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07/15/2017

For the week 7/10-7/14

[Posted 11:00 PM ET, Friday]

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Edition 953

Trump World...Donnie Jr. ‘Loves It’....

Charles Krauthammer: “I have defended (the White House) for six months, saying there is no there.  Now there is a there.”

Saturday, the New York Times reported on a meeting June 9, 2016, at Trump Tower in New York, two weeks after Donald Trump secured the Republican nomination.  The meeting was arranged by a British publicist, Rob Goldstone, who sent an email to Donald Trump Jr. saying that a Russian lawyer, Natalia Veselnitskaya, had material on Hillary Clinton, part of a Russian government effort to help his father’s election campaign.

Donald Trump Jr. confirmed the meeting took place, with Jared Kushner and then-campaign manager Paul Manafort in attendance, but said the meeting was about adoption issues.

Sunday, the Times said Trump Jr. had agreed to the meeting that was detrimental to Clinton and helpful to the Trump campaign.

Trump Jr. then said he had been asked to meet “an individual who I was told might have information helpful to the campaign.”  He also said he was conducting normal opposition research.

“The woman stated that she had information that individuals connected to Russia were funding the Democratic National Committee and supporting Mrs. Clinton.

“Her statements were vague, ambiguous and made no sense. No details or supporting information was provided or even offered.  It quickly became clear that she had no meaningful information.”

Trump Jr. also said the lawyer changed the topic to the Magnitsky Act and “it became clear to me that this was the true agenda all along.”

The Magnitsky Act, adopted by Congress in 2012, allows the U.S. to withhold visas and freeze financial assets of Russian officials thought to have been involved in human rights violations.  [Sergei Magnitsky was an attorney working with American Bill Browder when he was arrested, tortured and beaten to death.]

The attorney, Veselnitskaya, is married to a Moscow government official and her clients are said to include companies and individuals close to the Kremlin.  But she has denied ever working for the Kremlin and on Saturday said as much and that “nothing at all was discussed about the presidential campaign” at the meeting with Trump Jr.

Monday, Trump Jr. tweeted sarcastically: “Obviously I’m the first person on a campaign to ever take a meeting to hear info about an opponent.”

But Donald Jr. was missing the broader point in his first days trying to handle the disclosure, that being when a foreign government, let alone an adversarial one, offers incriminating information about an opponent, it should have set off all kinds of alarm bells and the FBI should have been notified.

Russian Foreign Minister Lavrov said it was “wild” that Donald Trump Jr. was blamed for meeting a Russian lawyer.

“I learned with surprise that a Russian lawyer, a woman, is being blamed and Trump’s son is being blamed for meeting. For me, this is wild.”

Lavrov is one of the great liars of our time.

For her part, Natalia Veselnitskaya then told NBC on Tuesday she didn’t have information on the Clinton campaign and reiterated she has never worked for the Russian government.

On Clinton, she said through a translator: “It’s quite possible they were looking for information.  They wanted it so badly.”

Democratic Senator Tim Kaine (Va.) was typical of the response from his side of the aisle: “We’re now beyond obstruction of justice. ...This is moving into perjury, false statements, and even into potentially treason.”

Republican Sen., and Trump critic, Lindsey Graham (S.C.), told reporters that “anytime you’re in a campaign and you get an offer from a foreign government to help your campaign, the answer is no.”  Graham called on Trump Jr. to testify before Congress about the matter.

Wednesday, appearing on Fox News, Bill Browder, the fund manager and partner of Sergei Magnitsky, turned Kremlin critic, told Martha MacCallum that Natalia Veselnitskaya did indeed work for the Kremlin and he had firsthand knowledge of this.  Anyone who knows Browder’s story understands Putin wants him dead.

The White House is a mess.  President Trump was invisible, without a single public appearance until he took off for a quick two-day visit to Paris Wednesday evening.

Vice President Pence is clearly trying to distance himself from the controversy.

The Trump team is trying to defend Donald Jr. by going after the reporters working the story, but as one outside adviser told the Washington Post: “The meeting happened.  It’s tough to go to war with the facts.”

And looming in the background is the Robert Mueller investigation.  It’s being reported all the senior staffers are lawyering up, which makes accomplishing anything connected to the agenda even more difficult.

But Trump told Reuters the mood in the White House is “fantastic” despite the intense scrutiny.  The administration was “functioning beautifully,” he said.

Eric Trump retweeted a message from British politician and Trump supporter Nigel Farage, who said Trump Jr. was under attack because he is “the best public supporter” of the president. Eric tweeted: “This is the EXACT  reason they viciously attack our family! They can’t stand that we are extremely close and will ALWAYS support each other.”

Meanwhile, President Trump’s pick to be the next FBI director, Christopher Wray, was impressive in his Senate Judiciary Committee confirmation hearing, even as he was continually pressed by both Democrats and Republicans as to whether he would be truly independent as the bureau continues its investigations into the Trump campaign.

“I believe to my core that there’s only one right way to do this job, and that is with strict independence, by the book, playing it straight.”

Wray, 50, a former top Justice Department official and longtime defense lawyer, added he had no reason to doubt intelligence agencies’ conclusion that Russia meddled in the election.

If the president asked him to do something unethical or illegal, Wray also testified: “First, I would try to talk him out of it, and if that failed, then I would resign.”

Thursday in Paris, President Trump was asked in a two-question press conference whether Donald Jr., per Christopher Wray, should have alerted the FBI rather than accept the meeting.  “Is he wrong?  Also, were you misled by your team in not knowing about this meeting?”

PRESIDENT TRUMP: “Well, I’ll start off by saying, first of all, I believe that we will have a great FBI director. I think he’s doing really well, and we’re very proud of that choice....

“As far as my son is concerned, my son is a wonderful young man. He took a meeting with a Russian lawyer, not a government lawyer, but a Russian lawyer. It was a short meeting. It was a meeting that went very, very quickly, very fast. Two of the people in the room, they – I guess one of them left almost immediately and the other one was not really focused on the meeting.

“I do think this: I think from a practical standpoint, most people would have taken that meeting.  It’s called opposition research, or even research into your opponent. I’ve had many people – I have only been in politics for two years, but I’ve had many people call up – ‘Oh, gee, we have information on this factor or this person, or, frankly, Hillary.’ That’s very standard in politics.  Politics is not the nicest business in the world, but it’s very standard where they have information and you take the information.

“In the case of Don, he listened. I guess they talked about – as I see it, they talked about adoption and some things. Adoption wasn’t even a part of the campaign. But nothing happened from the meeting.  Zero happened from the meeting. And, honestly, I think the press made a very big deal over something that, really, a lot of people would do.

“Now, the lawyer that went to the meeting, I see that she was in the halls of Congress, also. Somebody said that her visa or her passport to come into the country was approved by Attorney General Lynch. Now, maybe that’s wrong. I just heard that a little while ago. But a little surprised to hear that. So she was here because of Lynch.

“So, again, I have a son who’s a great young man. He’s a fine person. He took a meeting with a lawyer from Russia. It lasted for a very short period, and nothing came of the meeting. And I think it’s a meeting that most people in politics probably would have taken.”

Wrong.  And nothing on meeting with an adversarial government?  Sad.

Friday, we then had the bombshell that a Russian American lobbyist, Rinat Akhmetshin, also attended the June 2016 meeting, as first reported by the Associated Press.  We later learned further that there was an interpreter and another person, whose identity isn’t clear as I go to post.

Immediately there were stories Akhmetshin was, or had been, a Russian intelligence operative on top of his lobbying efforts. He denied he ever worked as an intel official, though he has admitted serving in a unit of the Soviet military for two years responsible for law enforcement issues.

And that’s where we are tonight.  One thing is clear, we Lyin’ Donnie has become quite the embarrassment.

Some Tweets from POTUS the past week....

W.H. is functioning perfectly, focused on HealthCare, Tax Cuts/Reform & many other things.  I have very little time for watching T.V. [Trump wrote this as he watched TV, of this you can be 100 percent certain.]

Why aren’t the same standards placed on the Democrats.  Look what Hillary Clinton may have gotten away with. Disgraceful!

Getting the job done! Sen. Mitch McConnell delays August recess to work on health care bill

Remember, when you hear the words “sources say” from the Fake Media, often times those sources are made up and do not exist.

My son Donald did a good job last night.  He was open, transparent and innocent.  This is the greatest Witch Hunt in political history. Sad!

My son, Donald, will be interviewed by @seanhannity tonight at 10:00 P.M. He is a great person who loves our country!

I strongly pressed President Putin twice about Russian meddling in our election.  He vehemently denied it.  I’ve already given my opinion....

Opinion.... *all of the following was written prior to Friday’s revelation of more people in the June 2016 meeting.

Editorial / New York Post

“We see one truly solid takeaway from the story of the day:  Donald Trump Jr. is an idiot.

“In the heat of your father’s presidential campaign, a bozo British publicist e-mails you to set up a sitdown with a ‘Russian government attorney’ promising ‘documents and information’ to ‘incriminate Hillary’ courtesy of the ‘Crown prosecutor of Russia’ as ‘part of’ the Russian government’s ‘support’ for dad – and you eagerly take the meeting.

“ ‘If it’s what you say I love it,’ wrote Junior. As if the government of former KGB spymaster Vladimir Putin would do anything so clumsy.  (Our former colleague Kyle Smith put it nicely: ‘Don Jr. is why Nigerian e-mail scammers keep trying their luck.’)

“Worse, he dragged brother-in-law Jared Kushner and then-campaign chief Paul Manafort into the meeting, which proved to be a bid by a Moscow fixer to undo a U.S. law causing trouble for her clients....

“Oh, and someone was so careless with the e-mail trail that it all wound up being fed to The New York Times, for days of headlines that (at best) undermine President Trump’s agenda as both health and tax reform hang in the balance in Congress.

“Dumb.  Dumb.  Dumb.  As were Junior’s shifting, incomplete accounts of the meeting under days of Times questioning.

“Democrats and the media are frothing to find something criminal in it all, with the most unhinged talking treason.  What it clearly was, was criminally stupid.”

John Podhoretz / New York Post

“He said, ‘I love it.’

“Yes, upon being informed in June 2016 he might soon be in receipt of information from the Russian government damaging to Hillary Clinton, Donald Trump Jr. responded with the words, ‘I love it.’

“He didn’t call the FBI to say he had evidence the Russian government was seeking to interfere with the presidential election of 2016.  No, he said, ‘I love it’ – and set up a meeting with the shady Russian lawyer who, he was told, might share dirt with him.

“He didn’t steer the Trump campaign away to shield it from the stain of a potentially scandalous encounter with an operative working for Vladimir Putin. No, Trump Jr. brought the campaign’s chairman, Paul Manafort, and his brother-in-law, Jared Kushner, into the meeting.

“Donald Jr. loved it so, you see....

“(But) unless they’re dissembling – and they could be – no actual collusion between the Trump campaign and the Russian government took place at the meeting.  If they’re not prevaricating, this isn’t the smoking gun that will take down the Trump presidency.

“To be sure, Donald Jr. liked outright when the New York Times contacted him about the meeting, which is not good, because lying is bad unless someone asks you whether they look fat in those pants and they do.

“But as it happens, lying to the New York Times is not a crime.

“At the moment, the only person who might be in some legal jeopardy as a result of the meeting is Kushner, who did not mention the meeting on the form he filled out to secure a security clearance (called an SF-86).  The form specifically states that ‘knowingly falsifying or concealing a material fact is a felony which may result in fines and/or up to five (5) years imprisonment.’

“But enough about legal jeopardy.....There is not enough focus on the moral aspect of this event, which is far more significant.

“Donald Trump Jr.’s conduct defines the word ‘disgraceful.’  He may not have colluded in the disruption of an American election, but the evidence of the emails he released himself indicates he was only too willing and eager to do so....

“If we knew he had been or is in bad odor with his father, or that his father has kept his distance from his son due to the kid’s poor judgment or bad behavior, that would help exculpate the president.

“But we know Trump Sr. has knitted his children into every aspect of his professional life. In other words: The president whose daughter took his seat at the G20 conference and who wants his son-in-law to negotiate a Middle East peace is the same man whose son took a meeting with someone he had been led to believe was a Putin cut-out to procure information that would destroy Hillary Clinton.

“I’m sure there are people who will defend this, because there are people who will defend anything.”

Editorial / Washington Post

“There can now be no doubt: The Russia meddling story is not just smoke but fire. Donald Trump Jr.’s interactions with Russians during last year’s presidential campaign were abnormal and alarming.  An incriminating email chain has made it impossible for the administration to deploy its always flimsy argument of last resort – that the whole story is just ‘fake news.’

“Not only Mr. Trump but also presidential son-in-law Jared Kushner and then-campaign chairman Paul J. Manafort are involved.  Following a string of misleading and false statements, Americans must also wonder: Were other Trump associates involved?  Did other meetings take place? Was President Trump aware of them?  What more did the Trump camp know about Kremlin support for the Trump campaign?....

“Even if the Trump camp got no dirt on Ms. Clinton out of that meeting, the Russians could have used the email chain and subsequent meeting as leverage over Mr. Trump and Mr. Kushner, who is now a top White House adviser.  Mr. Trump’s enthusiasm may also have communicated to the Kremlin that the Trump camp would welcome Kremlin election meddling.  The Russians went on to run an anti-Clinton hacking campaign....

“(Republican) leaders, including Senate Majority Leader Mitch McConnell and House Speaker Paul D. Ryan, must finally decide: Is this really okay?  Are they really prepared to debase themselves in defense of a president whose closest advisers may have welcomed underhanded interference in America’s election from a hostile foreign power?”

Michael Goodwin / New York Post

“A year from now, Donald Trump still will be president and the media and the permanent bureaucracy still will be hounding him in a ruthless bid to drive him from office.

“In responding to the attacks, Trump and his team will make numerous mistakes, none fatal, but the accumulation will take a toll on his presidency.

“Drip, drip, drip goes the optimism.

“That’s what we’re witnessing now, with another round of toxic mud masquerading as bombshell news overshadowing all other issues, from North Korea to tax reform.

“I say masquerading because, for all the intrigue about the June 2016 meeting in Trump Tower, and for all the hyperventilating by Maxine Waters Democrats that this was the ‘gotcha’ moment, the end result was the same: more smoke, yet still no fire.”

Editorial / Wall Street Journal

“President Trump’s critics claim to have uncovered proof, finally, of 2016 collusion between the campaign and the Kremlin. Another reading of the meeting between Donald Trump Jr. and a well-connected Russian lawyer is, well, political farce.

“In June 2016, Mr. Trump Jr. arranged an appointment in Trump Tower with the lawyer, Natalia Veselnitskaya.  He said in a statement that he hoped to acquire opposition research about Hillary Clinton, and he even pulled in Trump son-in-law Jared Kushner and then campaign manager Paul Manafort.  By Mr. Trump Jr.’s account, Ms. Veselnitskaya relayed nothing to compromise Mrs. Clinton and then lobbied him about the Magnitsky Act, a 2012 U.S. law that sanctions Russian human-rights abusers.

“According to the emails that Mr. Trump Jr. released Tuesday, Mr. Trump Jr. agreed to meet with Ms. Veselnitskaya after he was approached by Rob Goldstone, a publicist who offered to pass along ‘some official documents and information that would incriminate Hillary and her dealings with Russia and would be very useful to your father.’ He wrote that this information ‘is part of Russia and it’s government’s support for Mr. Trump.’

“The appropriate response from a political competent would have been to alert the FBI if a cut-out promised material supplied by a foreign government.  Mr. Trump Jr. instead replied that ‘if it’s what you say I love it.’....

“The problem is that President Trump has too often made the implausible plausible by undermining his own credibility on Russia.  He’s stocked his cabinet with Russia hawks but dallied with characters like the legendary Beltway bandit Mr. Manafort or the conspiratorialist Roger Stone.  His Syrian bombing and energy policy are tough on Russia, but Mr. Trump thinks that if he says Russia interfered in 2016 he will play into the Democratic narrative that his victory is illegitimate.

“Thus in retrospect the John Podesta and Democratic National Committee hacks – still so far the tangible extent of Russian meddling – did less damage to U.S. democracy than it has done to the Trump Presidency. The person who should be maddest about the Russian hacks is Mr. Trump.”

Charles Krauthammer / Washington Post

“The Russia scandal has entered a new phase, and there’s no going back.

“For six months, the White House claimed that this scandal was nothing more than innuendo about Trump campaign collusion with Russia in meddling in the 2016 election.  Innuendo for which no concrete evidence had been produced.

“Yes, there were several meetings with Russian officials, some only belatedly disclosed. But that is circumstantial evidence at best.  Meetings tell you nothing unless you know what happened in them. We didn’t. Some of these were casual encounters in large groups, like the famous July 2016 Kislyak-Sessions exchange of pleasantries at the Republican National Convention. Big deal.

“I was puzzled.  Lots of coverup, but where was the crime?  Not even a third-rate burglary. For six months, smoke without fire. Yes, President Trump himself was acting very defensively, as if he were hiding something. But no one ever produced the something.

“My view was: Collusion? I just don’t see it. But I’m open to empirical evidence. Show me.

“The evidence is now shown. This is not hearsay, not fake news, not unsourced leaks. This is an email chain released by Donald Trump Jr. himself....(The) Kremlin is willing to share troves of incriminating documents from the Crown Prosecutor. (Error: Britain has a Crown Prosecutor. Russia has a Prosecutor General.)

“Donald Jr. emails back.  ‘I love it.’  Fatal words.

“Once you’ve said ‘I’m in,’ it makes no difference that the meeting was a bust, that the intermediary brought no such goods. What matters is what Donald Jr. thought going into the meeting, as well as Jared Kushner and then-campaign manager Paul Manafort, who were forwarded the correspondence, invited to the meeting, and attended.

“ ‘It was literally just a wasted 20 minutes, which was a shame,’ Donald Jr. told Sean Hannity.  A shame? On the contrary, a stroke of luck. Had the lawyer real stuff to deliver, Donald Jr. and the others would be in far deeper legal trouble. It turned out to be incompetent collusion, amateur collusion, comically failed collusion. That does not erase the fact that three top Trump campaign officials were ready to play. It may turn out that they did later collaborate more fruitfully. We don’t know.  But even if nothing else is found, the evidence is damning.

“It’s rather pathetic to hear Trump apologists protesting that it’s no big deal because we Americans are always intervening in other people’s elections, and they in ours. You don’t have to go back to the ‘40s and ‘50s when the CIA intervened in France and Italy to keep the communists from coming to power.  What about the Obama administration’s blatant interference to try to defeat Benjamin Netanyahu in the latest Israeli election?  One might even add the work of groups supported by the U.S. during Russian parliamentary elections – the very origin of Vladimir Putin’s deep animus toward Clinton, then secretary of state, whom he accuses of having orchestrated the opposition.

“This defense is pathetic for two reasons. First, have the Trumpites not been telling us for six months that no collusion ever happened?  And now they say: Sure it happened. So what?  Everyone does it.

“What’s left of your credulity when you make such a casual about-face?

“Second, no, not everyone does it. It’s one thing to be open to opposition research dug up in Indiana.  But not dirt from Russia, a hostile foreign power that has repeatedly invaded its neighbors (Georgia, Crimea, eastern Ukraine), that buzzes our planes and ships in international waters, that opposes our every move and objective around the globe. Just last week the Kremlin killed additional U.N. sanctions we were looking to impose on North Korea for its ICBM test.

“There is no statute against helping a foreign hostile power meddle in an American election. What Donald Jr. – and Kushner and Manafort – did may not be criminal. But it is not merely stupid. It is also deeply wrong, a fundamental violation of any code of civic honor.

“I leave it to the lawyers to adjudicate the legalities of unconsummated collusion.  But you don’t need a lawyer to see that the Trump defense – collusion as a desperate Democratic fiction designed to explain away a lost election – is now officially dead.”

Finally...journalist Chris Uhlmann of the Australian Broadcasting Corp. (ABC) offered a scathing assessment of Donald Trump’s presidency. 

Uhlmann was delivering a wrap on the G20 summit and his analysis went viral, around the world.

“He has no desire and no capacity to lead the world,” said Uhlmann.  “[He] barks out bile in 140 characters, [and] wastes his precious days as President at war with the West’s institutions.”

Uhlmann also criticized the President’s desire to be the centerpiece of conversation, saying that it was the only thing Trump cared about.

“Donald Trump is a man who craves power because it burnishes his celebrity. To be constantly talking and talked about is all that really matters.”

And...

“Donald Trump has pressed ‘fast forward’ on the decline of the United States as a global leader.   He managed to isolate his nation, to confuse and alienate his allies and to diminish America.”

ObamaCare

Early in the week, Senate Majority Leader Mitch McConnell (Ky.) said he was determined to bring a new health-care bill to a vote next week, but the party remained split and can afford just two defections to begin with.  A big point of contention inside the Republican caucus is McConnell is prepared to preserve two taxes for high-earning Americans.  And there are deep divisions on the levels of Medicaid funding.

Wednesday, President Trump put the onus squarely on McConnell and Co. to pass a health-care bill, saying in an interview with Pat Robertson of CBN News that he will be “very angry” if they fall short on a long-standing promise of the party.

[Earlier he had tweeted: “I cannot imagine that Congress would dare to leave Washington without a beautiful new HealthCare bill fully approved and ready to go!”]

“I am sitting in the Oval Office with a pen in hand, waiting for our senators to give it to me,” Trump said to Robertson.  “It has to get passed.  They have to do it.  They have to get together and get it done.”

But some conservatives argue McConnell’s revamped measure would not undo the Affordable Care Act aggressively enough.

Kentucky Republican Sen. Rand Paul said, “As far as I can tell, the new bill is the same as the old bill, except it leaves in place more taxes.  I can’t support it at this point.”

So Thursday, Republican leaders unveiled a revised version of their bill to repeal and replace, vowing still to vote next week, with the measure intended to win over additional votes, but few believe it was mission accomplished.

Republican Senators Susan Collins (Maine) and Rand Paul said they were firmly against and it would take just one more to kill it.

The bill largely keeps the Medicaid sections the same, meaning deeper cuts still start in 2025, with the funds for Medicaid expansion, as established by ObamaCare, ending in 2024.

Medicaid is the prime issue for Sens. Rob Portman (Ohio) Shelley Moore Capito (W. Va.) and Lisa Murkowski (Alaska).

The CBO had said these changes would result in 15 million fewer people being enrolled in the program, while cutting spending by $772 billion over 10 years.

The revised bill does include a provision put forward by Sen. Ted Cruz (Tex.) and Sen. Mike Lee (Utah) aimed at allowing insurers to offer “skinny” plans that do not meet all of ObamaCare’s requirements, including those protecting people with pre-existing conditions and mandating that healthcare cover services such as maternity care.

Conservatives argue the provision would allow healthier people to buy cheaper plans, but others say that premiums on the sick would thus spike for those remaining in more generous plans.

The Cruz plan is a hot topic because Senate Republicans had previously vowed not to change the ObamaCare protections for people being charged more based on their health.

The bill does include $70 billion for those sick people who remained in ObamaCare plans.

There are other details I’m leaving out but no one expects this to get through next week.  A new CBO analysis will come out before a vote.

For now just this blurb from an editorial in Friday’s Wall Street Journal:

“In the new bill, the GOP’s economic growth wing made a major and bitter concession by retaining the 3.8-percentage-point surcharge on investment income. This political capitulation doesn’t even phase out the tax. Repealing this millstone on investment and rising wages has allegedly been a Republican goal for years, and the Senate voted to do so as recently as 2015.  Markets have also been expecting relief, meaning the retreat will undercut an economy that can’t afford many political shocks.

“As worrisome is what this capitulation shows about GOP fortitude against relentless progressive opposition.  Moderate Republicans folded amid a false if completely predictable tax-cuts-for-the-rich narrative, as if they’ll somehow get credit for reneging.  Has opposition to the bill lessened even an iota?  Choking over the tax doesn’t bode well for tax reform, when Democrats will be invoking ‘the affluent’ at every turn....

“Moderates never objected to the repeal-and-replace agenda and surely benefitted from the slogan politically, yet some are still threatening to vote against even allowing a debate. If what they really want is ObamaCare, they should have said so earlier, though now at least they’ll be accountable for their true position.  Mr. McConnell is right to hold a vote next week to force Republicans to honor their avowed principles – or betray them.”

Fallout from the Trump-Putin Meeting

I was able to comment some on the first meeting between President Trump and Russian President Vladimir Putin last week, but as it took place on Friday on the sidelines of the G20, more news, and tweets, came out over the weekend.

Editorial / Wall Street Journal

“We’ll find out in the coming weeks how Vladimir Putin sized up Donald Trump in their first mano a mano meeting on Friday, but one bad sign is the Trump team’s post-meeting resort to Obama-like rhetoric of cooperation and shared U.S.-Russia purposes.

“Secretary of State Rex Tillerson frequently lapses into this form of John Kerry-speak as he did trying to sell the new U.S.-Russia-brokered ceasefire in a corner of Syria.  ‘I think this is our first indication of the U.S. and Russia being able to work together in Syria,’ Mr. Tillerson told reporters.

“He added: ‘I would tell you that, by and large, our objectives are exactly the same.  How we get there, we each have a view.  But there’s a lot more commonality to that than there are differences. So we want to build on the commonality, and we spent a lot of time talking about next steps.  And then where there’s differences, we have more work to get together and understand.  Maybe they’ve got the right approach and we’ve got the wrong approach.’

“The same objectives?  The Russians want to help their client Bashar Assad win back all of Syria while retaining their military bases. If they are now talking about a larger ceasefire, it’s only because they think that can serve Mr. Assad’s purposes.  The Trump Administration doesn’t seem to know what it wants in Syria after Islamic State is ousted from Raqqa, and we hope Mr. Tillerson isn’t saying the U.S. shares the same post-ISIS goals as Russia.

“As for the right or wrong ‘approach’ to Syria, the Pentagon believes Russia knew in advance about Mr. Assad’s use of chemical weapons this year. The U.S. fired cruise missiles in response and has since shot down an Assad airplane bombing U.S. allies on the ground, which drew a threat of Russian reprisal if the U.S. did it again.  Somehow ‘approach’ doesn’t capture this moral and military difference.

“Then there’s Mr. Trump’s Sunday tweet that ‘Putin & I discussed forming an impenetrable Cyber Security unit so that election hacking, & many other negative things, will be guarded.’  No doubt Mr. Putin, the KGB man, would love to get an insight into America’s cyber secrets, though don’t count on any of those secrets being ‘guarded,’ much less ‘impenetrable.’

“Republican Senator Marco Rubio had it right on Sunday when he tweeted that ‘partnering with Putin on a ‘Cyber Security Unit’ is akin to partnering with Assad on a ‘Chemical Weapons Unit’.’  He added, in advice Mr. Trump could help himself by taking, that ‘while reality & pragmatism requires that we engage Vladimir Putin, he will never be a trusted ally or a reliable constructive partner.’”

Sen. Lindsey Graham blasted Trump’s comments about working with Russia to form a cybersecurity unit.  “It’s not the dumbest idea I’ve ever heard, but it’s pretty close,” Graham said on NBC’s “Meet the Press.”

Sen. John McCain joked he thinks Putin would be helpful regarding cybersecurity – because the Russian leader is the one doing the hacking.

“I’m sure that Vladimir Putin could be of enormous assistance in that effort,” McCain said on CBS’ “Face the Nation.”

Both McCain and Graham are incredulous there still has been no price to pay for Russia’s meddling.

Sunday, U.S. Ambassador to the U.N. Nikki Haley said everyone knows that Russia meddled in the elections, as well as other elections around the world, despite President Trump’s refusal to say they did.

For his part, Putin said on Saturday he thought Trump had been satisfied with his assertions that Russia had not meddled.

Trump said he had a “tremendous meeting” with Vlad the Impaler.

Wall Street

So this is what has cracked me up when it comes to the Federal Reserve (and to a certain extent the European Central Bank as well).  Both Chair Janet Yellen and her ECB counterpart, Mario Draghi, have talked over the last few years of low inflation and slow recoveries, and the need to “let inflation run hot” for a spell (above the 2% target level in each) in order to ensure that the recovery holds, i.e., keep rates low for longer to get inflation cranking once and for all, then gradually tighten.

But all you’ve heard from Yellen and her band of Droogs (“Clockwork Orange” gets worked into WIR for a first time) recently is optimism that forces holding down consumer prices will fade in the coming months, so the Fed can stick to its plan of gradual hikes in rates, though in her semi-annual testimony this week on the state of the economy, she said the Fed would alter its plans if prices stayed soft. 

“It’s premature to reach the judgement that we’re not on the path to 2% inflation over the next couple of years,” Chair Yellen told the House Financial Services Committee (that’s the one where half the members are outright idiots, in case you needed reminding... “Oh, you mean Maxine Waters and her ilk, Editor...”).  “We’re watching this very closely and stand ready to adjust our policy if it appears the inflation undershoot will be persistent.”

But so much for talk of letting inflation run hot!  [I’m saying up to 3%, as was clearly the Fed’s intent, say, 2013-2015.]  It’s all about hitting 2% with their preferred inflation barometer (PCE) that is at 1.4% currently.

So we had the June data on producer and consumer prices this week and they both fell below expectations.  The PPI was 0.1%, ex-food and energy 0.1% as well, and for the 12 months, PPI was 2.0% and the core 1.9%.  The CPI was unchanged in June, 0.1% ex-stuff we use, with the corresponding 12-month figures being just 1.6% and 1.7%., 1.6% being less than the prior month’s annualized 1.9% (the core, 1.7%, the same).

Ergo, boys and girls, there is no inflation whatsoever on the horizon.  And that means that a rate hike in September (ignore the upcoming July 25-26 confab like I previously told you...just a lot of white win spritzers and shrimp cocktail at this one) is off the table and then we turn to December.  A ton will happen between now and then, especially on the Trump/Congress agenda and enactment or no enactment of same, that will definitely have a say in future economic activity and prices.

Where I was wrong in all this is that I thought, up until recently, that inflation would begin to pick up, leaving the Fed with its pants down because it wasn’t acting quick enough, which in turn would lead to at least a mini-bond market debacle.  We’ve seen coming attractions in Europe in this regard as Mario Draghi has strongly hinted at finally turning off the spigot of free money, with the yield on the German 10-year Bund rising from 0.25% to 0.59% in just three weeks.

But in the U.S., after rising sharply from 2.14% to 2.39% from 6/23-7/7, the 10-year Treasury fell back to 2.32% on Friday on the tame price data.

Anyway, enough on this topic (I’ll get into the Fed’s balance sheet later, though for the purposes of this column, Yellen told Congress the central bank will begin shrinking it “relatively soon,” which would be expected to nudge long-term rates higher).  

Two other economic items of note.  June retail sales were down 0.2% when a rise of 0.2% was expected, which added to the bond rally today, while June industrial production was a tick better than forecast at 0.4%.

After weighing all of this week’s minutiae, the Atlanta Fed’s GDPNow indicator is forecasting second-quarter growth of 2.4%, a figure which has been falling steadily since an initial 4%+ estimate (as is the wont of this barometer over each three-month period).

All of the above Fed talk, however, was good for stocks, virtually around the world, as the Dow Jones and S&P 500 hit new all-time highs and Nasdaq came within nine points of setting its own record.

Europe/Asia

After the slew of economic data last week at quarter’s end, there was little to report on for both the eurozone and Asia this week.

European car sales rose 2.1% in June, down from growth of 7.6% in May, according to the European Automobile Manufacturers Association.

Over 8 million new cars were registered in the first half of the year, a rise of 4.7% over the same period last year, with Italy, Spain, Germany and France all showing growth, but U.K. sales fell 1.3%.

Eurobits....

--On the Brexit front, talks are underway again after a brief break and the U.K. acknowledged for the first time that it will have to pay a breakup fee to the European Union.

“The government has been clear that we will work with the EU to determine a fair settlement of the U.K.’s rights and obligations as a departing member state,” Brexit Minister Joyce Anelay, a member of the House of Lords, said in a written statement to Parliament.

Speculation has Britain being forced to pay an exit bill as high as 100bn euros ($114bn) and Prime Minister Theresa May needs to come to an agreement with her EU counterparts on the payment, because it is one of three critical areas, the other two being citizens’ rights and the border with Ireland, that the EU is demanding “sufficient progress” on before any discussions can take place on Britain’s future relationship with the bloc on trade.

Two days earlier, though, Foreign Secretary Boris Johnson issued a defiant statement answering questions in Parliament, when he agreed with a euro-skeptic lawmaker who suggested Johnson should “make it clear to the EU that if it wants a penny piece more” from Britain as part of the settlement, “it can go whistle.”  Johnson responded that “the sums I have seen that they propose to demand from this country seem to me to be extortionate, and I think that to ‘go whistle’ is an entirely appropriate expression.”

The EU’s chief negotiator, Michel Barnier, hasn’t publicly endorsed a figure, but Luxembourg’s Prime Minister Xavier Bettel said the sum should be 40-60bn euros.

Earlier in the week, Prime Minister May unveiled her landmark draft law to take Britain out of the EU, and Scotland and Wales were none too pleased, which imperils her Brexit plans altogether.

The 66-page bill would transfer EU laws onto the British statute book for when the U.K. leaves the bloc in March 2019, but semi-autonomous Scottish and Welsh lawmakers said this would fail to give them sufficient powers and threatened to block the bill in the national legislatures in Edinburgh and Cardiff.

Now I admit I needed reminding on the principle of “devolution” that Britain governs under, with the bill taking power back from the EU in Brussels and giving it to the central government in London, instead of devolving decision-making to Wales and Scotland.

This is what happens when you don’t win an outright parliamentary majority, as was the case in Mrs. May’s decision to call a snap election.

The prime minister needs unity before she can open talks on a new free-trade deal between the U.K. and the EU (after addressing the other three issues discussed above, including citizens’ rights and the exit fee).

Even though May has the support of the Democratic Unionists in Northern Ireland, it would only take seven lawmakers from her Conservatives (Tories) to rebel in order to potentially defeat her proposals in the House of Commons.

The bill would give May’s government two years to alter British law through a fast-track process designed to ensure regulations work properly after Brexit. Brexit Secretary David Davis is trying to assure Scotland and Wales that they’ll have input and it’s not that big a deal.

The European Union (Withdrawal) Bill is designed to prevent a black hole appearing overnight as Britain exits the EU, preventing regulatory continuity for businesses such as aviation and pharmaceuticals.  The government wants to be able to tweak laws without parliamentary approval.

One other...under Mrs. May’s proposal the government would allow the continuation of pending cases in the European Court of Justice but will not allow new ones after the date it leaves – meaning British courts would decide matters, regardless of whether the facts of a case occurred before.

I hope I’m not confusing things too much, but it is confusing to an outsider when you intertwine the ‘devolution’ aspect with the broader U.K. exit. There need to be bridges of some kind between EU law and regulations and a British takeover, getting out from under the mandates of the EU Court of Justice a major reason for Brexit in the first place.

Meanwhile, parliament won’t be debating the prime minister’s legislation until after the summer recess, with the lower House of Commons returning in early September.

Do you see what this means?  The Brexit clock is already ticking and there are long gaps of time when absolutely nothing is taking place and if the European Union wants to play hardball, and they have no reason not to, it’s conceivable we could get to March 2019 without a deal and then it’s beyond chaos.  [Though we would likely see some kind of extension in the negotiations, I imagine.]

Obviously, none of this is good for business confidence in the U.K.

[At least for the rolling three-month period ending May (Britain using such time frames), unemployment fell to 4.5%, the lowest since 1975.  But inflation was 2.9% over that period, and wages, adjusted for inflation, fell 0.7%...not good, sports fans.]

--That was quite a Bromance on display in Paris between Presidents Trump and Macron.  Nothing but praise lavished on one another.  It was a great respite for Trump, and it further showed the rest of Europe that Macron considers himself to be one of a handful of elite world leaders, along with Trump, Xi, Putin and Merkel.  In terms of global importance, he is vying to be on par with Merkel.  And there’s nothing wrong with that. I am very comfortable with a strong leader in the Elysee Palace.

Frankly, I have zero bad to say about what transpired here.  If you assume Trump is around a while, despite all the problems encircling the White House, Macron could be a good sounding board for Trump. I see him calling Macron a lot for advice.

And, yes, Trump should rejoin the Paris Climate Accord.  As I said ad nauseam before, the United States is under zero obligation to adhere to the “targets.” But we need to have a seat at the table.

--One other item...Eurostat reported that the population of the European Union was estimated at 511.8 million for Jan. 1, 2017, compared with 510.3 million the year before.  There were as many deaths as birth (5.1 million), so the increase was due to net migration.

Next time you’re at a bar and you are tired of chatting about the Mets and Jets, quiz your friends on the population of the following:

Germany 82.8 million
France 67.0m
U.K. 65.8m
Italy 60.6m
Spain 46.5m
Ireland 4.8m
Montenegro 622,400

If someone gets Montenegro correct, pints all around!

Turning to Asia...

Exports in China in dollar terms in June rose 11.3% year-over-year, according to China’s General Administration of Customs, accelerating from a rise of 8.7% in May and beating forecasts.  Imports were up 17.2%, also blowing past expectations and above May levels.

Auto sales rose 2.3% in June, yoy, after May’s 2.6% pace.  SUV sales were up 15.7%, sedans down 4.3%, according to the Chinese Association of Automobile Manufacturers.

And producer prices in June rose 5.5%, year-over-year, unchanged from May. The CPI was up 1.5%, annualized.

In Japan, the key machine orders figure for May was down 3.6% over April, which in turn was down 3.1%, not good.

Street Bytes

--As alluded to above, the Dow Jones was up 1.0% this week to a record 21637, while the S&P 500 gained 1.4% to its new high-water mark, 2459.  Nasdaq added 2.6% to 6312, shy of its record 6321, but up 17.3% on the year.  As Ronald Reagan would have said, ‘Not bad, not bad at all.’

Earnings begin in earnest this coming week with the likes of IBM, Microsoft and GE, plus Goldman Sachs and Morgan Stanley.  Overall, earnings for the S&P 500 are slated to come in up 8% for Q2.

--U.S. Treasury Yields

6-mo. 1.12%  2-yr. 1.36%  10-yr. 2.33%  30-yr. 2.92%

The 10-year was most affected by Yellen’s dovish talk on inflation, the yield dropping from 2.39% to 2.33%.

--The International Energy Agency said on Thursday that OPEC’s compliance with its own supply cuts fell in June.

Global oil supply rose sharply by 720,000 barrels a day in June, with Nigeria, Libya and Saudi Arabia raising output.  Compliance with the OPEC deal dropped to 78 percent.

Nigeria and Libya are off the hook because of unrest and disruptions in both countries, but it was very curious that the Saudis suddenly opened the spigot more.

Global demand is expected to grow by 1.5% this year to 98 million barrels a day, driven in part by rising consumption in Germany and the U.S.

But then the Energy Information Administration in its weekly report said inventories in the U.S. fell sharply by 7.6 million barrels in the July 7 week, more than expected.

Add it all up and oil rallied to $46.68.

--JPMorgan Chase, Wells Fargo and Citigroup all beat their earnings estimates, but for varying reasons each saw their shares drop a bit on the news Friday.

Citigroup’s revenue rose 2 percent, compared to the same period in 2016, with net income of $3.6 billion. 

JPMorgan had net income of $6.6 billion, which was boosted by a $406 million after-tax gain from a legal settlement, with revenue up 5%.  JPM also said net interest income wouldn’t rise by as much as first expected, amid slower loan growth and a decline in long-term interest rates.

Total loans at JPMorgan were up just 4% from a year earlier and were up only 1% at Wells Fargo.

Wells reported net income of $5.4 billion on flat revenue.

JPMorgan announced revenue from both its fixed income and equity trading units fell 14% in the second quarter. Citigroup’s fixed-income trading revenue declined 6%, though this was telegraphed by the industry in May.

Bankers have said that businesses are hesitant to take out large loans, in part because of uncertainty surrounding policy action in Washington.

So in keeping with this last point, JPMorgan Chase CEO Jamie Dimon went off on the state of affairs in D.C. on one of his post-earnings conference calls.

“It’s almost embarrassing being an American citizen...and listening to the stupid shit we have to deal with in this country.”  The inability to make headway on significant legislation is “holding us back and it is hurting the average American.  It isn’t a Republican issue; it is not a Democratic issue.”

Dimon stopped short of criticizing the Trump administration, for which he serves on a business council.

“We have become one of the most bureaucratic, confusing, litigious societies on the planet,” he said. “...And at one point we have to get our act together or we won’t do what we’re supposed to do for the average American.”  [Washington Post]

--The Bank of Canada lifted its benchmark lending rate on Wednesday for the first time since 2010, becoming the second of the G7 nations to do so following the Federal Reserve, which in June increased rates for the fourth time since December 2015.

The BoC was reacting to rapid job growth and booming property prices, so it felt comfortable in pulling back some of the stimulus.  The overnight rate is still an ultra-low 0.75 percent, up a quarter point.

--An annual report from the trustees of Social Security and other entitlement programs revealed Thursday that the trust fund for Social Security’s disability program will last until 2028, five years longer than previously projected, while the far larger retirement fund, in combination with the disability program, would be exhausted in 2034, unchanged from last year.

The difference with the disability program is lower-than-expected applications for disability benefits.

Under current law, when the funds are exhausted, benefits would be immediately slashed.

The Medicare trust fund would be depleted in 2029 under current estimates, a one-year extension from last year.

All these programs account for 42% of federal spending.

--Alphabet Inc.’s Google won a reprieve, at least temporarily, from a Paris court that threw out a $1.27bn judgment against it by France’s tax authority, which has sought five years of back taxes.

The Paris administrative tribunal ruled that Google’s advertising-sales business had no taxable presence in France – absolving it of income or sales taxes on advertising income from French clients.

The tax authority will appeal.

[This tax issue is not to be confused with the recent $2.7 billion fine levied on Google by the European Commission on antitrust grounds, which Google is appealing.]

--Apple said it would comply with strict new cybersecurity rules in China by storing all cloud data there for its China customers with a government-owned company. So Apple is relinquishing control on data that will include photos, documents, messages, apps and videos uploaded by Apple users throughout the mainland, the company announced.

Apple’s first Chinese data center will be built in southern Guizhou province.

Heretofore, Apple has long been a company advocating for fending off government intrusions into user data. But the Chinese have been tightening ‘freedoms’ of all sorts as the government goes for the ability to intrude on every single facet of your life.

--Target Corp. led a rally in retail stocks on Thursday when it forecast sales would increase for the first time in five quarters, thanks to improved customer traffic and sales trends.  Days earlier, JC Penney also said it was expecting a ‘significant’ improvement in Q2 sales.

--Children’s clothing retailer Gymboree, however, filed for bankruptcy protection in June and this week it announced it would close 350 of its 1,250 stores as it restructures.  The company also said it could close another 100.

--PepsiCo reported stronger-than-expected results in its second quarter, with net revenue climbing 2 percent to $15.7bn. Net income came in at $2.1bn, or $1.46 s share, easily topping the Street’s estimates.

PepsiCo is continuing to diversify away from its namesake Pepsi brand with the focus on healthier drinks and snacks.  In the past year the company has introduced probiotic versions of its Tropicana juices and has acquired Kevita – a maker of fermented tea drink kombucha, among other beverages.

--Shares in Snap Inc. were downgraded by the lead underwriter of its IPO about five months ago, Morgan Stanley, and the shares fell to $15.30 at week’s end, well below the $17 offering price.  Morgan Stanley cut its price target to $16 from $28, citing shortfalls in Snap’s ad products and increased competition from Facebook-owned Instagram.

Snap shares had surged to $29.44 in the day after its IPO and it’s been largely sliding ever since.

--The NFL is losing two big revenue generators, as Viagra and Cialis pull back on their TV ad spending. Viagra spent $100 million on TV over the past year, according to iSpot.tv, $31 million of it on NFL telecasts.

The patents on both Viagra and Cialis for erectile-dysfunction are expiring and generic versions are set to flood the market.

More broadly speaking, changes in how people view NFL broadcasts are changing the advertising landscape. Anheuser-Busch, for example, is saying that with more people watching steaming sports, negotiations on the price of traditional TV sports needs to change.

--Vanguard Group announced a change at CEO as William McNabb III said he would step down in January, to be replaced by Mortimer “Tim” Buckley, a onetime assistant to the firm’s founder Jack Bogle.  The asset manager is the second largest in the world at $4.4 trillion, trailing only BlackRock Inc.

Vanguard continued its dominance in the first half in pulling in $214bn in net new money the first six months of the year vs. an industry-wide, mutual fund and exchange-traded funds total of net $387.3bn.

But with massive size come issues, with increased complaints on customer service.

--PIMCO’s assets under management surged 6.6% to $1.61 trillion in the second quarter as the post-Bill Gross departure recovery continues.  PIMCO at one time had assets of over $2tn in 2014 before all the internal turmoil that led to Gross leaving for Janus Capital, which led to a decline to $1.43tn at the end of 2015.

But despite the improvement in assets, the flagship PIMCO Total Return Fund, which peaked at $300bn, is now $73.3bn as of the end of the second quarter.  [The PIMCO Income Fund is actually the biggest there at $88.8 billion.]

--Despite a big bounceback in real estate prices in Ireland, including a nationwide jump of 12% in the year to May, according to the Central Statistics Office, the national index is still 29.5% lower than its highest level in 2007.

But prices have been rising too rapidly again and some experts here are warning of a new bubble.

I’ve seen it all in Ireland. The depths of despair in the late ‘80s, and then the roar of the Celtic Tiger, when I was writing in this spot after my then-annual trips that a crash was looming.

--Two extensive large-scale studies of coffee drinkers, released Monday in the Annals of Internal Medicine (one funded by the National Cancer Institute, the other by Imperial College London and the International Agency for Research on Cancer), found that coffee drinkers of both regular and decaffeinated coffee live longer.

Hundreds of thousands of people were tracked over many years and while these were not clinical trials, they demonstrate an association that coffee-drinking reduced the risk of various diseases, including heart disease, cancer, diabetes and kidney disease.  And the more you drink the more of a potential positive effect.

--While the gap between Fox News and rivals CNN and MSNBC has narrowed, in the second quarter, Fox was still No. 1 in viewers and first in the key 25-to-54 demographic, according to Nielsen.

Average primetime viewers, adults 25 to 54, Q2 2017

Fox News 472,000
MSNBC 389,000
CNN 370,000

[Source: Nielsen / The Wall Street Journal]

So despite all the turmoil, Fox prevails.

Tucker Carlson’s average audience in the 8 pm hour since succeeding Bill O’Reilly is 5% smaller than what “The O’Reilly Factor” was averaging, but Carlson is doing better than O’Reilly did among the 25-to-54 demo.  And Carlson makes far less than the $25 million a year O’Reilly took down.  [I can’t stand Tucker.]

Foreign Affairs

Iraq/Syria: The battle for Mosul is over, but it took far too long, nine months since it began in October, and the casualties and damage were far worse than many expected.  It proved to be some of the toughest urban fighting since World War II, as American commanders put it.

The only casualty figures that might be fairly accurate have 1,000 Iraqi security personnel dying in the fight, seven journalists, but an untold number of civilians and ISIS fighters.  One million were displaced, a humanitarian catastrophe.

The United Nations estimates the cost of reconstruction at more than $700 million, but no doubt it will be in the $billions, though I’ll be shocked if two years from now we are talking about any real progress on this front.

Seth G. Jones / Wall Street Journal

“Iraqi Prime Minister Haider al-Abadi arrived in Mosul on Sunday, dressed in a black military uniform, and announced the ‘liberation’ of the city where Islamic State declared its so-called caliphate in 2014.  ‘The world did not imagine that Iraqis could eliminate Daesh,’ he remarked, using the Arabic acronym for the group.

“But this war is far from over. A growing number of Iraq’s Sunnis are disenchanted with the slow pace of reconstruction and frustrated with a Baghdad government they consider too friendly to Iran.  The U.S. needs to shift its focus quickly from supporting military operations in cities such as Mosul to helping the Iraqi government better address political grievances. Failure risks sowing the seeds of ISIS’ resurgence....

“Despite (Iraqi military successes), there are troubling signs in Iraq, particularly within the Sunni Arab community. Take the western city of Fallujah. A year after Iraqi forces liberated the city, residents are disenchanted because of the slow pace of rebuilding, the absence of government services and skyrocketing unemployment.  ‘This area was liberated in June, and it still looks the same now,’ Hussein Ahmed, a Fallujah resident, told a visiting journalist earlier this year.  ‘I speak for thousands of people when I say the government has forgotten us.’

“Many Sunnis also look warily at growing Iranian influence. Tehran is committed to increasing its influence in Iraq through such organizations as the Popular Mobilization Units, militias that include as many as 150,000 Shiite Fighters....Today, such Shiite forces are nearly as large as the entire Iraqi army.  ISIS fighters are attempting to leverage these grievances in several ways.  Its operatives have recruited new members who are unhappy about the pace of reconstruction in Sunni towns and cities, angry about friends or family members who have been abused by pro-government militias, and nervous about Iran’s growing influence in the country.  Iraq’s security services have noted with alarm that ISIS cells are re-establishing intelligence networks in Ramadi and Fallujah. Even after last week’s defeat in Mosul, ISIS still holds nearly 10,000 square kilometers of territory in Iraq... It also boasts over 15,000 fighters across the Iraq-Syria battlefield and more than $500 million in annual revenue through the end of 2016....

“ISIS is also shifting from conventional to guerrilla operations, including ambushes, raids, suicide attacks, car bombs and assassinations....

“Islamic State’s predecessor, al Qaeda in Iraq, began to reconstitute itself in 2011 in part because of Baghdad’s failure to address Sunni grievances and Washington’s decision to withdraw U.S. forces and inability to influence Iraqi politics.  It would be doubly tragic to make the same mistake again today.”

So I’ve written for years on how it has been too late in Syria, and in large areas of Iraq, in terms of rebuilding and reconstruction.  You’ve seen the pictures of Mosul...a massive city reduced to rubble.

An official with the aid group Mercy Corps told the Wall Street Journal the other day, “Nearly every building on the western side of Mosul was completely destroyed.  With this level of devastation, it’s very unlikely that the hundreds of thousands of displaced families will be going home anytime soon.  This is a critical moment for Mosul.”

That keeps all these folks in refugee camps, and that breeds future terrorists and insurgencies.

In Syria, a ceasefire in the southwest is holding, but Israeli Prime Minister Benjamin Netanyahu warned that the ceasefire plan potentially could allow for a vacuum to be filled by Iran and its proxies in an area near the border with Israel.

While the agreement is between Russia, the U.S. and Jordan, the U.S. has little control, if any, in monitoring the ceasefire.

Trump tweeted early in the week: “Syrian ceasefire seems to be holding.  Many lives can be saved. Came out of meeting. Good!”  Whatever, Mr. President.

Israel: Two Israeli police officers were killed today in an attack by Palestinian assailants near the Temple Mount shrine in Jerusalem.  Three Arab citizens of Israel opened fire on police at a checkpoint to enter the shrine compound, the holiest site in Judaism and the third-holiest in Islam.  The three attackers were killed.  Palestinian President Abbas actually condemned the attack, a rarity.

China: In his presser in Paris on Thursday, President Trump was asked by a Chinese television reporter, “Mr. President, you have just met with Chinese President (Xi Jinping) during the G20 Summit. How do you want to continue to work with China?  And what do you personally think about Mr. Xi Jinping?”

PRESIDENT TRUMP: “Well, he’s a friend of mine. I have great respect for him. We’ve gotten to know each other very well. A great leader. He’s a very talented man. I think he’s a very good man. He loves China, I can tell you. He loves China. He wants to do what’s right for China.

“We’ve asked him for some assistance with respect to North Korea.  Probably, he could do a little bit more, but we’ll find out. We’re now working on some trade deals.  He’s been very nice. He’s let, as you know, beef go back in, certain financing go back in, credit card financing, and various other things go back in at my request, which is a great thing for our farmers.  A lot of good things are happening, but we’re going to be working on some very major trade components.

“But President Xi is a terrific guy. I like being with him a lot, and he’s a very special person.”

No, Xi is not a terrific guy.  He is choking his people in more ways than one.  He’s also not a ‘great leader,’ but rather a thug.  Xi is a princeling who doesn’t deserve to be where he is.

Xi also only listens to about three people.  He is a dolt, but he has to be feared.  [As opposed to Sec. of State Tillerson, who is an amiable dunce.]

Meanwhile, Chinese Nobel Peace laureate Liu Xiaobo died on Thursday.  He was 61.  Authorities in Shenyang said he had suffered multiple organ failure and efforts to save him had failed.  President Trump had a chance to comment on him but didn’t.

Liu was jailed for 11 years in 2009 for ‘inciting subversion of state power” after he helped write a petition known as “Charter 08” calling for sweeping political reforms.  He was recently moved from jail to a hospital in Shenyang and there had been worldwide calls for him to be allowed to fly overseas for treatment.

British Foreign Secretary Boris Johnson said, “Liu Xiaobo should have been allowed to choose his own medical treatment overseas, which the Chinese authorities repeatedly denied him.”

Liu was the first Chinese citizen to be awarded a Nobel Prize of any kind while still living in China.

U.S. Senator John McCain (R-AZ):

“The death of Liu Xiaobo in a Chinese prison represents an egregious violation of the fundamental human rights for which Dr. Liu spent his life fighting.  Unfortunately, and as Dr. Liu would have wanted everyone to remember today, this is only the latest example of Communist China’s assault on human rights, democracy, and freedom.

“A Nobel Peace Prize laureate who was wrongly imprisoned by the Chinese government for nearly a decade, Dr. Liu was a champion for human rights throughout his life.  From protesting at Tiananmen Square to authoring a human rights manifesto for which he was unjustly jailed, Dr. Liu was relentless in his pursuit of a democratic China. As he suffered from late-term liver cancer in prison, the Chinese government’s delay in treatment was the last barbaric violation of Dr. Liu’s human rights.

“Even as it brutalizes its own citizens, China has continually bullied its neighbors and destabilized the Asia-Pacific region by militarizing the South China Sea and propping up the North Korean regime.  China has again ignored the international community in its inhumane treatment of prisoners of conscience. The United States of America should demand the immediate release of Dr. Liu’s wife, Liu Xia, and make clear that we will not tolerate China’s pervasive violation of human rights.”

Fred Hiatt / Washington Post

“As you read about Nobel Peace Prize winner Liu Xiaobo, who died in Chinese captivity Thursday, ask yourself this: Why are his jailers – President Xi Jinping and the rest of China’s Communist regime – so afraid?

“I wonder about that question sometimes when I think of another of their captives, someone you are less likely to have heard of, a man named Wang Bingzhang.

“Wang is, at this point, one of China’s longest-serving political prisoners. He is 69 years old and in poor health.  He has been locked up since 2002, when Chinese agents kidnapped him from Vietnam, hauled him across the border, kept him incommunicado for six months and then sentenced him, in a one-day, closed-door ‘trial’ held without notice to family or friends, to life in prison.

“Wang’s crime?  Like Liu, he had campaigned, peacefully, for democracy in China. He had argued that freedom is not a ‘Western’ value but a desire and a right of all human beings....

“Far from delivering continuous progress for an ever-happier nation, the regime since 1949 has intermittently plunged China into disastrous famines and spasms of internecine violence that have cost tens of millions of lives. Today it must employ tens of thousands of censors and lock away hundreds of lawyers, journalists and religious believers to maintain the façade of universal acclaim.

“Perhaps most perilously, the Communist Party rules over a population that no longer believes in communism. The regime’s only remaining justification is that it delivers economic growth. Yet, as the economy becomes more complex, growth becomes more and more dependent on people being free to think, read, challenge and compete. The regime is caught in this paradox – and afraid.

“ ‘Any government that jails its own people for political dissent still has a long way to go to become a respected member of the international community,’ Ti-Anna Wang wrote in a 2009 op-ed.

“So some level, the regime must understand that....

“So some level, Xi and his colleagues must know that Liu and Wang are right and they are wrong. Clearly they fear that their people will come to that realization.  Maybe they are also afraid to admit it to themselves.”

North Korea: According to South Korea’s Yonhap news agency, North Korea’s recent intercontinental ballistic missile test may not have been the total success it was made out to be as there are questions among experts whether it successfully re-entered the atmosphere.

Kim Jong Un held a big celebration of the test on Tuesday and among the songs performed at the concert were “Song of Hwasong Rocket.”  I assume this is sung to the Police’s “Roxanne.”

Hwaaa-song....you don’t have to put on the red light...Those days are over you are limited to Sea of Japan....”

It doesn’t much matter if the test of the Hwasong-14 missile was fully completed.  They are making rapid progress and on the missile defense front we are in danger of getting caught with our pants down.

Russia: Editorial / Washington Post

“After we learned that Donald Trump Jr. said he would ‘love’ to receive campaign help from the Russian government, it was pointed out that Russia is a hostile power. This is true, but what does it mean?  It’s worth revisiting the question, because the answer has a lot to do with what Russian President Vladimir Putin stood to gain by interfering in the United States’ 2016 presidential election.  ‘Hostile,’ in this case, doesn’t mean that Russia and the United States are about to go to war.  In theory, their interests shouldn’t even diverge all that much. They are two continental powers on opposite sides of the world with no territorial disputes (though the melting of Arctic ice may change that). They share a fear of Islamist terrorism.

“What makes Russia hostile is Mr. Putin’s adherence to, and dependence on, a set of values that are antithetical to what have been, at least until now, bedrock American values.  He favors spheres of influence over self-determination; corruption over transparency; and repression over democracy.  His antipathy toward Hillary Clinton was not personality-driven but based on her advocacy of values that would threaten his rule.

“It’s sometimes hard for Americans to understand the gulf  between the two nations because Mr. Putin has maintained the trappings of democracy – a parliament, national elections – even as he has made them meaningless by shuttering most independent media and eliminating most political opposition. The state now serves Mr. Putin and his cronies, who have become immensely wealthy, rather than the reverse.  When people try to expose the corruption, they are imprisoned or killed (or both, as in the case of lawyer Sergei Magnitsky).  When Mr. Putin stakes out any position, the first question on his mind is not ‘Is this good for Russia?’ but rather: ‘Will this help my regime to survive?’....

“It may be true that Mr. Putin’s hacking and fake-news campaign began as an effort simply to damage Ms. Clinton’s reputation on her road to the White House or to make the democratic process look as ugly as possible.  But along the way, Mr. Putin must have realized that Donald Trump’s policies aligned with his values more than he could have dared expect from any American candidate.  Mr. Trump disparaged democratic allies and alliances while expressing admiration for dictators.  He appeared willing to mingle private business with public duties in unprecedented ways, while elevating family members in the style of a Central Asian Caesar.  At home, he echoed Mr. Putin in his cynical disparagement of a free press, his celebration of violence at his rallies, and his ugliness toward Muslims, Mexicans and others he perceived or portrayed as outsiders.

“So while the younger Mr. Trump may have seen advantage in accepting Russia’s help, Russia certainly would have seen an advantage in proffering it.  Mr. Putin’s values are antithetical to American values, but the Russian dictator had good reason to hope that they would not be antithetical to the values of a Trump administration.”

Regarding the cyber threat...

Jordan Robertson and Michael Riley / Bloomberg Businessweek

“Russian cybersecurity company Kaspersky Lab boasts 400 million users worldwide. As many as 200 million may not know it.  The huge reach of Kaspersky’s technology is partly the result of licensing agreements that allow customers to quietly embed the software in everything from firewalls to sensitive telecommunications equipment – none of which carry the Kaspersky name.

“That success is starting to worry U.S. national security officials concerned about the company’s links to the Russian government. In early May six U.S. intelligence and law enforcement agency chiefs were asked in an open Senate hearing whether they’d let their networks use Kaspersky software, often found on Best Buy shelves. The answer was a unanimous and resounding no.  The question, from Florida Republican Marco Rubio, came out of nowhere, often a sign a senator is trying to indirectly draw attention to something learned in classified briefings.

“Eugene Kaspersky took to Reddit to respond. Claims about Kaspersky Lab’s ties to the Kremlin are ‘unfounded conspiracy theories’ and ‘total BS,’ the company’s boisterous, barrel-chested chief executive officer wrote. While the U.S. government hasn’t disclosed any evidence of the ties, internal company emails obtained by Bloomberg Businessweek show that Kaspersky Lab has maintained a much closer working relationship with Russia’s main intelligence agency, the FSB, than it has publicly admitted. It has developed security technology at the spy agency’s behest and worked on joint projects the CEO knew would be embarrassing if made public....

“Antivirus companies are especially delicate because the products they make have access to every file on the computers they protect.  The software also regularly communicates with the maker to receive updates, which security experts say could theoretically provide access to sensitive users such as government agencies, banks, and internet companies. Adding to the U.S. government’s jitters, Kaspersky recently has developed products designed to help run critical infrastructure such as power grids....

“The U.S. government hasn’t identified any evidence connecting Kaspersky Lab to Russia’s spy agencies, even as it continues to turn up the heat.  In June, FBI agents visited a number of the company’s U.S. employees at their homes, asking to whom they reported and how much guidance they received from Kaspersky’s Moscow headquarters.  And a bill was introduced in Congress that would ban the U.S. military from using any Kaspersky products, with one senator calling ties between the company and the Kremlin ‘very alarming.’  Russia’s communications minister promptly threatened sanctions if the measure passed.”

Brazil: Former President Luiz Lula da Silva, who is a top contender to return to office in next year’s presidential election, was convicted on corruption charges on Wednesday and sentenced to nearly 10 years in prison.

Lula had been Brazil’s first working-class president and he remains a popular figure after he left office six years ago with an 83% approval rating.

But he got swept up in the massive corruption investigation that has rattled Brazil the past three years, centered around state oil giant Petrobras.

Lula’s handpicked successor Dilma Rousseff was elected president and then as the economy was tanking, she was impeached last year for breaking budget rules.  The man who orchestrated what many call a ‘coup’ against her, Michel Temer, the current president, faces serious corruption charges himself.

Random Musings

--Presidential tracking polls: Gallup, President Trump 40% approval rating; Rasmussen, 44%.

--Karl Rove had a piece in the Wall Street Journal laying out how difficult it will be for the Democrats to retake the Senate in 2018.  Of the 25 Democrats up for re-election, 10 are from states carried by President Trump, with six in states where Trump’s margin was huge: Joe Manchin (W. Va.), Heidi Heitkamp (N.D.), Jon Tester (Mt.), Joe Donnelly (Ind.), Claire McCaskill (Mo.) and Sherrod Brown (Ohio), all won by Trump from anywhere from 8 points to 42 points.

Michigan’s Debbie Stabenow, Pennsylvania’s Bob Casey, Wisconsin’s Tammy Baldwin and Florida’s Bill Nelson are Dems from states that Trump won by narrow margins.

But Rove points to the fact that on Election Day, Trump was viewed favorably by 37.5% of voters and unfavorably by 58.5%, according to the RealClearPolitics average, and as of this Wednesday, his rating stood at 40.4% favorable and 53.6% unfavorable.

So what does this mean?  As I keep pointing out, Republicans will get their clocks cleaned in 2018 and 2020 unless we retain the Independents that voted for Trump.  Obviously, when you look at a 37% or 40% favorable, that means if you won with more than that, Independents, who didn’t necessarily like Trump, voted for him either because they wanted to roll the dice with something different or they loathed Hillary.

--The man who was New Jersey Gov. Chris Christie’s “fixer” at the Port Authority, the mastermind of the Bridgegate scandal, David Wildstein, avoided jail time at his sentencing and will serve, instead, three years’ probation, perform 500 hours’ community service, and pay a $10,000 fine, plus $14,314 in restitution.  [I didn’t see what the restitution is for and who it goes to.]  He has also been barred from serving in public office ever again.

Wildstein faced 27 to 33 months behind bars, but I have zero problem with how this was handled.

Wildstein and others told the jury that despite Christie’s denials, they had talked with the governor about the traffic scheme.

[In a Monmouth University Poll, Gov. Christie achieved the same record-low 15% approval rating that an earlier Quinnipiac Univ. poll came up with.  If nothing else, us New Jerseyans are consistent!]

--One of the biggest icebergs on record has broken away from Antarctica, which has been long predicted...5,800 sq. km, calved away from the Larsen C Ice Shelf.  So as it breaks up, we could have multiple Titanic-type incidents.

The iceberg is the size of Delaware, which, while a small state, makes for a big iceberg.

But, alas, we aren’t about to have a straight-to-video adventure flick about a 6,000-passenger Carnival Cruise ship being taken down, sea-rescue dogs diving in to save thousands, as the iceberg is likely to stay south for a long spell and not overwhelm Paradise Island.

Then again, if you’re taking a cruise to visit Antarctica and take some selfies, your life will be in danger and you should make appropriate changes to your will as needed.

By the way, scientists do not believe the break up has anything to do with manmade climate change.

--New York Mayor de Blasio has declared a war on rats, with the city planning to spend $32 million to combat infestations across three boroughs by attempting to take away the places they live.

By the way, the three main areas to be attacked are apparently the three most rat-ridden sectors: the Grand Concourse area of the Bronx, Manhattan’s Lower East Side and Bedford-Stuyvesant, Brooklyn.

Months ago I watched a terrific documentary that looked at the rat situation around the world, with a big segment on New York, and boy is it depressing.  It’s a virtually impossible task to win the battle.

A 2014 study by a Columbia University doctoral student estimated a rat population in Gotham of 2 million, but since then, the number of complaints filed on the city’s 311 line has been soaring.

Separately, de Blasio was excoriated anew for his trip to Hamburg during the G20, where among other things he praised that city’s police as they dealt with the protests there while the NYPD was mourning, without him, the assassination of one of their own.  He showed up for the funeral, which I watched and was incredibly moving, but I was unnerved by de Blasio’s presence and eulogy given his track record.  This is a bad guy...a bad person.

--Speaking of bad people, former New York State Assembly Speaker Sheldon Silver saw his corruption conviction overturned by a federal appeals court on Thursday, citing a recent U.S. Supreme Court decision narrowing what kind of conduct can support corruption prosecutions (the overturning of the corruption charges against former Virginia Gov. Bob McDonnell).

Silver is a dirtball and acting U.S. Attorney Joon Kim in Manhattan has vowed to retry him, but at 73, I’m guessing he will avoid another trial.

The Silver conviction was a biggie for Kim’s predecessor, Preet Bharara, who is none too pleased today.

--Finally, the Wall Street Journal in its opinion page the other day had this quote from Supreme Court Chief Justice John Roberts speaking at his son’s middle-school graduation, June 3:

From time to time in the years to come, I hope you will be treated unfairly, so that you will come to know the value of justice. I hope that you will suffer betrayal because that will teach you the importance of loyalty.  Sorry to say, but I hope you will be lonely from time to time so that you don’t take friends for granted.  I wish you bad luck, again, from time to time so that you will be conscious of the role of chance in life and understand that your success is not completely deserved and that the failure of others is not completely deserved either. And when you lose, as you will from time to time, I hope every now and then, your opponent will gloat over your failure. It is a way for you to understand the importance of sportsmanship.  I hope you’ll be ignored so that you know the importance of listening to others, and I hope you will have just enough pain to learn compassion.  Whether I wish these things or not, they’re going to happen.  And whether you benefit from them or not will depend upon your ability to see the message in your misfortunes.

---

Pray for the men and women of our armed forces...and all the fallen, especially the 15 Marines and one Navy corpsman who were killed in a tragic military plane crash in a field in Mississippi.  RIP.  Thank you for your service.

God bless America.

---

Gold $1228
Oil $46.68

Returns for the week 7/10-7/14

Dow Jones  +1.0%  [21637]
S&P 500  +1.4%  [2459]
S&P MidCap  +1.0%
Russell 2000  +0.9%
Nasdaq  +2.6%  [6312]

Returns for the period 1/1/17-7/14/17

Dow Jones  +9.5%
S&P 500  +9.9%
S&P MidCap  +6.3%
Russell 2000  +5.3%
Nasdaq  +17.3%

Bulls 50.0
Bears 18.6  [Source: Investors Intelligence]

Have a great week.

Brian Trumbore



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Week in Review

07/15/2017

For the week 7/10-7/14

[Posted 11:00 PM ET, Friday]

Note: StocksandNews has significant ongoing costs and your support is greatly appreciated.  Click on the gofundme link or send a check to PO Box 990, New Providence, NJ 07974.

Edition 953

Trump World...Donnie Jr. ‘Loves It’....

Charles Krauthammer: “I have defended (the White House) for six months, saying there is no there.  Now there is a there.”

Saturday, the New York Times reported on a meeting June 9, 2016, at Trump Tower in New York, two weeks after Donald Trump secured the Republican nomination.  The meeting was arranged by a British publicist, Rob Goldstone, who sent an email to Donald Trump Jr. saying that a Russian lawyer, Natalia Veselnitskaya, had material on Hillary Clinton, part of a Russian government effort to help his father’s election campaign.

Donald Trump Jr. confirmed the meeting took place, with Jared Kushner and then-campaign manager Paul Manafort in attendance, but said the meeting was about adoption issues.

Sunday, the Times said Trump Jr. had agreed to the meeting that was detrimental to Clinton and helpful to the Trump campaign.

Trump Jr. then said he had been asked to meet “an individual who I was told might have information helpful to the campaign.”  He also said he was conducting normal opposition research.

“The woman stated that she had information that individuals connected to Russia were funding the Democratic National Committee and supporting Mrs. Clinton.

“Her statements were vague, ambiguous and made no sense. No details or supporting information was provided or even offered.  It quickly became clear that she had no meaningful information.”

Trump Jr. also said the lawyer changed the topic to the Magnitsky Act and “it became clear to me that this was the true agenda all along.”

The Magnitsky Act, adopted by Congress in 2012, allows the U.S. to withhold visas and freeze financial assets of Russian officials thought to have been involved in human rights violations.  [Sergei Magnitsky was an attorney working with American Bill Browder when he was arrested, tortured and beaten to death.]

The attorney, Veselnitskaya, is married to a Moscow government official and her clients are said to include companies and individuals close to the Kremlin.  But she has denied ever working for the Kremlin and on Saturday said as much and that “nothing at all was discussed about the presidential campaign” at the meeting with Trump Jr.

Monday, Trump Jr. tweeted sarcastically: “Obviously I’m the first person on a campaign to ever take a meeting to hear info about an opponent.”

But Donald Jr. was missing the broader point in his first days trying to handle the disclosure, that being when a foreign government, let alone an adversarial one, offers incriminating information about an opponent, it should have set off all kinds of alarm bells and the FBI should have been notified.

Russian Foreign Minister Lavrov said it was “wild” that Donald Trump Jr. was blamed for meeting a Russian lawyer.

“I learned with surprise that a Russian lawyer, a woman, is being blamed and Trump’s son is being blamed for meeting. For me, this is wild.”

Lavrov is one of the great liars of our time.

For her part, Natalia Veselnitskaya then told NBC on Tuesday she didn’t have information on the Clinton campaign and reiterated she has never worked for the Russian government.

On Clinton, she said through a translator: “It’s quite possible they were looking for information.  They wanted it so badly.”

Democratic Senator Tim Kaine (Va.) was typical of the response from his side of the aisle: “We’re now beyond obstruction of justice. ...This is moving into perjury, false statements, and even into potentially treason.”

Republican Sen., and Trump critic, Lindsey Graham (S.C.), told reporters that “anytime you’re in a campaign and you get an offer from a foreign government to help your campaign, the answer is no.”  Graham called on Trump Jr. to testify before Congress about the matter.

Wednesday, appearing on Fox News, Bill Browder, the fund manager and partner of Sergei Magnitsky, turned Kremlin critic, told Martha MacCallum that Natalia Veselnitskaya did indeed work for the Kremlin and he had firsthand knowledge of this.  Anyone who knows Browder’s story understands Putin wants him dead.

The White House is a mess.  President Trump was invisible, without a single public appearance until he took off for a quick two-day visit to Paris Wednesday evening.

Vice President Pence is clearly trying to distance himself from the controversy.

The Trump team is trying to defend Donald Jr. by going after the reporters working the story, but as one outside adviser told the Washington Post: “The meeting happened.  It’s tough to go to war with the facts.”

And looming in the background is the Robert Mueller investigation.  It’s being reported all the senior staffers are lawyering up, which makes accomplishing anything connected to the agenda even more difficult.

But Trump told Reuters the mood in the White House is “fantastic” despite the intense scrutiny.  The administration was “functioning beautifully,” he said.

Eric Trump retweeted a message from British politician and Trump supporter Nigel Farage, who said Trump Jr. was under attack because he is “the best public supporter” of the president. Eric tweeted: “This is the EXACT  reason they viciously attack our family! They can’t stand that we are extremely close and will ALWAYS support each other.”

Meanwhile, President Trump’s pick to be the next FBI director, Christopher Wray, was impressive in his Senate Judiciary Committee confirmation hearing, even as he was continually pressed by both Democrats and Republicans as to whether he would be truly independent as the bureau continues its investigations into the Trump campaign.

“I believe to my core that there’s only one right way to do this job, and that is with strict independence, by the book, playing it straight.”

Wray, 50, a former top Justice Department official and longtime defense lawyer, added he had no reason to doubt intelligence agencies’ conclusion that Russia meddled in the election.

If the president asked him to do something unethical or illegal, Wray also testified: “First, I would try to talk him out of it, and if that failed, then I would resign.”

Thursday in Paris, President Trump was asked in a two-question press conference whether Donald Jr., per Christopher Wray, should have alerted the FBI rather than accept the meeting.  “Is he wrong?  Also, were you misled by your team in not knowing about this meeting?”

PRESIDENT TRUMP: “Well, I’ll start off by saying, first of all, I believe that we will have a great FBI director. I think he’s doing really well, and we’re very proud of that choice....

“As far as my son is concerned, my son is a wonderful young man. He took a meeting with a Russian lawyer, not a government lawyer, but a Russian lawyer. It was a short meeting. It was a meeting that went very, very quickly, very fast. Two of the people in the room, they – I guess one of them left almost immediately and the other one was not really focused on the meeting.

“I do think this: I think from a practical standpoint, most people would have taken that meeting.  It’s called opposition research, or even research into your opponent. I’ve had many people – I have only been in politics for two years, but I’ve had many people call up – ‘Oh, gee, we have information on this factor or this person, or, frankly, Hillary.’ That’s very standard in politics.  Politics is not the nicest business in the world, but it’s very standard where they have information and you take the information.

“In the case of Don, he listened. I guess they talked about – as I see it, they talked about adoption and some things. Adoption wasn’t even a part of the campaign. But nothing happened from the meeting.  Zero happened from the meeting. And, honestly, I think the press made a very big deal over something that, really, a lot of people would do.

“Now, the lawyer that went to the meeting, I see that she was in the halls of Congress, also. Somebody said that her visa or her passport to come into the country was approved by Attorney General Lynch. Now, maybe that’s wrong. I just heard that a little while ago. But a little surprised to hear that. So she was here because of Lynch.

“So, again, I have a son who’s a great young man. He’s a fine person. He took a meeting with a lawyer from Russia. It lasted for a very short period, and nothing came of the meeting. And I think it’s a meeting that most people in politics probably would have taken.”

Wrong.  And nothing on meeting with an adversarial government?  Sad.

Friday, we then had the bombshell that a Russian American lobbyist, Rinat Akhmetshin, also attended the June 2016 meeting, as first reported by the Associated Press.  We later learned further that there was an interpreter and another person, whose identity isn’t clear as I go to post.

Immediately there were stories Akhmetshin was, or had been, a Russian intelligence operative on top of his lobbying efforts. He denied he ever worked as an intel official, though he has admitted serving in a unit of the Soviet military for two years responsible for law enforcement issues.

And that’s where we are tonight.  One thing is clear, we Lyin’ Donnie has become quite the embarrassment.

Some Tweets from POTUS the past week....

W.H. is functioning perfectly, focused on HealthCare, Tax Cuts/Reform & many other things.  I have very little time for watching T.V. [Trump wrote this as he watched TV, of this you can be 100 percent certain.]

Why aren’t the same standards placed on the Democrats.  Look what Hillary Clinton may have gotten away with. Disgraceful!

Getting the job done! Sen. Mitch McConnell delays August recess to work on health care bill

Remember, when you hear the words “sources say” from the Fake Media, often times those sources are made up and do not exist.

My son Donald did a good job last night.  He was open, transparent and innocent.  This is the greatest Witch Hunt in political history. Sad!

My son, Donald, will be interviewed by @seanhannity tonight at 10:00 P.M. He is a great person who loves our country!

I strongly pressed President Putin twice about Russian meddling in our election.  He vehemently denied it.  I’ve already given my opinion....

Opinion.... *all of the following was written prior to Friday’s revelation of more people in the June 2016 meeting.

Editorial / New York Post

“We see one truly solid takeaway from the story of the day:  Donald Trump Jr. is an idiot.

“In the heat of your father’s presidential campaign, a bozo British publicist e-mails you to set up a sitdown with a ‘Russian government attorney’ promising ‘documents and information’ to ‘incriminate Hillary’ courtesy of the ‘Crown prosecutor of Russia’ as ‘part of’ the Russian government’s ‘support’ for dad – and you eagerly take the meeting.

“ ‘If it’s what you say I love it,’ wrote Junior. As if the government of former KGB spymaster Vladimir Putin would do anything so clumsy.  (Our former colleague Kyle Smith put it nicely: ‘Don Jr. is why Nigerian e-mail scammers keep trying their luck.’)

“Worse, he dragged brother-in-law Jared Kushner and then-campaign chief Paul Manafort into the meeting, which proved to be a bid by a Moscow fixer to undo a U.S. law causing trouble for her clients....

“Oh, and someone was so careless with the e-mail trail that it all wound up being fed to The New York Times, for days of headlines that (at best) undermine President Trump’s agenda as both health and tax reform hang in the balance in Congress.

“Dumb.  Dumb.  Dumb.  As were Junior’s shifting, incomplete accounts of the meeting under days of Times questioning.

“Democrats and the media are frothing to find something criminal in it all, with the most unhinged talking treason.  What it clearly was, was criminally stupid.”

John Podhoretz / New York Post

“He said, ‘I love it.’

“Yes, upon being informed in June 2016 he might soon be in receipt of information from the Russian government damaging to Hillary Clinton, Donald Trump Jr. responded with the words, ‘I love it.’

“He didn’t call the FBI to say he had evidence the Russian government was seeking to interfere with the presidential election of 2016.  No, he said, ‘I love it’ – and set up a meeting with the shady Russian lawyer who, he was told, might share dirt with him.

“He didn’t steer the Trump campaign away to shield it from the stain of a potentially scandalous encounter with an operative working for Vladimir Putin. No, Trump Jr. brought the campaign’s chairman, Paul Manafort, and his brother-in-law, Jared Kushner, into the meeting.

“Donald Jr. loved it so, you see....

“(But) unless they’re dissembling – and they could be – no actual collusion between the Trump campaign and the Russian government took place at the meeting.  If they’re not prevaricating, this isn’t the smoking gun that will take down the Trump presidency.

“To be sure, Donald Jr. liked outright when the New York Times contacted him about the meeting, which is not good, because lying is bad unless someone asks you whether they look fat in those pants and they do.

“But as it happens, lying to the New York Times is not a crime.

“At the moment, the only person who might be in some legal jeopardy as a result of the meeting is Kushner, who did not mention the meeting on the form he filled out to secure a security clearance (called an SF-86).  The form specifically states that ‘knowingly falsifying or concealing a material fact is a felony which may result in fines and/or up to five (5) years imprisonment.’

“But enough about legal jeopardy.....There is not enough focus on the moral aspect of this event, which is far more significant.

“Donald Trump Jr.’s conduct defines the word ‘disgraceful.’  He may not have colluded in the disruption of an American election, but the evidence of the emails he released himself indicates he was only too willing and eager to do so....

“If we knew he had been or is in bad odor with his father, or that his father has kept his distance from his son due to the kid’s poor judgment or bad behavior, that would help exculpate the president.

“But we know Trump Sr. has knitted his children into every aspect of his professional life. In other words: The president whose daughter took his seat at the G20 conference and who wants his son-in-law to negotiate a Middle East peace is the same man whose son took a meeting with someone he had been led to believe was a Putin cut-out to procure information that would destroy Hillary Clinton.

“I’m sure there are people who will defend this, because there are people who will defend anything.”

Editorial / Washington Post

“There can now be no doubt: The Russia meddling story is not just smoke but fire. Donald Trump Jr.’s interactions with Russians during last year’s presidential campaign were abnormal and alarming.  An incriminating email chain has made it impossible for the administration to deploy its always flimsy argument of last resort – that the whole story is just ‘fake news.’

“Not only Mr. Trump but also presidential son-in-law Jared Kushner and then-campaign chairman Paul J. Manafort are involved.  Following a string of misleading and false statements, Americans must also wonder: Were other Trump associates involved?  Did other meetings take place? Was President Trump aware of them?  What more did the Trump camp know about Kremlin support for the Trump campaign?....

“Even if the Trump camp got no dirt on Ms. Clinton out of that meeting, the Russians could have used the email chain and subsequent meeting as leverage over Mr. Trump and Mr. Kushner, who is now a top White House adviser.  Mr. Trump’s enthusiasm may also have communicated to the Kremlin that the Trump camp would welcome Kremlin election meddling.  The Russians went on to run an anti-Clinton hacking campaign....

“(Republican) leaders, including Senate Majority Leader Mitch McConnell and House Speaker Paul D. Ryan, must finally decide: Is this really okay?  Are they really prepared to debase themselves in defense of a president whose closest advisers may have welcomed underhanded interference in America’s election from a hostile foreign power?”

Michael Goodwin / New York Post

“A year from now, Donald Trump still will be president and the media and the permanent bureaucracy still will be hounding him in a ruthless bid to drive him from office.

“In responding to the attacks, Trump and his team will make numerous mistakes, none fatal, but the accumulation will take a toll on his presidency.

“Drip, drip, drip goes the optimism.

“That’s what we’re witnessing now, with another round of toxic mud masquerading as bombshell news overshadowing all other issues, from North Korea to tax reform.

“I say masquerading because, for all the intrigue about the June 2016 meeting in Trump Tower, and for all the hyperventilating by Maxine Waters Democrats that this was the ‘gotcha’ moment, the end result was the same: more smoke, yet still no fire.”

Editorial / Wall Street Journal

“President Trump’s critics claim to have uncovered proof, finally, of 2016 collusion between the campaign and the Kremlin. Another reading of the meeting between Donald Trump Jr. and a well-connected Russian lawyer is, well, political farce.

“In June 2016, Mr. Trump Jr. arranged an appointment in Trump Tower with the lawyer, Natalia Veselnitskaya.  He said in a statement that he hoped to acquire opposition research about Hillary Clinton, and he even pulled in Trump son-in-law Jared Kushner and then campaign manager Paul Manafort.  By Mr. Trump Jr.’s account, Ms. Veselnitskaya relayed nothing to compromise Mrs. Clinton and then lobbied him about the Magnitsky Act, a 2012 U.S. law that sanctions Russian human-rights abusers.

“According to the emails that Mr. Trump Jr. released Tuesday, Mr. Trump Jr. agreed to meet with Ms. Veselnitskaya after he was approached by Rob Goldstone, a publicist who offered to pass along ‘some official documents and information that would incriminate Hillary and her dealings with Russia and would be very useful to your father.’ He wrote that this information ‘is part of Russia and it’s government’s support for Mr. Trump.’

“The appropriate response from a political competent would have been to alert the FBI if a cut-out promised material supplied by a foreign government.  Mr. Trump Jr. instead replied that ‘if it’s what you say I love it.’....

“The problem is that President Trump has too often made the implausible plausible by undermining his own credibility on Russia.  He’s stocked his cabinet with Russia hawks but dallied with characters like the legendary Beltway bandit Mr. Manafort or the conspiratorialist Roger Stone.  His Syrian bombing and energy policy are tough on Russia, but Mr. Trump thinks that if he says Russia interfered in 2016 he will play into the Democratic narrative that his victory is illegitimate.

“Thus in retrospect the John Podesta and Democratic National Committee hacks – still so far the tangible extent of Russian meddling – did less damage to U.S. democracy than it has done to the Trump Presidency. The person who should be maddest about the Russian hacks is Mr. Trump.”

Charles Krauthammer / Washington Post

“The Russia scandal has entered a new phase, and there’s no going back.

“For six months, the White House claimed that this scandal was nothing more than innuendo about Trump campaign collusion with Russia in meddling in the 2016 election.  Innuendo for which no concrete evidence had been produced.

“Yes, there were several meetings with Russian officials, some only belatedly disclosed. But that is circumstantial evidence at best.  Meetings tell you nothing unless you know what happened in them. We didn’t. Some of these were casual encounters in large groups, like the famous July 2016 Kislyak-Sessions exchange of pleasantries at the Republican National Convention. Big deal.

“I was puzzled.  Lots of coverup, but where was the crime?  Not even a third-rate burglary. For six months, smoke without fire. Yes, President Trump himself was acting very defensively, as if he were hiding something. But no one ever produced the something.

“My view was: Collusion? I just don’t see it. But I’m open to empirical evidence. Show me.

“The evidence is now shown. This is not hearsay, not fake news, not unsourced leaks. This is an email chain released by Donald Trump Jr. himself....(The) Kremlin is willing to share troves of incriminating documents from the Crown Prosecutor. (Error: Britain has a Crown Prosecutor. Russia has a Prosecutor General.)

“Donald Jr. emails back.  ‘I love it.’  Fatal words.

“Once you’ve said ‘I’m in,’ it makes no difference that the meeting was a bust, that the intermediary brought no such goods. What matters is what Donald Jr. thought going into the meeting, as well as Jared Kushner and then-campaign manager Paul Manafort, who were forwarded the correspondence, invited to the meeting, and attended.

“ ‘It was literally just a wasted 20 minutes, which was a shame,’ Donald Jr. told Sean Hannity.  A shame? On the contrary, a stroke of luck. Had the lawyer real stuff to deliver, Donald Jr. and the others would be in far deeper legal trouble. It turned out to be incompetent collusion, amateur collusion, comically failed collusion. That does not erase the fact that three top Trump campaign officials were ready to play. It may turn out that they did later collaborate more fruitfully. We don’t know.  But even if nothing else is found, the evidence is damning.

“It’s rather pathetic to hear Trump apologists protesting that it’s no big deal because we Americans are always intervening in other people’s elections, and they in ours. You don’t have to go back to the ‘40s and ‘50s when the CIA intervened in France and Italy to keep the communists from coming to power.  What about the Obama administration’s blatant interference to try to defeat Benjamin Netanyahu in the latest Israeli election?  One might even add the work of groups supported by the U.S. during Russian parliamentary elections – the very origin of Vladimir Putin’s deep animus toward Clinton, then secretary of state, whom he accuses of having orchestrated the opposition.

“This defense is pathetic for two reasons. First, have the Trumpites not been telling us for six months that no collusion ever happened?  And now they say: Sure it happened. So what?  Everyone does it.

“What’s left of your credulity when you make such a casual about-face?

“Second, no, not everyone does it. It’s one thing to be open to opposition research dug up in Indiana.  But not dirt from Russia, a hostile foreign power that has repeatedly invaded its neighbors (Georgia, Crimea, eastern Ukraine), that buzzes our planes and ships in international waters, that opposes our every move and objective around the globe. Just last week the Kremlin killed additional U.N. sanctions we were looking to impose on North Korea for its ICBM test.

“There is no statute against helping a foreign hostile power meddle in an American election. What Donald Jr. – and Kushner and Manafort – did may not be criminal. But it is not merely stupid. It is also deeply wrong, a fundamental violation of any code of civic honor.

“I leave it to the lawyers to adjudicate the legalities of unconsummated collusion.  But you don’t need a lawyer to see that the Trump defense – collusion as a desperate Democratic fiction designed to explain away a lost election – is now officially dead.”

Finally...journalist Chris Uhlmann of the Australian Broadcasting Corp. (ABC) offered a scathing assessment of Donald Trump’s presidency. 

Uhlmann was delivering a wrap on the G20 summit and his analysis went viral, around the world.

“He has no desire and no capacity to lead the world,” said Uhlmann.  “[He] barks out bile in 140 characters, [and] wastes his precious days as President at war with the West’s institutions.”

Uhlmann also criticized the President’s desire to be the centerpiece of conversation, saying that it was the only thing Trump cared about.

“Donald Trump is a man who craves power because it burnishes his celebrity. To be constantly talking and talked about is all that really matters.”

And...

“Donald Trump has pressed ‘fast forward’ on the decline of the United States as a global leader.   He managed to isolate his nation, to confuse and alienate his allies and to diminish America.”

ObamaCare

Early in the week, Senate Majority Leader Mitch McConnell (Ky.) said he was determined to bring a new health-care bill to a vote next week, but the party remained split and can afford just two defections to begin with.  A big point of contention inside the Republican caucus is McConnell is prepared to preserve two taxes for high-earning Americans.  And there are deep divisions on the levels of Medicaid funding.

Wednesday, President Trump put the onus squarely on McConnell and Co. to pass a health-care bill, saying in an interview with Pat Robertson of CBN News that he will be “very angry” if they fall short on a long-standing promise of the party.

[Earlier he had tweeted: “I cannot imagine that Congress would dare to leave Washington without a beautiful new HealthCare bill fully approved and ready to go!”]

“I am sitting in the Oval Office with a pen in hand, waiting for our senators to give it to me,” Trump said to Robertson.  “It has to get passed.  They have to do it.  They have to get together and get it done.”

But some conservatives argue McConnell’s revamped measure would not undo the Affordable Care Act aggressively enough.

Kentucky Republican Sen. Rand Paul said, “As far as I can tell, the new bill is the same as the old bill, except it leaves in place more taxes.  I can’t support it at this point.”

So Thursday, Republican leaders unveiled a revised version of their bill to repeal and replace, vowing still to vote next week, with the measure intended to win over additional votes, but few believe it was mission accomplished.

Republican Senators Susan Collins (Maine) and Rand Paul said they were firmly against and it would take just one more to kill it.

The bill largely keeps the Medicaid sections the same, meaning deeper cuts still start in 2025, with the funds for Medicaid expansion, as established by ObamaCare, ending in 2024.

Medicaid is the prime issue for Sens. Rob Portman (Ohio) Shelley Moore Capito (W. Va.) and Lisa Murkowski (Alaska).

The CBO had said these changes would result in 15 million fewer people being enrolled in the program, while cutting spending by $772 billion over 10 years.

The revised bill does include a provision put forward by Sen. Ted Cruz (Tex.) and Sen. Mike Lee (Utah) aimed at allowing insurers to offer “skinny” plans that do not meet all of ObamaCare’s requirements, including those protecting people with pre-existing conditions and mandating that healthcare cover services such as maternity care.

Conservatives argue the provision would allow healthier people to buy cheaper plans, but others say that premiums on the sick would thus spike for those remaining in more generous plans.

The Cruz plan is a hot topic because Senate Republicans had previously vowed not to change the ObamaCare protections for people being charged more based on their health.

The bill does include $70 billion for those sick people who remained in ObamaCare plans.

There are other details I’m leaving out but no one expects this to get through next week.  A new CBO analysis will come out before a vote.

For now just this blurb from an editorial in Friday’s Wall Street Journal:

“In the new bill, the GOP’s economic growth wing made a major and bitter concession by retaining the 3.8-percentage-point surcharge on investment income. This political capitulation doesn’t even phase out the tax. Repealing this millstone on investment and rising wages has allegedly been a Republican goal for years, and the Senate voted to do so as recently as 2015.  Markets have also been expecting relief, meaning the retreat will undercut an economy that can’t afford many political shocks.

“As worrisome is what this capitulation shows about GOP fortitude against relentless progressive opposition.  Moderate Republicans folded amid a false if completely predictable tax-cuts-for-the-rich narrative, as if they’ll somehow get credit for reneging.  Has opposition to the bill lessened even an iota?  Choking over the tax doesn’t bode well for tax reform, when Democrats will be invoking ‘the affluent’ at every turn....

“Moderates never objected to the repeal-and-replace agenda and surely benefitted from the slogan politically, yet some are still threatening to vote against even allowing a debate. If what they really want is ObamaCare, they should have said so earlier, though now at least they’ll be accountable for their true position.  Mr. McConnell is right to hold a vote next week to force Republicans to honor their avowed principles – or betray them.”

Fallout from the Trump-Putin Meeting

I was able to comment some on the first meeting between President Trump and Russian President Vladimir Putin last week, but as it took place on Friday on the sidelines of the G20, more news, and tweets, came out over the weekend.

Editorial / Wall Street Journal

“We’ll find out in the coming weeks how Vladimir Putin sized up Donald Trump in their first mano a mano meeting on Friday, but one bad sign is the Trump team’s post-meeting resort to Obama-like rhetoric of cooperation and shared U.S.-Russia purposes.

“Secretary of State Rex Tillerson frequently lapses into this form of John Kerry-speak as he did trying to sell the new U.S.-Russia-brokered ceasefire in a corner of Syria.  ‘I think this is our first indication of the U.S. and Russia being able to work together in Syria,’ Mr. Tillerson told reporters.

“He added: ‘I would tell you that, by and large, our objectives are exactly the same.  How we get there, we each have a view.  But there’s a lot more commonality to that than there are differences. So we want to build on the commonality, and we spent a lot of time talking about next steps.  And then where there’s differences, we have more work to get together and understand.  Maybe they’ve got the right approach and we’ve got the wrong approach.’

“The same objectives?  The Russians want to help their client Bashar Assad win back all of Syria while retaining their military bases. If they are now talking about a larger ceasefire, it’s only because they think that can serve Mr. Assad’s purposes.  The Trump Administration doesn’t seem to know what it wants in Syria after Islamic State is ousted from Raqqa, and we hope Mr. Tillerson isn’t saying the U.S. shares the same post-ISIS goals as Russia.

“As for the right or wrong ‘approach’ to Syria, the Pentagon believes Russia knew in advance about Mr. Assad’s use of chemical weapons this year. The U.S. fired cruise missiles in response and has since shot down an Assad airplane bombing U.S. allies on the ground, which drew a threat of Russian reprisal if the U.S. did it again.  Somehow ‘approach’ doesn’t capture this moral and military difference.

“Then there’s Mr. Trump’s Sunday tweet that ‘Putin & I discussed forming an impenetrable Cyber Security unit so that election hacking, & many other negative things, will be guarded.’  No doubt Mr. Putin, the KGB man, would love to get an insight into America’s cyber secrets, though don’t count on any of those secrets being ‘guarded,’ much less ‘impenetrable.’

“Republican Senator Marco Rubio had it right on Sunday when he tweeted that ‘partnering with Putin on a ‘Cyber Security Unit’ is akin to partnering with Assad on a ‘Chemical Weapons Unit’.’  He added, in advice Mr. Trump could help himself by taking, that ‘while reality & pragmatism requires that we engage Vladimir Putin, he will never be a trusted ally or a reliable constructive partner.’”

Sen. Lindsey Graham blasted Trump’s comments about working with Russia to form a cybersecurity unit.  “It’s not the dumbest idea I’ve ever heard, but it’s pretty close,” Graham said on NBC’s “Meet the Press.”

Sen. John McCain joked he thinks Putin would be helpful regarding cybersecurity – because the Russian leader is the one doing the hacking.

“I’m sure that Vladimir Putin could be of enormous assistance in that effort,” McCain said on CBS’ “Face the Nation.”

Both McCain and Graham are incredulous there still has been no price to pay for Russia’s meddling.

Sunday, U.S. Ambassador to the U.N. Nikki Haley said everyone knows that Russia meddled in the elections, as well as other elections around the world, despite President Trump’s refusal to say they did.

For his part, Putin said on Saturday he thought Trump had been satisfied with his assertions that Russia had not meddled.

Trump said he had a “tremendous meeting” with Vlad the Impaler.

Wall Street

So this is what has cracked me up when it comes to the Federal Reserve (and to a certain extent the European Central Bank as well).  Both Chair Janet Yellen and her ECB counterpart, Mario Draghi, have talked over the last few years of low inflation and slow recoveries, and the need to “let inflation run hot” for a spell (above the 2% target level in each) in order to ensure that the recovery holds, i.e., keep rates low for longer to get inflation cranking once and for all, then gradually tighten.

But all you’ve heard from Yellen and her band of Droogs (“Clockwork Orange” gets worked into WIR for a first time) recently is optimism that forces holding down consumer prices will fade in the coming months, so the Fed can stick to its plan of gradual hikes in rates, though in her semi-annual testimony this week on the state of the economy, she said the Fed would alter its plans if prices stayed soft. 

“It’s premature to reach the judgement that we’re not on the path to 2% inflation over the next couple of years,” Chair Yellen told the House Financial Services Committee (that’s the one where half the members are outright idiots, in case you needed reminding... “Oh, you mean Maxine Waters and her ilk, Editor...”).  “We’re watching this very closely and stand ready to adjust our policy if it appears the inflation undershoot will be persistent.”

But so much for talk of letting inflation run hot!  [I’m saying up to 3%, as was clearly the Fed’s intent, say, 2013-2015.]  It’s all about hitting 2% with their preferred inflation barometer (PCE) that is at 1.4% currently.

So we had the June data on producer and consumer prices this week and they both fell below expectations.  The PPI was 0.1%, ex-food and energy 0.1% as well, and for the 12 months, PPI was 2.0% and the core 1.9%.  The CPI was unchanged in June, 0.1% ex-stuff we use, with the corresponding 12-month figures being just 1.6% and 1.7%., 1.6% being less than the prior month’s annualized 1.9% (the core, 1.7%, the same).

Ergo, boys and girls, there is no inflation whatsoever on the horizon.  And that means that a rate hike in September (ignore the upcoming July 25-26 confab like I previously told you...just a lot of white win spritzers and shrimp cocktail at this one) is off the table and then we turn to December.  A ton will happen between now and then, especially on the Trump/Congress agenda and enactment or no enactment of same, that will definitely have a say in future economic activity and prices.

Where I was wrong in all this is that I thought, up until recently, that inflation would begin to pick up, leaving the Fed with its pants down because it wasn’t acting quick enough, which in turn would lead to at least a mini-bond market debacle.  We’ve seen coming attractions in Europe in this regard as Mario Draghi has strongly hinted at finally turning off the spigot of free money, with the yield on the German 10-year Bund rising from 0.25% to 0.59% in just three weeks.

But in the U.S., after rising sharply from 2.14% to 2.39% from 6/23-7/7, the 10-year Treasury fell back to 2.32% on Friday on the tame price data.

Anyway, enough on this topic (I’ll get into the Fed’s balance sheet later, though for the purposes of this column, Yellen told Congress the central bank will begin shrinking it “relatively soon,” which would be expected to nudge long-term rates higher).  

Two other economic items of note.  June retail sales were down 0.2% when a rise of 0.2% was expected, which added to the bond rally today, while June industrial production was a tick better than forecast at 0.4%.

After weighing all of this week’s minutiae, the Atlanta Fed’s GDPNow indicator is forecasting second-quarter growth of 2.4%, a figure which has been falling steadily since an initial 4%+ estimate (as is the wont of this barometer over each three-month period).

All of the above Fed talk, however, was good for stocks, virtually around the world, as the Dow Jones and S&P 500 hit new all-time highs and Nasdaq came within nine points of setting its own record.

Europe/Asia

After the slew of economic data last week at quarter’s end, there was little to report on for both the eurozone and Asia this week.

European car sales rose 2.1% in June, down from growth of 7.6% in May, according to the European Automobile Manufacturers Association.

Over 8 million new cars were registered in the first half of the year, a rise of 4.7% over the same period last year, with Italy, Spain, Germany and France all showing growth, but U.K. sales fell 1.3%.

Eurobits....

--On the Brexit front, talks are underway again after a brief break and the U.K. acknowledged for the first time that it will have to pay a breakup fee to the European Union.

“The government has been clear that we will work with the EU to determine a fair settlement of the U.K.’s rights and obligations as a departing member state,” Brexit Minister Joyce Anelay, a member of the House of Lords, said in a written statement to Parliament.

Speculation has Britain being forced to pay an exit bill as high as 100bn euros ($114bn) and Prime Minister Theresa May needs to come to an agreement with her EU counterparts on the payment, because it is one of three critical areas, the other two being citizens’ rights and the border with Ireland, that the EU is demanding “sufficient progress” on before any discussions can take place on Britain’s future relationship with the bloc on trade.

Two days earlier, though, Foreign Secretary Boris Johnson issued a defiant statement answering questions in Parliament, when he agreed with a euro-skeptic lawmaker who suggested Johnson should “make it clear to the EU that if it wants a penny piece more” from Britain as part of the settlement, “it can go whistle.”  Johnson responded that “the sums I have seen that they propose to demand from this country seem to me to be extortionate, and I think that to ‘go whistle’ is an entirely appropriate expression.”

The EU’s chief negotiator, Michel Barnier, hasn’t publicly endorsed a figure, but Luxembourg’s Prime Minister Xavier Bettel said the sum should be 40-60bn euros.

Earlier in the week, Prime Minister May unveiled her landmark draft law to take Britain out of the EU, and Scotland and Wales were none too pleased, which imperils her Brexit plans altogether.

The 66-page bill would transfer EU laws onto the British statute book for when the U.K. leaves the bloc in March 2019, but semi-autonomous Scottish and Welsh lawmakers said this would fail to give them sufficient powers and threatened to block the bill in the national legislatures in Edinburgh and Cardiff.

Now I admit I needed reminding on the principle of “devolution” that Britain governs under, with the bill taking power back from the EU in Brussels and giving it to the central government in London, instead of devolving decision-making to Wales and Scotland.

This is what happens when you don’t win an outright parliamentary majority, as was the case in Mrs. May’s decision to call a snap election.

The prime minister needs unity before she can open talks on a new free-trade deal between the U.K. and the EU (after addressing the other three issues discussed above, including citizens’ rights and the exit fee).

Even though May has the support of the Democratic Unionists in Northern Ireland, it would only take seven lawmakers from her Conservatives (Tories) to rebel in order to potentially defeat her proposals in the House of Commons.

The bill would give May’s government two years to alter British law through a fast-track process designed to ensure regulations work properly after Brexit. Brexit Secretary David Davis is trying to assure Scotland and Wales that they’ll have input and it’s not that big a deal.

The European Union (Withdrawal) Bill is designed to prevent a black hole appearing overnight as Britain exits the EU, preventing regulatory continuity for businesses such as aviation and pharmaceuticals.  The government wants to be able to tweak laws without parliamentary approval.

One other...under Mrs. May’s proposal the government would allow the continuation of pending cases in the European Court of Justice but will not allow new ones after the date it leaves – meaning British courts would decide matters, regardless of whether the facts of a case occurred before.

I hope I’m not confusing things too much, but it is confusing to an outsider when you intertwine the ‘devolution’ aspect with the broader U.K. exit. There need to be bridges of some kind between EU law and regulations and a British takeover, getting out from under the mandates of the EU Court of Justice a major reason for Brexit in the first place.

Meanwhile, parliament won’t be debating the prime minister’s legislation until after the summer recess, with the lower House of Commons returning in early September.

Do you see what this means?  The Brexit clock is already ticking and there are long gaps of time when absolutely nothing is taking place and if the European Union wants to play hardball, and they have no reason not to, it’s conceivable we could get to March 2019 without a deal and then it’s beyond chaos.  [Though we would likely see some kind of extension in the negotiations, I imagine.]

Obviously, none of this is good for business confidence in the U.K.

[At least for the rolling three-month period ending May (Britain using such time frames), unemployment fell to 4.5%, the lowest since 1975.  But inflation was 2.9% over that period, and wages, adjusted for inflation, fell 0.7%...not good, sports fans.]

--That was quite a Bromance on display in Paris between Presidents Trump and Macron.  Nothing but praise lavished on one another.  It was a great respite for Trump, and it further showed the rest of Europe that Macron considers himself to be one of a handful of elite world leaders, along with Trump, Xi, Putin and Merkel.  In terms of global importance, he is vying to be on par with Merkel.  And there’s nothing wrong with that. I am very comfortable with a strong leader in the Elysee Palace.

Frankly, I have zero bad to say about what transpired here.  If you assume Trump is around a while, despite all the problems encircling the White House, Macron could be a good sounding board for Trump. I see him calling Macron a lot for advice.

And, yes, Trump should rejoin the Paris Climate Accord.  As I said ad nauseam before, the United States is under zero obligation to adhere to the “targets.” But we need to have a seat at the table.

--One other item...Eurostat reported that the population of the European Union was estimated at 511.8 million for Jan. 1, 2017, compared with 510.3 million the year before.  There were as many deaths as birth (5.1 million), so the increase was due to net migration.

Next time you’re at a bar and you are tired of chatting about the Mets and Jets, quiz your friends on the population of the following:

Germany 82.8 million
France 67.0m
U.K. 65.8m
Italy 60.6m
Spain 46.5m
Ireland 4.8m
Montenegro 622,400

If someone gets Montenegro correct, pints all around!

Turning to Asia...

Exports in China in dollar terms in June rose 11.3% year-over-year, according to China’s General Administration of Customs, accelerating from a rise of 8.7% in May and beating forecasts.  Imports were up 17.2%, also blowing past expectations and above May levels.

Auto sales rose 2.3% in June, yoy, after May’s 2.6% pace.  SUV sales were up 15.7%, sedans down 4.3%, according to the Chinese Association of Automobile Manufacturers.

And producer prices in June rose 5.5%, year-over-year, unchanged from May. The CPI was up 1.5%, annualized.

In Japan, the key machine orders figure for May was down 3.6% over April, which in turn was down 3.1%, not good.

Street Bytes

--As alluded to above, the Dow Jones was up 1.0% this week to a record 21637, while the S&P 500 gained 1.4% to its new high-water mark, 2459.  Nasdaq added 2.6% to 6312, shy of its record 6321, but up 17.3% on the year.  As Ronald Reagan would have said, ‘Not bad, not bad at all.’

Earnings begin in earnest this coming week with the likes of IBM, Microsoft and GE, plus Goldman Sachs and Morgan Stanley.  Overall, earnings for the S&P 500 are slated to come in up 8% for Q2.

--U.S. Treasury Yields

6-mo. 1.12%  2-yr. 1.36%  10-yr. 2.33%  30-yr. 2.92%

The 10-year was most affected by Yellen’s dovish talk on inflation, the yield dropping from 2.39% to 2.33%.

--The International Energy Agency said on Thursday that OPEC’s compliance with its own supply cuts fell in June.

Global oil supply rose sharply by 720,000 barrels a day in June, with Nigeria, Libya and Saudi Arabia raising output.  Compliance with the OPEC deal dropped to 78 percent.

Nigeria and Libya are off the hook because of unrest and disruptions in both countries, but it was very curious that the Saudis suddenly opened the spigot more.

Global demand is expected to grow by 1.5% this year to 98 million barrels a day, driven in part by rising consumption in Germany and the U.S.

But then the Energy Information Administration in its weekly report said inventories in the U.S. fell sharply by 7.6 million barrels in the July 7 week, more than expected.

Add it all up and oil rallied to $46.68.

--JPMorgan Chase, Wells Fargo and Citigroup all beat their earnings estimates, but for varying reasons each saw their shares drop a bit on the news Friday.

Citigroup’s revenue rose 2 percent, compared to the same period in 2016, with net income of $3.6 billion. 

JPMorgan had net income of $6.6 billion, which was boosted by a $406 million after-tax gain from a legal settlement, with revenue up 5%.  JPM also said net interest income wouldn’t rise by as much as first expected, amid slower loan growth and a decline in long-term interest rates.

Total loans at JPMorgan were up just 4% from a year earlier and were up only 1% at Wells Fargo.

Wells reported net income of $5.4 billion on flat revenue.

JPMorgan announced revenue from both its fixed income and equity trading units fell 14% in the second quarter. Citigroup’s fixed-income trading revenue declined 6%, though this was telegraphed by the industry in May.

Bankers have said that businesses are hesitant to take out large loans, in part because of uncertainty surrounding policy action in Washington.

So in keeping with this last point, JPMorgan Chase CEO Jamie Dimon went off on the state of affairs in D.C. on one of his post-earnings conference calls.

“It’s almost embarrassing being an American citizen...and listening to the stupid shit we have to deal with in this country.”  The inability to make headway on significant legislation is “holding us back and it is hurting the average American.  It isn’t a Republican issue; it is not a Democratic issue.”

Dimon stopped short of criticizing the Trump administration, for which he serves on a business council.

“We have become one of the most bureaucratic, confusing, litigious societies on the planet,” he said. “...And at one point we have to get our act together or we won’t do what we’re supposed to do for the average American.”  [Washington Post]

--The Bank of Canada lifted its benchmark lending rate on Wednesday for the first time since 2010, becoming the second of the G7 nations to do so following the Federal Reserve, which in June increased rates for the fourth time since December 2015.

The BoC was reacting to rapid job growth and booming property prices, so it felt comfortable in pulling back some of the stimulus.  The overnight rate is still an ultra-low 0.75 percent, up a quarter point.

--An annual report from the trustees of Social Security and other entitlement programs revealed Thursday that the trust fund for Social Security’s disability program will last until 2028, five years longer than previously projected, while the far larger retirement fund, in combination with the disability program, would be exhausted in 2034, unchanged from last year.

The difference with the disability program is lower-than-expected applications for disability benefits.

Under current law, when the funds are exhausted, benefits would be immediately slashed.

The Medicare trust fund would be depleted in 2029 under current estimates, a one-year extension from last year.

All these programs account for 42% of federal spending.

--Alphabet Inc.’s Google won a reprieve, at least temporarily, from a Paris court that threw out a $1.27bn judgment against it by France’s tax authority, which has sought five years of back taxes.

The Paris administrative tribunal ruled that Google’s advertising-sales business had no taxable presence in France – absolving it of income or sales taxes on advertising income from French clients.

The tax authority will appeal.

[This tax issue is not to be confused with the recent $2.7 billion fine levied on Google by the European Commission on antitrust grounds, which Google is appealing.]

--Apple said it would comply with strict new cybersecurity rules in China by storing all cloud data there for its China customers with a government-owned company. So Apple is relinquishing control on data that will include photos, documents, messages, apps and videos uploaded by Apple users throughout the mainland, the company announced.

Apple’s first Chinese data center will be built in southern Guizhou province.

Heretofore, Apple has long been a company advocating for fending off government intrusions into user data. But the Chinese have been tightening ‘freedoms’ of all sorts as the government goes for the ability to intrude on every single facet of your life.

--Target Corp. led a rally in retail stocks on Thursday when it forecast sales would increase for the first time in five quarters, thanks to improved customer traffic and sales trends.  Days earlier, JC Penney also said it was expecting a ‘significant’ improvement in Q2 sales.

--Children’s clothing retailer Gymboree, however, filed for bankruptcy protection in June and this week it announced it would close 350 of its 1,250 stores as it restructures.  The company also said it could close another 100.

--PepsiCo reported stronger-than-expected results in its second quarter, with net revenue climbing 2 percent to $15.7bn. Net income came in at $2.1bn, or $1.46 s share, easily topping the Street’s estimates.

PepsiCo is continuing to diversify away from its namesake Pepsi brand with the focus on healthier drinks and snacks.  In the past year the company has introduced probiotic versions of its Tropicana juices and has acquired Kevita – a maker of fermented tea drink kombucha, among other beverages.

--Shares in Snap Inc. were downgraded by the lead underwriter of its IPO about five months ago, Morgan Stanley, and the shares fell to $15.30 at week’s end, well below the $17 offering price.  Morgan Stanley cut its price target to $16 from $28, citing shortfalls in Snap’s ad products and increased competition from Facebook-owned Instagram.

Snap shares had surged to $29.44 in the day after its IPO and it’s been largely sliding ever since.

--The NFL is losing two big revenue generators, as Viagra and Cialis pull back on their TV ad spending. Viagra spent $100 million on TV over the past year, according to iSpot.tv, $31 million of it on NFL telecasts.

The patents on both Viagra and Cialis for erectile-dysfunction are expiring and generic versions are set to flood the market.

More broadly speaking, changes in how people view NFL broadcasts are changing the advertising landscape. Anheuser-Busch, for example, is saying that with more people watching steaming sports, negotiations on the price of traditional TV sports needs to change.

--Vanguard Group announced a change at CEO as William McNabb III said he would step down in January, to be replaced by Mortimer “Tim” Buckley, a onetime assistant to the firm’s founder Jack Bogle.  The asset manager is the second largest in the world at $4.4 trillion, trailing only BlackRock Inc.

Vanguard continued its dominance in the first half in pulling in $214bn in net new money the first six months of the year vs. an industry-wide, mutual fund and exchange-traded funds total of net $387.3bn.

But with massive size come issues, with increased complaints on customer service.

--PIMCO’s assets under management surged 6.6% to $1.61 trillion in the second quarter as the post-Bill Gross departure recovery continues.  PIMCO at one time had assets of over $2tn in 2014 before all the internal turmoil that led to Gross leaving for Janus Capital, which led to a decline to $1.43tn at the end of 2015.

But despite the improvement in assets, the flagship PIMCO Total Return Fund, which peaked at $300bn, is now $73.3bn as of the end of the second quarter.  [The PIMCO Income Fund is actually the biggest there at $88.8 billion.]

--Despite a big bounceback in real estate prices in Ireland, including a nationwide jump of 12% in the year to May, according to the Central Statistics Office, the national index is still 29.5% lower than its highest level in 2007.

But prices have been rising too rapidly again and some experts here are warning of a new bubble.

I’ve seen it all in Ireland. The depths of despair in the late ‘80s, and then the roar of the Celtic Tiger, when I was writing in this spot after my then-annual trips that a crash was looming.

--Two extensive large-scale studies of coffee drinkers, released Monday in the Annals of Internal Medicine (one funded by the National Cancer Institute, the other by Imperial College London and the International Agency for Research on Cancer), found that coffee drinkers of both regular and decaffeinated coffee live longer.

Hundreds of thousands of people were tracked over many years and while these were not clinical trials, they demonstrate an association that coffee-drinking reduced the risk of various diseases, including heart disease, cancer, diabetes and kidney disease.  And the more you drink the more of a potential positive effect.

--While the gap between Fox News and rivals CNN and MSNBC has narrowed, in the second quarter, Fox was still No. 1 in viewers and first in the key 25-to-54 demographic, according to Nielsen.

Average primetime viewers, adults 25 to 54, Q2 2017

Fox News 472,000
MSNBC 389,000
CNN 370,000

[Source: Nielsen / The Wall Street Journal]

So despite all the turmoil, Fox prevails.

Tucker Carlson’s average audience in the 8 pm hour since succeeding Bill O’Reilly is 5% smaller than what “The O’Reilly Factor” was averaging, but Carlson is doing better than O’Reilly did among the 25-to-54 demo.  And Carlson makes far less than the $25 million a year O’Reilly took down.  [I can’t stand Tucker.]

Foreign Affairs

Iraq/Syria: The battle for Mosul is over, but it took far too long, nine months since it began in October, and the casualties and damage were far worse than many expected.  It proved to be some of the toughest urban fighting since World War II, as American commanders put it.

The only casualty figures that might be fairly accurate have 1,000 Iraqi security personnel dying in the fight, seven journalists, but an untold number of civilians and ISIS fighters.  One million were displaced, a humanitarian catastrophe.

The United Nations estimates the cost of reconstruction at more than $700 million, but no doubt it will be in the $billions, though I’ll be shocked if two years from now we are talking about any real progress on this front.

Seth G. Jones / Wall Street Journal

“Iraqi Prime Minister Haider al-Abadi arrived in Mosul on Sunday, dressed in a black military uniform, and announced the ‘liberation’ of the city where Islamic State declared its so-called caliphate in 2014.  ‘The world did not imagine that Iraqis could eliminate Daesh,’ he remarked, using the Arabic acronym for the group.

“But this war is far from over. A growing number of Iraq’s Sunnis are disenchanted with the slow pace of reconstruction and frustrated with a Baghdad government they consider too friendly to Iran.  The U.S. needs to shift its focus quickly from supporting military operations in cities such as Mosul to helping the Iraqi government better address political grievances. Failure risks sowing the seeds of ISIS’ resurgence....

“Despite (Iraqi military successes), there are troubling signs in Iraq, particularly within the Sunni Arab community. Take the western city of Fallujah. A year after Iraqi forces liberated the city, residents are disenchanted because of the slow pace of rebuilding, the absence of government services and skyrocketing unemployment.  ‘This area was liberated in June, and it still looks the same now,’ Hussein Ahmed, a Fallujah resident, told a visiting journalist earlier this year.  ‘I speak for thousands of people when I say the government has forgotten us.’

“Many Sunnis also look warily at growing Iranian influence. Tehran is committed to increasing its influence in Iraq through such organizations as the Popular Mobilization Units, militias that include as many as 150,000 Shiite Fighters....Today, such Shiite forces are nearly as large as the entire Iraqi army.  ISIS fighters are attempting to leverage these grievances in several ways.  Its operatives have recruited new members who are unhappy about the pace of reconstruction in Sunni towns and cities, angry about friends or family members who have been abused by pro-government militias, and nervous about Iran’s growing influence in the country.  Iraq’s security services have noted with alarm that ISIS cells are re-establishing intelligence networks in Ramadi and Fallujah. Even after last week’s defeat in Mosul, ISIS still holds nearly 10,000 square kilometers of territory in Iraq... It also boasts over 15,000 fighters across the Iraq-Syria battlefield and more than $500 million in annual revenue through the end of 2016....

“ISIS is also shifting from conventional to guerrilla operations, including ambushes, raids, suicide attacks, car bombs and assassinations....

“Islamic State’s predecessor, al Qaeda in Iraq, began to reconstitute itself in 2011 in part because of Baghdad’s failure to address Sunni grievances and Washington’s decision to withdraw U.S. forces and inability to influence Iraqi politics.  It would be doubly tragic to make the same mistake again today.”

So I’ve written for years on how it has been too late in Syria, and in large areas of Iraq, in terms of rebuilding and reconstruction.  You’ve seen the pictures of Mosul...a massive city reduced to rubble.

An official with the aid group Mercy Corps told the Wall Street Journal the other day, “Nearly every building on the western side of Mosul was completely destroyed.  With this level of devastation, it’s very unlikely that the hundreds of thousands of displaced families will be going home anytime soon.  This is a critical moment for Mosul.”

That keeps all these folks in refugee camps, and that breeds future terrorists and insurgencies.

In Syria, a ceasefire in the southwest is holding, but Israeli Prime Minister Benjamin Netanyahu warned that the ceasefire plan potentially could allow for a vacuum to be filled by Iran and its proxies in an area near the border with Israel.

While the agreement is between Russia, the U.S. and Jordan, the U.S. has little control, if any, in monitoring the ceasefire.

Trump tweeted early in the week: “Syrian ceasefire seems to be holding.  Many lives can be saved. Came out of meeting. Good!”  Whatever, Mr. President.

Israel: Two Israeli police officers were killed today in an attack by Palestinian assailants near the Temple Mount shrine in Jerusalem.  Three Arab citizens of Israel opened fire on police at a checkpoint to enter the shrine compound, the holiest site in Judaism and the third-holiest in Islam.  The three attackers were killed.  Palestinian President Abbas actually condemned the attack, a rarity.

China: In his presser in Paris on Thursday, President Trump was asked by a Chinese television reporter, “Mr. President, you have just met with Chinese President (Xi Jinping) during the G20 Summit. How do you want to continue to work with China?  And what do you personally think about Mr. Xi Jinping?”

PRESIDENT TRUMP: “Well, he’s a friend of mine. I have great respect for him. We’ve gotten to know each other very well. A great leader. He’s a very talented man. I think he’s a very good man. He loves China, I can tell you. He loves China. He wants to do what’s right for China.

“We’ve asked him for some assistance with respect to North Korea.  Probably, he could do a little bit more, but we’ll find out. We’re now working on some trade deals.  He’s been very nice. He’s let, as you know, beef go back in, certain financing go back in, credit card financing, and various other things go back in at my request, which is a great thing for our farmers.  A lot of good things are happening, but we’re going to be working on some very major trade components.

“But President Xi is a terrific guy. I like being with him a lot, and he’s a very special person.”

No, Xi is not a terrific guy.  He is choking his people in more ways than one.  He’s also not a ‘great leader,’ but rather a thug.  Xi is a princeling who doesn’t deserve to be where he is.

Xi also only listens to about three people.  He is a dolt, but he has to be feared.  [As opposed to Sec. of State Tillerson, who is an amiable dunce.]

Meanwhile, Chinese Nobel Peace laureate Liu Xiaobo died on Thursday.  He was 61.  Authorities in Shenyang said he had suffered multiple organ failure and efforts to save him had failed.  President Trump had a chance to comment on him but didn’t.

Liu was jailed for 11 years in 2009 for ‘inciting subversion of state power” after he helped write a petition known as “Charter 08” calling for sweeping political reforms.  He was recently moved from jail to a hospital in Shenyang and there had been worldwide calls for him to be allowed to fly overseas for treatment.

British Foreign Secretary Boris Johnson said, “Liu Xiaobo should have been allowed to choose his own medical treatment overseas, which the Chinese authorities repeatedly denied him.”

Liu was the first Chinese citizen to be awarded a Nobel Prize of any kind while still living in China.

U.S. Senator John McCain (R-AZ):

“The death of Liu Xiaobo in a Chinese prison represents an egregious violation of the fundamental human rights for which Dr. Liu spent his life fighting.  Unfortunately, and as Dr. Liu would have wanted everyone to remember today, this is only the latest example of Communist China’s assault on human rights, democracy, and freedom.

“A Nobel Peace Prize laureate who was wrongly imprisoned by the Chinese government for nearly a decade, Dr. Liu was a champion for human rights throughout his life.  From protesting at Tiananmen Square to authoring a human rights manifesto for which he was unjustly jailed, Dr. Liu was relentless in his pursuit of a democratic China. As he suffered from late-term liver cancer in prison, the Chinese government’s delay in treatment was the last barbaric violation of Dr. Liu’s human rights.

“Even as it brutalizes its own citizens, China has continually bullied its neighbors and destabilized the Asia-Pacific region by militarizing the South China Sea and propping up the North Korean regime.  China has again ignored the international community in its inhumane treatment of prisoners of conscience. The United States of America should demand the immediate release of Dr. Liu’s wife, Liu Xia, and make clear that we will not tolerate China’s pervasive violation of human rights.”

Fred Hiatt / Washington Post

“As you read about Nobel Peace Prize winner Liu Xiaobo, who died in Chinese captivity Thursday, ask yourself this: Why are his jailers – President Xi Jinping and the rest of China’s Communist regime – so afraid?

“I wonder about that question sometimes when I think of another of their captives, someone you are less likely to have heard of, a man named Wang Bingzhang.

“Wang is, at this point, one of China’s longest-serving political prisoners. He is 69 years old and in poor health.  He has been locked up since 2002, when Chinese agents kidnapped him from Vietnam, hauled him across the border, kept him incommunicado for six months and then sentenced him, in a one-day, closed-door ‘trial’ held without notice to family or friends, to life in prison.

“Wang’s crime?  Like Liu, he had campaigned, peacefully, for democracy in China. He had argued that freedom is not a ‘Western’ value but a desire and a right of all human beings....

“Far from delivering continuous progress for an ever-happier nation, the regime since 1949 has intermittently plunged China into disastrous famines and spasms of internecine violence that have cost tens of millions of lives. Today it must employ tens of thousands of censors and lock away hundreds of lawyers, journalists and religious believers to maintain the façade of universal acclaim.

“Perhaps most perilously, the Communist Party rules over a population that no longer believes in communism. The regime’s only remaining justification is that it delivers economic growth. Yet, as the economy becomes more complex, growth becomes more and more dependent on people being free to think, read, challenge and compete. The regime is caught in this paradox – and afraid.

“ ‘Any government that jails its own people for political dissent still has a long way to go to become a respected member of the international community,’ Ti-Anna Wang wrote in a 2009 op-ed.

“So some level, the regime must understand that....

“So some level, Xi and his colleagues must know that Liu and Wang are right and they are wrong. Clearly they fear that their people will come to that realization.  Maybe they are also afraid to admit it to themselves.”

North Korea: According to South Korea’s Yonhap news agency, North Korea’s recent intercontinental ballistic missile test may not have been the total success it was made out to be as there are questions among experts whether it successfully re-entered the atmosphere.

Kim Jong Un held a big celebration of the test on Tuesday and among the songs performed at the concert were “Song of Hwasong Rocket.”  I assume this is sung to the Police’s “Roxanne.”

Hwaaa-song....you don’t have to put on the red light...Those days are over you are limited to Sea of Japan....”

It doesn’t much matter if the test of the Hwasong-14 missile was fully completed.  They are making rapid progress and on the missile defense front we are in danger of getting caught with our pants down.

Russia: Editorial / Washington Post

“After we learned that Donald Trump Jr. said he would ‘love’ to receive campaign help from the Russian government, it was pointed out that Russia is a hostile power. This is true, but what does it mean?  It’s worth revisiting the question, because the answer has a lot to do with what Russian President Vladimir Putin stood to gain by interfering in the United States’ 2016 presidential election.  ‘Hostile,’ in this case, doesn’t mean that Russia and the United States are about to go to war.  In theory, their interests shouldn’t even diverge all that much. They are two continental powers on opposite sides of the world with no territorial disputes (though the melting of Arctic ice may change that). They share a fear of Islamist terrorism.

“What makes Russia hostile is Mr. Putin’s adherence to, and dependence on, a set of values that are antithetical to what have been, at least until now, bedrock American values.  He favors spheres of influence over self-determination; corruption over transparency; and repression over democracy.  His antipathy toward Hillary Clinton was not personality-driven but based on her advocacy of values that would threaten his rule.

“It’s sometimes hard for Americans to understand the gulf  between the two nations because Mr. Putin has maintained the trappings of democracy – a parliament, national elections – even as he has made them meaningless by shuttering most independent media and eliminating most political opposition. The state now serves Mr. Putin and his cronies, who have become immensely wealthy, rather than the reverse.  When people try to expose the corruption, they are imprisoned or killed (or both, as in the case of lawyer Sergei Magnitsky).  When Mr. Putin stakes out any position, the first question on his mind is not ‘Is this good for Russia?’ but rather: ‘Will this help my regime to survive?’....

“It may be true that Mr. Putin’s hacking and fake-news campaign began as an effort simply to damage Ms. Clinton’s reputation on her road to the White House or to make the democratic process look as ugly as possible.  But along the way, Mr. Putin must have realized that Donald Trump’s policies aligned with his values more than he could have dared expect from any American candidate.  Mr. Trump disparaged democratic allies and alliances while expressing admiration for dictators.  He appeared willing to mingle private business with public duties in unprecedented ways, while elevating family members in the style of a Central Asian Caesar.  At home, he echoed Mr. Putin in his cynical disparagement of a free press, his celebration of violence at his rallies, and his ugliness toward Muslims, Mexicans and others he perceived or portrayed as outsiders.

“So while the younger Mr. Trump may have seen advantage in accepting Russia’s help, Russia certainly would have seen an advantage in proffering it.  Mr. Putin’s values are antithetical to American values, but the Russian dictator had good reason to hope that they would not be antithetical to the values of a Trump administration.”

Regarding the cyber threat...

Jordan Robertson and Michael Riley / Bloomberg Businessweek

“Russian cybersecurity company Kaspersky Lab boasts 400 million users worldwide. As many as 200 million may not know it.  The huge reach of Kaspersky’s technology is partly the result of licensing agreements that allow customers to quietly embed the software in everything from firewalls to sensitive telecommunications equipment – none of which carry the Kaspersky name.

“That success is starting to worry U.S. national security officials concerned about the company’s links to the Russian government. In early May six U.S. intelligence and law enforcement agency chiefs were asked in an open Senate hearing whether they’d let their networks use Kaspersky software, often found on Best Buy shelves. The answer was a unanimous and resounding no.  The question, from Florida Republican Marco Rubio, came out of nowhere, often a sign a senator is trying to indirectly draw attention to something learned in classified briefings.

“Eugene Kaspersky took to Reddit to respond. Claims about Kaspersky Lab’s ties to the Kremlin are ‘unfounded conspiracy theories’ and ‘total BS,’ the company’s boisterous, barrel-chested chief executive officer wrote. While the U.S. government hasn’t disclosed any evidence of the ties, internal company emails obtained by Bloomberg Businessweek show that Kaspersky Lab has maintained a much closer working relationship with Russia’s main intelligence agency, the FSB, than it has publicly admitted. It has developed security technology at the spy agency’s behest and worked on joint projects the CEO knew would be embarrassing if made public....

“Antivirus companies are especially delicate because the products they make have access to every file on the computers they protect.  The software also regularly communicates with the maker to receive updates, which security experts say could theoretically provide access to sensitive users such as government agencies, banks, and internet companies. Adding to the U.S. government’s jitters, Kaspersky recently has developed products designed to help run critical infrastructure such as power grids....

“The U.S. government hasn’t identified any evidence connecting Kaspersky Lab to Russia’s spy agencies, even as it continues to turn up the heat.  In June, FBI agents visited a number of the company’s U.S. employees at their homes, asking to whom they reported and how much guidance they received from Kaspersky’s Moscow headquarters.  And a bill was introduced in Congress that would ban the U.S. military from using any Kaspersky products, with one senator calling ties between the company and the Kremlin ‘very alarming.’  Russia’s communications minister promptly threatened sanctions if the measure passed.”

Brazil: Former President Luiz Lula da Silva, who is a top contender to return to office in next year’s presidential election, was convicted on corruption charges on Wednesday and sentenced to nearly 10 years in prison.

Lula had been Brazil’s first working-class president and he remains a popular figure after he left office six years ago with an 83% approval rating.

But he got swept up in the massive corruption investigation that has rattled Brazil the past three years, centered around state oil giant Petrobras.

Lula’s handpicked successor Dilma Rousseff was elected president and then as the economy was tanking, she was impeached last year for breaking budget rules.  The man who orchestrated what many call a ‘coup’ against her, Michel Temer, the current president, faces serious corruption charges himself.

Random Musings

--Presidential tracking polls: Gallup, President Trump 40% approval rating; Rasmussen, 44%.

--Karl Rove had a piece in the Wall Street Journal laying out how difficult it will be for the Democrats to retake the Senate in 2018.  Of the 25 Democrats up for re-election, 10 are from states carried by President Trump, with six in states where Trump’s margin was huge: Joe Manchin (W. Va.), Heidi Heitkamp (N.D.), Jon Tester (Mt.), Joe Donnelly (Ind.), Claire McCaskill (Mo.) and Sherrod Brown (Ohio), all won by Trump from anywhere from 8 points to 42 points.

Michigan’s Debbie Stabenow, Pennsylvania’s Bob Casey, Wisconsin’s Tammy Baldwin and Florida’s Bill Nelson are Dems from states that Trump won by narrow margins.

But Rove points to the fact that on Election Day, Trump was viewed favorably by 37.5% of voters and unfavorably by 58.5%, according to the RealClearPolitics average, and as of this Wednesday, his rating stood at 40.4% favorable and 53.6% unfavorable.

So what does this mean?  As I keep pointing out, Republicans will get their clocks cleaned in 2018 and 2020 unless we retain the Independents that voted for Trump.  Obviously, when you look at a 37% or 40% favorable, that means if you won with more than that, Independents, who didn’t necessarily like Trump, voted for him either because they wanted to roll the dice with something different or they loathed Hillary.

--The man who was New Jersey Gov. Chris Christie’s “fixer” at the Port Authority, the mastermind of the Bridgegate scandal, David Wildstein, avoided jail time at his sentencing and will serve, instead, three years’ probation, perform 500 hours’ community service, and pay a $10,000 fine, plus $14,314 in restitution.  [I didn’t see what the restitution is for and who it goes to.]  He has also been barred from serving in public office ever again.

Wildstein faced 27 to 33 months behind bars, but I have zero problem with how this was handled.

Wildstein and others told the jury that despite Christie’s denials, they had talked with the governor about the traffic scheme.

[In a Monmouth University Poll, Gov. Christie achieved the same record-low 15% approval rating that an earlier Quinnipiac Univ. poll came up with.  If nothing else, us New Jerseyans are consistent!]

--One of the biggest icebergs on record has broken away from Antarctica, which has been long predicted...5,800 sq. km, calved away from the Larsen C Ice Shelf.  So as it breaks up, we could have multiple Titanic-type incidents.

The iceberg is the size of Delaware, which, while a small state, makes for a big iceberg.

But, alas, we aren’t about to have a straight-to-video adventure flick about a 6,000-passenger Carnival Cruise ship being taken down, sea-rescue dogs diving in to save thousands, as the iceberg is likely to stay south for a long spell and not overwhelm Paradise Island.

Then again, if you’re taking a cruise to visit Antarctica and take some selfies, your life will be in danger and you should make appropriate changes to your will as needed.

By the way, scientists do not believe the break up has anything to do with manmade climate change.

--New York Mayor de Blasio has declared a war on rats, with the city planning to spend $32 million to combat infestations across three boroughs by attempting to take away the places they live.

By the way, the three main areas to be attacked are apparently the three most rat-ridden sectors: the Grand Concourse area of the Bronx, Manhattan’s Lower East Side and Bedford-Stuyvesant, Brooklyn.

Months ago I watched a terrific documentary that looked at the rat situation around the world, with a big segment on New York, and boy is it depressing.  It’s a virtually impossible task to win the battle.

A 2014 study by a Columbia University doctoral student estimated a rat population in Gotham of 2 million, but since then, the number of complaints filed on the city’s 311 line has been soaring.

Separately, de Blasio was excoriated anew for his trip to Hamburg during the G20, where among other things he praised that city’s police as they dealt with the protests there while the NYPD was mourning, without him, the assassination of one of their own.  He showed up for the funeral, which I watched and was incredibly moving, but I was unnerved by de Blasio’s presence and eulogy given his track record.  This is a bad guy...a bad person.

--Speaking of bad people, former New York State Assembly Speaker Sheldon Silver saw his corruption conviction overturned by a federal appeals court on Thursday, citing a recent U.S. Supreme Court decision narrowing what kind of conduct can support corruption prosecutions (the overturning of the corruption charges against former Virginia Gov. Bob McDonnell).

Silver is a dirtball and acting U.S. Attorney Joon Kim in Manhattan has vowed to retry him, but at 73, I’m guessing he will avoid another trial.

The Silver conviction was a biggie for Kim’s predecessor, Preet Bharara, who is none too pleased today.

--Finally, the Wall Street Journal in its opinion page the other day had this quote from Supreme Court Chief Justice John Roberts speaking at his son’s middle-school graduation, June 3:

From time to time in the years to come, I hope you will be treated unfairly, so that you will come to know the value of justice. I hope that you will suffer betrayal because that will teach you the importance of loyalty.  Sorry to say, but I hope you will be lonely from time to time so that you don’t take friends for granted.  I wish you bad luck, again, from time to time so that you will be conscious of the role of chance in life and understand that your success is not completely deserved and that the failure of others is not completely deserved either. And when you lose, as you will from time to time, I hope every now and then, your opponent will gloat over your failure. It is a way for you to understand the importance of sportsmanship.  I hope you’ll be ignored so that you know the importance of listening to others, and I hope you will have just enough pain to learn compassion.  Whether I wish these things or not, they’re going to happen.  And whether you benefit from them or not will depend upon your ability to see the message in your misfortunes.

---

Pray for the men and women of our armed forces...and all the fallen, especially the 15 Marines and one Navy corpsman who were killed in a tragic military plane crash in a field in Mississippi.  RIP.  Thank you for your service.

God bless America.

---

Gold $1228
Oil $46.68

Returns for the week 7/10-7/14

Dow Jones  +1.0%  [21637]
S&P 500  +1.4%  [2459]
S&P MidCap  +1.0%
Russell 2000  +0.9%
Nasdaq  +2.6%  [6312]

Returns for the period 1/1/17-7/14/17

Dow Jones  +9.5%
S&P 500  +9.9%
S&P MidCap  +6.3%
Russell 2000  +5.3%
Nasdaq  +17.3%

Bulls 50.0
Bears 18.6  [Source: Investors Intelligence]

Have a great week.

Brian Trumbore