claims channel checks show the new model’s European sales were down 25% vs. last year’s launch of iPhone 6.  [Some dispute GfK’s data collection methods.]

--In another potential blow for Samsung, a Galaxy Note 2 phone started smoking on an Indian commercial plane in mid-air, but there was no damage and the aircraft landed safely.  Passengers on board an IndiGo flight from Singapore to Chennai spotted the smoke filtering from the baggage bin and there were sparks and smoke coming from the phone.  This is not the Galaxy Note 7 model that has been recalled around the world for its lithium-ion battery fire risk.

--The Securities and Exchange Commission charged hedge fund mogul Leon Cooperman obtained inside information from an executive at Atlas Pipeline in 2010 to pocket at least $4 million in fraudulent profits – and then tried to cover-up his scheme.

Cooperman, 73, runs Omega Advisors and is a large investor in Atlas.  He was allegedly told the company was selling a natural gas processing facility in Oklahoma and was told not to trade on the information, but he did so anyway, quickly buying Atlas stock, options and bonds, according to the SEC.  When Atlas announced the deal, the stock soared 31% as the sale allowed the company to pay down debt and possibly return money to shareholders.

Omega did not sell any Atlas shares for more than a year after the company announced the Elk City sale, according to a five-page letter Cooperman wrote in defending himself.

But the SEC complaint also lists several instances where Cooperman did not file timely trade notifications with the agency.

The SEC is seeking to have Cooperman barred from acting as an officer or director of a publicly traded company, as well as return “unlawful trading profits, and any other ill-gotten gains.”

--Last Sunday’s Emmy Awards telecast was seen by an average of 11.3 million viewers, an all-time low.  I only watched the last half hour to make sure “Game of Thrones” won Best Drama.  [Actually, I had just put a Bar Chat column to bed and was bored.]

But, seriously, sports fans, as Stephen Battaglio wrote in the Los Angeles Times: “Ratings have been sliding as more statuettes and nominations have been lavished on shows that do not have the kind of broad appeal as broadcast network programs.”

--Good news for the music business, with U.S. revenues of recording companies reaching $3.4 billion in the first half owing to a big jump in online streaming, an overall 8.1% increase from the same period a year earlier, according to the Recording Industry Association of America.

It’s the industry’s strongest growth since the CD boom of the late 1990s.

Subscription services such as Spotify and Apple Music are leading the way.  Spotify counts 40 million paying subscribers world-wide, while Apple has 17 million subscribers globally, mostly in the U.S. (though Apple Music didn’t launch until June 2015).

Meanwhile, streaming came at the expense of CD sales, which fell 16%, while revenue from digital singles dropped nearly 22%.  Vinyl sales fell 6%, though vinyl accounted for about one-third of the total $632 million in physical music sales.

I haven’t made a music purchase of any kind whatsoever in years....seriously.  The only time I listen to it is in the car on either 1250 AM, an oldies station, or NASH FM, New York’s great country station.

And that’s a memo....Charles Krauthammer is here....

[Truth be told, I have a zillion CDs here at home as that used to be my drug of choice.  Safer than heroin.]

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey: The “truce” was dealt a major blow last Saturday when war planes from the U.S.-led coalition against ISIS unintentionally bombed Syrian troops in the eastern city of Deir al-Zour, killing at least 80.  President Bashar al-Assad called the attacks the “latest example of flagrant American aggression against Syrian army positions in the interests of the terrorist organization Daesh [IS].” Australian, British and Danish warplanes were involved in the attack on Syrian army positions.  [The U.K. confirmed on Monday that it was British aircraft – believed to be unmanned, remotely-piloted Reaper drones – that had been involved in the strike, along with jets from the other two countries.] 

Syria’s Foreign Ministry said Sunday that “American” warplanes repeatedly attacked the Syrian army the previous afternoon.  Russian U.N. envoy Vitaly Churkin suggested the strike was not an accident and that the U.S. had not coordinated the strike with Russian military officials, which the U.S. denied, saying it had indeed contacted its Russian counterparts.

Prior to Monday, the one-week mark of the cease-fire, the Syrian Observatory for Human Rights said 92 people had been killed in Syria since the start of it, including 29 children, as well as 17 women; a figure that doesn’t include Saturday’s strike on Syrian soldiers, as well as attacks on ISIS.

But the same day, Syria’s military declared an end to the week-long truce and hours after, an airstrike hit a U.N. aid convoy near Aleppo, killing 20 civilians and destroying 18 trucks, according to the Red Cross.  The U.N. immediately suspended all humanitarian relief efforts across the country.  [A few days later, a medical facility near Aleppo was hit in an airstrike, killing five employees of an international aid agency, the Syrian Observatory blaming Russian or Syrian jets.]

President Obama’s national security spokesman Ben Rhodes said, “We hold the Russian government responsible for airstrikes in this space.”

General Joseph Dunford, chairman of the Joint Chiefs of Staff, said there was “no doubt” that Russia was responsible for the devastating strike on the aid convoy, Monday, calling it an “unacceptable atrocity.” Two Russian SU-24 ground attack jets were operating in the area where the convoy was struck, another U.S. official told AFP.

The Russian foreign ministry said the “unsubstantiated, hasty accusations” seemed designed to “distract attention from the strange ‘effort’ of coalition pilots,” referring to Saturday’s bombardment of Syrian troops by the U.S.-led coalition.

Negotiations between Secretary of State John Kerry and his Russian counterpart, Sergei Lavrov, failed in New York after Russia refused U.S. demands that it promise to immediately ground the Syrian regime’s air force.

“We cannot continue on the same path any longer,” Kerry said.

General Dunford told a Senate hearing that he did not believe it would be wise to share intelligence with Russia, seemingly squashing any cooperation previously agreed to.

Addressing a conference in Washington, D.C., U.S. Air Force Gen. Hawk Carlisle, who leads Air Combat Command, said the U.S.-led coalition may have ISIS on the run, but the fog of war over the battlefields of Syria and Iraq is far thicker than it was a year ago.

“It’s gotten significantly more complex,” he said, noting there are too many players in the field with too many agendas.

“The Russians, what they’re doing there; the Syrians, what they’re doing there; different agreements with different crowds” all add to the difficulty and confusion.

With the cease-fire history, rebel-held areas of Aleppo then saw the heaviest air strikes in months; the Assad government announcing a new offensive aimed at retaking all of the divided second city, with Syrian and Russian aircraft pounding the area Wednesday through Friday as I go to post.  Widespread further destruction was overwhelming rescue teams, according to the activists on the ground.  Aside from airstrikes, there has been artillery fire and barrel bombing.  Entire apartment blocks were flattened, as reported by Agence France Presse.  Casualties are mounting rapidly.  It seems the Syrian army (and its proxies) are preparing for a ground assault.

U.N. aid convoys had started rolling in Syria again on Thursday, though there was little success in using the key Castello Road into east Aleppo, so the U.N. is looking into longer aid routes, including through Damascus, but this won’t work.  They’ll still be blocked.  250,000 residents of east Aleppo have desperately needed aid for months and months.

The U.N. estimates roughly 600,000 are stuck in Syria’s 18 besieged areas.  As of Friday, 40 aid trucks were still sitting at the Turkish-Syrian border waiting for the situation to improve, but now it’s only gotten worse all over again.

Editorial / Wall Street Journal

“President Obama delivered his final address to the U.N. General Assembly on Tuesday, and we wonder what Vladimir Putin and the world’s other increasingly assertive authoritarians thought of it.  Even as the American President chastised the Russian President for his failure to abide by international ‘norms,’ Mr. Obama’s latest attempt to appease Mr. Putin was disintegrating in Syria.

“ ‘In a world that left the age of empire behind, we see Russia attempting to recover lost glory through force,’ Mr. Obama scolded.  ‘If Russia continues to interfere in the affairs of its neighbors, it may be popular at home, it may fuel nationalist fervor for a time, but over time it is also going to diminish its stature and make its borders less secure.’

“This is another expression of Mr. Obama’s now familiar progressive faith that the world’s bad guys are doomed to fail because, well, they are doomed to fail.

“Meanwhile, in the real world, U.S. officials were telling the press Tuesday that U.S. intelligence agencies believe Russian jets conducted the strike that targeted a humanitarian aid convoy in Syria on Monday.  This is the same Russia that Mr. Obama and Secretary of State John Kerry have been beseeching to stop aiding Bashar Assad as he seeks to crush his domestic opposition....

“Mr. Assad and the Russians don’t appear to be honoring their cease-fire commitments, which was predictable given that they have most of the military leverage.  Mr. Putin is busy establishing facts on the ground, while Mr. Obama lectures at Turtle Bay.”

Editorial / Washington Post

“Even by the blood-drenched standards of Syria, the attack on a United Nations humanitarian relief convoy near Aleppo on Monday was horrific – and criminal. Aid workers say trucks that carried desperately needed aid for the rebel-held side of the city, along with a warehouse, were repeatedly bombed, killing at least 20 people.  Senior U.S. officials told reporters there were ‘strong indications’ that the attack came from the air and that either Russian or Syrian planes were responsible....

“Secretary of State John F. Kerry declared that the cease-fire the attack had so gruesomely violated was ‘not dead’ – and called for more talks with Russia.  ‘There was still an imperative’ to pursue ‘the arrangement reached last week in Geneva between the United States and Russia,’ read a State Department statement.

“Mr. Kerry’s optimism was at odds with that of the Syrian and Russian governments: The former declared the cease-fire over, and the latter said the prospects were ‘very weak.’  His optimism also showed a shocking tolerance for atrocities committed by forces with which the United States is proposing to ally itself.  The Obama administration pledged that if the truce held for seven days and humanitarian supplies were delivered, it would join with Russia in launching airstrikes against Syrian rebel forces deemed to be ‘terrorists.’  It is hard to conceive of a more definitive trashing of the agreement than Monday’s attack....

“The administration’s evident willingness to overlook war crimes in its zeal to collaborate with Vladimir Putin was perhaps best explained by British Foreign Secretary Boris Johnson: The Kerry-Russia deal, he said, ‘is the only show in town.’ That’s because President Obama has refused to allow other options, such as a U.S.-defended safe zone for civilians or military action to ground the Syrian air force.  With no other cards, Mr. Kerry is still pleading for cooperation from those who bombed the Red Cross.”

Meanwhile, Turkish President Recep Tayyip Erdogan, in New York for the U.N. General Assembly, said in an interview on Thursday that the U.S. was failing to live up to its obligations on two key issues of vital importance to Turkey: backing Kurdish fighters Turkey considers terrorists and continuing to harbor cleric Fethullah Gulen, who Erdogan accuses of fomenting this summer’s failed coup.

Erdogan is dismissing the U.S. argument that the extradition of Gulen, who is living in eastern Pennsylvania, must first work its way through the judicial system.

We had our chance with Erdogan in 2012.  Obama, and he alone, blew it.

Regarding Iraq....the Iraqi military closed in on a key town, Shirqat, that is held by ISIS and is seen as a stepping stone in the campaign to recapture the Islamic State stronghold of Mosul.

With air support from the U.S., the troops have taken 12 nearby villages.  But tens of thousands are said to be trapped in Shirqat as officials have warned of a humanitarian disaster inside.

Editorial / Wall Street Journal

“Hillary Clinton was adamant this month that ‘we are not putting ground troops in Iraq ever again,’ telling NBC’s Matt Lauder ‘we’re going to defeat ISIS without committing American ground troops.’  Her foreign-policy team might want to finesse that whopper lest she embarrass herself by repeating it at Monday’s presidential debate.

“The Pentagon is now asking the White House for another 500 troops in advance of an offensive to retake Mosul from Islamic State, which conquered the city in June 2014.  That is in addition to the nearly 6,000 U.S. military personnel already in Iraq.  Some 4,400 are deployed on an ‘official’ basis, many in so-called advise-and-assist missions with the Iraqi army.  Another 1,500 U.S. troops are there in other capacities but aren’t acknowledged by the Administration as part of the overall force....

“Mrs. Clinton may hope that by January ISIS will have been defeated in Iraq and the U.S. troops will come home.  President Obama is eager to retake Mosul before the election so he can claim a foreign-policy victory, much as he did about al Qaeda after the Osama Bin Laden operation....

“The tragedy is that Mr. Obama might have avoided this current deployment had he not withdrawn all U.S. forces prematurely from Iraq in 2011 so he could campaign for re-election claiming that ‘the tide of war is receding.’  He could have kept 5,000 or 10,000 troops in Iraq and stopped ISIS from regrouping and conquering Mosul in the first place.  Mrs. Clinton was Secretary of State when that decision was made, which may be why she is so averse to admitting the truth now.”

Benny Avni / New York Post

“President Obama will surely put his best spin on his legacy Tuesday in his eighth and final speech to the United Nations General Assembly. But even his biggest fans must struggle to ignore the spread of mayhem on his watch, in the Mideast and beyond....

“Take the refugee crisis.  During the last decade, according to the United Nations, the number of people fleeing wars around the world jumped from 37 million to 66 million – most of them from the Mideast, and many flooding Europe.

“European policymakers are at a loss for answers, and Syria’s neighbors – Jordan, Lebanon and Turkey – are struggling to handle the inflow.

“But not to worry.  Obama’s on the case. While at the U.N. assembly, he’ll host world leaders in a conference on migration.  They’ve already reached an understanding to talk about it further and may even, in two years or so, reach a global treaty (which will surely be too weak to make a dent in the growing problem)....

“Meanwhile, in Syria, the eye of the refugee storm, America is losing its trace of dignity. On Monday the Syrian army announced an end to that cease-fire declared just a week ago....

“The Kerry-Lavrov pact was doomed from the start, but the death blow came late last week when U.S. planes [Ed. we learned the details later] bombed forces loyal to Syria’s butcher-in-chief, Bashar al-Assad.  The Obama administration rushed to apologize, swearing it was a mistake.

“Remember when Team Obama said Assad must go?  That policy, we learned over the weekend, secretly became a dead letter two years ago: It was back then, Russian U.N. Ambassador Vitaly Churkin disclosed, that the United States ‘committed,’ in an agreement with Damascus, that our airstrikes in Syria ‘would not affect’ Assad’s army.

“We became, in effect, an accomplice of Assad, the world’s most prolific killer.

“One chief reason: our desire to secure an agreement with his main regional backer, Iran.

“That agreement was supposed to be the crown jewel in Obama’s attempt to promote a nuke-free world.  Yet, eight years after he announced that goal at the United Nations, North Korea’s arsenal grows as it tests new nukes with added frequency. And under Obama’s deal, Pyongyang’s ally, Iran, is on the road to joining the growing club of nuclear-armed countries.

“Meanwhile, Iran wages proxy wars with rival Saudi Arabia; consolidates its Syrian and Lebanese bases to assure a presence near the borders of the country it vows to annihilate, Israel; and stretches its tentacles as far as Africa and Latin America.

“And America shies from confronting Iran for fear Tehran might walk away from the nuke deal. So instead, the West lifts sanctions and enriches Iran’s leaders.

“A top promise of the Obama presidency was that, as a global child (African roots and Indonesian childhood), he’d unite the world and help nudge it toward the ideals the United Nations was originally meant to espouse.

“Yet while America toiled these last eight years to strengthen global institutions like the United Nations, America’s global leadership has wanted.  The world is worse off, and so are we.  But you won’t hear that part in Obama’s speech.”

And we didn’t.

Israel: Prime Minister Benjamin Netanyahu attacked the U.N. at the beginning of his General Assembly speech on Thursday, saying that Israel welcomes “the spirit of the Arab peace initiative” and inviting Palestinian Authority President Mahmoud Abbas to the Knesset.

“The U.N. began as a moral force, and has become a moral farce,” Netanyahu said.

Yet more and more nations around the world see Israel as a partner, he said.  “Everything will change and a lot sooner than you think.”

Netanyahu emphasized that many in the Arab world see Israel as an ally against Iran.  “The biggest change is taking place in the Arab world.  For the first time in my lifetime many other states recognize us not as the enemy but as an ally.”

Regarding the Palestinians and the contentious issue of the growing Israeli settlements, Netanyahu said, “The real settlements the [Palestinians] are after are Tel Aviv and Haifa.”

The prime minister added that the Palestinians still refuse to recognize Israel as the nation-state of the Jewish people “in any boundary.” 

“We will never negotiate our right to the one and only Jewish state,” he said.

Separately, Netanyahu has been heavily criticized at home for the record $38 billion defense package Israel negotiated with the U.S., critics saying the 10-year deal would have been better had he not given “an uncalled-for speech to Congress,” which former military intelligence chief Amos Yadlin said Israel is still “paying for it.”

Netanyahu said in a weekly Cabinet meeting, “I want to make it clear: We’ve never been offered more.  We weren’t offered more money, not even a single dollar more, and we weren’t offered special technologies.”

The deal, which increased aid to $3.8 billion annually from about $3 billion, bars Israel from seeking supplemental funding from Congress as it has repeatedly done. It also requires Israel to use the funds for solely American goods, whereas previous accords allowed Israel to spend up to 26% of the funds on domestic defense products.

Former Prime Minister and Defense Minister Ehud Barak argues that due to a 20% increase in the cost of arms, Israel is actually getting less bang for the buck.

Lastly, in emails leaked this week by DCLeaks, former Secretary of State Colin Powell blew the lid off Israel’s hush-hush nuclear program, writing a Democratic Party donor about Netanyahu’s speech to Congress, and the latter’s concerns about the Iranian nuke deal, that “The boys in Tehran know Israel has 200 (nukes), all targeted on Tehran.”

The 200 figure is a well-known estimate (the range going from 80 to 400), only it has never been made public by Israel, choosing nuclear ambiguity...correctly so.

Iran: In marking the anniversary of its 1980 invasion by Iraq, the Iranian military paraded its arsenal and told the United States not to meddle in the Gulf.  The regime also threatened to “turn Tel Aviv and Haifa to dust” as it displayed a wide array of long-range missiles, tanks, and the Russian-supplied S-300 surface-to-air missile defense system.

At the port of Bandar Abbas on the Gulf, the navy showed off 500 vessels, as well as submarines and helicopters, at a time of high tension with the United States.

Iran, by the way, has been increasingly open about its involvement in Syria, where it has lost some 400 “advisers,” as many Iranians, initially opposed, are warming to the mission, believing ISIS poses a threat to their existence and it’s best fought outside the borders.

Supreme Leader Ayatollah Ali Khamenei recently described the wars in Syria and Iraq as crucial to the survival of the Islamic Republic.  If Iranians had not gone and died fighting there, “the enemy would enter the country.”  [Jerusalem Post]

Russia: Two senior Democratic lawmakers with access to classified intelligence, Sen. Dianne Feinstein and Rep. Adam B. Schiff – the ranking Democrats on the Senate and House intelligence committees, respectively – said recent cyberattacks of the Democratic National Committee and other U.S. political entities were intrusions likely directed by Russian President Vladimir Putin.

“At the least, this effort is intended to sow doubt about the security of our election and may well be intended to influence the outcomes,” a statement from the two read.  “We believe that orders for the Russian intelligence agencies to conduct such actions could come only from very senior levels of the Russian government.”

Meanwhile, Russia held its parliamentary elections last weekend and, surprise surprise, the pro-Putin United Russia party took 343 out of the State Duma’s 450 seats, 76%, easily gaining a constitutional super-majority. 

But Russia’s friendly “opposition” took the remaining seats: the Communist Party won 42, the nationalist-leaning LDPR won 39 seats and A Just Russia took 23 seats.  Rodina and the Civic Platform won a seat each, and the Duma’s only “independent” deputy is Vladimir Reznik, a man who once found himself on Interpol wanted lists and was for many years a United Russia lawmaker.  So, literally, all 450 seats are in Putin’s control.  You can’t make this up.

The day after the election, President Putin declared his party victorious and congratulated them for the “good result.”

“How is that possible, given the economic difficulties we’ve been facing and the drop in people’s real incomes?” he said.  “At times of risk, you can count on people to trust the government.”

But only 48 percent of Russians took part, the lowest turnout for a parliamentary election in post-Soviet history.  [Apparently just 30% in Moscow and even less in St. Petersburg.]

Of course the election was rigged, and any protest voters simply chose to stay at home.

The Moscow Times also noted: “Renowned physicist Sergei Shpilkin produced his own analysis of the election results, based on expected statistical distributions. His data suggested that almost 45 percent of all votes recorded for United Russia may have been falsified.”

As for 2018 and the next presidential election, it is assumed Putin will run, but unless he turns the economy around, one that requires painful reforms, those in the Duma won’t help him get re-elected. He’ll need the vote of the people for a fourth term. 

North Korea: Pyongyang claimed it successfully tested a high-powered rocket engine for launching satellites, which is of course part of the North’s long-range ballistic missile program.

I’m amazed at how some “experts” in the U.S. continue to say that North Korea won’t have the capability to threaten the U.S. with a nuclear weapon until 2020, but these same folks can’t deny the speed at which Kim Jong Un and his Orcs appear to be progressing towards their goal of a full nuclear arsenal.  Depending on the success of coming ballistic missile tests, I have been arguing a realistic target for Pyongyang would be Guam and our heavy military presence there.  That’s a far shorter route than the U.S. west coast...or Hawaii.  [Guam, from North Korea, is roughly the distance from New York to Las Vegas.]

And I would worry Kim could have the capacity to hit Guam by the end of next year (I’ve said Fourth of July).

Remember, U.S. intelligence missed both India and Pakistan’s first nuclear weapons tests.

Japan’s Defense Minister Tomomi Inada said this week that “the speed of North Korea’s development” meant it was important to “take all possible measures” to ensure Japan’s defenses were sufficient and to reinforce the Japan-U.S. alliance.

So what to do in the interim?

Ian Bremmer / TIME

“Launch a surprise military attack to change the regime? That risks a shooting war with one of the largest standing armies in the world – with Seoul, a city of 10 million, well within firing range. The easy course is still to condemn, issue a threat, offer a bribe and delay the reckoning.

“This strategy gives North Korea time to expand its capabilities.  Unless outsiders find a way to undermine Kim’s regime from within, he will one day have the capacity to kill millions of people in a matter of hours. 

“The next U.S. president must prepare for the moment when a tough choice will need to be made quickly.  Only then can unity of opinion create unity of action.”

India/Pakistan: Tensions continue to mount in the disputed border region of Kashmir.  Sunday, India blamed Pakistan for an attack on a brigade headquarters in the town of Uri near the border that killed 18 soldiers.  Pakistan denied any role in the raid, which was one of the deadliest in years.

Tuesday, Indian soldiers killed eight people trying to cross the border and security forces were also fighting suspected militants near the frontier.

86 Kashmiris have been killed in anti-India protests the past few months.

Both sides have their forces on high alert.  India’s Prime Minister Modi is under increasing pressure to respond harshly to the attack, but options are limited without escalating the crisis into a full-blown war that we all know, should it ever occur again, could go nuclear.

Australia: An Essential Research poll released on Wednesday found 49 percent of Australians support a ban on Muslim immigration, a high figure for sure.  The most common reasons given are fears over terrorism and a belief Muslim migrants do not integrate into society or share Australian values.

Random Musings

--Presidential Polls....

A new NBC News/Wall Street Journal national survey has Donald Trump leading Hillary Clinton 43% to 37%, among likely voters.  Gary Johnson draws 9%, Jill Stein 3%.

Clinton leads Trump 42-37 among college educated white voters – a big bloc GOP candidates traditionally win.  In 2012, Romney won those voters by 14 points.

When you throw in Johnson and Stein, Clinton leads Trump by a 76-5 margin among African-Americans (81-7 in a two-way race); short of the 93% Obama won in 2012.

While Trump leads 46-41 on the issue of who would do a better job with the economy, Clinton leads on immigration (50-39), who would make a better commander-in-chief (48-33), who should be in charge of nuclear weapons (51-25), and temperament to be president (56-23).

A CBS News Battleground Tracker Poll of registered voters in 13 key states, including Florida, Ohio, Pennsylvania and North Carolina, had Clinton and Trump tied at 42 percent.  The same poll gave Clinton a 1-point lead the previous week.

A Los Angeles Times/USC Dornsife national survey has Trump with a 6-point lead, 47-41.

But a Reuters/Ipsos national tracking poll released Friday has Clinton with a 4-point lead, 41-37.  In a 4-way, it’s Clinton 39-37, Johnson 7%.  [Ergo, those of you concerned with my potential vote need not be storming my building.]

According to a Monmouth University poll of Florida, Clinton holds a 5-point lead over Trump, slightly less than the 9-point lead she held last month.  Clinton polled 46%, Trump 41%, and Gary Johnson 6%.

[Sen. Marco Rubio, in a tough race with his Democratic challenger Patrick Murphy, is ahead by just two points after leading by 5 in August.]

According to a series of Fox News polls...

Trump leads Clinton, 43-40, in Nevada, which Obama carried in the prior two elections.  Gary Johnson is at 8%.

Trump also leads Clinton in North Carolina, 45-40, and Ohio, 42-37.

In Carolina, whites favor Trump 58-27, while blacks support Clinton 85-3.

However, a New York Times Upshot/Siena College poll released on Thursday has Clinton and Trump tied in North Carolina at 41, with Gary Johnson at 11%.  Jill Stein is not on the ballot there.

[Republican Sen. Richard Burr is trailing his Democratic challenger, Deborah Ross, by four points in N.C., 46-42.  This would be a huge blow for the Republicans, looking to maintain control of the Senate.]

Not that this is a surprise, but a Siena poll released Tuesday gives Clinton a 51-30 lead in New York State, unchanged from a month ago.  But what should concern Clinton is that she is essentially tied in the New York City suburbs, where Gary Johnson and Jill Stein are hurting her.

In a Los Angeles Times/USC Dornsife poll, Trump saw a 16.5 percentage-point increase in backing from African-American voters, up from 3.1% to 19.6%, while Clinton’s support among that group plummeted from 90.4% to 71.4%.  As this was over a one-week period of time, that’s staggering, though this covered the Sunday when Clinton collapsed while entering a Secret Service van at the 9/11 ceremony in New York.

[Sensing the changing attitudes in the black community, especially the lack of passion, last Saturday night at the Congressional Black Caucus Foundation gala dinner in Washington, President Obama said he would consider it a “personal insult” if African-Americans did not vote for Hillary Clinton.  “My name may not be on the ballot, but our progress is on the ballot,” the president said.]

A Wall Street Journal/NBC News/Telemundo survey finds Clinton maintaining her lopsided lead among likely Hispanic voters, winning 65% to Trump’s 17%; a 48-point margin that compares to the 44 points by which President Obama beat Mitt Romney in 2012.

--Rich Lowry / New York Post

“Hillary Clinton will almost certainly win Monday night’s epic presidential debate on points – and still could lose.

“It’s hard to see how Clinton, who has marinated in public policy for 30 years and is preparing for the debate like it’s the invasion of Normandy, won’t repeatedly best Donald Trump on substance.

“Her strength in this area perfectly matches Trump’s weakness.  Trump has appeared to learn for the first time such basic information as that the Trans-Pacific Partnership doesn’t include China and that Russia has already invaded Ukraine on the debate stage or during a media interview. He sometimes reads his speeches as if they include revelations to him – ‘so true.’ He’ll interject after coming across a striking fact or observation in the text.

“If Trump has spent time hitting the briefing books, his campaign has kept it under wraps and he has yet to reveal any hint of a new policy depth in anything he’s said over the past few weeks. So Trump won’t be particularly well-informed, and figures it won’t particularly matter – and may well be right.

“Trump has a significant built-in advantage in that there’s a lower standard for him – not because the media isn’t tough enough on him, as all the media mavens agree, but because he’s the de facto challenger and candidate of change in a change election.  Trump can win by clearing a bar of acceptability, whereas Clinton has to do more than that...(like) make a compellingly positive case for herself that has so far eluded her in both 2008 and 2016.

“This isn’t to say that Trump won’t be on treacherous terrain.  He can’t bully and mock Clinton the way he did his Republican rivals.  He won’t have a crowd to feed off of.  Without a teleprompter, message discipline still tends to elude him.

“The one-on-one format for an hour-and-a-half could make his thin knowledge painfully obvious.  And any misstep or outburst that reinforces the idea that he lacks the qualities to be commander in chief would be devastating....

“(But) it’s not as though he needs to mount a convincing, detailed defense of his tax or child care plan or anything else to invalidate Clinton’s critique of him; he just needs to seem a reasonable person.

“That is why Trump doesn’t need to be the aggressor.  As long as he’s firm and calm, he is implicitly rebutting the case against him on temperament.  And then he can look for a big moment or two that will be memorable and drive the post-debate conversation in the media that is arguably as important as the debate itself.”

--Michael Gerson / Washington Post

“If Trump succeeds in essentially turning out the midterm electorate in a presidential year – whiter, older, angrier – the main motivating issue may be the restriction of immigration.  But the general atmosphere of contempt for government that helps Trump – of disdain for the weakness and incompetence of the political class – is due to the Affordable Care Act.

“More than six years after becoming law, the proudest accomplishment of the Obama years is a political burden for Democrats.  A recent Gallup poll found that a majority of Americans disapprove of ObamaCare.  The larger concern for Clinton and her party comes deeper in the numbers.  Only 18 percent of Americans believe the Affordable Care Act has helped their families; 80 percent say it has hurt or had no effect.  A higher proportion of Americans believe the federal government was behind the 9/11 attacks than believe it has helped them through ObamaCare.

“The Affordable Care Act has come to embody and summarize declining trust in political institutions.  The law was passed in a partisan march, without a single Republican vote.  The system’s federal website was launched with a series of glitches and failures that still make ‘healthcare.gov’ a byword for public incompetence in the computer age.  Only 17 state-based exchanges (16 states and the District of Columbia) were created.  Of that number, four (Hawaii, New Mexico, Nevada and Oregon) have failed, and Kentucky’s will be dismantled/shuttered next year.  According to a recent report by the House Energy and Commerce Committee, the Oregon exchange received $305 million in federal funds but never created a functional website or enrolled a single person in private insurance online.

"Premium costs in the exchanges increased about 12 percent nationwide from 2015 to 2016.  Current rates are being finalized, but it looks as if the increase from 2016 to 2017 will be double that.  ‘This suggests that the system is not finding its balance or approaching stability but actually getting more unstable,’ says Yuval Levin of National Affairs.  ‘People just aren’t finding the insurance offerings in the exchanges attractive, and the law leaves insurers very few options for improving them.  The insurers are increasingly fleeing – a third of counties in the U.S. will have only one option in the exchanges next year.  And there isn’t much the administration can do about it.’....

“There is no reason to trust Trump on the health issue; but there is plenty of reason to distrust Democratic leadership.  No issue – none – has gone further to convey the impression of public incompetence that feeds Trumpism.

“If Trump wins, there will be a host of reasons, but one will be this dramatic failure of liberal governance.”

--Hillary Clinton wants to levy a 65% tax on the largest estates – up from today’s 40% - while making it harder for wealthy people to pass appreciated assets on to their heirs without paying taxes.

In all, Clinton would raise taxes by about $1.5 trillion over the next decade to pay for expanded education assistance, paid family leave and other programs.

By contrast, Trump favors repealing the estate tax, as well as steep cuts in business tax rates.

--James V. Grimaldi / Wall Street Journal

“The Fragrance Foundation, a trade group for the perfume industry, paid former President Bill Clinton $260,000 to give a speech in January 2014 that lasted less than an hour.

“In the months after the talk, the Bill, Hillary and Chelsea Clinton Foundation organized and partially funded an effort to get hundreds of farmers in Haiti to plant thousands of lime trees, a project designed to help both the impoverished farmers and the perfume and beverage industries, which had been hurt by a spike in lime prices caused by drought and crop blight.

“The Clinton Foundation’s partner on the project was one of the world’s largest fragrance and flavoring suppliers, Firmenich International SA....

“Mr. Clinton’s $260,000 speaking fee wasn’t a donation to the foundation but was reported as personal income – an honorarium – on the candidate financial-disclosure form of his wife, Hillary Clinton... The speech was one of 104 paid speeches that earned Bill and Hillary Clinton about $25 million in the 16 months before she launched her presidential campaign.

“The timing of Bill Clinton’s speech income, from a perfume trade group in which a large member would later benefit from a Clinton Foundation project in Haiti, represents the kind of overlapping of private and charitable interests that has become a political liability for his wife as she runs for office.”

--Robert M. Gates / Wall Street Journal

“You wouldn’t know it from the presidential campaigns, but the first serious crisis to face our new president most likely will be international. The list of possibilities is long – longer than it was eight years ago.

“Here is the world the new president will inherit at noon on January 20 – a range of challenges for which neither candidate has offered new strategies or paths forward.

“Every aspect of our relationship with China is becoming more challenging. In addition to Chinese cyberspying and theft of intellectual property, many American businesses in China are encountering an increasingly hostile environment. China’s nationalist determination unilaterally to assert sovereignty over disputed waters and islands in the East and South China Seas is steadily increasing the risk of military confrontation.

“Most worrying, given their historic bad blood, escalation of a confrontation between China and Japan could be very dangerous.  As a treaty partner of Japan, we would be obligated to help Tokyo. China intends to challenge the U.S. for regional dominance in East Asia over the long term, but the new president could quickly face a Chinese military challenge over disputed islands and freedom of navigation.

“Dealing effectively with China requires a president with strategic acumen and vision, nuance, deft diplomatic and political skill, and sound instincts on when to challenge, when to stay silent and when to compromise or partner.

“On this most complex challenge, neither Hillary Clinton nor Donald Trump has said or done much to give anyone confidence.  All we really know is Mr. Trump’s intention to launch a trade war with a country holding over $1 trillion in U.S. debt and the largest market for many U.S. companies; and Mrs. Clinton’s opposition to the Trans-Pacific Partnership trade agreement, which she helped to create and the failure of which would hand China an easy political and economic win.

“Then there is Vladimir Putin’s Russia, now routinely challenging the U.S. and its allies.  How to count the ways....

“There is Russia’s luring the U.S. secretary of state into believing that a cease-fire in Syria is just around the corner – if only the U.S. would do more, or less, depending on the issue; the cyberattacks on the U.S., including possible attempts to influence the U.S. presidential election; and covert efforts to aggravate division and weakness with the European Union and inside European countries....

“No one in the West wants a return to the Cold War, so the challenge is to confront and stop Mr. Putin’s aggressions while pursuing cooperation on international challenges that can only be addressed successfully if Russia is at the table – from terrorism to climate change, from the Syrian conflict to nuclear nonproliferation and arms control. Again, neither Mrs. Clinton nor Mr. Trump has expressed any views on how they would deal with Mr. Putin (although Mr. Trump’s expressions of admiration for the man and his authoritarian regime are naïve and irresponsible).

“North Korea and Iran are sworn enemies of the U.S....

“On his good days, Kim Jong Un appears to outsiders as a cartoonish megalomaniac; on his bad days, he seems to yearn for a Gotterdammerung finale in which a perishing North Korea takes a lot of Asians and Americans with it....”

Mr. Gates goes on to talk about Iran, ISIS, terrorism, the issues facing Egypt and Turkey, and how both Clinton and Trump “have a credibility problem in foreign affairs.”

But Gates is particularly harsh on Donald Trump.

“(Trump) is willfully ignorant about the rest of the world, about our military and its capabilities, and about government itself.  He disdains expertise and experience while touting his own – such as his claim that he knows more about ISIS than America’s generals. He has no clue about the difference between negotiating a business deal and negotiating with sovereign nations.

“All of the presidents I served were strong personalities with strongly held views about the world. But each surrounded himself with independent-minded, knowledgeable and experienced advisers who would tell the president what he needed to hear, not what he wanted to hear.  Sometimes presidents would take their advice, sometimes not.  But they always listened.

“The world we confront is too perilous and too complex to have as president a man who believes he, and he alone, has all the answers and has no need to listen to anyone. In domestic affairs, there are many checks on what a president can do; in national security there are few constraints.  A thin-skinned, temperamental, shoot-from-the-hip and lip, uninformed commander-in-chief is too great a risk for America....

“At least on national security, I believe Mr. Trump is beyond repair. He is stubbornly uninformed about the world and how to lead our country and government, and temperamentally unsuited to lead our men and women in uniform. He is unqualified and unfit to be commander-in-chief.”

Trump responded by calling Gates “a clown” and “I know more than he ever will.”  I promptly spit up my Chex Mix.

--David A. Fahrenthold / Washington Post

“Donald Trump spent more than a quarter-million dollars from his charitable foundation to settle lawsuits that involved the billionaire’s for-profit businesses, according to interviews and a review of legal documents.

“Those cases, which together used $258,000 from Trump’s charity, were among four newly documented expenditures in which Trump may have violated laws against ‘self-dealing’ – which prohibit nonprofit leaders from using charity money to benefit themselves or their businesses.

“In one case, from 2007, Trump’s Mar-a-Lago Club faced $120,000 in unpaid fines from the town of Palm Beach, Fla., resulting from a dispute over the height of a flagpole.

“In a settlement...Trump’s club made a $100,000 donation to a specific charity for veterans.  (But) Trump sent a check from the Donald J. Trump Foundation, a charity funded almost entirely by other people’s money, according to tax records.

“In another case, court papers say one of Trump’s golf courses in New York agreed to settle a lawsuit by making a donation to the plaintiff’s chosen charity.  A $158,000 donation was made by the Trump Foundation.”

You’re not supposed to be able to do this.  At best, it’s incredibly unethical.  Trump is now facing scrutiny from New York’s attorney general, who himself has severe ethics issues.

One leading tax attorney in Washington, D.C., Jeffrey Tenenbaum, who represents 700 nonprofits a year, told The Post, “I’ve never encountered anything so brazen,” describing the details of these Trump Foundation gifts as “really shocking.”

--The man who authorities say set off powerful bombs in Manhattan and at the Jersey Shore over the weekend, Ahmad Khan Rahami, 28, was charged with several crimes, including use of weapons of mass destruction and bombing a place of public use.

The bomb that went off in Manhattan’s Chelsea neighborhood was powerful enough to vault a heavy steel dumpster more than 120 feet through the air, shatter windows 400 feet from where the explosion went off, and one of the victims had multiple ball bearings removed from her body as well as bits of metal from an ear and wood shards from her neck, the criminal complaint read.  [One of 30 injured.]

Rahami had a notebook with him when he was arrested, a journal containing screeds against the wars in Iraq and Afghanistan.  He pleads that he be able to carry out his planned attacks before he is caught.  He also writes of shooting police officers and refers to pipe bombs and pressure cookers.

Rahami had been planning his attacks since at least June, acquiring many of the materials required to make the bombs through eBay.

Federal authorities, the FBI, first became aware of Rahami two years ago, when his father shared his concern with them that his son might be a terrorist.  An FBI review did not turn up anything warranting further inquiry and the matter was closed.

Rahami had extensive travels to Afghanistan and Pakistan, marrying his wife in the latter.

--Dahir A. Adan, a Kenyan-born ethnic Somali who had been in the U.S. for 15 years, was killed by an off-duty police officer at a shopping mall in St. Cloud, Minn., after Adan had stabbed nine people at the shopping center, though none fatally.

ISIS claimed responsibility, saying Adan was a “soldier of the Islamic State.”

Minnesota has the nation’s largest Somali community, according to Census figures.

--In the trial of former close associates of New Jersey Gov. Chris Christie, “Bridgegate,” prosecutors for the first time have accused Christie of knowing about the scheme to shut down lanes leading to the George Washington Bridge as it unfolded.  Today’s testimony was devastating for the Gov.  The defense will have its turn on Monday.

--A top former aide to New York Gov. Mario Cuomo, Joseph Percoco, once one of the more powerful officials in state government who was also known to be Cuomo’s closest friend, was among nine people charged by federal prosecutors Thursday in two wide-ranging bribery, bid-rigging and extortion schemes involving one of the governor’s signature programs.

The charges were detailed in an 80-page complaint filed by U.S. Attorney Preet Bharara’s office and laid out in detail the mechanics of power employed by those in Cuomo’s orbit.

Percoco is alleged to have accepted some $315,000 in bribes and other perks in exchange for using his position to perform favors for an energy company, and $35,000 more from a Syracuse-based developer.

--The Pew Research Center analyzed census data and concluded that the number of immigrants unlawfully in the U.S. has been steady at 11 million since the end of the Great Recession.  The undocumented Mexican population continues to shrink, which is being offset by a rise in undocumented immigrants from Central America, Asia and Africa.

Illegal immigration peaked at 12.2 million in 2007.

--According to the latest World University Rankings, released annually by Times Higher Education, the University of Oxford is No. 1, followed by Cal-Tech, Stanford, Cambridge, and MIT.

Until it folded in 2010, Trump University was No. 1, or so I imagine its titular head would have said.

--Researchers from Harvard and Columbia University have concluded the haze from forest fires that raged across Indonesia last year may have caused more than 100,000 premature deaths in Indonesia, Malaysia and Singapore.  The estimate is more than double that of 2006 during a similar episode resulting from fires in the South Sumatra province.

“Exposure to air pollution increases the risk of death from a number of ailments including stroke and respiratory illnesses,” said Dr. Shannon Koplitz of Harvard.

But Indonesia’s disaster agency said just 24 people had died due to the 2015 fires, 12 of whom were killed fighting the fires and 12 from respiratory problems.

The fires strained relations between Indonesia and Singapore, where air pollution levels soared, schools were closed, flights grounded.

--Facebook founder Mark Zuckerberg and his wife Priscilla Chan have pledged to “end all illness” with a $3bn donation to medical research.  The money will be designed to “cure, prevent or manage all diseases by the end of the century.”

Good luck.

--Actor Brad Pitt has asked the press to give his six children, ages 8 to 15, “the space they deserve during this challenging time,” as the world was rocked by the news this week that actress/activist Angelina Jolie had filed for divorce.

It is the end of “Brangelina,” the end of civilization as we know it.                      

[I am on Pitt’s side in this...without knowing any real facts whatsoever.]

--Lastly, a week ago Friday, in a move I learned of after posting the last WIR, the second man on the moon, Buzz Aldrin, had his old middle school in Montclair, N.J., renamed the Buzz Aldrin Middle School, which was a very cool thing.

What a great way to teach future generations of students of the greatness of one of its former citizens and students.

Today, the place is a STEM (science, technology, engineering, and mathematics) magnet school; focusing on STEM a passion of Aldrin’s, so this is even more appropriate.

Aldrin, now 86, was born in Montclair in 1930.

---

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

God bless America.

---

Gold $1341
Oil $44.59

Returns for the week 9/19-9/23

Dow Jones  +0.8%  [18261]
S&P 500  +1.2%   [2164]
S&P MidCap  +2.0%
Russell 2000  +2.4%
Nasdaq  +1.2%  [5305]

Returns for the period 1/1/16-9/23/16

Dow Jones  +4.8%
S&P 500  +5.9%
S&P MidCap  +10.9%
Russell 2000  +10.5%
Nasdaq  +6.0%

Bulls  44.6
Bears  24.3 [Source: Investors Intelligence]

Have a great week.

Brian Trumbore



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Week in Review

09/24/2016

For the week 9/19-9/23

[Posted 11:00 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 Lin D.R. (who slipped me a check at my high school reunion last weekend, which was funny, and appreciated).

Edition 911

Washington and Wall Street

Between the bombings in New York and New Jersey and a mass stabbing in Minnesota, attention was refocused in the presidential race on terrorism and national security.  And we had some depressing rioting in Charlotte, N.C., that resulted from a cop shooting.  [I’m the wait 24 hours guy...evidence is still being developed on this one.  As for the Tulsa shooting, for the record the female white cop was charged with manslaughter.]

But then there was President Obama, giving his final address to the U.N. General Assembly, as the nation also prepares to watch the first presidential debate on Monday, prelude to which I cover below but no doubt will dominate the beginning of this column next week.

As for the current occupant of the Oval Office, his speech on Tuesday was a dry run for his farewell address to the nation next January.  I watched it all and was sickened, knowing what his true legacy is, but also knowing how some, such as Mr. Ignatius below, understand what an incredible failure this man has been, yet still feel compelled to issue platitudes, which I have largely edited out of the following.  Platitudes?  For leaving us a world within years of total collapse and disorder?  Are you kidding me?

David Ignatius / Washington Post

“What a moment for President Obama to deliver his valedictory address to the United Nations on Tuesday – defending the liberal international order at a time when it’s under severe stress around the world.

“Obama’s speech was preceded by some sickening reminders of how global security is fraying: The day before, a Syrian, or perhaps Russian, airstrike had ravaged a U.N. aid convoy trying to relieve Aleppo; over the weekend, a suspected lone-wolf terrorist had tried to slaughter innocents in the New York area; three days before, errant American bombs had incinerated a camp of Syrian soldiers and, in the process, torched a fragile cease-fire.  [Ed. not entirely accurate.]

“Amid this disordered world, Obama displayed his sterling assets: his idealism, moral clarity and calm intellect.  But those good qualities seemed unequal this past week to containing the bad forces that are loose in the world.  As this gifted but sometimes vexed leader prepares to leave office, the world seems more disordered than when he arrived.  He has been a creature of light at a time when the world has been darkening....

“Obama didn’t talk much about the hard power that would be necessary to roll back recent gains for the autocrats and restore a liberal global order. Such a policy – let’s call it ‘Obama Heavy’ – would be the challenge for a President Hillary Clinton, if she can get past the finish line first in November.

“Obama will leave behind the right ideas for restoration of an American-led order but sadly, also, the inescapable fact of its decline during his presidency.”

Anders Fogh Rasmussen / Wall Street Journal

“Barely had I been seated before Vladimir Putin told me that NATO – the organization that I then headed – no longer had any purpose and should be disbanded.  ‘After the end of the Cold War, we dissolved the Warsaw Pact,’ he said. ‘Similarly, you should dissolve NATO.  That is a relic from the Cold War.’

“During my visit to Moscow in December 2009, I sensed that President Putin was challenging the world order that the U.S. created so successfully after World War II.  Beginning in 2014, he invaded Ukraine and launched a military action in Syria.

“From my former positions as prime minister of Denmark and secretary-general of NATO, I know how important American leadership is. We desperately need a U.S. president who is able and willing to lead the free world and counter autocrats like President Putin.  A president who will lead from the front, not from behind.

“The world needs such a policeman if freedom and prosperity are to prevail against the forces of oppression, and the only capable, reliable and desirable candidate for the position is the United States.  The presidential elections thus come at a pivotal point in history.

“The Middle East is torn by war.  In North Africa, Libya has collapsed and become a breeding ground for terrorists.  In Eastern Europe, a resurgent Russia has brutally attacked and grabbed land by force from Ukraine.  China is flexing its muscles against its neighbors – and the rogue state of North Korea is threatening a nuclear attack.

“In this world of interconnections, it has become a cliché to talk about the ‘global village.’  But right now, the village is burning, and the neighbors are fighting in the light of the flames.  Just as we need a policeman to restore order; we need a firefighter to put out the flames of conflict, and a kind of mayor, smart and sensible, to lead the rebuilding.

“Only America can play all these roles, because of all world powers, America alone has the credibility to shape sustainable solutions to these challenges....

“The Obama administration’s reluctance to lead the world has had serious consequences, and none is graver than the behavior of Mr. Putin.  While Europe and the U.S. slept, he launched a ruthless military operation in support of the Assad regime in Syria and tried to present Russia as a global power challenging the U.S. in importance.  In Europe, he is trying to carve out a sphere of influence and establish Russia as a regional power capable of diminishing American influence.

“These are only a few examples of what is now at stake as autocrats, terrorists and rogue states challenge America’s leadership of the international rules-based order – which was created after World War II and which secured for the world an unprecedented period of peace, progress and prosperity.

“The next president must acknowledge this inheritance.  American isolationism will not make the U.S. and other freedom-loving countries safer and more prosperous, it will make them less so and unleash a plague of dictators and other oppressors.  Above all, American isolationism will threaten the future of the rules-based international world order that has brought freedom and prosperity to so many people.”

---

Turning to Wall Street, it was all about the Federal Reserve (and the Bank of Japan), as both affirmed their commitments to monetary easing, which led to a global rally in stocks, and bonds.

The Federal Reserve on Wednesday left rates unchanged, as your editor long expected, and appeared to pave the way for a hike in December, which I concur with, though my point has long been they wouldn’t move in September because of the election (their protestations to the contrary that they are not political being total B.S.), and then at some point between now and December, the Fed will get caught with its pants down amid a mini-inflation scare, which will roil the markets.  I stand by this long-held belief as well.

Wednesday, Chair Janet Yellen told a press conference after the Fed’s two-day meeting, “The economy has a little more room to run than might have been previously thought,” explaining the decision to hold the line on rates.  “That’s good news.”

But Yellen also made clear the central bank intends to raise rates this year.  “I would expect to see that, if we continue on the current course of labor market improvement and there are no major new risks that develop.”

[The formal Fed statement read in part: “The committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives.”]

However, this time there were three voting members of the Federal Open Market Committee who dissented – the first time that’s happened since December 2014; the three seeking an immediate hike.  [The vote was 7-3 overall.]

One of the three, Eric Rosengren, said in a note on Friday that given the “progress” the U.S. economy has made and the potential side effects of low rates, the case for a rate rise has “become even more compelling.”

In addressing prospects for a 4.5% jobless rate by 2019, Rosengren offered:

“Unemployment this low may well have the desirable effect of bringing more workers into the labor force – but, unfortunately, only temporarily.  Historical experience suggests it also risks overheating the economy, the effects of which include heightened pressure on inflation and potentially increasing financial-market imbalances.”

But the FOMC, in opting to put off a rate increase, also scaled back the number of hikes it expects next year to just two from three.

Yellen said the Fed wasn’t concerned that easy monetary policy was fueling bubbles.  “In general, I would not say that asset valuations are out of line with historical norms,” she said.

Policymakers also lowered their estimate of GDP in the long run to just 1.8% from 2%, while trimming their calculation of the long-run federal funds rate to 2.9% from June’s 3%, in contrast to the current 0.25%-0.50% band.

I thought one of the better questions at the press conference was, paraphrasing, ‘How can you forecast a Fed funds rate of 3%, longer term, from the current 0.25%, when you are saying growth remains at the same putrid pace we have today, 2%ish?’  As in, what would cause you to move rates higher if, one assumes, in this slow-growth environment you are forecasting, inflation remains tame?

I don’t think inflation will remain tame, and thus I’m probably in the camp we see a little stronger growth, but it’s just funny how full of merde the Fed is.  

Separately, there were two data points on the housing market this week of note: August housing starts came in at 1.142 million, annualized, less than expected, ditto August existing home sales at 5.31 million, the lowest annualized pace since February. The median existing home price was $240,200, up 5.1% year on year.  Rising prices and tight inventories seem to be holding buyers back but it’s not really worrisome.

Finally, there could be a budget showdown this week to fund the government beyond the Sept. 30 deadline for the fiscal year.  Congress must pass a spending measure to keep the government open and the Senate passed a bill with funding to fight Zika, but it lacks other provisions the White House wants.  We should assume a deal is reached to keep things going until early December.

Europe and Asia

A flash reading on the Eurozone economy for September, as put out by IHS Markit, showed that the composite PMI (manufacturing and services) is 52.6 vs. 52.9 in August (50 being the dividing line between growth and contraction), a 20-month low, with the services reading at 52.1 vs. 52.8 (a 21-month low) and manufacturing at 52.6 vs. 51.7 last month (3-month high).

Economist Rob Dobson of IHS Markit:

“The Eurozone economy ended the third quarter on a disappointing note, with its rate of expansion easing to a 20-month low in September. While the underlying picture remains one of sluggish growth of close to 0.3% over the quarter as a whole, it also remains clear that the economic upturn is still fragile and failing to achieve any real traction.  Job creation is wavering as a result, with employment rising at the slowest pace since April.”

The flash readings in France were a bit encouraging with services at 54.1 vs. 52.3 in August, a 15-month high, though manufacturing was still contracting at 49.5 vs. 48.3.

[A revised look at second-quarter GDP in France has it at -0.1%, after earlier readings suggested it was flat, with year-on-year growth at 1.3%, instead of 1.4%.  GDP is expected to rebound a bit in the third quarter.]

Germany’s flash services PMI was 50.6 vs. 51.7, a 39-month low, while manufacturing came in at 54.3 vs. 53.6 last month.

As for Brexit, which is looking like February in terms of when Britain may start the two-year negotiating window, the scale of disruption in the City of London has been shown to be 5,500 U.K.-registered companies that rely on “passports” to do business in other European countries.

More than 8,000 financial services companies based in the EU or the European Economic Area also rely on single-market passports to do business in Britain.

Passporting allows financial services companies licensed in one EU state to provide services across the bloc, rather than having to gain licenses in each individual country.

The U.K. accounts for 40% of Europe’s assets under management and 60% of its capital markets business, according to a report from the British Bankers’ Association and the Financial Times.

*A Bloomberg News interview with London Stock Exchange Group Plc CEO Xavier Rolet talked of a potential job loss of 100,000 if ‘clearing’ operations left the U.K.  [Risk management, compliance, middle office, back-office, etc.]

So this is one big issue that will be part of the Brexit negotiations.  But the biggest one, certainly at least politically, is the U.K.’s wish for immigration curbs, while maintaining free-market access, and as many in the Eastern bloc, for instance (Czech Republic, Hungary, Poland and Slovakia...the Visegrad Four) are saying, there is zero chance the U.K. can clinch a deal with both.

“There is no way whatsoever for the U.K. to have the cake and eat it at the same time,” said Czech State Secretary for EU Affairs Tomas Prouza, his country’s top Brexit negotiator.  His opinions are echoed throughout the region.

There are more than one million Eastern European workers in the U.K., exercising EU residence rights, yet British Prime Minister Theresa May wants more control over them, curbing the free movement principles that the EU insists are integral to the single market.

Others are saying that “cherry-picking” certain elements for Britain just isn’t in the cards without freedom of movement.

Prouza said the final package must address four elements: access to the internal market, passporting to let British-based financial institutions do business on the continent, payments into the EU budget, and free movement of labor for EU citizens to the U.K.

Eurobits....

--German Chancellor Angela Merkel’s party was dealt another blow in a regional election, this time in Berlin last weekend as the anti-immigration Alternative for Germany extended its challenge to the political establishment. 

The Social Democrats, Merkel’s junior coalition partner in the national government, claimed first with just under 22%, while Merkel’s Christian Democratic Union came in second at less than 18%, with each party losing about 5 percentage points of support.  The Alternative for Germany, AfG, took about 14%, putting it just behind the anti-capitalist Left party (16.5%) and the Green Party (also 16.5%).

After the results rolled in, Merkel admitted she wished she could turn back the clock on her refugee policy, “so that I could better prepare myself and the whole government and all those in positions of responsibility for the situation that caught us unprepared in the late summer of 2015,” admitting she underestimated the scale of the integration challenge.

But she also argued the decision to offer such a warm welcome to refugees was “absolutely right” and that it had come after years of ineffectual responses to the continent’s issues.

Merkel said Germany “for a long time had insufficient control [of its borders.]  We have learnt from history. Nobody, including me, wants a repeat of this situation.”

The chancellor does have some breathing space now, with the next three regional elections not until the spring, but she needs to tell her party at its annual conference in December whether or not she is running for a fourth term next fall.

--The IMF is applying more pressure on eurozone governments to take bolder action to alleviate Greece’s debt burden, saying the measures currently on the table don’t go far enough to address the country’s chronic problems.  At the same time, the IMF is calling on the Greeks to further reform its tax and pension systems, but Greece is currently struggling to meet the conditions of the latest injection of bailout funds, and needs to do a better job of it, soon, before another 2.8bn euro of rescue cash is released this autumn.

--Air France’s shares hit their lowest level in four years on Tuesday after the airline said it expected a further decline in bookings in the coming months as a result of the terror attacks, as well as a cabin crew strike.  The CEO said he expected bookings to be down 10% the balance of the year, with the biggest drop in demand coming from China, Japan and the United States.

--According to a survey conducted by the European Jewish Association and the Rabbinical Center of Europe, 70% of European Jews will not go to synagogue on Rosh Hashanah or Yom Kippur, many due to increased anti-Semitism across the continent.

While the focus of the extreme right has been the perceived Islamic threat, Jewish leaders warn of the impact on their communities of growing nationalism and xenophobia.

On the migration front, the number of first time asylum seekers in the EU was up slightly in the second quarter, 306,000, up 6% compared with the first quarter’s pace of 287,000.

Syrians remained the main citizenship of people seeking to become registered at 90,500, ahead of Afghans at 50,300 and Iraqis, 34,300.  So the three account for almost 60% of all first time applicants.  [Eurostat]

In the second quarter, Germany registered 187,000 of the first time applicants, or 61% of the EU total, followed by Italy (27,000) and France (17,800).

Back to the problems faced by Chancellor Merkel, according to the country’s Federal Statistical Office, 21% of Germany’s population has a migrant background, 17.1 million, as the results of the 2015 micro-census show many of the new arrivals can’t speak the language or lack basic schooling...the very integration problems that scare the heck out of German intelligence officials, for one.  They can be easily radicalized.

Lastly, French authorities dismantled a makeshift migrant camp in Paris, with 2,000, mostly from Sudan, Afghanistan and Eritrea, having set up tents in north Paris near the city’s main railway station, which links Paris to the coastal town of Calais, where there are larger migrant camps that are being dismantled.  What a freakin’ nightmare.

Turning to Asia....

The Bank of Japan is keeping its negative interest rate policy unchanged at minus 0.1% for its benchmark short rate, but also announced it was going to begin targeting long-term bond yields, rather than the typical act of a central bank of focusing solely on the short end of the yield curve, though since the financial crisis, central banks have been using programs like quantitative easing (QE) to influence long rates.

The BOJ, following its “comprehensive assessment” of its policies, has now decided to target 10-year bonds, JGBs, that are currently at -0.05% but have traded with a yield as low as -0.30%, at zero.

The BOJ is attempting to engineer a steeper yield curve to improve the profitability of banks, but this is also an admission that BOJ Gov. Haruhiko Kuroda’s policy of negative interest rates hasn’t been working; Japan’s biggest problem being deflation, and/or total stagnation, when it desperately needs some of the inverse.

At least now the BOJ has finally given up on setting a timetable for an inflation target of 2%.

What Japan needs more than anything, though, is true economic reform, including regulatory relief.

Separately, Japan’s exports fell 9.6% year-on-year in August, but this was better than July’s 14% contraction.

Imports contracted at a 17.3% pace last month, an improvement from the previous month’s 24.7% fall.

Some improvement in both numbers was to be expected, seeing as July’s figures were the worst since 2009.

Machine tool orders, a key proxy for capital spending in Japan, dropped 8.4% year on year in August, a thirteenth straight month of declines.

And retail sales at department stores fell 6% yoy, having slipped 0.1% in July, according to industry data.

The flash reading for the manufacturing sector in Japan in September did improve to 50.3 vs. 49.5 in August, the first month of expansion since February.  The manufacturing sector has been hampered by sluggish growth, a rising yen (bad for exports) and the effects of the two major earthquakes in the spring, affecting one of the main manufacturing regions on the island of Kyushu.

There are signs manufacturers are more optimistic about the rest of the year with some goods producers taking on more workers.

In China, August new home prices came in up 9.2% year over year (vs. 7.9% in July), with prices on the month up in 64 of 70 cities, according to the National Bureau of Statistics, an improvement from 51 of 70 the prior month.  [62 of 70 in yearly terms.]

Prices were up 36.8% in the tech hub of Shenzhen (40.9% in July, so ‘cooling off’), but when you add in Beijing (up 23.5% yoy) and Shanghai (31.2%), it’s clear all three are way overheated and it’s unsustainable.

So on a related topic, bad debts in the Chinese banking system are 10 times higher than officially admitted, Fitch Ratings warns, with the costs of recovery potentially reaching a third of GDP within two years if authorities don’t address the crisis.

Fitch said the rate of non-performing loans has reached 15 to 21 percent and is rising fast.

It would cost up to $2.1 trillion to clean up the toxic mess even if the state started today, with government bearing the lion’s share of it. 

Official estimates put the percentage of NPLs at just 1.8 percent.

Street Bytes

--Stocks rose a second straight week, with Nasdaq hitting new highs on Wednesday and Thursday, before a drop on Friday.  Nasdaq finished up 1.2% to 5305, its new high now being 5339, while the Dow advanced 0.8% and the S&P 500 1.2%.

--U.S. Treasury Yields

6-mo. 0.39%  2-yr. 0.75%  10-yr. 1.62%  30-yr. 2.35%

Jon Sindreu of the Wall Street Journal reported that last year, the central banks of eight large developed economies “remitted about $149 billion to their respective governments, more than triple the $40 billion they sent along in 2005,” according to a Journal analysis of central-bank data.

Since the financial crisis, the central banks have been buying trillions of dollars (yen, euro, etc.) of bonds and lending to commercial banks as part of the effort to lower interest rates and spark growth.

But this means the central banks are collecting interest on their lending and on government bonds purchased.

The U.S. Federal Reserve sent $117.2 billion in 2015 to the Treasury, which compares with $21.5 billion in 2005.

--Yahoo announced on Thursday that information associated with at least 500 million user accounts was stolen by a “state-sponsored actor,” read Russia, in late 2014, but the company didn’t confirm this rather important information until this week.  If you haven’t changed your password since 2014, do so immediately, and you should change your security questions and answers.  [Example...  Q: Who is your favorite pitcher?  A: Tom Seaver.  For San Diego fans...Randy Jones.]

Account information stolen may have included names, email addresses, telephone numbers, dates of birth, and passwords.

Yahoo’s ongoing investigation has concluded no credit-card or bank account data was stolen, noting it doesn’t store such information on the affected network.

But when did Yahoo really learn of the breach?  The Financial Times reports CEO Marissa Mayer knew of it in July.  Other reports say Yahoo knew in 2014.

What makes this an even bigger deal than the largest breach in history is that it will no doubt lower the $4.8 billion price that Verizon Communications agreed to pay to acquire Yahoo this summer.

--Not a good time on Tuesday for Wells Fargo CEO John Stumpf during his grilling on Capitol Hill, as Sen. Elizabeth Warren went after him with a vengeance:

“This is about accountability. You should resign.  You should give back the money,” said the Massachusetts Democrat and outspoken critic of Wall Street.  “You should be criminally investigated.”

In prepared remarks, Stumpf said he was “deeply sorry.”

But while Wells has fired 5,300 employees tied to the scandal, no high-level executives have walked the plank.  [Good pay-for-view potential if you included alligators.]

Warren called out Stumpf for “gutless leadership” during the ‘scam,’ to which Stumpf shot back, “It was not a scam.”

But Republican Sen. Pat Toomey (Penn.) told Stumpf, “This isn’t cross-selling. This is fraud.”

In actuality, the scope of the problem was very small and resulted in just $2.6 million in fees – which didn’t rise to the level of a material public disclosure.

Yet you also have the case of Carrie Tolstedt, the executive who stands to receive $125 million in cash and prizes after retiring as the head of the Wells Fargo retail bank division responsible for the sales practices that have hit the bank’s reputation to the tune of $tens of $billions.

Republican Sen. Bob Corker (Tenn.) said it would amount to “malpractice” if Wells did not dock some of Tolstedt’s pay.

Democratic Sen. Bob Menendez (N.J.) called it “despicable” that Wells Fargo has “laid the blame on low-paid retail bank employees” when the company’s culture really was to blame.

--Mylan CEO Heather Bresch was also grilled on Capitol Hill, telling the House Committee on Oversight and Government Reform that Mylan makes only $50 in profit on each of the company’s life-saving EpiPens, the emergency allergy shot.

But the EpiPen has gone from $100 for a two-pack a few years ago to more than $600 today.  [The price of a six-pack of Coors Light, on the other hand, has risen from $5.50 to $6.50 over the same time period, but I digress, recognizing this was totally inappropriate.]

Democratic Representative Elijah Cummings (Md.) said, “They raised the prices to get filthy rich at the expense of our constituents,” in addressing Bresch’s $18 million in compensation last year, which she described as “in the middle” of pay packages for the industry, though surveys place her near the top.

Bresch’s father is Democratic Sen. Joe Manchin of West Virginia.

Bresch emphasized EpiPen’s uniqueness, noting that “fewer than 1 million of the 43 million people at risk had access to an epinephrine auto-injector” before Mylan launched a nationwide access-and-awareness campaign for the brand.

But she claimed the market offered alternatives to EpiPens – even though Mylan’s market share tops 90 percent after paying for a no-compete to block a potential rival.

--The big oil companies continue to slash their capital spending plans.  Petrobras announced it was cutting it 25% to the lowest level in a decade.  Yes, it’s heavily indebted and in the midst of a scandal, but still meaningful.

[Friday, Petrobras announced it struck a deal to sell a controlling stake in its natural gas pipeline unit with a Canadian consortium of investors for $5.2bn, which will help it pay down some of its humongous debt load.]

French oil and gas giant Total is looking to cut capital spending by $2 billion, as part of an overall effort to save $4bn by 2018.

The price of crude was rising this week on the, once again, false premise, an upcoming OPEC meeting (in this case next week in Algiers), would produce an agreement on a production cut, but no freakin’ way, boys and girls, and while the price finished the week up $1.40 at $44.59 on West Texas Int., it had been above $46 the day before.

--Home builder Lennar Corp. posted third-quarter results that beat the Street. CEO Stuart Miller said “the housing market’s recovery has continued to progress on a slow, steady and sometimes, choppy path.”

The number of deliveries rose 7% for the third quarter from a year before as the average price of a delivered home increased 3.7% to $363,000.

The company’s results were hit by its Houston segment, whose large energy sector has been in a dive.

Fellow builder KB Home also reported continued growth with total revenue increasing 8%, with an 11% increase in deliveries and a 2% rise in average selling prices.

--Southern California home sales hit a 10-year high in August, according to CoreLogic, up 10% over last year, with the region’s median price at $465,000, up 6.2% year over year.

--Home goods retailer Bed Bath & Beyond reported disappointing same-store sales for its second quarter, -1.2%, which compared with +0.7% in the year ago period.  Earnings per share also fell short of the Street’s expectations.  The stock fell about 5% on the news.

--FedEx Corp. shares rose sharply as the company handily beat analyst estimates in its fiscal first quarter, while predicting another record shipping season over the holidays, lifted by e-commerce.

Revenue in the quarter ended Aug. 31 rose to $14.7 billion from $12.3 billion a year earlier, aided by the acquisition of Dutch parcel delivery company TNT.  Net income rose to $715 million from $692 million in the year-earlier quarter.

The company did say, however, that it would hire ‘only’ 50,000 seasonal workers for the holiday shopping season, after hiring 55,000 last year, but this is because of increased automation.

If you’re a robot, your future looks good.  Just continue to update your software and try and improve your people skills as you’ll still need to interact with us humans at some point.  Remember, we can always remove your brain.

--According to the World Trade Organization, the EU has failed to eliminate billions of dollars in illegal aid to Airbus, in the latest chapter in a 12-year battle between the European aircraft maker and rival Boeing.

But the WTO rejected Washington’s claims the likes of France and Germany illegally supported Airbus’ newest long haul passenger jet, the A350XWB.

Nonetheless, a big victory for the U.S. and Boeing.  Mike Froman, the U.S. trade representative, said: “This report is a sweeping victory for the United States and its aerospace workers.  We have long maintained that EU aircraft subsidies have cost American companies tens of billions of dollars in lost revenue, which this report clearly proves.”

The EU is expected to appeal the decision.

--Commerzbank is considering cutting thousands of jobs, as many as 5,000, as Germany’s second-biggest lender prepares to unveil a new strategy to deal with flagging profitability. [All European banks are undergoing similar reviews.]

--A Chinese driver was killed in a crash while using Tesla’s Autopilot technology, four months before a similar fatal accident in Florida, according to a lawsuit filed by the victim’s father.  Tesla denies the Autopilot was to blame.

--Shares in Twitter soared 21% on Friday on a report by CNBC’s David Faber that the company could receive a bid for sale, with the suitors including Salesforce and Google.  [But the stock, at $22.50, is still shy of its IPO price of $26 about three years earlier.]

--Apple Inc. has approached British Formula One team owner McLaren Technology Group for a strategic investment or a potential buyout, according to the Financial Times.  If Apple is serious about getting into the car business, this is one move that make eminent sense.

More importantly in the near term, shares in Apple hit a speed bump this week amid signs initial sales of its iPhone 7 are not as strong as we were led to believe.   Specifically, research firm GfK claims channel checks show the new model’s European sales were down 25% vs. last year’s launch of iPhone 6.  [Some dispute GfK’s data collection methods.]

--In another potential blow for Samsung, a Galaxy Note 2 phone started smoking on an Indian commercial plane in mid-air, but there was no damage and the aircraft landed safely.  Passengers on board an IndiGo flight from Singapore to Chennai spotted the smoke filtering from the baggage bin and there were sparks and smoke coming from the phone.  This is not the Galaxy Note 7 model that has been recalled around the world for its lithium-ion battery fire risk.

--The Securities and Exchange Commission charged hedge fund mogul Leon Cooperman obtained inside information from an executive at Atlas Pipeline in 2010 to pocket at least $4 million in fraudulent profits – and then tried to cover-up his scheme.

Cooperman, 73, runs Omega Advisors and is a large investor in Atlas.  He was allegedly told the company was selling a natural gas processing facility in Oklahoma and was told not to trade on the information, but he did so anyway, quickly buying Atlas stock, options and bonds, according to the SEC.  When Atlas announced the deal, the stock soared 31% as the sale allowed the company to pay down debt and possibly return money to shareholders.

Omega did not sell any Atlas shares for more than a year after the company announced the Elk City sale, according to a five-page letter Cooperman wrote in defending himself.

But the SEC complaint also lists several instances where Cooperman did not file timely trade notifications with the agency.

The SEC is seeking to have Cooperman barred from acting as an officer or director of a publicly traded company, as well as return “unlawful trading profits, and any other ill-gotten gains.”

--Last Sunday’s Emmy Awards telecast was seen by an average of 11.3 million viewers, an all-time low.  I only watched the last half hour to make sure “Game of Thrones” won Best Drama.  [Actually, I had just put a Bar Chat column to bed and was bored.]

But, seriously, sports fans, as Stephen Battaglio wrote in the Los Angeles Times: “Ratings have been sliding as more statuettes and nominations have been lavished on shows that do not have the kind of broad appeal as broadcast network programs.”

--Good news for the music business, with U.S. revenues of recording companies reaching $3.4 billion in the first half owing to a big jump in online streaming, an overall 8.1% increase from the same period a year earlier, according to the Recording Industry Association of America.

It’s the industry’s strongest growth since the CD boom of the late 1990s.

Subscription services such as Spotify and Apple Music are leading the way.  Spotify counts 40 million paying subscribers world-wide, while Apple has 17 million subscribers globally, mostly in the U.S. (though Apple Music didn’t launch until June 2015).

Meanwhile, streaming came at the expense of CD sales, which fell 16%, while revenue from digital singles dropped nearly 22%.  Vinyl sales fell 6%, though vinyl accounted for about one-third of the total $632 million in physical music sales.

I haven’t made a music purchase of any kind whatsoever in years....seriously.  The only time I listen to it is in the car on either 1250 AM, an oldies station, or NASH FM, New York’s great country station.

And that’s a memo....Charles Krauthammer is here....

[Truth be told, I have a zillion CDs here at home as that used to be my drug of choice.  Safer than heroin.]

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey: The “truce” was dealt a major blow last Saturday when war planes from the U.S.-led coalition against ISIS unintentionally bombed Syrian troops in the eastern city of Deir al-Zour, killing at least 80.  President Bashar al-Assad called the attacks the “latest example of flagrant American aggression against Syrian army positions in the interests of the terrorist organization Daesh [IS].” Australian, British and Danish warplanes were involved in the attack on Syrian army positions.  [The U.K. confirmed on Monday that it was British aircraft – believed to be unmanned, remotely-piloted Reaper drones – that had been involved in the strike, along with jets from the other two countries.] 

Syria’s Foreign Ministry said Sunday that “American” warplanes repeatedly attacked the Syrian army the previous afternoon.  Russian U.N. envoy Vitaly Churkin suggested the strike was not an accident and that the U.S. had not coordinated the strike with Russian military officials, which the U.S. denied, saying it had indeed contacted its Russian counterparts.

Prior to Monday, the one-week mark of the cease-fire, the Syrian Observatory for Human Rights said 92 people had been killed in Syria since the start of it, including 29 children, as well as 17 women; a figure that doesn’t include Saturday’s strike on Syrian soldiers, as well as attacks on ISIS.

But the same day, Syria’s military declared an end to the week-long truce and hours after, an airstrike hit a U.N. aid convoy near Aleppo, killing 20 civilians and destroying 18 trucks, according to the Red Cross.  The U.N. immediately suspended all humanitarian relief efforts across the country.  [A few days later, a medical facility near Aleppo was hit in an airstrike, killing five employees of an international aid agency, the Syrian Observatory blaming Russian or Syrian jets.]

President Obama’s national security spokesman Ben Rhodes said, “We hold the Russian government responsible for airstrikes in this space.”

General Joseph Dunford, chairman of the Joint Chiefs of Staff, said there was “no doubt” that Russia was responsible for the devastating strike on the aid convoy, Monday, calling it an “unacceptable atrocity.” Two Russian SU-24 ground attack jets were operating in the area where the convoy was struck, another U.S. official told AFP.

The Russian foreign ministry said the “unsubstantiated, hasty accusations” seemed designed to “distract attention from the strange ‘effort’ of coalition pilots,” referring to Saturday’s bombardment of Syrian troops by the U.S.-led coalition.

Negotiations between Secretary of State John Kerry and his Russian counterpart, Sergei Lavrov, failed in New York after Russia refused U.S. demands that it promise to immediately ground the Syrian regime’s air force.

“We cannot continue on the same path any longer,” Kerry said.

General Dunford told a Senate hearing that he did not believe it would be wise to share intelligence with Russia, seemingly squashing any cooperation previously agreed to.

Addressing a conference in Washington, D.C., U.S. Air Force Gen. Hawk Carlisle, who leads Air Combat Command, said the U.S.-led coalition may have ISIS on the run, but the fog of war over the battlefields of Syria and Iraq is far thicker than it was a year ago.

“It’s gotten significantly more complex,” he said, noting there are too many players in the field with too many agendas.

“The Russians, what they’re doing there; the Syrians, what they’re doing there; different agreements with different crowds” all add to the difficulty and confusion.

With the cease-fire history, rebel-held areas of Aleppo then saw the heaviest air strikes in months; the Assad government announcing a new offensive aimed at retaking all of the divided second city, with Syrian and Russian aircraft pounding the area Wednesday through Friday as I go to post.  Widespread further destruction was overwhelming rescue teams, according to the activists on the ground.  Aside from airstrikes, there has been artillery fire and barrel bombing.  Entire apartment blocks were flattened, as reported by Agence France Presse.  Casualties are mounting rapidly.  It seems the Syrian army (and its proxies) are preparing for a ground assault.

U.N. aid convoys had started rolling in Syria again on Thursday, though there was little success in using the key Castello Road into east Aleppo, so the U.N. is looking into longer aid routes, including through Damascus, but this won’t work.  They’ll still be blocked.  250,000 residents of east Aleppo have desperately needed aid for months and months.

The U.N. estimates roughly 600,000 are stuck in Syria’s 18 besieged areas.  As of Friday, 40 aid trucks were still sitting at the Turkish-Syrian border waiting for the situation to improve, but now it’s only gotten worse all over again.

Editorial / Wall Street Journal

“President Obama delivered his final address to the U.N. General Assembly on Tuesday, and we wonder what Vladimir Putin and the world’s other increasingly assertive authoritarians thought of it.  Even as the American President chastised the Russian President for his failure to abide by international ‘norms,’ Mr. Obama’s latest attempt to appease Mr. Putin was disintegrating in Syria.

“ ‘In a world that left the age of empire behind, we see Russia attempting to recover lost glory through force,’ Mr. Obama scolded.  ‘If Russia continues to interfere in the affairs of its neighbors, it may be popular at home, it may fuel nationalist fervor for a time, but over time it is also going to diminish its stature and make its borders less secure.’

“This is another expression of Mr. Obama’s now familiar progressive faith that the world’s bad guys are doomed to fail because, well, they are doomed to fail.

“Meanwhile, in the real world, U.S. officials were telling the press Tuesday that U.S. intelligence agencies believe Russian jets conducted the strike that targeted a humanitarian aid convoy in Syria on Monday.  This is the same Russia that Mr. Obama and Secretary of State John Kerry have been beseeching to stop aiding Bashar Assad as he seeks to crush his domestic opposition....

“Mr. Assad and the Russians don’t appear to be honoring their cease-fire commitments, which was predictable given that they have most of the military leverage.  Mr. Putin is busy establishing facts on the ground, while Mr. Obama lectures at Turtle Bay.”

Editorial / Washington Post

“Even by the blood-drenched standards of Syria, the attack on a United Nations humanitarian relief convoy near Aleppo on Monday was horrific – and criminal. Aid workers say trucks that carried desperately needed aid for the rebel-held side of the city, along with a warehouse, were repeatedly bombed, killing at least 20 people.  Senior U.S. officials told reporters there were ‘strong indications’ that the attack came from the air and that either Russian or Syrian planes were responsible....

“Secretary of State John F. Kerry declared that the cease-fire the attack had so gruesomely violated was ‘not dead’ – and called for more talks with Russia.  ‘There was still an imperative’ to pursue ‘the arrangement reached last week in Geneva between the United States and Russia,’ read a State Department statement.

“Mr. Kerry’s optimism was at odds with that of the Syrian and Russian governments: The former declared the cease-fire over, and the latter said the prospects were ‘very weak.’  His optimism also showed a shocking tolerance for atrocities committed by forces with which the United States is proposing to ally itself.  The Obama administration pledged that if the truce held for seven days and humanitarian supplies were delivered, it would join with Russia in launching airstrikes against Syrian rebel forces deemed to be ‘terrorists.’  It is hard to conceive of a more definitive trashing of the agreement than Monday’s attack....

“The administration’s evident willingness to overlook war crimes in its zeal to collaborate with Vladimir Putin was perhaps best explained by British Foreign Secretary Boris Johnson: The Kerry-Russia deal, he said, ‘is the only show in town.’ That’s because President Obama has refused to allow other options, such as a U.S.-defended safe zone for civilians or military action to ground the Syrian air force.  With no other cards, Mr. Kerry is still pleading for cooperation from those who bombed the Red Cross.”

Meanwhile, Turkish President Recep Tayyip Erdogan, in New York for the U.N. General Assembly, said in an interview on Thursday that the U.S. was failing to live up to its obligations on two key issues of vital importance to Turkey: backing Kurdish fighters Turkey considers terrorists and continuing to harbor cleric Fethullah Gulen, who Erdogan accuses of fomenting this summer’s failed coup.

Erdogan is dismissing the U.S. argument that the extradition of Gulen, who is living in eastern Pennsylvania, must first work its way through the judicial system.

We had our chance with Erdogan in 2012.  Obama, and he alone, blew it.

Regarding Iraq....the Iraqi military closed in on a key town, Shirqat, that is held by ISIS and is seen as a stepping stone in the campaign to recapture the Islamic State stronghold of Mosul.

With air support from the U.S., the troops have taken 12 nearby villages.  But tens of thousands are said to be trapped in Shirqat as officials have warned of a humanitarian disaster inside.

Editorial / Wall Street Journal

“Hillary Clinton was adamant this month that ‘we are not putting ground troops in Iraq ever again,’ telling NBC’s Matt Lauder ‘we’re going to defeat ISIS without committing American ground troops.’  Her foreign-policy team might want to finesse that whopper lest she embarrass herself by repeating it at Monday’s presidential debate.

“The Pentagon is now asking the White House for another 500 troops in advance of an offensive to retake Mosul from Islamic State, which conquered the city in June 2014.  That is in addition to the nearly 6,000 U.S. military personnel already in Iraq.  Some 4,400 are deployed on an ‘official’ basis, many in so-called advise-and-assist missions with the Iraqi army.  Another 1,500 U.S. troops are there in other capacities but aren’t acknowledged by the Administration as part of the overall force....

“Mrs. Clinton may hope that by January ISIS will have been defeated in Iraq and the U.S. troops will come home.  President Obama is eager to retake Mosul before the election so he can claim a foreign-policy victory, much as he did about al Qaeda after the Osama Bin Laden operation....

“The tragedy is that Mr. Obama might have avoided this current deployment had he not withdrawn all U.S. forces prematurely from Iraq in 2011 so he could campaign for re-election claiming that ‘the tide of war is receding.’  He could have kept 5,000 or 10,000 troops in Iraq and stopped ISIS from regrouping and conquering Mosul in the first place.  Mrs. Clinton was Secretary of State when that decision was made, which may be why she is so averse to admitting the truth now.”

Benny Avni / New York Post

“President Obama will surely put his best spin on his legacy Tuesday in his eighth and final speech to the United Nations General Assembly. But even his biggest fans must struggle to ignore the spread of mayhem on his watch, in the Mideast and beyond....

“Take the refugee crisis.  During the last decade, according to the United Nations, the number of people fleeing wars around the world jumped from 37 million to 66 million – most of them from the Mideast, and many flooding Europe.

“European policymakers are at a loss for answers, and Syria’s neighbors – Jordan, Lebanon and Turkey – are struggling to handle the inflow.

“But not to worry.  Obama’s on the case. While at the U.N. assembly, he’ll host world leaders in a conference on migration.  They’ve already reached an understanding to talk about it further and may even, in two years or so, reach a global treaty (which will surely be too weak to make a dent in the growing problem)....

“Meanwhile, in Syria, the eye of the refugee storm, America is losing its trace of dignity. On Monday the Syrian army announced an end to that cease-fire declared just a week ago....

“The Kerry-Lavrov pact was doomed from the start, but the death blow came late last week when U.S. planes [Ed. we learned the details later] bombed forces loyal to Syria’s butcher-in-chief, Bashar al-Assad.  The Obama administration rushed to apologize, swearing it was a mistake.

“Remember when Team Obama said Assad must go?  That policy, we learned over the weekend, secretly became a dead letter two years ago: It was back then, Russian U.N. Ambassador Vitaly Churkin disclosed, that the United States ‘committed,’ in an agreement with Damascus, that our airstrikes in Syria ‘would not affect’ Assad’s army.

“We became, in effect, an accomplice of Assad, the world’s most prolific killer.

“One chief reason: our desire to secure an agreement with his main regional backer, Iran.

“That agreement was supposed to be the crown jewel in Obama’s attempt to promote a nuke-free world.  Yet, eight years after he announced that goal at the United Nations, North Korea’s arsenal grows as it tests new nukes with added frequency. And under Obama’s deal, Pyongyang’s ally, Iran, is on the road to joining the growing club of nuclear-armed countries.

“Meanwhile, Iran wages proxy wars with rival Saudi Arabia; consolidates its Syrian and Lebanese bases to assure a presence near the borders of the country it vows to annihilate, Israel; and stretches its tentacles as far as Africa and Latin America.

“And America shies from confronting Iran for fear Tehran might walk away from the nuke deal. So instead, the West lifts sanctions and enriches Iran’s leaders.

“A top promise of the Obama presidency was that, as a global child (African roots and Indonesian childhood), he’d unite the world and help nudge it toward the ideals the United Nations was originally meant to espouse.

“Yet while America toiled these last eight years to strengthen global institutions like the United Nations, America’s global leadership has wanted.  The world is worse off, and so are we.  But you won’t hear that part in Obama’s speech.”

And we didn’t.

Israel: Prime Minister Benjamin Netanyahu attacked the U.N. at the beginning of his General Assembly speech on Thursday, saying that Israel welcomes “the spirit of the Arab peace initiative” and inviting Palestinian Authority President Mahmoud Abbas to the Knesset.

“The U.N. began as a moral force, and has become a moral farce,” Netanyahu said.

Yet more and more nations around the world see Israel as a partner, he said.  “Everything will change and a lot sooner than you think.”

Netanyahu emphasized that many in the Arab world see Israel as an ally against Iran.  “The biggest change is taking place in the Arab world.  For the first time in my lifetime many other states recognize us not as the enemy but as an ally.”

Regarding the Palestinians and the contentious issue of the growing Israeli settlements, Netanyahu said, “The real settlements the [Palestinians] are after are Tel Aviv and Haifa.”

The prime minister added that the Palestinians still refuse to recognize Israel as the nation-state of the Jewish people “in any boundary.” 

“We will never negotiate our right to the one and only Jewish state,” he said.

Separately, Netanyahu has been heavily criticized at home for the record $38 billion defense package Israel negotiated with the U.S., critics saying the 10-year deal would have been better had he not given “an uncalled-for speech to Congress,” which former military intelligence chief Amos Yadlin said Israel is still “paying for it.”

Netanyahu said in a weekly Cabinet meeting, “I want to make it clear: We’ve never been offered more.  We weren’t offered more money, not even a single dollar more, and we weren’t offered special technologies.”

The deal, which increased aid to $3.8 billion annually from about $3 billion, bars Israel from seeking supplemental funding from Congress as it has repeatedly done. It also requires Israel to use the funds for solely American goods, whereas previous accords allowed Israel to spend up to 26% of the funds on domestic defense products.

Former Prime Minister and Defense Minister Ehud Barak argues that due to a 20% increase in the cost of arms, Israel is actually getting less bang for the buck.

Lastly, in emails leaked this week by DCLeaks, former Secretary of State Colin Powell blew the lid off Israel’s hush-hush nuclear program, writing a Democratic Party donor about Netanyahu’s speech to Congress, and the latter’s concerns about the Iranian nuke deal, that “The boys in Tehran know Israel has 200 (nukes), all targeted on Tehran.”

The 200 figure is a well-known estimate (the range going from 80 to 400), only it has never been made public by Israel, choosing nuclear ambiguity...correctly so.

Iran: In marking the anniversary of its 1980 invasion by Iraq, the Iranian military paraded its arsenal and told the United States not to meddle in the Gulf.  The regime also threatened to “turn Tel Aviv and Haifa to dust” as it displayed a wide array of long-range missiles, tanks, and the Russian-supplied S-300 surface-to-air missile defense system.

At the port of Bandar Abbas on the Gulf, the navy showed off 500 vessels, as well as submarines and helicopters, at a time of high tension with the United States.

Iran, by the way, has been increasingly open about its involvement in Syria, where it has lost some 400 “advisers,” as many Iranians, initially opposed, are warming to the mission, believing ISIS poses a threat to their existence and it’s best fought outside the borders.

Supreme Leader Ayatollah Ali Khamenei recently described the wars in Syria and Iraq as crucial to the survival of the Islamic Republic.  If Iranians had not gone and died fighting there, “the enemy would enter the country.”  [Jerusalem Post]

Russia: Two senior Democratic lawmakers with access to classified intelligence, Sen. Dianne Feinstein and Rep. Adam B. Schiff – the ranking Democrats on the Senate and House intelligence committees, respectively – said recent cyberattacks of the Democratic National Committee and other U.S. political entities were intrusions likely directed by Russian President Vladimir Putin.

“At the least, this effort is intended to sow doubt about the security of our election and may well be intended to influence the outcomes,” a statement from the two read.  “We believe that orders for the Russian intelligence agencies to conduct such actions could come only from very senior levels of the Russian government.”

Meanwhile, Russia held its parliamentary elections last weekend and, surprise surprise, the pro-Putin United Russia party took 343 out of the State Duma’s 450 seats, 76%, easily gaining a constitutional super-majority. 

But Russia’s friendly “opposition” took the remaining seats: the Communist Party won 42, the nationalist-leaning LDPR won 39 seats and A Just Russia took 23 seats.  Rodina and the Civic Platform won a seat each, and the Duma’s only “independent” deputy is Vladimir Reznik, a man who once found himself on Interpol wanted lists and was for many years a United Russia lawmaker.  So, literally, all 450 seats are in Putin’s control.  You can’t make this up.

The day after the election, President Putin declared his party victorious and congratulated them for the “good result.”

“How is that possible, given the economic difficulties we’ve been facing and the drop in people’s real incomes?” he said.  “At times of risk, you can count on people to trust the government.”

But only 48 percent of Russians took part, the lowest turnout for a parliamentary election in post-Soviet history.  [Apparently just 30% in Moscow and even less in St. Petersburg.]

Of course the election was rigged, and any protest voters simply chose to stay at home.

The Moscow Times also noted: “Renowned physicist Sergei Shpilkin produced his own analysis of the election results, based on expected statistical distributions. His data suggested that almost 45 percent of all votes recorded for United Russia may have been falsified.”

As for 2018 and the next presidential election, it is assumed Putin will run, but unless he turns the economy around, one that requires painful reforms, those in the Duma won’t help him get re-elected. He’ll need the vote of the people for a fourth term. 

North Korea: Pyongyang claimed it successfully tested a high-powered rocket engine for launching satellites, which is of course part of the North’s long-range ballistic missile program.

I’m amazed at how some “experts” in the U.S. continue to say that North Korea won’t have the capability to threaten the U.S. with a nuclear weapon until 2020, but these same folks can’t deny the speed at which Kim Jong Un and his Orcs appear to be progressing towards their goal of a full nuclear arsenal.  Depending on the success of coming ballistic missile tests, I have been arguing a realistic target for Pyongyang would be Guam and our heavy military presence there.  That’s a far shorter route than the U.S. west coast...or Hawaii.  [Guam, from North Korea, is roughly the distance from New York to Las Vegas.]

And I would worry Kim could have the capacity to hit Guam by the end of next year (I’ve said Fourth of July).

Remember, U.S. intelligence missed both India and Pakistan’s first nuclear weapons tests.

Japan’s Defense Minister Tomomi Inada said this week that “the speed of North Korea’s development” meant it was important to “take all possible measures” to ensure Japan’s defenses were sufficient and to reinforce the Japan-U.S. alliance.

So what to do in the interim?

Ian Bremmer / TIME

“Launch a surprise military attack to change the regime? That risks a shooting war with one of the largest standing armies in the world – with Seoul, a city of 10 million, well within firing range. The easy course is still to condemn, issue a threat, offer a bribe and delay the reckoning.

“This strategy gives North Korea time to expand its capabilities.  Unless outsiders find a way to undermine Kim’s regime from within, he will one day have the capacity to kill millions of people in a matter of hours. 

“The next U.S. president must prepare for the moment when a tough choice will need to be made quickly.  Only then can unity of opinion create unity of action.”

India/Pakistan: Tensions continue to mount in the disputed border region of Kashmir.  Sunday, India blamed Pakistan for an attack on a brigade headquarters in the town of Uri near the border that killed 18 soldiers.  Pakistan denied any role in the raid, which was one of the deadliest in years.

Tuesday, Indian soldiers killed eight people trying to cross the border and security forces were also fighting suspected militants near the frontier.

86 Kashmiris have been killed in anti-India protests the past few months.

Both sides have their forces on high alert.  India’s Prime Minister Modi is under increasing pressure to respond harshly to the attack, but options are limited without escalating the crisis into a full-blown war that we all know, should it ever occur again, could go nuclear.

Australia: An Essential Research poll released on Wednesday found 49 percent of Australians support a ban on Muslim immigration, a high figure for sure.  The most common reasons given are fears over terrorism and a belief Muslim migrants do not integrate into society or share Australian values.

Random Musings

--Presidential Polls....

A new NBC News/Wall Street Journal national survey has Donald Trump leading Hillary Clinton 43% to 37%, among likely voters.  Gary Johnson draws 9%, Jill Stein 3%.

Clinton leads Trump 42-37 among college educated white voters – a big bloc GOP candidates traditionally win.  In 2012, Romney won those voters by 14 points.

When you throw in Johnson and Stein, Clinton leads Trump by a 76-5 margin among African-Americans (81-7 in a two-way race); short of the 93% Obama won in 2012.

While Trump leads 46-41 on the issue of who would do a better job with the economy, Clinton leads on immigration (50-39), who would make a better commander-in-chief (48-33), who should be in charge of nuclear weapons (51-25), and temperament to be president (56-23).

A CBS News Battleground Tracker Poll of registered voters in 13 key states, including Florida, Ohio, Pennsylvania and North Carolina, had Clinton and Trump tied at 42 percent.  The same poll gave Clinton a 1-point lead the previous week.

A Los Angeles Times/USC Dornsife national survey has Trump with a 6-point lead, 47-41.

But a Reuters/Ipsos national tracking poll released Friday has Clinton with a 4-point lead, 41-37.  In a 4-way, it’s Clinton 39-37, Johnson 7%.  [Ergo, those of you concerned with my potential vote need not be storming my building.]

According to a Monmouth University poll of Florida, Clinton holds a 5-point lead over Trump, slightly less than the 9-point lead she held last month.  Clinton polled 46%, Trump 41%, and Gary Johnson 6%.

[Sen. Marco Rubio, in a tough race with his Democratic challenger Patrick Murphy, is ahead by just two points after leading by 5 in August.]

According to a series of Fox News polls...

Trump leads Clinton, 43-40, in Nevada, which Obama carried in the prior two elections.  Gary Johnson is at 8%.

Trump also leads Clinton in North Carolina, 45-40, and Ohio, 42-37.

In Carolina, whites favor Trump 58-27, while blacks support Clinton 85-3.

However, a New York Times Upshot/Siena College poll released on Thursday has Clinton and Trump tied in North Carolina at 41, with Gary Johnson at 11%.  Jill Stein is not on the ballot there.

[Republican Sen. Richard Burr is trailing his Democratic challenger, Deborah Ross, by four points in N.C., 46-42.  This would be a huge blow for the Republicans, looking to maintain control of the Senate.]

Not that this is a surprise, but a Siena poll released Tuesday gives Clinton a 51-30 lead in New York State, unchanged from a month ago.  But what should concern Clinton is that she is essentially tied in the New York City suburbs, where Gary Johnson and Jill Stein are hurting her.

In a Los Angeles Times/USC Dornsife poll, Trump saw a 16.5 percentage-point increase in backing from African-American voters, up from 3.1% to 19.6%, while Clinton’s support among that group plummeted from 90.4% to 71.4%.  As this was over a one-week period of time, that’s staggering, though this covered the Sunday when Clinton collapsed while entering a Secret Service van at the 9/11 ceremony in New York.

[Sensing the changing attitudes in the black community, especially the lack of passion, last Saturday night at the Congressional Black Caucus Foundation gala dinner in Washington, President Obama said he would consider it a “personal insult” if African-Americans did not vote for Hillary Clinton.  “My name may not be on the ballot, but our progress is on the ballot,” the president said.]

A Wall Street Journal/NBC News/Telemundo survey finds Clinton maintaining her lopsided lead among likely Hispanic voters, winning 65% to Trump’s 17%; a 48-point margin that compares to the 44 points by which President Obama beat Mitt Romney in 2012.

--Rich Lowry / New York Post

“Hillary Clinton will almost certainly win Monday night’s epic presidential debate on points – and still could lose.

“It’s hard to see how Clinton, who has marinated in public policy for 30 years and is preparing for the debate like it’s the invasion of Normandy, won’t repeatedly best Donald Trump on substance.

“Her strength in this area perfectly matches Trump’s weakness.  Trump has appeared to learn for the first time such basic information as that the Trans-Pacific Partnership doesn’t include China and that Russia has already invaded Ukraine on the debate stage or during a media interview. He sometimes reads his speeches as if they include revelations to him – ‘so true.’ He’ll interject after coming across a striking fact or observation in the text.

“If Trump has spent time hitting the briefing books, his campaign has kept it under wraps and he has yet to reveal any hint of a new policy depth in anything he’s said over the past few weeks. So Trump won’t be particularly well-informed, and figures it won’t particularly matter – and may well be right.

“Trump has a significant built-in advantage in that there’s a lower standard for him – not because the media isn’t tough enough on him, as all the media mavens agree, but because he’s the de facto challenger and candidate of change in a change election.  Trump can win by clearing a bar of acceptability, whereas Clinton has to do more than that...(like) make a compellingly positive case for herself that has so far eluded her in both 2008 and 2016.

“This isn’t to say that Trump won’t be on treacherous terrain.  He can’t bully and mock Clinton the way he did his Republican rivals.  He won’t have a crowd to feed off of.  Without a teleprompter, message discipline still tends to elude him.

“The one-on-one format for an hour-and-a-half could make his thin knowledge painfully obvious.  And any misstep or outburst that reinforces the idea that he lacks the qualities to be commander in chief would be devastating....

“(But) it’s not as though he needs to mount a convincing, detailed defense of his tax or child care plan or anything else to invalidate Clinton’s critique of him; he just needs to seem a reasonable person.

“That is why Trump doesn’t need to be the aggressor.  As long as he’s firm and calm, he is implicitly rebutting the case against him on temperament.  And then he can look for a big moment or two that will be memorable and drive the post-debate conversation in the media that is arguably as important as the debate itself.”

--Michael Gerson / Washington Post

“If Trump succeeds in essentially turning out the midterm electorate in a presidential year – whiter, older, angrier – the main motivating issue may be the restriction of immigration.  But the general atmosphere of contempt for government that helps Trump – of disdain for the weakness and incompetence of the political class – is due to the Affordable Care Act.

“More than six years after becoming law, the proudest accomplishment of the Obama years is a political burden for Democrats.  A recent Gallup poll found that a majority of Americans disapprove of ObamaCare.  The larger concern for Clinton and her party comes deeper in the numbers.  Only 18 percent of Americans believe the Affordable Care Act has helped their families; 80 percent say it has hurt or had no effect.  A higher proportion of Americans believe the federal government was behind the 9/11 attacks than believe it has helped them through ObamaCare.

“The Affordable Care Act has come to embody and summarize declining trust in political institutions.  The law was passed in a partisan march, without a single Republican vote.  The system’s federal website was launched with a series of glitches and failures that still make ‘healthcare.gov’ a byword for public incompetence in the computer age.  Only 17 state-based exchanges (16 states and the District of Columbia) were created.  Of that number, four (Hawaii, New Mexico, Nevada and Oregon) have failed, and Kentucky’s will be dismantled/shuttered next year.  According to a recent report by the House Energy and Commerce Committee, the Oregon exchange received $305 million in federal funds but never created a functional website or enrolled a single person in private insurance online.

"Premium costs in the exchanges increased about 12 percent nationwide from 2015 to 2016.  Current rates are being finalized, but it looks as if the increase from 2016 to 2017 will be double that.  ‘This suggests that the system is not finding its balance or approaching stability but actually getting more unstable,’ says Yuval Levin of National Affairs.  ‘People just aren’t finding the insurance offerings in the exchanges attractive, and the law leaves insurers very few options for improving them.  The insurers are increasingly fleeing – a third of counties in the U.S. will have only one option in the exchanges next year.  And there isn’t much the administration can do about it.’....

“There is no reason to trust Trump on the health issue; but there is plenty of reason to distrust Democratic leadership.  No issue – none – has gone further to convey the impression of public incompetence that feeds Trumpism.

“If Trump wins, there will be a host of reasons, but one will be this dramatic failure of liberal governance.”

--Hillary Clinton wants to levy a 65% tax on the largest estates – up from today’s 40% - while making it harder for wealthy people to pass appreciated assets on to their heirs without paying taxes.

In all, Clinton would raise taxes by about $1.5 trillion over the next decade to pay for expanded education assistance, paid family leave and other programs.

By contrast, Trump favors repealing the estate tax, as well as steep cuts in business tax rates.

--James V. Grimaldi / Wall Street Journal

“The Fragrance Foundation, a trade group for the perfume industry, paid former President Bill Clinton $260,000 to give a speech in January 2014 that lasted less than an hour.

“In the months after the talk, the Bill, Hillary and Chelsea Clinton Foundation organized and partially funded an effort to get hundreds of farmers in Haiti to plant thousands of lime trees, a project designed to help both the impoverished farmers and the perfume and beverage industries, which had been hurt by a spike in lime prices caused by drought and crop blight.

“The Clinton Foundation’s partner on the project was one of the world’s largest fragrance and flavoring suppliers, Firmenich International SA....

“Mr. Clinton’s $260,000 speaking fee wasn’t a donation to the foundation but was reported as personal income – an honorarium – on the candidate financial-disclosure form of his wife, Hillary Clinton... The speech was one of 104 paid speeches that earned Bill and Hillary Clinton about $25 million in the 16 months before she launched her presidential campaign.

“The timing of Bill Clinton’s speech income, from a perfume trade group in which a large member would later benefit from a Clinton Foundation project in Haiti, represents the kind of overlapping of private and charitable interests that has become a political liability for his wife as she runs for office.”

--Robert M. Gates / Wall Street Journal

“You wouldn’t know it from the presidential campaigns, but the first serious crisis to face our new president most likely will be international. The list of possibilities is long – longer than it was eight years ago.

“Here is the world the new president will inherit at noon on January 20 – a range of challenges for which neither candidate has offered new strategies or paths forward.

“Every aspect of our relationship with China is becoming more challenging. In addition to Chinese cyberspying and theft of intellectual property, many American businesses in China are encountering an increasingly hostile environment. China’s nationalist determination unilaterally to assert sovereignty over disputed waters and islands in the East and South China Seas is steadily increasing the risk of military confrontation.

“Most worrying, given their historic bad blood, escalation of a confrontation between China and Japan could be very dangerous.  As a treaty partner of Japan, we would be obligated to help Tokyo. China intends to challenge the U.S. for regional dominance in East Asia over the long term, but the new president could quickly face a Chinese military challenge over disputed islands and freedom of navigation.

“Dealing effectively with China requires a president with strategic acumen and vision, nuance, deft diplomatic and political skill, and sound instincts on when to challenge, when to stay silent and when to compromise or partner.

“On this most complex challenge, neither Hillary Clinton nor Donald Trump has said or done much to give anyone confidence.  All we really know is Mr. Trump’s intention to launch a trade war with a country holding over $1 trillion in U.S. debt and the largest market for many U.S. companies; and Mrs. Clinton’s opposition to the Trans-Pacific Partnership trade agreement, which she helped to create and the failure of which would hand China an easy political and economic win.

“Then there is Vladimir Putin’s Russia, now routinely challenging the U.S. and its allies.  How to count the ways....

“There is Russia’s luring the U.S. secretary of state into believing that a cease-fire in Syria is just around the corner – if only the U.S. would do more, or less, depending on the issue; the cyberattacks on the U.S., including possible attempts to influence the U.S. presidential election; and covert efforts to aggravate division and weakness with the European Union and inside European countries....

“No one in the West wants a return to the Cold War, so the challenge is to confront and stop Mr. Putin’s aggressions while pursuing cooperation on international challenges that can only be addressed successfully if Russia is at the table – from terrorism to climate change, from the Syrian conflict to nuclear nonproliferation and arms control. Again, neither Mrs. Clinton nor Mr. Trump has expressed any views on how they would deal with Mr. Putin (although Mr. Trump’s expressions of admiration for the man and his authoritarian regime are naïve and irresponsible).

“North Korea and Iran are sworn enemies of the U.S....

“On his good days, Kim Jong Un appears to outsiders as a cartoonish megalomaniac; on his bad days, he seems to yearn for a Gotterdammerung finale in which a perishing North Korea takes a lot of Asians and Americans with it....”

Mr. Gates goes on to talk about Iran, ISIS, terrorism, the issues facing Egypt and Turkey, and how both Clinton and Trump “have a credibility problem in foreign affairs.”

But Gates is particularly harsh on Donald Trump.

“(Trump) is willfully ignorant about the rest of the world, about our military and its capabilities, and about government itself.  He disdains expertise and experience while touting his own – such as his claim that he knows more about ISIS than America’s generals. He has no clue about the difference between negotiating a business deal and negotiating with sovereign nations.

“All of the presidents I served were strong personalities with strongly held views about the world. But each surrounded himself with independent-minded, knowledgeable and experienced advisers who would tell the president what he needed to hear, not what he wanted to hear.  Sometimes presidents would take their advice, sometimes not.  But they always listened.

“The world we confront is too perilous and too complex to have as president a man who believes he, and he alone, has all the answers and has no need to listen to anyone. In domestic affairs, there are many checks on what a president can do; in national security there are few constraints.  A thin-skinned, temperamental, shoot-from-the-hip and lip, uninformed commander-in-chief is too great a risk for America....

“At least on national security, I believe Mr. Trump is beyond repair. He is stubbornly uninformed about the world and how to lead our country and government, and temperamentally unsuited to lead our men and women in uniform. He is unqualified and unfit to be commander-in-chief.”

Trump responded by calling Gates “a clown” and “I know more than he ever will.”  I promptly spit up my Chex Mix.

--David A. Fahrenthold / Washington Post

“Donald Trump spent more than a quarter-million dollars from his charitable foundation to settle lawsuits that involved the billionaire’s for-profit businesses, according to interviews and a review of legal documents.

“Those cases, which together used $258,000 from Trump’s charity, were among four newly documented expenditures in which Trump may have violated laws against ‘self-dealing’ – which prohibit nonprofit leaders from using charity money to benefit themselves or their businesses.

“In one case, from 2007, Trump’s Mar-a-Lago Club faced $120,000 in unpaid fines from the town of Palm Beach, Fla., resulting from a dispute over the height of a flagpole.

“In a settlement...Trump’s club made a $100,000 donation to a specific charity for veterans.  (But) Trump sent a check from the Donald J. Trump Foundation, a charity funded almost entirely by other people’s money, according to tax records.

“In another case, court papers say one of Trump’s golf courses in New York agreed to settle a lawsuit by making a donation to the plaintiff’s chosen charity.  A $158,000 donation was made by the Trump Foundation.”

You’re not supposed to be able to do this.  At best, it’s incredibly unethical.  Trump is now facing scrutiny from New York’s attorney general, who himself has severe ethics issues.

One leading tax attorney in Washington, D.C., Jeffrey Tenenbaum, who represents 700 nonprofits a year, told The Post, “I’ve never encountered anything so brazen,” describing the details of these Trump Foundation gifts as “really shocking.”

--The man who authorities say set off powerful bombs in Manhattan and at the Jersey Shore over the weekend, Ahmad Khan Rahami, 28, was charged with several crimes, including use of weapons of mass destruction and bombing a place of public use.

The bomb that went off in Manhattan’s Chelsea neighborhood was powerful enough to vault a heavy steel dumpster more than 120 feet through the air, shatter windows 400 feet from where the explosion went off, and one of the victims had multiple ball bearings removed from her body as well as bits of metal from an ear and wood shards from her neck, the criminal complaint read.  [One of 30 injured.]

Rahami had a notebook with him when he was arrested, a journal containing screeds against the wars in Iraq and Afghanistan.  He pleads that he be able to carry out his planned attacks before he is caught.  He also writes of shooting police officers and refers to pipe bombs and pressure cookers.

Rahami had been planning his attacks since at least June, acquiring many of the materials required to make the bombs through eBay.

Federal authorities, the FBI, first became aware of Rahami two years ago, when his father shared his concern with them that his son might be a terrorist.  An FBI review did not turn up anything warranting further inquiry and the matter was closed.

Rahami had extensive travels to Afghanistan and Pakistan, marrying his wife in the latter.

--Dahir A. Adan, a Kenyan-born ethnic Somali who had been in the U.S. for 15 years, was killed by an off-duty police officer at a shopping mall in St. Cloud, Minn., after Adan had stabbed nine people at the shopping center, though none fatally.

ISIS claimed responsibility, saying Adan was a “soldier of the Islamic State.”

Minnesota has the nation’s largest Somali community, according to Census figures.

--In the trial of former close associates of New Jersey Gov. Chris Christie, “Bridgegate,” prosecutors for the first time have accused Christie of knowing about the scheme to shut down lanes leading to the George Washington Bridge as it unfolded.  Today’s testimony was devastating for the Gov.  The defense will have its turn on Monday.

--A top former aide to New York Gov. Mario Cuomo, Joseph Percoco, once one of the more powerful officials in state government who was also known to be Cuomo’s closest friend, was among nine people charged by federal prosecutors Thursday in two wide-ranging bribery, bid-rigging and extortion schemes involving one of the governor’s signature programs.

The charges were detailed in an 80-page complaint filed by U.S. Attorney Preet Bharara’s office and laid out in detail the mechanics of power employed by those in Cuomo’s orbit.

Percoco is alleged to have accepted some $315,000 in bribes and other perks in exchange for using his position to perform favors for an energy company, and $35,000 more from a Syracuse-based developer.

--The Pew Research Center analyzed census data and concluded that the number of immigrants unlawfully in the U.S. has been steady at 11 million since the end of the Great Recession.  The undocumented Mexican population continues to shrink, which is being offset by a rise in undocumented immigrants from Central America, Asia and Africa.

Illegal immigration peaked at 12.2 million in 2007.

--According to the latest World University Rankings, released annually by Times Higher Education, the University of Oxford is No. 1, followed by Cal-Tech, Stanford, Cambridge, and MIT.

Until it folded in 2010, Trump University was No. 1, or so I imagine its titular head would have said.

--Researchers from Harvard and Columbia University have concluded the haze from forest fires that raged across Indonesia last year may have caused more than 100,000 premature deaths in Indonesia, Malaysia and Singapore.  The estimate is more than double that of 2006 during a similar episode resulting from fires in the South Sumatra province.

“Exposure to air pollution increases the risk of death from a number of ailments including stroke and respiratory illnesses,” said Dr. Shannon Koplitz of Harvard.

But Indonesia’s disaster agency said just 24 people had died due to the 2015 fires, 12 of whom were killed fighting the fires and 12 from respiratory problems.

The fires strained relations between Indonesia and Singapore, where air pollution levels soared, schools were closed, flights grounded.

--Facebook founder Mark Zuckerberg and his wife Priscilla Chan have pledged to “end all illness” with a $3bn donation to medical research.  The money will be designed to “cure, prevent or manage all diseases by the end of the century.”

Good luck.

--Actor Brad Pitt has asked the press to give his six children, ages 8 to 15, “the space they deserve during this challenging time,” as the world was rocked by the news this week that actress/activist Angelina Jolie had filed for divorce.

It is the end of “Brangelina,” the end of civilization as we know it.                      

[I am on Pitt’s side in this...without knowing any real facts whatsoever.]

--Lastly, a week ago Friday, in a move I learned of after posting the last WIR, the second man on the moon, Buzz Aldrin, had his old middle school in Montclair, N.J., renamed the Buzz Aldrin Middle School, which was a very cool thing.

What a great way to teach future generations of students of the greatness of one of its former citizens and students.

Today, the place is a STEM (science, technology, engineering, and mathematics) magnet school; focusing on STEM a passion of Aldrin’s, so this is even more appropriate.

Aldrin, now 86, was born in Montclair in 1930.

---

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

God bless America.

---

Gold $1341
Oil $44.59

Returns for the week 9/19-9/23

Dow Jones  +0.8%  [18261]
S&P 500  +1.2%   [2164]
S&P MidCap  +2.0%
Russell 2000  +2.4%
Nasdaq  +1.2%  [5305]

Returns for the period 1/1/16-9/23/16

Dow Jones  +4.8%
S&P 500  +5.9%
S&P MidCap  +10.9%
Russell 2000  +10.5%
Nasdaq  +6.0%

Bulls  44.6
Bears  24.3 [Source: Investors Intelligence]

Have a great week.

Brian Trumbore