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Week in Review

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07/29/2017

For the week 7/24-7/28

[Posted 11:30 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.  Special thanks to George R. this week.

Edition 955

Trump World...pure chaos....

What an appalling and embarrassing week for the presidency of Donald Trump.  One thing should have been foremost on his agenda, making sure that repeal and replacement of ObamaCare proceeded apace and instead, Trump continued his humiliation of Attorney General Jeff Sessions, he made up a policy on transgender individuals in the U.S. military and tweeted it, blindsiding the Pentagon, he gave an appalling speech to the Boy Scouts, his new communications director, Anthony Scaramucci, was unleashed to launch a second offensive inside the West Wing, and on Friday, North Korea launched another intercontinental ballistic missile, a test that at first appearances looks like a major advancement over the test of an ICBM on July 4, tensions escalated with Russia and China, and, oh, ObamaCare collapsed.  Trump was like an ugly ogre, just trampling on any successful message he might have put forward, to what end no one has any clue.  For crying out loud, Mr. President, take Melania and Barron for a walk, to a concert, anything....just try to be normal for one freakin’ week, can you?!

There is no way I can cover everything this time in the depth I normally do...it’s frankly overwhelming.

Some, though, tonight are breathing a little sigh of relief with the appointment of Gen. John Kelly to be the new chief of staff, replacing Reince Priebus, but I may be the only one around who wants to wait 24 hours on this one.  No doubt Kelly can instill some discipline among the White House staff, but we’ll see if the president’s behavior really changes any, beyond the first few days, if that.

As for Reince Priebus, I don’t know what he was thinking in taking the chief of staff job in the first place.  He ended up being totally emasculated.

Back to the news....

The seven-year quest to undo ObamaCare collapsed as Sen. John McCain shocked his colleagues by voting ‘no’ on a “skinny repeal,” that was not designed to be as much a final piece of legislation, but a way to get enough Republicans to vote for continuing the process and bringing it to conference with the House.

In a statement explaining his vote, McCain, who after a dramatic return this week following brain surgery, now heads back to Arizona to face treatment and recovery, with the prognosis not good, said:

“I’ve stated time and time again that one of the major failures of ObamaCare was that it was rammed through Congress by Democrats on a strict party-line basis without a single Republican vote.  We should not make the mistakes of the past.”

Two days before, McCain made his return to vote ‘yes’ to begin debate and keep the process moving, which made his vote at 1:30 a.m. Friday morning all the more surprising, especially since about 9 hours earlier, appearing alongside Sens. Lindsey Graham and Ron Johnson, McCain said he would vote ‘yes’ if he was assured the House wouldn’t just send it to the president’s desk, but would take it up in conference and broad House-Senate negotiations for a wider rollback of the law.  Two hours later, Speaker Paul Ryan issued a statement signaling he would launch negotiations, and Graham and Johnson announced their support.

But McCain kept everyone in suspense until the eleventh hour. With Sens. Susan Collins and Lisa Murkowski already planning to vote against the plan, it was up to McCain and a 50-50 final count, with Vice President Mike Pence breaking the tie.  But then came McCain’s thumbs down, 49-51, and Senate Majority Leader Mitch McConnell was humiliated.  “This is clearly a disappointing moment,” he told his colleagues.  “I think the American people are going to regret that we couldn’t find a better way forward.”

President Trump tweeted: “3 Republicans and 48 Democrats let the American people down. As I said from the beginning, let ObamaCare implode, then deal.  Watch!”

Trumpets....

Saturday, Trump said “all” agree that he has “complete power to pardon,” as he issued a tweet blasting leaks in his administration.

Sunday, new communications director Anthony Scaramucci said: “[Trump] says he doesn’t have to be pardoned.  There’s nobody around who has to be pardoned.  He was just making the statement about the power to pardon. So now all of the speculation and all of the spin is ‘he’s going to pardon himself’ and all of this other nonsense. The president does not need to pardon himself, and the reason he doesn’t have to pardon himself is because he hasn’t done anything wrong.”

--In a shocking tweetstorm early Wednesday, President Trump said “transgender individuals” should not be allowed to serve in “any capacity” in the U.S. military.

“After consultation with my Generals and military people, please be advised that the United States Government will not accept or allow...

“Transgender individuals to serve in any capacity in the U.S. Military. Our military must be focused on decisive and overwhelming...

“victory and cannot be burdened with the tremendous medical costs and disruption that transgenders in the military would entail. Thank you.”

Trump lied to us.  He had not had extensive discussions with his generals on the topic. James Mattis had given himself six months to study the issue, and there were five months to go.

Sen. McCain, chairman of the Armed Services Committee, said Trump’s announcement barring transgender individuals from the military was “unclear” and inappropriate given the ongoing Pentagon study.  “I do not believe that any new policy decision is appropriate until that study is complete and thoroughly reviewed by the Secretary of Defense, our military leadership, and the Congress.”

President Obama’s defense secretary, Ash Carter, had issued a directive last year that permitted transgender troops to serve in the military, and to undergo reassignment surgery.

So that left it up to Mattis to make a decision on whether to allow new transgender troops to enter the military. 

Trump during the campaign called himself a “real friend” of the LGBT community and accused Hillary Clinton of prioritizing “Islamic extremists” over LGBT Americans.

“Thank you to the LGBT community! I will fight for you while Hillary brings in more people that will threaten your freedoms and beliefs,” he tweeted in June 2016.

Social media blasted Ivanka Trump, who had supposedly convinced her father to moderate his stance during the campaign.  Now where was she?

--The House approved a national security-themed spending package on Thursday that includes $1.6 billion to start building the president’s proposed border wall (meeting his full request).  But this isn’t Mexico paying for it, it’s the American taxpayer.

The spending is part of a $827 billion package passed largely along party lines, 235-192, that includes spending for defense and veterans programs, legislative branch operations, and the Department of Energy.

This is just an opening salvo in the budget process, with government funding running out on Oct. 1 without an agreement.  September in Washington is going to be unreal.

Opinion....

Greg Ip / Wall Street Journal

“Six months into his presidency, Donald Trump’s detractors portray him as a do-nothing president with no big wins on issues such as health care, taxes and infrastructure.

“That may be true if the benchmark is legislation, but that is an incomplete benchmark.  To gauge a president’s impact you have to go beyond the laws he signs to the vast authority he wields through departments and agencies that apply the law.  On that score, Mr. Trump is on track to do a lot.  On finance, the internet, immigration and drugs, to name just a few issues, Trump appointees have begun nudging the economy and the country in a more conservative, pro-business direction. Whether that is good or bad is to a great extent in the eye of the beholder.  What isn’t debatable is that the imperial presidency, after expanding under Barack Obama, remains just as formidable under Mr. Trump.

“In recent weeks headlines have been dominated by the Senate’s stop-start efforts to repeal the Affordable Care Act.  Away from this drama, Mr. Trump’s Labor Department moved to undo Mr. Obama’s expansion of eligibility for overtime pay, financial regulators dropped efforts to tighten restrictions on banker pay and the Interior Department signaled it would rescind proposed rules on oil and gas fracking on federal land. On Wednesday, Mr. Trump announced transgender individuals couldn’t serve in the military, reversing an Obama-era decision.

“In Mr. Trump’s first six months, rule-making has changed dramatically. The latest update on regulatory actions released last week by the White House Office of Management and Budget contained 1,731 preliminary, proposed or final rules, down 40% from its peak under Mr. Obama in 2011 and a 17-year low, according to Sofie Miller of George Washington University’s Regulatory Studies Center.  Many actions taken under Mr. Trump are actually reversals of earlier rules.  Ms. Miller says of 66 completed actions at the Environmental Protection Agency, a third were rule withdrawals....

“Mr. Trump may be distracted with investigations into his campaign’s links to Russia or cable news, but that really doesn’t matter to regulators who have enormous freedom to act without any input from the White House....

“Of course, the fruits of Mr. Trump’s presidential actions, like Mr. Obama’s, could be swept away as soon as another president takes office.  But for the time being, don’t underestimate how much a president can shape the economy with no input at all from Congress.”

Editorial / Wall Street Journal

“Allow us to surmise what Secretary of Defense Jim Mattis and General Joe Dunford, Chairman of the Joint Chiefs of Staff, were doing prior to the President’s transgender-policy tweet Wednesday.

“We would guess they were spending most of their time shaping U.S. policy toward the enormously complex military challenge in the Middle East and toward the nuclear-bomb threat posed by North Korea’s Kim Jong Un.

“No longer. Instead, they must now pull over, park what they were doing and deal with what is charitably being called Mr. Trump’s ‘policy announcement’ on transgender people serving in the U.S. military.

“Notwithstanding that the President dedicated some 420 characters to the U.S. military’s new transgender policy, officials at the Pentagon have expressed some, er, confusion about the details of the directive, whose timing apparently took them by surprise....

“Gen. Dunford released a statement post-tweet Thursday that there would be no modifications to current policy ‘until the President’s direction has been received.’”

Charles Krauthammer / Washington Post

“Transparency, thy name is Trump, Donald Trump.  No filter, no governor, no editor lies between his impulses and his public actions.  He tweets, therefore he is.

“Ronald Reagan was so self-contained and impenetrable that his official biographer was practically driven mad trying to figure him out. Donald Trump is penetrable, hourly.

“Never more so than during his ongoing war on his own attorney general, Jeff Sessions. Trump has been privately blaming Sessions for the Russia cloud.  But rather than calling him in to either work it out or demand his resignation, Trump has engaged in a series of deliberate public humiliations.

“Day by day, he taunts Sessions, calling him ‘beleaguered’ and ‘very weak’ and attacking him for everything from not firing the acting FBI director (which Trump could do himself in an instant) to not pursuing criminal charges against Hillary Clinton.

“What makes the spectacle so excruciating is that the wounded Sessions plods on, refusing the obvious invitation to resign his dream job, the capstone of his career.  After all, he gave up his safe Senate seat to enter the service of Trump. Where does he go?

“Trump relishes such a cat-and-mouse game and, by playing it so openly, reveals a deeply repellent vindictiveness in the service of a pathological need to display dominance.

“Dominance is his game.  Doesn’t matter if you backed him, as did Chris Christie, cast out months ago.  Or if you opposed him, as did Mitt Romney, before whom Trump ostentatiously dangled the State Department, only to snatch it away, leaving Romney looking the foolish supplicant.

“Yet the Sessions affair is more than just a study in character. It carries political implications. It has caused the first crack in Trump’s base.  Not yet a split, mind you. The base is simply too solid for that.  But amid his 35 to 40 percent core support, some are peeling off, both in Congress and in the pro-Trump commentariat....

“But beyond character and beyond ideology lies the most appalling aspect of the Sessions affair – reviving the idea of prosecuting Clinton.

“In the 2016 campaign, there was nothing more disturbing than crowds chanting ‘lock her up,’ often encouraged by Trump and his surrogates.  After the election, however, Trump reconsidered, saying he would not pursue Clinton, who ‘went through a lot and suffered greatly.’

“Now under siege, Trump has jettisoned magnanimity.  Maybe she should be locked up after all.

”This is pure misdirection.  Even if every charge against Clinton were true and she got 20 years in the clink, it would change not one iota of the truth – or falsity – of the charges of collusion being made against the Trump campaign.

“Moreover, in America we don’t lock up political adversaries. They do that in Turkey.  They do that (and worse) in Russia.  Part of American greatness is that we don’t criminalize our politics.

“Last week, Trump spoke at the commissioning of the USS Gerald R. Ford aircraft carrier.  Ford was no giant. Nor did he leave a great policy legacy.  But he is justly revered for his decency and honor. His great gesture was pardoning Richard Nixon, an act for which he was excoriated at the time and which cost him the 1976 election.

“It was an act of political self-sacrifice, done for precisely the right reason.  Nixon might indeed have committed crimes. But the spectacle of an ex-president on trial and perhaps even in jail was something Ford would not allow the country to go through.

“In doing so, he vindicated the very purpose of the presidential pardon. On its face, it’s perverse. It allows one person to overturn equal justice. But the Founders understood that there are times, rare but vital, when social peace and national reconciliation require contravening ordinary justice.  Ulysses S. Grant amnestied (technically: paroled) Confederate soldiers and officers at Appomattox, even allowing them to keep a horse for the planting.

“In Trump World, the better angels are not in evidence.

“To be sure, Trump is indeed examining the pardon power.  For himself and his cronies.”

Editorial / Wall Street Journal

“On Tuesday morning Mr. Trump tweeted that Mr. Sessions ‘has taken a very weak position on Hillary Clinton crimes.’  This might play well with the red-meat crowd in Mr. Trump’s Twitterverse, but Sen. Lindsey Graham was explicit and correct in describing the legal line Mr. Trump had crossed.

“ ‘Prosecutorial decisions should be based on applying facts to the law without hint of political motivation,’ Sen. Graham said.  ‘To do otherwise is to run away from the long-standing American tradition of separating the law from politics regardless of party.’  Republican Sen. Thom Tillis also came to Mr. Sessions’ defense, citing his ‘unwavering commitment to the rule of law,’ and Sen. Richard Shelby called him ‘a man of integrity.’

“We will put the problem more bluntly.  Mr. Trump’s suggestion that his Attorney General prosecute his defeated opponent is the kind of crude political retribution one expects in Erdogan’s’ Turkey or Duterte’s Philippines.

“Mr. Sessions had no way of knowing when he accepted the AG job that the Russia probe would become the firestorm it has, or that his belated memory of brief, public meetings with the Russian ambassador in 2016 would require his recusal from supervising the probe.   He was right to step back once the facts were out, not the least to shelter the Trump Administration from any suspicion of a politicized investigation.

“If Mr. Trump wants someone to blame for the existence of Special Counsel Robert Mueller, he can pick up a mirror. That open-ended probe is the direct result of Mr. Trump’s decision to fire FBI Director James Comey months into his Russia investigation and then tweet that Mr. Comey should hope there are no Oval Office tapes of their meeting.  That threat forced Deputy Attorney General Rod Rosenstein to appoint a special counsel.

“As a candidate, Mr. Trump thought he could say anything and get away with it, and most often he did.  A sitting President is not a one-man show. He needs allies in politics and allies to govern.  Mr. Trump’s treatment of Jeff Sessions makes clear that he will desert both at peril to his Presidency.”

Wall Street

On the economic front, existing home sales for June came in at 5.52 million annualized, a little less than expected and down 1.8% over May; while June new home sales were also down slightly over forecasts at 610,000.

June durable goods orders were strong, up 6.5%, but up just 0.2% ex-transportation.  All of the figures in this series are highly volatile so one should never make too much of this month-to-month.

And then we had the first look at second-quarter GDP and it was 2.6% annualized, basically in line with expectations.  But the figure for the first quarter was revised down to 1.2% from 1.4%, so when you average the two, we’re still growing at just 2% (1.9%).

[The Atlanta Fed’s GDPNow indicator had forecast Q2 GDP at 2.8% after looking at the latest data.]

Consumer spending was up a strong 2.8% in Q2, but the price index rose just 1.0%, wages only 0.5%* (2.3% on a year-on-year basis...which you want to be 3%+), so as the officer was heard to tell the gathering crowd outside the Commerce Department, “No inflation to see here...move along, people.”

*This was part of a separate report issued by the Labor Department. The Fed’s preferred inflation gauge, the personal consumption expenditures price index (PCE) ex-food and energy, increased only 0.9 percent, the slowest rise in more than two years and following a 1.8% rate of increase in the first quarter.

As for the Federal Reserve, it met for shrimp and adult beverages on Tuesday and Wednesday and no change in interest rates, with the market now not expecting another rate hike until December, though the Fed said it would begin running down its balance sheet “relatively soon,” which everyone takes to mean starting with the September meeting.

Reducing the balance sheet, even if it’s in minuscule increments as the Fed is telegraphing, is still in essence a rate-hike, but the market is taking it in stride, as it does everything else these days, including powerful North Korean bottle rocket tests.

It’s just that if we all agree there is no inflation, at least the kind the markets, and the Fed,  look for, it is kind of curious Wall Street isn’t the least bit quizzical about raising rates in this environment, but we’ll see how long the complacency lasts.

Meanwhile, the IMF issued its latest World Economic Outlook and it revised the U.S. growth forecast from 2.3% this year to 2.1%; 2.1% as well in 2018 (down from 2.5%).

Global growth is slated to be 3.5% in 2017, 3.6% next year.

Separately, President Trump had some nice things to say about Chair Janet Yellen, as her term is set to expire, and it is not out of the realm of possibility that the president could renominate her, though Trump said in an interview this week that top financial advisor Gary Cohn is a leading candidate to replace her.  [Trump likes Yellen because she is a “low rate person,” another ignorant statement by the man who went to “great schools.”]

But now we’re moving into August, a dangerous month.  All kinds of geopolitical and monetary issues have cropped up over the years, though this year focus on the former as there is little chance of something going wrong bigly on the latter.  [I’m just talking the single month of August 2017.]

And when looking at the stock market, that Bull / Bear ratio I have highlighted since Edition No. 1 of “Week in Review” back in Feb. 1999, is once again in ‘danger territory,” at 60.2% bulls, 16.5% bears.  It can be over the 60 mark for weeks and months without any damage to the markets, but it’s a good contrarian barometer. As the folks at Investors Intelligence remind us, “the bulls ended Jan-1987 at 64.6% and then returned to 60.8% that August after further market highs. Stocks crashed in Oct-1987!”

Europe and Asia

The July flash readings for the eurozone, courtesy of IHS Markit, had the composite at 55.8 (50 being the dividing line between growth and contraction)  vs. 56.3 in June, with manufacturing at 56.8 vs. 57.4, and services at 55.4, unchanged from last month.

The manufacturing flash reading for this month in Germany was 58.3 vs. 59.6 in June, with services also ticking down to 53.5 from 54.0.

In France (remember, the flash readings only look at Germany and France, individually), manufacturing was 55.4 vs. 54.8, a 75-month high, while services was 55.9 vs. 56.9.

So slight declines generally across the board but still strong numbers.

Chris Williamson / Chief Economist, IHS Markit:

“The July fall in the PMI indicates that the eurozone’s recent growth spurt lost momentum for a second successive month, but still remained impressive.

“The survey data are historically consistent with GDP rising at a quarterly rate of 0.6%, falling slightly from a pace of over 0.7% signaled for the second quarter.

“The slowing pace of economic growth signaled by the surveys and the accompanying easing of price pressures adds to the belief that ECB policymakers will be in no rush to taper policy, and will leave all options open until the central bank sees a clearer picture of the sustainability of the upturn.”

The above-mentioned IMF World Economic Outlook revised GDP in Spain up to 3.1% for this year from 2.6%, while Italy was revised to 1.3% from 0.8%.

The IMF has the euro area as a whole now growing at 1.9% this year and 1.7% in 2018.

Speaking of Spain, its jobless rate fell to 17.2% - the lowest in eight years in the second quarter, and while this is still sky high, it’s quite an improvement from the worst levels of 28%.

In the U.K., second-quarter GDP rose 0.3% (1.7% year-over-year), compared with 0.2% in the first quarter.  It seems clear the Bank of England will keep interest rates on hold when it meets next week.  [The IMF has U.K. growth now at 1.7% for all of 2017, 1.5% for next year.]

Eurobits....

--On the Brexit front, finally, the government of British Prime Minister Theresa May has come together to speak as one voice.  Britain will seek a multiyear transitional agreement with the European Union to reduce the economic uncertainty caused by withdrawal from the EU.

Having a transition period after leaving the bloc’s regime of zero tariffs and common regulation is critical for helping firms adjust, as well as providing time for customs and the bureaucracy to prepare for the chaos that will no doubt ensue.

Finally, it hit the U.K. government in the head that it now has only 20 months before Brexit takes place, and with there being no way for any kind of wide-ranging permanent trade and economic agreement with the rest of the EU in that time frame, it needs to stress the transition period.

Not all ministers are totally on board, the immigration minister saying “Free movement of labor ends when we leave the European Union in the spring of 2019,” which hardly allows for a transition period, and so one shouldn’t conclude it is a sudden lovefest at Mrs. May’s cabinet table.

--Greece returned to the private debt market this week for the first time since 2014 (which was a special ‘one-off’...so you really should go back to 2010), raising 3bn euro at a relatively low (for Greece) interest rate of 4.6% for five-year paper.

But the 3bn is a miniscule amount given Greece’s humongous debt load (less than 1%) and the economy is still very shaky with deep political issues, while the structural reforms it has signed off on have barely begun to take hold, many of them put off until after 2018.

For now, though, there is some cause for optimism and if Europe overall continues to perform better, that will only help Greece.

--Hungary’s anti-migration prime minister, Viktor Orban, speaking at a cultural festival in Romania last Saturday, said European Union leaders and Hungarian-American billionaire George Soros are seeking a “new, mixed, Muslimized Europe.”

Orban said that while Hungary opposed taking in migrants “who could change the country’s cultural identity,” Hungary would remain a place where “Western European Christians will always be able to find security.”

Orban also noted that Hungary’s low birth rate made the country an “endangered species,” and the government is using taxes on multinational companies in Hungary to fund social policies and spur families to have more children.

Further, Orban said he would defend Poland as the European Union threatens Warsaw with sanctions over its plans to extend government control over its courts, which has led to major protests around the country.

--Italy and France are at major loggerheads on a number of fronts, especially over Libya, as Rome feels it was snubbed by French President Macron when he took over negotiations regarding a ceasefire.  I cover this in more detail down in the “Foreign Affairs” section, but Italy is bearing the brunt of the migrant surge from Libya and it is duly miffed Macron, who we’ve seen very early on is thirsting for power, is just doing his own thing without consulting the Italians.

But then Macron on Thursday suddenly announced he was nationalizing the Atlantic Shipyards in France, even though he had run for office as a pro-business, free-marketeer.

The move was designed to block Italy’s Fincantieri SpA from taking control of the 155-year-old shipbuilder.  It was a confounding decision.

As one French economist, Ludovic Subran, observed, “Macron is all about strengthening the business environment in France but his first action is more interventionism. For the private sector, this sends the wrong message.”  [Bloomberg]

But it’s really all about politics.  Macron is otherwise off and running on a major reform campaign, having announced earlier he is slashing spending on public housing, looking to cut state welfare and commence with major labor reform, but at the same time he has to protect a symbolic and historic industry.  [The National Front party of Marine Le Pen welcomed the decision.  Far-left leader Jean-Luc Melenchon also called it a “good decision.”]

Italian Finance Minister Pier Carlo Padoan said in a statement that what Macron did “is serious and incomprehensible.”

An Ifop poll published last Sunday shows Macron’s approval rating down 10 percentage points in a month to 54 percent.

Turning to Asia, the aforementioned IMF World Economic Outlook raised its 2017 forecast for Chinese GDP from 6.6% to 6.7%.

In Japan, a flash reading on manufacturing for July from Markit came in at 52.2, an 8-month low.

Separately, Japan said Friday it would impose a temporary 50% tariff on frozen beef from the U.S. and several other countries, which Tokyo said was a required response to a surge in imports, though in today’s environment, it is bound to tick off President Trump.

Under Japanese law, the added tariff, known as a safeguard, is triggered when frozen-beef imports from all countries, including those lacking free-trade deals with Japan (which includes the U.S.), increase by more than 17% from the same period a year earlier. The import volumes are reviewed each quarter.

This rule, a result of a 1994 global trade deal, would have been eliminated under the Trans-Pacific Partnership, a proposed 12-nation trade deal that included the U.S. and Japan, but President Trump pulled the U.S. out of it before it went into effect.  [Yoko Kubota / Wall Street Journal]

Street Bytes

--The market finished mixed this week, with the Dow Jones gaining 1.2% to 21830, a new high, largely on the heels of terrific earnings reports from Dow components Boeing, Caterpillar and Verizon, while the S&P 500 was unchanged and Nasdaq fell 0.2% as the tech boom may have hit a wall, with the key stocks in the sector having been priced for perfection.

Earnings have been strong and are now running somewhere between 9% and 10% for the quarter, with revenues up a solid 5%.  But you better meet your guidance or your stock is going to get hammered.

--U.S. Treasury Yields

6-mo. 1.13%  2-yr. 1.35%  10-yr. 2.29%  30-yr. 2.90%

--OPEC and leading non-OPEC producers met in St. Petersburg this week and Saudi Arabia’s energy minister Khalid al Falih said, “We are going to forcefully demand participation of all” when it came to producer nations failing to meet their share of supply cuts. The 1.8m b/d cut reached end of last year has now been extended to May 2018, but the price of crude, as measured by WTI, continues to languish under $50.  In the end, the tough talk has been meaningless.

But oil did have a terrific week, finishing at $49.79, the highest level since 5/19 ($50.53).

--On Wednesday, Amazon.com passed the $500 billion market cap level for the first time (before finishing the week at $487bn), a club that includes just three others: Apple, Alphabet and Microsoft.

Thursday, CEO Jeff Bezos became the richest man in the world, briefly, as Amazon shares soared ahead of the company’s earnings report after the market closed. Bezos’ net worth crossed $90 billion, surpassing Bill Gates’ $89 billion...Gates having held the top spot since May 2013.

But it was all short-lived, as Amazon shares began tanking Thursday afternoon after peaking at $1,083 (Bezos’ net worth $92bn at that point), closing at $1,045 prior to release of the earnings, after which the stock fell further on the news that while revenue of $38 billion, up 25%, beat the Street’s consensus, the company’s runaway spending, which had been under control, appears to be taking off again.  Earnings of 40 cents per share were way short of the $1.42 analysts’ expected.

Amazon Web Services, the cloud platform, saw its revenue shoot up 42% to $4.1bn, as it remains the big driver of growth, but AWS is also a prime source of the surge in spending, including the hiring of software engineers and sales teams to maintain its lead over rivals Google and Microsoft, let alone massive spending on new data centers (and warehouses for the retail effort).  But with higher spending comes lower profits and that’s what the Street has to now adjust to.

Amazon finished the week at $1,020.

--Meanwhile, Whole Foods, who Amazon is in the process of acquiring for $13.7 billion, reported its eighth consecutive quarter of same-store sales declines on Wednesday, as it’s no longer the only large-scale natural and organic goods grocer in the marketplace.

For the three months ending July 2, comp sales fell 1.9% compared to the year ago period, when it was down 2.6%.

Adjusted net earnings were $114m, down from $120m last year.

--Facebook Inc. reported second-quarter net income of $3.89 billion, far higher than expected, with earnings of $1.32 per share vs. the Street’s forecast of $1.14.

Revenue was $9.32 billion, also exceeding analysts’ projections, up 44.8%, with mobile ad revenue accounting for 87% of the company’s total advertising revenue of $9.16bn, up 84% from a year ago.

The number of daily active users rose 17% to 1.32 billion, with big upticks in Asia.  Just terrific numbers all around.

CEO Mark Zuckerberg said the “biggest driver of the business and determinant of how we do is going to be video.”  This requires increased spending, though, on new buildings to store digital data, develop new hardware and acquire videos it can stream to users.

Instagram is an “increasing contribution,” CFO David Wehner told Reuters, with 15 million business profiles, while Facebook has 70 million business pages.

--Alphabet Inc., parent of Google, said clicks on its ads surged 52% in the second quarter from a year earlier, but ads on smartphones and YouTube videos earn less per ad than search ads on traditional computers, so as a result, revenue per click fell 23% in the quarter, the biggest spread between these two metrics in six years, which isn’t good.  Operating margin was down to 26.4% from 27.8% a year ago.

But, second-quarter revenue rose 21% to $26.01 billion, while net profit fell 28% to $3.52 billion because of a $2.74bn fine from European regulators, though Google said it is considering an appeal.  You add it all together and the shares fell about 3% in response.

Google and Facebook dominate the digital-ad landscape, the two capturing 77% of the $12 billion increase in spending on online ads in the U.S. last year, according to eMarketer.

Google still has a problem with the YouTube platform, when it emerged earlier in the year that some brands’ ads were running alongside content that was deemed hateful or racist, which led to the likes of Wal-Mart, AT&T and JPMorgan Chase pulling their ads, which they still haven’t resumed.  Others such as GM that had pulled out, resumed their ad spending on YouTube when Google improved its technology to screen videos.

Ad sales accounted for 88% of Google’s $90.27bn in revenue in 2016, but the company believes its cloud division will one day surpass the ad segment, cloud sales growing 42% last quarter to $3.09 billion.

--Twitter shares plunged anew after the company reported zero meaningful increases in users since getting a bump from the presidential election.  Twitter’s monthly user figure of 328 million in the second quarter was the same as the first, and up just 5% from a year ago. The user figure for the U.S. actually declined 2%.

Revenue slid 5% to $574 million.

--Chinese telecom giant Huawei Technologies Co. reclaimed the top spot in China’s smartphone market, shipping 73 million during the first six months of the year, an increase of 21% from year ago levels.  Huawei, with global market share now of 9.9%, remains firmly behind rivals Apple and Samsung.

The company is also a major player in the sale of networking gear and telecom equipment, though it has been effectively banned from selling in the U.S. since 2012, Congress then issuing a report that the company could use its gear to spy on Americans, which Huawei has repeatedly denied.

--McDonald’s Corp. kicked butt again, reporting second-quarter earnings of $1.4 billion, with adjusted earnings of $1.73 a share, handily beating the Street’s expectations of $1.62.  Revenue came in at $6.05bn, also exceeding forecasts, though this was down 3.4%.

The shares soared, though, primarily because U.S. same-store sales rose a solid 3.9% over a year ago, which is excellent in today’s fast-food environment, while global comps climbed a super 6.6%, the biggest increase in more than 5 years.

Two years into a turnaround under CEO Steve Easterbrook, McDonald’s has found a way to squeeze more out of its customers, even though traffic continues to decline. Easterbrook pointed to better menu items and more customer choice, such as cooked-to-order Quarter Pounders with fresh beef and higher-end signature crafted sandwiches.  McDonald’s has also been selling sodas of all sizes for $1 since April.

--Starbucks said it returned to 5% same-store sales growth in the U.S. for its fiscal third quarter, but it missed on earnings and the coffee chain lowered its guidance for the second time this year, with the shares taking a hit in the after-market Thursday.  Overall revenue rose 8.1% from a year ago to $5.66 billion, though this was also shy of the Street.

Starbucks reiterated declining mall traffic has been hurting, and it is closing its 379 Teavana mall-based stores.

--Boeing soared to new highs on Wednesday following release of super earnings for the second quarter, despite lower revenue, with the aircraft maker raising its outlook for full-year profit.

With airlines profitable around the world, Boeing is benefiting from continuing new orders, a backlog for same approaching half a trillion dollars, according to the company.  Orders for the single-aisle 737 are booming, plus there is rising profitability with the 787 Dreamliner, that was once a drag on the bottom line and this past quarter contributed $530 million in cash.

Boeing also said it is buying back $10bn of its stock, while paying down its pension liability, which helps its tax bill.

Boeing shares rose $21 Wednesday and this single Dow component was the reason why the Dow Jones finished up 97 points on the day, while the S&P 500 was unchanged.

--Caterpillar Inc. reported a 46% jump in quarterly profit on Tuesday, the shares surging 5% in response, with total sales and revenue rising a strong 9.6% to $11.33 billion.

Sales from the key Asia Pacific region jumped 23% in the quarter, boosted by an increase in construction equipment sales in China.  Demand has been growing here after bottoming out last year.

CAT raised its full-year profit forecast from $3.75 a share to $5.

--Ford Motor Co. had a better-than-expected second quarter despite lower sales and turmoil in the CEO ranks.  The new CEO Jim Hackett called it “a solid performance” but said the company still needs to get much more fit and nimble.

“We know we’re going to be quicker and more purposeful in our decisions about where to play and how to win,” Hackett told analysts in his first earnings call as CEO.  “We’re in an incredibly competitive industry and the competition doesn’t relax because we’re thinking through a decision.”

Total revenue rose just 1 percent to $39.85 billion.  Overall vehicle sales fell 3 percent to 1.65 million vehicles, with much of the decrease due to lower sales of the Fiesta in Europe.

Ford earned $2.2bn in North American, its biggest market, but this was down 19 percent from the same period last year.

Hackett said as he continues his 100-day review of Ford’s operations, he is considering exiting some markets. General Motors abandoned Europe earlier this year, but Hackett said Ford is competitive there and plans to stay.  The automaker saw its profit there plunge to $88 million, down from $379m a year ago, and blamed disruptions from Brexit, as well as unfavorable exchange rates and the cost of introducing a new Fiesta compact, a key model in the region.

Ford made money in Asia, but lost money in South America.

--General Motors said its second-quarter profit dropped 42% from a year earlier, primarily because of losses associated with the pending sale of its European operations. But while net income fell to $1.7bn from $2.9bn, adjusted earnings per share rose and handily beat the Street.

The company has agreed to sell its Opel and Vauxhall divisions in Europe to the French automaker PSA Group by end of the year.  Aside from downsizing from its least profitable businesses, GM is looking to shift more resources into new technology, such as self-driving and electric vehicles.

GM’s revenue for the quarter was $37bn, a slight decline from year ago levels of $37.4bn.

--Shares in Southwest Airlines fell after a weak forecast for a key revenue figure in the third quarter. The airline provided more evidence that the industry’s efforts to push average fares higher are faltering.

Southwest said so-called unit revenue, the amount it gets for every seat flown one mile, was 1.5-percent higher in the second quarter than a year earlier, but for the current quarter, Southwest expects the figure to be lower, while analysts have been more bullish about future results.

--Shares in AstraZeneca plunged 16% after the pharmaceutical company reported that a cancer drug in development had not shown as much progress as expected.  The treatment for lung cancer had been expected to be a major driver of growth for the British-Swedish company, which back in 2014, fended off a $119bn takeover attempt from Pfizer, arguing that it had promising drugs in the pipeline.  The lung cancer drug back then was thought to be worth as much as $6 billion in annual sales.

AstraZeneca’s issues are compounded by the fate of anti-cholesterol pill Crestor, which was prescribed more than 20 million times in the United States in 2015, the second-highest of any brand-name drug, but last year, a generic version was approved and sales of Crestor have fallen sharply since then.

--Foxconn, one of the world’s largest electronics manufacturers, unveiled plans to build a new factory in southeastern Wisconsin, delivering a much-needed shot-in-the-arm for both President Trump and Wisconsin Republican Gov. Scott Walker.

The facility will make flat-screen displays and will be the size of several football fields, employing as many as 10,000 employees.

The Taiwanese company, also known as Hon Hai Precision, contracts with the likes of Apple for its iPhones, as well as for virtually every other large tech company, including Amazon, Google and Microsoft.

But Foxconn is also known for splashy job announcements that don’t always pan out.  For example, in 2013, it promised a new factory in central Pennsylvania that would employ 500 workers, but it never came about. The company has had similar announcements, and then failure to follow through, in India, Indonesia and Vietnam, among others.

--Median home prices in six-county Southern California continue to hit record highs, jumping 7.4% from a year ago in June to $569,000, surpassing the previous record set in May.  In Orange County, the median price was up 6.1% vs. a year ago, tying the previous record price of $695,000, according to Core Logic and the Los Angeles Times’ Andrew Khouric.

--Shares in Domino’s Pizza, which have been soaring for years, fell sharply on the company’s second-quarter earnings report.  While Domino’s bottom line was better than the Street had forecast, and revenues also beat, reports that international same-store sales were well below analysts’ estimates tanked the stock. The weak international results were in contrast to those of rival McDonald’s.

--Shares in Chipotle Mexican Grill Inc. continued to struggle following release of its second-quarter earnings.  Initially, the market liked the results, with earnings beating expectations, but Chipotle missed on same-store sales growth, and the health issues from the week before overwhelmed investor sentiment when looking at the future.  Overall, though, the stock rallied a little on the week.

Chipotle raised prices 5% in many of its markets in April, the first time in more than two years, but now many doubt the increases will stick after the latest norovirus incident at a restaurant in Virginia, which was beyond disgusting (a sick employee being the cause for more than 135 customers reporting getting sick after).

--The “failing New York Times” posted one of its strongest quarters in recent years amid robust digital growth and rising digital advertising revenue and online subscriptions that offset the continued declines in print advertising.

Digital advertising revenue in the second quarter rose 23% to $55 million.  That’s 42% of toal ad revenue, compared with 34% a year earlier.

The Times also added 93,000 net digital-only subscriptions, driving revenue in that category to $83 million, a 46% increase year-over-year.

Including all its platforms, the Times has more than 2.3 million digital-only subscribers.

Meanwhile, there continues to be lots of turmoil in the Times newsroom with ongoing layoffs and restructurings, such as in the elimination of a stand-alone copy desk.

--Greece arrested a Russian man believed to be the mastermind behind one of the oldest crypto-currency exchanges and of laundering at least $4 billion, Alexander Vinnik being taken in after a tip-off from the U.S., which will now seek to extradite him.  Vinnik was a key person behind the BTC-e virtual currency exchange.  The $4bn in cash had been laundered through a bitcoin platform since 2011 – the year BTC-e was founded. 

--The chairman of New York City’s beleaguered Metropolitan Transportation Authority announced the organization would add 2,400 workers to alleviate subway delays, with strategically placed units to respond to everything from signal malfunctions to sick customers at the core of an “emergency” plan ordered by Gov. Andrew Cuomo. The program requires an injection of $836 million of new operating and capital funds, which the MTA hopes is split between the state and the city.

But the big controversy in Gotham these days is the fact Mayor Bill de Blasio has not been amenable to calls from the state and MTA to shell out more funding, saying it has yet to spend what the city has already given it and siphoned money away from subway maintenance.

--I was pleased to see the movie “Dunkirk” did well its first weekend, the World War II epic  taking in an estimated $50.5 million in the U.S. and Canada. The picture, which cost about $150 million to make, has received strong reviews across the board and the pre-opening buzz helped.  The movie also took in $55.4 million overseas in 46 markets.

IMAX theatres, by the way, accounted for 23% of the domestic opening weekend.

Meanwhile, “Valerian and the City of a Thousand Planets,” with a budget of $180 million, was an enormous flop, debuting with just $17 million in North America. Rihanna being in it didn’t help, I guess.

--Uh oh...the overall gaming handle at the casinos in Deadwood, South Dakota, of which I am most familiar, fell 8.3% in June vs. year ago levels, as released by the South Dakota Commission on Gaming.  The thing is, hotel occupancy is edging up.  Love this place...especially Saloon No. 10.

--Speaking of beer, according to a Goldman Sachs research report, the three major beer brands, Budweiser, Miller and Coors, make up about 65% of the total market. But the report notes that millennials are helping push down sales of beer in the U.S. as they choose more wine, spirits and craft and imported beers. Goldman is looking for total beer sales in the U.S. this year to fall 0.7%, with the Big Three down 3%.  Nooooo! cried the Coors Light drinker in fake anguish.

Separately, Anheuser-Busch InBev said its best-selling brand in the U.S., Bud Light, lost a full percentage point of market share in the second quarter.  Budweiser also lost market share.

Overall sales volume for AB Inbev in the second quarter fell 1.1% from a year ago.

Foreign Affairs

North Korea: Early in the week, a new assessment by the Pentagon’s Defense Intelligence Agency (DIA), concludes North Korea will be able to field a reliable, nuclear-capable intercontinental ballistic missile as early as next year, a full two years earlier than the consensus forecast for Pyongyang’s ICBM program, though your editor emphatically told you this last year!

North Korea still has some hurdles before it can threaten the U.S., chief among them being the challenge of atmospheric “reentry” – the ability to reenter the upper atmosphere without damage to the warhead.  U.S. officials believe this will be part of the next ICBM test....

....which was today, late Friday night in Pyongyang, a rare launch time for it.  The North fired a missile that just hours later experts said was likely capable of reaching cities in the continental United States.  If this is the case, a huge development.  We are without a viable missile defense system to protect, say, Denver.

It hasn’t mattered what Washington, Seoul or Tokyo say to Lil’ Kim Jong Un, let alone the worthless U.N., or China, as Kim and his scientists just keep making progress.

With today’s missile landing in the Sea of Japan, just 80 miles from the Japanese coast, after flying for about 45 minutes on a huge flight into space, reaching an altitude of more than 3,000km (1,860 miles), according to Japan, before coming down.  South Korea’s military said the missile reached an altitude of 3,700km (2,300 miles).  Jeffrey Lewis, one of the foremost experts on North Korea and its missile technology, said the missile could have reached Los Angeles with ease, but Chicago, New York and Washington were just out of reach.  Other U.S. experts also said the missile could have hit multiple major targets in the U.S.

This is a stunning amount of progress in less than four weeks.  We must assume they have been making equally rapid progress on miniaturizing a warhead.

Japanese Prime Minister Shinzo Abe said: “As a result of their launches of ICBM-level missiles, this clearly shows the threat to our nation’s safety is severe and real.”

South Korean President Moon Jae-in said he wanted the U.N. Security Council to discuss stronger sanctions, while he ordered discussions be held with the United States on deploying additional THAAD anti-missile defense units in his country.

China urged North Korea to respect United Nations Security Council resolutions and stop all acts that could worsen tensions on the Korean peninsula.

North Korea just confirmed the test, saying the missile was meant as a “stern warning” for the United States.  The ICBM, which aimed for “maximum distance,” flew over 47 minutes and 12 seconds while reaching a maximum altitude of 3,724.9km, as put out via the state news agency.

Syria / Iraq: Fighting broke out east of Damascus between rebel and government forces on Wednesday for the first time since the two sides declared a ceasefire at the weekend.  The Bashar al-Assad regime hit the rebels with air strikes, which I’d say is a rather violent ceasefire violation.

The air strikes were reported by the reliable Syrian Observatory for Human Rights, but Russia dismissed their reports.

Michael G. Vickers / Washington Post

“Based on recent statements by several senior administration officials, President Trump’s Syria policy now focuses exclusively, in cooperation with Russia, on defeating the Islamic State.  President Barack Obama’s goal of removing Syrian dictator Bashar al-Assad from power is no longer a U.S. foreign policy objective.

“Acquiescing to Assad remaining in power, and ending support for the Syrian moderate opposition, would strengthen our adversaries, further convince allies that the Trump administration places Russian interests above our own, enable Iran to consolidate strategic gains, increase global jihadist threat to the United States – and make a stable Middle East that much harder to achieve.

“Abandoning the goal of removing Assad from power will place the United States on the side of not only the barbaric Syrian regime, which has American blood on its hands dating to the early 1980s, but also Iran, Hizbullah and Russia.  This is strategic folly....

“The Assad regime’s brutality against its majority Sunni population has been a magnet for international terrorist travel to Syria, and it will continue to serve as a rallying cry for global jihadists. If the United States is viewed as being on the side of the Assad regime, Russia and Iran, we will become even more of a target for jihadists. Elements of the moderate Syrian opposition – there are tens of thousands of them – will no doubt become radicalized by this abandonment, strengthening jihadist ranks....

“The United States faces growing challenges to the international order from Sunni global jihadists and the Iranian regime in the Middle East, from Russia in Europe and from China in East Asia.  Making common cause with Russia and Iran in Syria can only lead to the further erosion of U.S. global power.

“So a pressing question arises: Why would the Trump administration embrace a Syria policy that serves Russian and Iranian interests and harms American interests?  In time, we will learn the answer.”

Editorial / Wall Street Journal

“Does the Trump Administration have a policy in Syria worth the name? If so it isn’t obvious, and its recent decisions suggest that the White House may be willing to accommodate the Russian and Iranian goal of propping up Bashar Assad for the long term.

“Last week the Administration disclosed that it has stopped assisting the anti-Assad Sunni Arab fighters whom the CIA has trained, equipped and funded since 2013.  U.S. Special Operations Command chief Gen. Raymond Thomas told the Aspen Security Forum Friday that the decision to pull the plug was ‘based on an assessment of the nature of the program and what we are trying to accomplish and the viability of it going forward.’

“That might make sense if anyone knew what the U.S. is trying to accomplish beyond ousting Islamic State from Raqqa in northern Syria.  In that fight the Pentagon has resisted Russia and Iran by arming the Kurdish Syrian Democratic Forces and shooting down the Syria aircraft threatening them.  Mr. Trump also launched cruise missiles to punish Mr. Assad after the strongman used chemical weapons....

“(But now) the Trump Administration seems to want to find some agreement with Russia to stabilize Syria even if that means entrenching Mr. Assad and the Russian and Iranian military presence....

“Russia and Iran know what they want in Syria: a reunified country under Mr. Assad’s control. Iran will then get another Arab city – Damascus – under its dominion. It will have another base from which to undermine U.S. allies in Jordan and attack Israeli when the next war breaks out. Russia wants to show the world that its allies always win while keeping its air base and a Mediterranean port.

“None of this is in the U.S. interest....

“And if abandoning Syria to Iran is the policy, then at least own up to it in public so everyone knows the score.”

Israel: A major international crisis was averted by week’s end after Israel removed metal detectors and metal archways supporting security cameras that had to be installed following the attack by Arab gunmen on July 14 that killed two Israeli policemen.  The moves sparked violent protests and attacks last weekend that left three Israelis and at least three Palestinians dead.  Monday, the Arab League had warned Israel was “playing with fire and risking a major crisis with the Arab and Islamic world.”  Muslim religious leaders alleged Israel was trying to expand its control at the site under the guise of security – a claim Israel denied.

The 37-acre walled compound is the third holiest site of Islam, after Mecca and Medina in Saudi Arabia.  It is also the holiest site of Judaism, revered as the place where the biblical Temples once stood.

In a probable spillover, two Jordanian men were shot dead and an Israeli wounded in a violent incident at the Israeli embassy in Amman. 

Israeli’s Foreign Ministry said the incident began when two Jordanian workmen arrived at the building to replace furniture and one of the workers, later identified as a 17-year-old of Palestinian origin, attacked an Israeli security guard with a screwdriver.  The guard killed the teen and a second Jordanian was hit by gunfire and later died of his wounds, while the guard was lightly wounded.

The Netanyahu government was rocked further, the prime minister facing growing unpopularity owing to corruption allegations.

After Israel removed the remaining security measures at the entrance to the Temple Mount ahead of Friday prayers and Muslim leaders called off a boycott imposed in protest of the measures.  77% of Israelis believe the government capitulated to Palestinian demands, according to a poll by the country’s Channel 2 broadcaster.  Israel Hayom, a daily owned by U.S. billionaire Sheldon Adelson, which had been seen to be supportive of Netanyahu, blasted him in an editorial over his handling of the crisis.

Personally, I would not have given in to the Palestinians, but Prime Minister Netanyahu also acted hastily it seems in approving the metal detectors, without coordinating with his Palestinian and Jordanian counterparts, nor did he heed warnings from his own intelligence officials who said the move would incite the outrage that ensued.

Iran: Tehran announced it had launched a rocket it says can deliver a satellite into space, a clear violation of a U.N. Security Council resolution as well as the spirit of the Iran nuclear deal, the U.S. State Department said in response.  “We consider that to be continued ballistic missile development,” State Department spokeswoman Heather Nauert said in a briefing.

Well it clearly is part of Iran’s ballistic missile program, and this particular move makes it easier for President Trump to pull out of the nuclear deal, but as I noted from the day it was signed, it’s already too late.  He would never get Germany, France and Britain to go along, let alone Russia and China, the other signatories.

Libya: Prime Minister Fayez al-Serraj and the divided country’s eastern commander Khalifa Haftar committed to a conditional ceasefire and to work towards holding elections next spring in talks chaired by French President Emmanuel Macron on Tuesday; Macron wanting France to play a bigger role in coaxing Libya’s factions to end the turmoil that is allowing terrorists to gain a foothold, while migrant smugglers flourish in the absence of a strong central government

Haftar had declared victory in the east after defeating rival groups in the battle for Benghazi, Libya’s second city.  But he has been refusing to recognize the central government and with backing from Egypt and the UAE, Haftar has been gaining ground.

Serraj is backed by Haftar’s rivals, but he faces resistance from many sides in Tripoli.

But as alluded to above, Italy is upset at France’s efforts, because Italy had previously taken the lead in efforts to bring peace here, while bearing the brunt in the surge of African migrants.  Italy wants to be involved with France and Macron seems intent on going it alone.

Pakistan: As I go to post, this strategic nation is in a state of political turmoil after Pakistan’s Supreme Court disqualified Prime Minister Nawaz Sharif from holding public office following an investigation into corruption allegations.

The ruling came after a probe into his family’s wealth following the 2015 Panama Papers dump that linked Sharif’s children to offshore companies.

Sharif has consistently denied any wrongdoing.  The five-man court ruled unanimously.  Sharif then resigned.  He had been serving as prime minister a record third time, so Pakistan still has never had a prime minister complete a full term.  The last time Sharif was in charge, he was toppled in a bloodless coup in October 1999.

No successor has been named as yet.

Separately, on Monday a suicide bomber killed at least 25 people, many of them police, in the eastern city of Lahore, Pakistan’s second largest.  The Pakistani Taliban claimed responsibility.

Afghanistan: Violence was rampant across the country this week, with a Taliban attack on an Afghan army base in southern Kandahar province killing at least 26 soldiers, according to the Defense Ministry, as the insurgents step up pressure on government forces. Kandahar shares a border with Pakistan, which adds to the security concerns.

Two days earlier, a Taliban suicide car bomb targeted a minibus carrying government employees in western Kabul, killing 31.

Last weekend we learned a U.S. airstrike mistakenly hit an Afghan police unit in southern Helmand province, killing 16 police officers, the Pentagon confirming the errant strike near the town of Gereshk, where U.S. and Afghan forces have been engaging the Taliban. The same day, Saturday, more than 40 Afghan government-backed militiamen were killed in a Taliban raid that captured a district in the remote northeastern province of Badakhshan.

Russia: With the Senate, 98-2, and House, 419-3, having voted overwhelmingly for tougher sanctions on Russia, the White House expressed trepidations, saying it could hinder its diplomatic relationship with Russia.  The administration strongly hinted the president would veto the legislation, but then it would easily be overridden.

So then the story emerged on Thursday that the White House wanted a ‘tougher’ sanctions bill (the legislation also containing increased sanctions against North Korea and Iran), so it could veto it for that reason, but not one person in Congress believes this angle because President Trump has wanted to ‘lessen,’ not ‘tighten; sanctions.  It all seemed a ruse to get Congress, somehow, to hold off while the White House bought time for.....well, who knows what.

The Kremlin threatened to retaliate against new sanctions passed by the U.S. House, saying they made it all but impossible to improve relations, as stated by Deputy Foreign Minister Sergei Ryabkov, according to the Interfax news service.

Konstantin Kosachyov, chairman of the international affairs committee in Russia’s upper house of parliament, said on Facebook, Russia should prepare a response to the sanctions that’s “painful for the Americans.” Kremlin spokesman Dmitry Peskov told reporters Putin will decide on a response if the bill becomes law. [Bloomberg]

The Senate has questions about the bill and may hold off until September because they want to examine North Korea sanctions added to the bill by the House.

But this same legislation has European Union officials upset because the sanctions would let President Trump penalize European companies working on the development, maintenance, modernization or repair of energy export pipelines.

Austrian Chancellor Christian Kern slammed the House bill as an unacceptable “mixing of political interests with economic ones, at the cost of European jobs.”

So the above was all prior to today, when Russia ordered the United States to reduce its diplomatic and technical staff at its embassy in Moscow and other cities in the country by September in response to the tougher sanctions.  Moscow also warned against any retaliatory moves Washington may now take.

Late tonight, Trump said he would sign the sanctions bill.

On a totally different potential flashpoint, the Balkans....

Walter Russell Mead / Wall Street Journal

“At a recent closed think-tank meeting, a well-informed German official was asked what problem in Europe caused him the most worry. His answer came without hesitation: the Western Balkans, where a new crisis is brewing as Turkey and Russia stir the pot.

“In his worst-case scenario, Russia and Turkey would encourage their proxies in the Balkans, Serbia and Albania, to help them redraw the region’s borders. The Serbian government, with Russian support, could annex large portions of Bosnia populated by ethnic Serbs. Turkish support could help Albania pull off a similar maneuver, not only in heavily Albanian Kosovo, but also in Macedonia, where much of the large Albanian minority would like to reunite with the motherland....

“Turkey and Russia have been brought together by their opposition to Germany and the European Union.  Russians don’t just hate NATO; they see the EU as a barrier against Russia’s historical great-power role in European affairs. Turkey has also turned against the EU and is looking for leverage against Germany and its fellow members.  For Russia and Turkey, the ability to cause Europe trouble in the Balkans with relatively little risk and cost is too good to pass up....

“For the EU, a new round of Balkan chaos would be a disaster: refugees, crime, radicalization among Balkan Muslims, greater opportunities for hostile powers to gain influence at EU expense.”

But the EU wants the U.S. to be part of a solution, and this is hardly happening with Donald Trump president.

China: Ahead of the crucial ruling Communist Party Congress this fall, President Xi Jinping, who will be cementing his power further at the gathering, said the fight against corruption must continue, or the party will lose its ability to retain power, Xi told a meeting of regional leaders this week.

“We will forever be on the path of comprehensive, strict governance of the party.  One political party, one political authority, its prospects and fate rest on the support of the people,” Xi said, according to official state news agency Xinhua.

Meanwhile, a U.S. Navy reconnaissance plane was forced to take evasive action to avoid a possible mid-air collision with a Chinese fighter jet that had flown to within 300 feet of the American aircraft over the East China Sea, just the latest in a series of incidents between the two in the region.  The U.S. plane was flying in international airspace.

China also warned India that Beijing would protect its sovereignty “at all costs” amid a month-long border dispute.  A week earlier, Chinese troops took part in a live-fire military exercise on the Tibetan plateau, at a location not far from where Chinese and Indian troops are locked in a stand-off sparked by a road project in a disputed border area at the tri-junction with Bhutan.

Venezuela: The death toll in anti-government protests reached 106 on Thursday. But a major problem here is that the opposition is largely fractured, with no cohesive leadership.  A coup should have taken place long ago.

Editorial / The Economist

“Those who want to save Venezuela have limited influence, but they are not helpless. The opposition, a variegated alliance long on personal ambition and short on cohesion, needs to do far more to become a credible alternative government. That includes agreeing on a single leader. Some in the opposition think all that is needed to trigger the regime’s collapse is to ramp up the protests. That looks fanciful.  (President Nicolas) Maduro can still count on the army, with which he co-governs.  In Venezuela’s command economy he controls such money as there is, and retains the backing of a quarter of Venezuelans – enough to put his own people on the streets. And he has the advice of Cuba’s security officials, who are experts in selective repression....

“Already there are signs of anarchy, with radicals on both sides slipping loose from their leaders’ control.  Rather than a second Cuba or a tropical China, chavista Venezuela, with its corruption, gangs and ineptitude, risks becoming something much worse.”

Sunday, there is an election for a legislative superbody that is Maduro’s attempt to create a dictatorship. It will write a new constitution and supersede the existing National Assembly, which currently has a majority from the opposition.  Colombia is among the nations who have said they will not recognize the result.

Random Musings

--Presidential tracking polls....

Gallup has President Trump with a 39% approval rating; Rasmussen 41% (the lowest yet in this one).

--David Ignatius / Washington Post

“Here’s a road map of three dangers ahead (for the CIA), drawn from conversations with a half-dozen CIA veterans who served in Republican and Democratic administrations:

“Intelligence today is politicized, perhaps more than at any time in our history.  President Trump outrageously likened intelligence professionals to Nazis and regularly describes intelligence estimates of the Russian threat as ‘fake news’ or a ‘witch hunt.’ Senior ex-spooks, not surprisingly, have fought back. In the process, the CIA is becoming a political football.

“James R. Clapper Jr. and John Brennan, former directors of national intelligence and the CIA, respectively, took some roundhouse swings in Aspen, calling Trump’s remarks ‘insulting,’ ‘completely inappropriate’ and ‘not...honorable.’ They’re right. The problem is that the millions of Americans who fantasize about a supposed ‘deep state’ become more convinced that this conspiracy exists when they hear former intel chiefs attack the president.

“The Trump administration has failed to make clear strategic decisions. Trump’s policies on Syria, Russia, Iran and China are a hodgepodge of conflicting goals and unresolved issues.  Meanwhile, the president keeps pushing the agency to come up with options.

“Historically, this is where the CIA gets in trouble.  Presidents who want ‘wins’ but lack a systematic diplomatic strategy have used covert action to topple governments or wage undeclared wars. When the secret campaigns backfire and public support disappears, the agency is left holding the bag....

“Finally, and most important, the administration (Director) Pompeo serves is in disarray. The president is trying to bad-mouth his attorney general into resigning, and he may plan to fire special counsel Robert S. Mueller III next. The country needs steadiness and independence from the CIA.  Pompeo should think about institutional and constitutional obligations, as well as presidential ones. He knows where the accelerator is, but he should also look for the brake.”

--Some of us who watch a lot of CNBC, or Fox News and Fox Business, feel like we know White House communications director Anthony Scaramucci pretty well after all the air time he has received.  In 2013, the New York Times wrote of the former Harvard Law School classmate of Barack Obama’s:

“In an industry known for reclusive traders and math geeks,” Scaramucci is “Wall Street’s first hedge fund impresario, a P.T. Barnum in a Ferragamo tie. In a gilded industry that has preferred to stay below the radar, Mr. Scaramucci embraces the white-hot center of it all.”

After seven years at Goldman Sachs, in 2005 he started SkyBridge Capital as an incubator for hedge fund managers, while opening up to investors with as little as $25,000, when many top hedge funds required a $10 million investment.

He has also been a longtime supporter of Republican candidates, supporting Mitt Romney in the 2012 election, and then Gov. Scott Walker and former Gov. Jeb Bush in this last one.

Upon taking his new post, Scaramucci pledged “to take drastic” action to stop leaks coming out of the White House.   “If the leads don’t stop, I’m going to pare down the staff because it’s just not right,” he said.  “I think it’s not fair to the president, it’s actually not fair to America or the people in the government.”

Scaramucci also said he would like to reset White House relations with the media, creating “positive mojo” between the White House and the press.

“It’s a fresh start for everybody.  I certainly want to engage the mainstream media.  I expect that they’re going to want to hold me and the White House accountable, but we’re going to want to sort of hold them accountable too,” Scaramucci told Chris Wallace on “Fox News Sunday.”

“I’m hoping to create an era of a new good feeling with the media,” he added.

But in light of everything that has transpired just the last two days, I can’t help but note the following, written on Monday.

Robert George / New York Daily News

“Hi, Anthony...bye, Anthony?

“You heard it here first.

“Don’t get too attached to Anthony Scaramucci as White House communications director. The clock may already be ticking on his tenure – in more ways than one.  Oh, sure there’s already a published report that President Trump is considering pushing Chief of Staff Reince Priebus aside and replacing him with the man they call ‘The Mooch.’

“Priebus...has been in the Trump doghouse for some time; he is said to have been opposed to the hiring of Scaramucci – who is already reporting directly to Trump, not Priebus.  So, a Scaramucci promotion wouldn’t come as too much of a surprise.

“But could he find himself kicked out almost as quickly as he’s kicked upstairs?

“Just days into the communications director job, Scaramucci has already committed a communications cardinal sin: He’s a little too happy being in the spotlight himself. Worse (especially in Trump World): He’s better looking than his boss and may enjoy being on TV even more than his boss does....

“Lest you think he’s just a pretty face, Scaramucci reminds you, over and over again, that he’s got smarts.

“Interviewed on CNN Sunday, he was boasting that, ‘I went to Harvard Law School,’ and, moments later that he got an A- in constitutional law from top prof Lawrence Tribe....

“Scaramucci also seems to forget who’s the subordinate in this new relationship. In his Sunday CNN interview, trying to be complimentary, the Mooch said Trump ‘likes speaking from the heart, telling you what he likes and dislikes. He’s the type of coach I worked very well with in high school football.’

“Here’s the problem: If Trump is the ‘coach,’ that means that Scaramucci and the other staffers are the talent.  Can you imagine Donald Trump imagining anyone else being the quarterback?.....

“New Yorkers have seen a version of this before. In 1996, former Mayor Rudy Giuliani famously got rid of a talented superstar police commissioner named Bill Bratton – who, yes, committed the ultimate sin: He got on the cover of TIME magazine and was credited with bringing crime down – something the mayor was more than happy to take credit for by his lonesome.

“If Giuliani couldn’t stand being eclipsed by Bratton, how long before Trump Town kicks the flamboyant Scaramucci to the curb?

“Hunch: Likely shorter than the six months Sean Spicer got.”

--The Boy Scouts’ chief executive, Michael Surbaugh, apologized Thursday for President Trump’s politically charged remarks at the Scouts’ 2017 National Jamboree earlier in the week.

“I want to extend my sincere apologies to those in our Scouting family who were offended by the political rhetoric that was inserted into the jamboree.  That was never our intent...We sincerely regret that politics was inserted into the Scouting program.”

Asked whether the president owed the Boy Scouts an apology, White House press secretary Sarah Huckabee Sanders said she witnessed an enthusiastic audience for Trump.

I watched the entire speech, appalled.  This was a group of 12-18-year-olds.  But Trump gave his normal stump speech, criticizing the press, former President Obama, Hillary and ObamaCare.  It was embarrassing.

I read some of the speeches given by past presidents and they all stuck to the themes of being a good citizen, and what it was to be a Scout, and learning to love your country and such.

The next day in an interview with the Wall Street Journal, Trump said he got a warm reception from the crowd. 

“That was a standing ovation from the time I walked out to the time I left, and for five minutes after I had already gone,” he said.  Oh brother.

John McLaughlin (former deputing director of the CIA under George W. Bush):

“President Trump’s Boy Scout Jamboree speech gave me the creeps, and I don’t think I’m alone.

“Part of this was an emotional reaction to watching a captive audience of 40,000 young people, children really, who’d been told to be polite and welcoming, and who were excited because the most powerful man in the world’s most powerful country was coming to talk to them.  A moment pregnant with possibilities – a potential teaching moment.  Then the jarring spectacle of the kids cheering and applauding as Trump blasted through a speech full of derision toward others, self-obsession, political spin, and incoherent rambling about cocktail society and high finance in New York city.  I suspect it was the excitement of the occasion that spurred the applause rather than actual endorsement of what Trump said.  Still, it evoked the sort of cheering for obvious nonsense – or worse – that we’ve witnessed in dictatorships around the world.

“The kids were being used. If my child had been there, I’d be mad as hell....

“The real power of the American presidency lies in its ability to inspire – especially young people who are in awe of the office, its majesty, history and symbolism. There was no inspiration here, only mockery, spin and manipulation....

“Implicit in Trump’s ‘fake news’ message is that only he can be trusted to tell the truth. This is the sort of subtext you often see from authoritarian leaders, as in the constant repetition of a theme – until the populace becomes numb, no longer objects, and begins to accept it.

“Are we getting to that point with ‘fake news’?  Did he plant the seed with these children?

“And when many of them go on a school trip to Washington, will they be looking for what Trump calls the ‘swamp,’ the ‘cesspool’ or the ‘sewer’ in the town that bears our first president’s name?  How many of the best and brightest would want to work there or devote their lives to public service?

“Another tenet of a healthy democracy is a degree of respect and acceptance between government and opposition, no matter how deep their policy differences.  In immature or faltering democracies, the winners typically punish and seek to crush their opponents.  How else to interpret Trump’s criticism of the Justice Department on the morning of his Boy Scout speech for not pursuing ‘crimes’ he ascribes to former secretary of state Hillary Clinton?  It is seemingly not enough to have won the presidency fair and square – he reveals a need to vanquish his opponent.  A great lesson for budding citizens and future voters.

“To a degree, we adults have become accustomed to his sort of behavior – ‘Let Trump be Trump,’ his supporters say. This was the first time we’ve seen him be Trump in front of a captive audience of children.  So it restores a bit of the shock many felt at some of his early campaign antics and to which many have become inured.

“In this sense, Trump may have done us a favor by making all of this new again – reminding us of what is neither presidential nor acceptable in the nation’s leader.”

--Congressman Steve Scalise was released from the hospital on Tuesday and is now home undergoing intensive rehabilitation, according to the medical center where he was being treated. It had been six weeks since Scalise was critically wounded in the congressional shooting at a softball practice. Because of where the bullet entered, a lot of us were concerned he wouldn’t make it.

--Hillary Clinton’s upcoming book will double down on the Russia issue and James Comey’s involvement in her election defeat.  One longtime ally told The Hill, “She really believes that’s why she lost, and she wants to explain why in no uncertain terms....I think a lot of people are going to be really surprised by how much she reveals.”  The book, “What Happened,” is due out in September.

So she’ll be all over the airwaves that month, and her story will be counter to the message Democratic Party leadership wants to put forward these days.  As Senate Minority Leader Chuck Schumer (N.Y.) told the Washington Post this week: “When you lose to somebody who has 40 percent popularity, you don’t blame other things – Comey, Russia – you blame yourself.  So what did we do wrong?  People didn’t know what we stood for, just that we were against Trump. And still believe that.”

--In a poll by Reuters/Ipsos following President Trump’s announcement that he will ban transgender personnel from the armed forces, 58 percent of adults agreed with the statement, “Transgender people should be allowed to serve in the military.”  27% said they should not, while the rest answered “don’t know.”  Among Republicans, 32% said they should, 49% said they should not.

Personally, I’ll support whatever Gen. Mattis concludes. 

--In succession this week....

The parents of Charlie Gard ended their legal battle to give the terminally ill British baby further treatment.  “For Charlie it is too late. The damage has been done,” Grant Armstrong, a lawyer representing the parents, said on Monday.  The parents had sought to send him to the United States to undergo experimental therapy.  Britain’s courts, backed by the European Court of Human Rights, refused permission, saying it would prolong his suffering.

Thursday, Charlie was moved to a hospice to spend his final hours there before a ventilator that keeps him alive is turned off.

Charlie died today.

--We note the passing of longtime Washington, D.C. local news anchorman Jim Vance, who anchored for NBC Washington for more than four decades.  He was 75 and had recently announced he was battling cancer.

I worked in Washington briefly back in 1987 and as an NBC guy, quickly got used to Vance, who was much like New York’s long-time NBC 4 anchor Chuck Scarborough, just class.  I later traveled a lot on business and pleasure to D.C. and never failed to catch the guy.  He first became co-anchor of NBC Washington’s daily newscasts in 1972.  RIP.

---

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

God bless America.

---

Gold $1275
Oil $49.79

Returns for the week 7/24-7/28

Dow Jones +1.2%  [21830]
S&P 500  unch  [2472]
S&P MidCap  -0.7%
Russell 2000  -0.5%
Nasdaq  -0.2%  [6374]

Returns for the period 1/1/17-7/28/17

Dow Jones  +10.5%
S&P 500  +10.4%
S&P MidCap  +6.1%
Russell 2000  +5.3%
Nasdaq  +18.4%

Bulls 60.2
Bears 16.5 [Source: Investors Intelligence]

Have a great week.

Brian Trumbore



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Week in Review

07/29/2017

For the week 7/24-7/28

[Posted 11:30 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.  Special thanks to George R. this week.

Edition 955

Trump World...pure chaos....

What an appalling and embarrassing week for the presidency of Donald Trump.  One thing should have been foremost on his agenda, making sure that repeal and replacement of ObamaCare proceeded apace and instead, Trump continued his humiliation of Attorney General Jeff Sessions, he made up a policy on transgender individuals in the U.S. military and tweeted it, blindsiding the Pentagon, he gave an appalling speech to the Boy Scouts, his new communications director, Anthony Scaramucci, was unleashed to launch a second offensive inside the West Wing, and on Friday, North Korea launched another intercontinental ballistic missile, a test that at first appearances looks like a major advancement over the test of an ICBM on July 4, tensions escalated with Russia and China, and, oh, ObamaCare collapsed.  Trump was like an ugly ogre, just trampling on any successful message he might have put forward, to what end no one has any clue.  For crying out loud, Mr. President, take Melania and Barron for a walk, to a concert, anything....just try to be normal for one freakin’ week, can you?!

There is no way I can cover everything this time in the depth I normally do...it’s frankly overwhelming.

Some, though, tonight are breathing a little sigh of relief with the appointment of Gen. John Kelly to be the new chief of staff, replacing Reince Priebus, but I may be the only one around who wants to wait 24 hours on this one.  No doubt Kelly can instill some discipline among the White House staff, but we’ll see if the president’s behavior really changes any, beyond the first few days, if that.

As for Reince Priebus, I don’t know what he was thinking in taking the chief of staff job in the first place.  He ended up being totally emasculated.

Back to the news....

The seven-year quest to undo ObamaCare collapsed as Sen. John McCain shocked his colleagues by voting ‘no’ on a “skinny repeal,” that was not designed to be as much a final piece of legislation, but a way to get enough Republicans to vote for continuing the process and bringing it to conference with the House.

In a statement explaining his vote, McCain, who after a dramatic return this week following brain surgery, now heads back to Arizona to face treatment and recovery, with the prognosis not good, said:

“I’ve stated time and time again that one of the major failures of ObamaCare was that it was rammed through Congress by Democrats on a strict party-line basis without a single Republican vote.  We should not make the mistakes of the past.”

Two days before, McCain made his return to vote ‘yes’ to begin debate and keep the process moving, which made his vote at 1:30 a.m. Friday morning all the more surprising, especially since about 9 hours earlier, appearing alongside Sens. Lindsey Graham and Ron Johnson, McCain said he would vote ‘yes’ if he was assured the House wouldn’t just send it to the president’s desk, but would take it up in conference and broad House-Senate negotiations for a wider rollback of the law.  Two hours later, Speaker Paul Ryan issued a statement signaling he would launch negotiations, and Graham and Johnson announced their support.

But McCain kept everyone in suspense until the eleventh hour. With Sens. Susan Collins and Lisa Murkowski already planning to vote against the plan, it was up to McCain and a 50-50 final count, with Vice President Mike Pence breaking the tie.  But then came McCain’s thumbs down, 49-51, and Senate Majority Leader Mitch McConnell was humiliated.  “This is clearly a disappointing moment,” he told his colleagues.  “I think the American people are going to regret that we couldn’t find a better way forward.”

President Trump tweeted: “3 Republicans and 48 Democrats let the American people down. As I said from the beginning, let ObamaCare implode, then deal.  Watch!”

Trumpets....

Saturday, Trump said “all” agree that he has “complete power to pardon,” as he issued a tweet blasting leaks in his administration.

Sunday, new communications director Anthony Scaramucci said: “[Trump] says he doesn’t have to be pardoned.  There’s nobody around who has to be pardoned.  He was just making the statement about the power to pardon. So now all of the speculation and all of the spin is ‘he’s going to pardon himself’ and all of this other nonsense. The president does not need to pardon himself, and the reason he doesn’t have to pardon himself is because he hasn’t done anything wrong.”

--In a shocking tweetstorm early Wednesday, President Trump said “transgender individuals” should not be allowed to serve in “any capacity” in the U.S. military.

“After consultation with my Generals and military people, please be advised that the United States Government will not accept or allow...

“Transgender individuals to serve in any capacity in the U.S. Military. Our military must be focused on decisive and overwhelming...

“victory and cannot be burdened with the tremendous medical costs and disruption that transgenders in the military would entail. Thank you.”

Trump lied to us.  He had not had extensive discussions with his generals on the topic. James Mattis had given himself six months to study the issue, and there were five months to go.

Sen. McCain, chairman of the Armed Services Committee, said Trump’s announcement barring transgender individuals from the military was “unclear” and inappropriate given the ongoing Pentagon study.  “I do not believe that any new policy decision is appropriate until that study is complete and thoroughly reviewed by the Secretary of Defense, our military leadership, and the Congress.”

President Obama’s defense secretary, Ash Carter, had issued a directive last year that permitted transgender troops to serve in the military, and to undergo reassignment surgery.

So that left it up to Mattis to make a decision on whether to allow new transgender troops to enter the military. 

Trump during the campaign called himself a “real friend” of the LGBT community and accused Hillary Clinton of prioritizing “Islamic extremists” over LGBT Americans.

“Thank you to the LGBT community! I will fight for you while Hillary brings in more people that will threaten your freedoms and beliefs,” he tweeted in June 2016.

Social media blasted Ivanka Trump, who had supposedly convinced her father to moderate his stance during the campaign.  Now where was she?

--The House approved a national security-themed spending package on Thursday that includes $1.6 billion to start building the president’s proposed border wall (meeting his full request).  But this isn’t Mexico paying for it, it’s the American taxpayer.

The spending is part of a $827 billion package passed largely along party lines, 235-192, that includes spending for defense and veterans programs, legislative branch operations, and the Department of Energy.

This is just an opening salvo in the budget process, with government funding running out on Oct. 1 without an agreement.  September in Washington is going to be unreal.

Opinion....

Greg Ip / Wall Street Journal

“Six months into his presidency, Donald Trump’s detractors portray him as a do-nothing president with no big wins on issues such as health care, taxes and infrastructure.

“That may be true if the benchmark is legislation, but that is an incomplete benchmark.  To gauge a president’s impact you have to go beyond the laws he signs to the vast authority he wields through departments and agencies that apply the law.  On that score, Mr. Trump is on track to do a lot.  On finance, the internet, immigration and drugs, to name just a few issues, Trump appointees have begun nudging the economy and the country in a more conservative, pro-business direction. Whether that is good or bad is to a great extent in the eye of the beholder.  What isn’t debatable is that the imperial presidency, after expanding under Barack Obama, remains just as formidable under Mr. Trump.

“In recent weeks headlines have been dominated by the Senate’s stop-start efforts to repeal the Affordable Care Act.  Away from this drama, Mr. Trump’s Labor Department moved to undo Mr. Obama’s expansion of eligibility for overtime pay, financial regulators dropped efforts to tighten restrictions on banker pay and the Interior Department signaled it would rescind proposed rules on oil and gas fracking on federal land. On Wednesday, Mr. Trump announced transgender individuals couldn’t serve in the military, reversing an Obama-era decision.

“In Mr. Trump’s first six months, rule-making has changed dramatically. The latest update on regulatory actions released last week by the White House Office of Management and Budget contained 1,731 preliminary, proposed or final rules, down 40% from its peak under Mr. Obama in 2011 and a 17-year low, according to Sofie Miller of George Washington University’s Regulatory Studies Center.  Many actions taken under Mr. Trump are actually reversals of earlier rules.  Ms. Miller says of 66 completed actions at the Environmental Protection Agency, a third were rule withdrawals....

“Mr. Trump may be distracted with investigations into his campaign’s links to Russia or cable news, but that really doesn’t matter to regulators who have enormous freedom to act without any input from the White House....

“Of course, the fruits of Mr. Trump’s presidential actions, like Mr. Obama’s, could be swept away as soon as another president takes office.  But for the time being, don’t underestimate how much a president can shape the economy with no input at all from Congress.”

Editorial / Wall Street Journal

“Allow us to surmise what Secretary of Defense Jim Mattis and General Joe Dunford, Chairman of the Joint Chiefs of Staff, were doing prior to the President’s transgender-policy tweet Wednesday.

“We would guess they were spending most of their time shaping U.S. policy toward the enormously complex military challenge in the Middle East and toward the nuclear-bomb threat posed by North Korea’s Kim Jong Un.

“No longer. Instead, they must now pull over, park what they were doing and deal with what is charitably being called Mr. Trump’s ‘policy announcement’ on transgender people serving in the U.S. military.

“Notwithstanding that the President dedicated some 420 characters to the U.S. military’s new transgender policy, officials at the Pentagon have expressed some, er, confusion about the details of the directive, whose timing apparently took them by surprise....

“Gen. Dunford released a statement post-tweet Thursday that there would be no modifications to current policy ‘until the President’s direction has been received.’”

Charles Krauthammer / Washington Post

“Transparency, thy name is Trump, Donald Trump.  No filter, no governor, no editor lies between his impulses and his public actions.  He tweets, therefore he is.

“Ronald Reagan was so self-contained and impenetrable that his official biographer was practically driven mad trying to figure him out. Donald Trump is penetrable, hourly.

“Never more so than during his ongoing war on his own attorney general, Jeff Sessions. Trump has been privately blaming Sessions for the Russia cloud.  But rather than calling him in to either work it out or demand his resignation, Trump has engaged in a series of deliberate public humiliations.

“Day by day, he taunts Sessions, calling him ‘beleaguered’ and ‘very weak’ and attacking him for everything from not firing the acting FBI director (which Trump could do himself in an instant) to not pursuing criminal charges against Hillary Clinton.

“What makes the spectacle so excruciating is that the wounded Sessions plods on, refusing the obvious invitation to resign his dream job, the capstone of his career.  After all, he gave up his safe Senate seat to enter the service of Trump. Where does he go?

“Trump relishes such a cat-and-mouse game and, by playing it so openly, reveals a deeply repellent vindictiveness in the service of a pathological need to display dominance.

“Dominance is his game.  Doesn’t matter if you backed him, as did Chris Christie, cast out months ago.  Or if you opposed him, as did Mitt Romney, before whom Trump ostentatiously dangled the State Department, only to snatch it away, leaving Romney looking the foolish supplicant.

“Yet the Sessions affair is more than just a study in character. It carries political implications. It has caused the first crack in Trump’s base.  Not yet a split, mind you. The base is simply too solid for that.  But amid his 35 to 40 percent core support, some are peeling off, both in Congress and in the pro-Trump commentariat....

“But beyond character and beyond ideology lies the most appalling aspect of the Sessions affair – reviving the idea of prosecuting Clinton.

“In the 2016 campaign, there was nothing more disturbing than crowds chanting ‘lock her up,’ often encouraged by Trump and his surrogates.  After the election, however, Trump reconsidered, saying he would not pursue Clinton, who ‘went through a lot and suffered greatly.’

“Now under siege, Trump has jettisoned magnanimity.  Maybe she should be locked up after all.

”This is pure misdirection.  Even if every charge against Clinton were true and she got 20 years in the clink, it would change not one iota of the truth – or falsity – of the charges of collusion being made against the Trump campaign.

“Moreover, in America we don’t lock up political adversaries. They do that in Turkey.  They do that (and worse) in Russia.  Part of American greatness is that we don’t criminalize our politics.

“Last week, Trump spoke at the commissioning of the USS Gerald R. Ford aircraft carrier.  Ford was no giant. Nor did he leave a great policy legacy.  But he is justly revered for his decency and honor. His great gesture was pardoning Richard Nixon, an act for which he was excoriated at the time and which cost him the 1976 election.

“It was an act of political self-sacrifice, done for precisely the right reason.  Nixon might indeed have committed crimes. But the spectacle of an ex-president on trial and perhaps even in jail was something Ford would not allow the country to go through.

“In doing so, he vindicated the very purpose of the presidential pardon. On its face, it’s perverse. It allows one person to overturn equal justice. But the Founders understood that there are times, rare but vital, when social peace and national reconciliation require contravening ordinary justice.  Ulysses S. Grant amnestied (technically: paroled) Confederate soldiers and officers at Appomattox, even allowing them to keep a horse for the planting.

“In Trump World, the better angels are not in evidence.

“To be sure, Trump is indeed examining the pardon power.  For himself and his cronies.”

Editorial / Wall Street Journal

“On Tuesday morning Mr. Trump tweeted that Mr. Sessions ‘has taken a very weak position on Hillary Clinton crimes.’  This might play well with the red-meat crowd in Mr. Trump’s Twitterverse, but Sen. Lindsey Graham was explicit and correct in describing the legal line Mr. Trump had crossed.

“ ‘Prosecutorial decisions should be based on applying facts to the law without hint of political motivation,’ Sen. Graham said.  ‘To do otherwise is to run away from the long-standing American tradition of separating the law from politics regardless of party.’  Republican Sen. Thom Tillis also came to Mr. Sessions’ defense, citing his ‘unwavering commitment to the rule of law,’ and Sen. Richard Shelby called him ‘a man of integrity.’

“We will put the problem more bluntly.  Mr. Trump’s suggestion that his Attorney General prosecute his defeated opponent is the kind of crude political retribution one expects in Erdogan’s’ Turkey or Duterte’s Philippines.

“Mr. Sessions had no way of knowing when he accepted the AG job that the Russia probe would become the firestorm it has, or that his belated memory of brief, public meetings with the Russian ambassador in 2016 would require his recusal from supervising the probe.   He was right to step back once the facts were out, not the least to shelter the Trump Administration from any suspicion of a politicized investigation.

“If Mr. Trump wants someone to blame for the existence of Special Counsel Robert Mueller, he can pick up a mirror. That open-ended probe is the direct result of Mr. Trump’s decision to fire FBI Director James Comey months into his Russia investigation and then tweet that Mr. Comey should hope there are no Oval Office tapes of their meeting.  That threat forced Deputy Attorney General Rod Rosenstein to appoint a special counsel.

“As a candidate, Mr. Trump thought he could say anything and get away with it, and most often he did.  A sitting President is not a one-man show. He needs allies in politics and allies to govern.  Mr. Trump’s treatment of Jeff Sessions makes clear that he will desert both at peril to his Presidency.”

Wall Street

On the economic front, existing home sales for June came in at 5.52 million annualized, a little less than expected and down 1.8% over May; while June new home sales were also down slightly over forecasts at 610,000.

June durable goods orders were strong, up 6.5%, but up just 0.2% ex-transportation.  All of the figures in this series are highly volatile so one should never make too much of this month-to-month.

And then we had the first look at second-quarter GDP and it was 2.6% annualized, basically in line with expectations.  But the figure for the first quarter was revised down to 1.2% from 1.4%, so when you average the two, we’re still growing at just 2% (1.9%).

[The Atlanta Fed’s GDPNow indicator had forecast Q2 GDP at 2.8% after looking at the latest data.]

Consumer spending was up a strong 2.8% in Q2, but the price index rose just 1.0%, wages only 0.5%* (2.3% on a year-on-year basis...which you want to be 3%+), so as the officer was heard to tell the gathering crowd outside the Commerce Department, “No inflation to see here...move along, people.”

*This was part of a separate report issued by the Labor Department. The Fed’s preferred inflation gauge, the personal consumption expenditures price index (PCE) ex-food and energy, increased only 0.9 percent, the slowest rise in more than two years and following a 1.8% rate of increase in the first quarter.

As for the Federal Reserve, it met for shrimp and adult beverages on Tuesday and Wednesday and no change in interest rates, with the market now not expecting another rate hike until December, though the Fed said it would begin running down its balance sheet “relatively soon,” which everyone takes to mean starting with the September meeting.

Reducing the balance sheet, even if it’s in minuscule increments as the Fed is telegraphing, is still in essence a rate-hike, but the market is taking it in stride, as it does everything else these days, including powerful North Korean bottle rocket tests.

It’s just that if we all agree there is no inflation, at least the kind the markets, and the Fed,  look for, it is kind of curious Wall Street isn’t the least bit quizzical about raising rates in this environment, but we’ll see how long the complacency lasts.

Meanwhile, the IMF issued its latest World Economic Outlook and it revised the U.S. growth forecast from 2.3% this year to 2.1%; 2.1% as well in 2018 (down from 2.5%).

Global growth is slated to be 3.5% in 2017, 3.6% next year.

Separately, President Trump had some nice things to say about Chair Janet Yellen, as her term is set to expire, and it is not out of the realm of possibility that the president could renominate her, though Trump said in an interview this week that top financial advisor Gary Cohn is a leading candidate to replace her.  [Trump likes Yellen because she is a “low rate person,” another ignorant statement by the man who went to “great schools.”]

But now we’re moving into August, a dangerous month.  All kinds of geopolitical and monetary issues have cropped up over the years, though this year focus on the former as there is little chance of something going wrong bigly on the latter.  [I’m just talking the single month of August 2017.]

And when looking at the stock market, that Bull / Bear ratio I have highlighted since Edition No. 1 of “Week in Review” back in Feb. 1999, is once again in ‘danger territory,” at 60.2% bulls, 16.5% bears.  It can be over the 60 mark for weeks and months without any damage to the markets, but it’s a good contrarian barometer. As the folks at Investors Intelligence remind us, “the bulls ended Jan-1987 at 64.6% and then returned to 60.8% that August after further market highs. Stocks crashed in Oct-1987!”

Europe and Asia

The July flash readings for the eurozone, courtesy of IHS Markit, had the composite at 55.8 (50 being the dividing line between growth and contraction)  vs. 56.3 in June, with manufacturing at 56.8 vs. 57.4, and services at 55.4, unchanged from last month.

The manufacturing flash reading for this month in Germany was 58.3 vs. 59.6 in June, with services also ticking down to 53.5 from 54.0.

In France (remember, the flash readings only look at Germany and France, individually), manufacturing was 55.4 vs. 54.8, a 75-month high, while services was 55.9 vs. 56.9.

So slight declines generally across the board but still strong numbers.

Chris Williamson / Chief Economist, IHS Markit:

“The July fall in the PMI indicates that the eurozone’s recent growth spurt lost momentum for a second successive month, but still remained impressive.

“The survey data are historically consistent with GDP rising at a quarterly rate of 0.6%, falling slightly from a pace of over 0.7% signaled for the second quarter.

“The slowing pace of economic growth signaled by the surveys and the accompanying easing of price pressures adds to the belief that ECB policymakers will be in no rush to taper policy, and will leave all options open until the central bank sees a clearer picture of the sustainability of the upturn.”

The above-mentioned IMF World Economic Outlook revised GDP in Spain up to 3.1% for this year from 2.6%, while Italy was revised to 1.3% from 0.8%.

The IMF has the euro area as a whole now growing at 1.9% this year and 1.7% in 2018.

Speaking of Spain, its jobless rate fell to 17.2% - the lowest in eight years in the second quarter, and while this is still sky high, it’s quite an improvement from the worst levels of 28%.

In the U.K., second-quarter GDP rose 0.3% (1.7% year-over-year), compared with 0.2% in the first quarter.  It seems clear the Bank of England will keep interest rates on hold when it meets next week.  [The IMF has U.K. growth now at 1.7% for all of 2017, 1.5% for next year.]

Eurobits....

--On the Brexit front, finally, the government of British Prime Minister Theresa May has come together to speak as one voice.  Britain will seek a multiyear transitional agreement with the European Union to reduce the economic uncertainty caused by withdrawal from the EU.

Having a transition period after leaving the bloc’s regime of zero tariffs and common regulation is critical for helping firms adjust, as well as providing time for customs and the bureaucracy to prepare for the chaos that will no doubt ensue.

Finally, it hit the U.K. government in the head that it now has only 20 months before Brexit takes place, and with there being no way for any kind of wide-ranging permanent trade and economic agreement with the rest of the EU in that time frame, it needs to stress the transition period.

Not all ministers are totally on board, the immigration minister saying “Free movement of labor ends when we leave the European Union in the spring of 2019,” which hardly allows for a transition period, and so one shouldn’t conclude it is a sudden lovefest at Mrs. May’s cabinet table.

--Greece returned to the private debt market this week for the first time since 2014 (which was a special ‘one-off’...so you really should go back to 2010), raising 3bn euro at a relatively low (for Greece) interest rate of 4.6% for five-year paper.

But the 3bn is a miniscule amount given Greece’s humongous debt load (less than 1%) and the economy is still very shaky with deep political issues, while the structural reforms it has signed off on have barely begun to take hold, many of them put off until after 2018.

For now, though, there is some cause for optimism and if Europe overall continues to perform better, that will only help Greece.

--Hungary’s anti-migration prime minister, Viktor Orban, speaking at a cultural festival in Romania last Saturday, said European Union leaders and Hungarian-American billionaire George Soros are seeking a “new, mixed, Muslimized Europe.”

Orban said that while Hungary opposed taking in migrants “who could change the country’s cultural identity,” Hungary would remain a place where “Western European Christians will always be able to find security.”

Orban also noted that Hungary’s low birth rate made the country an “endangered species,” and the government is using taxes on multinational companies in Hungary to fund social policies and spur families to have more children.

Further, Orban said he would defend Poland as the European Union threatens Warsaw with sanctions over its plans to extend government control over its courts, which has led to major protests around the country.

--Italy and France are at major loggerheads on a number of fronts, especially over Libya, as Rome feels it was snubbed by French President Macron when he took over negotiations regarding a ceasefire.  I cover this in more detail down in the “Foreign Affairs” section, but Italy is bearing the brunt of the migrant surge from Libya and it is duly miffed Macron, who we’ve seen very early on is thirsting for power, is just doing his own thing without consulting the Italians.

But then Macron on Thursday suddenly announced he was nationalizing the Atlantic Shipyards in France, even though he had run for office as a pro-business, free-marketeer.

The move was designed to block Italy’s Fincantieri SpA from taking control of the 155-year-old shipbuilder.  It was a confounding decision.

As one French economist, Ludovic Subran, observed, “Macron is all about strengthening the business environment in France but his first action is more interventionism. For the private sector, this sends the wrong message.”  [Bloomberg]

But it’s really all about politics.  Macron is otherwise off and running on a major reform campaign, having announced earlier he is slashing spending on public housing, looking to cut state welfare and commence with major labor reform, but at the same time he has to protect a symbolic and historic industry.  [The National Front party of Marine Le Pen welcomed the decision.  Far-left leader Jean-Luc Melenchon also called it a “good decision.”]

Italian Finance Minister Pier Carlo Padoan said in a statement that what Macron did “is serious and incomprehensible.”

An Ifop poll published last Sunday shows Macron’s approval rating down 10 percentage points in a month to 54 percent.

Turning to Asia, the aforementioned IMF World Economic Outlook raised its 2017 forecast for Chinese GDP from 6.6% to 6.7%.

In Japan, a flash reading on manufacturing for July from Markit came in at 52.2, an 8-month low.

Separately, Japan said Friday it would impose a temporary 50% tariff on frozen beef from the U.S. and several other countries, which Tokyo said was a required response to a surge in imports, though in today’s environment, it is bound to tick off President Trump.

Under Japanese law, the added tariff, known as a safeguard, is triggered when frozen-beef imports from all countries, including those lacking free-trade deals with Japan (which includes the U.S.), increase by more than 17% from the same period a year earlier. The import volumes are reviewed each quarter.

This rule, a result of a 1994 global trade deal, would have been eliminated under the Trans-Pacific Partnership, a proposed 12-nation trade deal that included the U.S. and Japan, but President Trump pulled the U.S. out of it before it went into effect.  [Yoko Kubota / Wall Street Journal]

Street Bytes

--The market finished mixed this week, with the Dow Jones gaining 1.2% to 21830, a new high, largely on the heels of terrific earnings reports from Dow components Boeing, Caterpillar and Verizon, while the S&P 500 was unchanged and Nasdaq fell 0.2% as the tech boom may have hit a wall, with the key stocks in the sector having been priced for perfection.

Earnings have been strong and are now running somewhere between 9% and 10% for the quarter, with revenues up a solid 5%.  But you better meet your guidance or your stock is going to get hammered.

--U.S. Treasury Yields

6-mo. 1.13%  2-yr. 1.35%  10-yr. 2.29%  30-yr. 2.90%

--OPEC and leading non-OPEC producers met in St. Petersburg this week and Saudi Arabia’s energy minister Khalid al Falih said, “We are going to forcefully demand participation of all” when it came to producer nations failing to meet their share of supply cuts. The 1.8m b/d cut reached end of last year has now been extended to May 2018, but the price of crude, as measured by WTI, continues to languish under $50.  In the end, the tough talk has been meaningless.

But oil did have a terrific week, finishing at $49.79, the highest level since 5/19 ($50.53).

--On Wednesday, Amazon.com passed the $500 billion market cap level for the first time (before finishing the week at $487bn), a club that includes just three others: Apple, Alphabet and Microsoft.

Thursday, CEO Jeff Bezos became the richest man in the world, briefly, as Amazon shares soared ahead of the company’s earnings report after the market closed. Bezos’ net worth crossed $90 billion, surpassing Bill Gates’ $89 billion...Gates having held the top spot since May 2013.

But it was all short-lived, as Amazon shares began tanking Thursday afternoon after peaking at $1,083 (Bezos’ net worth $92bn at that point), closing at $1,045 prior to release of the earnings, after which the stock fell further on the news that while revenue of $38 billion, up 25%, beat the Street’s consensus, the company’s runaway spending, which had been under control, appears to be taking off again.  Earnings of 40 cents per share were way short of the $1.42 analysts’ expected.

Amazon Web Services, the cloud platform, saw its revenue shoot up 42% to $4.1bn, as it remains the big driver of growth, but AWS is also a prime source of the surge in spending, including the hiring of software engineers and sales teams to maintain its lead over rivals Google and Microsoft, let alone massive spending on new data centers (and warehouses for the retail effort).  But with higher spending comes lower profits and that’s what the Street has to now adjust to.

Amazon finished the week at $1,020.

--Meanwhile, Whole Foods, who Amazon is in the process of acquiring for $13.7 billion, reported its eighth consecutive quarter of same-store sales declines on Wednesday, as it’s no longer the only large-scale natural and organic goods grocer in the marketplace.

For the three months ending July 2, comp sales fell 1.9% compared to the year ago period, when it was down 2.6%.

Adjusted net earnings were $114m, down from $120m last year.

--Facebook Inc. reported second-quarter net income of $3.89 billion, far higher than expected, with earnings of $1.32 per share vs. the Street’s forecast of $1.14.

Revenue was $9.32 billion, also exceeding analysts’ projections, up 44.8%, with mobile ad revenue accounting for 87% of the company’s total advertising revenue of $9.16bn, up 84% from a year ago.

The number of daily active users rose 17% to 1.32 billion, with big upticks in Asia.  Just terrific numbers all around.

CEO Mark Zuckerberg said the “biggest driver of the business and determinant of how we do is going to be video.”  This requires increased spending, though, on new buildings to store digital data, develop new hardware and acquire videos it can stream to users.

Instagram is an “increasing contribution,” CFO David Wehner told Reuters, with 15 million business profiles, while Facebook has 70 million business pages.

--Alphabet Inc., parent of Google, said clicks on its ads surged 52% in the second quarter from a year earlier, but ads on smartphones and YouTube videos earn less per ad than search ads on traditional computers, so as a result, revenue per click fell 23% in the quarter, the biggest spread between these two metrics in six years, which isn’t good.  Operating margin was down to 26.4% from 27.8% a year ago.

But, second-quarter revenue rose 21% to $26.01 billion, while net profit fell 28% to $3.52 billion because of a $2.74bn fine from European regulators, though Google said it is considering an appeal.  You add it all together and the shares fell about 3% in response.

Google and Facebook dominate the digital-ad landscape, the two capturing 77% of the $12 billion increase in spending on online ads in the U.S. last year, according to eMarketer.

Google still has a problem with the YouTube platform, when it emerged earlier in the year that some brands’ ads were running alongside content that was deemed hateful or racist, which led to the likes of Wal-Mart, AT&T and JPMorgan Chase pulling their ads, which they still haven’t resumed.  Others such as GM that had pulled out, resumed their ad spending on YouTube when Google improved its technology to screen videos.

Ad sales accounted for 88% of Google’s $90.27bn in revenue in 2016, but the company believes its cloud division will one day surpass the ad segment, cloud sales growing 42% last quarter to $3.09 billion.

--Twitter shares plunged anew after the company reported zero meaningful increases in users since getting a bump from the presidential election.  Twitter’s monthly user figure of 328 million in the second quarter was the same as the first, and up just 5% from a year ago. The user figure for the U.S. actually declined 2%.

Revenue slid 5% to $574 million.

--Chinese telecom giant Huawei Technologies Co. reclaimed the top spot in China’s smartphone market, shipping 73 million during the first six months of the year, an increase of 21% from year ago levels.  Huawei, with global market share now of 9.9%, remains firmly behind rivals Apple and Samsung.

The company is also a major player in the sale of networking gear and telecom equipment, though it has been effectively banned from selling in the U.S. since 2012, Congress then issuing a report that the company could use its gear to spy on Americans, which Huawei has repeatedly denied.

--McDonald’s Corp. kicked butt again, reporting second-quarter earnings of $1.4 billion, with adjusted earnings of $1.73 a share, handily beating the Street’s expectations of $1.62.  Revenue came in at $6.05bn, also exceeding forecasts, though this was down 3.4%.

The shares soared, though, primarily because U.S. same-store sales rose a solid 3.9% over a year ago, which is excellent in today’s fast-food environment, while global comps climbed a super 6.6%, the biggest increase in more than 5 years.

Two years into a turnaround under CEO Steve Easterbrook, McDonald’s has found a way to squeeze more out of its customers, even though traffic continues to decline. Easterbrook pointed to better menu items and more customer choice, such as cooked-to-order Quarter Pounders with fresh beef and higher-end signature crafted sandwiches.  McDonald’s has also been selling sodas of all sizes for $1 since April.

--Starbucks said it returned to 5% same-store sales growth in the U.S. for its fiscal third quarter, but it missed on earnings and the coffee chain lowered its guidance for the second time this year, with the shares taking a hit in the after-market Thursday.  Overall revenue rose 8.1% from a year ago to $5.66 billion, though this was also shy of the Street.

Starbucks reiterated declining mall traffic has been hurting, and it is closing its 379 Teavana mall-based stores.

--Boeing soared to new highs on Wednesday following release of super earnings for the second quarter, despite lower revenue, with the aircraft maker raising its outlook for full-year profit.

With airlines profitable around the world, Boeing is benefiting from continuing new orders, a backlog for same approaching half a trillion dollars, according to the company.  Orders for the single-aisle 737 are booming, plus there is rising profitability with the 787 Dreamliner, that was once a drag on the bottom line and this past quarter contributed $530 million in cash.

Boeing also said it is buying back $10bn of its stock, while paying down its pension liability, which helps its tax bill.

Boeing shares rose $21 Wednesday and this single Dow component was the reason why the Dow Jones finished up 97 points on the day, while the S&P 500 was unchanged.

--Caterpillar Inc. reported a 46% jump in quarterly profit on Tuesday, the shares surging 5% in response, with total sales and revenue rising a strong 9.6% to $11.33 billion.

Sales from the key Asia Pacific region jumped 23% in the quarter, boosted by an increase in construction equipment sales in China.  Demand has been growing here after bottoming out last year.

CAT raised its full-year profit forecast from $3.75 a share to $5.

--Ford Motor Co. had a better-than-expected second quarter despite lower sales and turmoil in the CEO ranks.  The new CEO Jim Hackett called it “a solid performance” but said the company still needs to get much more fit and nimble.

“We know we’re going to be quicker and more purposeful in our decisions about where to play and how to win,” Hackett told analysts in his first earnings call as CEO.  “We’re in an incredibly competitive industry and the competition doesn’t relax because we’re thinking through a decision.”

Total revenue rose just 1 percent to $39.85 billion.  Overall vehicle sales fell 3 percent to 1.65 million vehicles, with much of the decrease due to lower sales of the Fiesta in Europe.

Ford earned $2.2bn in North American, its biggest market, but this was down 19 percent from the same period last year.

Hackett said as he continues his 100-day review of Ford’s operations, he is considering exiting some markets. General Motors abandoned Europe earlier this year, but Hackett said Ford is competitive there and plans to stay.  The automaker saw its profit there plunge to $88 million, down from $379m a year ago, and blamed disruptions from Brexit, as well as unfavorable exchange rates and the cost of introducing a new Fiesta compact, a key model in the region.

Ford made money in Asia, but lost money in South America.

--General Motors said its second-quarter profit dropped 42% from a year earlier, primarily because of losses associated with the pending sale of its European operations. But while net income fell to $1.7bn from $2.9bn, adjusted earnings per share rose and handily beat the Street.

The company has agreed to sell its Opel and Vauxhall divisions in Europe to the French automaker PSA Group by end of the year.  Aside from downsizing from its least profitable businesses, GM is looking to shift more resources into new technology, such as self-driving and electric vehicles.

GM’s revenue for the quarter was $37bn, a slight decline from year ago levels of $37.4bn.

--Shares in Southwest Airlines fell after a weak forecast for a key revenue figure in the third quarter. The airline provided more evidence that the industry’s efforts to push average fares higher are faltering.

Southwest said so-called unit revenue, the amount it gets for every seat flown one mile, was 1.5-percent higher in the second quarter than a year earlier, but for the current quarter, Southwest expects the figure to be lower, while analysts have been more bullish about future results.

--Shares in AstraZeneca plunged 16% after the pharmaceutical company reported that a cancer drug in development had not shown as much progress as expected.  The treatment for lung cancer had been expected to be a major driver of growth for the British-Swedish company, which back in 2014, fended off a $119bn takeover attempt from Pfizer, arguing that it had promising drugs in the pipeline.  The lung cancer drug back then was thought to be worth as much as $6 billion in annual sales.

AstraZeneca’s issues are compounded by the fate of anti-cholesterol pill Crestor, which was prescribed more than 20 million times in the United States in 2015, the second-highest of any brand-name drug, but last year, a generic version was approved and sales of Crestor have fallen sharply since then.

--Foxconn, one of the world’s largest electronics manufacturers, unveiled plans to build a new factory in southeastern Wisconsin, delivering a much-needed shot-in-the-arm for both President Trump and Wisconsin Republican Gov. Scott Walker.

The facility will make flat-screen displays and will be the size of several football fields, employing as many as 10,000 employees.

The Taiwanese company, also known as Hon Hai Precision, contracts with the likes of Apple for its iPhones, as well as for virtually every other large tech company, including Amazon, Google and Microsoft.

But Foxconn is also known for splashy job announcements that don’t always pan out.  For example, in 2013, it promised a new factory in central Pennsylvania that would employ 500 workers, but it never came about. The company has had similar announcements, and then failure to follow through, in India, Indonesia and Vietnam, among others.

--Median home prices in six-county Southern California continue to hit record highs, jumping 7.4% from a year ago in June to $569,000, surpassing the previous record set in May.  In Orange County, the median price was up 6.1% vs. a year ago, tying the previous record price of $695,000, according to Core Logic and the Los Angeles Times’ Andrew Khouric.

--Shares in Domino’s Pizza, which have been soaring for years, fell sharply on the company’s second-quarter earnings report.  While Domino’s bottom line was better than the Street had forecast, and revenues also beat, reports that international same-store sales were well below analysts’ estimates tanked the stock. The weak international results were in contrast to those of rival McDonald’s.

--Shares in Chipotle Mexican Grill Inc. continued to struggle following release of its second-quarter earnings.  Initially, the market liked the results, with earnings beating expectations, but Chipotle missed on same-store sales growth, and the health issues from the week before overwhelmed investor sentiment when looking at the future.  Overall, though, the stock rallied a little on the week.

Chipotle raised prices 5% in many of its markets in April, the first time in more than two years, but now many doubt the increases will stick after the latest norovirus incident at a restaurant in Virginia, which was beyond disgusting (a sick employee being the cause for more than 135 customers reporting getting sick after).

--The “failing New York Times” posted one of its strongest quarters in recent years amid robust digital growth and rising digital advertising revenue and online subscriptions that offset the continued declines in print advertising.

Digital advertising revenue in the second quarter rose 23% to $55 million.  That’s 42% of toal ad revenue, compared with 34% a year earlier.

The Times also added 93,000 net digital-only subscriptions, driving revenue in that category to $83 million, a 46% increase year-over-year.

Including all its platforms, the Times has more than 2.3 million digital-only subscribers.

Meanwhile, there continues to be lots of turmoil in the Times newsroom with ongoing layoffs and restructurings, such as in the elimination of a stand-alone copy desk.

--Greece arrested a Russian man believed to be the mastermind behind one of the oldest crypto-currency exchanges and of laundering at least $4 billion, Alexander Vinnik being taken in after a tip-off from the U.S., which will now seek to extradite him.  Vinnik was a key person behind the BTC-e virtual currency exchange.  The $4bn in cash had been laundered through a bitcoin platform since 2011 – the year BTC-e was founded. 

--The chairman of New York City’s beleaguered Metropolitan Transportation Authority announced the organization would add 2,400 workers to alleviate subway delays, with strategically placed units to respond to everything from signal malfunctions to sick customers at the core of an “emergency” plan ordered by Gov. Andrew Cuomo. The program requires an injection of $836 million of new operating and capital funds, which the MTA hopes is split between the state and the city.

But the big controversy in Gotham these days is the fact Mayor Bill de Blasio has not been amenable to calls from the state and MTA to shell out more funding, saying it has yet to spend what the city has already given it and siphoned money away from subway maintenance.

--I was pleased to see the movie “Dunkirk” did well its first weekend, the World War II epic  taking in an estimated $50.5 million in the U.S. and Canada. The picture, which cost about $150 million to make, has received strong reviews across the board and the pre-opening buzz helped.  The movie also took in $55.4 million overseas in 46 markets.

IMAX theatres, by the way, accounted for 23% of the domestic opening weekend.

Meanwhile, “Valerian and the City of a Thousand Planets,” with a budget of $180 million, was an enormous flop, debuting with just $17 million in North America. Rihanna being in it didn’t help, I guess.

--Uh oh...the overall gaming handle at the casinos in Deadwood, South Dakota, of which I am most familiar, fell 8.3% in June vs. year ago levels, as released by the South Dakota Commission on Gaming.  The thing is, hotel occupancy is edging up.  Love this place...especially Saloon No. 10.

--Speaking of beer, according to a Goldman Sachs research report, the three major beer brands, Budweiser, Miller and Coors, make up about 65% of the total market. But the report notes that millennials are helping push down sales of beer in the U.S. as they choose more wine, spirits and craft and imported beers. Goldman is looking for total beer sales in the U.S. this year to fall 0.7%, with the Big Three down 3%.  Nooooo! cried the Coors Light drinker in fake anguish.

Separately, Anheuser-Busch InBev said its best-selling brand in the U.S., Bud Light, lost a full percentage point of market share in the second quarter.  Budweiser also lost market share.

Overall sales volume for AB Inbev in the second quarter fell 1.1% from a year ago.

Foreign Affairs

North Korea: Early in the week, a new assessment by the Pentagon’s Defense Intelligence Agency (DIA), concludes North Korea will be able to field a reliable, nuclear-capable intercontinental ballistic missile as early as next year, a full two years earlier than the consensus forecast for Pyongyang’s ICBM program, though your editor emphatically told you this last year!

North Korea still has some hurdles before it can threaten the U.S., chief among them being the challenge of atmospheric “reentry” – the ability to reenter the upper atmosphere without damage to the warhead.  U.S. officials believe this will be part of the next ICBM test....

....which was today, late Friday night in Pyongyang, a rare launch time for it.  The North fired a missile that just hours later experts said was likely capable of reaching cities in the continental United States.  If this is the case, a huge development.  We are without a viable missile defense system to protect, say, Denver.

It hasn’t mattered what Washington, Seoul or Tokyo say to Lil’ Kim Jong Un, let alone the worthless U.N., or China, as Kim and his scientists just keep making progress.

With today’s missile landing in the Sea of Japan, just 80 miles from the Japanese coast, after flying for about 45 minutes on a huge flight into space, reaching an altitude of more than 3,000km (1,860 miles), according to Japan, before coming down.  South Korea’s military said the missile reached an altitude of 3,700km (2,300 miles).  Jeffrey Lewis, one of the foremost experts on North Korea and its missile technology, said the missile could have reached Los Angeles with ease, but Chicago, New York and Washington were just out of reach.  Other U.S. experts also said the missile could have hit multiple major targets in the U.S.

This is a stunning amount of progress in less than four weeks.  We must assume they have been making equally rapid progress on miniaturizing a warhead.

Japanese Prime Minister Shinzo Abe said: “As a result of their launches of ICBM-level missiles, this clearly shows the threat to our nation’s safety is severe and real.”

South Korean President Moon Jae-in said he wanted the U.N. Security Council to discuss stronger sanctions, while he ordered discussions be held with the United States on deploying additional THAAD anti-missile defense units in his country.

China urged North Korea to respect United Nations Security Council resolutions and stop all acts that could worsen tensions on the Korean peninsula.

North Korea just confirmed the test, saying the missile was meant as a “stern warning” for the United States.  The ICBM, which aimed for “maximum distance,” flew over 47 minutes and 12 seconds while reaching a maximum altitude of 3,724.9km, as put out via the state news agency.

Syria / Iraq: Fighting broke out east of Damascus between rebel and government forces on Wednesday for the first time since the two sides declared a ceasefire at the weekend.  The Bashar al-Assad regime hit the rebels with air strikes, which I’d say is a rather violent ceasefire violation.

The air strikes were reported by the reliable Syrian Observatory for Human Rights, but Russia dismissed their reports.

Michael G. Vickers / Washington Post

“Based on recent statements by several senior administration officials, President Trump’s Syria policy now focuses exclusively, in cooperation with Russia, on defeating the Islamic State.  President Barack Obama’s goal of removing Syrian dictator Bashar al-Assad from power is no longer a U.S. foreign policy objective.

“Acquiescing to Assad remaining in power, and ending support for the Syrian moderate opposition, would strengthen our adversaries, further convince allies that the Trump administration places Russian interests above our own, enable Iran to consolidate strategic gains, increase global jihadist threat to the United States – and make a stable Middle East that much harder to achieve.

“Abandoning the goal of removing Assad from power will place the United States on the side of not only the barbaric Syrian regime, which has American blood on its hands dating to the early 1980s, but also Iran, Hizbullah and Russia.  This is strategic folly....

“The Assad regime’s brutality against its majority Sunni population has been a magnet for international terrorist travel to Syria, and it will continue to serve as a rallying cry for global jihadists. If the United States is viewed as being on the side of the Assad regime, Russia and Iran, we will become even more of a target for jihadists. Elements of the moderate Syrian opposition – there are tens of thousands of them – will no doubt become radicalized by this abandonment, strengthening jihadist ranks....

“The United States faces growing challenges to the international order from Sunni global jihadists and the Iranian regime in the Middle East, from Russia in Europe and from China in East Asia.  Making common cause with Russia and Iran in Syria can only lead to the further erosion of U.S. global power.

“So a pressing question arises: Why would the Trump administration embrace a Syria policy that serves Russian and Iranian interests and harms American interests?  In time, we will learn the answer.”

Editorial / Wall Street Journal

“Does the Trump Administration have a policy in Syria worth the name? If so it isn’t obvious, and its recent decisions suggest that the White House may be willing to accommodate the Russian and Iranian goal of propping up Bashar Assad for the long term.

“Last week the Administration disclosed that it has stopped assisting the anti-Assad Sunni Arab fighters whom the CIA has trained, equipped and funded since 2013.  U.S. Special Operations Command chief Gen. Raymond Thomas told the Aspen Security Forum Friday that the decision to pull the plug was ‘based on an assessment of the nature of the program and what we are trying to accomplish and the viability of it going forward.’

“That might make sense if anyone knew what the U.S. is trying to accomplish beyond ousting Islamic State from Raqqa in northern Syria.  In that fight the Pentagon has resisted Russia and Iran by arming the Kurdish Syrian Democratic Forces and shooting down the Syria aircraft threatening them.  Mr. Trump also launched cruise missiles to punish Mr. Assad after the strongman used chemical weapons....

“(But now) the Trump Administration seems to want to find some agreement with Russia to stabilize Syria even if that means entrenching Mr. Assad and the Russian and Iranian military presence....

“Russia and Iran know what they want in Syria: a reunified country under Mr. Assad’s control. Iran will then get another Arab city – Damascus – under its dominion. It will have another base from which to undermine U.S. allies in Jordan and attack Israeli when the next war breaks out. Russia wants to show the world that its allies always win while keeping its air base and a Mediterranean port.

“None of this is in the U.S. interest....

“And if abandoning Syria to Iran is the policy, then at least own up to it in public so everyone knows the score.”

Israel: A major international crisis was averted by week’s end after Israel removed metal detectors and metal archways supporting security cameras that had to be installed following the attack by Arab gunmen on July 14 that killed two Israeli policemen.  The moves sparked violent protests and attacks last weekend that left three Israelis and at least three Palestinians dead.  Monday, the Arab League had warned Israel was “playing with fire and risking a major crisis with the Arab and Islamic world.”  Muslim religious leaders alleged Israel was trying to expand its control at the site under the guise of security – a claim Israel denied.

The 37-acre walled compound is the third holiest site of Islam, after Mecca and Medina in Saudi Arabia.  It is also the holiest site of Judaism, revered as the place where the biblical Temples once stood.

In a probable spillover, two Jordanian men were shot dead and an Israeli wounded in a violent incident at the Israeli embassy in Amman. 

Israeli’s Foreign Ministry said the incident began when two Jordanian workmen arrived at the building to replace furniture and one of the workers, later identified as a 17-year-old of Palestinian origin, attacked an Israeli security guard with a screwdriver.  The guard killed the teen and a second Jordanian was hit by gunfire and later died of his wounds, while the guard was lightly wounded.

The Netanyahu government was rocked further, the prime minister facing growing unpopularity owing to corruption allegations.

After Israel removed the remaining security measures at the entrance to the Temple Mount ahead of Friday prayers and Muslim leaders called off a boycott imposed in protest of the measures.  77% of Israelis believe the government capitulated to Palestinian demands, according to a poll by the country’s Channel 2 broadcaster.  Israel Hayom, a daily owned by U.S. billionaire Sheldon Adelson, which had been seen to be supportive of Netanyahu, blasted him in an editorial over his handling of the crisis.

Personally, I would not have given in to the Palestinians, but Prime Minister Netanyahu also acted hastily it seems in approving the metal detectors, without coordinating with his Palestinian and Jordanian counterparts, nor did he heed warnings from his own intelligence officials who said the move would incite the outrage that ensued.

Iran: Tehran announced it had launched a rocket it says can deliver a satellite into space, a clear violation of a U.N. Security Council resolution as well as the spirit of the Iran nuclear deal, the U.S. State Department said in response.  “We consider that to be continued ballistic missile development,” State Department spokeswoman Heather Nauert said in a briefing.

Well it clearly is part of Iran’s ballistic missile program, and this particular move makes it easier for President Trump to pull out of the nuclear deal, but as I noted from the day it was signed, it’s already too late.  He would never get Germany, France and Britain to go along, let alone Russia and China, the other signatories.

Libya: Prime Minister Fayez al-Serraj and the divided country’s eastern commander Khalifa Haftar committed to a conditional ceasefire and to work towards holding elections next spring in talks chaired by French President Emmanuel Macron on Tuesday; Macron wanting France to play a bigger role in coaxing Libya’s factions to end the turmoil that is allowing terrorists to gain a foothold, while migrant smugglers flourish in the absence of a strong central government

Haftar had declared victory in the east after defeating rival groups in the battle for Benghazi, Libya’s second city.  But he has been refusing to recognize the central government and with backing from Egypt and the UAE, Haftar has been gaining ground.

Serraj is backed by Haftar’s rivals, but he faces resistance from many sides in Tripoli.

But as alluded to above, Italy is upset at France’s efforts, because Italy had previously taken the lead in efforts to bring peace here, while bearing the brunt in the surge of African migrants.  Italy wants to be involved with France and Macron seems intent on going it alone.

Pakistan: As I go to post, this strategic nation is in a state of political turmoil after Pakistan’s Supreme Court disqualified Prime Minister Nawaz Sharif from holding public office following an investigation into corruption allegations.

The ruling came after a probe into his family’s wealth following the 2015 Panama Papers dump that linked Sharif’s children to offshore companies.

Sharif has consistently denied any wrongdoing.  The five-man court ruled unanimously.  Sharif then resigned.  He had been serving as prime minister a record third time, so Pakistan still has never had a prime minister complete a full term.  The last time Sharif was in charge, he was toppled in a bloodless coup in October 1999.

No successor has been named as yet.

Separately, on Monday a suicide bomber killed at least 25 people, many of them police, in the eastern city of Lahore, Pakistan’s second largest.  The Pakistani Taliban claimed responsibility.

Afghanistan: Violence was rampant across the country this week, with a Taliban attack on an Afghan army base in southern Kandahar province killing at least 26 soldiers, according to the Defense Ministry, as the insurgents step up pressure on government forces. Kandahar shares a border with Pakistan, which adds to the security concerns.

Two days earlier, a Taliban suicide car bomb targeted a minibus carrying government employees in western Kabul, killing 31.

Last weekend we learned a U.S. airstrike mistakenly hit an Afghan police unit in southern Helmand province, killing 16 police officers, the Pentagon confirming the errant strike near the town of Gereshk, where U.S. and Afghan forces have been engaging the Taliban. The same day, Saturday, more than 40 Afghan government-backed militiamen were killed in a Taliban raid that captured a district in the remote northeastern province of Badakhshan.

Russia: With the Senate, 98-2, and House, 419-3, having voted overwhelmingly for tougher sanctions on Russia, the White House expressed trepidations, saying it could hinder its diplomatic relationship with Russia.  The administration strongly hinted the president would veto the legislation, but then it would easily be overridden.

So then the story emerged on Thursday that the White House wanted a ‘tougher’ sanctions bill (the legislation also containing increased sanctions against North Korea and Iran), so it could veto it for that reason, but not one person in Congress believes this angle because President Trump has wanted to ‘lessen,’ not ‘tighten; sanctions.  It all seemed a ruse to get Congress, somehow, to hold off while the White House bought time for.....well, who knows what.

The Kremlin threatened to retaliate against new sanctions passed by the U.S. House, saying they made it all but impossible to improve relations, as stated by Deputy Foreign Minister Sergei Ryabkov, according to the Interfax news service.

Konstantin Kosachyov, chairman of the international affairs committee in Russia’s upper house of parliament, said on Facebook, Russia should prepare a response to the sanctions that’s “painful for the Americans.” Kremlin spokesman Dmitry Peskov told reporters Putin will decide on a response if the bill becomes law. [Bloomberg]

The Senate has questions about the bill and may hold off until September because they want to examine North Korea sanctions added to the bill by the House.

But this same legislation has European Union officials upset because the sanctions would let President Trump penalize European companies working on the development, maintenance, modernization or repair of energy export pipelines.

Austrian Chancellor Christian Kern slammed the House bill as an unacceptable “mixing of political interests with economic ones, at the cost of European jobs.”

So the above was all prior to today, when Russia ordered the United States to reduce its diplomatic and technical staff at its embassy in Moscow and other cities in the country by September in response to the tougher sanctions.  Moscow also warned against any retaliatory moves Washington may now take.

Late tonight, Trump said he would sign the sanctions bill.

On a totally different potential flashpoint, the Balkans....

Walter Russell Mead / Wall Street Journal

“At a recent closed think-tank meeting, a well-informed German official was asked what problem in Europe caused him the most worry. His answer came without hesitation: the Western Balkans, where a new crisis is brewing as Turkey and Russia stir the pot.

“In his worst-case scenario, Russia and Turkey would encourage their proxies in the Balkans, Serbia and Albania, to help them redraw the region’s borders. The Serbian government, with Russian support, could annex large portions of Bosnia populated by ethnic Serbs. Turkish support could help Albania pull off a similar maneuver, not only in heavily Albanian Kosovo, but also in Macedonia, where much of the large Albanian minority would like to reunite with the motherland....

“Turkey and Russia have been brought together by their opposition to Germany and the European Union.  Russians don’t just hate NATO; they see the EU as a barrier against Russia’s historical great-power role in European affairs. Turkey has also turned against the EU and is looking for leverage against Germany and its fellow members.  For Russia and Turkey, the ability to cause Europe trouble in the Balkans with relatively little risk and cost is too good to pass up....

“For the EU, a new round of Balkan chaos would be a disaster: refugees, crime, radicalization among Balkan Muslims, greater opportunities for hostile powers to gain influence at EU expense.”

But the EU wants the U.S. to be part of a solution, and this is hardly happening with Donald Trump president.

China: Ahead of the crucial ruling Communist Party Congress this fall, President Xi Jinping, who will be cementing his power further at the gathering, said the fight against corruption must continue, or the party will lose its ability to retain power, Xi told a meeting of regional leaders this week.

“We will forever be on the path of comprehensive, strict governance of the party.  One political party, one political authority, its prospects and fate rest on the support of the people,” Xi said, according to official state news agency Xinhua.

Meanwhile, a U.S. Navy reconnaissance plane was forced to take evasive action to avoid a possible mid-air collision with a Chinese fighter jet that had flown to within 300 feet of the American aircraft over the East China Sea, just the latest in a series of incidents between the two in the region.  The U.S. plane was flying in international airspace.

China also warned India that Beijing would protect its sovereignty “at all costs” amid a month-long border dispute.  A week earlier, Chinese troops took part in a live-fire military exercise on the Tibetan plateau, at a location not far from where Chinese and Indian troops are locked in a stand-off sparked by a road project in a disputed border area at the tri-junction with Bhutan.

Venezuela: The death toll in anti-government protests reached 106 on Thursday. But a major problem here is that the opposition is largely fractured, with no cohesive leadership.  A coup should have taken place long ago.

Editorial / The Economist

“Those who want to save Venezuela have limited influence, but they are not helpless. The opposition, a variegated alliance long on personal ambition and short on cohesion, needs to do far more to become a credible alternative government. That includes agreeing on a single leader. Some in the opposition think all that is needed to trigger the regime’s collapse is to ramp up the protests. That looks fanciful.  (President Nicolas) Maduro can still count on the army, with which he co-governs.  In Venezuela’s command economy he controls such money as there is, and retains the backing of a quarter of Venezuelans – enough to put his own people on the streets. And he has the advice of Cuba’s security officials, who are experts in selective repression....

“Already there are signs of anarchy, with radicals on both sides slipping loose from their leaders’ control.  Rather than a second Cuba or a tropical China, chavista Venezuela, with its corruption, gangs and ineptitude, risks becoming something much worse.”

Sunday, there is an election for a legislative superbody that is Maduro’s attempt to create a dictatorship. It will write a new constitution and supersede the existing National Assembly, which currently has a majority from the opposition.  Colombia is among the nations who have said they will not recognize the result.

Random Musings

--Presidential tracking polls....

Gallup has President Trump with a 39% approval rating; Rasmussen 41% (the lowest yet in this one).

--David Ignatius / Washington Post

“Here’s a road map of three dangers ahead (for the CIA), drawn from conversations with a half-dozen CIA veterans who served in Republican and Democratic administrations:

“Intelligence today is politicized, perhaps more than at any time in our history.  President Trump outrageously likened intelligence professionals to Nazis and regularly describes intelligence estimates of the Russian threat as ‘fake news’ or a ‘witch hunt.’ Senior ex-spooks, not surprisingly, have fought back. In the process, the CIA is becoming a political football.

“James R. Clapper Jr. and John Brennan, former directors of national intelligence and the CIA, respectively, took some roundhouse swings in Aspen, calling Trump’s remarks ‘insulting,’ ‘completely inappropriate’ and ‘not...honorable.’ They’re right. The problem is that the millions of Americans who fantasize about a supposed ‘deep state’ become more convinced that this conspiracy exists when they hear former intel chiefs attack the president.

“The Trump administration has failed to make clear strategic decisions. Trump’s policies on Syria, Russia, Iran and China are a hodgepodge of conflicting goals and unresolved issues.  Meanwhile, the president keeps pushing the agency to come up with options.

“Historically, this is where the CIA gets in trouble.  Presidents who want ‘wins’ but lack a systematic diplomatic strategy have used covert action to topple governments or wage undeclared wars. When the secret campaigns backfire and public support disappears, the agency is left holding the bag....

“Finally, and most important, the administration (Director) Pompeo serves is in disarray. The president is trying to bad-mouth his attorney general into resigning, and he may plan to fire special counsel Robert S. Mueller III next. The country needs steadiness and independence from the CIA.  Pompeo should think about institutional and constitutional obligations, as well as presidential ones. He knows where the accelerator is, but he should also look for the brake.”

--Some of us who watch a lot of CNBC, or Fox News and Fox Business, feel like we know White House communications director Anthony Scaramucci pretty well after all the air time he has received.  In 2013, the New York Times wrote of the former Harvard Law School classmate of Barack Obama’s:

“In an industry known for reclusive traders and math geeks,” Scaramucci is “Wall Street’s first hedge fund impresario, a P.T. Barnum in a Ferragamo tie. In a gilded industry that has preferred to stay below the radar, Mr. Scaramucci embraces the white-hot center of it all.”

After seven years at Goldman Sachs, in 2005 he started SkyBridge Capital as an incubator for hedge fund managers, while opening up to investors with as little as $25,000, when many top hedge funds required a $10 million investment.

He has also been a longtime supporter of Republican candidates, supporting Mitt Romney in the 2012 election, and then Gov. Scott Walker and former Gov. Jeb Bush in this last one.

Upon taking his new post, Scaramucci pledged “to take drastic” action to stop leaks coming out of the White House.   “If the leads don’t stop, I’m going to pare down the staff because it’s just not right,” he said.  “I think it’s not fair to the president, it’s actually not fair to America or the people in the government.”

Scaramucci also said he would like to reset White House relations with the media, creating “positive mojo” between the White House and the press.

“It’s a fresh start for everybody.  I certainly want to engage the mainstream media.  I expect that they’re going to want to hold me and the White House accountable, but we’re going to want to sort of hold them accountable too,” Scaramucci told Chris Wallace on “Fox News Sunday.”

“I’m hoping to create an era of a new good feeling with the media,” he added.

But in light of everything that has transpired just the last two days, I can’t help but note the following, written on Monday.

Robert George / New York Daily News

“Hi, Anthony...bye, Anthony?

“You heard it here first.

“Don’t get too attached to Anthony Scaramucci as White House communications director. The clock may already be ticking on his tenure – in more ways than one.  Oh, sure there’s already a published report that President Trump is considering pushing Chief of Staff Reince Priebus aside and replacing him with the man they call ‘The Mooch.’

“Priebus...has been in the Trump doghouse for some time; he is said to have been opposed to the hiring of Scaramucci – who is already reporting directly to Trump, not Priebus.  So, a Scaramucci promotion wouldn’t come as too much of a surprise.

“But could he find himself kicked out almost as quickly as he’s kicked upstairs?

“Just days into the communications director job, Scaramucci has already committed a communications cardinal sin: He’s a little too happy being in the spotlight himself. Worse (especially in Trump World): He’s better looking than his boss and may enjoy being on TV even more than his boss does....

“Lest you think he’s just a pretty face, Scaramucci reminds you, over and over again, that he’s got smarts.

“Interviewed on CNN Sunday, he was boasting that, ‘I went to Harvard Law School,’ and, moments later that he got an A- in constitutional law from top prof Lawrence Tribe....

“Scaramucci also seems to forget who’s the subordinate in this new relationship. In his Sunday CNN interview, trying to be complimentary, the Mooch said Trump ‘likes speaking from the heart, telling you what he likes and dislikes. He’s the type of coach I worked very well with in high school football.’

“Here’s the problem: If Trump is the ‘coach,’ that means that Scaramucci and the other staffers are the talent.  Can you imagine Donald Trump imagining anyone else being the quarterback?.....

“New Yorkers have seen a version of this before. In 1996, former Mayor Rudy Giuliani famously got rid of a talented superstar police commissioner named Bill Bratton – who, yes, committed the ultimate sin: He got on the cover of TIME magazine and was credited with bringing crime down – something the mayor was more than happy to take credit for by his lonesome.

“If Giuliani couldn’t stand being eclipsed by Bratton, how long before Trump Town kicks the flamboyant Scaramucci to the curb?

“Hunch: Likely shorter than the six months Sean Spicer got.”

--The Boy Scouts’ chief executive, Michael Surbaugh, apologized Thursday for President Trump’s politically charged remarks at the Scouts’ 2017 National Jamboree earlier in the week.

“I want to extend my sincere apologies to those in our Scouting family who were offended by the political rhetoric that was inserted into the jamboree.  That was never our intent...We sincerely regret that politics was inserted into the Scouting program.”

Asked whether the president owed the Boy Scouts an apology, White House press secretary Sarah Huckabee Sanders said she witnessed an enthusiastic audience for Trump.

I watched the entire speech, appalled.  This was a group of 12-18-year-olds.  But Trump gave his normal stump speech, criticizing the press, former President Obama, Hillary and ObamaCare.  It was embarrassing.

I read some of the speeches given by past presidents and they all stuck to the themes of being a good citizen, and what it was to be a Scout, and learning to love your country and such.

The next day in an interview with the Wall Street Journal, Trump said he got a warm reception from the crowd. 

“That was a standing ovation from the time I walked out to the time I left, and for five minutes after I had already gone,” he said.  Oh brother.

John McLaughlin (former deputing director of the CIA under George W. Bush):

“President Trump’s Boy Scout Jamboree speech gave me the creeps, and I don’t think I’m alone.

“Part of this was an emotional reaction to watching a captive audience of 40,000 young people, children really, who’d been told to be polite and welcoming, and who were excited because the most powerful man in the world’s most powerful country was coming to talk to them.  A moment pregnant with possibilities – a potential teaching moment.  Then the jarring spectacle of the kids cheering and applauding as Trump blasted through a speech full of derision toward others, self-obsession, political spin, and incoherent rambling about cocktail society and high finance in New York city.  I suspect it was the excitement of the occasion that spurred the applause rather than actual endorsement of what Trump said.  Still, it evoked the sort of cheering for obvious nonsense – or worse – that we’ve witnessed in dictatorships around the world.

“The kids were being used. If my child had been there, I’d be mad as hell....

“The real power of the American presidency lies in its ability to inspire – especially young people who are in awe of the office, its majesty, history and symbolism. There was no inspiration here, only mockery, spin and manipulation....

“Implicit in Trump’s ‘fake news’ message is that only he can be trusted to tell the truth. This is the sort of subtext you often see from authoritarian leaders, as in the constant repetition of a theme – until the populace becomes numb, no longer objects, and begins to accept it.

“Are we getting to that point with ‘fake news’?  Did he plant the seed with these children?

“And when many of them go on a school trip to Washington, will they be looking for what Trump calls the ‘swamp,’ the ‘cesspool’ or the ‘sewer’ in the town that bears our first president’s name?  How many of the best and brightest would want to work there or devote their lives to public service?

“Another tenet of a healthy democracy is a degree of respect and acceptance between government and opposition, no matter how deep their policy differences.  In immature or faltering democracies, the winners typically punish and seek to crush their opponents.  How else to interpret Trump’s criticism of the Justice Department on the morning of his Boy Scout speech for not pursuing ‘crimes’ he ascribes to former secretary of state Hillary Clinton?  It is seemingly not enough to have won the presidency fair and square – he reveals a need to vanquish his opponent.  A great lesson for budding citizens and future voters.

“To a degree, we adults have become accustomed to his sort of behavior – ‘Let Trump be Trump,’ his supporters say. This was the first time we’ve seen him be Trump in front of a captive audience of children.  So it restores a bit of the shock many felt at some of his early campaign antics and to which many have become inured.

“In this sense, Trump may have done us a favor by making all of this new again – reminding us of what is neither presidential nor acceptable in the nation’s leader.”

--Congressman Steve Scalise was released from the hospital on Tuesday and is now home undergoing intensive rehabilitation, according to the medical center where he was being treated. It had been six weeks since Scalise was critically wounded in the congressional shooting at a softball practice. Because of where the bullet entered, a lot of us were concerned he wouldn’t make it.

--Hillary Clinton’s upcoming book will double down on the Russia issue and James Comey’s involvement in her election defeat.  One longtime ally told The Hill, “She really believes that’s why she lost, and she wants to explain why in no uncertain terms....I think a lot of people are going to be really surprised by how much she reveals.”  The book, “What Happened,” is due out in September.

So she’ll be all over the airwaves that month, and her story will be counter to the message Democratic Party leadership wants to put forward these days.  As Senate Minority Leader Chuck Schumer (N.Y.) told the Washington Post this week: “When you lose to somebody who has 40 percent popularity, you don’t blame other things – Comey, Russia – you blame yourself.  So what did we do wrong?  People didn’t know what we stood for, just that we were against Trump. And still believe that.”

--In a poll by Reuters/Ipsos following President Trump’s announcement that he will ban transgender personnel from the armed forces, 58 percent of adults agreed with the statement, “Transgender people should be allowed to serve in the military.”  27% said they should not, while the rest answered “don’t know.”  Among Republicans, 32% said they should, 49% said they should not.

Personally, I’ll support whatever Gen. Mattis concludes. 

--In succession this week....

The parents of Charlie Gard ended their legal battle to give the terminally ill British baby further treatment.  “For Charlie it is too late. The damage has been done,” Grant Armstrong, a lawyer representing the parents, said on Monday.  The parents had sought to send him to the United States to undergo experimental therapy.  Britain’s courts, backed by the European Court of Human Rights, refused permission, saying it would prolong his suffering.

Thursday, Charlie was moved to a hospice to spend his final hours there before a ventilator that keeps him alive is turned off.

Charlie died today.

--We note the passing of longtime Washington, D.C. local news anchorman Jim Vance, who anchored for NBC Washington for more than four decades.  He was 75 and had recently announced he was battling cancer.

I worked in Washington briefly back in 1987 and as an NBC guy, quickly got used to Vance, who was much like New York’s long-time NBC 4 anchor Chuck Scarborough, just class.  I later traveled a lot on business and pleasure to D.C. and never failed to catch the guy.  He first became co-anchor of NBC Washington’s daily newscasts in 1972.  RIP.

---

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

God bless America.

---

Gold $1275
Oil $49.79

Returns for the week 7/24-7/28

Dow Jones +1.2%  [21830]
S&P 500  unch  [2472]
S&P MidCap  -0.7%
Russell 2000  -0.5%
Nasdaq  -0.2%  [6374]

Returns for the period 1/1/17-7/28/17

Dow Jones  +10.5%
S&P 500  +10.4%
S&P MidCap  +6.1%
Russell 2000  +5.3%
Nasdaq  +18.4%

Bulls 60.2
Bears 16.5 [Source: Investors Intelligence]

Have a great week.

Brian Trumbore