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10/15/2016

For the week 10/10-10/14

[Posted 11:00 p.m. ET, Friday]

Note: StocksandNews has considerable ongoing expenses.  Your support is greatly appreciated.  Please click on the gofundme link or send a check to PO Box 990, New Providence, NJ  07974.

**Like two weeks ago, this is extremely long...if you are used to printing it out...over 40 pages.

Edition 914

Washington and Wall Street

Barry Diller, chairman of IAC/InterActiveCorp., was on CNBC the other day and when asked about the upcoming vote said, “I want this election over, and I don’t want to talk about politics for the next year and a half.”

That’s how we all feel.  I’m sure tired of writing about it, but as one who is documenting in great detail the entre tumultuous period since 1999, I have no choice.  I’m tired of writing about two candidates, neither of whom should be our president, yet we’re about to end up with one.

I’m tired of one candidate who won’t let a single attack go unanswered, much to his detriment, while the other is so freakin’ corrupt, it’s beyond belief she could be measuring the drapes in the Oval Office.

I’m the ‘wait 24 hours’ guy.  When it comes to the accusations against Donald Trump I just think back to the Duke lacrosse team case and how long it took to get to the truth in that one.

But at the same time, Trump has uttered the words now blowing up his campaign in countless forums, on video and audio tape, and the women’s accusations fit the narrative to a tee.

And instead of just saying, “If they want to sue me, I’ll see them in court.  For the next four weeks I’m focusing on the issues,” Trump goes out like he did Friday and talks about one of his accusers.

“When you looked at that horrible woman last night, you said, ‘I don’t think so,’” referring to People magazine writer Natasha Stoynoff, who claimed he pushed her against a wall and forcibly kissed her in 2005 during an interview at Mara Lago.

Or Jessica Leeds, who accused Trump of groping her during a flight more than 30 years ago, compelling Trump to say: “Believe me, she would not be my first choice.  That I can tell you.”

Geezuz, just shut up! 

But of the stories coming out against Trump, the ones that are most believable involve walking into the dressing rooms at his beauty pageants.  The girls just seem to be confirming what he told Howard Stern directly.

The bottom line is, as I’ve been writing for months, the world scene today couldn’t be more dangerous and the United States is rudderless...without leadership...and the election won’t solve anything.  It could easily make things worse.

Gerald F. Seib / Wall Street Journal

“Travel around the country speaking about the election and you’ll frequently get this question: Can an independent candidate make a serious run for president?

“We now essentially have such an independent candidate.  His name is Donald Trump.  So the new questions are: Is it possible to win an election that way?  Perhaps as important, if a candidate prevails in such a campaign, could he govern effectively afterward?

“Increasingly, Mr. Trump and his unshakable core of supporters are breaking away from the party hierarchy.  Mr. Trump himself has been getting large institutional support from the Republican National Committee, and many committee members around the country rallied behind him Monday.  But simultaneously he has been estranged from many of the party’s senior figures and elected officials.  He has not only challenged party orthodoxy on immigration, trade, the deficit and entitlement reform, but also sometimes mocked those who formed that party orthodoxy.  Then, of course, the estrangement turned into divorce over the weekend, when a long list of party regulars bolted from Mr. Trump’s side after the disclosure of a videotape in which he described his style for groping women, including a married woman.   Mr. Trump then basically said goodbye to the establishment of his own party, tweeting about ‘self-righteous hypocrites.  Watch their poll numbers – and elections – go down!’

“Meanwhile, weekend polling by The Wall Street Journal and NBC News finds that two-thirds of self-identified Republicans said the party should stand by Mr. Trump.  Many Trump backers openly urge him to bust the chops of the party establishment....

“The current system may well place too much emphasis on party loyalty.  But there’s also a penalty for having too little. The bottom line for Mr. Trump is this: If he were to win now, he would have to generate a lot of popular support around the country to make up for lost party loyalty in Washington.”

The Debate....

Cathleen Decker / Los Angeles Times

“Donald Trump had a deep hole to climb out of Sunday in the second presidential debate, one he’d dug with a succession of self-generated controversies that culminated Friday in the release of a 2005 video in which he bragged about groping women....

“Trump ended the debate in the same wounded condition in which he’d begun it: with fearful Republicans worried about the trajectory of his campaign....

“In one stunning passage, he said that he disagreed with the Syria policy laid out five days ago by his vice presidential running mate, Mike Pence, but said that he hadn’t yet talked to Pence about it....

“Clinton did not leave the debate site undamaged.  She was hit with several questions attesting to weaknesses in her candidacy, among them her use of a private email system as secretary of State and a comment in  a recent dump of hacked emails that she had a private policy and a public policy on energy.

“An able opponent could have developed both of those into a unified assault on Clinton’s trustworthiness and honesty, areas that already represent a weakness for her.

“When Clinton tried to deflect criticism for the two practices by invoking a Steven Spielberg movie about Abraham Lincoln, Trump got off perhaps his best zinger of the night.

“ ‘Honest Abe never lied. That’s the good thing.  That’s the big difference between Abraham Lincoln and you,’ he said....

“Often (Trump) seemed to be disgorging unconnected arguments within the same paragraph.

“His answer on the question of the 2005 video inexplicably melded with a promise to be tough against ISIS.

“ ‘Yes, I’m very embarrassed by it. I hate it,’ he said.  ‘But it’s locker-room talk, and it’s one of those things.  I will knock the hell out of ISIS.  We’re going to defeat ISIS.  ISIS happened a number of years ago in a vacuum that was left because of bad judgment.  And I will tell you, I will take care of ISIS.’

“Then, as at several other times in the debate, Clinton sat back looking vaguely amused, as if egging him on to talk some more.”

Niall Stanage / The Hill

“Donald Trump saved his campaign from meltdown Sunday evening with a debate performance that was, at the least, a marked improvement on his showing in his first clash with Hillary Clinton almost two weeks ago.

“But whether Trump changed any minds is much more open to question.  The debate was both nasty and personal, especially in its early stages, potentially turning off more voters from both candidates than it won over for either....

“Trump was aggressive throughout the debate.  He interrupted repeatedly, often with sarcastic comments aimed at either Clinton or the co-moderators, Anderson Cooper and Martha Raddatz.  He also sometimes stood directly behind Clinton, creating an unusual TV image that drew mostly adverse comment on social media.

“But Trump did have some striking moments.  Prime among them was an exchange over Trump’s promise to seek a special prosecutor, if he were elected, to probe Clinton’s use of a private email server while secretary of State. Clinton said such a proposal proved it was a good thing he would never have such authority.

“ ‘Because you’d be in jail,’ Trump shot back.

“Republican consultant Frank Luntz said on Twitter that this registered as the GOP nominee’s ‘highest moment’ of the debate in a focus group.

“The same aggressive tone could also cost Trump with some voters, however, especially the women whom he needs to bring over to his side if he is to have any real chance of prevailing on Nov. 8.”

Editorial / Los Angeles Times

“After the release of a video in which Donald Trump boasted in obscene terms about groping women, his running mate, Mike  Pence, condemned the GOP presidential nominee’s words and actions.  But Pence also said he looked forward to the opportunity that Sunday’s presidential debate with Hillary Clinton afforded Trump to ‘show what is in his heart.’

“On Sunday night Trump squandered that opportunity, or perhaps he just failed to show what Pence was hoping for.  Even before the debate began, Trump appeared at a news conference with four women: three who had accused President Bill Clinton with sexually attacking or harassing them and a fourth who was a rape victim at age 12 whose alleged attacker had been represented by Hillary Clinton, a court-appointed defense attorney.

“It was a sickening stunt that foreshadowed Trump’s attempt during the debate to deflect criticism of what he continued to minimize as ‘locker-room talk’ by insisting that his comments paled in comparison to Bill Clinton’s sexual misdeeds (not to mention the atrocities of Islamic State militants).

“Of course the former president isn’t on the ballot this year, and somehow holding Hillary Clinton responsible for her husband’s infidelities is ridiculous....

“When he wasn’t hurling insults at his opponent or complaining about unfair treatment by the moderators, Trump did manage to make some substantive points about the failure of the Affordable Care Act and U.S. foreign policy in Syria....

“He also offered an olive branch to black, Latino and Muslim Americans and seemed finally to declare an end to his policy of a ‘total and complete shutdown of Muslims entering the United States.’  But he offered no real solutions, just a fusillade of criticisms – of the Obama administration, Hillary Clinton and the United States’ fortunes today.”

Post-debate, House Speaker Paul Ryan said on Monday he would no longer campaign on Trump’s behalf.  Trump responded by declaring war on the Republican establishment, saying in a series of tweets that Ryan is “weak and ineffective” and has provided “zero support” for his candidacy.  Then, in a Fox News interview, Trump suggested that if he wins the election Ryan should be removed, saying “maybe he’ll be in a different position.”

Trump declared, “It’s so nice that the shackles have been taken off me and I can now fight for America the way I want to.”

Trump also called John McCain, another who pulled his support of Trump, “foul-mouthed,” while accusing him of once begging for his support.  He then said dealing with his party is harder than his rival, Clinton.

“Disloyal R’s are far more difficult than Crooked Hillary,” Trump tweeted.  “They come at you from all sides.  They don’t know how to win – I will teach them!”

Back to Ryan, he initially urged his members to focus on their re-election campaigns and to make individual decisions about how to handle Trump, according to sources on a conference call, but after an uproar from his own caucus, Ryan said he would dedicate himself full time to keeping control of the House and that he “won’t defend” Trump, people on the call said.  Some of the House members attacked Ryan for effectively giving up on the party’s candidate, as Ryan did not say if he was withdrawing his endorsement.  [The Hill]

Rep. Dana Rohrabacher (R., Calif.) said: “Just bad-mouthing our candidate is not acceptable,” after hearing Ryan say he wouldn’t defend or campaign with Trump.  “If you’re saying bad things about your candidate, you might as well be on the other side.”

For his part, Trump issued an apology on the 2005 video around midnight, Friday (Oct. 7), and soon after Republican Sen. Mike Lee called for Trump to “step aside.”  Lee was followed by Sen. Mike Crapo, who withdrew his endorsement, then New Hampshire Sen. Kelly Ayotte (who faces defeat unless she can claw back in her re-election bid) and then Sen. John Thune of South Dakota, the first in the Senate GOP leadership to call for Trump to step aside.

“Donald Trump should withdraw and Mike Pence should be our nominee effective immediately,” Thune tweeted Saturday.  Many of Thune’s constituents were not happy with his decision, though he is expected to win his re-election next month easily.

At first running mate Mike Pence was clearly going through a personal crisis on what to do and then following the debate, Pence said on Fox News: “Donald Trump stepped up and won the debate last night.  He showed humility and he showed strength and he expressed genuine contrition.”

According to a survey by the USA TODAY Network, of the 31 Republican governors, 54 GOP senators and the 246 Republican members of the House (331 total), 87 are not endorsing Trump’s candidacy as of late Tuesday; an unprecedented fracture in modern American political history.

By way of comparison, The Hill reported in September 2012 that only a “handful” of Republican lawmakers were declining to support Mitt Romney, naming only three.  The 87 USA TODAY cites breaks down to 19 Senators, 11 Governors and 57 House members.

More opinion...all sides...

Editorial / The Economist

“How do people learn to accept what they once found unacceptable?  In 1927 Frederic Thrasher published a ‘natural history’ of 1,313 gangs in Chicago. Each of them lived by a set of unwritten rules that had come to make sense to gang members but were still repellent to everyone else.  So it is with Donald Trump and many of his supporters. By normalizing attitudes that, before he came along, were publicly taboo, Mr. Trump has taken a knuckle-duster to American political culture.

“The recording of him boasting about grabbing women ‘by the pussy,’ long before he was a candidate, was unpleasant enough.  More worrying still has been the insistence by many Trump supporters that his behavior was normal.  So too his threat, issued in the second presidential debate, to have Hillary Clinton thrown into jail if he wins. In a more fragile democracy that sort of talk would foreshadow post-election violence.  Mercifully, America is not about to riot on November 9th.  But the reasons have less to do with the state’s power to enforce the letter of the law than with the unwritten rules that American democracy thrives on. It is these that Mr. Trump is trampling over – and which Americans need to defend.

“If this seems exaggerated, consider what Mr. Trump has introduced to political discourse this year: the idea that Muslims must be banned from entering the country; that a federal judge born of Mexican parents was unfit to preside over a case involving Mr. Trump; that a reporter’s disability is ripe for mockery; that ‘crooked’ Mrs. Clinton must be watched lest she steal the election.  Daniel Patrick Moynihan wrote that when many bad things happen at once, societies define deviancy down, until the list of what is unacceptable is short enough to be manageable. When parents wonder if a presidential debate is suitable for their children to watch, Mr. Trump’s promise to build a wall on the Mexican border no longer seems quite so shocking....

“If Mr. Trump loses, Mrs. Clinton will begin her presidency with tens of millions of people believing that she ought to be in jail.  Perhaps he will lose so comprehensively that he takes the Republican majorities in both chambers down with him. That would afford Mrs. Clinton at least two years, before the next mid-term elections, during which she might push through immigration reform, increase spending on infrastructure and change the balance of the Supreme Court.  These would be big achievements, but something close to 40% of voters would feel they were being steamrollered by a hostile government.  Politics could  become yet more polarized.

“Partly because Mrs. Clinton is mistrusted and disliked, the more probable outcome in November is that she will be the next president but will face a House of Representatives controlled by Republicans – and perhaps a Senate, too.  This is a recipe for furious, hate-filled gridlock.  There would be more government shutdowns and perhaps even an attempt at impeachment.  It would also mean yet more government by executive actions and regulation to get around Congress, feeding the widespread sense that Mrs. Clinton is illegitimate.

“Tied down and unpopular at home, Mrs. Clinton would be weaker abroad as well.  She could less easily take risks... America’s role in the world would shrink.  Frustration and disillusion would grow.”

Gideon Rachman / Financial Times

“How did it come to this?  The presidential election debates should represent U.S. democracy at its finest.  Instead, the second Clinton-Trump debate centered around sordid allegations of sexual assault, threats, lies and mutual contempt.

“At one stage, Mr. Trump boasted that Mrs. Clinton would ‘be in jail’ if he were in charge of the legal system.  Political rivals to the president get imprisoned in Robert Mugabe’s Zimbabwe.  America is meant to live by different standards.

“Sunday night’s spectacle is not just embarrassing for the U.S.  America is widely regarded as the ‘leader of the free world.’  So the rise of Mr. Trump threatens to damage the prestige of democracy everywhere.

“The damage is not restricted to the world of ideas.  Authoritarianism and anti-Americanism are on the march, led by increasingly confident governments in Beijing and Moscow. A strong and impressive U.S. should be central to rallying the response of the world’s democracies.  Instead, we had the depressing and degrading spectacle of the second Trump-Clinton debate....

“It is true that neither Xi Jinping of China nor Vladimir Putin of Russia would ever be subjected to the kind of brutal interrogation to which American politicians are subjected on a routine basis. Instead, last week, the Russian Duma sent Mr. Putin 450 roses to mark his birthday.

“Yet, even so, the second presidential election debate was a desperately poor advertisement for U.S. democracy.  In some respects, Mr. Trump has actually introduced some of the malign features of Russian and Chinese politics into the U.S.  One of the strengths of the western democratic system is that a free press and open debate are meant to expose falsehoods.  Yet Mr. Trump sprays out lies like a skunk trying to repel its enemies.  His method seems to be to create such confusion that the truth simply gets buried amid a mass of falsehoods. This is a characteristic of the current Russian propaganda system....

“The Chinese challenge to America’s democratic ideology is more subtle and perhaps more dangerous because China, unlike Russia, can make a good claim to be a well-governed country.  China is the largest economy in the world measured by purchasing power parity. The Chinese argue that their system selects leaders on merit, after decades of rigorous assessment.  President Xi only made it to the pinnacle of state power after many years of work in the provinces and in different government jobs.  He has been judged by his peers, not the voters, to be qualified to run the country.

“The Chinese do not yet argue that their system should be applied around the world.  But they do increasingly condemn – as agents of America, seeking to ‘sow chaos’ – those who make the case for a more liberal political system within the Sinic world, for example in Hong Kong or Taiwan.  Beleaguered liberals in Russia or China need a well-functioning U.S. democracy as a support and an inspiration.  Instead, they see a system that produces Mr. Trump, a man whose political style owes more to President Putin than to President Obama....

“Mr. Trump is manifestly unqualified and has thrown the U.S. system into confusion, leaving the press and the Republican party floundering. The fact that more than 40 percent of Americans, and a majority of whites, are probably going to vote for him suggests that the U.S. is in deep trouble....

“If Mrs. Clinton makes it to the White House there will be relief across the west and a certain disappointment in Moscow and, perhaps, Beijing.  But it will be very hard to erase the memory of this campaign.  It has presented an image of a troubled, divided and deluded U.S. to the rest of the world.  As a result, it has already dealt a serious blow to the prestige and power of the west.”

Bret Stephens / Wall Street Journal

“Donald Trump emerged the victor from his debate Sunday night with Hillary Clinton, which means he slightly exceeded expectations by not spontaneously combusting on stage, which means his ardent loyalists have again absolved him of sin....

“Rudy Giuliani, the former New York mayor, variously defended the Republican nominee by invoking Jesus Christ and Monica Lewinsky’s stained blue dress, which is the type of disgusting association you’d expect from a defrocked priest.

“Tony Perkins of the Family Research Council brushed aside the controversy by insisting his support for Mr. Trump rested on ‘shared concerns’ not ‘shared values.’ That marks a milestone: The president of an organization ostensibly devoted to the preservation of family values has endorsed a man who wants to sleep with other men’s wives.”

Daniel Henninger / Wall Street Journal

“The 2016 presidential election feels like a 1930s Hollywood movie about people lost in a jungle.  No, not ‘King Kong.’  The one in which lost souls slog and sweat through a swamp, attacked by bugs, cobwebs and things falling out of the trees. Inevitably there’s a moment when one of the party, gripped by fever, abandons the group and heads deeper into the swamp alone.

“Donald Trump is now a party of one.  It’s better that way....

“It was never in the cards that (Trump), an utterly unique phenomenon, would integrate his interests with the interests of the Republican Party.  The two simply don’t inhabit the same space.

“ ‘It is so nice that the shackles have been taken off me,’ he tweeted, ‘and I can now fight for America the way I want to.’ Take his word for it: Donald Trump is where he wants to be – alone, the center of it all, a party of one.

“It is almost surely true that the GOP’s three principal figures – Reince Priebus, Paul Ryan and Mitch McConnell – always understood this.  But there was no chance – none – that any would ever admit that Mr. Trump was running as an independent candidate inside the formal structure of the Republican Party....

“This meant that nearly all other Republican candidates would have to survive in a universe different than Donald Trump’s. For the day Mr. Trump secured the nomination, there was never much chance that he would integrate his personal fame, for example, with the pedestrian daily grind and needs of a Kelly Ayotte in New Hampshire or Pat Toomey in Pennsylvania.

“Whether they or the other at-risk candidates – Richard Burr, Rob Portman, Ron Johnson or Mark Kirk – should have been pro-Trump or anti-Trump is at this point a secondary matter to the practical realities of their own campaigns.

“Donald Trump passes in and out of their states like a visiting meteor.  It’s an awesome event, but there’s’ nothing they can do but gape, and get back to work inside the smaller orbit of a North Carolina or Wisconsin.

“Many Trump supporters are currently in a rage because these candidates won’t merely attach themselves to Mr. Trump’s candidacy.  But that is hard to do when every few days the mercurial Mr. Trump is producing a personal October surprise or midcourse policy correction....

“The question now is whether Republican voters and Mr. Trump’s supporters can distinguish between his unique candidacy and everything else...

“His most dedicated supporters either will stay aloft to share in his go-it-alone, in-your-face triumph, or fall to earth with him.  But refusing to vote for at-risk Republican incumbents because of insufficient Trump loyalty or disdain for his candidacy is cutting off your nose to spite your face.”

Thomas L. Friedman / New York Times

“The bigger Clinton’s margin of victory, the less dependent she’d be, I hope, on the left wing of her party, and the more likely she’d work with Republicans, as she vowed during the last debate, by ‘finding common ground, because you have to be able to get along with people to get things done in Washington.’

“I say ‘hope’ because I don’t know who the real Hillary is – the more Bernie Sanderish one speaking publicly or the more Bill Clintonish one who spoke privately to Goldman Sachs.

“The nightmarish scenario – ruling out, God forbid, a Trump victory – is that Clinton wins with a slim majority and the GOP holds the House and the Senate. The Democratic left would have a stranglehold on Clinton while Trump, who would start his own TV network and movement, would keep the Republican base in a state of permanent anger, intimidating every Republican lawmaker who contemplated compromise. If that happens, America will be adrift.”

Editorial / Wall Street Journal

“He’s trailing in the polls, and his campaign is advertising that his comeback strategy is to run almost as an independent to drive turnout among his core supporters. He’s given up trying to expand his appeal to women, minorities and college-educated Republicans. Instead he’ll tear into Mrs. Clinton in an attempt to demoralize her voters and motivate his.

“At least this will be a political market test of the Trumpian wing of the GOP.   Going back to Mitt Romney’s defeat in 2012, the GOP has divided roughly into two strategic political camps.  One camp wants to reach out to minorities, young people and moderates to expand the GOP electorate. The Republican National Committee urged this strategy in a 2013 report, and candidates like Colorado Sen. Cory Gardner followed it to win in 2014.  This makes sense to us on demographic grounds but also because it is what a party should do in a healthy democracy. Governing for only half a country has been President Obama’s great mistake.

“The other GOP camp has disdained such outreach in favor of mobilizing the white working-class voters who supposedly stayed home in 2012.  The evidence is strong that most of those voters weren’t in swing states and so didn’t affect the election.  But Alabama Senator Jeff Sessions, the talk-radio gang, Heritage Action and Breitbart.com decided that the path to victory is flogging immigration and trade resentments to mobilize white voters rightly upset with the results of Obama’s economic policies....

“We’ve long thought this is a losing political hand, if not in 2016 then certainly in the long run, but now the Trumpians have their chance to prove us wrong.  They certainly couldn’t get a better year. Hillary Clinton is the second most disliked major party candidate in modern history – after Mr. Trump.  Two-thirds of Americans are unhappy with the direction of the country, the economy is underperforming, and disorder has just spread around the world in the incumbent party’s second term. The table has been set for a Republican nominee to make the case for change and win.

“So no excuses, gents. The GOP insurgents won the nomination, and now that their candidate is unshackled he can campaign as they want him to.  That includes taking responsibility, win or lose.”

USA TODAY / Editorial

“Clinton was fortunate that, once again, the glaring shortcomings of her opponent overshadowed her own vulnerabilities. These include both the email fiasco and her private high-dollar speeches to Wall Street barons, exposed in recently leaked documents that show her private tone differed markedly from her public stance.  In one of Trump’s best moments of the debate, he mocked Clinton’s effort to explain away her public/private distinction as being in the tradition of Abraham Lincoln.

“Trump’s shortcomings, on vivid display again Sunday night, include a short attention span, difficulty mastering complex issues such as the civil war in Syria, and his continuing bizarre reluctance to criticize Russia.”

Charles Krauthammer / Washington Post

“The second presidential debate – bloody, muddy and raucous – was just enough to save Donald Trump’s campaign from extinction, but not enough to restore his chances of winning, barring an act of God (a medical calamity) or of Putin (a cosmically incriminating WikiLeak).

“That Trump crashed because of a sex-talk tape is odd. It should have been a surprise to no one.  His views on women have been on open display for years. And he’d offered a dazzling array of other reasons for disqualification: habitual mendacity, pathological narcissism, profound ignorance and an astonishing dearth of basic human empathy.

“To which list Trump added in the second debate, and it had nothing to do with sex.  It was his threat, if elected, to put Hillary Clinton in jail.  After appointing a special prosecutor, of course.  The niceties must be observed.  First, a fair trial, then a proper hanging. The day after the debate at a rally in Pennsylvania, Trump responded to chants of ‘lock her up’ with ‘Lock her up is right.’  Two days later, he told a rally in Lakeland, Fla., ‘She has to go to jail.’

“Such incendiary talk is an affront to elementary democratic decency and a breach of the boundaries of American political discourse.  In democracies, the electoral process is a subtle and elaborate substitute for combat, the age-old way of settling struggles for power.  But that sublimation only works if there is mutual agreement to accept both the legitimacy of the result (which Trump keeps undermining with charges that the very process is ‘rigged’) and the boundaries of the contest.

“The prize for the winner is temporary accession to limited political power, not the satisfaction of vendettas. Vladimir Putin, Hugo Chavez and a cavalcade of two-bit caudillos lock up their opponents.  American leaders don’t.

“One doesn’t even talk like this.  It takes decades, centuries, to develop ingrained norms of political restraint and self-control.  But they can be undone in short order by a demagogue feeding a vengeful populism.

“This is not to say that the investigation into the Clinton emails was not itself compromised by politics...

“But the answer is not to start a new process whose outcome is preordained.  Conservatives have relentlessly, and correctly, criticized this administration for abusing its power and suborning the civil administration (e.g., the IRS).  Is the Republican response to do the same?

“Wasn’t presidential overreach one of the major charges against Obama by the anti-establishment GOP candidates?  Wasn’t the animating spirit of the entire tea party movement the restoration of constitutional limits and restraints?....

“This election is not just about placing the nuclear codes in Trump’s hands.  It’s also about handing him the instruments of civilian coercion, such as the IRS, the FBI, the FCC, the SEC.  Think of what he could do to enforce the ‘fairness’ he demands.  Imagine giving over the vast power of the modern state to a man who says in advance that he will punish his critics* and jail his opponent.”

*Krauthammer is referring to Trump’s threats against the likes of Jeff Bezos and the Rickets family, who own the Chicago Cubs; Bezos because he owns the Washington Post and the Rickets’ because they have supported Democrats, including Clinton.

Demetri Sevastopulo / Financial Times

“Hillary Clinton and Donald Trump traded insults in a bitterly contentious debate that saw the Republican regain some of his footing following a disastrous two weeks that had threatened to derail his White House campaign....

“In exchanges on healthcare, tax policy and the humanitarian crisis in Syria, Mrs. Clinton tried to rile her opponent as she had successfully done in the first debate.  But Mr. Trump was more disciplined than during their last encounter.

“Larry Sabato, a politics expert at the University of Virginia, said the Republican had ‘enthused his base, stopped the bleeding, and stymied GOP efforts to get him to resign from the ticket’ because of his debate performance.”

Gerald F. Seib / Wall Street Journal

“Donald Trump entered Sunday night’s debate both lacerated and liberated.  He had been lacerated by the release of a now infamous videotape in which he talked about how he seduces women, including married women.

“And he was liberated by essentially declaring his independence from the Republican party and its leading figures, many of whom abandoned him over the release of that tape.

“So the question approaching an epic presidential debate Sunday night was whether, in this new phase, a liberated Donald Trump could stop the bleeding and get back on his feet.  In the first half hour, that seemed unlikely.  But then, over the next hour, he appeared to succeed....

“It is hard to know how much a decent debate performance will matter to the many Republicans who seem to have lost faith in Mr. Trump or confidence that any step forward in his campaign won’t be followed by a step backward.

“It’s also hard to know what will happen to Mr. Trump’s support among women, and among Republicans with misgivings about him, whose support he had been consolidating in the weeks before the explosive tape with his lewd comments about women.

“It also isn’t clear whether his reminding voters of Bill Clinton’s sexual history will matter, or how effective he was at skewing Mrs. Clinton again for her use of a private email server as secretary of state.

“But if the imperative of this debate was for Mr. Trump to survive the onslaught and get back on his feet, he appeared to do that.”

John Podhoretz / New York Post

“History’s weirdest election just got a lot weirder last night.  After a horrendous two weeks capped by the ultimate presidential candidate’s weekend from Hell, Donald Trump turned around and trounced Hillary Clinton in the second presidential debate.

“As Samuel Johnson said, the prospect of a hanging can concentrate the mind – and after an opening ten minutes in which he looked as though he was going to blow himself up with rage at Bill Clinton – Trump suddenly and surprisingly found the focus that had eluded him two weeks ago.

“He came right at her – and on policy, yet.  He hit her effectively on her email scandal, on the Democratic party’s commitment to ObamaCare, on her ineffectuality as a senator when it came to changing the tax policies she claims he abuses as a wealthy person, and on the administration’s energy policies....

“Trump, however, did say some astoundingly awful things, especially about Syria. He claimed Syria’s Bashar al-Assad (whom he said he doesn’t like) was killing ISIS when Assad is actually busy enacting a genocide against his own people in Aleppo. And when the tough-on-Russia-and-Syria strategy outlined by his own vice-presidential candidate Mike Pence in the VP debate was brought up, Trump said he hadn’t spoken to Pence about it and that he disagrees.

“Hillary Clinton lost the debate because she likely figures she’s already won the election – she was ahead in every battleground state now and in all the major poll averages by around 5 percent even before the nation really takes account of the ‘Access Hollywood’ hot mic tape – and decided to play it safe.

“The prevent defense is a sound strategy when you’re ahead by two touchdowns and a field goal.  Hillary isn’t there yet.  Her refusal to try and deal a death blow, and Trump’s own refusal to lie down and play dead, has kept him alive to fight another day.

“Unless she knows there’s something even worse coming out next...”

And there was....

---

Turning to the action on Wall Street, stocks edged down a second consecutive week, but this masks some intra-week volatility as the market was buffeted at times by poor earnings, in the form of Alcoa at first, forecasts for more of the same, trade data out of China (negative) and then the next day a producer price figure out of there that showed the first rise in prices in 55 months (good).  Mining stocks, for example, fell on the import data, but then recovered on Friday on the wholesale, or factory gate, price news.

Friday’s tone was also set by decent bank earnings (more in a bit), a solid figure for U.S. retail sales, and our own producer price figures that show inflation is bubbling.

The September retail sales number came in as expected, up a solid 0.6%, 0.5% ex-autos, while the PPI was up 0.3% last month, 0.2% ex-food and energy, and up 0.7%, year over year, and 1.2% yoy on the core, which is encouraging.

Of course the market also continues to play the Fed guessing game, with most now convinced another hike is coming in December (Dec. 13-14 being the yearend FOMC meeting), as Chair Janet Yellen told an audience in Boston on Friday that the Fed may need to run a “high-pressure” economy in order to reverse damage from the crisis that depressed output and sidelined workers; meaning the Fed is willing to let the economy run a little hot, or above their employment and inflation targets, but this certainly doesn’t preclude action in December of just a quarter-point.

[My conclusion. She didn’t specifically address interest rates or immediate policy concerns today.]

Another speaker at this Boston conference of policymakers and academics, Eric Rosengren, Boston Fed president, stuck to his belief from September that the Fed should be hiking rates.

The Fed’s minutes from the September confab noted that the decision to hold rates where they are was a “close call,” so barring some major negative news, like a massive terror attack that impacts confidence (and/or an October surprise of a different sort), or a poor U.S. market reaction to the election, the Fed will move just in time for Christmas.  I’ve been saying this for months and you can book it.

Europe and Asia

First, a few notes on the eurozone economy:  Industrial production rose 1.6% in August over July for the euro area, up 1.8% year over year.

New car sales across Europe grew by 7.2% in September to 1.46m units, far slower than the 9.8% growth in the same month a year earlier, according to data from ACEA, the European car manufacturers’ group.

Sales were dragged down by the U.K., which accounted for one in three cars sold across the EU, up just 1.6%.

Germany’s grew 9.4%, France 2.5%, Italy 17.4%.

Sales shrank 4.2% in the Netherlands and 1.6% in Ireland.

Brexit: As noted in recent weeks, British Prime Minister Theresa May said her government would trigger Article 50 of the Lisbon Treaty – beginning formal negotiations between the U.K. and EU – by the end of March.

The process will then take two years, or more, and as also noted the other week, Mrs. May has made clear it’s about immigration and access to the European single market.

May also announced this week that she would allow a vote on her Brexit plan in Parliament, but asked lawmakers to do it in a way that gives her space to negotiate.

While this is unlikely to stop Brexit (it’s not clear to me how detailed the proposal presented to Parliament would be), it does give MPs a tool to pressure the prime minister as she has only a slim majority.

European Council President Donald Tusk has said Britain’s only real alternative to a “hard Brexit” is “no Brexit,” warning the EU would not compromise on its insistence that freedom of movement will be a condition of Britain’s access to the single market.

Tusk suggested that Britain might ultimately decide not to leave the EU “even if today hardly anyone believes in such a possibility.”

Sarah Gordon / Financial Times

“Theresa May is playing a dangerous game. Her unwillingness to engage with business, and apparent readiness to alienate it, comes with serious risks.

“For many in the U.K.’s business community, last week’s Conservative party conference crystallized a sense of growing frustration at the new government. Home Secretary Amber Rudd’s proposals to limit immigration and ‘name and shame’ companies which employ large numbers of foreign workers set the stage for the prime minister to take a series of sideswipes at business in her speech, placing employers firmly in the category of the ‘powerful and privileged’ whom she has in her sights....

“(The speech) reiterated some of the measures on corporate governance that Mrs. May is contemplating. These include worker and consumer representatives on boards, binding shareholder votes on executive pay and publishing the ratio between chief executive and median workers’ pay.

“The U.K.’s business community is as keen to outlaw the egregious behavior of some corporate bosses as BHS pensioners or Sports Direct staff.  As Mrs. May herself acknowledged, such behavior by the few tars the reputation of the many.  They are also as desperate – probably more – to improve skills as any Whitehall policy wonk, and welcome the idea of an industrial strategy.  ‘Fairness’ matters to most employers as much as it appears to do to Mrs. May.

“But they question if the interventionist proposals on the table are the best way to go about achieving these aims.  Volkswagen has a supervisory council of 20 representatives of employees and shareholders, but that did not avoid the emissions scandal in which it is mired.

“Mrs. May says she is listening to those who voted for Brexit. Yet she is proposing putting additional legislative and regulatory burdens on employers who, if they voted to leave the EU, did so in part to escape red tape from Brussels.  Doing so at a time of significant economic uncertainty is also counterproductive.  And shutting business out of the debate over the best way to achieve her aims is foolish....

“Mrs. May has disbanded the advisory group of 20 big business representatives that her predecessor David Cameron used as a sounding board for policy....there is no forum nor clear channel via which business can make its case to government....

“Losing the goodwill of the business community will not just affect the nitty-gritty of the Brexit negotiations, but also risks damaging growth prospects.  Instead of attacking employers, the government should be asking how it can help companies prosper and grow.”

London Mayor Sadiq Khan told business leaders this week that he’ll fight any attempt to take the U.K. out of the EU’s single market.

“If we were to leave the single market without an agreement in place for privileged access for British business, the consequences could be disastrous,” Khan told a business gathering.

Lastly, Scottish First Minister Nicola Sturgeon said she’ll publish a draft Scottish Independence Referendum Bill next week, holding out the threat of breaking away from the U.K. if she feels her nation’s interests aren’t being protected in Brexit negotiations.

But this is frankly going nowhere fast. The Scots just voted in 2014 by 55% to 45% to stay in the U.K. and it would take years and years before Scots could call a second referendum.  A survey taken last month by Kantar TNS found 53% were opposed to independence and 47% in favor.

Eurobits....

--Yields have been rising around the world, with the yield on the British 10-year up 35 basis points in two weeks from 0.74% to 1.09%...1.09% being the highest since the day after Brexit, June 24, which was 1.08%, after which it plummeted to a weekly low of 0.52% on Aug. 2.

It’s about the sentiment that inflation is beginning to percolate, which is brushing up against central bank stimulus.  I’ve been warning, admittedly like Chicken Little, that some investors are going to get creamed and you have been, for example, if you bought at 0.52% on the 10-year gilt.

In the case of the U.K., with the pound at 31-year lows against the U.S. dollar, that’s raising the cost of imports, such as groceries.

--The euro area authorized a 1.1 billion euro ($1.2 billion) payment to Greece and signaled a further 1.7bn euros would follow this month, saying Greece had made progress in overhauling its economy; the green light coming from euro-area finance ministers on Monday in Luxembourg.

This would make it easier for Greece to then achieve some form of debt relief down the road, on which Prime Minister Alexis Tsipras has staked his political future.  Greece had to fulfill 15 conditions for further payments, including selling state assets.

But question marks remain over the role of the International Monetary Fund, which has said it wouldn’t participate in further bailouts unless debt relief was granted, but this won’t occur as yet because the IMF still has “significant concerns” about uncompleted reforms in Greece, including on pensions and the welfare state.  The IMF helps monitor the bailout, but it doesn’t make any financial contribution.

--The European Commission told Italy it can count on all the flexibility EU budget rules can offer with its 2017 budget, but that it shouldn’t increase its already sky high debt, noting that the immigration crisis needs to be taken into consideration by the EU in terms of costs.

Eurozone countries are obliged by EU rules to move towards a balanced budget and lower public debt every year, sending their budget draft assumptions for the following year to Brussels for scrutiny, but Italian Prime Minister Matteo Renzi is attempting to avoid unpopular austerity measures ahead of a December referendum on constitutional reform that will decide his political future.

He is therefore planning no cut in the deficit this year and the debt will no doubt rise, contrary to promises made to the EU.

The official debt-to-GDP ratio in Italy is at about 133 percent currently.  [Unofficial, try 150%.]

--Despite nine months without a government, Spain’s economy is growing at one of the fastest paces in the eurozone, now forecast by the Economy Minister to grow 3.1% in 2016.

--In France, President Hollande has been perhaps mortally wounded politically by publication of a book titled “A President Shouldn’t Say That,” written by two respected journalists from Le Monde newspaper who met with Hollande 61 times.  The president, already deeply unpopular, is quoted as calling members of the judiciary “cowards” and saying France has “a problem with Islam,” with members of his Socialist party questioning whether he can run for re-election next spring.  Hollande apologized to judges, but it sounds like it’s too late.

Meanwhile, former prime minister and conservative Alain Juppe scored 47% in a recent poll to become the next president, with Hollande at just 16%.

Juppe’s main center-right rival is former president Nicolas Sarkozy, who in a first round of voting would get 28% to Juppe’s 42%, crunching the numbers differently.  [The center-right holds its primary Nov. 20.]

Juppe, as of today, would then defeat/crush Marine Le Pen of the National Front in the second round. 

On the migration front, the government of Chancellor Angela Merkel is feeling more heat after a 22-year-old Syrian man, suspected of plotting an Islamic extremist bombing attack, was able to take his own life in a jail cell after being arrested following a three-day manhunt.  Thus the investigation into whether Jaber Albakr (who German authorities say had contact with ISIS) had any accomplices is far more difficult.

Prison authorities were told the man was a suicide risk and it still seems he hanged himself.

Security officials were already facing heat for allowing Albakr to elude them as they prepared a raid on his apparent in the city of Chemnitz on Saturday.  Inside the apartment police found highly volatile explosives and a homemade bomb vest.

Albakr had been granted asylum after coming to Germany last year and he was finally arrested days later after three fellow Syrians tied him up and alerted police. He had been under surveillance by German police.

So needless to say when it comes to Chancellor Merkel and her open-door policy regarding migrants, the public backlash against her grows, and will only add to support for the right wing Alternative for Germany party.

---

Turning to Asia, in China, as noted above it was about trade and inflation.

Exports in $ terms fell a whopping 10% in September, year over year, with imports falling 1.9%, both far worse than expected.

Exports to the EU were down 9.8%, down 8.1% to the U.S.

Copper imports were way down, which depressed the stock price of miners, and called into question the strength of the recent recovery in domestic demand.

But markets then rallied on word producer prices in China actually rose 0.1%, annualized, the first increase since Jan. 2012, ending 55 months of deflation, according to the National Bureau of Statistics. This is good.

China’s CPI rose 1.9% year over year in September, up from August’s 1.3% pace.  Extensive flooding over the summer impacted food prices.

But next week we get China’s third-quarter GDP, which economists peg at 6.7%, same as Q2.

The thing is, no one will believe 6.7% is the real number, especially with the trade data and little global growth.

[The Communist Party on Tuesday stressed the need to “prevent and punish” fake government statistics.  Off with their heads!]

One other economic data point, passenger car sales rose 28.9% year on year in September, according to the China Association of Automobile Manufacturers.  Part of this could be the result of a short-term surge by Chinese consumers hoping to take advantage of a tax break set to end soon.

An analyst at Moody’s said he expects car sales will rise 6.7% this year, but just 2.7% in 2017 based on a belief the tax cut won’t be extended.  [FT]

Separately, the government is talking about reforms and encouraging foreign investment.  But regarding the former, in an unusual meeting of party leaders and executives of big state-owned companies that ended on Tuesday, President Xi Jinping announced that the Chinese Communist Party had the ultimate say over these businesses.

“Party leadership and building the role of the party are the root and soul for state-owned enterprises,” said Xi, according to state media.  “The party’s leadership in state-owned enterprises is a major political principle, and that principle must be insisted on.”

Such enterprises make up nearly 40% of China’s industrial assets and contribute to the government’s tight control over the economy.  But in recent years the Chinese government had adopted more market-friendly measures, which Xi’s edict flies in the face of. 

The longer bloated state-enterprises, often in industries with overcapacity, sop up credit that could go to smaller and medium-size businesses, the tougher it is to achieve growth.

As for a vow by the State Council, China’s cabinet, to cut red tape and ease rules for foreign investors to help boost the economy and counter a decline in private investment, the investors are looking for tangible results.

“Though the shift from investment approvals to investment notifications may offer some limited benefit to foreign companies applying to invest in China, these measures clearly fall short of the significant liberalizations needed to reinvigorate foreign investors’ moderating confidence in the China market,” said Jake Parker, vice president of China operations at the U.S.-China Business Council, which represents over 200 American companies doing business there.  [Mark Magnier / Wall Street Journal]

A survey by the American Chamber of Commerce in China this year found 77% of respondent companies felt less welcome than a year ago, compared with 47% in 2015, although most companies said they would remain in China.  I sure as heck wouldn’t.  Just read my column every week.  Xi is melding into a total Maoist, let alone his increasingly aggressive foreign policy, which leads to rising nationalism.  Apple products?  I think not.

In Japan, producer prices for September fell 3.2% year over year, which was actually an improvement over August’s 3.6% pace.

Street Bytes

--The Dow Jones fell 0.6% to 18138, while the S&P 500 lost 1.0% and Nasdaq 1.5%.

--U.S. Treasury Yields

6-mo. 0.44%  2-yr. 0.83%  10-yr. 1.80%  30-yr. 2.56%

The yield on the 10-year has risen 21 basis points in two weeks.

--Oil hit a 15-month high on the news that Russia was ready to join OPEC in curbing output, while Algeria’s oil minister said he expected similar commitments from other non-OPEC producers.

At the World Energy Congress in Istanbul, Vladimir Putin said, “Russia is ready to join in joint measures to limit output and calls on other oil exporters to do the same.  In the current situation, we think that a freeze or even a cut in oil production is probably the only proper decision to preserve stability in the global energy market.”

OPEC is looking to cut about 700,000 barrels per day, bringing its output to 32.5-33.0 million bpd* by the time it meets in Vienna for its policy meeting on Nov. 30.  The fact Putin has come out lends credence to the story that there may indeed be a real cut.

However, once an agreement is reached (and many details have to be agreed to prior to Nov. 30), they all tend to cheat on their targets and back up we go with inventories.  And it’s not like there is robust economic growth (i.e., oil demand growth) around the world these days.  So count me as highly skeptical.

Plus, Libya, Nigeria and Iran are set to be exempt from the deal, meaning bigger cuts would have to be made by others, like Saudi Arabia.

*OPEC pumped a record 33.64 million bpd in September, according to the International Energy Agency.

Separately, the Energy Information Administration reported U.S. inventories of crude climbed for the first time in six weeks in the week ended Oct. 7, 4.85m barrels, above expectations.

--Wells Fargo, Citibank and JPMorgan Chase were among the banks reporting earnings on Friday.

Following the scandal over fraudulent sales practices that toppled the CEO (more below), Wells Fargo reported that new account openings had dropped sharply, to 429,000 in September from a year ago, down by a quarter, while credit card applications were down by a fifth to 308,000.

The bank said fewer accounts were being opened because of “lower referrals, marketing activity and product offerings” but added that “overall customer traffic to branches and call centers remained at levels typical for September.”

Profits dipped for a fourth consecutive quarter, $5.64bn vs. $5.8bn a year ago, with revenues little changed at $22bn.

Wells Fargo’s net interest margin – the gap between what banks charge borrowers and pay for their funds – dipped from 2.96% last time to 2.82%.

Citigroup reported revenue declined by 4.8% in the third quarter on a year-on-year basis to $17.8bn, still beating the Street.  Net income fell to $3.8bn, compared with $4.3bn, though this too beat consensus.

Bond trading revenue jumped 35% to $3.5bn, while investment banking revenues gained 15% to $1.1bn on higher debt underwriting.

But the retail banking operation posted just a 1% rise in revenues to $8.2bn.

JPMorgan Chase posted an 8% decline in net income, better than forecasts, on record net revenues from its corporate and investment banking divisions. 

Third-quarter net income was $6.3bn, on revenues of $24.7bn.  JPM’s trading operation generated net revenues of $6.5bn, more than a fifth higher than last year, while investment banking revenues were up 6% to $2.9bn.

Profits at the consumer and community banking division dropped 16% to $2.2bn.  JPM did say it was doing a “deep dive” into whether it had any of the problems Wells Fargo did in terms of overly aggressive sales practices.

--Wells Fargo chairman and CEO John Stumpf gave into reality on Wednesday and announced his immediate departure (retirement).  Stumpf had been in control since 2007 when he was named CEO and it was Wells that emerged from the financial crisis largely unscathed, only to be undone by a fraudulent sales culture that might have continued were it not for a Los Angeles Times piece in 2013 that brought to light problems in the branch system, including sham accounts that customers often didn’t know about until they saw fees accumulating.

Stumpf, who was hauled before Congress twice in recent weeks, will walk away with reported parting gifts of $133 million in cash and prizes, including $109 million in stock.  [The package is after Stumpf agreed to a $41 million clawback following his grilling from the Senate Banking Committee.]

Stumpf is being replaced by Timothy J. Sloan, the president and chief operating officer.

Sloan, in a call with analysts following release of the bank’s earnings on Friday, said: “I am deeply committed to restoring the trust of all of our stakeholders.  We know that it will take time and a lot of hard work to earn back our reputation, but I am confident.”

--After a disastrous recall initiative, Samsung killed production of its Galaxy Note 7 smartphones after the devices continued to burst into flames.  This comes after the South Korean giant first temporarily stopped its production of them, then suspended sales around the world, and now it has ceased producing the model entirely.  Friday, the FAA banned the phone from all flights, including in checked baggage.

Samsung is also in the middle of a product safety issue in Australia, recalling more than 144,000 Samsung washing machines that were prone to causing fires, and there is a potential recall looming for same in the United States.

Back in 2003 there was a recall of 184,000 microwave ovens in the U.S. and in 2009, 210,000 Samsung refrigerators were recalled in South Korea.

So the company has had some major manufacturing issues.  Galaxy Note 7 is far from an isolated case.

Apple, by contrast, has had product recalls of its own, like one for thousands of Beats speakers last year, but nowhere near the scale of any of Samsung’s biggies.

Wednesday, Samsung revised its third-quarter profit estimates down by $2 billion as a result of the Galaxy Note 7 issue, and said earnings would be 33% less than what they had estimated the week before. Then Friday, they revised the profit hit to $2.7 billion.  The total loss from the fiasco is expected to be in the $5bn range.  Needless to say the shares have been suffering.

If you have a Galaxy Note 7, you have to bring it back and get something different.  Whatever you do, make sure it is off!

Personally, I have an older Galaxy model and I used to leave it plugged in for days (I know, I know...that reduces the life of the battery), but no longer.  If I remember, I’m only recharging it when I’m home.  [Heck, I never use the damn thing anyway.]

Of course Samsung’s problems have helped Apple, at least the stock, as this week it hit a high not seen since December.

--Deutsche Bank AG CEO John Cryan failed to reach an agreement with the Justice Department to resolve a years-long investigation into mortgage-bond dealings last weekend in Washington, when there had been rumors of a settlement; rather than the $14 billion opening bid from Justice last month that sent the stock, and the market, briefly, into a tailspin.

There was talk the penalty might be more in the $5-$6 billion range but now who knows.

Meanwhile, Qatar’s royal family is considering increasing its stake in DB to as much as 25 percent, as the bank implemented a companywide hiring freeze (save for compliance) on Wednesday in another attempt to lower costs, after previously eliminating 9,000 jobs and scrapping bonus awards for top management.

--Alcoa opened up earnings season on Tuesday with profits and revenues that were below expectations, while the company revised down its revenue projections for the full year.

Alcoa is breaking up into two separate companies, effective the next quarter, so it was the last quarterly report for the whole operation.  Earnings were up 52 percent, while revenues fell 6 percent, both below the Street’s forecasts.

The new businesses are Arconic, which will be comprised of the group’s specialized metals and products businesses serving the aerospace and automotive industries, and Alcoa Corp., which will have the operations producing commodity aluminum, alumina and bauxite.

--From Defense One: “The White House’s recent decision to allow the sale of F-15 fighter jets to Qatar helped to seal the $18.6 billion purchase of 100 Boeing jetliners announced Friday by Qatar Airways, according to people with knowledge of the deal.

“Executives with Boeing and state-owned Qatar Airways denied links between the military and commercial sales.”

But the jetliner deal had been in negotiation for months and it suddenly came into fruition right after the Obama administration approved the 36 F-15 fighter jets.

The fighter jet deal is worth up to $4 billion, and can be expanded.  The airliner deal includes the purchase of long-haul Dreamliners and 777-ER aircraft, valued at $11.7 billion, plus regional aircraft used for shorter flights worth $6.9 billion.  Finalizing the latter (737 MAX 8 aircraft) would be a real coup for Boeing as Qatar Airways flies only European-made Airbus planes on these regional routes.

Ray Conner, president and CEO of Boeing Commercial Airplanes, said the deal would affect 104,000 jobs across America, not just in the Seattle area where Boeing builds commercial aircraft.

--Volkswagen has reported increased year-to-date sales of its core VW brand for the first time since the emissions scandal broke last September, up 0.6% for the first nine months vs. the same period in 2015.  Sales in September alone were up 6.7%.  [Deliveries are down 12.5% in the U.S. for Jan.-Sept.  But they were up 11.4% in China.]

--Amazon’s attempt to take over every business involved in consumer spending, and then some, continues with the launch of an on-demand music service, costing $7.99 a month for Prime members – about $2 less than rival services from Pandora and Spotify.  It costs $9.99 for non-Prime users.

Cowen & Co. analyst John Blackledge told the New York Post that this new product could be a game changer.  His research suggests that 70 percent of Spotify’s U.S. premium subscribers were also Amazon Prime households, while 75 percent of Apple Music subscribers use Prime, and 74 percent of Pandora One users pay for Amazon’s Prime service.

“Given Amazon’s massive scale, it’s reasonable to assume it could take [music streaming] share,” said Blackledge.

Separately, Amazon plans to hire 20% more seasonal workers for its U.S. warehouses this holiday season as some competitors have kept hiring steady.  The company will add 120,000 positions, up from 100,000.  By comparison, Target is looking to hire the same amount of workers in its stores as last year, 70,000, but will add 7,500 additional workers for its distribution and fulfillment facilities.  Macy’s is planning on adding 2,000 fewer; 83,000 vs. 85,000 in 2015.  [Wall Street Journal]

--Ericsson AB reported sales and earnings that missed forecasts, warning the weakness won’t end any time soon as customers around the world cut spending.  The CEO said, “The negative industry trends have further accelerated.”

Revenue fell 14 percent in the third quarter, a huge drop for such an established company.

Last week I wrote of the phone-network manufacturer’s plans to cut 3,000 jobs in Sweden, a fifth of its workforce there.

--HP said it plans to cut between 3,000 and 4,000 jobs across its printer and PC divisions over the next two fiscal years. This is on top of 3,000 cuts announced in February.  But the company (recall, this is part of the split off from Hewlett-Packard; the printer/PC business and its enterprise solutions operation) is optimistic about the future.

--Shares in Twitter continued to fall as efforts to sell itself are failing.  Late Friday, prime suitor Salesforce.com backed out. 

--Verizon is getting major cold feet in its acquisition of Yahoo, with the general counsel saying on Thursday that the unprecedented hack of 500 million Yahoo accounts presented a material adverse condition (MAC) on the portal’s core asset.

If Verizon isn’t convinced by Yahoo that an MAC has not occurred, Verizon can exit the deal or renegotiate the price.

But Verizon CEO Lowell McAdam is acting like the deal is going to move forward, regardless of what his top lawyer is saying.

--Shares of St. Jude Medical fell on Tuesday after the company said it would have to recall some of its implantable heart devices because of “premature battery depletion,” which led to two patient deaths.

Back in August, short-seller Muddy Waters Research attacked the company, saying its devices could be hacked, which St. Jude denied.

--Japanese IT equipment and services company Fujitsu said it was cutting up to 1,800 jobs in the U.K.

Tokyo has warned Japanese companies could reduce operations in Britain as a result of Brexit, but Fujitsu insists this is not the reason for its move, rather it is part of an effort to streamline operations.

Fujitsu has multiple facilities across the country and unions are threatening job actions.

[I just Fujitsu is eliminating 400 jobs in Germany, too.]

--The SEC voted unanimously to approve a set of rules designed to ensure mutual funds and ETFs are able to liquidate assets quickly enough to pay investors if there is a stampede for the exit.

This has been a concern with all the money that has piled into bond funds, owing to the aggressive monetary policy of the world’s central banks. With low interest rates, investors have been seeking higher yields, thus riskier assets that aren’t always easy to sell quickly.

So the rules will require funds to classify investments into four liquidity buckets, based on the amount of time it would take to convert an asset to cash, and the rules will set a 15 percent limit on the amount of illiquid investments a fund can hold.

A fund’s board will approve a minimum percentage of its assets that are to be designated as highly liquid, defined as cash or an asset able to be converted to cash within three business days.  The board will do this over dinner at Peter Luger’s.

--A report from Morningstar Credit Ratings found that about 45 percent of the 1,035 malls across America have weak sales, declining occupancy and one or more anchor-store vacancies.

Among the most vulnerable are 100 that have Macy’s, JCPenney and Sears, all of which are aggressively closing stores.

--More people now work for New York City – 287,000 full-time employees as of July – than at any other point in its modern history, with thousands more scheduled to join them, as reported in the New York Times the other day by J. David Goodman.

“The projected growth finds few parallels in other major American metropolises; most, like New York, trimmed their numbers after the financial crash of 2008.  Some have rehired, though not at the level that New York has under Mayor Bill de Blasio.

“But behind all the job growth is a complicated set of factors that explain the possible benefits and costs to the city, the mayor and his supporters.  Unions will see new jobs for their members, but the city will see future pension costs rise.

Most of the recent growth has been for teachers, corrections officers and an expansion of the police force.

--Jonathon Trugman of the New York Post reported on a study put out by Sentier Research that showed how over an 18-year period, from 1996 to 2014, white males in the working class with a high school education have seen their pay fall by 9 percent, the study only looking at white males.

There in a nutshell is the reason why so many of America’s working class feel left behind and cheated...and have turned to Trump.

In the 45- to 49-year-old age group, earnings fell from $62,767 to $54,303, a 13.7 percent loss in income.

By contrast, white male college graduates saw their income rise 23 percent.

But an analysis of health-care costs by Aon “found that there has been a 134 percent rise since 2005 in employee contributions and out-of-pocket co-payments and deductibles,” as noted by Jonathon Trugman.

Ergo, even a 23 percent income increase over 18 years is very weak, let alone a 9 percent loss. Both segments are falling behind at a rapid clip.

--According to the U.S. Department of Agriculture, more than 43 million gallons’ worth of milk has been dumped in the first eight months of 2016, amid a massive glut that has slashed prices and filled warehouses with cheese.  [Time for me to resort to a life of crime and take down some cheese warehouses.  I’ll use my Swiss Army Knife with the saw blade.  Then I’ll ride the rails, eating said product.] 

The Wall Street Journal reports this is the most milk wasted in at least 16 years, as producers attempt to find new uses for the excess, like getting more milk into school lunches.

But prices have plunged 36% since hitting records in 2014.  It was then that dairy and meat producers expanded production and, voila, the stage was set for the next bubble.

The milk is being dumped in every place imaginable, including manure lagoons, because milk processing plants are filled to capacity.

Farmers in the U.S. are also now dealing with record harvests for corn and soybeans, with low prices for both leading to the third consecutive drop in farm incomes.

--U.K.-born Oliver Hart and Bengt Holmstrom of Finland won the Nobel Prize for economics for their work on contract theory, such as in bankruptcy legislation and political constitutions.

Working separately, the two created tools to help determine whether public sector workers should receive fixed salaries or performance-based pay, and whether providers of public services should be publicly or privately owned.

Holmstrom, a former Nokia board member, is a professor at MIT, while Hart is an econ professor at Harvard.

--The “Today” show is a major revenue generator for NBC so Street Bytes is the appropriate place to note that Billy Bush is not returning to the program following the controversial videotape with Donald Trump.  He was suspended indefinitely but is negotiating his exit, according to reports.  [$10 million is the latest, the full value of his three-year deal.]

Aside from chuckling and encouraging Trump as the two are talking about how Trump tried to have sex with Nancy O’Dell, we see how Bush, then a co-host on “Access Hollywood,” could not have been more of a jerk when he got off the bus with Trump, begging the actress they were meeting with to give them both hugs.

According to the New York Post’s Page Six, Bush “brazenly bragged to NBC staff about the vulgar Donald Trump tape while covering the Olympics in Rio.”

It seems that at a party in August, Bush said he had a “tape of Trump being a real dog,” prompting staffers at “Access Hollywood” to track it down.

Bush never told NBC News brass about the tape when he joined “Today,” which is what in hindsight really ticked them off.  Imagine, the tape was under the News division’s nose and they didn’t get the scoop, though it’s not known if Bush remembered his own role in it.

Because Bush was such a jerk, “Today” staff is being urged to come forward “with any concerns” about him.

Yes, Billy Bush is now in my December file for “Jerk...” and “Dirtball of the Year” consideration, an exclusive on my Bar Chat link.

--Noooo!  Lobster prices have hit their highest levels in a decade thanks to the rise of burger and lobster chains, as reported by the Financial Times.

“In London, Burger & Lobster, which was launched in 2011, has been a pioneer in the genre and has expanded to other cities around the world.”

It’s the lobster roll phenomenon, sports fans, and thus the demand for lobster meat is rising rapidly.  The price is now $6 a pound, wholesale, an 11-year high.

Following the financial crisis of 2008, and a warm water phenomenon off Maine, lobster prices fell to historical lows...$3.70 in 2009.

Bottom line...not a good time to be a lobster.  #16 on the “All-Species List,” the link for which on my site (at the very top of the home page), is in the soft-launch phase as we work out some kinks.  But I’ll be asking for your feedback.  And have fun with it!  [Especially if you’re a dog lover.]

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey: After a temporary lull in bombing called by the Syrian government, partly to allow civilians to leave rebel areas, Russian warplanes resumed airstrikes on Aleppo, scores dying.

British Prime Minister Theresa May said there are “many questions” over whether a no-fly zone is an appropriate solution to the Syria crisis and bombing of Iraq’s once largest city.

Speaking about the potential benefits of a no-fly zone, May, addressing Prime Minister’s Questions in Parliament on Wednesday, said:

“Who is there to protect? Would it lead to Assad bombing people in the expectation that they would then move to that zone?  How would you actually enforce a safe area there?”

May said the only real solution is a “political transition” to a “stable Syria” free of President Bashar al-Assad “and it’s time that Russia accepted that,” she said.

You know my feelings on this situation.  The time for a no-fly zone was 2012.  It has long passed with Russia involved.  I love all the politicos talking glibly about it now.  Freakin’ idiots...every one of them.

French President Francois Hollande delivered a sharp critique of the Obama administration on Wednesday in a magazine interview, calling Washington afraid to use its power to stop the bloodshed in Syria, but too eager to wield its economic might to penalize European companies.

“The U.S. has ‘too much power to take back money and not enough power to make peace,” Hollande said in an interview published in the French magazine l’Obs.

Hollande would like to see strikes against the Assad regime, but France is not going it alone and President Obama has obviously been resistant to intervene against Assad.

Hollande went back to 2013 and said the decision not to retaliate against the Syrian government for using chemical weapons encouraged Russia’s military expansion into Ukraine and Syria.

“This signal was interpreted as weakness from the international community,” Hollande said. “That’s what provoked the crisis in Ukraine, the illegal annexation of Crimea, and what’s happening to Syria right now.”  [Matthew Dalton / Wall Street Journal]

Meanwhile, the Russian military, which recently placed advanced anti-missile systems in Syria, said it would shoot down American aircraft if they launched a campaign against Assad.

In Iraq, it appears the operation to retake Mosul, expected to begin in a major way shortly, has been slowed by Turkey, which is saying any mistake in the U.S.-backed operation to drive out Islamic State could result in hundreds of thousands of refugees, according to a presidential spokesman.  I noted this weeks ago, this being the chief fear in both Washington and Baghdad, but Turkey is locked in an escalating row with Iraq over who should take part in the Mosul assault and Turkey doesn’t want the Kurdistan Workers Party (PKK) militants*, viewed by Ankara and some in the West as terrorists, to be involved.  It’s the PKK fighting the insurgency in Turkey that has left 40,000 people dead.

*The PKK was blamed for a car bomb in southeast Turkey this week at a military checkpoint that killed ten soldiers and eight civilians.

Turkey has been training Sunni Muslim and allied Kurdish Peshmerga units at a camp near Mosul and wants them involved in the assault.

But Baghdad’s Shiite-led government objects to the Turkish military presence and wants Iraqi army units at the forefront, though this also includes the use of Shiite militias.

How bad is the growing rift between these two?  On Tuesday, Turkish President Erdogan unleashed a tirade against Iraqi Prime Minister Haider Abadi, telling the Iraqi he needed “to know his limits.”

“You are not my equal,” Erdogan said, “and you are not at my level and your shouting in Iraq is not important to us at all.”

Uh oh.

The U.S. has said any foreign forces, such as Turkey’s, should have the approval of the Baghdad government.

[There’s a Reuters story out tonight that ISIS executed 58 suspected of taking part in a plot to help deliver Mosul to government forces, according to residents and Iraqi security officials. Among those killed was a local aide to IS leader Abu Bakr al-Baghdadi, who led the plotters.]

Yemen/Iran: Saturday, a Saudi air strike mistakenly killed more than 140 mourners, 500+ wounded, at a funeral in the Yemeni capital of Sana’a, with Houthi rebels blaming the attack on the Saudis, who would later concede they blew it.  The Iranian-backed Houthis then launched cruise-missile attacks against U.S. Navy ships on Sunday night and Wednesday from Yemen, clearly in retaliation and at the direction of Tehran.

The U.S. struck back, as described below; our first direct military action against the Houthis.

Editorial / Wall Street Journal

“The White House doesn’t want Americans to notice, but the tide of war is not receding in the Middle East.  The Navy this week became part of the hot war in Yemen, with a U.S. warship launching missiles against radar targets after American vessels were fired on this week.  Just when President Obama promised that American retreat would bring peace to the region, the region pulls him back in.

“The destroyer USS Nitze fired Tomahawk cruise missiles to take out three radar sites on the Yemen coast believed to be manned by Houthi rebels.  Though the Houthis deny it, the Pentagon believes they were responsible for the multiple-missile attack on Sunday against the USS Mason, another destroyer patrolling in international waters.  This was no mere warning shot.  The Mason had to use active defenses, including interceptor missiles, to prevent a strike that could have killed dozens of sailors....

“But there’s more to this story because the Houthis are one of Iran’s regional proxy armies.  They are fighting to control Yemen against a Saudi-led coalition that is trying to restore the former Sunni Arab government in Sana’a.  The U.S. has been quietly backing the Saudis with intelligence and arms, though the Saudi coalition has been fighting to a draw with the Houthis, who are supplied by Iran. The cruise missiles used against the USS Mason are also used by Hizbullah, another Iran proxy army.

“Don’t expect the White House to acknowledge this because the ironies here are something to behold.  Mr. Obama is backing the Saudis in Yemen in part to reassure them of U.S. support after the U.S.-Iran nuclear deal that the Saudis opposed.  Mr. Obama’s Iran deal was supposed to moderate Iran’s regional ambitions, so Mr. Obama could play a mediating role between Tehran and Riyadh.  But the nuclear deal has emboldened Iran, and fortified it with more money, so now the U.S. is being drawn into what amounts to a proxy war against Iran.  Genius....

“Two years ago Mr. Obama called U.S. policy in Yemen a model of counterinsurgency.  But it has since become, like Syria and Iraq, another catastrophic civil war that is another front in the Iranian campaign to become the dominant power in the Middle East.

“Mr. Obama doesn’t want Americans to figure this out during the election campaign, or as he exits the White House, which is one reason he’s responded so feebly to this blatant act of war against U.S. ships.  Mark Yemen down as one more hot mess that this President is leaving to his successor.”

Benny Avni / New York Post

“Yemen, a microcosm of the current Mideast mess, can in part be chalked up to America’s policy in the last decade.  We tried to divorce ourselves from a region that simply refuses to accept our pleas for separation.

“Our withdrawal gave rise to the region’s most extremist elements and their anti-American backers.

“Regrettably, the two presidential frontrunners signal they’ll mostly continue Obama’s attempt at ending America’s traditional global leadership, which sooner or later will come back to bite us, and American will likely be drawn into a much messier war.”

Iran sent warships to the coast of Yemen today.

The civil war in Yemen has claimed at least 6,700 lives, according to the U.N., with 4,000 of the deaths being civilian.  60% of the civilian deaths are related to coalition airstrikes.

Three million are in need of immediate food supplies.  Cholera has also been reported in Sana’a and other cities.  Three million have been displaced.

Afghanistan: ISIS claimed responsibility for two attacks on mosques in the country this week, one that killed 18 Shiite worshippers in Kabul, the other in the northern part of the country that killed at least 14, as Shia worshippers were observing Ashura, one of its holiest days.

Needless to say it is worrisome ISIS clearly has an established base of operations in the country that is growing.  For its part, the Taliban denied any involvement in the attacks.

Israel: A Palestinian gunman shot and killed two Israelis as he drove through Jerusalem on Sunday, in what Israeli authorities called a terror attack.  Israeli police shot dead the 39-year-old assailant.  Others were wounded.

The wave of bloodshed that began a year ago has left 42 Israelis dead and more than 500 wounded.  Israeli security forces have killed some 200 Palestinians, most after attacks against Israelis.

Russia: Speaking at the “VTB Russia Calling!” Conference in Moscow, Wednesday, President Vladimir Putin claimed the West had unilaterally withdrawn from the negotiating table.

“There is no dialogue now, only some kind of dictate,” he told the audience.

Russia finds itself increasingly isolated internationally.  The U.S. is considering imposing additional sanctions on Russia for its role in supporting Syrian President Assad’s ongoing assault on the opposition holdout of Aleppo, and for its alleged hacking of servers in the Democratic National Committee and selected officials.

Putin used the forum to defend the Kremlin’s position on Syria.  “Our partners should not be offended by our veto (of a French U.N. resolution to end airstrikes in Aleppo),” he said.  “We are the ones who should be offended.”

He claimed the French had “failed to take Russia’s interests in Syria into account,” and had failed to place any blame on the Syrian opposition for the war there.

Russia’s relations with France have taken a severe hit, with the Kremlin cancelling a state visit to Paris, scheduled for Oct. 19.  Preparations for the trip were a year in the making, but President Hollande pulled away from the engagement following Russia’s continued bombing of Aleppo, accusing Russia of war crimes and saying the visit to France by Putin would only be about Syria.

Alexander Baunov / Moscow Times

“Russia has made an unexpected maneuver by declaring an ostentatious break with the United States on a broad front.

“Until recently, everything seemed to be moving in the opposite direction, with Russia coveting an international ‘diplomatic victory’ that restored its status in the West and presupposed support from the United States.  In Syria, where Moscow has increasingly set the agenda ove the past year, it had largely accomplished that goal.

“Yet on Oct. 3, Moscow said it was pulling out of the U.S.-Russia Plutonium Management and Disposition Agreement, signed in 2000.  The two countries have traded threats and accusations on a whole series of issues, and relations have abruptly dropped to a new low....

“(In Syria) the reasons can easily be listed.  Moscow blamed the United States for an airstrike that wiped out an entire Syrian regiment, calling it a serious setback in the fight against IS. The Americans blamed Russia for attacking a humanitarian convoy. Then came the bombardment of Aleppo, which caused angry dissension between the two sides.

“But Russia went further, turning a local breakdown in bilateral relations into a global one. President Putin announced that Russia was suspending the 2000 agreement on plutonium disposal. In his decree halting cooperation, Vladimir Putin explains the decision by ‘a fundamental change of circumstances’ and the ‘emergence of a threat to strategic stability’ caused by U.S. actions.

“Now, the new Duma will start its term by approving a text condemning the United States for taking ‘steps resulting in a fundamental change in strategic stability.’

“Moreover, the conditions Russia set for rejoining the treaty are extreme.  Moscow demanded that the United States scale back its military presence in states that joined NATO after 2000 and told Washington to repeal the Magnitsky Act and the Ukraine Freedom Support Act, lift all anti-Russian sanctions, and compensate Russia for the damage the U.S. inflicted on its economy.

“On the American side, the harder line was reinforced by the Dutch Safety Board report on the MH-17 airliner downing.  Although most of the world already knew that Moscow was in some shape or form responsible for the disaster, the report has  a legal dimension....

“One more factor has helped trigger Moscow’s decision to break with the United States: the U.S. election campaign in which Russia has been playing a prominent role.

“Americans are now defining Russia as a full-fledged global adversary. The shock is not that Russia misbehaved somewhere overseas but that it directly interfered in American domestic politics.

“The American media and politicians are now essentially saying what Putin said: Russia is a direct threat to U.S. security.

“It will be hard to undo this rhetoric in the case of Hillary Clinton’s more than likely victory.  Leaders of a new administration who just recently claimed that a powerful foreign adversary was about to destroy the country through its political manipulations will not act as though nothing has ever happened.  Putin will have to deal with a hostile foreign policy environment during his last term in office.

“So Russia decided not to wait to be punished by the United States and instead seized the initiative to drive the relationship to rock bottom.  The assumption must be that when relations are so low, the only way for them to go is up.  It is a bold political move that Putin hopes will give him greater freedom of maneuver on issues like Aleppo and the Donbas [Ed. Ukraine].  But the assumption carries one obvious risk: the present rock bottom may only conceal another even deeper one.”

Separately, Russia said it’s working with China to counter U.S. plans to expand its missile-defense network, which the two see as targeting their military assets.

The U.S. and NATO have stressed the alliance’s global missile shield will be a defense solely against missiles from rogue states such as Iran and North Korea.

George F. Will / Washington Post

“Vladimir Putin’s serial humiliations of America’s bewildered secretary of state regarding Syria indicate Putin’s determination to destabilize the world. Here is an even more ominous indication of events moving his way: On just one day last week, Italian ships plucked 6,055 migrants from the Mediterranean.

“What has this to do with Putin? It portends fulfillment of his aspiration for Europe’s political, social and moral disorientation....

“Europe has recently been politically destabilized and socially convulsed by the arrival of a million Syrian migrants seeking asylum. Future migrations from Africa, with a large Muslim component, could pose the greatest threat to the social cohesion of Europe since 1945, or even since invading Arab forces were halted at Poitiers in 732.

“Undermining the West’s confident sense of itself is important to Putin’s implementation of his ideology of Eurasianism.  It holds that Russia’s security and greatness depend on what Ben Judah calls a ‘geographically ordained empire’ that ‘looks east to Tashkent, not west to Paris.’

“Writing in the British journal Standpoint, Judah reports that Russian television relentlessly presents ‘a dangerous, angry wonderland’: ‘Russia is special, Russia is under attack, Russia swarms with traitors, Russia was betrayed in 1991, Russia was glorious under Stalin’s steady hand.’  This justifies gigantic military, intelligence and police establishments steeped in Eurasianist tracts published by the Russian General Staff.

“Putin’s Russia, writes Owen Matthews in the Spectator, is developing a ‘state-sponsored culture of prudery’ to make it a ‘moral fortress’ against Western decadence....

“Twenty-one percent of Russians want homosexuals ‘liquidated,’ and 37 percent favor ‘separating them from society.’....

“In many worrisome ways, the 1930s are being reprised.  In Europe, Russia is playing the role of Germany in fomenting anti-democratic factions. In inward-turning, distracted America, the role of Charles Lindbergh is played by a presidential candidate smitten by Putin and too ignorant to know the pedigree of his slogan ‘America First.’”

In a poll by state-backed Public Opinion Fund, Donald Trump is Russia’s favorite to win the election; 44% said a Trump victory would be in Russia’s best interests, while just 7% backed Hillary Clinton. The rest either said the outcome would not matter for Russia, or didn’t answer. 

Only 8% viewed Clinton positively, 61% negatively.  38% viewed Trump positively, 20% negatively.

China: So I’ve written the past two weeks about the upcoming 19th Party Congress and rumors that President Xi Jinping won’t be content with being in charge for ‘just’ ten years.  So I found it interesting that the Financial Times’ Tom Mitchell had similar thoughts this week.

“For more than a decade, a tacit understanding among China’s top rulers has ensured the ruling Communist party does not become a gerontocracy. That understanding, known as qishang baxia or ‘seven-up, eight-down,’ dictates that only leaders 67 or younger can ascend to or remain in top posts, while those 68 or older must retire when the party changes guard every five years.

“But as China prepares to enter a ‘selection year’ under the leadership of a very unconventional president, Xi Jinping, there is increasing speculation he may try to dispense with the retirement convention entirely....

“It would also be the strongest signal to date that Mr. Xi could ignore a similar unwritten rule on term limits that would require him to step down from his current position as party leader in 2022.

“Mr. Xi heads the seven-member Politburo Standing Committee, the party’s most powerful body.  Since 2012 he has overseen a draconian anti-corruption campaign and asserted his authority over the military and even economic policy, an area traditionally delegated to the premier.

“As a result, he is widely regarded as the party’s most powerful leader since Deng Xiaoping, the architect of China’s reform and opening, if not Mao Zedong, the party’s revolutionary hero.”

Taiwan: In her National Day speech, Taiwan’s President Tsai Ing-wen urged the mainland to accept that the “Republic of China exists” and that the people of Taiwan have an “unshakable faith in the democratic system.”

Once again, Tsai refused to accept the “one China” principle, which upsets Beijing to no end.

“We respect the historical fact that in 1992 the two institutions representing each side across the strait held a meeting,” Tsai said.

But she declined to refer to the “1992 consensus” – the key words that refer to one-China.

“The new government will conduct cross-strait affairs in accordance with the Constitution of the Republic of China [Taiwan’s official title], the Act Governing Relations between the People of Taiwan and Mainland Areas, and other relevant legislation,” Tsai said.

Beijing has suspended talks and other official channels of communication with Tsai’s government since June in what was seen as a move to pressure Tsai into accepting the “1992 consensus.”

Remember, Beijing still regards Taiwan as part of the mainland awaiting eventual reunification, and has threatened to take it by force if necessary.  It will.  Sooner than later.  That’s been my prediction.

North Korea: David Ignatius / Washington Post

“When South Korean officials talk about the growing nuclear challenge from North Korea, they use red-alert phrases such as ‘existential threat,’ ‘imminent danger’ and ‘dagger at the throat.’ They want Americans to understand that this long-running story of brinkmanship has entered a new phase.

“One senior South Korean official told me starkly: ‘A nuclear missile from the North can land on this office in four to five minutes.  We don’t have the luxury of thinking twice...This is no longer a dark cloud on the horizon.  It’s a threat at our doorstep.’....

“There’s a sense here, among South Korean and American officials alike, that Kim Jong Un, the mercurial leader in Pyongyang, is racing through the warning lights to gain nuclear weapons and missile capabilities to attack his neighbors, and also the United States.  The next U.S. president will have to decide what to do about it....

“The frustration voiced by U.S. and South Korean officials is that nothing has succeeded in checking North Korea’s relentless advance toward nuclear weapons....

“Even China seems to have limited leverage....

“South Korean officials hope the United States can reassure a jittery public about the reliability of its nuclear umbrella...That could mean more overflights by B-52 and B-1 bombers, more visits by top U.S. officials and more joint defense talks....

“What happens if all these efforts fail, and Kim deploys nuclear-tipped missiles that could hit U.S. territory?  ‘We should have a euphemism for ‘preemption,’’ commented one former senior U.S. official at the conference here [Seoul].

“But whatever word is used, an unpalatable military choice may confront the next president – for the simple reason that nothing else seems to have worked.”

Philippines: President Duterte is leading a delegation of 250 Philippine business executives to Beijing this coming week as he seeks a new partnership with China at a time of rising tensions between Manila and Washington.

Duterte has an 86 percent approval rating after three months in office, according to a Pulse Asia Research Inc. poll conducted Sept. 25-Oct. 1.

Ethiopia: Robyn Dixon / Los Angeles Times

“For years, Ethiopia’s government has repressed dissent, jailed opposition leaders and at times shut down social media, producing the kind of political stability that has helped reassure foreign investors.

“But the climate that nurtured one of Africa’s fastest-growing economies is suddenly under threat, as months of violent antigovernment protests have turned in recent days into attacks on Dutch, Turkish, Saudi and Nigerian businesses.

“ ‘A state of emergency has been declared because the situation posed a threat against the people of the country,’ Ethiopian Prime Minister Hailemariam Desalegn declared over the weekend....

“Authorities have been accused by international human rights groups of a heavy-handed response to the protests that began in November....

“Security forces have killed at least 500 people and detained tens of thousands of others since protests erupted late last year, according to Human Rights Watch, as the government confronts its worst public unrest in its 25 years in power.”

More refugees coming to Europe, boys and girls.

Thailand: King Bhumibol Adulyadej died.  He was 88.

Bhumibol was the world’s longest-reigning monarch, serving seven decades since being enthroned as an 18-year-old in 1946; the one enduring figure during Thailand’s transition from an agrarian backwater to Southeast Asia’s second-biggest economy. His reign encompassed more than two dozen changes of prime minister and 10 coups, including the most recent one in May 2014.

Bhumibol was a truly beloved monarch, traveling the nation to meet with everyone from tribesmen to aristocracy.  His rule was seen as one of the few things that were stable in the country.  His picture was in every home and business.

Bhumibol’s successor is his only son, 64-year-old Crown Prince Vajiralongkorn, who is far from beloved, being a playboy and womanizer, thrice divorced, living with a German stewardess these days.  Looks like a total spoiled brat (when you see the pictures)...an old one at that.

So lots of uncertainty in this land in the coming months.  How will the military act?

Nigeria: Boko Haram released 21 of the 276 schoolgirls snatched from their dormitories in the town of Chibok 2 ½ years ago.  The 21 were apparently swapped for four Boko Haram members that had been captured.

Random Musings

Presidential Polls....

According to the latest NBC News/Wall Street Journal survey taken after a videotape of Donald Trump making vulgar remarks about women surfaced, but before Sunday night’s second debate, Hillary Clinton had an 11-point lead, 46% to 35%, among likely voters, in a four-person race (Gary Johnson 9%, Jill Stein 2%), up from 6 percentage points in September, when the split was 43-37 in a four-way contest.

But...in the same poll, including voters after the debate, through Monday, it was a 9-point lead, 46-37 (Johnson 8, Stein 2).

A new Reuters/Ipsos national tracking poll launched after Sunday night’s debate has Clinton leading Trump by 8 points among likely voters.  It was 5 points the prior week.  [Among those who watched at least a portion of the debate, 53% said Clinton won, 32% said Trump did.  82% of Democrats thought Clinton won, 68% of Republicans thought Trump did.]

A Fox News national poll had Clinton leading Trump 45-38 in a four-way race, 49-41 in a two-way.

In battleground states’ polling....

Two new NBC News/Wall Street Journal/Marist polls, taken before the 2005 video of Trump and Billy Bush was released, show Clinton leading Trump in Pennsylvania by 12 points among likely voters, 49% to 37%; Gary Johnson 6% and Jill Stein 4%.

[Also in the NBC/WSJ survey, incumbent Republican Sen. Pat Toomey trails Democratic challenger Katie McGinty by four points, 48-44, in this key Senate race.]

In Florida, Clinton led Trump 45-42, with Johnson at 5% and Stein 3%.

[Rep. Sen. Marco Rubio leads Democratic challenger Patrick Murphy 48-46.]

In NBC/WSJ/Marist polls released end of the week, Clinton leads Trump in critical North Carolina, 45-41 in a four-way race, while Trump edges her in Ohio, 42-41 (also four-way).

Back to Pennsylvania, a new Bloomberg Politics poll conducted Friday through Tuesday after the video’s release and the debate has Clinton with a 9-point lead in a two-way race statewide, 51-42, with a huge 28-point lead in four key Philadelphia suburban counties, 18 points larger than Barack Obama’s winning margin there in 2012.  To offset this, Trump needs to take the rest of the state by a far bigger margin than his current 11-point lead.  Without the Keystone state’s 20 electoral votes, Trump’s chances of gaining the White House are virtually nil.

Clinton still leads Trump in Pennsylvania in a four-way by 9 points.

[In the Pennsylvania Senate race, according to the Bloomberg Politics poll, McGinty leads Toomey, 47-45, or within the margin of error.]

--Jonathan Swan of The Hill reported that Steve Bannon, the chairman of right-wing news outlet Breitbart who became CEO of Donald Trump’s presidential campaign, has given explicit orders to his staff to destroy Paul Ryan.

“On editorial conference calls, the Breitbart chairman would often say ‘Paul Ryan is the enemy,’ according to a source who worked with Bannon at the news organization.

“In December 2015, weeks after Ryan became Speaker, Bannon wrote in an internal Breitbart email obtained by The Hill that the ‘long game’ for his news site was for Ryan to be ‘gone’ by the spring.

“In the Dec. 1 email, Breitbart’s Washington editor, Matt Boyle, suggested to Bannon that a story promoting Ryan’s planned overhaul of the mental health system would be a good way to ‘open a bridge’ to Ryan.

“Bannon wasn’t keen on the idea.

“ ‘I’ve got a cure for mental health issue,’ Bannon wrote to Boyle.  ‘Spank your children more.’

“ ‘I get that,’ responded Boyle, ‘but this is a place where we can open a bridge to Paul Ryan – we’re playing the very long long long game Steve.’

“Replied Bannon: ‘Long game is him gone by spring.’”

But a source close to the Trump campaign said it’s not Bannon today who is going after Ryan.  That’s Trump’s doing.  That said, Bannon, according to the source, “thinks Paul Ryan is part of a conspiracy with George Soros and Paul Singer, in which elitists want to bring one world government.”

--The emails....

CNN political commentator Donna Brazile seemingly gave the Clinton campaign advance notice of a question that came up at the network’s presidential town hall on March 13, 2016, according to emails released Tuesday.

“From time to time I get the questions in advance,” said Brazile, who was then vice-chair of the Democratic National Committee, in a March 12, 2016, email to Clinton’s communications director.

Brazile then relayed a question on the death penalty that was then asked, virtually verbatim, the next night.

[Brazile is now on leave from CNN as she serves as interim chair of the DNC.]

Also as part of the above WikiLeaks dump, it seems clear Hillary Clinton’s staff was in communication with government officials about the email issue once it was disclosed she was using a private email server while leading the State Department.

Campaign spokesman Brian Fallon, who worked at Justice before joining the campaign in 2015, is shown being given a heads up about a preliminary hearing in a  lawsuit brought against State.

Michael Goodwin / New York Post

Goodwin writes of the slanted coverage of the New York Times as “reflected in the trove of emails WikiLeaks released from Clinton campaign chairman John Podesta.”

“Times reporters and columnists repeatedly show up in partisan ways.  Washington correspondent John Harwood sends Podesta his private approval of Hillary Clinton appearances, as if he’s on the team.  Columnist Nicholas Kristof, in advance of an interview with Bill Clinton, emails his questions, which Podesta’s team passes around to staffers to shape Clinton’s answers.

“A Washington reporter gives Hillary Clinton veto power over quotations he can use from an interview.  Another reporter is praised as someone who has ‘never disappointed’ in delivering stories the campaign wants ‘teed up’ for public consumption.”

For his part, Podesta blamed Russia for the hack into his emails.

The emails released thus far certainly should anger Sanders supporters but there isn’t anything truly explosive as yet.

But you do have this situation that garnered a lot of press in certain circles.

Byron Tau / Wall Street Journal

“Mr. Podesta and Mrs. Clinton’s campaign communications director, Jennifer Palmieri, also received an email from a scholar at the Center for American Progress noting that then-Wall Street Journal managing editor Robert Thomson and Rupert Murdoch, chairman of News Corp., were raising their children as Catholics.

“ ‘Many of the most powerful elements of the conservative movement are all Catholic (many converts) from the SC and think tanks to the media and social groups,’ wrote John Halpin, a senior fellow at the Center.

“Ms. Palmieri wrote back: ‘I imagine they think it is the most socially acceptable politically conservative religion.  Their rich friends wouldn’t understand if they became evangelicals.’”

Editorial / Wall Street Journal

“This is a window into the intolerant secular soul of the Democratic establishment and perhaps explains why it has done so little to accommodate requests for religious liberty from the Little Sisters of the Poor.  Team Clinton apparently views religion merely as a justification people adopt for their views on politics and gender.  Don’t Clinton campaign advisers think it’s at least possible that a person might be motivated by sincere belief?....

“(The) disdain for people of faith helps explain today’s political polarization and why so many people are willing to support a blunt, avenging force like Donald Trump.  Religious Americans know that much of the political establishment detests them.

“Imagine the media bonfire if emails surfaced from the Trump campaign with similar comments about Islam, but the anti-Catholic emails have received little media attention.  To the progressives who dominate American culture and politics, anti-Christian views are the most socially acceptable form of bigotry.”

Kimberley A. Strassel / Wall Street Journal

“If average voters turned on the TV for five minutes this week, chances are they know that Donald Trump made lewd remarks a decade ago and now stands accused of groping women. But even if average voters had the TV on 24/7, they still probably haven’t heard the news about Hillary Clinton: That the nation now has proof of pretty much everything she has been accused of....

“Start with a June 2015 email to Clinton staffers from Erika Rottenberg, the former general counsel of LinkedIn.  Ms. Rottenberg wrote that none of the attorneys in her circle of friends ‘can understand how it was viewed as ok/secure/appropriate to use a private server for secure documents AND why further Hillary took it upon herself to review them and delete documents.’  She added: ‘It smacks of acting above the law and it smacks of the type of thing I’ve either gotten discovery sanctions for, fired people for, etc.’

“A few months later, in a September 2015 email, a Clinton confidante fretted that Mrs. Clinton was too bullheaded to acknowledge she’d done wrong.  ‘Everyone wants her to apologize,’ wrote Neera Tanden, president of the liberal Center for American Progress.  ‘And she should. Apologies are like her Achilles’ heel.’....

“The entire progressive apparatus – the Clinton campaign and boosters at the Center for American Progress – appears to view voters as stupid and tiresome, segregated into groups that must either be cajoled into support or demeaned into silence.  We read that Republicans are attracted to Catholicism’s ‘severely backwards gender relations’ and only join the faith to ‘sound sophisticated’; that Democratic leaders such as Bill Richardson are ‘needy Latinos’; that Bernie Sanders supporters are ‘self-righteous’; that the only people who watch Miss America ‘are from the confederacy’; and that New York Mayor Bill de Blasio is ‘a terrorist.’

“The leaks also show that the press is in Mrs. Clinton’s pocket....

“Mrs. Clinton has been exposed to have no core, to be someone who constantly changes her position to maximize political gain.  Leaked speeches prove that she has two positions (public and private) on banks; two positions on the wealthy; two positions on borders; two positions on energy.  Her team had endless discussions about what positions she should adopt to appease ‘the Red Army’- i.e. ‘the base of the Democratic Party.’

“Voters might not know any of this, because while both presidential candidates have plenty to answer for, the press has focused solely on taking out Mr. Trump. And the press is doing a diligent job of it.”

--Michelle Obama proved to be one heckuva surrogate for Hillary Clinton on Thursday, as she eviscerated Trump in a speech in Manchester, N.H., hammering him for his behavior towards women.

“This is not normal,” she said.  “This is not politics as usual.  This is disgraceful.  It is intolerable.”

Referring to the 2005 videotape with Billy Bush, Obama said:

“This was not just a lewd conversation, that wasn’t just locker room banter.  This was a powerful individual speaking freely and openly about sexually predatory behavior and actually bragging about kissing and groping women – using language so obscene that many of us were worried about children hearing it when we turn on the TV.”

The speech was terrific, frankly. 

--Addressing Trump’s behavior, including lashing out at Speaker Paul Ryan for abandoning the nominee, Newt Gingrich said: “Look, first of all, let me just say about Trump, who I admire and I’ve tried to help as much as I can.  There’s a big Trump and a little Trump.  The little Trump is frankly pathetic.  I mean he’s mad over not getting a phone call?”

Trump blasted Ryan for not offering his congratulations after Sunday night’s debate.

Gingrich on a Thursday morning appearance on Fox Business said Trump needs to focus his energy on Clinton and to stop being distracted.  On “O’Reilly” that night, he said Trump’s tweeting was “baloney.”  “We want our leaders to think things through.”  I would have said, “Wait 24 hours!”

--Questioned about Donald Trump’s sexist comments, Russian Foreign Minister Sergei Lavrov told CNN, “There are so many pussies around your presidential campaign on both sides that I prefer not to comment.”

Lavrov prefaced the statement by pointing out that English is not his native language and that he was not sure if his words would be considered “decent.”

On the issue of whether or not the Russian government is trying to interfere in the U.S. election, Lavrov said he had not seen “a single fact, not a single proof” of any attempt by Moscow to influence the electoral process.

--According to a Quinnipiac University survey, despite a 4-1 approval among black adults, all American adults disapprove 54-38 percent of athletes refusing to stand during the National Anthem.

White adults disapprove 63-30.  Black adults approve 74-17.

There is a similar racial split on police in general as whites approve 70-20 of the way “police in the U.S. are doing their job,” while black Americans disapprove 67-24.

But...blacks approve 68-25 of the way “police in your community are doing their job.”  Whites approve 88-8.

--The Swedish Academy awarded the Nobel Prize in literature to Bob Dylan “for having created new poetic expressions within American song tradition.”

Dylan had long been rumored for the prize, but literary watchers considered his name among those in the running as more of a novelty.

He is the first American to win the prize since Toni Morrison in 1993.

--I wrote the following last week:

“I have nothing to say on Hurricane Matthew, as it still poses a significant danger.  But to those who say it was overhyped, remember my adage, ‘wait 24 hours.’  Good luck to my friends in Kiawah, S.C.  I hope I am down there again in December.”

I have to admit when I wrote this I was furious with some of what I heard on the radio that Thursday, especially from Rush Limbaugh, pooh-poohing the storm. What an idiot, I thought. 

It was only by chance I heard him, but I’m assuming he didn’t apologize to his listeners on Monday after the storm swamped eastern North Carolina on Saturday, killing 22, as I write now, with total devastation in some parts.  17 inches of rain in many cities, including down in Savannah, Georgia.

I have lots of college friends from the area and one I checked up on, Ken S., doesn’t live in the danger zone anymore but still has family there (Rocky Mount, N.C.).  Ken reminded me of one of the cities you are seeing on the national news today, Princeville.  Yes, it’s destroyed...an historic town built by freed slaves.

But it was destroyed in a flood 15 years ago, and the government, state and federal, insisted on rebuilding against the advice of all experts.  What an incredible waste of money.  Yet today, Gov. McCrory is talking about rebuilding again, because he has to say that...it’s what politicians do.

---

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

God bless America.

---

Gold $1251
Oil $50.32

Returns for the week 10/10-10/14

Dow Jones  -0.6%  [18138]
S&P 500  -1.0%  [2132]
S&P MidCap  -0.9%
Russell 2000  -2.0%
Nasdaq  -1.5%  [5214]

Returns for the period 1/1/16-10/14/16

Dow Jones  +4.1%
S&P 500  +4.4%
S&P MidCap  +8.7%
Russell 2000  +6.7%
Nasdaq  +4.1%

Bulls 46.1
Bears 23.1  [Source: Investors Intelligence]

Have a great week.

Brian Trumbore



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Week in Review

10/15/2016

For the week 10/10-10/14

[Posted 11:00 p.m. ET, Friday]

Note: StocksandNews has considerable ongoing expenses.  Your support is greatly appreciated.  Please click on the gofundme link or send a check to PO Box 990, New Providence, NJ  07974.

**Like two weeks ago, this is extremely long...if you are used to printing it out...over 40 pages.

Edition 914

Washington and Wall Street

Barry Diller, chairman of IAC/InterActiveCorp., was on CNBC the other day and when asked about the upcoming vote said, “I want this election over, and I don’t want to talk about politics for the next year and a half.”

That’s how we all feel.  I’m sure tired of writing about it, but as one who is documenting in great detail the entre tumultuous period since 1999, I have no choice.  I’m tired of writing about two candidates, neither of whom should be our president, yet we’re about to end up with one.

I’m tired of one candidate who won’t let a single attack go unanswered, much to his detriment, while the other is so freakin’ corrupt, it’s beyond belief she could be measuring the drapes in the Oval Office.

I’m the ‘wait 24 hours’ guy.  When it comes to the accusations against Donald Trump I just think back to the Duke lacrosse team case and how long it took to get to the truth in that one.

But at the same time, Trump has uttered the words now blowing up his campaign in countless forums, on video and audio tape, and the women’s accusations fit the narrative to a tee.

And instead of just saying, “If they want to sue me, I’ll see them in court.  For the next four weeks I’m focusing on the issues,” Trump goes out like he did Friday and talks about one of his accusers.

“When you looked at that horrible woman last night, you said, ‘I don’t think so,’” referring to People magazine writer Natasha Stoynoff, who claimed he pushed her against a wall and forcibly kissed her in 2005 during an interview at Mara Lago.

Or Jessica Leeds, who accused Trump of groping her during a flight more than 30 years ago, compelling Trump to say: “Believe me, she would not be my first choice.  That I can tell you.”

Geezuz, just shut up! 

But of the stories coming out against Trump, the ones that are most believable involve walking into the dressing rooms at his beauty pageants.  The girls just seem to be confirming what he told Howard Stern directly.

The bottom line is, as I’ve been writing for months, the world scene today couldn’t be more dangerous and the United States is rudderless...without leadership...and the election won’t solve anything.  It could easily make things worse.

Gerald F. Seib / Wall Street Journal

“Travel around the country speaking about the election and you’ll frequently get this question: Can an independent candidate make a serious run for president?

“We now essentially have such an independent candidate.  His name is Donald Trump.  So the new questions are: Is it possible to win an election that way?  Perhaps as important, if a candidate prevails in such a campaign, could he govern effectively afterward?

“Increasingly, Mr. Trump and his unshakable core of supporters are breaking away from the party hierarchy.  Mr. Trump himself has been getting large institutional support from the Republican National Committee, and many committee members around the country rallied behind him Monday.  But simultaneously he has been estranged from many of the party’s senior figures and elected officials.  He has not only challenged party orthodoxy on immigration, trade, the deficit and entitlement reform, but also sometimes mocked those who formed that party orthodoxy.  Then, of course, the estrangement turned into divorce over the weekend, when a long list of party regulars bolted from Mr. Trump’s side after the disclosure of a videotape in which he described his style for groping women, including a married woman.   Mr. Trump then basically said goodbye to the establishment of his own party, tweeting about ‘self-righteous hypocrites.  Watch their poll numbers – and elections – go down!’

“Meanwhile, weekend polling by The Wall Street Journal and NBC News finds that two-thirds of self-identified Republicans said the party should stand by Mr. Trump.  Many Trump backers openly urge him to bust the chops of the party establishment....

“The current system may well place too much emphasis on party loyalty.  But there’s also a penalty for having too little. The bottom line for Mr. Trump is this: If he were to win now, he would have to generate a lot of popular support around the country to make up for lost party loyalty in Washington.”

The Debate....

Cathleen Decker / Los Angeles Times

“Donald Trump had a deep hole to climb out of Sunday in the second presidential debate, one he’d dug with a succession of self-generated controversies that culminated Friday in the release of a 2005 video in which he bragged about groping women....

“Trump ended the debate in the same wounded condition in which he’d begun it: with fearful Republicans worried about the trajectory of his campaign....

“In one stunning passage, he said that he disagreed with the Syria policy laid out five days ago by his vice presidential running mate, Mike Pence, but said that he hadn’t yet talked to Pence about it....

“Clinton did not leave the debate site undamaged.  She was hit with several questions attesting to weaknesses in her candidacy, among them her use of a private email system as secretary of State and a comment in  a recent dump of hacked emails that she had a private policy and a public policy on energy.

“An able opponent could have developed both of those into a unified assault on Clinton’s trustworthiness and honesty, areas that already represent a weakness for her.

“When Clinton tried to deflect criticism for the two practices by invoking a Steven Spielberg movie about Abraham Lincoln, Trump got off perhaps his best zinger of the night.

“ ‘Honest Abe never lied. That’s the good thing.  That’s the big difference between Abraham Lincoln and you,’ he said....

“Often (Trump) seemed to be disgorging unconnected arguments within the same paragraph.

“His answer on the question of the 2005 video inexplicably melded with a promise to be tough against ISIS.

“ ‘Yes, I’m very embarrassed by it. I hate it,’ he said.  ‘But it’s locker-room talk, and it’s one of those things.  I will knock the hell out of ISIS.  We’re going to defeat ISIS.  ISIS happened a number of years ago in a vacuum that was left because of bad judgment.  And I will tell you, I will take care of ISIS.’

“Then, as at several other times in the debate, Clinton sat back looking vaguely amused, as if egging him on to talk some more.”

Niall Stanage / The Hill

“Donald Trump saved his campaign from meltdown Sunday evening with a debate performance that was, at the least, a marked improvement on his showing in his first clash with Hillary Clinton almost two weeks ago.

“But whether Trump changed any minds is much more open to question.  The debate was both nasty and personal, especially in its early stages, potentially turning off more voters from both candidates than it won over for either....

“Trump was aggressive throughout the debate.  He interrupted repeatedly, often with sarcastic comments aimed at either Clinton or the co-moderators, Anderson Cooper and Martha Raddatz.  He also sometimes stood directly behind Clinton, creating an unusual TV image that drew mostly adverse comment on social media.

“But Trump did have some striking moments.  Prime among them was an exchange over Trump’s promise to seek a special prosecutor, if he were elected, to probe Clinton’s use of a private email server while secretary of State. Clinton said such a proposal proved it was a good thing he would never have such authority.

“ ‘Because you’d be in jail,’ Trump shot back.

“Republican consultant Frank Luntz said on Twitter that this registered as the GOP nominee’s ‘highest moment’ of the debate in a focus group.

“The same aggressive tone could also cost Trump with some voters, however, especially the women whom he needs to bring over to his side if he is to have any real chance of prevailing on Nov. 8.”

Editorial / Los Angeles Times

“After the release of a video in which Donald Trump boasted in obscene terms about groping women, his running mate, Mike  Pence, condemned the GOP presidential nominee’s words and actions.  But Pence also said he looked forward to the opportunity that Sunday’s presidential debate with Hillary Clinton afforded Trump to ‘show what is in his heart.’

“On Sunday night Trump squandered that opportunity, or perhaps he just failed to show what Pence was hoping for.  Even before the debate began, Trump appeared at a news conference with four women: three who had accused President Bill Clinton with sexually attacking or harassing them and a fourth who was a rape victim at age 12 whose alleged attacker had been represented by Hillary Clinton, a court-appointed defense attorney.

“It was a sickening stunt that foreshadowed Trump’s attempt during the debate to deflect criticism of what he continued to minimize as ‘locker-room talk’ by insisting that his comments paled in comparison to Bill Clinton’s sexual misdeeds (not to mention the atrocities of Islamic State militants).

“Of course the former president isn’t on the ballot this year, and somehow holding Hillary Clinton responsible for her husband’s infidelities is ridiculous....

“When he wasn’t hurling insults at his opponent or complaining about unfair treatment by the moderators, Trump did manage to make some substantive points about the failure of the Affordable Care Act and U.S. foreign policy in Syria....

“He also offered an olive branch to black, Latino and Muslim Americans and seemed finally to declare an end to his policy of a ‘total and complete shutdown of Muslims entering the United States.’  But he offered no real solutions, just a fusillade of criticisms – of the Obama administration, Hillary Clinton and the United States’ fortunes today.”

Post-debate, House Speaker Paul Ryan said on Monday he would no longer campaign on Trump’s behalf.  Trump responded by declaring war on the Republican establishment, saying in a series of tweets that Ryan is “weak and ineffective” and has provided “zero support” for his candidacy.  Then, in a Fox News interview, Trump suggested that if he wins the election Ryan should be removed, saying “maybe he’ll be in a different position.”

Trump declared, “It’s so nice that the shackles have been taken off me and I can now fight for America the way I want to.”

Trump also called John McCain, another who pulled his support of Trump, “foul-mouthed,” while accusing him of once begging for his support.  He then said dealing with his party is harder than his rival, Clinton.

“Disloyal R’s are far more difficult than Crooked Hillary,” Trump tweeted.  “They come at you from all sides.  They don’t know how to win – I will teach them!”

Back to Ryan, he initially urged his members to focus on their re-election campaigns and to make individual decisions about how to handle Trump, according to sources on a conference call, but after an uproar from his own caucus, Ryan said he would dedicate himself full time to keeping control of the House and that he “won’t defend” Trump, people on the call said.  Some of the House members attacked Ryan for effectively giving up on the party’s candidate, as Ryan did not say if he was withdrawing his endorsement.  [The Hill]

Rep. Dana Rohrabacher (R., Calif.) said: “Just bad-mouthing our candidate is not acceptable,” after hearing Ryan say he wouldn’t defend or campaign with Trump.  “If you’re saying bad things about your candidate, you might as well be on the other side.”

For his part, Trump issued an apology on the 2005 video around midnight, Friday (Oct. 7), and soon after Republican Sen. Mike Lee called for Trump to “step aside.”  Lee was followed by Sen. Mike Crapo, who withdrew his endorsement, then New Hampshire Sen. Kelly Ayotte (who faces defeat unless she can claw back in her re-election bid) and then Sen. John Thune of South Dakota, the first in the Senate GOP leadership to call for Trump to step aside.

“Donald Trump should withdraw and Mike Pence should be our nominee effective immediately,” Thune tweeted Saturday.  Many of Thune’s constituents were not happy with his decision, though he is expected to win his re-election next month easily.

At first running mate Mike Pence was clearly going through a personal crisis on what to do and then following the debate, Pence said on Fox News: “Donald Trump stepped up and won the debate last night.  He showed humility and he showed strength and he expressed genuine contrition.”

According to a survey by the USA TODAY Network, of the 31 Republican governors, 54 GOP senators and the 246 Republican members of the House (331 total), 87 are not endorsing Trump’s candidacy as of late Tuesday; an unprecedented fracture in modern American political history.

By way of comparison, The Hill reported in September 2012 that only a “handful” of Republican lawmakers were declining to support Mitt Romney, naming only three.  The 87 USA TODAY cites breaks down to 19 Senators, 11 Governors and 57 House members.

More opinion...all sides...

Editorial / The Economist

“How do people learn to accept what they once found unacceptable?  In 1927 Frederic Thrasher published a ‘natural history’ of 1,313 gangs in Chicago. Each of them lived by a set of unwritten rules that had come to make sense to gang members but were still repellent to everyone else.  So it is with Donald Trump and many of his supporters. By normalizing attitudes that, before he came along, were publicly taboo, Mr. Trump has taken a knuckle-duster to American political culture.

“The recording of him boasting about grabbing women ‘by the pussy,’ long before he was a candidate, was unpleasant enough.  More worrying still has been the insistence by many Trump supporters that his behavior was normal.  So too his threat, issued in the second presidential debate, to have Hillary Clinton thrown into jail if he wins. In a more fragile democracy that sort of talk would foreshadow post-election violence.  Mercifully, America is not about to riot on November 9th.  But the reasons have less to do with the state’s power to enforce the letter of the law than with the unwritten rules that American democracy thrives on. It is these that Mr. Trump is trampling over – and which Americans need to defend.

“If this seems exaggerated, consider what Mr. Trump has introduced to political discourse this year: the idea that Muslims must be banned from entering the country; that a federal judge born of Mexican parents was unfit to preside over a case involving Mr. Trump; that a reporter’s disability is ripe for mockery; that ‘crooked’ Mrs. Clinton must be watched lest she steal the election.  Daniel Patrick Moynihan wrote that when many bad things happen at once, societies define deviancy down, until the list of what is unacceptable is short enough to be manageable. When parents wonder if a presidential debate is suitable for their children to watch, Mr. Trump’s promise to build a wall on the Mexican border no longer seems quite so shocking....

“If Mr. Trump loses, Mrs. Clinton will begin her presidency with tens of millions of people believing that she ought to be in jail.  Perhaps he will lose so comprehensively that he takes the Republican majorities in both chambers down with him. That would afford Mrs. Clinton at least two years, before the next mid-term elections, during which she might push through immigration reform, increase spending on infrastructure and change the balance of the Supreme Court.  These would be big achievements, but something close to 40% of voters would feel they were being steamrollered by a hostile government.  Politics could  become yet more polarized.

“Partly because Mrs. Clinton is mistrusted and disliked, the more probable outcome in November is that she will be the next president but will face a House of Representatives controlled by Republicans – and perhaps a Senate, too.  This is a recipe for furious, hate-filled gridlock.  There would be more government shutdowns and perhaps even an attempt at impeachment.  It would also mean yet more government by executive actions and regulation to get around Congress, feeding the widespread sense that Mrs. Clinton is illegitimate.

“Tied down and unpopular at home, Mrs. Clinton would be weaker abroad as well.  She could less easily take risks... America’s role in the world would shrink.  Frustration and disillusion would grow.”

Gideon Rachman / Financial Times

“How did it come to this?  The presidential election debates should represent U.S. democracy at its finest.  Instead, the second Clinton-Trump debate centered around sordid allegations of sexual assault, threats, lies and mutual contempt.

“At one stage, Mr. Trump boasted that Mrs. Clinton would ‘be in jail’ if he were in charge of the legal system.  Political rivals to the president get imprisoned in Robert Mugabe’s Zimbabwe.  America is meant to live by different standards.

“Sunday night’s spectacle is not just embarrassing for the U.S.  America is widely regarded as the ‘leader of the free world.’  So the rise of Mr. Trump threatens to damage the prestige of democracy everywhere.

“The damage is not restricted to the world of ideas.  Authoritarianism and anti-Americanism are on the march, led by increasingly confident governments in Beijing and Moscow. A strong and impressive U.S. should be central to rallying the response of the world’s democracies.  Instead, we had the depressing and degrading spectacle of the second Trump-Clinton debate....

“It is true that neither Xi Jinping of China nor Vladimir Putin of Russia would ever be subjected to the kind of brutal interrogation to which American politicians are subjected on a routine basis. Instead, last week, the Russian Duma sent Mr. Putin 450 roses to mark his birthday.

“Yet, even so, the second presidential election debate was a desperately poor advertisement for U.S. democracy.  In some respects, Mr. Trump has actually introduced some of the malign features of Russian and Chinese politics into the U.S.  One of the strengths of the western democratic system is that a free press and open debate are meant to expose falsehoods.  Yet Mr. Trump sprays out lies like a skunk trying to repel its enemies.  His method seems to be to create such confusion that the truth simply gets buried amid a mass of falsehoods. This is a characteristic of the current Russian propaganda system....

“The Chinese challenge to America’s democratic ideology is more subtle and perhaps more dangerous because China, unlike Russia, can make a good claim to be a well-governed country.  China is the largest economy in the world measured by purchasing power parity. The Chinese argue that their system selects leaders on merit, after decades of rigorous assessment.  President Xi only made it to the pinnacle of state power after many years of work in the provinces and in different government jobs.  He has been judged by his peers, not the voters, to be qualified to run the country.

“The Chinese do not yet argue that their system should be applied around the world.  But they do increasingly condemn – as agents of America, seeking to ‘sow chaos’ – those who make the case for a more liberal political system within the Sinic world, for example in Hong Kong or Taiwan.  Beleaguered liberals in Russia or China need a well-functioning U.S. democracy as a support and an inspiration.  Instead, they see a system that produces Mr. Trump, a man whose political style owes more to President Putin than to President Obama....

“Mr. Trump is manifestly unqualified and has thrown the U.S. system into confusion, leaving the press and the Republican party floundering. The fact that more than 40 percent of Americans, and a majority of whites, are probably going to vote for him suggests that the U.S. is in deep trouble....

“If Mrs. Clinton makes it to the White House there will be relief across the west and a certain disappointment in Moscow and, perhaps, Beijing.  But it will be very hard to erase the memory of this campaign.  It has presented an image of a troubled, divided and deluded U.S. to the rest of the world.  As a result, it has already dealt a serious blow to the prestige and power of the west.”

Bret Stephens / Wall Street Journal

“Donald Trump emerged the victor from his debate Sunday night with Hillary Clinton, which means he slightly exceeded expectations by not spontaneously combusting on stage, which means his ardent loyalists have again absolved him of sin....

“Rudy Giuliani, the former New York mayor, variously defended the Republican nominee by invoking Jesus Christ and Monica Lewinsky’s stained blue dress, which is the type of disgusting association you’d expect from a defrocked priest.

“Tony Perkins of the Family Research Council brushed aside the controversy by insisting his support for Mr. Trump rested on ‘shared concerns’ not ‘shared values.’ That marks a milestone: The president of an organization ostensibly devoted to the preservation of family values has endorsed a man who wants to sleep with other men’s wives.”

Daniel Henninger / Wall Street Journal

“The 2016 presidential election feels like a 1930s Hollywood movie about people lost in a jungle.  No, not ‘King Kong.’  The one in which lost souls slog and sweat through a swamp, attacked by bugs, cobwebs and things falling out of the trees. Inevitably there’s a moment when one of the party, gripped by fever, abandons the group and heads deeper into the swamp alone.

“Donald Trump is now a party of one.  It’s better that way....

“It was never in the cards that (Trump), an utterly unique phenomenon, would integrate his interests with the interests of the Republican Party.  The two simply don’t inhabit the same space.

“ ‘It is so nice that the shackles have been taken off me,’ he tweeted, ‘and I can now fight for America the way I want to.’ Take his word for it: Donald Trump is where he wants to be – alone, the center of it all, a party of one.

“It is almost surely true that the GOP’s three principal figures – Reince Priebus, Paul Ryan and Mitch McConnell – always understood this.  But there was no chance – none – that any would ever admit that Mr. Trump was running as an independent candidate inside the formal structure of the Republican Party....

“This meant that nearly all other Republican candidates would have to survive in a universe different than Donald Trump’s. For the day Mr. Trump secured the nomination, there was never much chance that he would integrate his personal fame, for example, with the pedestrian daily grind and needs of a Kelly Ayotte in New Hampshire or Pat Toomey in Pennsylvania.

“Whether they or the other at-risk candidates – Richard Burr, Rob Portman, Ron Johnson or Mark Kirk – should have been pro-Trump or anti-Trump is at this point a secondary matter to the practical realities of their own campaigns.

“Donald Trump passes in and out of their states like a visiting meteor.  It’s an awesome event, but there’s’ nothing they can do but gape, and get back to work inside the smaller orbit of a North Carolina or Wisconsin.

“Many Trump supporters are currently in a rage because these candidates won’t merely attach themselves to Mr. Trump’s candidacy.  But that is hard to do when every few days the mercurial Mr. Trump is producing a personal October surprise or midcourse policy correction....

“The question now is whether Republican voters and Mr. Trump’s supporters can distinguish between his unique candidacy and everything else...

“His most dedicated supporters either will stay aloft to share in his go-it-alone, in-your-face triumph, or fall to earth with him.  But refusing to vote for at-risk Republican incumbents because of insufficient Trump loyalty or disdain for his candidacy is cutting off your nose to spite your face.”

Thomas L. Friedman / New York Times

“The bigger Clinton’s margin of victory, the less dependent she’d be, I hope, on the left wing of her party, and the more likely she’d work with Republicans, as she vowed during the last debate, by ‘finding common ground, because you have to be able to get along with people to get things done in Washington.’

“I say ‘hope’ because I don’t know who the real Hillary is – the more Bernie Sanderish one speaking publicly or the more Bill Clintonish one who spoke privately to Goldman Sachs.

“The nightmarish scenario – ruling out, God forbid, a Trump victory – is that Clinton wins with a slim majority and the GOP holds the House and the Senate. The Democratic left would have a stranglehold on Clinton while Trump, who would start his own TV network and movement, would keep the Republican base in a state of permanent anger, intimidating every Republican lawmaker who contemplated compromise. If that happens, America will be adrift.”

Editorial / Wall Street Journal

“He’s trailing in the polls, and his campaign is advertising that his comeback strategy is to run almost as an independent to drive turnout among his core supporters. He’s given up trying to expand his appeal to women, minorities and college-educated Republicans. Instead he’ll tear into Mrs. Clinton in an attempt to demoralize her voters and motivate his.

“At least this will be a political market test of the Trumpian wing of the GOP.   Going back to Mitt Romney’s defeat in 2012, the GOP has divided roughly into two strategic political camps.  One camp wants to reach out to minorities, young people and moderates to expand the GOP electorate. The Republican National Committee urged this strategy in a 2013 report, and candidates like Colorado Sen. Cory Gardner followed it to win in 2014.  This makes sense to us on demographic grounds but also because it is what a party should do in a healthy democracy. Governing for only half a country has been President Obama’s great mistake.

“The other GOP camp has disdained such outreach in favor of mobilizing the white working-class voters who supposedly stayed home in 2012.  The evidence is strong that most of those voters weren’t in swing states and so didn’t affect the election.  But Alabama Senator Jeff Sessions, the talk-radio gang, Heritage Action and Breitbart.com decided that the path to victory is flogging immigration and trade resentments to mobilize white voters rightly upset with the results of Obama’s economic policies....

“We’ve long thought this is a losing political hand, if not in 2016 then certainly in the long run, but now the Trumpians have their chance to prove us wrong.  They certainly couldn’t get a better year. Hillary Clinton is the second most disliked major party candidate in modern history – after Mr. Trump.  Two-thirds of Americans are unhappy with the direction of the country, the economy is underperforming, and disorder has just spread around the world in the incumbent party’s second term. The table has been set for a Republican nominee to make the case for change and win.

“So no excuses, gents. The GOP insurgents won the nomination, and now that their candidate is unshackled he can campaign as they want him to.  That includes taking responsibility, win or lose.”

USA TODAY / Editorial

“Clinton was fortunate that, once again, the glaring shortcomings of her opponent overshadowed her own vulnerabilities. These include both the email fiasco and her private high-dollar speeches to Wall Street barons, exposed in recently leaked documents that show her private tone differed markedly from her public stance.  In one of Trump’s best moments of the debate, he mocked Clinton’s effort to explain away her public/private distinction as being in the tradition of Abraham Lincoln.

“Trump’s shortcomings, on vivid display again Sunday night, include a short attention span, difficulty mastering complex issues such as the civil war in Syria, and his continuing bizarre reluctance to criticize Russia.”

Charles Krauthammer / Washington Post

“The second presidential debate – bloody, muddy and raucous – was just enough to save Donald Trump’s campaign from extinction, but not enough to restore his chances of winning, barring an act of God (a medical calamity) or of Putin (a cosmically incriminating WikiLeak).

“That Trump crashed because of a sex-talk tape is odd. It should have been a surprise to no one.  His views on women have been on open display for years. And he’d offered a dazzling array of other reasons for disqualification: habitual mendacity, pathological narcissism, profound ignorance and an astonishing dearth of basic human empathy.

“To which list Trump added in the second debate, and it had nothing to do with sex.  It was his threat, if elected, to put Hillary Clinton in jail.  After appointing a special prosecutor, of course.  The niceties must be observed.  First, a fair trial, then a proper hanging. The day after the debate at a rally in Pennsylvania, Trump responded to chants of ‘lock her up’ with ‘Lock her up is right.’  Two days later, he told a rally in Lakeland, Fla., ‘She has to go to jail.’

“Such incendiary talk is an affront to elementary democratic decency and a breach of the boundaries of American political discourse.  In democracies, the electoral process is a subtle and elaborate substitute for combat, the age-old way of settling struggles for power.  But that sublimation only works if there is mutual agreement to accept both the legitimacy of the result (which Trump keeps undermining with charges that the very process is ‘rigged’) and the boundaries of the contest.

“The prize for the winner is temporary accession to limited political power, not the satisfaction of vendettas. Vladimir Putin, Hugo Chavez and a cavalcade of two-bit caudillos lock up their opponents.  American leaders don’t.

“One doesn’t even talk like this.  It takes decades, centuries, to develop ingrained norms of political restraint and self-control.  But they can be undone in short order by a demagogue feeding a vengeful populism.

“This is not to say that the investigation into the Clinton emails was not itself compromised by politics...

“But the answer is not to start a new process whose outcome is preordained.  Conservatives have relentlessly, and correctly, criticized this administration for abusing its power and suborning the civil administration (e.g., the IRS).  Is the Republican response to do the same?

“Wasn’t presidential overreach one of the major charges against Obama by the anti-establishment GOP candidates?  Wasn’t the animating spirit of the entire tea party movement the restoration of constitutional limits and restraints?....

“This election is not just about placing the nuclear codes in Trump’s hands.  It’s also about handing him the instruments of civilian coercion, such as the IRS, the FBI, the FCC, the SEC.  Think of what he could do to enforce the ‘fairness’ he demands.  Imagine giving over the vast power of the modern state to a man who says in advance that he will punish his critics* and jail his opponent.”

*Krauthammer is referring to Trump’s threats against the likes of Jeff Bezos and the Rickets family, who own the Chicago Cubs; Bezos because he owns the Washington Post and the Rickets’ because they have supported Democrats, including Clinton.

Demetri Sevastopulo / Financial Times

“Hillary Clinton and Donald Trump traded insults in a bitterly contentious debate that saw the Republican regain some of his footing following a disastrous two weeks that had threatened to derail his White House campaign....

“In exchanges on healthcare, tax policy and the humanitarian crisis in Syria, Mrs. Clinton tried to rile her opponent as she had successfully done in the first debate.  But Mr. Trump was more disciplined than during their last encounter.

“Larry Sabato, a politics expert at the University of Virginia, said the Republican had ‘enthused his base, stopped the bleeding, and stymied GOP efforts to get him to resign from the ticket’ because of his debate performance.”

Gerald F. Seib / Wall Street Journal

“Donald Trump entered Sunday night’s debate both lacerated and liberated.  He had been lacerated by the release of a now infamous videotape in which he talked about how he seduces women, including married women.

“And he was liberated by essentially declaring his independence from the Republican party and its leading figures, many of whom abandoned him over the release of that tape.

“So the question approaching an epic presidential debate Sunday night was whether, in this new phase, a liberated Donald Trump could stop the bleeding and get back on his feet.  In the first half hour, that seemed unlikely.  But then, over the next hour, he appeared to succeed....

“It is hard to know how much a decent debate performance will matter to the many Republicans who seem to have lost faith in Mr. Trump or confidence that any step forward in his campaign won’t be followed by a step backward.

“It’s also hard to know what will happen to Mr. Trump’s support among women, and among Republicans with misgivings about him, whose support he had been consolidating in the weeks before the explosive tape with his lewd comments about women.

“It also isn’t clear whether his reminding voters of Bill Clinton’s sexual history will matter, or how effective he was at skewing Mrs. Clinton again for her use of a private email server as secretary of state.

“But if the imperative of this debate was for Mr. Trump to survive the onslaught and get back on his feet, he appeared to do that.”

John Podhoretz / New York Post

“History’s weirdest election just got a lot weirder last night.  After a horrendous two weeks capped by the ultimate presidential candidate’s weekend from Hell, Donald Trump turned around and trounced Hillary Clinton in the second presidential debate.

“As Samuel Johnson said, the prospect of a hanging can concentrate the mind – and after an opening ten minutes in which he looked as though he was going to blow himself up with rage at Bill Clinton – Trump suddenly and surprisingly found the focus that had eluded him two weeks ago.

“He came right at her – and on policy, yet.  He hit her effectively on her email scandal, on the Democratic party’s commitment to ObamaCare, on her ineffectuality as a senator when it came to changing the tax policies she claims he abuses as a wealthy person, and on the administration’s energy policies....

“Trump, however, did say some astoundingly awful things, especially about Syria. He claimed Syria’s Bashar al-Assad (whom he said he doesn’t like) was killing ISIS when Assad is actually busy enacting a genocide against his own people in Aleppo. And when the tough-on-Russia-and-Syria strategy outlined by his own vice-presidential candidate Mike Pence in the VP debate was brought up, Trump said he hadn’t spoken to Pence about it and that he disagrees.

“Hillary Clinton lost the debate because she likely figures she’s already won the election – she was ahead in every battleground state now and in all the major poll averages by around 5 percent even before the nation really takes account of the ‘Access Hollywood’ hot mic tape – and decided to play it safe.

“The prevent defense is a sound strategy when you’re ahead by two touchdowns and a field goal.  Hillary isn’t there yet.  Her refusal to try and deal a death blow, and Trump’s own refusal to lie down and play dead, has kept him alive to fight another day.

“Unless she knows there’s something even worse coming out next...”

And there was....

---

Turning to the action on Wall Street, stocks edged down a second consecutive week, but this masks some intra-week volatility as the market was buffeted at times by poor earnings, in the form of Alcoa at first, forecasts for more of the same, trade data out of China (negative) and then the next day a producer price figure out of there that showed the first rise in prices in 55 months (good).  Mining stocks, for example, fell on the import data, but then recovered on Friday on the wholesale, or factory gate, price news.

Friday’s tone was also set by decent bank earnings (more in a bit), a solid figure for U.S. retail sales, and our own producer price figures that show inflation is bubbling.

The September retail sales number came in as expected, up a solid 0.6%, 0.5% ex-autos, while the PPI was up 0.3% last month, 0.2% ex-food and energy, and up 0.7%, year over year, and 1.2% yoy on the core, which is encouraging.

Of course the market also continues to play the Fed guessing game, with most now convinced another hike is coming in December (Dec. 13-14 being the yearend FOMC meeting), as Chair Janet Yellen told an audience in Boston on Friday that the Fed may need to run a “high-pressure” economy in order to reverse damage from the crisis that depressed output and sidelined workers; meaning the Fed is willing to let the economy run a little hot, or above their employment and inflation targets, but this certainly doesn’t preclude action in December of just a quarter-point.

[My conclusion. She didn’t specifically address interest rates or immediate policy concerns today.]

Another speaker at this Boston conference of policymakers and academics, Eric Rosengren, Boston Fed president, stuck to his belief from September that the Fed should be hiking rates.

The Fed’s minutes from the September confab noted that the decision to hold rates where they are was a “close call,” so barring some major negative news, like a massive terror attack that impacts confidence (and/or an October surprise of a different sort), or a poor U.S. market reaction to the election, the Fed will move just in time for Christmas.  I’ve been saying this for months and you can book it.

Europe and Asia

First, a few notes on the eurozone economy:  Industrial production rose 1.6% in August over July for the euro area, up 1.8% year over year.

New car sales across Europe grew by 7.2% in September to 1.46m units, far slower than the 9.8% growth in the same month a year earlier, according to data from ACEA, the European car manufacturers’ group.

Sales were dragged down by the U.K., which accounted for one in three cars sold across the EU, up just 1.6%.

Germany’s grew 9.4%, France 2.5%, Italy 17.4%.

Sales shrank 4.2% in the Netherlands and 1.6% in Ireland.

Brexit: As noted in recent weeks, British Prime Minister Theresa May said her government would trigger Article 50 of the Lisbon Treaty – beginning formal negotiations between the U.K. and EU – by the end of March.

The process will then take two years, or more, and as also noted the other week, Mrs. May has made clear it’s about immigration and access to the European single market.

May also announced this week that she would allow a vote on her Brexit plan in Parliament, but asked lawmakers to do it in a way that gives her space to negotiate.

While this is unlikely to stop Brexit (it’s not clear to me how detailed the proposal presented to Parliament would be), it does give MPs a tool to pressure the prime minister as she has only a slim majority.

European Council President Donald Tusk has said Britain’s only real alternative to a “hard Brexit” is “no Brexit,” warning the EU would not compromise on its insistence that freedom of movement will be a condition of Britain’s access to the single market.

Tusk suggested that Britain might ultimately decide not to leave the EU “even if today hardly anyone believes in such a possibility.”

Sarah Gordon / Financial Times

“Theresa May is playing a dangerous game. Her unwillingness to engage with business, and apparent readiness to alienate it, comes with serious risks.

“For many in the U.K.’s business community, last week’s Conservative party conference crystallized a sense of growing frustration at the new government. Home Secretary Amber Rudd’s proposals to limit immigration and ‘name and shame’ companies which employ large numbers of foreign workers set the stage for the prime minister to take a series of sideswipes at business in her speech, placing employers firmly in the category of the ‘powerful and privileged’ whom she has in her sights....

“(The speech) reiterated some of the measures on corporate governance that Mrs. May is contemplating. These include worker and consumer representatives on boards, binding shareholder votes on executive pay and publishing the ratio between chief executive and median workers’ pay.

“The U.K.’s business community is as keen to outlaw the egregious behavior of some corporate bosses as BHS pensioners or Sports Direct staff.  As Mrs. May herself acknowledged, such behavior by the few tars the reputation of the many.  They are also as desperate – probably more – to improve skills as any Whitehall policy wonk, and welcome the idea of an industrial strategy.  ‘Fairness’ matters to most employers as much as it appears to do to Mrs. May.

“But they question if the interventionist proposals on the table are the best way to go about achieving these aims.  Volkswagen has a supervisory council of 20 representatives of employees and shareholders, but that did not avoid the emissions scandal in which it is mired.

“Mrs. May says she is listening to those who voted for Brexit. Yet she is proposing putting additional legislative and regulatory burdens on employers who, if they voted to leave the EU, did so in part to escape red tape from Brussels.  Doing so at a time of significant economic uncertainty is also counterproductive.  And shutting business out of the debate over the best way to achieve her aims is foolish....

“Mrs. May has disbanded the advisory group of 20 big business representatives that her predecessor David Cameron used as a sounding board for policy....there is no forum nor clear channel via which business can make its case to government....

“Losing the goodwill of the business community will not just affect the nitty-gritty of the Brexit negotiations, but also risks damaging growth prospects.  Instead of attacking employers, the government should be asking how it can help companies prosper and grow.”

London Mayor Sadiq Khan told business leaders this week that he’ll fight any attempt to take the U.K. out of the EU’s single market.

“If we were to leave the single market without an agreement in place for privileged access for British business, the consequences could be disastrous,” Khan told a business gathering.

Lastly, Scottish First Minister Nicola Sturgeon said she’ll publish a draft Scottish Independence Referendum Bill next week, holding out the threat of breaking away from the U.K. if she feels her nation’s interests aren’t being protected in Brexit negotiations.

But this is frankly going nowhere fast. The Scots just voted in 2014 by 55% to 45% to stay in the U.K. and it would take years and years before Scots could call a second referendum.  A survey taken last month by Kantar TNS found 53% were opposed to independence and 47% in favor.

Eurobits....

--Yields have been rising around the world, with the yield on the British 10-year up 35 basis points in two weeks from 0.74% to 1.09%...1.09% being the highest since the day after Brexit, June 24, which was 1.08%, after which it plummeted to a weekly low of 0.52% on Aug. 2.

It’s about the sentiment that inflation is beginning to percolate, which is brushing up against central bank stimulus.  I’ve been warning, admittedly like Chicken Little, that some investors are going to get creamed and you have been, for example, if you bought at 0.52% on the 10-year gilt.

In the case of the U.K., with the pound at 31-year lows against the U.S. dollar, that’s raising the cost of imports, such as groceries.

--The euro area authorized a 1.1 billion euro ($1.2 billion) payment to Greece and signaled a further 1.7bn euros would follow this month, saying Greece had made progress in overhauling its economy; the green light coming from euro-area finance ministers on Monday in Luxembourg.

This would make it easier for Greece to then achieve some form of debt relief down the road, on which Prime Minister Alexis Tsipras has staked his political future.  Greece had to fulfill 15 conditions for further payments, including selling state assets.

But question marks remain over the role of the International Monetary Fund, which has said it wouldn’t participate in further bailouts unless debt relief was granted, but this won’t occur as yet because the IMF still has “significant concerns” about uncompleted reforms in Greece, including on pensions and the welfare state.  The IMF helps monitor the bailout, but it doesn’t make any financial contribution.

--The European Commission told Italy it can count on all the flexibility EU budget rules can offer with its 2017 budget, but that it shouldn’t increase its already sky high debt, noting that the immigration crisis needs to be taken into consideration by the EU in terms of costs.

Eurozone countries are obliged by EU rules to move towards a balanced budget and lower public debt every year, sending their budget draft assumptions for the following year to Brussels for scrutiny, but Italian Prime Minister Matteo Renzi is attempting to avoid unpopular austerity measures ahead of a December referendum on constitutional reform that will decide his political future.

He is therefore planning no cut in the deficit this year and the debt will no doubt rise, contrary to promises made to the EU.

The official debt-to-GDP ratio in Italy is at about 133 percent currently.  [Unofficial, try 150%.]

--Despite nine months without a government, Spain’s economy is growing at one of the fastest paces in the eurozone, now forecast by the Economy Minister to grow 3.1% in 2016.

--In France, President Hollande has been perhaps mortally wounded politically by publication of a book titled “A President Shouldn’t Say That,” written by two respected journalists from Le Monde newspaper who met with Hollande 61 times.  The president, already deeply unpopular, is quoted as calling members of the judiciary “cowards” and saying France has “a problem with Islam,” with members of his Socialist party questioning whether he can run for re-election next spring.  Hollande apologized to judges, but it sounds like it’s too late.

Meanwhile, former prime minister and conservative Alain Juppe scored 47% in a recent poll to become the next president, with Hollande at just 16%.

Juppe’s main center-right rival is former president Nicolas Sarkozy, who in a first round of voting would get 28% to Juppe’s 42%, crunching the numbers differently.  [The center-right holds its primary Nov. 20.]

Juppe, as of today, would then defeat/crush Marine Le Pen of the National Front in the second round. 

On the migration front, the government of Chancellor Angela Merkel is feeling more heat after a 22-year-old Syrian man, suspected of plotting an Islamic extremist bombing attack, was able to take his own life in a jail cell after being arrested following a three-day manhunt.  Thus the investigation into whether Jaber Albakr (who German authorities say had contact with ISIS) had any accomplices is far more difficult.

Prison authorities were told the man was a suicide risk and it still seems he hanged himself.

Security officials were already facing heat for allowing Albakr to elude them as they prepared a raid on his apparent in the city of Chemnitz on Saturday.  Inside the apartment police found highly volatile explosives and a homemade bomb vest.

Albakr had been granted asylum after coming to Germany last year and he was finally arrested days later after three fellow Syrians tied him up and alerted police. He had been under surveillance by German police.

So needless to say when it comes to Chancellor Merkel and her open-door policy regarding migrants, the public backlash against her grows, and will only add to support for the right wing Alternative for Germany party.

---

Turning to Asia, in China, as noted above it was about trade and inflation.

Exports in $ terms fell a whopping 10% in September, year over year, with imports falling 1.9%, both far worse than expected.

Exports to the EU were down 9.8%, down 8.1% to the U.S.

Copper imports were way down, which depressed the stock price of miners, and called into question the strength of the recent recovery in domestic demand.

But markets then rallied on word producer prices in China actually rose 0.1%, annualized, the first increase since Jan. 2012, ending 55 months of deflation, according to the National Bureau of Statistics. This is good.

China’s CPI rose 1.9% year over year in September, up from August’s 1.3% pace.  Extensive flooding over the summer impacted food prices.

But next week we get China’s third-quarter GDP, which economists peg at 6.7%, same as Q2.

The thing is, no one will believe 6.7% is the real number, especially with the trade data and little global growth.

[The Communist Party on Tuesday stressed the need to “prevent and punish” fake government statistics.  Off with their heads!]

One other economic data point, passenger car sales rose 28.9% year on year in September, according to the China Association of Automobile Manufacturers.  Part of this could be the result of a short-term surge by Chinese consumers hoping to take advantage of a tax break set to end soon.

An analyst at Moody’s said he expects car sales will rise 6.7% this year, but just 2.7% in 2017 based on a belief the tax cut won’t be extended.  [FT]

Separately, the government is talking about reforms and encouraging foreign investment.  But regarding the former, in an unusual meeting of party leaders and executives of big state-owned companies that ended on Tuesday, President Xi Jinping announced that the Chinese Communist Party had the ultimate say over these businesses.

“Party leadership and building the role of the party are the root and soul for state-owned enterprises,” said Xi, according to state media.  “The party’s leadership in state-owned enterprises is a major political principle, and that principle must be insisted on.”

Such enterprises make up nearly 40% of China’s industrial assets and contribute to the government’s tight control over the economy.  But in recent years the Chinese government had adopted more market-friendly measures, which Xi’s edict flies in the face of. 

The longer bloated state-enterprises, often in industries with overcapacity, sop up credit that could go to smaller and medium-size businesses, the tougher it is to achieve growth.

As for a vow by the State Council, China’s cabinet, to cut red tape and ease rules for foreign investors to help boost the economy and counter a decline in private investment, the investors are looking for tangible results.

“Though the shift from investment approvals to investment notifications may offer some limited benefit to foreign companies applying to invest in China, these measures clearly fall short of the significant liberalizations needed to reinvigorate foreign investors’ moderating confidence in the China market,” said Jake Parker, vice president of China operations at the U.S.-China Business Council, which represents over 200 American companies doing business there.  [Mark Magnier / Wall Street Journal]

A survey by the American Chamber of Commerce in China this year found 77% of respondent companies felt less welcome than a year ago, compared with 47% in 2015, although most companies said they would remain in China.  I sure as heck wouldn’t.  Just read my column every week.  Xi is melding into a total Maoist, let alone his increasingly aggressive foreign policy, which leads to rising nationalism.  Apple products?  I think not.

In Japan, producer prices for September fell 3.2% year over year, which was actually an improvement over August’s 3.6% pace.

Street Bytes

--The Dow Jones fell 0.6% to 18138, while the S&P 500 lost 1.0% and Nasdaq 1.5%.

--U.S. Treasury Yields

6-mo. 0.44%  2-yr. 0.83%  10-yr. 1.80%  30-yr. 2.56%

The yield on the 10-year has risen 21 basis points in two weeks.

--Oil hit a 15-month high on the news that Russia was ready to join OPEC in curbing output, while Algeria’s oil minister said he expected similar commitments from other non-OPEC producers.

At the World Energy Congress in Istanbul, Vladimir Putin said, “Russia is ready to join in joint measures to limit output and calls on other oil exporters to do the same.  In the current situation, we think that a freeze or even a cut in oil production is probably the only proper decision to preserve stability in the global energy market.”

OPEC is looking to cut about 700,000 barrels per day, bringing its output to 32.5-33.0 million bpd* by the time it meets in Vienna for its policy meeting on Nov. 30.  The fact Putin has come out lends credence to the story that there may indeed be a real cut.

However, once an agreement is reached (and many details have to be agreed to prior to Nov. 30), they all tend to cheat on their targets and back up we go with inventories.  And it’s not like there is robust economic growth (i.e., oil demand growth) around the world these days.  So count me as highly skeptical.

Plus, Libya, Nigeria and Iran are set to be exempt from the deal, meaning bigger cuts would have to be made by others, like Saudi Arabia.

*OPEC pumped a record 33.64 million bpd in September, according to the International Energy Agency.

Separately, the Energy Information Administration reported U.S. inventories of crude climbed for the first time in six weeks in the week ended Oct. 7, 4.85m barrels, above expectations.

--Wells Fargo, Citibank and JPMorgan Chase were among the banks reporting earnings on Friday.

Following the scandal over fraudulent sales practices that toppled the CEO (more below), Wells Fargo reported that new account openings had dropped sharply, to 429,000 in September from a year ago, down by a quarter, while credit card applications were down by a fifth to 308,000.

The bank said fewer accounts were being opened because of “lower referrals, marketing activity and product offerings” but added that “overall customer traffic to branches and call centers remained at levels typical for September.”

Profits dipped for a fourth consecutive quarter, $5.64bn vs. $5.8bn a year ago, with revenues little changed at $22bn.

Wells Fargo’s net interest margin – the gap between what banks charge borrowers and pay for their funds – dipped from 2.96% last time to 2.82%.

Citigroup reported revenue declined by 4.8% in the third quarter on a year-on-year basis to $17.8bn, still beating the Street.  Net income fell to $3.8bn, compared with $4.3bn, though this too beat consensus.

Bond trading revenue jumped 35% to $3.5bn, while investment banking revenues gained 15% to $1.1bn on higher debt underwriting.

But the retail banking operation posted just a 1% rise in revenues to $8.2bn.

JPMorgan Chase posted an 8% decline in net income, better than forecasts, on record net revenues from its corporate and investment banking divisions. 

Third-quarter net income was $6.3bn, on revenues of $24.7bn.  JPM’s trading operation generated net revenues of $6.5bn, more than a fifth higher than last year, while investment banking revenues were up 6% to $2.9bn.

Profits at the consumer and community banking division dropped 16% to $2.2bn.  JPM did say it was doing a “deep dive” into whether it had any of the problems Wells Fargo did in terms of overly aggressive sales practices.

--Wells Fargo chairman and CEO John Stumpf gave into reality on Wednesday and announced his immediate departure (retirement).  Stumpf had been in control since 2007 when he was named CEO and it was Wells that emerged from the financial crisis largely unscathed, only to be undone by a fraudulent sales culture that might have continued were it not for a Los Angeles Times piece in 2013 that brought to light problems in the branch system, including sham accounts that customers often didn’t know about until they saw fees accumulating.

Stumpf, who was hauled before Congress twice in recent weeks, will walk away with reported parting gifts of $133 million in cash and prizes, including $109 million in stock.  [The package is after Stumpf agreed to a $41 million clawback following his grilling from the Senate Banking Committee.]

Stumpf is being replaced by Timothy J. Sloan, the president and chief operating officer.

Sloan, in a call with analysts following release of the bank’s earnings on Friday, said: “I am deeply committed to restoring the trust of all of our stakeholders.  We know that it will take time and a lot of hard work to earn back our reputation, but I am confident.”

--After a disastrous recall initiative, Samsung killed production of its Galaxy Note 7 smartphones after the devices continued to burst into flames.  This comes after the South Korean giant first temporarily stopped its production of them, then suspended sales around the world, and now it has ceased producing the model entirely.  Friday, the FAA banned the phone from all flights, including in checked baggage.

Samsung is also in the middle of a product safety issue in Australia, recalling more than 144,000 Samsung washing machines that were prone to causing fires, and there is a potential recall looming for same in the United States.

Back in 2003 there was a recall of 184,000 microwave ovens in the U.S. and in 2009, 210,000 Samsung refrigerators were recalled in South Korea.

So the company has had some major manufacturing issues.  Galaxy Note 7 is far from an isolated case.

Apple, by contrast, has had product recalls of its own, like one for thousands of Beats speakers last year, but nowhere near the scale of any of Samsung’s biggies.

Wednesday, Samsung revised its third-quarter profit estimates down by $2 billion as a result of the Galaxy Note 7 issue, and said earnings would be 33% less than what they had estimated the week before. Then Friday, they revised the profit hit to $2.7 billion.  The total loss from the fiasco is expected to be in the $5bn range.  Needless to say the shares have been suffering.

If you have a Galaxy Note 7, you have to bring it back and get something different.  Whatever you do, make sure it is off!

Personally, I have an older Galaxy model and I used to leave it plugged in for days (I know, I know...that reduces the life of the battery), but no longer.  If I remember, I’m only recharging it when I’m home.  [Heck, I never use the damn thing anyway.]

Of course Samsung’s problems have helped Apple, at least the stock, as this week it hit a high not seen since December.

--Deutsche Bank AG CEO John Cryan failed to reach an agreement with the Justice Department to resolve a years-long investigation into mortgage-bond dealings last weekend in Washington, when there had been rumors of a settlement; rather than the $14 billion opening bid from Justice last month that sent the stock, and the market, briefly, into a tailspin.

There was talk the penalty might be more in the $5-$6 billion range but now who knows.

Meanwhile, Qatar’s royal family is considering increasing its stake in DB to as much as 25 percent, as the bank implemented a companywide hiring freeze (save for compliance) on Wednesday in another attempt to lower costs, after previously eliminating 9,000 jobs and scrapping bonus awards for top management.

--Alcoa opened up earnings season on Tuesday with profits and revenues that were below expectations, while the company revised down its revenue projections for the full year.

Alcoa is breaking up into two separate companies, effective the next quarter, so it was the last quarterly report for the whole operation.  Earnings were up 52 percent, while revenues fell 6 percent, both below the Street’s forecasts.

The new businesses are Arconic, which will be comprised of the group’s specialized metals and products businesses serving the aerospace and automotive industries, and Alcoa Corp., which will have the operations producing commodity aluminum, alumina and bauxite.

--From Defense One: “The White House’s recent decision to allow the sale of F-15 fighter jets to Qatar helped to seal the $18.6 billion purchase of 100 Boeing jetliners announced Friday by Qatar Airways, according to people with knowledge of the deal.

“Executives with Boeing and state-owned Qatar Airways denied links between the military and commercial sales.”

But the jetliner deal had been in negotiation for months and it suddenly came into fruition right after the Obama administration approved the 36 F-15 fighter jets.

The fighter jet deal is worth up to $4 billion, and can be expanded.  The airliner deal includes the purchase of long-haul Dreamliners and 777-ER aircraft, valued at $11.7 billion, plus regional aircraft used for shorter flights worth $6.9 billion.  Finalizing the latter (737 MAX 8 aircraft) would be a real coup for Boeing as Qatar Airways flies only European-made Airbus planes on these regional routes.

Ray Conner, president and CEO of Boeing Commercial Airplanes, said the deal would affect 104,000 jobs across America, not just in the Seattle area where Boeing builds commercial aircraft.

--Volkswagen has reported increased year-to-date sales of its core VW brand for the first time since the emissions scandal broke last September, up 0.6% for the first nine months vs. the same period in 2015.  Sales in September alone were up 6.7%.  [Deliveries are down 12.5% in the U.S. for Jan.-Sept.  But they were up 11.4% in China.]

--Amazon’s attempt to take over every business involved in consumer spending, and then some, continues with the launch of an on-demand music service, costing $7.99 a month for Prime members – about $2 less than rival services from Pandora and Spotify.  It costs $9.99 for non-Prime users.

Cowen & Co. analyst John Blackledge told the New York Post that this new product could be a game changer.  His research suggests that 70 percent of Spotify’s U.S. premium subscribers were also Amazon Prime households, while 75 percent of Apple Music subscribers use Prime, and 74 percent of Pandora One users pay for Amazon’s Prime service.

“Given Amazon’s massive scale, it’s reasonable to assume it could take [music streaming] share,” said Blackledge.

Separately, Amazon plans to hire 20% more seasonal workers for its U.S. warehouses this holiday season as some competitors have kept hiring steady.  The company will add 120,000 positions, up from 100,000.  By comparison, Target is looking to hire the same amount of workers in its stores as last year, 70,000, but will add 7,500 additional workers for its distribution and fulfillment facilities.  Macy’s is planning on adding 2,000 fewer; 83,000 vs. 85,000 in 2015.  [Wall Street Journal]

--Ericsson AB reported sales and earnings that missed forecasts, warning the weakness won’t end any time soon as customers around the world cut spending.  The CEO said, “The negative industry trends have further accelerated.”

Revenue fell 14 percent in the third quarter, a huge drop for such an established company.

Last week I wrote of the phone-network manufacturer’s plans to cut 3,000 jobs in Sweden, a fifth of its workforce there.

--HP said it plans to cut between 3,000 and 4,000 jobs across its printer and PC divisions over the next two fiscal years. This is on top of 3,000 cuts announced in February.  But the company (recall, this is part of the split off from Hewlett-Packard; the printer/PC business and its enterprise solutions operation) is optimistic about the future.

--Shares in Twitter continued to fall as efforts to sell itself are failing.  Late Friday, prime suitor Salesforce.com backed out. 

--Verizon is getting major cold feet in its acquisition of Yahoo, with the general counsel saying on Thursday that the unprecedented hack of 500 million Yahoo accounts presented a material adverse condition (MAC) on the portal’s core asset.

If Verizon isn’t convinced by Yahoo that an MAC has not occurred, Verizon can exit the deal or renegotiate the price.

But Verizon CEO Lowell McAdam is acting like the deal is going to move forward, regardless of what his top lawyer is saying.

--Shares of St. Jude Medical fell on Tuesday after the company said it would have to recall some of its implantable heart devices because of “premature battery depletion,” which led to two patient deaths.

Back in August, short-seller Muddy Waters Research attacked the company, saying its devices could be hacked, which St. Jude denied.

--Japanese IT equipment and services company Fujitsu said it was cutting up to 1,800 jobs in the U.K.

Tokyo has warned Japanese companies could reduce operations in Britain as a result of Brexit, but Fujitsu insists this is not the reason for its move, rather it is part of an effort to streamline operations.

Fujitsu has multiple facilities across the country and unions are threatening job actions.

[I just Fujitsu is eliminating 400 jobs in Germany, too.]

--The SEC voted unanimously to approve a set of rules designed to ensure mutual funds and ETFs are able to liquidate assets quickly enough to pay investors if there is a stampede for the exit.

This has been a concern with all the money that has piled into bond funds, owing to the aggressive monetary policy of the world’s central banks. With low interest rates, investors have been seeking higher yields, thus riskier assets that aren’t always easy to sell quickly.

So the rules will require funds to classify investments into four liquidity buckets, based on the amount of time it would take to convert an asset to cash, and the rules will set a 15 percent limit on the amount of illiquid investments a fund can hold.

A fund’s board will approve a minimum percentage of its assets that are to be designated as highly liquid, defined as cash or an asset able to be converted to cash within three business days.  The board will do this over dinner at Peter Luger’s.

--A report from Morningstar Credit Ratings found that about 45 percent of the 1,035 malls across America have weak sales, declining occupancy and one or more anchor-store vacancies.

Among the most vulnerable are 100 that have Macy’s, JCPenney and Sears, all of which are aggressively closing stores.

--More people now work for New York City – 287,000 full-time employees as of July – than at any other point in its modern history, with thousands more scheduled to join them, as reported in the New York Times the other day by J. David Goodman.

“The projected growth finds few parallels in other major American metropolises; most, like New York, trimmed their numbers after the financial crash of 2008.  Some have rehired, though not at the level that New York has under Mayor Bill de Blasio.

“But behind all the job growth is a complicated set of factors that explain the possible benefits and costs to the city, the mayor and his supporters.  Unions will see new jobs for their members, but the city will see future pension costs rise.

Most of the recent growth has been for teachers, corrections officers and an expansion of the police force.

--Jonathon Trugman of the New York Post reported on a study put out by Sentier Research that showed how over an 18-year period, from 1996 to 2014, white males in the working class with a high school education have seen their pay fall by 9 percent, the study only looking at white males.

There in a nutshell is the reason why so many of America’s working class feel left behind and cheated...and have turned to Trump.

In the 45- to 49-year-old age group, earnings fell from $62,767 to $54,303, a 13.7 percent loss in income.

By contrast, white male college graduates saw their income rise 23 percent.

But an analysis of health-care costs by Aon “found that there has been a 134 percent rise since 2005 in employee contributions and out-of-pocket co-payments and deductibles,” as noted by Jonathon Trugman.

Ergo, even a 23 percent income increase over 18 years is very weak, let alone a 9 percent loss. Both segments are falling behind at a rapid clip.

--According to the U.S. Department of Agriculture, more than 43 million gallons’ worth of milk has been dumped in the first eight months of 2016, amid a massive glut that has slashed prices and filled warehouses with cheese.  [Time for me to resort to a life of crime and take down some cheese warehouses.  I’ll use my Swiss Army Knife with the saw blade.  Then I’ll ride the rails, eating said product.] 

The Wall Street Journal reports this is the most milk wasted in at least 16 years, as producers attempt to find new uses for the excess, like getting more milk into school lunches.

But prices have plunged 36% since hitting records in 2014.  It was then that dairy and meat producers expanded production and, voila, the stage was set for the next bubble.

The milk is being dumped in every place imaginable, including manure lagoons, because milk processing plants are filled to capacity.

Farmers in the U.S. are also now dealing with record harvests for corn and soybeans, with low prices for both leading to the third consecutive drop in farm incomes.

--U.K.-born Oliver Hart and Bengt Holmstrom of Finland won the Nobel Prize for economics for their work on contract theory, such as in bankruptcy legislation and political constitutions.

Working separately, the two created tools to help determine whether public sector workers should receive fixed salaries or performance-based pay, and whether providers of public services should be publicly or privately owned.

Holmstrom, a former Nokia board member, is a professor at MIT, while Hart is an econ professor at Harvard.

--The “Today” show is a major revenue generator for NBC so Street Bytes is the appropriate place to note that Billy Bush is not returning to the program following the controversial videotape with Donald Trump.  He was suspended indefinitely but is negotiating his exit, according to reports.  [$10 million is the latest, the full value of his three-year deal.]

Aside from chuckling and encouraging Trump as the two are talking about how Trump tried to have sex with Nancy O’Dell, we see how Bush, then a co-host on “Access Hollywood,” could not have been more of a jerk when he got off the bus with Trump, begging the actress they were meeting with to give them both hugs.

According to the New York Post’s Page Six, Bush “brazenly bragged to NBC staff about the vulgar Donald Trump tape while covering the Olympics in Rio.”

It seems that at a party in August, Bush said he had a “tape of Trump being a real dog,” prompting staffers at “Access Hollywood” to track it down.

Bush never told NBC News brass about the tape when he joined “Today,” which is what in hindsight really ticked them off.  Imagine, the tape was under the News division’s nose and they didn’t get the scoop, though it’s not known if Bush remembered his own role in it.

Because Bush was such a jerk, “Today” staff is being urged to come forward “with any concerns” about him.

Yes, Billy Bush is now in my December file for “Jerk...” and “Dirtball of the Year” consideration, an exclusive on my Bar Chat link.

--Noooo!  Lobster prices have hit their highest levels in a decade thanks to the rise of burger and lobster chains, as reported by the Financial Times.

“In London, Burger & Lobster, which was launched in 2011, has been a pioneer in the genre and has expanded to other cities around the world.”

It’s the lobster roll phenomenon, sports fans, and thus the demand for lobster meat is rising rapidly.  The price is now $6 a pound, wholesale, an 11-year high.

Following the financial crisis of 2008, and a warm water phenomenon off Maine, lobster prices fell to historical lows...$3.70 in 2009.

Bottom line...not a good time to be a lobster.  #16 on the “All-Species List,” the link for which on my site (at the very top of the home page), is in the soft-launch phase as we work out some kinks.  But I’ll be asking for your feedback.  And have fun with it!  [Especially if you’re a dog lover.]

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey: After a temporary lull in bombing called by the Syrian government, partly to allow civilians to leave rebel areas, Russian warplanes resumed airstrikes on Aleppo, scores dying.

British Prime Minister Theresa May said there are “many questions” over whether a no-fly zone is an appropriate solution to the Syria crisis and bombing of Iraq’s once largest city.

Speaking about the potential benefits of a no-fly zone, May, addressing Prime Minister’s Questions in Parliament on Wednesday, said:

“Who is there to protect? Would it lead to Assad bombing people in the expectation that they would then move to that zone?  How would you actually enforce a safe area there?”

May said the only real solution is a “political transition” to a “stable Syria” free of President Bashar al-Assad “and it’s time that Russia accepted that,” she said.

You know my feelings on this situation.  The time for a no-fly zone was 2012.  It has long passed with Russia involved.  I love all the politicos talking glibly about it now.  Freakin’ idiots...every one of them.

French President Francois Hollande delivered a sharp critique of the Obama administration on Wednesday in a magazine interview, calling Washington afraid to use its power to stop the bloodshed in Syria, but too eager to wield its economic might to penalize European companies.

“The U.S. has ‘too much power to take back money and not enough power to make peace,” Hollande said in an interview published in the French magazine l’Obs.

Hollande would like to see strikes against the Assad regime, but France is not going it alone and President Obama has obviously been resistant to intervene against Assad.

Hollande went back to 2013 and said the decision not to retaliate against the Syrian government for using chemical weapons encouraged Russia’s military expansion into Ukraine and Syria.

“This signal was interpreted as weakness from the international community,” Hollande said. “That’s what provoked the crisis in Ukraine, the illegal annexation of Crimea, and what’s happening to Syria right now.”  [Matthew Dalton / Wall Street Journal]

Meanwhile, the Russian military, which recently placed advanced anti-missile systems in Syria, said it would shoot down American aircraft if they launched a campaign against Assad.

In Iraq, it appears the operation to retake Mosul, expected to begin in a major way shortly, has been slowed by Turkey, which is saying any mistake in the U.S.-backed operation to drive out Islamic State could result in hundreds of thousands of refugees, according to a presidential spokesman.  I noted this weeks ago, this being the chief fear in both Washington and Baghdad, but Turkey is locked in an escalating row with Iraq over who should take part in the Mosul assault and Turkey doesn’t want the Kurdistan Workers Party (PKK) militants*, viewed by Ankara and some in the West as terrorists, to be involved.  It’s the PKK fighting the insurgency in Turkey that has left 40,000 people dead.

*The PKK was blamed for a car bomb in southeast Turkey this week at a military checkpoint that killed ten soldiers and eight civilians.

Turkey has been training Sunni Muslim and allied Kurdish Peshmerga units at a camp near Mosul and wants them involved in the assault.

But Baghdad’s Shiite-led government objects to the Turkish military presence and wants Iraqi army units at the forefront, though this also includes the use of Shiite militias.

How bad is the growing rift between these two?  On Tuesday, Turkish President Erdogan unleashed a tirade against Iraqi Prime Minister Haider Abadi, telling the Iraqi he needed “to know his limits.”

“You are not my equal,” Erdogan said, “and you are not at my level and your shouting in Iraq is not important to us at all.”

Uh oh.

The U.S. has said any foreign forces, such as Turkey’s, should have the approval of the Baghdad government.

[There’s a Reuters story out tonight that ISIS executed 58 suspected of taking part in a plot to help deliver Mosul to government forces, according to residents and Iraqi security officials. Among those killed was a local aide to IS leader Abu Bakr al-Baghdadi, who led the plotters.]

Yemen/Iran: Saturday, a Saudi air strike mistakenly killed more than 140 mourners, 500+ wounded, at a funeral in the Yemeni capital of Sana’a, with Houthi rebels blaming the attack on the Saudis, who would later concede they blew it.  The Iranian-backed Houthis then launched cruise-missile attacks against U.S. Navy ships on Sunday night and Wednesday from Yemen, clearly in retaliation and at the direction of Tehran.

The U.S. struck back, as described below; our first direct military action against the Houthis.

Editorial / Wall Street Journal

“The White House doesn’t want Americans to notice, but the tide of war is not receding in the Middle East.  The Navy this week became part of the hot war in Yemen, with a U.S. warship launching missiles against radar targets after American vessels were fired on this week.  Just when President Obama promised that American retreat would bring peace to the region, the region pulls him back in.

“The destroyer USS Nitze fired Tomahawk cruise missiles to take out three radar sites on the Yemen coast believed to be manned by Houthi rebels.  Though the Houthis deny it, the Pentagon believes they were responsible for the multiple-missile attack on Sunday against the USS Mason, another destroyer patrolling in international waters.  This was no mere warning shot.  The Mason had to use active defenses, including interceptor missiles, to prevent a strike that could have killed dozens of sailors....

“But there’s more to this story because the Houthis are one of Iran’s regional proxy armies.  They are fighting to control Yemen against a Saudi-led coalition that is trying to restore the former Sunni Arab government in Sana’a.  The U.S. has been quietly backing the Saudis with intelligence and arms, though the Saudi coalition has been fighting to a draw with the Houthis, who are supplied by Iran. The cruise missiles used against the USS Mason are also used by Hizbullah, another Iran proxy army.

“Don’t expect the White House to acknowledge this because the ironies here are something to behold.  Mr. Obama is backing the Saudis in Yemen in part to reassure them of U.S. support after the U.S.-Iran nuclear deal that the Saudis opposed.  Mr. Obama’s Iran deal was supposed to moderate Iran’s regional ambitions, so Mr. Obama could play a mediating role between Tehran and Riyadh.  But the nuclear deal has emboldened Iran, and fortified it with more money, so now the U.S. is being drawn into what amounts to a proxy war against Iran.  Genius....

“Two years ago Mr. Obama called U.S. policy in Yemen a model of counterinsurgency.  But it has since become, like Syria and Iraq, another catastrophic civil war that is another front in the Iranian campaign to become the dominant power in the Middle East.

“Mr. Obama doesn’t want Americans to figure this out during the election campaign, or as he exits the White House, which is one reason he’s responded so feebly to this blatant act of war against U.S. ships.  Mark Yemen down as one more hot mess that this President is leaving to his successor.”

Benny Avni / New York Post

“Yemen, a microcosm of the current Mideast mess, can in part be chalked up to America’s policy in the last decade.  We tried to divorce ourselves from a region that simply refuses to accept our pleas for separation.

“Our withdrawal gave rise to the region’s most extremist elements and their anti-American backers.

“Regrettably, the two presidential frontrunners signal they’ll mostly continue Obama’s attempt at ending America’s traditional global leadership, which sooner or later will come back to bite us, and American will likely be drawn into a much messier war.”

Iran sent warships to the coast of Yemen today.

The civil war in Yemen has claimed at least 6,700 lives, according to the U.N., with 4,000 of the deaths being civilian.  60% of the civilian deaths are related to coalition airstrikes.

Three million are in need of immediate food supplies.  Cholera has also been reported in Sana’a and other cities.  Three million have been displaced.

Afghanistan: ISIS claimed responsibility for two attacks on mosques in the country this week, one that killed 18 Shiite worshippers in Kabul, the other in the northern part of the country that killed at least 14, as Shia worshippers were observing Ashura, one of its holiest days.

Needless to say it is worrisome ISIS clearly has an established base of operations in the country that is growing.  For its part, the Taliban denied any involvement in the attacks.

Israel: A Palestinian gunman shot and killed two Israelis as he drove through Jerusalem on Sunday, in what Israeli authorities called a terror attack.  Israeli police shot dead the 39-year-old assailant.  Others were wounded.

The wave of bloodshed that began a year ago has left 42 Israelis dead and more than 500 wounded.  Israeli security forces have killed some 200 Palestinians, most after attacks against Israelis.

Russia: Speaking at the “VTB Russia Calling!” Conference in Moscow, Wednesday, President Vladimir Putin claimed the West had unilaterally withdrawn from the negotiating table.

“There is no dialogue now, only some kind of dictate,” he told the audience.

Russia finds itself increasingly isolated internationally.  The U.S. is considering imposing additional sanctions on Russia for its role in supporting Syrian President Assad’s ongoing assault on the opposition holdout of Aleppo, and for its alleged hacking of servers in the Democratic National Committee and selected officials.

Putin used the forum to defend the Kremlin’s position on Syria.  “Our partners should not be offended by our veto (of a French U.N. resolution to end airstrikes in Aleppo),” he said.  “We are the ones who should be offended.”

He claimed the French had “failed to take Russia’s interests in Syria into account,” and had failed to place any blame on the Syrian opposition for the war there.

Russia’s relations with France have taken a severe hit, with the Kremlin cancelling a state visit to Paris, scheduled for Oct. 19.  Preparations for the trip were a year in the making, but President Hollande pulled away from the engagement following Russia’s continued bombing of Aleppo, accusing Russia of war crimes and saying the visit to France by Putin would only be about Syria.

Alexander Baunov / Moscow Times

“Russia has made an unexpected maneuver by declaring an ostentatious break with the United States on a broad front.

“Until recently, everything seemed to be moving in the opposite direction, with Russia coveting an international ‘diplomatic victory’ that restored its status in the West and presupposed support from the United States.  In Syria, where Moscow has increasingly set the agenda ove the past year, it had largely accomplished that goal.

“Yet on Oct. 3, Moscow said it was pulling out of the U.S.-Russia Plutonium Management and Disposition Agreement, signed in 2000.  The two countries have traded threats and accusations on a whole series of issues, and relations have abruptly dropped to a new low....

“(In Syria) the reasons can easily be listed.  Moscow blamed the United States for an airstrike that wiped out an entire Syrian regiment, calling it a serious setback in the fight against IS. The Americans blamed Russia for attacking a humanitarian convoy. Then came the bombardment of Aleppo, which caused angry dissension between the two sides.

“But Russia went further, turning a local breakdown in bilateral relations into a global one. President Putin announced that Russia was suspending the 2000 agreement on plutonium disposal. In his decree halting cooperation, Vladimir Putin explains the decision by ‘a fundamental change of circumstances’ and the ‘emergence of a threat to strategic stability’ caused by U.S. actions.

“Now, the new Duma will start its term by approving a text condemning the United States for taking ‘steps resulting in a fundamental change in strategic stability.’

“Moreover, the conditions Russia set for rejoining the treaty are extreme.  Moscow demanded that the United States scale back its military presence in states that joined NATO after 2000 and told Washington to repeal the Magnitsky Act and the Ukraine Freedom Support Act, lift all anti-Russian sanctions, and compensate Russia for the damage the U.S. inflicted on its economy.

“On the American side, the harder line was reinforced by the Dutch Safety Board report on the MH-17 airliner downing.  Although most of the world already knew that Moscow was in some shape or form responsible for the disaster, the report has  a legal dimension....

“One more factor has helped trigger Moscow’s decision to break with the United States: the U.S. election campaign in which Russia has been playing a prominent role.

“Americans are now defining Russia as a full-fledged global adversary. The shock is not that Russia misbehaved somewhere overseas but that it directly interfered in American domestic politics.

“The American media and politicians are now essentially saying what Putin said: Russia is a direct threat to U.S. security.

“It will be hard to undo this rhetoric in the case of Hillary Clinton’s more than likely victory.  Leaders of a new administration who just recently claimed that a powerful foreign adversary was about to destroy the country through its political manipulations will not act as though nothing has ever happened.  Putin will have to deal with a hostile foreign policy environment during his last term in office.

“So Russia decided not to wait to be punished by the United States and instead seized the initiative to drive the relationship to rock bottom.  The assumption must be that when relations are so low, the only way for them to go is up.  It is a bold political move that Putin hopes will give him greater freedom of maneuver on issues like Aleppo and the Donbas [Ed. Ukraine].  But the assumption carries one obvious risk: the present rock bottom may only conceal another even deeper one.”

Separately, Russia said it’s working with China to counter U.S. plans to expand its missile-defense network, which the two see as targeting their military assets.

The U.S. and NATO have stressed the alliance’s global missile shield will be a defense solely against missiles from rogue states such as Iran and North Korea.

George F. Will / Washington Post

“Vladimir Putin’s serial humiliations of America’s bewildered secretary of state regarding Syria indicate Putin’s determination to destabilize the world. Here is an even more ominous indication of events moving his way: On just one day last week, Italian ships plucked 6,055 migrants from the Mediterranean.

“What has this to do with Putin? It portends fulfillment of his aspiration for Europe’s political, social and moral disorientation....

“Europe has recently been politically destabilized and socially convulsed by the arrival of a million Syrian migrants seeking asylum. Future migrations from Africa, with a large Muslim component, could pose the greatest threat to the social cohesion of Europe since 1945, or even since invading Arab forces were halted at Poitiers in 732.

“Undermining the West’s confident sense of itself is important to Putin’s implementation of his ideology of Eurasianism.  It holds that Russia’s security and greatness depend on what Ben Judah calls a ‘geographically ordained empire’ that ‘looks east to Tashkent, not west to Paris.’

“Writing in the British journal Standpoint, Judah reports that Russian television relentlessly presents ‘a dangerous, angry wonderland’: ‘Russia is special, Russia is under attack, Russia swarms with traitors, Russia was betrayed in 1991, Russia was glorious under Stalin’s steady hand.’  This justifies gigantic military, intelligence and police establishments steeped in Eurasianist tracts published by the Russian General Staff.

“Putin’s Russia, writes Owen Matthews in the Spectator, is developing a ‘state-sponsored culture of prudery’ to make it a ‘moral fortress’ against Western decadence....

“Twenty-one percent of Russians want homosexuals ‘liquidated,’ and 37 percent favor ‘separating them from society.’....

“In many worrisome ways, the 1930s are being reprised.  In Europe, Russia is playing the role of Germany in fomenting anti-democratic factions. In inward-turning, distracted America, the role of Charles Lindbergh is played by a presidential candidate smitten by Putin and too ignorant to know the pedigree of his slogan ‘America First.’”

In a poll by state-backed Public Opinion Fund, Donald Trump is Russia’s favorite to win the election; 44% said a Trump victory would be in Russia’s best interests, while just 7% backed Hillary Clinton. The rest either said the outcome would not matter for Russia, or didn’t answer. 

Only 8% viewed Clinton positively, 61% negatively.  38% viewed Trump positively, 20% negatively.

China: So I’ve written the past two weeks about the upcoming 19th Party Congress and rumors that President Xi Jinping won’t be content with being in charge for ‘just’ ten years.  So I found it interesting that the Financial Times’ Tom Mitchell had similar thoughts this week.

“For more than a decade, a tacit understanding among China’s top rulers has ensured the ruling Communist party does not become a gerontocracy. That understanding, known as qishang baxia or ‘seven-up, eight-down,’ dictates that only leaders 67 or younger can ascend to or remain in top posts, while those 68 or older must retire when the party changes guard every five years.

“But as China prepares to enter a ‘selection year’ under the leadership of a very unconventional president, Xi Jinping, there is increasing speculation he may try to dispense with the retirement convention entirely....

“It would also be the strongest signal to date that Mr. Xi could ignore a similar unwritten rule on term limits that would require him to step down from his current position as party leader in 2022.

“Mr. Xi heads the seven-member Politburo Standing Committee, the party’s most powerful body.  Since 2012 he has overseen a draconian anti-corruption campaign and asserted his authority over the military and even economic policy, an area traditionally delegated to the premier.

“As a result, he is widely regarded as the party’s most powerful leader since Deng Xiaoping, the architect of China’s reform and opening, if not Mao Zedong, the party’s revolutionary hero.”

Taiwan: In her National Day speech, Taiwan’s President Tsai Ing-wen urged the mainland to accept that the “Republic of China exists” and that the people of Taiwan have an “unshakable faith in the democratic system.”

Once again, Tsai refused to accept the “one China” principle, which upsets Beijing to no end.

“We respect the historical fact that in 1992 the two institutions representing each side across the strait held a meeting,” Tsai said.

But she declined to refer to the “1992 consensus” – the key words that refer to one-China.

“The new government will conduct cross-strait affairs in accordance with the Constitution of the Republic of China [Taiwan’s official title], the Act Governing Relations between the People of Taiwan and Mainland Areas, and other relevant legislation,” Tsai said.

Beijing has suspended talks and other official channels of communication with Tsai’s government since June in what was seen as a move to pressure Tsai into accepting the “1992 consensus.”

Remember, Beijing still regards Taiwan as part of the mainland awaiting eventual reunification, and has threatened to take it by force if necessary.  It will.  Sooner than later.  That’s been my prediction.

North Korea: David Ignatius / Washington Post

“When South Korean officials talk about the growing nuclear challenge from North Korea, they use red-alert phrases such as ‘existential threat,’ ‘imminent danger’ and ‘dagger at the throat.’ They want Americans to understand that this long-running story of brinkmanship has entered a new phase.

“One senior South Korean official told me starkly: ‘A nuclear missile from the North can land on this office in four to five minutes.  We don’t have the luxury of thinking twice...This is no longer a dark cloud on the horizon.  It’s a threat at our doorstep.’....

“There’s a sense here, among South Korean and American officials alike, that Kim Jong Un, the mercurial leader in Pyongyang, is racing through the warning lights to gain nuclear weapons and missile capabilities to attack his neighbors, and also the United States.  The next U.S. president will have to decide what to do about it....

“The frustration voiced by U.S. and South Korean officials is that nothing has succeeded in checking North Korea’s relentless advance toward nuclear weapons....

“Even China seems to have limited leverage....

“South Korean officials hope the United States can reassure a jittery public about the reliability of its nuclear umbrella...That could mean more overflights by B-52 and B-1 bombers, more visits by top U.S. officials and more joint defense talks....

“What happens if all these efforts fail, and Kim deploys nuclear-tipped missiles that could hit U.S. territory?  ‘We should have a euphemism for ‘preemption,’’ commented one former senior U.S. official at the conference here [Seoul].

“But whatever word is used, an unpalatable military choice may confront the next president – for the simple reason that nothing else seems to have worked.”

Philippines: President Duterte is leading a delegation of 250 Philippine business executives to Beijing this coming week as he seeks a new partnership with China at a time of rising tensions between Manila and Washington.

Duterte has an 86 percent approval rating after three months in office, according to a Pulse Asia Research Inc. poll conducted Sept. 25-Oct. 1.

Ethiopia: Robyn Dixon / Los Angeles Times

“For years, Ethiopia’s government has repressed dissent, jailed opposition leaders and at times shut down social media, producing the kind of political stability that has helped reassure foreign investors.

“But the climate that nurtured one of Africa’s fastest-growing economies is suddenly under threat, as months of violent antigovernment protests have turned in recent days into attacks on Dutch, Turkish, Saudi and Nigerian businesses.

“ ‘A state of emergency has been declared because the situation posed a threat against the people of the country,’ Ethiopian Prime Minister Hailemariam Desalegn declared over the weekend....

“Authorities have been accused by international human rights groups of a heavy-handed response to the protests that began in November....

“Security forces have killed at least 500 people and detained tens of thousands of others since protests erupted late last year, according to Human Rights Watch, as the government confronts its worst public unrest in its 25 years in power.”

More refugees coming to Europe, boys and girls.

Thailand: King Bhumibol Adulyadej died.  He was 88.

Bhumibol was the world’s longest-reigning monarch, serving seven decades since being enthroned as an 18-year-old in 1946; the one enduring figure during Thailand’s transition from an agrarian backwater to Southeast Asia’s second-biggest economy. His reign encompassed more than two dozen changes of prime minister and 10 coups, including the most recent one in May 2014.

Bhumibol was a truly beloved monarch, traveling the nation to meet with everyone from tribesmen to aristocracy.  His rule was seen as one of the few things that were stable in the country.  His picture was in every home and business.

Bhumibol’s successor is his only son, 64-year-old Crown Prince Vajiralongkorn, who is far from beloved, being a playboy and womanizer, thrice divorced, living with a German stewardess these days.  Looks like a total spoiled brat (when you see the pictures)...an old one at that.

So lots of uncertainty in this land in the coming months.  How will the military act?

Nigeria: Boko Haram released 21 of the 276 schoolgirls snatched from their dormitories in the town of Chibok 2 ½ years ago.  The 21 were apparently swapped for four Boko Haram members that had been captured.

Random Musings

Presidential Polls....

According to the latest NBC News/Wall Street Journal survey taken after a videotape of Donald Trump making vulgar remarks about women surfaced, but before Sunday night’s second debate, Hillary Clinton had an 11-point lead, 46% to 35%, among likely voters, in a four-person race (Gary Johnson 9%, Jill Stein 2%), up from 6 percentage points in September, when the split was 43-37 in a four-way contest.

But...in the same poll, including voters after the debate, through Monday, it was a 9-point lead, 46-37 (Johnson 8, Stein 2).

A new Reuters/Ipsos national tracking poll launched after Sunday night’s debate has Clinton leading Trump by 8 points among likely voters.  It was 5 points the prior week.  [Among those who watched at least a portion of the debate, 53% said Clinton won, 32% said Trump did.  82% of Democrats thought Clinton won, 68% of Republicans thought Trump did.]

A Fox News national poll had Clinton leading Trump 45-38 in a four-way race, 49-41 in a two-way.

In battleground states’ polling....

Two new NBC News/Wall Street Journal/Marist polls, taken before the 2005 video of Trump and Billy Bush was released, show Clinton leading Trump in Pennsylvania by 12 points among likely voters, 49% to 37%; Gary Johnson 6% and Jill Stein 4%.

[Also in the NBC/WSJ survey, incumbent Republican Sen. Pat Toomey trails Democratic challenger Katie McGinty by four points, 48-44, in this key Senate race.]

In Florida, Clinton led Trump 45-42, with Johnson at 5% and Stein 3%.

[Rep. Sen. Marco Rubio leads Democratic challenger Patrick Murphy 48-46.]

In NBC/WSJ/Marist polls released end of the week, Clinton leads Trump in critical North Carolina, 45-41 in a four-way race, while Trump edges her in Ohio, 42-41 (also four-way).

Back to Pennsylvania, a new Bloomberg Politics poll conducted Friday through Tuesday after the video’s release and the debate has Clinton with a 9-point lead in a two-way race statewide, 51-42, with a huge 28-point lead in four key Philadelphia suburban counties, 18 points larger than Barack Obama’s winning margin there in 2012.  To offset this, Trump needs to take the rest of the state by a far bigger margin than his current 11-point lead.  Without the Keystone state’s 20 electoral votes, Trump’s chances of gaining the White House are virtually nil.

Clinton still leads Trump in Pennsylvania in a four-way by 9 points.

[In the Pennsylvania Senate race, according to the Bloomberg Politics poll, McGinty leads Toomey, 47-45, or within the margin of error.]

--Jonathan Swan of The Hill reported that Steve Bannon, the chairman of right-wing news outlet Breitbart who became CEO of Donald Trump’s presidential campaign, has given explicit orders to his staff to destroy Paul Ryan.

“On editorial conference calls, the Breitbart chairman would often say ‘Paul Ryan is the enemy,’ according to a source who worked with Bannon at the news organization.

“In December 2015, weeks after Ryan became Speaker, Bannon wrote in an internal Breitbart email obtained by The Hill that the ‘long game’ for his news site was for Ryan to be ‘gone’ by the spring.

“In the Dec. 1 email, Breitbart’s Washington editor, Matt Boyle, suggested to Bannon that a story promoting Ryan’s planned overhaul of the mental health system would be a good way to ‘open a bridge’ to Ryan.

“Bannon wasn’t keen on the idea.

“ ‘I’ve got a cure for mental health issue,’ Bannon wrote to Boyle.  ‘Spank your children more.’

“ ‘I get that,’ responded Boyle, ‘but this is a place where we can open a bridge to Paul Ryan – we’re playing the very long long long game Steve.’

“Replied Bannon: ‘Long game is him gone by spring.’”

But a source close to the Trump campaign said it’s not Bannon today who is going after Ryan.  That’s Trump’s doing.  That said, Bannon, according to the source, “thinks Paul Ryan is part of a conspiracy with George Soros and Paul Singer, in which elitists want to bring one world government.”

--The emails....

CNN political commentator Donna Brazile seemingly gave the Clinton campaign advance notice of a question that came up at the network’s presidential town hall on March 13, 2016, according to emails released Tuesday.

“From time to time I get the questions in advance,” said Brazile, who was then vice-chair of the Democratic National Committee, in a March 12, 2016, email to Clinton’s communications director.

Brazile then relayed a question on the death penalty that was then asked, virtually verbatim, the next night.

[Brazile is now on leave from CNN as she serves as interim chair of the DNC.]

Also as part of the above WikiLeaks dump, it seems clear Hillary Clinton’s staff was in communication with government officials about the email issue once it was disclosed she was using a private email server while leading the State Department.

Campaign spokesman Brian Fallon, who worked at Justice before joining the campaign in 2015, is shown being given a heads up about a preliminary hearing in a  lawsuit brought against State.

Michael Goodwin / New York Post

Goodwin writes of the slanted coverage of the New York Times as “reflected in the trove of emails WikiLeaks released from Clinton campaign chairman John Podesta.”

“Times reporters and columnists repeatedly show up in partisan ways.  Washington correspondent John Harwood sends Podesta his private approval of Hillary Clinton appearances, as if he’s on the team.  Columnist Nicholas Kristof, in advance of an interview with Bill Clinton, emails his questions, which Podesta’s team passes around to staffers to shape Clinton’s answers.

“A Washington reporter gives Hillary Clinton veto power over quotations he can use from an interview.  Another reporter is praised as someone who has ‘never disappointed’ in delivering stories the campaign wants ‘teed up’ for public consumption.”

For his part, Podesta blamed Russia for the hack into his emails.

The emails released thus far certainly should anger Sanders supporters but there isn’t anything truly explosive as yet.

But you do have this situation that garnered a lot of press in certain circles.

Byron Tau / Wall Street Journal

“Mr. Podesta and Mrs. Clinton’s campaign communications director, Jennifer Palmieri, also received an email from a scholar at the Center for American Progress noting that then-Wall Street Journal managing editor Robert Thomson and Rupert Murdoch, chairman of News Corp., were raising their children as Catholics.

“ ‘Many of the most powerful elements of the conservative movement are all Catholic (many converts) from the SC and think tanks to the media and social groups,’ wrote John Halpin, a senior fellow at the Center.

“Ms. Palmieri wrote back: ‘I imagine they think it is the most socially acceptable politically conservative religion.  Their rich friends wouldn’t understand if they became evangelicals.’”

Editorial / Wall Street Journal

“This is a window into the intolerant secular soul of the Democratic establishment and perhaps explains why it has done so little to accommodate requests for religious liberty from the Little Sisters of the Poor.  Team Clinton apparently views religion merely as a justification people adopt for their views on politics and gender.  Don’t Clinton campaign advisers think it’s at least possible that a person might be motivated by sincere belief?....

“(The) disdain for people of faith helps explain today’s political polarization and why so many people are willing to support a blunt, avenging force like Donald Trump.  Religious Americans know that much of the political establishment detests them.

“Imagine the media bonfire if emails surfaced from the Trump campaign with similar comments about Islam, but the anti-Catholic emails have received little media attention.  To the progressives who dominate American culture and politics, anti-Christian views are the most socially acceptable form of bigotry.”

Kimberley A. Strassel / Wall Street Journal

“If average voters turned on the TV for five minutes this week, chances are they know that Donald Trump made lewd remarks a decade ago and now stands accused of groping women. But even if average voters had the TV on 24/7, they still probably haven’t heard the news about Hillary Clinton: That the nation now has proof of pretty much everything she has been accused of....

“Start with a June 2015 email to Clinton staffers from Erika Rottenberg, the former general counsel of LinkedIn.  Ms. Rottenberg wrote that none of the attorneys in her circle of friends ‘can understand how it was viewed as ok/secure/appropriate to use a private server for secure documents AND why further Hillary took it upon herself to review them and delete documents.’  She added: ‘It smacks of acting above the law and it smacks of the type of thing I’ve either gotten discovery sanctions for, fired people for, etc.’

“A few months later, in a September 2015 email, a Clinton confidante fretted that Mrs. Clinton was too bullheaded to acknowledge she’d done wrong.  ‘Everyone wants her to apologize,’ wrote Neera Tanden, president of the liberal Center for American Progress.  ‘And she should. Apologies are like her Achilles’ heel.’....

“The entire progressive apparatus – the Clinton campaign and boosters at the Center for American Progress – appears to view voters as stupid and tiresome, segregated into groups that must either be cajoled into support or demeaned into silence.  We read that Republicans are attracted to Catholicism’s ‘severely backwards gender relations’ and only join the faith to ‘sound sophisticated’; that Democratic leaders such as Bill Richardson are ‘needy Latinos’; that Bernie Sanders supporters are ‘self-righteous’; that the only people who watch Miss America ‘are from the confederacy’; and that New York Mayor Bill de Blasio is ‘a terrorist.’

“The leaks also show that the press is in Mrs. Clinton’s pocket....

“Mrs. Clinton has been exposed to have no core, to be someone who constantly changes her position to maximize political gain.  Leaked speeches prove that she has two positions (public and private) on banks; two positions on the wealthy; two positions on borders; two positions on energy.  Her team had endless discussions about what positions she should adopt to appease ‘the Red Army’- i.e. ‘the base of the Democratic Party.’

“Voters might not know any of this, because while both presidential candidates have plenty to answer for, the press has focused solely on taking out Mr. Trump. And the press is doing a diligent job of it.”

--Michelle Obama proved to be one heckuva surrogate for Hillary Clinton on Thursday, as she eviscerated Trump in a speech in Manchester, N.H., hammering him for his behavior towards women.

“This is not normal,” she said.  “This is not politics as usual.  This is disgraceful.  It is intolerable.”

Referring to the 2005 videotape with Billy Bush, Obama said:

“This was not just a lewd conversation, that wasn’t just locker room banter.  This was a powerful individual speaking freely and openly about sexually predatory behavior and actually bragging about kissing and groping women – using language so obscene that many of us were worried about children hearing it when we turn on the TV.”

The speech was terrific, frankly. 

--Addressing Trump’s behavior, including lashing out at Speaker Paul Ryan for abandoning the nominee, Newt Gingrich said: “Look, first of all, let me just say about Trump, who I admire and I’ve tried to help as much as I can.  There’s a big Trump and a little Trump.  The little Trump is frankly pathetic.  I mean he’s mad over not getting a phone call?”

Trump blasted Ryan for not offering his congratulations after Sunday night’s debate.

Gingrich on a Thursday morning appearance on Fox Business said Trump needs to focus his energy on Clinton and to stop being distracted.  On “O’Reilly” that night, he said Trump’s tweeting was “baloney.”  “We want our leaders to think things through.”  I would have said, “Wait 24 hours!”

--Questioned about Donald Trump’s sexist comments, Russian Foreign Minister Sergei Lavrov told CNN, “There are so many pussies around your presidential campaign on both sides that I prefer not to comment.”

Lavrov prefaced the statement by pointing out that English is not his native language and that he was not sure if his words would be considered “decent.”

On the issue of whether or not the Russian government is trying to interfere in the U.S. election, Lavrov said he had not seen “a single fact, not a single proof” of any attempt by Moscow to influence the electoral process.

--According to a Quinnipiac University survey, despite a 4-1 approval among black adults, all American adults disapprove 54-38 percent of athletes refusing to stand during the National Anthem.

White adults disapprove 63-30.  Black adults approve 74-17.

There is a similar racial split on police in general as whites approve 70-20 of the way “police in the U.S. are doing their job,” while black Americans disapprove 67-24.

But...blacks approve 68-25 of the way “police in your community are doing their job.”  Whites approve 88-8.

--The Swedish Academy awarded the Nobel Prize in literature to Bob Dylan “for having created new poetic expressions within American song tradition.”

Dylan had long been rumored for the prize, but literary watchers considered his name among those in the running as more of a novelty.

He is the first American to win the prize since Toni Morrison in 1993.

--I wrote the following last week:

“I have nothing to say on Hurricane Matthew, as it still poses a significant danger.  But to those who say it was overhyped, remember my adage, ‘wait 24 hours.’  Good luck to my friends in Kiawah, S.C.  I hope I am down there again in December.”

I have to admit when I wrote this I was furious with some of what I heard on the radio that Thursday, especially from Rush Limbaugh, pooh-poohing the storm. What an idiot, I thought. 

It was only by chance I heard him, but I’m assuming he didn’t apologize to his listeners on Monday after the storm swamped eastern North Carolina on Saturday, killing 22, as I write now, with total devastation in some parts.  17 inches of rain in many cities, including down in Savannah, Georgia.

I have lots of college friends from the area and one I checked up on, Ken S., doesn’t live in the danger zone anymore but still has family there (Rocky Mount, N.C.).  Ken reminded me of one of the cities you are seeing on the national news today, Princeville.  Yes, it’s destroyed...an historic town built by freed slaves.

But it was destroyed in a flood 15 years ago, and the government, state and federal, insisted on rebuilding against the advice of all experts.  What an incredible waste of money.  Yet today, Gov. McCrory is talking about rebuilding again, because he has to say that...it’s what politicians do.

---

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

God bless America.

---

Gold $1251
Oil $50.32

Returns for the week 10/10-10/14

Dow Jones  -0.6%  [18138]
S&P 500  -1.0%  [2132]
S&P MidCap  -0.9%
Russell 2000  -2.0%
Nasdaq  -1.5%  [5214]

Returns for the period 1/1/16-10/14/16

Dow Jones  +4.1%
S&P 500  +4.4%
S&P MidCap  +8.7%
Russell 2000  +6.7%
Nasdaq  +4.1%

Bulls 46.1
Bears 23.1  [Source: Investors Intelligence]

Have a great week.

Brian Trumbore