Week in Review

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Week in Review

03/04/2017

For the week 2/27-3/3

[Posted 10:00 PM ET, Friday]

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Edition 934

Trump’s Speech and the Agenda

President Donald Trump’s highly-anticipated first address to Congress on Tuesday was a home run.  The tone was presidential and it’s no small reason why the Dow Jones rose 300 points the next day to cross the 21,000 level for the first time.

I was watching Fox News’ coverage and afterwards, Chris Wallace, who hasn’t been afraid to be critical of the administration’s early days, said, “I think tonight Donald Trump became the president of the United States and everyone is going to have to accept that.”

But as a Republican who did not vote for Trump, many of my ilk agreed with Charles Krauthammer, who said after, “This should have been his inaugural address and would have vastly reduced the hysteria” that followed.

Reaction to Trump’s speech was positive.  57% of those tuning in had a very positive reaction, according to a CNN/ORC poll, with nearly 7-in-10 of those who watched saying the President’s proposed policies would move the country in the right direction and almost two-thirds said the president has the right priorities, while 7-in-10 said the speech made them feel more optimistic about the direction of the country.

A CBS News/YouGov Poll had viewers strongly approving of Trump’s speech, 76%, with 24% disapproving.  [40% of Democrats at least somewhat approved.]

Prior to the speech, Trump’s top advisers focused on how he was determined to keep his campaign promises on immigration, the economy and the budget, no matter how disruptive or chaotic it may appear to those looking in from the outside.

“They might not agree with everything you do, but people will respect you for doing what you said you were going to do,” said Jason Miller, a top communications strategist on the Trump campaign who remains close to the White House.

“He’s doing something first, and there’s time for talk later,” Miller added.  “This is ultimately how he’s going to get people who didn’t vote, or people who didn’t vote for him, into the fold.

“Inside the Beltway and with the media, there’s this focus on the palace intrigue.  Out in the rest of the country, they are seeing a guy who is focused on jobs and the economy.”  [The Hill]

But now it’s about delivering, and Trump’s job will be a lot easier if he gets his approval rating from the mid-40s, pre-speech, to 55%, which is possible in succeeding polls (Rasmussen’s daily tracking poll has Trump with a 53% approval as of today).

Former Speaker John Boehner, commenting the other day on the prospects for repeal and replacing ObamaCare, said, “In the 25 years that I served in the United States Congress, Republicans never, ever one time agreed on what a healthcare proposal should look like. Not once.”

While Republicans are supposed to be hashing out a plan shortly, I bring this topic up in this segment because as I’ve been writing, it’s about the Senate.  With a slim 52-48 margin, and most bills requiring 60 votes down the road, I’ve said it’s really pretty simple.  As every third grader should know by now, it’s about those 10 Democratic senators up for re-election in 2018 in states in which Trump won by large margins. 

In the House, Republicans can afford a few dozen defections from time to time, but in the Senate, replacing the Affordable Care Act will require at least 8 Democratic votes.

Prior to Trump’s speech, Senate Minority Leader Charles Schumer told the Washington Post that Democrats could win back the Senate if Trump’s approval rating is at 35% next year.

But “If Trump’s at 55 percent, we could lose the whole ball of wax,” he said, meaning Republicans could be at 60 and then have a clear path to basically do what they want.

So, yes, the reason why I note polls and approval ratings as they come in is because it’s important, and we know how much our current president likes to follow them.

But this is also an era more so than any time in our history, partly because of the ever-present terror threat, when my dictum of ‘wait 24 hours’ was never more appropriate.

The poll numbers could fluctuate wildly over the coming months, and at 55%, you can be sure many of those 10 Democratic senators will feel the heat from their constituents to go along with many of the Republicans’ agenda items. At 40-45%, it’s easier for these same Democrats to remain in the opposition.

Opinion on the speech....

Susan Page / USA TODAY

“President Trump’s first address to a joint session of Congress on Tuesday night underscored how he has redefined the Republicans’ political base and their policy message on issues from trade to immigration to deficits to international alliances. While he struck a sunnier tone than he did in his inaugural address six weeks ago, when he had talked darkly of ‘American carnage,’ he once again warned that the nation was threatened with decline at home and threats from abroad.

“He had led a political ‘earthquake’ of disenchanted American voters in last year’s election, he boasted.  ‘They were united by one very simple but crucial demand, that America must put its own citizens first,’ he declared, ‘because only then can we truly make America great again.’

“The hour long speech was in many ways a conventional presidential address, with a laundry list of proposals, allusions to American history and tributes to American heroes.  That’s notable in part because so much about Trump’s presidency has been unconventional – and because many of his populist, nationalist prescriptions that defy Republican orthodoxy are becoming part of the GOP mainstream.

“ ‘My job is not to represent the world,’ he said as he discussed the U.S. role around the globe.  ‘My job is to represent the United States of America.’

“He had been cheered when he spoke to CPAC, a conservative conclave he once viewed as so problematic that he canceled his appearance there during last year’s campaign.  In the ornate House chamber Tuesday, Republican senators and representatives gave him repeated standing ovations, though only a handful had endorsed his candidacy before his nomination became inevitable....

“In a final sign that his takeover of the GOP, once viewed as hostile, was complete: 84% of Republican-leaning voters in the Pew Research Center poll approved of the job Trump is doing in the White House, a level of support that nearly matches what Barack Obama received among Democrats at this point in his presidency in 2009, and is a bit better than the backing Ronald Reagan was getting among Republicans in 1981

“ ‘In the first 30 days it’s hard to think about how he could have cemented his relationship with the conservative heart and soul of the party any better,’ says Matt Schlapp, chairman of the American Conservative Union, which sponsors CPAC.  ‘I think it’s indisputable that he is the political head of the Republican Party.’

“That said, strains and a spiderweb of fractures in the GOP already are apparent as Trump continues to face allegations about his campaign’s ties to Russia and gets more enmeshed in the details of the proposals he had outlined only in broad strokes before.  On Tuesday afternoon, Senate Majority Leader Mitch McConnell, R-Ky., warned that the president’s budget plan to slash State Department funding, an idea floated just 24 hours earlier, probably couldn’t pass.

“And policymakers in both parties were roiled after TV anchors emerged from a luncheon with the president to report that a ‘senior administration official’ told them Trump was open to negotiating a comprehensive immigration bill, language that typically indicates a path to legal status or even citizenship for undocumented workers.

“There turned out to be no such conciliatory language in the president’s public remarks about dealing with the estimated 11 million illegal immigrants now living in the United States, though.  Instead, Trump reiterated his pledge to build a wall along the southwestern border and introduced guests he had invited to sit in the gallery who had seen family members killed by illegal immigrants....

“In the first 40 days of his tenure, Trump has demonstrated the power of executive action, ordering limits on new regulations and laying the groundwork for more aggressive deportation of illegal immigrants.

“However, reaching his most consequential goals, including a repeal of the Affordable Care Act and an overhaul of the tax code, will require building a congressional coalition to pass legislation.  Providing some details about what he wants to see in a big health care bill, he called on ‘all Democrats and Republicans in the Congress to work with us to save Americans from this imploding ObamaCare disaster.’

“Republicans applauded that line. Democrats didn’t.”

Chris Cillizza / Washington Post

“Winners... *Donald Trump: This was the best ‘big’ speech he has given as president.  It may well have been the best speech Trump has given since he entered politics way back in June 2015.  Trump didn’t walk away from his decidedly dark vision of the current state of the country, but his overall tone was more conciliatory and optimistic than I’ve ever heard him.

“Trump hit a few very nice notes: His condemnation of threats against Jewish community centers at the start of the speech was a very nice grace note, and his honoring of the widow of the Navy SEAL killed in the recent Yemen raid was a remarkably powerful moment.

“Critics will rightly point out that several of Trump’s claims – about the rising violence in America, for example – missed the factual mark by a wide margin.  And, at times, Trump seemed to be on the verge of returning to his confrontational self – particularly when discussing immigration and the border wall.

“But, top to bottom, Trump delivered both a forceful defense of his nationalist worldview – ‘My job is not to represent the world.  My job is to represent the United States of America,’ he said at one point – and a proof point that he can be, dare I say it, presidential when the moment demands it.

“ *Congressional Republicans: Anyone who tells you House Speaker Paul D. Ryan and Senate Majority Leader Mitch McConnell weren’t a little bit worried about how Trump would do on Tuesday night – and what that would mean for his ability to rally Republicans going forward – is lying to you. Trump’s speech will go a long way to quieting the nerves of congressional Republicans and convincing them that Trump might just be capable of being the president they desperately hope he can be.  His address will serve as a validation for the likes of Ryan and McConnell, who have steadfastly supported Trump throughout the rough seas of his first month in office.”

Editorial / Washington Post

“President Trump opened his first speech to a joint session of Congress in a conciliatory tone, declaring that he had come to ‘deliver a message of unity and strength’ and proclaiming ‘a new surge of optimism’ and ‘the renewal of the American spirit.’  But the sunny tone and a laudable condemnation of recent attacks on minorities soon gave way to the same dark and false vision of the country featured in the president’s grim inaugural address – one in which borders are open, drugs are pouring in, illegal immigrants prey on law-abiding Americans and globalization has impoverished vast swaths of the nation. When it came to specific policy proposals, Mr. Trump similarly offered a few encouraging signs – but many more reasons for skepticism.

“In describing his bleak vision of a ruined United States exploited by foreigners, Mr. Trump wrote a series of checks he almost certainly cannot cash. He promised that ‘dying industries will come roaring back to life,’ that ‘crumbling infrastructure will be replaced’ and ‘our terrible drug epidemic will slow down and ultimately stop.’....

“The president called to ‘restart the engine of the American economy,’ in part by making it ‘much, much harder for companies to leave,’ which implies ruinous protectionism or other government misdirection of investment.  Mr. Trump derided foreign duties on American goods after bragging that he tore up the Trans-Pacific Partnership, an agreement that would have lowered those very duties.

“Mr. Trump called for a $1 trillion ‘program of national rebuilding,’ ‘one of the largest increases in national defense spending in American history’ and ‘massive tax relief for the middle class,’ all issues on which he could work with Democrats. But he will have to find ways to finance these priorities that do not involve hollowing out the State Department, the Environmental Protection Agency and other essential government services.

“In foreign policy, Mr. Trump mixed praise of the NATO alliance with bursts of isolationist and xenophobic rhetoric, claiming the United States had ‘defended the borders of other nations’ but not its own.  He made no mention of relations with Russia or China and offered no substantive indication of what his strategy would be for the ongoing wars in Iraq and Afghanistan.”

John Podhoretz / New York Post

“In the first 38 days of his presidency, Donald Trump seemed to struggle to find his footing.  On the 39th, he found it unexpectedly in a strong, direct and – surprise of surprises – beautifully modulated and spectacularly delivered address before Congress.

“You might think it’s grading on a curve to say such a thing about a relatively conventional State of the Union-style speech, which this speech was.  But the fact that it was a relatively conventional speech was itself a sign that Trump is surrendering to the logic and traditions of the job he now has.

“By all means, we should argue about the content.  I was arguing with it on Twitter as he was speaking.

“Elected officials, activists and wonks should vociferously debate the policies he outlined on taxes, health care, the military, trade and immigration.  But the point is that he put himself on record as president.

“He stood before the nation and said he was seeking to end the sequestration that has kept the military’s budget from growing.

“He announced he would seek a giant infrastructure bill, but chose his words carefully in a way that suggested the federal government would actually spend far less than he hinted at for a year.  (Private investors will join with Washington to get the number up to $1 trillion, he said subtly.)

“He spoke more positively about our international alliances than ever before, and did so by claiming premature victory in getting our allies to pay ‘their fair share.’  (Already?  In 39 days?  Please.)

“He kept coming back to immigration, insisting that his wall will be built (ahead of schedule, which is a strange thing to say since there is no schedule as yet) and that he would move America to a merit-based legal immigration system rather than the haphazard family-based system that has been in use for half a century.

“And he continued to preach a protectionist trade agenda that many of us believe will be far more harmful to the pocketbooks and wallets of the very people – the suffering working-class Americans – he seeks to help.

“The point is, it’s not all coming out in leaks and trial balloons and often incompetently reported stories. What he said about these and other matters is now explicit Trump administration policy, which means we can go from here. And hold him accountable.

“These were the words of the speech.  But in this case, the music was far more important – the sound, the tone.

“The word ‘I,’ his favorite, appeared infrequently.  The raging was kept to a minimum.  He spoke quietly, fluently and in a dignified manner entirely different from the raucous talk-show-caller style that has turned American politics on its head.

“He even seemed to criticize it himself in his closing words: ‘The time for small thinking is over.  The time for trivial fights is behind us.’  It seemed, stunningly, an implicit acknowledgement that many of the fights he has been conducting over the past 39 days have been trivial ones, and it is time to rise to the moment.

“The improvisatory campaign, which he has not seemed to be able to move beyond either emotionally or practically, is over.  The formal presidency has begun. Rocking the boat was the way he got elected, but the president is supposed to put his hand on the tiller and steady the ship of state.

“And, at least for the night of Feb. 28, that’s what this speech did.”

Edward Luce / Financial Times

“To say Donald Trump’s pivot to optimism came across as a character transplant would be an understatement.

“It was as though Barack Obama took to yelling expletives at passers-by or Bill Clinton fixed his gaze on his shoes. Or perhaps a close-shaven Abraham Lincoln suddenly sprung up on the podium.  With the brief exception of his acceptance speech on 9 November, this was America’s first glimpse of an upbeat President Trump. He wore it surprisingly well....

“It was by far the most presidential speech Mr. Trump has yet given. The question is whether he can stick to it for hours, days or even weeks.

“Given Mr. Trump’s record, the odds must be with the sceptics.  Leaving that aside for a moment, it is worth stressing three things.

“First, Mr. Trump’s opening forty days may have gone better had he adopted Tuesday night’s tone at his inaugural address on 20 January. That notorious moment has already gone down as the ‘American carnage’ speech after Mr. Trump’s dystopian vision of the country he was inheriting – and his xenophobic tone towards the world.

“On Tuesday, Mr. Trump executed a big change in tone possibly after a family intervention. It is no coincidence that his Twitter account went quiet for the preceding 24 hours... If good ratings are what Mr. Trump most craves – and his compulsive viewing habits would suggest that they are – it is just possible the good feedback from Tuesday night will create its own positive cycle.

“Second, tone really does matter...

“The content was just as ‘America first’ on Tuesday as it was (20 January) – with the big exception of Mr. Trump’s positive words about NATO, which were glaringly absent from his inaugural address.

“The influence of Gen. Jim Mattis, who is shaping up to be a key figure in the Trump administration, was reflected in the general’s beaming visage....

“The final aspect was the degree to which Mr. Trump’s speech showed how readily the Republican Party is now eating out of his hand.

“Forty days may be biblical shorthand for a long time.  But it is astonishing how rapidly Mr. Trump has turned a pro-free trade party into an extension of his America First movement.

“It was striking to watch Paul Ryan, the Republican speaker, and supposed fiscal conservative, applaud a speech that did not once mention the U.S. budget deficit while unveiling measures that ensured it would swell....

“In a night of unexpected lines, Mr. Trump’s most memorable was when he said: ‘The time for trivial fights is over.’

“It was a moment of high chutzpah given Mr. Trump’s penchant for picking Twitter battles with celebrities, the media, and stray pundits on TV.  He could just possibly have meant it.  That was Tuesday night. Wednesday morning will Trump retain the sunny optimism?  We shall find out soon enough.”

Editorial / Wall Street Journal

“Donald Trump’s challenge Tuesday night was to look like he was up to the Presidency after a rocky start and set a clear direction for Congress.  He succeeded more on the former than the latter, and the test now will be whether he can corral a fractious Congress to deliver in particular on tax reform and health care.

“As a presidential rookie, Mr. Trump showed he could deliver a speech on this kind of stage in a calm and measured way. We haven’t seen enough of that in his first five weeks, and in that sense on Tuesday he rose to the occasion in democracy’s center ring.  He was less tendentious than in his inaugural, and he began and ended with notes of unity and inclusiveness that have been too few in his early days.

“Mr. Trump’s tone was also less combative than in his press conferences or TV appearances, and he didn’t sound like he was delivering a moral lecture as President Obama so often did.  His blunt, plain language has been part of his political appeal, and for the most part he also avoided the defensiveness and self-focus that are unbecoming in the world’s most powerful political leader.

“Even better was a tone of relative optimism.  We say relative because his previous major speeches, including the inaugural, have included a parade of American horribles. On Tuesday he offered more than a few downbeats, including an overwrought picture of crime and a country besieged by foreign scoundrels.  But he also pointed to better days and noted that Americans have always overcome their troubles.

“The speech was less helpful in laying down clear markers for Congress on his signature reforms.  The biggest miss was on taxes, where he barely developed his case for reform beyond what he has said in the campaign. He made only a tepid argument for the supply-side benefits of tax reform and instead cast corporate tax cuts mainly as a way to ‘create a level playing field for American companies and workers.’

“This generally may reflect the indecision within his own economic team about how to proceed on tax reform. But with Republicans on Capitol Hill all over the place on taxes and spending, Mr. Trump missed an opportunity to make a better case and to set a firm timetable for action that can’t afford to go beyond 2017.

“Also striking are the President’s contradictions on the wellsprings of economic growth. He understands that tax cuts and deregulation are essential to unleashing investment at home, but his capitalist instincts stop at the border.  His invocation of the hoary old Lincoln quote about the virtues of ‘protective policy’ couldn’t be less appropriate for the modern U.S. economy that needs global markets and world-class talent to succeed.

“This is the ‘economic nationalism’ promoted by his chief strategist Steve Bannon, and it is intended to show voters that Mr. Trump is on their side.  But if it is ever put into practice it will undermine the rest of his growth agenda.

“The President was better on health care, where he offered a set of sound principles....

“Perhaps most important, he made clear that Republicans can’t merely repeal ObamaCare and hope for the best.  Too many conservatives seem to think this is all they need to do to honor their campaign promises, but the moment they repeal it they will own every premium increase and cancelled health plan.  Mr. Trump will have to keep making the case that Republicans need to improve the health-insurance marketplace or voters will hold them accountable....

“As usual for new Presidents, Mr. Trump’s main focus was domestic reform, and the foreign-policy sections offered two notable details. He was reassuring in calling for ‘a direct, robust and meaningful engagement with the world’ and he also invoked ‘American leadership.’  How that will manifest itself beyond destroying Islamic State, he did not say.

“Our guess is the speech won’t do much to move Democrats in a polarized Washington.  But perhaps it will reassure nervous Republicans who have wondered when he would focus on the hard task of governing. The speech puts him on firmer ground for that challenge.”

Finally, CNN Trump critic Van Jones...on Trump’s tribute to Navy SEAL Ryan Owens:

“There are a lot of people who have a lot of reasons to be frustrated with (Trump), to be fearful of him. But that was one of the most extraordinary moments you have ever seen in American politics, period.  And he did something extraordinary. And for people who have been hoping that he would become unifying, hoping that he might find some way to become presidential, they should be happy with that moment.  For people who have been hoping that maybe he would remain a divisive cartoon, which he often finds a way to do, they should begin to become a little bit worried tonight, because that thing you just saw him do, if  he finds a way to do that over and over again, he’s going to be there for eight years.  Now, there was a lot that he said in that speech that was counterfactual, that was not right, that I oppose and will oppose. But he did something tonight that you cannot take away from him. He became president of the United States.”

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As for the specifics of a Trump budget plan, which we heard little of on Tuesday, we do know the administration is proposing a $54 billion increase in defense spending (a 10% increase from 2016 levels), with $54 billion in equivalent cuts, including significant ones, 37 percent, to the State Department’s U.S. Agency for International Development (USAID) budget for one.  Sen. Lindsey Graham (R-S.C.) said Tuesday that Trump’s first budget would be “dead on arrival.”  “It’s not going to happen.  It would be a disaster.”

“A budget this lean would put those who serve overseas for the State Department at risk,” said Graham, “and it’s not going to happen.”

Sen. Christopher Coons (D-Del.) said, “The aid we provide to countries around the world directly advances U.S. national interests by fostering a safer and more stable world.”

Senate Majority Leader Mitch McConnell (R-Ky.) said he would oppose drastic cuts to the State Department. 

Meanwhile, the Environmental Protection Agency would lose 20 percent of its staff and see 38 programs shut down under administration plans.

As for repeal and replacing of ObamaCare, the administration expects to release its plans within the next few weeks.

When it comes to tax reform, Republicans are split over a tax proposal employing a border adjustment that would tax imports and exempt exports.  Supporters say it would help U.S. manufacturers that export most of their products.  But at the same time, retailers would pay more.

But while Republicans tussle over the specifics, Democrats, save for those discussed in my opening, aren’t going to be rushing to support any Trump plan on taxes, especially since it will cut tax rates on upper earners.

And there’s the border wall, estimated cost $21 billion, and a $1 trillion infrastructure plan, that Trump said would be “financed through both public and private capital – creating millions of new jobs.”

Bottom line, we await details, knowing spending bills need to meet a 60-vote threshold to clear the Senate.  A few Democrats are likely to back each proposal, such as on the wall, but will 8 of the 10 do so, while Mitch McConnell keeps his caucus fully in line?

And with a $20 trillion debt, as deficit hawk Rep. Jim Jordan (R-Ohio) says: “Look, we’ve got to pay for things.”

A few times a year I bring up the interest paid on the debt, now currently about $230 billion, but projected to rise to $700bn in just ten years, especially as the Federal Reserve normalizes interest rates. We’ve been catching a break in the Fed’s zero-rate regime, but that’s going to change in a big way.

That’s $700bn not going to every congressman and senator’s pet projects, or benefits for you, and that will be an explosive formula down the road.  And this week I’m not even bringing up the failure on the part of Trump to tackle entitlements...or did I just do that....

In other matters, Wednesday night, as first reported by the Washington Post, we learned that Attorney General Jeff Sessions had two conversations with the Russian ambassador to the United States, Sergey Kislyak, during the presidential campaign season last year, with Sessions not disclosing those communications at his confirmation hearing in January when asked what he would do if “anyone affiliated” with the campaign had been in contact with the Russian government.

Sessions answered he had not had communication with the Russians and a Justice Department spokeswoman Sarah Isgur Flores said Wednesday night that “there was absolutely nothing misleading about his answer.”

Even before this new revelation Democrats had said Sessions would have to recuse himself from the ongoing federal investigation into Russian involvement in the election.

Democratic House Minority Leader Nancy Pelosi accused Sessions of “lying under oath” and demanded that he resign.

Sessions said in a statement Wednesday night: “I never met with any Russian officials to discuss issues of the campaign.  I have no idea what this allegation is about.  It is false.”

Sessions, in his role as a senior member of the Senate Armed Service Committee, had more than 25 conversations with foreign ambassadors last year, and one of his two separate interactions with Kislyak was a chance encounter in a group setting at a speech, when several ambassadors, including Kislyak, approached him after.

Spokeswoman Flores insists Sessions wasn’t misleading in his confirmation hearings when he said: “I have been called a surrogate at a time or two in that campaign and I didn’t have, did not have communications with the Russians, and I’m unable to comment on it.”

Flores: “He was asked during the hearing about communications between Russia and the Trump campaign – not about meetings he took as a senator and a member of the Armed Services Committee.”

But the private conversation between Sessions and Kislyak took place in September in the senator’s office, at the height of the alleged Russian cyber campaign to upend the presidential race.

Thursday, President Trump, in an appearance in Newport News, Va., touring the Gerald R. Ford, the newest American aircraft carrier, said he “wasn’t aware” that Sessions had spoken to the ambassador, but that he believed the  attorney general had testified truthfully to the Senate during his confirmation hearing.  Trump added he didn’t think Sessions should recuse himself.

Thursday morning, Republican leaders such as Rep. Jason Chaffetz, Sen. Rob Portman and House Majority Leader Kevin McCarthy all said Sessions should recuse himself.

But Senate Minority leader Chuck Schumer was emblematic of many on his side of the aisle.  “For the good of the country, Attorney General Jeff Sessions should resign.”

At 4:00 p.m., Sessions, in a brief press conference, didn’t resign, but said he would recuse himself from any investigations related to the presidential campaign.

Sessions said he met with department ethics officials and “They said that since I had involvement with the campaign, I should not be involved in any campaign investigation.”  He added that he concurred with their assessment and thus would recuse himself from any investigation involving the 2016 campaign.  President Trump reiterated his support.

Editorial / Wall Street Journal

“The story about the connection between Russia and the Donald Trump presidential campaign is either the most elaborate cover-up of all time, or the dumbest.  More evidence for the dumb theory arrives with the news that during his confirmation hearings Attorney General Jeff Sessions didn’t tell Senators about two 2016 meetings with Russia’s ambassador to the U.S. ....

“(At) his Jan. 10 confirmation hearing, Democrat Al Franken asked Mr. Sessions what he would do if he learned that anyone affiliated with the Trump campaign had communicated with the Russian government.  ‘I’m not aware of any of those activities,’ Mr. Sessions replied, adding that ‘I have been called a surrogate at a time or two in that campaign and I did not have communications with the Russians.’

“In a written question, Democrat Pat Leahy asked, ‘Have you been in contact with anyone connected to any part of the Russian government about the 2016 election, either before or after election day?’ Mr. Sessions replied: ‘No.’

“Democrats are calling this perjury and demanding that Mr. Sessions resign, but his only certain offense is ineptitude.  A spokesman for Mr. Sessions late Wednesday defended the AG by saying, ‘He was asked during the hearing about communications between Russia and the Trump campaign – not about meetings he took as a senator and a member of the Armed Services Committee.’

“Mr. Sessions added at a press conference Thursday that he would recuse himself from any FBI investigation of the Trump campaign or Russian interference in 2016, adding that his answers in the Senate were ‘honest and correct as I understood the questions at the time.’

“This may be technically true, but it won’t wash politically amid a Beltway feeding frenzy.  Mr. Sessions knew Democrats were hunting for any Russian-Trump campaign ties, and meeting with the Russian ambassador is no offense for a Senator or campaign adviser. So why not admit the meetings up front?  Give Democrats and the media nowhere to go.

“If Mr. Sessions was trying to cover up some dark Russian secret, he’s the Jim Carrey of cover-up artists. Surely he knew someone would discover a meeting in his Senate office, which isn’t exactly a drop-site in the Virginia suburbs, and the meeting in Cleveland had multiple witnesses.  Like former National Security Adviser Michael Flynn not telling Vice President Mike Pence about his meeting with the ambassador, this is a case of dumb and dumber....

“Democrats are...demanding a special prosecutor, but what the country needs to know is what happened, not another Patrick Fitzgerald on the political make. The intelligence committees need to finish their probes as soon as possible, and they should  err on the side of making as much information available to the public without damaging innocent reputations.

“President Trump could help by denouncing Russia’s election meddling and admitting that the Kremlin is acting against U.S. interests.  He has already gone on record denying any personal campaign ties to Russia.  If there really is nothing there, then the smart play isn’t to spar with the media and Democrats but to disarm them with transparency.  A penchant for denial and obfuscation helped ruin Hillary Clinton, and we’d have thought that the people who defeated here would have figured that out.”

Friday, Russian Foreign Minister Sergei Lavrov harshly criticized the current focus on U.S. officials’ contacts with the Russian ambassador, describing the situation as a “witch hunt.”  Lavrov compared the discussions on the ambassador’s contacts to “McCarthyism.”

Wall Street

I haven’t wavered one bit, going back to last year, that the Federal Reserve will raise interest rates again at its March 14-15 meeting, even when the fed funds futures market had the odds of such a move down to 9% a few weeks ago.  So today we learned from Chair Janet Yellen herself that the Fed was likely to raise its benchmark interest rate this month, barring any unpleasant economic surprises.

In a speech in Chicago, Yellen said: “At our meeting later this month, the committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate.”

Yellen added that she expects the Fed to hike rates in coming years to maintain a neutral stance.

“On the whole, the prospects for further moderate economic growth look encouraging, particularly as risks emanating from abroad appear to have receded somewhat.”

The Fed’s policy shift began earlier in the week with other Fed governors suggesting a rate hike in March was appropriate.

Fed Gov. Lael Brainard said on Wednesday: “We are closing in on full employment, inflation is moving gradually toward our target, foreign growth is on more solid footing, and risks to the outlook are as close to balanced as they have been in some time.  Assuming continued progress, it will likely be appropriate soon to remove additional accommodation, continuing on a gradual path.”

The Fed last lifted the funds rate in December to a range of 0.5 percent to 0.75 percent, at which time it forecast three rate hikes in 2017.

The issue in the markets had been that it was originally assumed the first hike would be in May or even June, but the stock market has taken off, up some 11% on the S&P 500 since election day, Nov. 8, amid rising optimism that the Trump agenda of lower taxes, regulatory reform, and increased fiscal spending, such as on a massive infrastructure program, would be enacted, and in a reasonable time frame.

This has been the message since then.  Just as in the topic of approval ratings and the 10 Democratic senators up for re-election, it’s not more complicated than this.

But talking points are one matter.  Getting legislation passed through Congress is another and this is going to be taking up an increasing amount of space in these columns over succeeding weeks and months.

In terms of this week’s economic data that no doubt influenced Chair Yellen’s remarks, January durable goods (big ticket items) rose a better than expected 1.8%, though ex-transportation they fell 0.2%.  January personal income was up a solid 0.4%, while consumption increased 0.2%.

The February ISM reading on manufacturing was 57.7 (50 being the dividing line between growth and contraction), the best since Aug. 2014, while the services figure was 57.6.  The Chicago PMI for manufacturing was an equally solid 57.4.

And the Case-Shiller 20-city housing index for December was up 5.6% year-on-year, with Seattle and Portland leading the way at 10.8% and 10.0%, respectively.

But perhaps most important for the Fed was the fact their preferred inflation benchmark, the personal consumption expenditures index, hit 1.9%, just shy of its 2% target.  I’ve been saying the Fed was behind the curve because all the other inflation barometers that matter are solidly above 2%.  The fact the PCE is now essentially there too is significant.

Meanwhile, stocks have been soaring, with the Dow Jones hitting a record high a 12th consecutive session on Monday, before falling a bit Tuesday ahead of Trump’s speech.  The Dow has never had a streak of 13 in a row.

But I do have to inject a note of caution.  As economist David Rosenberg said in an interview with Barron’s, tightening financial conditions are not necessarily a positive, and “We are at peak autos, peak housing,” though he also said “capital spending will do better than last year.”  His point being it’s a “real leap of faith to believe that the policies coming out of Washington are going to spin the dial toward 3% or 4% GDP growth.”

[A second look at fourth-quarter GDP this week came in unrevised at 1.9% annualized. The Atlanta Fed’s normally prescient GDPNow indicator is at 2.5% for the first quarter.]

And I can’t help but note that the Bull / Bear readings I have been listing below since day one of Week in Review show a Bull reading of 63.1, the highest level since 1987.

I made the following comment last week.

“Wall Street has been priced for perfection and while I said 2017 would be an up year for stocks, from this day forward the risks are to the downside as we’ll see some disappointments on the legislative side.”

Despite this week’s continuing positive action, I stand by that, as we also never know what is going to happen on Planet Trump.

Europe and Asia

There was a slew of economic data this week in the Euro area, courtesy of Markit.

Final data on manufacturing in February came in at 55.4 vs. January’s 55.2.

Germany was at 56.8, a 69-month high; France 52.2; Spain 54.8; Italy 55.0 (14-mo. high); Netherlands 58.3 (70-mo. high); and Greece 47.7.

A final reading on services for the Euro area last month came in at 55.5.

Germany 56.1; France 55.9 (69-mo. high); Spain 57.0; Italy 54.8.

Non-euro U.K. had a manufacturing PMI of 54.6 in February, down from January’s 55.7, and a services reading of 53.3, down from 54.5; still robust figures but the prospects for growth are coming down with rising inflation and reduced spending power among consumers.

Chris Williamson, chief economist, IHS Markit

“The final PMI numbers paint a bright picture of a eurozone economy starting to fire on all cylinders.

“Growth accelerated in all of the four largest member states in February to suggest an increasingly sustainable and robust-looking upturn.  Both France and Germany look to be on course to grow by 0.6% in the first quarter, with Spain set for at least a 0.7% expansion. Italy is lagging behind but is nevertheless enjoying its best growth for over a year, likely to see GDP rise by 0.4% in the first quarter....

“The acceleration in growth, employment and  prices signaled by the surveys suggests that analysts will begin to pull forward their expectations of when the ECB could begin tapering its stimulus.  However, it seems like central bank rhetoric will remain dovish in coming months, focusing on the headwinds that the economy faces in 2017, and specifically the need for policy to remain accommodative in the face of political uncertainty.”

A flash reading on inflation in the eurozone for February was at 2.0%, up from 1.8% in January and compared with -0.2% in February.  Ex-food and energy, the core rate for last month was 0.9%. [Eurostat]

The unemployment rate in the eurozone for January was 9.6%, unchanged from December and down from 10.4% in January 2016; still the lowest since May 2009.

Germany came in at 3.8%*, France 10.0%, Italy 11.9% (vs. 11.6% Jan. 2016), Spain 18.2% (down from 20.6% a year earlier), and Greece 23.0% (November).  Ireland 6.7% vs. 8.5% Jan. ’16.  The U.K. is at 4.7%. [Eurostat]

You still have sky-high youth unemployment rates in the likes of Greece, 45.7% (Nov.); Italy, 37.9%; and Spain, 42.2%.

*The German government calculates the jobless rate differently and pegs it at 5.9%, still the lowest level since reunification.

Eurobits....

--Retail sales in Germany were up 2.3% in January year-on-year, according to the national statistics bureau (Destatis), while inflation rose to 2.2% in February, the highest since Aug. 2012.

--Spain’s inflation rate hit 3% yoy, according to the National Statistics Office.

--Inflation in Italy rose to 1.6% yoy last month, vs. 1.0% in January.

--There were more twists and turns in the French presidential election, as investigators searched the home of scandal-hit center-right candidate Francois Fillon, allies leaving him in droves.  Fillon has refused to stand aside after he revealed judges will place him under formal investigation later this month over allegations that he illegally employed his British wife and children at taxpayers’ expense.  [He is being called in to speak to judges on March 15; the first round of the elections is April 23.]

More than 20 center-right MPs and councilors publicly withdrew their support for him and key members of his campaign team quit.  20 mayor also urged him to step down.

Former prime minister Alain Juppe is now poised to replace Fillon, Juppe having finished second in the party primaries, though Juppe said he would only step in if Fillon asked him to do so.

An opinion poll indicates 3/4s of voters would prefer Fillon withdraw.

Meanwhile, the European Parliament has lifted far-right leader Marine Le Pen’s immunity from prosecution after she tweeted pictures of so-called Islamic State violence.  She has been under investigation in France for posting three graphic images of ISIS killings in 2015, including the beheading of American journalist James Foley.  Her position as a member of the European Parliament has so far shielded her from prosecution.

Le Pen has dismissed efforts to lift her immunity as “part of the system that wants to stop the French people’s candidate that I am.”

The allegation goes back to December 2015, when she tweeted the pictures in response to a journalist who drew an analogy between the National Front and Islamic State.

Fillon and centrist Emmanuel Macron were both polling around 20% to Le Pen’s 27-28%, before Fillon’s latest troubles, while a Figaro/LCI poll last Sunday had Macron defeating Le Pen in a run-off, 58% to 42%.

But...a new Odoxa poll on Friday had Macron at 27%, Le Pen 25.5% and Fillon 19%.  More significantly, if Juppe replaced Fillon, he would poll 26.5, Macron 25, and Le Pen 24, meaning she would be eliminated.

--In the Netherlands, Dutch Prime Minister Mark Rutte called on voters to reject Geert Wilders’ Freedom Party, with the election in less than two weeks, March 15; Rutte calling on the people to reject the spread of populism and send a message to several Western democracies.

“The Netherlands now has the chance to stop the dominoes that keep falling in the U.K. and in the U.S., and that might fall in Germany, France and Italy.  We will stop this new trend.”

The latest poll has Rutte’s Liberals and Wilders’ anti-Islam, anti-EU Freedom Party tied at 22%.  [Another one issued this week had the Liberals at 16.3% and the Freedom Party at 15.7%, still 1-2.]

Jeroen Dijsselbloem, the country’s finance minister and a member of the Labor Party, said in a radio interview that Wilders has created a “poisonous atmosphere...in which an entire population is characterized as a problem, an atmosphere where freedom of religion is taken away from a segment of the population.”

As I’ve written, the Freedom Party is incapable of forming a new government because none of the other leading parties have said they would work with Wilders, but it also might mean the new government could be a coalition of as many as six separate groups to gain a 76-seat majority in the 150-person lower house of parliament.

--On the Brexit front, Prime Minister Theresa May is determined to push ahead and trigger Article 50 within the next two weeks, launching the start of formal negotiations on exiting the European Union.

The House of Lords voted to amend the Brexit bill (358-256) to force the U.K. government to guarantee the rights of EU citizens living in Britain, but Ms. May is confident the House of Commons will reject the amendment later this month.

The prime minister has already said she would protect the rights of the three million EU citizens living in the U.K., but will only guarantee this once the EU has granted reciprocal rights to the 900,000 Britons living in member states, which only makes sense.

Bottom line, the Brexit negotiations, particularly on issues of “equivalence,” such as in the financial sector, are going to be a bitch.

--Last week I mentioned that Poland could benefit from Brexit in terms of gaining 30,000 jobs in the banking sector.  Now the government is looking at the potential of 200,000 Poles overall returning from the U.K. owing to the red-hot job market in Poland.  Corporations there are having trouble finding skilled workers amid a worsening demographic situation.

The government has compensated by granting temporary work permits to foreigners, with Ukrainians taking a record 1.3 million last year.

--Finally, back to France, French President Francois Hollande fired back at Donald Trump after in his CPAC speech last Friday Trump said a friend, Jim, had told him “Paris is no longer Paris” after attacks by Islamic militants.

“There is terrorism and we must fight it together,” said Hollande.  “I think that it is never good to show the smallest defiance toward an allied country. I wouldn’t do it with the United States and I’m urging the U.S. president not to do it with France.”  Oui oui!

Turning to Asia....

China’s official manufacturing PMI for February was 51.6 vs. 51.3 in January, while the services reading for last month was 54.2 vs. 54.6.  The private Caixin manufacturing figure was 51.7 vs. 51.0; services 52.6 in February vs. 53.1.  Solid data.

But on February 28, President Xi Jinping said China must “prevent and control financial risks” and improve regulation to keep systemic risks at bay, sending a message that deregulation was now out of favor; part of a sweeping campaign to rein in risks deemed to pose a threat to the nation’s economy.

In Japan, the manufacturing PMI for February was 53.3, a 35-month high, with services at 51.3, though employment growth in the service sector was the strongest in 45 months.

Retail sales in January in Japan were up 0.5% month-on-month, an annualized pace of 1.0%, while industrial production for the month was down 0.8%, though the annualized pace was up 3.2%.

Meanwhile, core inflation returned to Japan for the first time since 2015, with consumer prices, ex-fresh food, rising by 0.1% in January over the same month a year earlier.  Price pressures are finally picking up again with the recovery in global commodity prices and the general slide in the yen since the election of Donald Trump.  The Bank of Japan is still hopeful its 2% inflation target will be hit at some point in 2018.

Headline consumer prices were up by 0.4% on a year ago.  Ex-food and energy, the figure was 0.2%.

Unemployment fell to 3.0% in January.

Taiwan’s February PMI on manufacturing was 54.5, down from 55.6 in January.  South Korea’s manufacturing reading was 49.2 last month, up from 49.0.  The political crisis there isn’t helping.

And across Asia, despite the generally solid tone, concerns remain over rising protectionism.

Street Bytes

--Stocks rose a fourth straight week, with the Dow Jones gaining 0.9% to 21005, having set a new all-time record of 21115 on Wednesday.  The S&P 500 rose 0.7% and Nasdaq 0.4%.

For the month of February, the Dow was up 4.8%, the S&P 3.7% and Nasdaq 3.8%.

Since the election, the S&P is up 11.4%.

--U.S. Treasury Yields

6-mo. 0.82%  2-yr. 1.31%  10-yr. 2.48%  30-yr. 3.07%

I wrote last week that the sudden rally in Treasuries, that saw the 10-year close the week with a yield of 2.31%, “really made no sense.”  I was right.  It didn’t.

--Oil prices fell a little this week as U.S. crude stockpiles rose to a new high, increasing by 1.5 million barrels to 520.2 million, according to the Energy Information Administration.  The U.S. imported more from Saudi Arabia, Iraq and Canada, while domestic production rose above 9 million barrels for the second straight week.  At the same time, domestic demand declined 6% from a year earlier.

As OPEC has feared, growing U.S. production is helping to offset the cartel’s output cuts implemented in January after last year’s deal was struck.

--Auto makers posted mixed U.S. sales in February, as dealers try to reduce gluts in their lots with steep discounts amid sagging demand.

J.D. Power said inventories are swelling, with vehicles taking an average of 70 days to sell, a level not seen since 2009.

GM’s sales rose 4.2%, Ford’s declined 4%, and Fiat Chrysler’s slid 10% over Feb. 2016.

Toyota’s dropped 7.2%, while Nissan’s rose 3.7%, and Honda’s increased 2.3%.

--Snap, a company that lost more than $500 million last year, while user growth for its Snapchat disappearing-message app has slowed, saw its shares surge 44 percent in their first day on the New York Stock Exchange Thursday.  Heck, the shares issued don’t even have any voting rights, leaving control in the hands of the company’s founders, who can retain that power for years even after leaving Snap.

By the close the first day, the company was valued at $34 billion, more than three times the value of Twitter, and equal to that of Deere & Co. and Norfolk Southern, which is beyond absurd.

Co-founders Evan Spiegel, 26, and Bobby Murphy, 28, were worth about $5.4bn each.

Then on Friday, the stock closed up another 11%.

Millennials check the Snapchat app on average more than 18 times a day.

--Amazon’s cloud service suffered a major outage on Tuesday, with multiple websites and apps using Amazon failing as its simple-storage service, known as S3, had difficulty sending and receiving client data for several hours.  Some of Amazon’s 1 million clients use the service, including GE, Snap, and the Centers for Disease Control and Prevention.

Many of the problems were on the East Coast.  Not good for PR.  The company said later it was human error.  A typo. 

--Targets shares plunged Tuesday, 12%, after the company gave a downbeat forecast for earnings this year and said sales and profit declined in the fourth quarter. The decline erased nearly all the gains since CEO Brian Cornell took the reins in August 2014 in the wake of Target’s massive customer-data breach.

Same-store sales fell 1.5%, and the company predicted they would fall this year.  Overall sales fell 4.3% to $20.69 billion.

Cornell said 2017 would be “a year of investment” as Target would spend $7 billion over the next three years to improve its stores, launch exclusive brands and develop its digital capabilities.  On this last item, it is way behind its competitors, with online sales just a fraction of overall revenue.  And Target said it was cutting prices.

--Lowe’s Cos. posted better than expected revenue and profit growth and its shares rose strongly.  During the fourth quarter, same-store sales grew a solid 4.2%, well above forecast, with comp sales in the U.S. up 5.1%.  Revenue overall rose 19% to $15.78 billion, while earnings rose to $663 million.

For 2017, Lowe’s said it expects to add 35 stores and grow comp-store sales by 3.5%. As of Feb. 3, it operated 2,129 stores, up 15% from last year.

--Shares in Best Buy tumbled after the consumer electronics retailer reported an unexpected drop in fourth quarter sales and forecast further declines.  Same-store sales fell 0.7% in the three months to the end of January, when a slight increase had been forecast.  Overall revenue also fell short.

Chairman and CEO Hubert Joly said that one of the issues was “weaker-than-expected demand in the gaming category.”

The company is forecasting same-store sales will fall 1 to 2 percent in the current fiscal first quarter.

--Shake Shack reported same-store sales rose 1.6% in the fourth quarter, slower than the 2.9% rise recorded in the third quarter, the fifth consecutive quarter of cooling sales growth.

--Shares in Monster Beverage rose sharply after the company reported revenues for the three-month period ending December 31 were nearly 17% higher than a year earlier and far better than expected.  Profits, though, fell a little shy.

It will be interesting going forward to see if Monster gets a boost from its sponsorship of NASCAR.  I’m guessing they will.  [Monster’s deal is a steal for the company.  And the Monster girls are...well, perhaps we should move on...]

--Wells Fargo CEO Tim Sloan and seven other high-ranking executives will not get cash bonuses for 2016 and will lose some stock compensation, the company reported this week. This comes a week after Wells fired four lower-level executives over the bank’s sales-practices scandal.

Sloan and the other seven will lose out on about $32 million in pay, according to the company.  Earlier, Wells revoked bonuses and stock awards worth an estimated $60 million for former Chairman and CEO John Stumpf and former head of retail, Carrie Tolstedt.

--According to data from Boston Consulting Group, banks globally have paid $321 billion in fines since the financial crisis in 2008, and the total is bound to increase in the coming years as European and Asian regulators catch up with the aggressive stance taken in the U.S.  [Bloomberg]

--Apple’s upcoming iPhone will reportedly feature a curved screen – and will cost about $1,000.  Holy Toledo.  The phone is rumored to be called either iPhone 8 or the iPhone X and will mark the 10th anniversary of the device.  There is also a story that the new phone will include wireless charging.

Apple shares were helped some by the disclosure on Monday by Warren Buffett that Berkshire Hathaway had doubled its stake in the company.

--Speaking of the 86-year-old Buffett, in his annual investor letter last weekend, he said of share buybacks: “Some people have come close to calling them un-American – characterizing them as corporate misdeeds that divert funds needed for productive endeavors. That simply isn’t the case.”

Well it is financial engineering, Warren.  Nothing illegal, mind you, but a way to ensure you meet or exceed earnings expectations, for one.

But Buffett does say: “Both American corporations and private investors are today awash in funds looking to be sensibly deployed.  I’m not aware of any enticing project that in recent years has died for lack of capital.”

And Buffett laid into the professional money management industry, while praising Jack Bogle, founder of Vanguard and popularizer of low-cost index funds.

“When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients,” Buffett wrote.  “Both large and small investors should stick with low-cost index funds.”

About a decade ago, Buffett challenged asset manager Protégé Partners to pick a group of hedge funds that it thought would beat an S&P 500 Index fund over 10 years.  Last Saturday, he gave an update: The bundle of hedge funds had compound annual returns of 2.2 percent in the nine years through 2016, compared with 7.1 percent for the index fund.  And a majority of the hedge funds’ gains were eaten up by management fees.  [Bloomberg]

--Shares in Caterpillar Inc. fell sharply on Thursday as officials from the Commerce Department, IRS, FDIC and Illinois State Police raided the company’s corporate headquarters in Peoria, Illinois, seeking evidence related to exports and a Swiss subsidiary as part of a criminal probe.

Caterpillar has long fought government allegations that it owed taxes on profits from parts shipments from a unit based in Geneva.

--Barnes & Noble had a same-store sales decline in its fiscal third quarter of 8.3%, as the company blamed both poor foot traffic and lack of a CD blockbuster like last year’s “25” by Adele. And because the weak sales trend has continued into the post-holiday period, B&N is now forecasting comp-store sales will drop 7% this year, worse than an earlier forecast.

Now if Adele would just hit the studio and put together an album, “26”, in 3 or 4 days, like the British Invasion groups used to do, B&N would be saved.

--Southern California home prices rose 5.4% in January from a year earlier to a four-year high, according to CoreLogic.  The median price in the six-county Southland rose 5.3% to $455,000, which is below the $465,000 level reached in June, a nine-year high.

[The median price in Orange County is $635,000.]

--South Korean prosecutors indicted Samsung’s de facto leader Lee Jae-yong on multiple charges, including bribery.

The 48-year-old vice chairman of Samsung Electronics Co. was arrested Feb. 17 but he had not formally been charged until a Tuesday deadline.  Four other Samsung executives were indicted on the same charges, which also include embezzlement and hiding assets abroad.

As I’ve written in the past, the case against Mr. Lee is in connection with about $37 million in payments to President Park Geun-hye, who was impeached and whose future lies in the hands of the country’s Constitutional Court.

Samsung acknowledges the payments but denies they were for political gain.

--Ray Dalio of Bridgewater Associates is stepping down as interim co-chief executive officer of the world’s largest hedge fund next month, but his star hire, Jon Rubinstein, one of the creators of the iPod, will leave after 10 months as co-CEO.

Dalio conceded his plan to bring in an industry outsider – a high-profile Silicon Valley executive – failed, Dalio saying the two mutually agreed he was “not a cultural fit for Bridgewater.”

So for the time being, President David McCormick and Eileen Murray, both of whom have been with Bridgewater eight years, will be co-CEOs while Dalio will be a co-chief investment officer.

Bridgewater is known for its strange culture, with employees monitored heavily and taped while being encouraged to criticize each other.  “You blow!”  “No, you blow!” “Oh yeah?”  “Yeah!”  “Well the Knicks suck!”  [StocksandNews’ hidden microphone, borrowed from Russian Ambassador Kislyak, caught this exchange.]

--Australia’s economy gained momentum in the last quarter of 2016, allowing the economy to extend its 25-year streak without recession, which brings it one quarter short of the record set by the Netherlands between 1982 and 2008.

Australia had contracted in the third quarter, but a 1.1% rise in the fourth pulled the annual figure back to a 2.4% growth rate.

Recession is defined as two consecutive quarters of negative growth and Australia hasn’t seen this since June 1991, despite the fact the economy is so dependent on resources such as iron ore and coal, the nation’s biggest exports, where demand can be volatile, though it has ridden the boom in China. [BBC News]

--India said its economy expanded 7% in the fourth quarter vs. the same period in 2015, down from 7.4% in Q3.

China gets criticized for its phony numbers when it comes to reporting GDP, but India is said to be even worse.  The government expects full-year growth of 7% for the current fiscal year, which ends in March.

--Brazil’s manufacturing PMI for February was 46.9 vs. 44.0 in January, a 13-month high but the 25th consecutive month below the 50 growth/contraction line.

--McDonald’s announced a new initiative where by the end of the year, customers will be able to order a Big Mac and fries via a mobile app – and have it delivered to their car curbside.

Customer traffic has been down for almost four years and McDonald’s is seeking ways to bring customers back.

Drive-thrus now account for 70% of fast-food sales, but McDonald’s has been way behind in adapting to the digital economy and it shows in the congestion in its drive-thrus.

McDonald’s is also experimenting with different delivery models, including partnering with third parties.

--Sterling Jewelers, the company that owns Kay Jewelers and Jared the Galleria of Jewelry, has been accused of fostering a culture of sexual harassment and discrimination against its female employees.

The company has been in an arbitration battle with hundreds of former employees for the better part of a decade, with women alleging they were pressured into sex for advancement or protection, and routinely paid less than men.

While the stores are known for their romantic commercials, “Every kiss begins with Kay,” the depositions and arbitration documents describe a hostile and abusive environment.

When you read some of the documents, it is beyond disgusting.  Manager meetings saw some of the worst behavior, and when women filed complaints with human resources, HR often never replied.

--Yes, quite an ending to the Oscars last Sunday night.  I told readers of Bar Chat that I surprised myself in watching the entire telecast, and then as soon as Best Picture was announced I turned it off and went to bed, not knowing the drama that was about to unfold had I kept the TV on another minute.

Only 32.9 million viewers watched the telecast, according to Nielsen, down 4 percent from 2016, and the second-lowest rated Academy Awards telecast since 1974. Only 2008, at 32 million, had lower ratings.

Worrisomely to ABC executives, and advertisers, the 9.1 rating among 18- to 49-year-olds was off 13 percent from last year, which is a huge decline in things of this sort.

Oscar Sunday generates more ad revenue for ABC than any other day of the year, according to Kantar Media.  Last year the network brought in $102 million in ad revenue, which jumped to $115 million when including its pre-Oscars show.  ABC recently signed a decade-long extension to do the broadcast.

The two PricewaterhouseCoopers executives responsible backstage were fired from the show.  No word yet on whether PwC will retain the overall job of tabulating and distributing the outcomes going forward. 

I’m available. I have a good work ethic and as I don’t care about these people, won’t want to document my evening in the least.

--I’m a fan of Subway and a frequent buyer of their turkey sub.  But Subway was in the news this week for using chicken that was only 50 percent actual chicken DNA – and is chock full of soy filler, according to lab research in Canada.

By contrast, grocery store chicken weighed in at 100 percent.

So Subway chicken is really half vegan.

The oven roasted chicken and chicken strips are found in the restaurant’s popular wraps.

The same lab tested other fast food restaurant chicken and found higher percentages of poultry DNA as, for example, McDonald’s Country Chicken weighed in at 84.9 percent, while Wendy’s Grilled Chicken Sandwich scored 88.5 percent.

No word on Subway’s turkey and we have not been able to subpoena any said birds to put them under oath.  [You know, turkeys and chickens are smarter than we’ve been giving them credit for since the first Thanksgiving...really...we just don’t let them grow up enough to prove it.]

For its part, Subway issued a statement saying its oven roasted chicken contained 1% or less of soy protein to help “stabilize the texture and moisture.”

And isn’t that what it’s all about, boys and girls?

--Meanwhile, I’ve been eating probably too much Domino’s Pizza lately, but when I see a decent deal, like a large pie with two toppings for $5.99, I scarf it up...especially since Domino’s quality is far better these days.

Domino’s announced results for the quarter and fiscal 2016, with domestic same-store sales up a whopping 12.2% versus the year-ago period, and 10.5% for the full year, which is outstanding.  International same-store grew 4.3% during the quarter and 6.3% for the full year.

It was the 92nd consecutive quarter, 23 years, of positive international comp-store growth and 23rd consecutive quarter of positive domestic sales growth.

Domino’s added 171 net new domestic stores in 2016 and 1,110 net new stores internationally.

Back to McDonald’s, Domino’s is light years ahead of them on the digital side.

Domino’s CEO Patrick Doyle has done an outstanding job.

--Barack and Michelle Obama agreed to a book deal with Penguin Random House, two books, one written by each of them.  The reported figure is $60 million! This is beyond absurd. 

Penguin Random House CEO Markus Dohle said in a statement: “With their words and their leadership, they changed the world, and every day, with the books we publish at Penguin Random House, we strive to do the same.”

Well, I can tell you the president changed the world for the worse.  Just go to Aleppo.

Bill Clinton’s 2004 autobiography “My Life” was snapped up for $15 million and George W. Bush’s memoir “Decision Points” yielded $10 million.

Obama’s “The Audacity of Me Running For President” raked in $8.8 million as a bestseller in 2006, according to Forbes.

--California’s snowpack is at historic levels in the Sierra Nevada mountains, and up and down the entire range, at an average of 185% above normal. With the Sierra providing one-third of the state’s water when it melts in the spring and summer, it’s the best evidence the state is effectively out of the drought.  The southern part of the range is 201% of average for this date and this was the area still said to be in drought.

It’s the wettest winter in California in at least 20 years, and in some parts the rainiest in history, according to state data.  [Los Angeles Times]

--We note the passing of Paul Kangas, 79.  Kangas helped pioneer television’s first daily business news show, joining the new “Nightly Business Report” as a stock commentator on a South Florida public television station, WPBT, in 1979.  At the time there was no program like it.  Kangas became a co-anchor in 1990, as “Nightly Business Report” eventually spread to 250 public television stations.  He retired in 2009.

His signature signoff was, “Wishing all of you the best of good buys.”

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey: Lots of items this week.  But on the peace talks front in Geneva, I’m going to limit discussion because the mood and attitudes seemingly change every hour.  Russia accused the main Syrian opposition group of sabotaging the process on Thursday, while Western nations, Arab states and Turkey blamed Russia for breaking the ceasefire on numerous occasions.

Russia has been holding parallel negotiations in Kazakhstan with Turkey and Iran on how to reinforce the ceasefire.

The fact is, violence has been escalating since the onset of talks and the warring sides are no closer to real negotiations. 

On the battle front, Syrian government forces bombarded a rebel-held area in Damascus’ outskirts, with fighting between the two sides killing at least 13 Syrian soldiers and an unknown number of rebels, according to the Syrian Observatory for Human Rights.

Last weekend, suicide attacks and battles around Homs, Syria’s third city, killed 100, including a close confidant of President Bashar Assad. An al-Qaeda affiliate claimed responsibility.

The Turkish army and allied Syrian rebel groups on Wednesday attacked villages held by U.S.-allied militias in northern Syria, where Turkey is trying to carve out a buffer zone.

Wednesday, Russian warplanes “mistakenly” bombed U.S.-backed fighters in northern Syria, with the Russians observing ISIS fighters in the area and wrongly assuming that others in the vicinity were also from Islamic State.

Syrian forces, with Russian air support, recaptured the ancient city of Palmyra from Islamic State militants, after they had taken it a second time last year.

But in the most significant development, al-Qaeda confirmed on Thursday that a U.S.-led coalition drone strike had killed senior leader Abu al-Khayr al-Masri, in a joint statement issued by the militant group’s Maghreb and Arabian Peninsula branches.  A Hellfire missile fired by a CIA drone killed al-Masri late on Sunday while he was riding in a car near the northwestern Syrian city of Idlib, a U.S. intelligence official said on Wednesday.

I couldn’t believe how neither the news networks, nor the Trump administration, made more of this highly significant action.  Al-Masri was second-in-command to al-Qaeda’s leader Ayman al-Zawahiri and a member of its shura council.

Separately, the U.S. and Russia clashed at the U.N. Security Council over a Syria sanctions resolution, with the U.S. accusing Russia of covering for Syria’s use of chemical weapons, while Russia accused the U.S. of using sanctions to try to topple the Assad regime.

New U.S. Ambassador Nikki Haley said, “It is a sad day on the Security Council when member states start making excuses for other member states killing their own people.”

China also opposed the sanctions resolution drafted by France, the U.K. and the U.S.

In Iraq, the battle for Mosul continues as ISIS has offered fierce resistance.  Thousands have been fleeing the fighting in the western part of the city (the eastern half now under Iraqi Army control), and some ISIS members have been discovered among the refugees, though the fighters are staying in the battle. For example, those working for ISIS, such as cooks, are leaving when an opportunity presents itself but the hard-core element appears ready to fight to the death.

Some 750,000 civilians are still believed to be trapped in western Mosul.

An estimated 300 Islamic State militants have killed themselves in suicide attacks in Mosul since the offensive to recapture the city commenced in October.

Yemen: The United States carried out extensive air strikes in Yemen targeting al-Qaeda in the Arabian Peninsula (AQAP), in the first operations since a January 29 raid by U.S. Special Forces against the group that resulted in the death of Navy SEAL Ryan Owens. 

But Friday, Reuters reported residents in Yemen said U.S. soldiers were fighting two separate gun battles with al-Qaeda militants, supported by heavy aerial bombardment.  If confirmed, it would be the first time Washington has deployed ground troops in the country since the operation in January.

AQAP boasts one of the world’s most feared bomb makers, Ibrahim Hassan al-Asiri, and the group has been taking advantage of the civil war pitting the Iranian-backed Houthis against the Saudi-backed government of President Mansour Hadi to try to widen its control in the impoverished nation.  More than 10,000 have died in the fighting, according to the U.N., and the war has created a humanitarian crisis, with widespread food shortages and limited medical facilities.

Afghanistan: Two suicide bombers struck security targets in the capital of Kabul, less than an hour apart on Wednesday, killing at least 16 and wounding dozens.  It’s assumed the Taliban was responsible.

I was reading the latest issue of Army Times and there was a story on Afghanistan, a 15-year-old war that threatens to become a 20-year one.

About 8,500 U.S. troops and another 5,000 from foreign allies are still stationed there, even though the official combat mission ended in 2014.

So today, lawmakers continue to spar over the decisions Barack Obama made.  Sen. John McCain, Chairman of the Senate Armed Services Committee, said recent decisions on troop levels and involvement have “tied the hands of our military in Afghanistan” and endangered both deployed troops lives and U.S. national security.

“Instead of trying to win, we settled for just trying not to lose,” said McCain.  “Time and time again, we saw troop withdrawals that seemed to have a lot more to do with American politics than conditions on the ground... Afghans are in the fight. They are not looking to us or anyone else to do their fighting for them. At the same time, they want and need our continued assistance. It is in our interest to help our Afghan partners become capable of standing on their own.”

There are 350,000 in the Afghan National Army, but the military’s 17,000 special forces personnel conducted 70 percent of all offensive operations in 2016.

Army Gen. John Nicholson, commander of United States Forces Afghanistan, said if the U.S. pulled out, it could result in new terrorist attacks against the American homeland.

“We need to say on top of it, because of the confluence of 20 different terrorist groups in the region,” he said.

But President Trump has shown no desire to stay in Afghanistan.  Defense Secretary James Mattis is due to visit the country soon.

Nearly 2,400 U.S. soldiers have been killed in fighting here since 2001.

And related to the above, Andrew deGrandpre and Shawn Snow had some of the following in a separate piece for Army/Military Times.

“The American military has failed to publicly disclose potentially thousands of lethal airstrikes conducted over several years in Iraq, Syria and Afghanistan, a Military Times investigation has revealed.  The enormous data gap raises serious doubts about transparency in reported progress against the Islamic State, al-Qaeda and the Taliban, and calls into question the accuracy of other Defense Department disclosures documenting everything from costs to casualty counts....

“Most alarming is the prospect this data has been incomplete since the war on terrorism began in October 2001.  If that is the case, it would fundamentally undermine confidence in much of what the Pentagon has disclosed about its prosecution of these wars, prompt critics to call into question whether the military sought to mislead the American public, and cast doubt on the competency with which other vital data collection is being performed and publicized. Those other key metrics include American combat casualties, taxpayer expense and the military’s overall progress in degrading enemy capabilities.”

For example, an official with CENTCOM told Military Times, “It is really weird.  We don’t track the number of strikes from Apaches,” the AH-64 attack helicopter having been used prolifically in combat the past 15 years.  The official, who spoke on condition of anonymity to freely discuss internal procedures, said:

“I can tell you, unequivocally, we are not trying to hide the number of strikes. That is just the way it has been tracked in the past.  That’s what it’s always been.”

Russia: Deputy Foreign Minister Sergei Ryabkov said in a statement Tuesday that Russia’s adversaries in the U.S. Congress are preparing an “economic blockade” against Russia, by pushing a bill that would prevent President Trump from easing sanctions against Russia.

“They are going out of their way to trample out any hope of improving our relations,” Ryabkov said.  [Moscow Times]

Editorial / Bloomberg News

“Say this for Donald Trump: He is forcing Europeans to think more seriously about how to protect and defend their continent.

“The U.S. president’s disparagement of NATO goes too far, and his focus on getting Europeans to spend more on defense is misplaced.  That said, European nations have for too long treated their defense budgets as an extension of social policy.  Expenditure on personnel is more than 50 percent of military spending in nearly all EU countries, compared with about a quarter in the U.S.

“Meanwhile, spending on equipment and R&D is barely 20 percent in Europe, compared with around 30 percent in the U.S., and only about 22 percent of equipment procurement is collaborative....

“Things may now be changing.  Between Brexit and Trumpism, European nations may be finally getting realistic about the urgency of preparing for threats from both within and outside the continent.  NATO’s intervention in Libya showed that European nations are willing and capable of leading such missions....

“As Europeans consider any changes, their focus should be less on whether NATO members meet the alliance’s requirement for overall defense spending and more on how and where they spend their money. The better Europe is able to defend itself, the better off it – and the U.S. – will be.”

Regarding the 2 percent of GDP NATO target, German Chancellor Angela Merkel said last weekend that Germany needed to fulfill its commitment.

“Obligations have to be fulfilled and others in the world will demand that of us, and I think they’re right that Germany must fulfill its obligations too.”

China/South Korea/North Korea:

South Korean officials fear that China’s verbal offensive against Seoul’s planned missile-defense system will include corporate boycotts, with a report of retaliation sending shares in South Korean retailers sharply lower.  Yup, the economic nationalism I’ve been talking about for years that threatens the likes of Apple on down.

For now, Beijing is urging travel agencies to stop selling tour packages to South Korea, part of a campaign to punish Seoul for its plans to deploy the U.S.-built Terminal High-Altitude Area Defense, or Thaad, to help defend against North Korea.

Wednesday, one of South Korea’s big conglomerates, Lotte Group, approved a land swap that will allow a golf course to be used to deploy the antimissile system.

Then, as the Wall Street Journal’s Jonathan Cheng reported, on Thursday, “the website for Lotte’s duty-free shopping website was crippled for a few hours by a denial-of-service attack.”

“That same day, an online retailer that’s part of Ruixiang Group said it wouldn’t sell Korean goods and would destroy all Korean Lotte products.”  And there were more examples of this.

An editorial in the People’s Daily called Thaad a “Pandora’s box.”  A Chinese Foreign Ministry spokesman said on Thursday that China welcomes foreign companies as long as they follow the law.

Another Communist Party mouthpiece, the Global Times, said in an editorial on Tuesday that Lotte should be shown the door in China, and that South Korean cars and cellphones should be targeted as well.

Separately, various Chinese officials are warning about trade frictions between the U.S. and China, following President Trump’s accusation in his address to Congress that China is causing massive American factory closures.

Huo Jingguo, vice-chairman of the Ministry of Commerce’s China Society for WTO Studies, said Beijing should be mentally and practically prepared for the coming trade friction with the U.S., which was only a matter of time and scale.

Wang Huiyao, an adviser to the State Council, said, “China’s contribution to the creation of new U.S. jobs and to maintaining low consumer prices for years has been ignored by (Trump).”  [South China Morning Post]

But thus far Trump has displayed significant flexibility in terms of dealing with China, including reaffirming the U.S. commitment to the one-China policy, which he originally indicated might be up for negotiation. 

Meanwhile, the White House is formulating a strategy on North Korea that includes the use of military force and/or regime change as part of its attempts to blunt Pyongyang’s nuclear-weapons threat.

Chinese and North Korean leaders held their first talks in nearly a year in Beijing this week, after China curtailed coal imports from North Korea, a big blow to the regime of Kim Jong Un.

We also learned this week that Kim had executed five senior security officials for making false reports, according to South Korea’s Yonhap news agency.  The five were killed with anti-aircraft guns, the National Intelligence Service said in a briefing to lawmakers.  The ‘false reports’ apparently were unrelated to the assassination of Kim Jong Nam.

Finally, I’ve written for some time that North Korea is probably far more along in its nuclear-weapons efforts than most believe, so I read with interest an op-ed in the Wall Street Journal by R. James Woolsey and Peter Vincent Pry.

“North Korea successfully tested a solid-fueled missile earlier this month, the latest in a series of technological leaps.  Instant experts allege Pyongyang is not yet a serious nuclear threat to the U.S.  Some reporters say North Korea does not have ‘miniaturized’ nuclear warheads for missile delivery and that its weapons are primitive – even after five nuclear tests. These are dangerous delusions....

“History suggests North Korea already has nuclear-missile warheads and a sophisticated array of nuclear weapons.

“Testing is not necessary to develop nuclear weapons.  The first atomic bomb, which used enriched uranium, was never tested: Hiroshima was the test.  The second one, which used plutonium, was tested once and worked perfectly at Trinity and on Nagasaki....

“According to the Wisconsin Project and defector Mordechai Vanunu, Israel developed a sophisticated array of nuclear weapons from the 1960s to the ‘80s – all without testing.”

South Africa, India and Pakistan designed atomic bombs years before testing.

And the Congressional EMP Commission – and Russian, Chinese and South Korean sources – “assess that North Korea probably has nuclear arms specialized for electromagnetic pulse, what the Russians call ‘Super-EMP’ weapons.  These warheads would be low-yield because they are designed to produce gamma rays, not a big explosion.

“These are the most dangerous weapons known to man. A single Super-EMP warhead detonated over North America could permanently black out the U.S. and Canada and kill up to 90% of the population through starvation and societal collapse.  [Ed. Which is why buying survival food is a fool’s game.  I’ll find you. Ditto the Crips and Bloods.]

“Since North Korea and Iran are strategic partners, and since nuclear testing is unnecessary to develop weapons, Iran too might already have nuclear-armed missiles.”

I started warning last year, watch this coming Fourth of July...and continue to sleep with one eye open.  Or let me do so for you.  Just send $5.99 to the address listed above.

Mexico: When Enrique Pena Nieto took office as Mexico’s president in December 2012, his approval rating was 54%.  After one year in office, it was 50%.

Then you had the tragedy of the group of students ambushed by police, with six killed, 25 injured, while 43 students disappeared, and Pena Nieto’s approval rating continued to slide.  Even the capture of “El Chapo” didn’t help because about 18 months later, he escaped.

Then the U.S. presidential campaign and Pena Nieto’s meeting with Trump, which hurt the former further.

So today his approval rating is 17%, with two years left in his term.  [Laura Tillman / Los Angeles Times]

Random Musings

--Former labor secretary Thomas Perez was elected the first Latino chair of the Democratic National Committee on Saturday, narrowly defeating Rep. Keith Ellison (D-Minn.) at the end of a contentious battle over the fate of the party in the age of Trump.

Ellison’s defeat was a blow to the liberal wing, the folks who largely supported the presidential bid of Sen. Bernie Sanders.  Many of these folks warned that by picking Perez, they were alienating the growing “resistance” that has organized against Trump.

Perez won with 235 of 435 votes cast in a second round.

Sanders said after that it was “imperative that Tom understands that the same-old, same-old is not working and that we must open the doors of the party to working people and young people in a way that has never been done before.”

--Billionaire investor Wilbur Ross was confirmed by the Senate as commerce secretary by a vote of 72-27.

--Ben Carson was confirmed as secretary of Housing and Urban Development by a 58-41 vote.

--The Senate confirmed Rick Perry to lead the Energy Department, 62-37.

--We’ll see in the coming weeks how the polls change, post- Trump’s speech to Congress, but before the address, he held a 44% job approval rating in a new NBC News/Wall Street Journal, a record low for a new commander in chief.  48% disagree with Trump’s performance so far.

But 85% of Republicans approve of the job Trump has done, compared with just 9% of Democrats.

--According to a Fox New Poll released Monday, 96% of voters have either a great deal (67%) or some (29%) confidence in the military.

The military is followed by the Supreme Court (83%), the FBI (80%), and the IRS (55%), in terms of the faith voters have in these institutions.

Interestingly, confidence in the Supreme Court is up 14 percentage points since the last time the question was asked in a Fox News Poll in 2014.

Confidence in the presidency and Congress is the same at 53%.  Confidence is different than ‘job approval,’ I hasten to add.

44% have faith in the media, mostly unchanged since 2014.

--In a NBC News/Wall Street Journal survey, 51% rate the media as too critical of President Trump since the election, while 41% say the coverage has been fair and objective.  53% believes the media has exaggerated problems in the administration.

The NBC/WSJ poll also found that 43% of Americans said they thought free trade between the United States and foreign countries helped the U.S., compared with 34% who said it hurt the country.

What’s interesting here is that the last time this survey question was asked in March 2016, only 27% of those surveyed felt free trade helped the U.S. and 43% said it hurt.

Today’s figures show the highest portion of Americans who said free trade helped more than hurt since the NBC/WSJ pollsters started asking the question in 1999.

Earlier in February, a Gallup survey had 72% of respondents saying they viewed foreign trade more as an “opportunity” than a “threat,” compared with 23% who felt the opposite, which was a 14% jump in support for trade from a year earlier Gallup poll.

--Despite the extraordinary moment during Trump’s speech Tuesday night where he led a celebration of Chief Petty Officer William “Ryan” Owens’ life, the fact is that during an interview Tuesday morning on “Fox ‘n’ Friends,” the president repeatedly said “they” – meaning the military – were at fault for the death of Owens, whose dad, Bill, refused to appear with Trump when his son’s body was returned to the U.S.

Trump said: “This was a mission that was started before I got here.  This was something they wanted to do.  They came to me, they explained what they wanted to do. The generals – who are very respected, my generals are the most respected that we’ve had in many decades, I believe. And they lost Ryan,” he said.

“This was something that they were looking at for a long time doing, and according to [Defense Secretary Jim] Mattis, it was a very successful mission.  They got tremendous amounts of information.”

Bill Owens told the Miami Herald last weekend: “Why at this time did there have to be this stupid mission when it wasn’t even barely a week into his administration.”

25 civilians, including women and children, died in the operation, while at least four other Americans were wounded and the military lost a $70 million helicopter.

But this week’s attacks on AQAP perhaps were a truer indication of ultimate success or failure.

--According to reporting from the Washington Post, the former British spy, Christopher Steele, who authored the controversial dossier on behalf of Donald Trump’s political opponents alleging ties between Trump and Russia, reached an agreement with the FBI before the election for the bureau to pay him to continue his work.

The agreement came about when U.S. intelligence agencies reached a consensus Russia had interfered in the election by orchestrating hacks of Democratic Party email accounts.

While Trump derided the dossier as “fake news,” the report the bureau was prepared to pay Steele shows they considered him to be credible.

But the FBI did not end up paying the former MI6 agent because the dossier became the subject of news stories and presidential denials

The FBI had previously hired Steele to help with an inquiry into alleged corruption in the world soccer organization FIFA.  It is not unusual for the bureau to occasionally pay informants, sources and outside investigators to assist it in its work.

--Rich Lowry / New York Post

“Steve Bannon blew a dog-whistle for constitutional conservatives when he spoke of ‘deconstructing the administrative state’ at CPAC.

“Although not everyone got the reference. Trump haters interpreted the line as an incendiary call to decimate the federal government, when ‘the administrative state’ was a more specific reference to a federal bureaucracy that operates free of the normal checks of democratic accountability.

“The administrative state has been called ‘the fourth branch’ of government.  It involves an alphabet soup of executive agencies that wield legislative, executive and judicial powers and thus run outside of and counter to our constitutional system.  The agencies write ‘rules’ that are laws in all but name, then enforce them and adjudicate violations.

“Boston University law professor Gary Lawson describes how this works in the case of, for instance, the Federal Trade Commission:

“ ‘The Commission promulgates substantive rules of conduct.  The Commission then considers whether to authorize investigations into whether the Commission’s rules have been violated.  If the Commission authorizes an investigation, the investigation is conducted by the Commission, which reports its findings to the Commission.

“ ‘If the Commission thinks that the Commission’s findings warrant an enforcement action, the Commission rule that has been violated is then prosecuted by the Commission and adjudicated by the Commission.’

“Welcome to government by commission.

“James Madison called such an undifferentiated accumulation of powers, which the Constitution is meant to avoid, ‘the very definition of tyranny.’  In his epic scholarship on the administrative state, Philip Hamburger argues that it’s ‘a version of absolute power.’....

“It’s chiefly Congress that needs to reassert itself. It has delegated its legislative powers over the decades, and needs to pull them back....It should revisit laws like the Clean Air Act and Communications Act of 1934 that give regulators too much leeway.  It should limit the deference that courts give to administrative agencies....

“Something as entrenched as the administrative state won’t be ‘deconstructed’ in one presidential term, or two. If it can be dialed back, though, it’ll be a significant victory for old-fashioned representative government.”

--Former president George W. Bush, in an interview on the “Today” show, was asked about Trump’s claim the media is the “enemy of the people.”  Bush warned an independent press is essential to democracy and that denouncing the press at home makes it difficult for the United States to preach democratic values abroad.

“I consider the media to be indispensable to democracy,” Bush said.  “We need an independent media to hold people like me to account.

“Power can be very addictive and it can be corrosive and it’s important for the media to call to account people who abuse power, whether it be here or elsewhere,” he added.

--I noted the following on Feb. 11 in this space:

“The White House Correspondents Dinner is April 29, and with the feud between the president and the media, well, who knows what will happen.  But I can’t imagine Trump will attend.

“Then again, if his poll numbers were up around April 15....”

This past weekend Trump indeed announced he wouldn’t attend.  Trump aide Sarah Huckabee Sanders told ABC’s “This Week” that “I think it’s kind of naïve of us to think that we can all walk into a room for a couple of hours and pretend that some of that tension isn’t there.”

If Trump’s approval rating was at 55% come mid-April, however, I still think he might reconsider.

Ms. Sanders asked us to believe that ‘Trump will spend the evening focused on protecting borders, national security and growing the economy,” at which point I spit up my chocolate donut.

--Thirteen members of the MS-13 street gang and its affiliates were rounded up and charged in seven murders, including a highly-publicized case in Brentwood, Long Island, where two girls were attacked and killed with a machete and baseball bats as they walked through town.

Kayla Cuevas, 16, was ambushed last September 13 because she had been feuding with MS-13 members at school and on social media, said investigators.  Her best friend, Nisa Mickens, 15, was in the wrong place at the wrong time, when a carload of attackers pulled up.

Another Brentwood High School schoolmate was killed last June by fellow gang members.

The thing is, ten of the thirteen arrested are citizens of El Salvador and Honduras who are in the U.S. illegally.  President Trump has used this case before to cite his immigration enforcement policy and look for him to employ it even more in the months ahead...as he should.

--What a story with the family of Joe Biden, and the widow of late son Beau Biden now starting a romantic relationship with her former brother-in-law, Hunter Biden, the former vice president’s younger son.

Hallie Biden, who was devastated when husband Beau died of brain cancer in May 2015, is with Hunter, who separated from his wife.

Hunter told the New York Post’s Page Six in an exclusive: “Hallie and I are incredibly lucky to have found the love and support we have for each in such a difficult time, and that’s been obvious to the people who love us most.”

Joe Biden and his wife have given their blessing to the relationship.

Hunter and his wife Kathleen apparently separated in October 2015.

But the New York Post obtained the divorce papers, filed last week by Kathleen Biden, and she says in part: “His spending rarely relates to legitimate family expenses, but focuses on his own travel (at times multiple hotel rooms on the same night), gifts for other women, alcohol, strip clubs, or other personal indulgences.”

She is looking for a $20,000 month allowance.

I am not saying what Kathleen claims is truthful.  Just reporting the story as it develops.

--Maureen Callahan wrote an extensive and scathing report in the New York Post last weekend on Chelsea Clinton, who Ms. Callahan writes is mulling a run for high office.

In trying to figure out how Chelsea would accomplish this, Callahan opines:

“Then there’s the general electorate.  Trump won by speaking to the white working class, acknowledging their economic and cultural anxieties, assuring them that they would no longer be left behind.  Hillary, defying even her husband’s advice, simply ignored them.

“Through this prism, it’s hard to see how Chelsea Clinton reaches the average voter. She has never struggled for anything. She and her husband, hedge-funder Mark Mezvinsky, live in a $10.5 million apartment in the Flatiron district.  Chelsea has held a series of vague high-paying jobs.  She worked at McKinsey & Co., a consulting firm, then at Avenue Capital Group, a hedge fund.  She was passionate about neither, and her accomplishments remain unknown....

“Chelsea eventually got a stint at NBC News, where she was paid $600,000 a year to conduct a few cringe-worthy interviews, the worst with the GEICO Gecko.  ‘Chelsea Clinton finds her level,’ said the Baltimore Sun....

“Currently, Chelsea commands a speaking fee of $65,000 and earns hundreds of thousands annually sitting on various boards.  Yet in 2014 she made one of the most tone-deaf comments of the decade, telling the U.K. Telegraph, ‘I was curious if I could care about [money] on some fundamental level, and I couldn’t.’”

---

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

God bless America.

---

Gold $1235
Oil $53.20

Returns for the week 2/27-3/3

Dow Jones  +0.9%  [21005]
S&P 500  +0.7%  [2383]
S&P MidCap  +0.2%
Russell 2000  -0.03%
Nasdaq  +0.4%  [5870]

Returns for the period 1/1/17-3/3/17

Dow Jones  +6.3%
S&P 500  +6.4%
S&P MidCap  +4.8%
Russell 2000  +2.7%
Nasdaq  +9.1%

Bulls 63.1
Bears 16.5 [Source: Investors Intelligence]

Have a great week.

Dr. Bortrum posted a new column.

Brian Trumbore

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