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09/16/2017

For the week 9/11-9/15

[Posted 11:30 PM ET, Friday]

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Edition 962

Hurricane Irma...Trump World...

I have to start out with historic Hurricane Irma and how, as a nation, we dodged a bullet, or as Miami Beach Mayor Philip Levine put it, “we dodged a cannon,” though the human and financial toll is still tremendous.  As of early Friday, Irma had killed 82,* at least 32 of them in Florida, including the eight elderly patients who died after being exposed to sweltering heat inside their Miami-area nursing home, and seven more combined in Georgia and South Carolina.  The balance died in the Caribbean and the toll in Cuba is unknown.

*The latest death toll from Hurricane Harvey is also 82, as of Friday.

I was out of pocket, off the grid, largely, starting last Friday afternoon for nearly 48 hours, out on the south shore of Long Island at a function with close friends, but I was following Irma and how it went over northern Cuba, which greatly reduced its power and the threat to Florida once it turned north.  Another 40 miles off Cuba and the narrative is greatly different.  We were lucky, while one of the untold stories is how Cuba’s nascent tourism industry on those very shores was dealt a deathblow.  [Not that I’m crying for the Castro regime itself.]

While we’ve all seen the damage to the Keys, another area that suffered a heavy blow to its livelihood, tourism, and the agricultural losses in Florida were pegged at $16 billion alone in Okeechobee County in southern Florida (with a total economic cost of Irma perhaps around $80 billion, according to Moody’s Analytics, vs. $108 billion for Hurricane Harvey), the devastation in the Caribbean is sickening.

All 1,800 residents on Barbuda, for example, have been taken off the island.  You’ve seen the pictures, and satellite images, of how the islands were destroyed, stripped of all vegetation and beauty.

But it’s such a multi-faceted story.  I have never been to the Caribbean myself, Eleuthera in the Bahamas being the closest facsimile, but a day or two after we learned of Barbuda, I was communicating with a good friend, Jeff B., who vacations in neighboring Antigua every March, and he was happy to hear the side of the island where his resort is supposedly escaped largely unscathed.  Only I noted that Antigua, like the others, will be changed forever because where are many of the displaced going to end up?  They only know one region.  They will flock to the islands that have something left. And thus there will be new problems. [There’s nothing for them in Puerto Rico, for example.]

I read all the accounts of the disaster, such as in St. Martin, where residents spoke about a general disintegration of law and order as survivors struggled in the face of severe food and water shortage.  The initial government response from the likes of Britain, France and the Netherlands was hardly robust.

Catherine Clayton, who owns a hotel with her family on Tortola, told the Times of London, “It is like an apocalyptic doomsday scene here.  No trees, leaves or greenery.”

Billionaire Sir Richard Branson summed it up best, Branson seeing his dream island resort of Necker Island (long on my ultimate bucket list...albeit unattainable...) destroyed.  He was there to ride out the storm and the initial photos of him were very sad.  Buildings down, trees uprooted.  The only thing that saved Branson and his workers was “a strong cellar built into Necker’s Great House.”

Today, Branson offers, the only thing that will save the Caribbean is a “Disaster Recovery Marshall Plan.”

I just don’t see it coming to fruition.  But I hope I’m wrong.

So the above is prelude to my missive on the topic of climate change.

I was fuming this week when I heard some influential voices, some of whom I mention in “Random Musings,” say the National Weather Service warnings for Florida, as Irma roared through the Caribbean, were nothing more than scare tactics...designed to gin up action on ‘climate change’ they don’t see as warranted.  What a bunch of a-holes.  It’s the same tune from them every time, too.

Personally, though, I have argued for over a decade that the debate over global climate change is mislabeled; that it should really be called “global pollution.”  There isn’t a soul who can argue that soot spewed from a factory, or gases from an airplane, is good for the environment.  Fine particulate matter is killing millions in China, for example, each year.

And there is no one who can argue that crap in our waterways, including fertilizers, isn’t bad for a different reason, though in this latter example there are tradeoffs.

But when you start talking about temperature change, the debate often hits a brick wall.  You all know the drill...I’m not here to argue it.

It’s also at this point where you get idiots like Beyonce blaming climate change for the Mexico earthquake, as she did the other night at a hurricane aid telethon.

No, the debate has to be over pollution, so that everyone can identify...so that the deniers are stifled.

The other day President Trump reiterated he was deeply skeptical of climate change.  Asked by a reporter if the record-breaking storms had shifted his thinking, Trump replied: “We’ve had bigger storms than this.”  [Hours before, he talked of Irma having “absolutely destructive potential,” but that’s our president. A nudnick.]

It’s frustrating.  Some will never be convinced we have to do all we can to limit the garbage we put in the air and in our waters.  The economy is more important, they say. Greenhouse gas levels were higher before the Industrial Revolution, blah blah blah.

I’m not interested in that battle.  I’m more interested in straight talk.  If it looks like crap, it’s not good for us.  Period.

And then there is the politics.  I said at the time President Trump was an outright idiot to exit the Paris Climate Accord.  Politically, it was one of the dumber moves in recent memory. Why?

What do we lose from being in it?  The targets aren’t enforceable!  But we keep our seat at the table, Trump could send some lower level official to the meetings if he wanted, but we would have looked far better among our allies, especially their people, and these are the same folks who we want to buy our products.

Trumpets....

--Many conservatives erupted in anger after Democrats announced that President Trump had agreed to pursue a legislative deal on DACA (the Deferred Action for Childhood Arrivals program) that would protect the 800,000 Dreamers, the undocumented immigrants who face deportation in six months without legislative action, with nothing for Trump’s signature campaign promise: building the border wall with Mexico.

Democratic leaders Sen. Charles Schumer and Rep. Nancy Pelosi said late Wednesday after dining with Trump that they had agreed with the president on a law that would protect the Dreamers, and that it would include border security, but “exclude the wall.”

“We agreed to enshrine the protections of DACA into law quickly, and to work out a package of border security, excluding the wall, that’s acceptable to both sides,” the two said in a joint statement.

Rep. Steve King (R-Iowa), one of the GOP’s biggest immigration hawks, warned the president in a tweet: “If AP is correct, Trump base is blown up, destroyed, irreparable, and disillusioned beyond repair,” referencing an Associated Press story on the bipartisan agreement following the dinner, with Senate Majority Leader McConnell and House Speaker Ryan not in attendance.

Conservative radio talk show host Laura Ingraham, who is friendly with Trump, mocked him for seeming to shelve his pledge that animated his supporters.

“Exactly what @realDonaldTrump campaigned on.  Not,” she tweeted, adding later, “BUILD THE WALL! BUILD THE WALL!...or...maybe...not really.”

Conservative firebrand Ann Coulter tweeted: “At this point, who DOESN’T want Trump impeached?”

Breitbart News, with Steve Bannon back running the show, called the president “Amnesty Don” in a headline.  Bannon, in a “60 Minutes” interview I delve more into below, said “I’m worried about losing the House now because of Trump’s decision to rescind DACA in six months, with the six-month delay for negotiations.

“My fear is that with this six months down range...if this goes all the way down to its logical conclusion, in February and March, it will be a civil war inside the Republican party that will be every bit as vitriolic as 2013. And to me, doing that in the springboard of primary season for 2018 is extremely unwise.”

Bannon said he wanted Trump to “go full bore” and “focus on the American citizens.”  In other words, rescind DACA immediately.  “As the work permits run out, they self-deport. There’s no path to citizenship, no path to a green card and no amnesty. Amnesty is non-negotiable.”

Thursday morning, Trump tweeted:

“No deal was made last night on DACA.  Massive border security would have to be agreed to in exchange for consent. Would be subject to vote.”

Then he chirped: “Does anybody really want to throw out good, educated and accomplished young people who have jobs, some serving in the military?  Really! [Ed. punctuation correct.]....

“They have been in our country for many years through no fault of their own – brought in by parents at young age.  Plus BIG border security,” he added.

Then late Thursday morning, as he headed to tour hurricane-ravaged Florida, Trump told reporters: “I think we’re fairly close (to a deal), but we have to get massive border security...(but) the wall will come later...The wall is going to be built, it’ll be funded a little bit later.”

Upon his return from Florida, Trump said he was close to a deal with Democratic congressional leaders on the Dreamers, while funding for the wall will “come later” and not be part of any final deal.  But he added, Democrats “cannot obstruct the wall.”

“We have to have an understanding that whether it’s in the budget or some other vehicle in a very short period of time, the wall will be funded.  Otherwise, we’re not doing anything.”

Meanwhile, House Speaker Ryan said, “There is no agreement (on DACA).  I think the president understands that he’s got to work the congressional majority,” adding that “we have not begun negotiations.”

Editorial / Wall Street Journal

“Who knows how this will turn out, but we hope Mr. Trump cuts that deal with the Democrats with few security strings attached. The benefits would be many.

“Congress would codify in law a policy that Barack Obama imposed illegally by executive fiat. Mr. Trump would solve the most politically emotive immigration problem, which is the fate of these young adults who committed no crime in coming here. Some 700,000 people could keep contributing to American society without fear of deportation.

“Mr. Trump would also notch a political success on immigration that eluded George W. Bush and Mr. Obama. He would show, as he promised in the campaign, that he can get things done.  Not a bad day’s work.

“As for the shouts of ‘betrayal’ from Mr. Trump’s restrictionist fans, we hope someone has confiscated the sharp objects at the Breitbart townhouse.  But what did they expect?

“Their desire to deport the Dreamers to countries they left as children is a minority view in the United States, the Republican Party and even among conservatives.  Mr. Trump adopted his anti-immigration positions during the campaign to win the GOP primary, not because they are lifelong beliefs. Mr. Trump’s core political conviction is winning, and the Dreamer deal will be popular.

“Our guess is the Trumpians in the media will soon find a way to blame everyone else – especially the GOP ‘establishment’ – for the President’s switcheroo. This is their political and commercial business model. They’ll be back cheering Mr. Trump soon enough. So go ahead and cut that deal, Mr. President, and include a path to citizenship too.  After Neil Gorsuch’s nomination and deregulation, it would be the biggest achievement of your Presidency.”

--Sen. Bernie Sanders (I-Vt.) introduced a single-payer bill for healthcare in 2013, and didn’t attract a single co-sponsor.  But that’s wasn’t the case Wednesday, as some of the biggest names in the Democratic Party were by his side.

While the bill has zero chance of passing this Congress, and Sanders gave zero details, particularly on the costs, which would be humongous, there is legitimate cause for concern for many of us. 

Editorial / Wall Street Journal

“Hillary Clinton’s memoir of her presidential campaign is getting most of the media attention this week, but that’s the politics of progressive nostalgia.  If you want to know where the Democratic Party is going, Bernie Sanders showed the way Wednesday with his proposal for a complete government takeover of health care.

“ ‘Medicare for all,’ the Vermont Socialist calls it, and what was once a crank idea is fast becoming a progressive litmus test for Democratic candidates.  Fifteen Democratic Senators endorsed it, including possible 2020 presidential candidates Elizabeth Warren (Mass.), Kamala Harris (Calif.) and even Cory Booker (N.J.).  Hard to believe, but not long ago Mr. Booker was posing as a moderate.

“The Sanders bill would expand Medicare – now available to people 65 and older – to the entire U.S. population over four years.  Our readers understand how expensive such ‘free’ medical care would be in runaway costs for taxpayers and rationed care in the form of the long waiting lists that exist in other socialist systems.

“But no one should think this can’t happen here. The Republican failure on health care guarantees the continuing decline of ObamaCare and that creates an opening for Democrats to escalate their designs for more government control.  Barack Obama once told us that he favored such a single-payer system but America wasn’t ready for it.  But in an era of political tumult, anything can happen, all the more so when millennials can’t remember the 1990s, much less the Cold War. All the old battles are new again.”

Meanwhile, Republican Sen. Bill Cassidy (La.) is predicting the ObamaCare alternative he put forward with Republican Sen. Lindsey Graham will win enough votes to pass.

“I am pretty confident we’ll get there on the Republican side,” Cassidy said on Friday.  “We’re probably at 48-49 and talking to two or three more.”

The Cassidy-Graham alternative ends ObamaCare funding for subsidies to help people afford coverage and funding for the Medicaid expansion, instead converting both pots of money into a block grant to the states.

But GOP leadership has not thrown its full weight behind the bill, with Mitch McConnell telling the two they need to find 50 votes on their own.

--Supreme Court Justice Anthony Kennedy temporarily restored President Trump’s refugee travel ban.  The order, issued Monday, allows the administration to block asylum seekers from entering the United States until the Supreme Court can assess the legality of a longer-term ban.

The order puts a hold on a lower court ruling allowing refugees with a formal assurance from a resettlement agency to enter the United States.

Next month, the Supreme Court will consider whether Trump’s travel ban is legal at its core.  It has previously ruled the administration can’t keep out those with a “credible claim of a bona fide relationship” to the United States, such as family members living in the U.S., or those tied in some fashion to a college or university in the country.

Last week’s federal appeals court ruling stipulated that the administration could not legally block grandparents or refugees with assurances.

Opinion....

Gerald F. Seib / Wall Street Journal

“A few weeks after Donald Trump won the presidential election last year, a Wall Street Journal/NBC News poll asked Trump voters why they went for the man who had just shocked the world.

“Four in 10 Trump voters said a primary reason was that he would change business as usual in Washington.  By contrast, only one in 10 said they picked Mr. Trump because they thought he would pursue traditional Republican policies.

“Those two numbers explain why now-President Trump probably is on safe ground in his sudden pivot to wooing Democratic leaders in Congress, while openly scorning those of his own Republican Party.

“A large share of Trump voters picked him because they thought he would rattle the status quo – and by that they meant the status quo of both parties.  Mr. Trump wasn’t a true ideological conservative, and his supporters knew that.

“He was barely a Republican, and his supporters also knew that.  In the first moment of the first Republican primary debate, after all, Mr. Trump alone among the candidates refused to say he would support the eventual GOP nominee or forswear running as an independent if he didn’t get the nomination.

“In sum, Mr. Trump ran as a virtual independent....After he won, he stood on the steps of the Capitol on Inauguration Day and delivered an angry address that attacked the entire Washington power structure arrayed around him, without regard to party.

“Given all that, it’s actually surprising it took Mr. Trump this long to really break with his own party and to exercise an option that was always available to him: the option of trying to govern as he ran, which was an independent in pursuit of working-class Democratic support....

“Still, the limits to bipartisanship are real and significant. Disdain for Mr. Trump among rank-and-file Democrats will put a ceiling on how far Mr. Schumer or any other party leader can go in cooperating with him.  Just 8% of Democrats say they approve of the job the president is doing, the latest Journal/NBC poll found.  That’s half the share of Republicans who approved of Democrat Barack Obama’s performance at this stage of his presidency....

“That means Democrats probably have license to cooperate with Mr. Trump on raising the debt ceiling, funding government and improved infrastructure, and on some trade matters. But the party base figures to rise up against the kind of largescale tax cut and defense spending increases Mr. Trump envisions and revolt if he doesn’t agree to extend legal status for ‘Dreamers’....

“So cooperation with Democrats has distinct boundaries. But nobody should be surprised Mr. Trump is choosing to test those boundaries at this point.”

Wall Street

The stage is set for an important Federal Reserve Open Market Committee meeting next Tues. and Wed., the biggest of the year, as it is expected the Fed will lay out its plan for dealing with its mammoth balance sheet.  While the Fed is not going to raise interest rates, at this time, it will no doubt announce it is going to begin very slowly selling off its Treasury and mortgage-backed positions, which serves as a rate hike of a different order.

And assuming the Fed goes this route, it was bolstered this week by the August inflation data, which had the producer price index rising 0.2%, 0.1% ex-food and energy, though 2.4% year-over-year, 2.0% on core.

The next day consumer price data was released and the CPI rose by 0.4% from the prior month, 1.9% compared with a year earlier, according to the Bureau of Labor Statistics.  The core rate rose 0.2%, 1.7% year-over-year.

So the inflation readings are at a seven-month high, though with higher gas prices a major culprit.  But that should be enough for the Fed, when coupled with solid employment data, to begin their balance sheet normalization.  As for a hike in rates in December, the odds are now 50/50, vs. about 40% a week ago.

We also saw less than expected figures on August retail sales, -0.2% (but up 3.2% year-over-year), with July being revised downward, though last month’s softness was Hurricane Harvey related.

Ditto August industrial production, -0.9% when a slight gain was expected, due to Harvey’s impact on the energy sector.

However, the declines in retail sales and industrial production led the Atlanta Fed to reduce its GDPNow indicator to 2.2% for the third quarter, down from 3.4% on Aug. 25.

On to next Wednesday’s Fed policy statement.

As for the stock market, it was the best week of the year, as Wall Street took relief (in a perverted way) from less than expected damage from Hurricane Irma, while Kim Jong Un hadn’t fired off any ballistic missiles over the weekend, as feared.

Ergo, risk back on, and the safe-haven trade (bonds and gold) reversed.

There was also growing confidence on tax reform, with House Speaker Paul Ryan saying a plan would be released next week that “won’t necessarily be revenue neutral.”

But then President Trump, working with Democrats Schumer and Pelosi, said there would be no cut for the wealthy.  This is an extremely complicated issue, including how you treat partnerships, single proprietorships and the like, and I’ll be very surprised if something is signed by the president come year end.

As for the impact Friday on Wall Street with Lil’ Kim’s latest missile test...zippo, nada.  He’s treated on the Street, and in many markets around the world, as an irritant, a gnat.  That’s a mistake.  The Dow Jones and S&P 500 finished at record highs, with Nasdaq just shy of its own, having reached a new one earlier in the week.

Europe / Asia

There was no major economic news for the eurozone as a whole this week.  But the big story was in the U.K., where the unemployment rate for the three months ending July (they like to do trailing 3-month averages here) dipped to 4.3%, the lowest since 1975.

But wages only rose 2.1%, year-over-year, vs. August inflation which came in at 2.9% annualized (2.7% ex-food and energy), versus 2.6% in July (2.4% on core).

Ergo, the people aren’t keeping up.

But the Bank of England then held a policy meeting after the inflation data was released and it clearly signaled that, unlike the below 2% rates in the eurozone, inflation is a distinct problem in the U.K. and is overtaking Brexit-related slowdown issues as an economic risk.  So the BOE said it is headed toward raising interest rates for the first time in more than a decade.

The pound surged in response, and the yield on the 10-year soared vs. a week earlier to 1.30%, compared with 0.99% last Friday.

The Bank of England voted 7-2 to hold the benchmark rate at 0.25 percent, but while leaving the European Union has cast a shadow over the economic outlook, the resulting drop in the pound, until this week, has pushed up inflation, and the BOE now sees the rate of price gains exceeding 3 percent next month and remaining above the 2 percent target level for years.  So it’s now looking like a hike come November’s meeting of the policy committee.

As for Brexit, Prime Minister Theresa May is now slated to give her key speech on exiting the EU on Sept. 22, in Florence, Italy, as the government tries to reassure the bloc it will not use Brexit to undercut financial regulations.

The point in giving the speech in the heart of Europe is to show that Britain still wants to work closely with the EU after leaving. After the last round of talks in Brussels went poorly, Mrs. May appears to want to take a softer tone.

Brussels had previously announced further negotiations would not take place until after May’s speech, recognizing the importance of it, but this allows little time for progress ahead of a key EU summit Oct. 19-20, at which Britain was hoping the bloc would announce that enough movement had taken place to allow for discussions on a new trade arrangement.  Just ain’t gonna happen, sports fans.

EU leaders will also be anxiously listening on Sept. 22 to the prime minister and whether she addresses the topic of the exit bill...settling future financial obligations to the EU. That is one of the three key sticking points in negotiations so far.

But May isn’t likely to address the topic in detail because she has a critical Conservative Party conference in early October.  The euroskeptics aren’t likely to want to hear about $50 billion or so tabs.

The prime minister did win a key vote in parliament on Brexit, 326-290, in favor of a bill designed to transpose more than 10,000 EU laws onto the U.K. statute book, March 29, 2019, the day the U.K. is scheduled to leave the bloc; the purpose being to prevent a legal vacuum.

But critics charge the bill gives a lot of power to the cabinet, allowing members to make changes to laws without parliamentary approval.  [The government defended the bill, while admitting it gives ministers wide-ranging powers to amend laws to make them work domestically, often by interchanging the word ‘EU’ for Britain.]

Mrs. May’s team says that parliamentary approval will be sought on key issues, but lawmakers are talking about attaching amendments at a later stage and this is a process that is expected to take months.

For his part, European Commission President Jean-Claude Juncker, addressing the European Parliament, said: “Europe can deliver for its citizens when and where it matters.  We’ve been slowly but surely gathering momentum,” despite the political threats posed by Brexit and populism.

Europe is presenting itself as a bastion of stability, with global developments having turned in the EU’s favor, especially with President Trump’s challenging the Atlantic order and Kim Jong Un’s nuclear and missile tests.

“The wind is back in Europe’s sails,” Juncker said.  “We have now a window of opportunity.”

Anne Applebaum / Washington Post

“It is a rare opportunity.  Seldom does the voting public have the chance to watch their elected politicians confront very specific false promises in real time.  Usually campaign promises are either too vague to be contrasted with reality (‘Make America Great Again’) or too long term.  By the time that ‘guaranteed growth’ either arrives or doesn’t, the person who said it would happen is long out of office.

“But in Britain right now, something different is unfolding.  During the referendum last year, politicians advocating their country’s departure from the European Union gave some specific assurances. Some derived from ignorance; as it turned out, few of them really understood how the E.U. works.  Others were lies, which they knew to be lies at the time.

“Because they didn’t expect to win that campaign, they didn’t expect either their ignorance or their dishonesty to be revealed. But then they won – and now it’s happening.

“The most egregious lie was about money. During the campaign, leading Brexiteers drove around the country in large red buses, emblazoned with a slogan: ‘We send the EU 350 million pounds a week, let’s fund our NHS [National Health Service] instead.’  This was a very influential argument, as the Brexit campaign managers have admitted.  It was also an invented number – Britain does not send the E.U. 350 million pounds a week, as fact-checkers showed over and over.  Some of those on the winning side admitted as much after the campaign.

“But now, instead of receiving ‘350 million pounds a week,’ negotiators are trapped in an argument about how much money Britain owes Europe – for budgetary promises not kept, for agreements signed and not honored.  More ominously, the British government is just now realizing that leaving the European single market, which is far more than an ordinary free-trade zone, will cost it in other ways, too.  Jointly designed European agencies and arrangements may now have to be re-created, at vast expense, from scratch: pharmaceutical and nuclear regulators, for example.  It is possible that a vast new customs service, complete with parking lots at the border, computer systems and customs agents, will be needed to cope with new tariff regimes once Britain is outside the European customs union.  In the long term, Britain will have more bureaucracy, and less money to spend on the NHS.

“The second falsehood, frequently repeated during the campaign, was that leaving the single market would be fast, simple and easy.  Liam Fox, now Britain’s top trade negotiator, said a new trade deal with Europe would be ‘the easiest in human history.’  David Davis, now the minister in charge of the whole process, declared that ‘we can do deals...and we can do them quickly.’ With breathtaking insouciance and eye-watering obliviousness, others implied that all sorts of trading arrangements with countries all over the world could be ready in a matter of months.

“In practice, more than a year has passed since the referendum and nearly six months have passed since Britain invoked Article 50, the ‘exiting the E.U.’ procedure.  During that time, almost no progress has been made....

“What happens next is unclear.  We know that the Brexiteers’ promises were hollow. Their assessments were wrong.... During the recent snap elections, (voters) seemed uneasy about the ruling party and refused to give it an absolute majority.  Will the Brexiteers now be further punished at the ballot box?  We’ll see.”

Eurobits....

--President Trump was at it again.  Immediately after news hit of another terrorist attack in London this morning, targeting a train, one that could have been far worse had the bombmaker gotten it right, Trump tweeted:

“Another attack in London by a loser terrorist. These are sick and demented people who were in the sights of Scotland Yard. Must be proactive!”

Clearly implying Scotland Yard wasn’t doing its job.

Prime Minister May and her police officials led the criticism of the president’s intervention, Trump being accused of betraying intelligence details.

The prime minister said in a pool TV interview: “I never think it’s helpful for anybody to speculate about what is an ongoing investigation.” The Metropolitan Police went further, saying in a statement that the tweets “are unhelpful and pure speculation.”

ISIS claimed responsibility and Britain raised its threat level to “critical” in response, meaning there was the risk of an imminent attack.

--Ireland’s second-quarter GDP grew 1.4%, 5.8% year-over-year.  But Ireland’s figures have been highly volatile and the data called into question.  Most economists prefer to look at the unemployment rate, which peaked at 15.1% five years ago and is now down to 6.3%.

[The issue with Ireland and the calculation of GDP is complicated by the large impact of multinational firms re-domiciling, relocating or depreciating their capital assets, so the state statistics office is coming up with a “Modified Gross National Income” that strips this out and is to be phased in by the end of 2018.]

--Support is waning rapidly for Catalonia’s secession from Spain, with Catalonia’s parliament decreeing that a referendum on the topic will be held on Oct. 1.  Surveys now show support for an independent Catalonia is just 35% from a peak of 49%, and it’s largely about the nation’s economy, with Spain on track to record its third year of 3%-plus growth.

Catalonia accounts for one-fifth of Spain’s economic output and is growing faster; powered by construction, tourism and chemical and pharmaceutical manufacturing.  Unemployment is below the national average.  In a nutshell, there’s little reason to take such a big risk.

It also doesn’t help the independence cause that voters can clearly observe how messy Brexit has been.

--A week from Sunday is Germany’s national election, with Chancellor Angela Merkel continuing to hold about a 13-point margin over challenger Martin Schulz.

Schulz has put social justice at the core of his campaign, but that has failed to gain traction and, after all, Germans have had 12 pretty good years under Merkel thus far.

The main issue is who Merkel’s coalition partner will be and that is totally up in the air.

Turning to Asia....

China’s vehicle sales (both cars and trucks) rose a third straight month, 5.3% year-over-year.  Overall sales were 2.19 million vehicles, according to the Chinese Association of Automobile Manufacturers.

Separately, August retail sales grew 10.1% year on year, but this was below expectations, while fixed-asset investment (read infrastructure) grew 7.8% for the eight months ended August, down from 8.3% at the end of July.  [State firms were more active, investment up 11.2% vs. a 6.4% rise from privately owned companies.  Industrial production also slowed, 6% in August, down from July’s 6.4% pace.  [All of the preceding courtesy of the National Bureau of Statistics.]

In line with slowing investment growth in the country, some key industrial indicators moved lower in August.  Steel output slowed while cement production growth nearly halved. Electricity production growth also nearly halved, and coal power growth plunged from 10.5% in July to just 3.5% in August.

Also related to the above, China announced it would blacklist companies that violate overseas investment rules as part of a wider crackdown on “irrational and unauthentic” foreign acquisitions, as reported by China Daily.

The blacklist will be shared across government departments to allow regulators to oversee investment activities.  It’s one thing for Chinese companies to snap up foreign technology and brands to speed their development.  It’s another to spend large sums on sports, entertainment and real estate...so the government believes.

So the Commerce Ministry said Thursday that outbound investment in the first eight months of the year had fallen 41.8 percent from a year earlier to $68.7 billion.  You aren’t likely to hear of more Chinese ownership in, say, Premier League football teams.

In Japan, the mood among manufacturers, as measured by the Reuters Tankan index, turned down for the first time in four months, though the service sector figure rose to its best level in over two years.

In terms of manufacturers, yes, North Korea has to take a toll, while some in Japan are saying capital spending is slowing overseas due to uncertainty on the recovery prospects for Europe, America and China, which isn’t really the case...today.

Street Bytes

--As noted earlier, the Dow Jones closed at a record today, 22268, up 2.2% for the week, its best performance of the year, while the S&P climbed 1.6% to a 2500, and Nasdaq gained 1.4% to 6448, 12 points shy of its record 6460.

--U.S. Treasury Yields

6-mo. 1.17%  2-yr. 1.38%  10-yr. 2.20%  30-yr. 2.77%

The yield on the 10-year rose from 2.05% the prior week as part of the risk-on trade, selling safe havens.

--West Texas Intermediate, the price of which I list at the end of this column each week, topped $50 briefly for the first time since August, before finishing at $49.83, as the situation with Gulf refiners stabilized, while OPEC revised upward its global oil demand growth forecasts for this year and next, with consumption in the second quarter surpassing expectations.

In its monthly oil market report, OPEC cited better-than-expected numbers from industrialized nations in the West and China, with the oil demand growth estimate rising to 1.42m b/d, with total consumption forecast at 96.8m b/d.

Robust demand should lead to further reductions in oil inventories, assuming OPEC and other producers such as Russia adhere to production cuts previously agreed to.

World demand growth in 2018 will increase 1.35m b/d to 98.12m b/d.

--The median U.S. household’s income finally topped pre-recession levels in 2016, according to the U.S. Census Bureau.

Incomes for a typical household, adjusted for inflation, rose 3.2 percent from 2015 to 2016 to $59,039, but only slightly above the previous peak of $58,665, reached in 1999.

Ergo, while incomes have risen solidly the past two years, we are basically where we were 17 years ago (to 2016).  And, officials cautioned the figure was affected by a change in methodology in 2013, and that actual incomes probably had not exceeded the previous peak.

[The Economic Policy Institute, a liberal research organization based in Washington, actually estimates that without the change in methodology, median household income was still 2.3 percent below the ’99 high.]

It also needs to be reported that the income gains fell disproportionately with the most affluent.  The mean household income for the poorest fifth of households fell by $571 over the decade ending last year, adjusted for inflation, while it rose $13,479 for the wealthiest fifth of  households.

Separately, the Census Bureau reported the poverty rate last year fell to 12.7 percent from 13.5 percent, with the number of people living below the poverty line falling 2.5 million to 40.6 million.

The proportion of Americans without health insurance fell to 8.8 percent from 9.1 percent.

--Apple rolled out a new series of products, including its much-anticipated iPhone X.  A decade after the release of the first iPhone, the model X was the highlight of the company’s most important product launch in years on Tuesday.  It won’t ship until Nov. 3, later than usual for new products.

Apple also unveiled the iPhone 8, creating a tiered system: two phones, equally new, one of which is more powerful than the other, with both being more powerful than prior models.

The iPhone X is going to list at $999, the most expensive iPhone ever released, $300 more than the base model iPhone 8 – which is also more expensive than Apple’s previous highest starting price for a base model phone.

The iPhone X is distinguished by an edge-to-edge OLED screen, along with facial recognition technology and a more vibrant display.

Apple is clearly looking to reestablish itself as the premium smartphone brand.

The company’s shares were down just a smidge on the week, Apple having a history of seeing its stock rise ahead of product announcements and then the same folks sell on the news. That wasn’t really the case this time.

--Meanwhile, Apple rival Samsung said pre-orders for its latest premium smartphone Galaxy Note 8 are the highest among the Note series, with Samsung looking to keep its market dominance as it competes with Apple.  The pre-orders are from about 40 countries.  It is being priced at $930 to $960 by U.S. network carriers, including a dialing and data plan.

--Equifax shares continued to plummet after the Massachusetts attorney general announced she was preparing to sue the credit bureau over one of the biggest data breaches in history.  [There are dozens of class-action suits that have been filed overall.]

Maura Healey said in a statement: “In all of our years investigating data breaches, this may be the most brazen failure to protect consumer data we have ever seen.”

Since the announcement of the cyberattack that put the personal data of as many as 143 million Americans at risk, the shares have fallen 35%.  The company, one of the three largest credit bureaus, has had one bungled P.R. move after another, starting with the failure to alert the public for months after first discovering the breach on July 29.  Three top executives sold almost $2 million in stocks days later, but we are being told, ‘Nothing to see here...move along.’

Plus, the company demanded at first that customers give up their right to sue the company in exchange for free credit-monitoring services – and then charged them to put a freeze on their credit; both moves having since been rescinded.

Democratic Sen. Heidi Heitkamp, a member of the Senate Banking Committee, said the data hack and potential insider trading was “disturbing” and if the latter occurred, “somebody needs to go to jail.”  No disagreement here.

But wait...there’s more!

Highly-respected cyber-crime blogger Brian Krebs said that for Equifax’s Argentine operations, an online employee tool could be accessed by typing “admin” as both a login and password.

Krebs added that this gave access to records including thousands of customers’ national identity numbers, as a web application – referred to as Ayuda, Spanish for “help” – was weakly guarded.

“[It] was wide open, protected by perhaps the most easy-to-guess password combination ever: admin/admin,” wrote Krebs.

--In another positive economic sign, Target Corp. announced it would hire about 100,000 seasonal workers for the holiday period, up 43%, from 70,000 last year.  It is also hiring an additional 4,500 at its distribution and fulfillment centers.

Macy’s, though, said it would hire around 80,000 seasonal workers for the holiday season, down from 83,000 last year, though 3,000 more to fulfill online orders.

--Shares in McDonald’s slid a few $s ($161 to $157) on an analyst’s sales forecast for the current quarter which is less than currently forecast due to Hurricanes Harvey and Irma, with McDonald’s having 2,000 locations in Texas and Florida, which were obviously disrupted for decent stretches.

M Science, a data tracker, said domestic revenue and same-store sales would obviously miss expectations.  Makes sense to me, though the Street is now largely discounting the miss.

--JPMorgan Chase CEO Jamie Dimon said trading revenue is likely to fall around 20% in the third quarter compared with the year earlier period.  Dimon said he wasn’t concerned about the lack of volatility in the markets, calling it “definitely cyclical.”

“You will have volatile markets again,” he added.  “People will panic, you will panic – running through the door like everybody else – regulators will panic.”

Nuclear war would do it, I mused.

[Separately, Citigroup announced it expects its trading revenues to fall 15 percent in the third quarter.]

But speaking at a banking industry conference organized by Barclays, Dimon called bitcoin a “fraud,” with the bank issuing a report on the digital currency the following day calling its legitimacy into question, while comparing it to “pyramid schemes.”

On Tuesday, Dimon said, “Bitcoin will eventually blow up.  It’s a fraud.  It’s worse than tulip bulbs and won’t end well.”.

The report said in part: “While we don’t know whether the price of cryptocurrencies will go up or down in the near term, the history of currencies, governments and financial fraud tells us that the future for cryptocurrencies will likely not be bright.”

There have also been reports Chinese authorities are shutting down bitcoin exchanges in the country by month’s end.  Last week, Chinese regulators declared so-called initial coin offerings illegal, dealing a blow to all digital currencies.  Then on Thursday, China’s largest bitcoin exchange said it would immediately stop accepting new account registrations, after “carefully considering” the Sept. 4 announcement. 

China accounts for nearly a quarter of bitcoin trades. 

Since Sept., the cryptocurrency has slumped nearly 30 percent from its recent high.  But while bitcoin fell in value five straight days, after peaking last week at above $5,000, it is still up about 500% the past 12 months.

Separately, in a survey by Bank of America Merrill Lynch, Bitcoin was the most-crowded trade among investors, overtaking Nasdaq Composite.

26 percent of investors polled by BAC identified bitcoin, versus 22 percent voting for the Nasdaq and 21 percent pointing to an anti-dollar wager.  In August, Nasdaq was picked by 30 percent.

Crowded trades normally don’t end well. The dollar was at the top at the start of the year, according to BofA Merrill, but it is down at least 10 percent against six major trading partners in 2017.

--In announcing its earnings for its fiscal first quarter, Oracle indicated slowing growth in its soaring cloud business, though it reported market-beating revenue and profit on Thursday after the close.

Oracle was a late entrant to the cloud market – but has been catching up rapidly as more and more clients ditch the costlier software licensing model.  But the company is facing strong competition from other big cloud players such as Amazon.com, Salesforce.com, Workday and Microsoft.

Oracle forecast total cloud revenue will increase 39% to 43% in the current quarter, lower than the 51% growth it reported in the latest quarter. The company said late last month it was hiring more than 5,000 engineers, consultants, sales and support people this year to boost the fast-growing business.

Overall, Oracle reported revenue climbed 7% to $9.19 billion, with earnings rising 21% to $1.83 billion, higher than expected on an adjusted basis.

The shares had gained 37% this year prior to the release, but fell 8% Friday.

--Ray Dalio of Bridgewater Associates, founder of the world’s largest hedge fund, said that if Gary Cohn were to quit the Trump administration, stock prices would tank.  “It would be terrible if Gary left,” Dalio said at a conference.  “It would be bad for the market,” because it would “undermine” the administration’s economic-reform efforts (presumably tax reform).

On Aug. 17, when it was suggested Cohn might leave on the heels of Charlottesville, the Dow Jones shed 275 points.

--Separately, Mr. Dalio announced that Bridgewater, which manages billions of dollars invested outside China by Chinese institutions and the government itself, is amassing a $multi-billion fund, with a unit based in China, that will buy and sell assets in the country.

Dalio has been a long-time student of Chinese culture, so much so that Bridgewater reflects aspects of Chinese political ideology, according to current and former employees.  China could also be crucial to Bridgewater’s future as investors withdraw money from hedge funds over issues like fees and lousy performance.

--Norway’s sovereign wealth fund, the world’s largest, hit $1 trillion for the first time on Tuesday as booming global stock markets and a rising euro lifted its assets. Established in 1998 to save oil and gas revenues for future generations, the fund is now 2.5 times Norway’s annual gross domestic product, against original projections it would peak at 1.3 times GDP in the 2020s.

As Ronald Reagan would have said, ‘Not bad, not bad at all.’

The fund is run by a unit of the central bank and invests its monies in foreign stocks, bonds and real estate, spread out over 77 countries.  Almost 2/3s of assets were in equities at the end of the second quarter, with stakes in about 9,000 companies, giving it control over 1.3 percent of all globally listed stocks.

Under a revised fiscal rule, the government can spend 3 percent of the fund’s value each year.

--Foot traffic at Whole Foods stores spiked more than 25 percent over two days last week – a week after Amazon.com completed its acquisition of the grocer and slashed prices on some items.  The spike was tracked by Foursquare Labs, which compares shoppers’ mobile whereabouts.

Online sales also soared last week when shoppers were able to purchase more than 2,000 Whole Foods items on Amazon.com.

Top selling items were water, turkey breast lunch meat, frozen berries, canned beans, coconut water and tomato paste.

To be fair, there was bound to be some initial euphoria and exuberance, and Amazon’s price cuts were on like 50 items out of 15,000 carried by a typical Whole Foods store.  And, overall, Whole Foods’ prices are still 25 to 35 percent higher than the competition.  One analyst, Burt Flickinger of Strategic Resource Group, said it will take Amazon a decade to bring the prices down to a competitive level.  [New York Post]

--A report from the Phoenix New Times Wednesday revealed that two Motel 6 locations in the area had been handing over lists of clientele to Immigrations and Customs Enforcement. As a result, from February to August, at least 20 undocumented immigrants were arrested by ICE agents, who were dropping in at the corporate-owned Motel 6s – not franchise locations – every two weeks.

The company issued a statement: “Over the past several days, it was brought to our attention that certain local Motel 6 properties in the Phoenix-area were voluntarily providing daily guest lists to (ICE).  As previously stated, this was undertaken at the local level without the knowledge of senior management. When we became aware of it, it was discontinued.”

But will this hurt the brand...the company best known for its welcoming tagline “We’ll leave the light on for you”?  I’ll say it does.

--Pharma Boy Martin Shkreli was decreed a “danger to society” Wednesday and jailed by a federal judge months before his scheduled January sentencing on his conviction for defrauding hedge fund investors.

The judge, Kiyo Matsumoto, revoked Shkreli’s $5 million bond following Facebook posts in which the jerk said he’d cough up $5,000 per strand of Hillary Clinton’s hair.  This followed a number of similar posts on the former secretary of state. Shkreli said they were an awkward attempt at humor and he never intended to “threaten” Clinton.

--The U.K. government continued to delay approval of 21st Century Fox Inc.’s proposal to consolidate ownership of Sky PLC, referring it to British antitrust regulators, while saying it was likely to broaden the review because of concerns over Fox’s broadcasting standards.

British Culture Secretary Karen Bradley said she was acting partly out of concern about corporate governance at 21st Century Fox after the series of sexual harassment scandals at the Fox News unit.

Officials at both 21st Century Fox and Sky expressed their disappointment and “surprise” with Bradley’s decision, arguing the two have the same records of compliance as other “comparable license holders.”

--Separately, as reported by the New York Times and CNN, right-wing radio host Laura Ingraham is poised to take Sean Hannity’s 10:00 p.m. time slot, with Hannity dropping down to 9 p.m., which would have Hannity facing off against MSNBC’s current cable ratings leader, Rachel Maddow.  [If this goes through, “The Five” goes back to 5 p.m. from 9 p.m.  Tucker Carlson would remain at 8 p.m.]

--Eric Bolling, a former host at Fox News Channel, was officially let go after being suspended in early August following the publication of a Huff Post story detailing allegations he had been sending unsolicited lewd photos.  Then, less than 24 hours after Fox announced it had cut ties with him, Bolling suffered a family tragedy, losing his 19-year-old son (circumstances of the death not being important).

--The horror movie “It” smashed September box office records last weekend with a $117.2 million estimated haul in North America, thus ending a painfully slow period at multiplexes.

This is also the biggest opening for an R-rated horror flick (actually, biggest opening for any horror movie), the film adapted from Stephen King’s 1986 novel about a demonic clown who emerges from a sewer to prey on children.

Needless to say, the picture was pre-marketed brilliantly, and the teaser trailer received 197 million views online in its first 24 hours, the largest in Hollywood history.  Plus Stephen King has a large audience.

Foreign Affairs

North Korea: Pyongyang launched another Hwasong-12 intermediate range ballistic missile Friday morning (local time), the second such launch in just over two weeks.

The missile reached an altitude of 478 miles and flew over 2,300 miles, flying over Japan and landing in the Pacific, 1,200 miles east of Hokkaido, according to Japan’s chief Cabinet Secretary.  According to South Korea’s military the missile flew for about 19 minutes and at a distance more than enough to reach the U.S. territory of Guam (2,100 miles away).

Joseph Dempsey of the International Institute for Strategic Studies said, it was “the furthest over ground any of their ballistic missiles has ever traveled.”

Daryl Kimball, executive director of the Washington-based Arms Control Association, said, “We are in an ever-worsening cycle of escalation and time is on North Korea’s side,” noting the country’s technicians are clearly getting better.  “So long as the war of words continues and the lack of communications continues, there is an increasing risk that one side or another miscalculates and we have a situation that can lead to military conflict.”

Japanese Prime Minister Shinzo Abe said Japan would “never tolerate” what he called North Korea’s “dangerous provocative action that threatens world peace.”

South Korean President Moon Jae-in, using his strongest language yet to condemn the latest test, said, “We have the power to smash North Korea into powder and put it beyond recovery if it provokes us or our alliance.”  [Seoul conducted a drill in which it fired two ballistic missiles into the Sea of Japan as a show of force, but one failed.]

Secretary of State Rex Tillerson demanded China and Russia take “direct actions” against Pyongyang.

“China and Russia must indicate their intolerance for these reckless missile launches by taking direct actions of their own,” he said.

Hours later, China’s Foreign Ministry said it had made enormous sacrifices to implement UN resolutions and that its sincerity could not be doubted.

The Kremlin said on Friday that the latest test was part of a series of unacceptable provocations and that the United Nations Security Council was united in believing such launches should not be taking place.

Australian Prime Minister Malcolm Turnbull said in an interview: “This is a sign, I believe, of their frustration at the increased sanctions on North Korea, recently imposed by the Security Council.  It’s a sign the sanctions are working.”

The UN Security Council had voted unanimously, Monday, on a U.S.-drafted resolution and a new round of sanctions that ban North Korea’s textile exports and cap fuel supplies, but no fuel embargo as the U.S. had hoped for.

Textiles totaled $752 million in exports in 2016, the second-biggest export after coal and other minerals.  The goal is to cut off the funding for the nuclear program, while limiting exports of crude oil and fuel products.  But such previous moves haven’t impacted Kim and his Orcs.  What needs to be done is to cut off the North’s oil and fuel supply totally, while freezing its financial assets overseas.

Thursday, prior to the test, North Korea’s state news agency threatened to use nuclear weapons to “sink” Japan and reduce the United States to “ashes and darkness” for supporting the UN resolution.

“The four islands of the archipelago should be sunken into the sea by the nuclear bomb of Juche. Japan is no longer needed to exist near us,” said the statement from Pyongyang’s Korea Asia-Pacific Peace Committee, which handles the North’s external ties and propaganda.

Juche is the term for North Korea’s ruling ideology that mixes Marxism with an extreme form of go-it-alone nationalism, as preached by founder Kim Il Sung, the grandfather of Kim Jong Un.

Lastly, the respected website 38 North, based in the U.S., has raised its estimate for the yield from the recent hydrogen bomb test to be around 250 kilotons – more than 16 times the size of the device that devastated Hiroshima.

Iran: President Trump tweeted Friday: “We have made more progress in the last nine months against ISIS than the Obama Administration has made in 8 years.  Must be proactive & nasty!”

I had to smile. In light of recent ISIS attacks (see below), the group is clearly still a threat, though the president and the military deserve great credit for being much more aggressive.

The problem is, once again, that we’ve lost the broader war.

To wit...Israel’s intelligence minister said on Monday that President Bashar al-Assad was ready to permit Iran to set up military bases in Syria that would pose a long-term threat to neighboring Israel.

Israeli Prime Minister Benjamin Netanyahu has been urging Russia, Assad’s most powerful backer, and the United States to curb the Iranian presence in Syria, while hinting Israel could launch preemptive strikes against Iran there.  Needless to say, that would be explosive.

My point being, President Trump can take credit for killing a lot of ISIS militants, and this is good, but we’ve lost sight of the big picture.  Iran has a large and growing presence in Syria, Lebanon (through Hizbullah) and Iraq.  Israel’s next war will be on three fronts.

Separately, British Prime Minister May stressed the importance of the 2015 international agreement on Iran’s nuclear program in talks with Secretary of State Rex Tillerson on Thursday.  Britain’s national security adviser said after, “(They) touched on the Iran nuclear deal, the PM underlining its importance in preventing Iran from procuring nuclear weapons.”

The White House is debating a new stance on the accord, with a draft urging consideration of tougher economic sanctions on Iran if it is found in violation. But I’ve been telling you since the agreement was signed by the P5+1 it was too late.

Editorial / The Economist

“When he was running for the presidency, Donald Trump described the agreement that constrained Iran’s nuclear ambitions in return for the relief of sanctions as ‘the worst deal ever negotiated.’  He has yet to find a way out of it. But he gets a chance to do so every 90 days – and the next opportunity is coming up.

“The Iran Nuclear Agreement Review Act (INARA) of 2015 obliges the administration to certify to Congress every three months that Iran is verifiably and fully implementing the Joint Comprehensive Plan of Action (JCPOA), as the Iran deal is formally known; that it has not broken agreed limits on its stockpiles of various nuclear materials; that it has not taken any action that could advance a nuclear-weapons program; and that continued suspension of nuclear-related sanctions is vital to America’s national security.  If the president does not confirm all this the issue is thrown back to Congress, which after 60 days can vote to re-impose sanctions.

“Mr. Trump first certified that Iran was meeting its obligations in April.  When he did so a second time, in July, he reportedly lambasted his national-security team, and in particular his secretary of state, Rex Tillerson, for failing to provide him with a case proving Iran’s bad faith.  When the next review comes up in October, Mr. Trump will be furnished with such arguments, however specious.  The administration will have difficulty withholding certification on the first three grounds.  Though Nikki Haley, America’s ambassador to the UN, has said that Iran is guilty of ‘multiple violations’ of the JCPOA, her assertion does not bear scrutiny. The International Atomic Energy Agency, the UN’s nuclear watchdog, which is responsible for monitoring Iran’s compliance and inspecting its nuclear facilities, said earlier this month that everything was in order and that its inspectors were able to go where they wanted ‘without making distinctions between military and civilian locations.’

“The reference to the sites was in response to complaints by Ms. Haley and others in the administration that Iran is not allowing routine access to some military bases. This is true: but the JCPOA does not require it to. Some sites may be visited only after an (admittedly cumbersome) procedure involving submitting evidence of banned activities to a joint commission of the JCPOA signatories (America, Britain, France, Germany, Russia, China and Iran).  If the Iranians have no satisfactory explanation and continue to deny access to the site in question, the UN Security Council would then be asked to vote on restoring international nuclear-related sanctions.

“There is thus no evidence that Iran is doing anything which would merit decertification.  But the fourth condition INARA imposes – taking a view of what is or is not in America’s national-security interest – is essentially subjective.  Mr. Tillerson, James Mattis, and the national security adviser, H.R. McMaster, all believe that sticking with the JCPOA is in the national interest. But other figures may think otherwise. The CIA director, Mike Pompeo, when a congressman, was a fierce critic of the deal. In taking a hawkish line, Ms. Haley may be positioning herself to replace the lackluster Mr. Tillerson.

“In a speech to a conservative think-tank on September 5, Ms. Haley indicated that Congress should be allowed to debate the issue.  ‘If the president finds that he cannot in good faith certify Iranian compliance, he would initiate a process whereby we move beyond the narrow technicalities and look at the big picture.’ That picture sees Iran, through its ‘destabilizing’ behavior in the region, its support for terrorism and its ballistic-missile tests, as flouting the ‘spirit’ of the JCPOA.

“This is to misunderstand the JCPOA....the deal itself was never presented as anything other than a highly technical arms-control agreement.  It was designed specifically to make it impossible for Iran to produce a nuclear weapon for at least 15 years and, thereafter, to make it prohibitively difficult for it to do so without being exposed.

“The JCPOA’s critics say they want a ‘better deal’ in which the entire nuclear infrastructure is dismantled and Iran stops throwing its weight around in the region. But they have no plausible account of how such a thing might be brought about.  If Mr. Trump blows up the JCPOA, Iran, free of constraints, could crank up its enrichment program and take a chance on developing nuclear weapons.  Iran’s leaders might reasonably calculate that the prospects of Mr. Trump rebuilding the international coalition on sanctions painstakingly put together by Mr. Obama would be slim.....

“(Decertification) on its own would do damage to America’s already shaky relationship with its European allies.  It would delight Iran’s hardliners who need America as a bogeyman.  Iran’s non-nuclear adventurism would continue unchanged. And Iran would from then on be able credibly to blame America if it were at some point to call time on the JCPOA.

“Decertifying could have an outcome typical of Mr. Trump’s presidency. Mr. Trump would feel good about honoring a pledge; and achievement of Mr. Obama’s would be threatened; and America’s reputation overseas would be further diminished. The JCPOA itself might survive.  On the other hand, Mr. Trump’s assault on it could be the first step towards Iran becoming a problem like North Korea. He might reflect that one of those is quite enough.”

Iraq / Syria: At least 60 people were killed in two attacks in southern Iraq on Thursday. A suicide bomber detonated a vest and gunmen opened fire inside a restaurant near Nasiriya, capital of Dhiqar province, security sources said.  Soon after, a car bomb exploded at a nearby checkpoint.  ISIS claimed responsibility.  [ISIS also killed at least 18 policemen in Egypt’s Sinai peninsula this week.]

Meanwhile, Hizbullah leader Nasrallah declared victory in the Syrian war, dismissing remaining fighting as “scattered batteries.”  The comment, as posted in a pro-Hizbullah newspaper, is one of the most confident assessments yet by the government side as it regains large swathes of territory in eastern Syria in an advance against Islamic State.

Israel: The High Court of Justice struck down on Tuesday the law that regulates the exemption of ultra-Orthodox Jews from compulsory military service so long as they are enrolled in religious studies at a yeshiva. The justices’ majority position (8-1) agreed with the petitioners’ position that the law perpetuates inequality between secular youths who are required to enlist in the army and religious youth who are exempted.

Opposition lawmaker Tzipi Livni of the Zionist Union party welcomed the ruling, tweeting: “Equality, gentlemen, equality.  Military, national or civilian service for all, without schticks and tricks. You can keep the yeshiva world without granting full exemptions to everyone.”

Russia: The Zapad military exercises commenced on Thursday and are set to run through next Wednesday.  Russia claims it is deploying under 13,000 troops, NATO says it will be closer to 100,000 in Belarus and western Russia, as well as the Russian enclave of Kaliningrad and in the Baltic Sea. As I’ve been writing for months, the issue is will Russia leave large numbers of troops at the border when the exercises are over, what many are calling a “Trojan Horse,” to make future incursions into Poland and Russian-speaking regions in the Baltics.

Russia accused the West of “whipping up hysteria” and denied that the maneuvers were being conducted with a lack of transparency.  Kremlin spokesman Dmitry Peskov said such talk was “a provocation.”

President Putin was to attend Zapad on Monday, observing the war games from a command center near St. Petersburg.

The U.S. Army moved 600 paratroopers to the Baltics for Zapad and has taken over guardianship of the airspace of Lithuania, Latvia and Estonia, which lack capable air forces and air defense systems.

Separately, the U.S. government banned the use of security software from Kaspersky Labs by federal agencies amid concerns the company has ties to state-sponsored cyberespionage activities.

Acting Homeland Security secretary Elaine Duke gave agencies a timeline to get rid of it, ordering the scrub on the grounds the company has connections to the Russian government and its software poses a security risk.

In a statement: “The Department is concerned about the ties between certain Kaspersky officials and Russian intelligence and other government agencies, and requirements under Russian law that allow Russian intelligence agencies to request or compel assistance from Kaspersky and to intercept communications transiting Russian networks.”  DHS continued: “The risk that the Russian government, whether acting on its own or in collaboration with Kaspersky, could capitalize on access provided by Kaspersky products to compromise federal information and information systems directly implicates U.S. national security.”

Kremlin spokesman Peskov said the U.S. action is designed to undermine the competitive position of Russian firms worldwide and amounts to unfair competition.

Eugene Kasperky denied the cyber-security firm he founded is close to the Russian government and insists it poses no danger to its American customers.

Kaspersky has long maintained that while his firm cooperated with Russian law enforcement on cyber-security, there were no deeper ties.

Best Buy is one American store chain that has now stopped selling Kaspersky products.

Lastly, Russia was targeted by a large number of bomb threats in all its major cities this week, more than a dozen, leading to mass evacuations at train stations, malls and other public places. Around 100,000 people were evacuated from venues in Moscow alone on Wednesday, Interfax news agency reported. Even eight schools in Moscow were targeted.

But state television and prime-time news shows have been ignoring the story.  Thus far, no one seems to know who is pulling this off.

China: James G. Stavridis and Johan Bergenas / Washington Post

“This week, as part of the pending National Defense Authorization Act, Congress asked the Navy to help fight illegal fishing. This is an important step.  Greater military and diplomatic efforts must follow.  Indeed, history is full of natural-resource wars, including over sugar, spices, textiles, minerals, opium and oil.  Looking at current dynamics, fish scarcity could be the next catalyst.

“The decline in nearly half of global fish stocks in recent decades is a growing and existential threat to roughly 1 billion people around the world who rely on seafood as their primary source of protein. No other country is more concerned about the increasingly empty oceans than China, whose people eat twice as much fish as the global average. Beijing is also the world’s largest exporter of fish, with 14 million fishers in a sector producing billions of dollars a year.

“In order to keep its people fed and employed, the Chinese government provides hundreds of millions of dollars a year in subsidies to its distant-water fishing fleet. And in the South China Sea, it is common for its ships to receive Chinese Coast Guard escorts when illegally entering other countries’ fishing waters.  As such, the Chinese government is directly enabling and militarizing the worldwide robbing of ocean resources.

“The deployment of both hard and soft power to acquire natural resources is nothing short of hybrid warfare.  Countries on the receiving end of Chinese actions are responding in kind: Indonesia has blown up hundreds of vessels fishing in their waters illegally; Argentina sank a Chinese vessel illegally fishing in its waters last year; and South Africa continues to clash with Beijing over fishing practices....

“The United States could be next.  Chinese vessels are increasingly fishing near our waters and are seeking to expand their footprint in the Caribbean.  U.S. Coast Guard Capt. Jay Caputo recently underscored this point: ‘It is imperative that the Coast Guard be prepared for when the Chinese fishing militia approaches the U.S. [exclusive economic zone].’

“Emptier oceans also lead to increased transnational crimes. The commander of the Navy’s 5th Fleet noted this year that ‘out-of-work fishermen’ are often involved in weapons smuggling for countries such as Iran.   Drug traffickers also use fishing vessels around the world, including U.S. waters....

“The United States can also revitalize efforts by including fighting illegal fishing as part of the mission of the Combined Maritime Forces, a voluntary maritime security initiative with 32 member nations that operates to combat terrorism and piracy and provide overall maritime security....

“Trump should also recognize illegal fishing as a direct threat to U.S. interests in his National Security Strategy this fall.”

 I couldn’t agree more.

Separately, China’s twice-a-decade Communist Party congress is scheduled to commence Oct. 18.  This year’s event is expected to replace about half the country’s top leadership and reveal the extent of President Xi Jinping’s influence, as he seeks Mao-like status.

I have argued Xi, who normally would be serving two, five-year terms, will attempt to put a structure in place to have him in power well beyond 2022.  His challengers have been sidelined.  There has been an intense crackdown on what people can read and watch just since July.  It’s Xi’s show...100 percent.

The closed-door meetings will also set policies from China’s banking system to its tactics in dealing with the United States and President Trump.

But Xi is no doubt fuming that Kim Jong Un will upstage the meetings in one fashion or another by stealing the headlines.

Lastly, Steve Bannon, in his “60 Minutes” interview, said the U.S. has to take a tougher stance with China over trade and appropriating U.S. technology. Beijing, he declared, was already at “economic war” with the U.S. and it was time for the U.S. to respond in kind.

“Donald Trump, for 30 years, has singled out China as the biggest single problem we have on the world stage,” Bannon said.  “The elites in this country have got us in a situation. We’re not at economic war with China; China is at economic war with us.”

Myanmar: The UN Security Council censured the nation as a push by the military to clear minority Rohingya villages and drive hundreds of thousands of members of the Muslim ethnic group into Bangladesh is a prime example of ethnic cleansing.

The military runs the country alongside Nobel Peace Laureate Aung San Suu Kyi, the latter doing zero to end the tragedy.  But the Security Council didn’t criticize Suu Kyi.

The Myanmar military says it is battling a group of “extremist militant terrorists,” the Arakan Rohingya Salvation Army, or ARSA.

Adding to the conflict, al Qaeda’s central leadership called on Muslims to travel to the country and support the Rohingya.

ARSA says it is defending the Rohingya after decades of repression in Buddhist-majority Myanmar.

More than 370,000 have moved into Bangladesh, which has zero resources to aid them.

Venezuela: The nation’s foreign minister defended his country’s record on Monday, rejecting as “baseless” reports by the United Nations human rights office that found grave violations by its security forces against protesters.  Earlier, UN High Commissioner for Human Rights Zeid Ra’ad al-Hussein warned that the government of President Nicolas Maduro may move further to crush democratic institutions and that crimes against humanity have already been committed.

But Foreign Minister Jorge Arreaza said to applause at the UN Human Rights Council, “Venezuela is back on the path of rule of law and democracy, we will see dialogue emerging thanks to the mediation of our friends.”

Yes, this was applauded. You can stop laughing.

Mexico: Because of President Trump, more Mexicans view the United States unfavorably than at any time in the last two years, as revealed by a new Pew Research Center survey.  65% of Mexicans hold a negative opinion of the U.S. – more than double the share two years ago.

Random Musings

--Presidential tracking polls....

Gallup: 37% approval for President Trump, 57% disapproval
Rasmussen:  43% approval, 55% disapproval

A Marist national poll released today had Trump with a 39% job approval, up from 35% last month.  50% disapprove in this one.

87% of Republicans, an increase from 79%, and 91% of those who supported the president in the 2016 election, view the president’s job performance positively.  86% of Democrats and 53% of independents currently disapprove of how Trump is doing his job, little changed from last month’s survey.

--The Pew Research Center released a poll Wednesday showing a sharp drop in Republican-leaning independents who say the GOP label describes them well.  49% said it describes them “fairly well” back in 2016, but just 33% say it does today.  At the same time, among Democratic-leaning voters who subscribe to the “Democrat” label, it has remained basically steady at 42%.

Other polls, including one from Quinnipiac University, show the percentage of independents rating the GOP brand favorably has been falling.

This is the single most important factor for me, as I’ve been saying since November, and will be the telling figure come the 2018 mid-term elections.

Pew pegs GOP-leaning independents at 17% of the electorate, so while a sharp decline for the GOP would only register a few overall percentage points, that obviously could be telling in the tighter races.

On the other hand, these same voters may come back around with Trump’s latest spirit of bipartisanship.

--Ex-national security adviser Susan Rice told House investigators that she “unmasked” the identities of some senior Trump officials to learn why the crown prince of the United Arab Emirates was in New York late last year.

The New York sitdown was a separate effort by the UAE to set up back-channel communications between Russia and the incoming Trump White House, according to CNN.  The problem was the Obama administration wasn’t told about it and this was December.

The Crown Prince Zayad met with Michael Flynn, Jared Kushner and Steve Bannon.  I understand why the Obama administration felt misled by the UAE, which failed to tell them Zayad was coming to the U.S., which is standard procedure. 

Many Republican members of the House Intelligence Committee seemed satisfied with Rice’s explanation. 

--White House press secretary Sarah Sanders said at a briefing Tuesday that it’s up to the Justice Department to prosecute former FBI Director James Comey, and that the move “should be looked at.”

“I think if there was ever a moment where we feel someone has broken the law, particularly if they are the head of the FBI, I think that’s certainly something that should be looked at,” Sanders said.  She added she’s “not here to ever direct DOJ into actions.”

So this leads us into the topic of former White House adviser/chief strategist Steve Bannon and his interview on “60 Minutes” last weekend.

Trump fired Comey in an effort to block the investigation into whether individuals in his campaign had improper contacts with Russia, or at least this is what special counsel Robert Mueller is looking into.

But Bannon called Comey’s firing the biggest mistake “in modern political history.”

Sanders, in response to a question on Bannon’s claim, said, “The president is proud of the decision that he made. The president was 100 percent right in firing James Comey.  He knew it could be bad for him politically and felt he had an obligation to do what was right for the American people and men and women at the FBI.”

Bannon said that if Comey had not been sacked, a special counsel would not have been appointed to probe alleged Russian election meddling.

Bannon added the special counsel inquiry was a “waste of time” and “a total and complete farce.”

“I don’t think there’s any doubt that if James Comey had not been fired, we would not have a special counsel... We would not have the Mueller investigation, and the breadth that clearly Mr. Mueller is going for.”

And, on a different topic, Bannon said Republican congressional leaders Paul Ryan and Mitch McConnell were “trying to nullify the 2016 election.”

“They do not want Donald Trump’s populist, economic nationalist agenda to be implemented. It’s obvious as night follows day,” Bannon said.

Speaking of the national security team that helped President George W. Bush, and is now critical of Trump, Bannon said: “I hold these people in contempt, total and complete contempt...They’re idiots and they’ve gotten us in this situation [Ed. like North Korea and the Middle East], and they question a good man like Donald Trump.”  Bannon mocked Condoleezza Rice, Colin Powell and Vice President Cheney as the “geniuses” who embroiled the nation in war with Iraq and empowered China economically.

--New Jersey Gov. Chris Christie, a target of Bannon in the interview, said in response to Bannon’s contention that the governor was blocked from a cabinet position for not vigorously defending Trump when the ‘Access Hollywood’ tape was released, “nobody is going to really care” what Bannon has to say “now that he’s been fired.”

Bannon said that Christie was told that he was to get on Trump’s campaign plane at 11 a.m. to help defend Trump and that “if you make the plane, you make the team. ...He didn’t make the plane.”

Bannon said Christie’s disloyalty was noted in his “little black book.”

Christie called that story a lie.

“That conversation that Mr. Bannon references in his interview never happened. Never had any conversations with him,” Christie said on PBS’ New Hour.

And Christie said: “I didn’t need to convey those kinds of feelings to staffers. I was speaking ot the principal, to the man who is now the president of the United States,” Christie said.  He also insisted he “was there the whole Billy Bush weekend” doing debate prep with Trump.

“Third, I was offered cabinet positions by this president. It was widely reported.”

--Maureen Callahan / New York Post

“Among the enduring criticisms of Hillary Clinton: Her sense of entitlement is limitless.  She’s tone-deaf and doesn’t understand the average American – nor does she care to. Her greed is insatiable.

“Add to this a gaping lack of self-awareness, and you have all the ingredients for the New York City launch of Hillary’s nationwide book tour Tuesday morning.

“Thousands of people lined up outside the Barnes & Noble at Union Square in hopes of meeting their idol. Some slept outside the night before....

“For Hillary supporters, this event was meant to be a salve, a corrective, a moment of collective grief and healing....

“Hillary’s attendees were willing to follow any directive. There were many, and here, in part, were the written instructions:

“ ‘A limited number of wristbands for entry will be distributed on a first-come, first-served basis with purchase of the featured title at Barnes & Noble Union Square.  Hillary Rodham Clinton will sign copies of her new release, What Happened and the 2017 illustrated children’s edition of It Takes a Village, no exceptions or personalizing. She will sign up to two books per customer, one of which must be What Happened.  No other books or memorabilia please.  Posed photos or selfies will not be taking place...’ ....

“In other words, everyone was here to serve two purposes: To make sure ‘What Happened’ debuts at No. 1 on the bestseller list and to line Hillary’s pockets.”

She showed up almost an hour late.

--Sen. John McCain returned to the Senate last week after treatment for an aggressive form of brain cancer, and while he said his prognosis is good, “the challenges are very significant.”

“This is a very vicious form of cancer that I’m facing,” he told CNN’s Jake Tapper.  [But then we learned after an MRI on Monday, McCain needs more chemotherapy and radiation.]

McCain said Sunday: “I’m very happy.  I’m very happy with my life.  I’m very happy with what I have been able to do.  And there’s two ways of looking at these things and one of them is to celebrate. I am able to celebrate a wonderful life and I will be grateful for additional time that I have.

“Every life has to end one way or another....So you’ve got to have joy.”

--Speaking of McCain, and his time as a POW in Vietnam, the 10-part, 18-hour Ken Burns documentary “The Vietnam War” commences on PBS this Sunday, Sept. 17.  It is said to be in the style of his prior works on the Civil War and World War II, heavy on retelling personal experiences of combat troops.

--President Trump on Thursday was asked by reporters aboard Air Force Once about his conversation the day before with Republican Sen. Tim Scott (S.C.), during which Scott, the Senate’s only black Republican, said he confronted the president on his claim that “both sides” were responsible for the violence that followed the torchlight protest in Charlottesville.

“Now because of what’s happened since then, with Antifa, you look at really what’s happened since Charlottesville – a lot of people are saying – in fact, a lot of people have actually written, ‘Gee, Trump might have a point,’” the president said.  “I said, ‘You’ve got some very bad people on  the other side, which is true.’”

In his remarks to reporters a day earlier, Sen. Scott said of his visit, and Trump saying there were two sides:

“My response was that, while that’s true, I mean I think if you look at it from a sterile perspective, there was an antagonist on the other side,” Mr. Scott said.  “However, the real picture has nothing to do with who is on the other side....

“I shared my thoughts of the last three centuries of challenges from white supremacists, white nationalists, KKK, Nazis.  So there’s no way to find an equilibrium when you have three centuries of history versus the situation that is occurring today.”

But Thursday, when asked about Trump’s version of the meeting, Scott said, “it’s who he has been.”

“I didn’t go in there to change who he was,” Scott said on Thursday.  “I wanted to inform and educate a different perspective. I think we accomplished that and to assume that immediately thereafter he’s going to have an epiphany is just unrealistic.”

--Conservative pundits Ann Coulter and Rush Limbaugh faced blowback after they expressed skepticism with the warnings on Hurricane Irma as it approached Florida.  Their take was the liberal media had cooked up the storm for ratings, retail sales and politics.

Coulter at one point tweeted that Miami was suffering a “light rain,” while Limbaugh said on his radio show (as he has with every serious storm) that the media was exaggerating the severity as a way to increase fears about climate change.  “They are the ones using it to advance a political agenda, not me.  And all I’m doing is pointing it out.”

Whatever you say, Rush.

--Stats on Hurricane Irma:

The 185 mph winds have been matched or exceeded only by three other Atlantic hurricanes:  Wilma (2005), Gilbert (1988) and Allen (1980), according to Dr. Phil Klotzbach, a tropical scientist at Colorado State University.

Allen had the strongest winds of those four, maxing out at 190 mph in early August 1980.

Irma’s winds were at 185 mph for 37 hours, the longest a tropical cyclone has maintained winds at that level anywhere in the world.

The previous record was Super Typhoon Haiyan (2013) in the northwest Pacific which held winds of that intensity for 24 hours.

Klotzbach says that Irma’s winds of 185 mph that raked the Leeward Islands, including Barbuda and Saint Martin, are the strongest for any hurricane on record to wallop the territory, beating out the Okeechobee Hurricane (1928) and David (1979), both of which had 160 mph winds at their peak in the Leeward Islands.

Hurricane Irma was a Category 5 for 3.25 days total, tying it with the Cuba Hurricane (1932) for the longest lifetime as a Cat 5.

--I imagine all of you were watching the flooding in Texas, and now Florida, thinking the same thing.  ‘Wow, the mosquitoes are going to be worse than ever’ in these two already buggy states.

So I saw a piece in Defense News by Zoe Schlanger on how the Air Force is spraying 6 million acres in Texas with insecticide from its low-flying C-130 cargo planes, an aircraft long used in mosquito-control missions.

The hope is to prevent mosquito-borne illnesses and prevent emergency response slowdowns by workers inundated by biting insects, though Texas health officials say most mosquitoes arriving after flooding don’t carry disease.

The only minor controversy in the operation is the use of the chemical naled, which the European Union banned in 2012 out of concern for human health, but which both the Centers for Disease Control and the U.S. EPA say is harmless in the small amounts humans are exposed to.

--Former CIA Acting Director Michael Morell announced his resignation as a senior fellow at Harvard after the university named U.S. Army soldier-turned-convicted felon Chelsea Manning a visiting fellow.  Manning was to take the role at Harvard’s John F. Kennedy School of Government, the school said on its website.

“She speaks on the social, technological and economic ramifications of Artificial Intelligence,” the Harvard announcement said.  “As a trans woman, she advocates for queer and transgender rights as @xychelsea on Twitter.”

Morell said he couldn’t be part of an organization “that honors convicted felon and leaker of classified information....I have an obligation in my conscience – and I believe to the country – to stand against any efforts to justify leaks of sensitive national security information.”

Current CIA Director Mike Pompeo pulled out of a speech to be made at a forum at Harvard the same day as Manning announcement.  Then, the dean of the Kennedy School, Douglas Elmendorf, withdrew the offer for Manning, calling it a “mistake.”

--A fond farewell to NASA’s Cassini spacecraft, which on Friday reached the end of a remarkable nearly 20-year mission to Saturn.  The pioneering voyage surveyed Saturn’s rings and exposed its moons as prime targets in the search for life beyond Earth.

Today, out of power, it plunged into the surface at about 76,000 miles an hour, which if you have to go, is just about as good a way as I can think of, especially if you’re a Mets and Jets fan.

Said Earl Maize, program manager for the mission at the Jet Propulsion Laboratory, “We left the world informed, but still wondering.  I couldn’t ask for more.”

--Congratulations to the Cleveland Indians, who set a modern-day, major-league record with 22 consecutive wins...a streak stopped tonight by Kansas City, 4-3.  A remarkable run.

--Finally, I was thinking of 9/11...having brought it up with a friend this past weekend...and these are my thoughts on the 10-year anniversary, from my column of 9/10/11.

I blocked my column from the actual week of 9/11, but this suffices.  I did not edit the following, but it’s for new readers, especially those from overseas, who may not have a sense of some of my time on Wall Street, or, if you’re younger, what it was like back then.

9/10/11....

To say the least I have some pretty good archives on the history of our times. I’m not reopening the early years for proprietary reasons, but I have some unique material on the period around 9/11, as I noted earlier like in my current “Wall Street History” column.  I was very upset at what I saw as a lot of shills that stepped forward in the financial industry during that time, or people like Bill O’Reilly who had no business handing out financial advice, as he was prone to do. I was less than charitable to Dick Grasso, for example, and stand by my treatment of him. On the other hand, looking back I had forgotten I was effusive in my praise of Street executive Wick Simmons. I also noted that when it came to Rudy Giuliani, there isn’t one line he said during the whole time that you can remember, he just led, period. Something for some of our politicians to remember when they are looking to be loved.

But in thinking back to 9/11, I just want to note some of the following regarding my own experience.

From 1982-90, save for two years when my employer transferred me six times up and down the east coast, including back to New York after the first year, I worked downtown, in the shadows of Wall Street. I was constantly going through the World Trade Center, thinking of terrorism even back then, and before the first attempt to take down the Towers. After I started with PIMCO (then Thomson Funds) in 1990, I worked out of Stamford, Conn., but I was in New York a few times a month, making my broker/dealer contacts. The Trade Center was the hub for many of us to work out of. For starters, you knew you could find a bathroom! 

The Trade Center also had a good phone bank on the ground floor, by the Vista Hotel, and I would camp out there for an hour or so each time I was in the area, in those pre-cellphone days. After the first attack that was gone, as the Vista never reopened, if I recall correctly. 

So I have different memories of the Twin Towers. Dean Witter was in one of them and I was constantly visiting them and a dear friend of many of us from the business, Jim Bach. If you were having a lousy day, it was always fun going to see him. He was Old School, when Wall Street still had some class.

But what I remember most about the WTC, aside from Philippe Petit and his high-wire act in the 1970s after the Towers had opened, was the restaurant Windows on the World. That was always for special occasions, special business dinners. In my case a few dates as well. The food wasn’t the greatest, but who cared?! It was literally another world being up there, except I do remember my last time, about a year before 9/11, when it was foggy the whole evening, a chance you took when you made your reservation.

The local news networks have been running a lot of segments on the restaurant the past week. 72 died out of a staff of 450. About an hour later it could have been another 100 that would have perished as they trickled in for the lunch shift.

I don’t have a dramatic personal story about 9/11 itself. I was scheduled to play golf with a friend up in Boston, who had set me up with a reporter from Sports Illustrated. I saw the first tower go down from Dave’s office, before he had arrived, and told the secretary, “Tell Dave I’m going home. We’ll catch up later.” My only thought then was get back to New Jersey, but how?

Being in tune as I was, all I wanted to do was take the Mass Pike west (I had my car) and get onto the other side of the Hudson quickly. I didn’t dare drive south, down I-95 and eventually the Tappan Zee, for example. Too big a target. So I crossed the Hudson at the Mass./New York border and headed down the New York State Thruway and then Rt. 287 in New Jersey, where there is a point on that road where you have a far off view of Manhattan, some 30 miles away, at least, but it was such a clear day the silhouette of the skyline was visible, as was the smoke.

When I got home, I first went to my parents’ house and then ran around the surrounding area, checking on my friends and some of their parents who had a spouse in New York who hadn’t come home yet. And once I was assured everyone was OK and there was nothing I could do, I went home, watched the coverage, and cried and cried and cried. In some respects I was kind of glad I was living alone.

I didn’t lose any close friends in the Twin Towers. I knew of one or two from town but we really didn’t know each other well. Professionally, I didn’t lose anyone. Some of my friends who worked downtown, however, were shaken for quite awhile after as they relived what they saw, and the horror of getting off the island that day. I have one friend who knew at least 25 who perished.

In the ten years since, I have been to Moscow twice, Beirut twice, Istanbul twice, China three times, Hong Kong four times, Yap three times, Singapore, South Korea, Slovenia, Romania, Paraguay…but not Ground Zero.

I’ve probably been in Manhattan to visit friends, sight-see, etc. at least 75 times, but never downtown. I have no particular reason for why it’s been this way. There’s just been nothing pulling me to it.

This coming week, though, I’m going to stop in Shanksville, Pa., which I visited in the first few years after 9/11. And then someday I’ll go to the World Trade Center Memorial when it’s fully opened. But I really don’t have to. I know the area well, after all. I actually have good memories. Maybe that’s why I haven’t been.

---

9/15/17:  You won’t believe this, but as I write, 16 years later, I still haven’t been to the site.  But starting the week after that awful day in 2001, I have ended the column thusly:

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

God Bless America.

---

Gold $1323
Oil $49.83

Returns for the week 9/11-9/15

Dow Jones  +2.2%  [22268]
S&P 500  +1.6%  [2500]
S&P MidCap  +2.0%
Russell 2000  +2.3%
Nasdaq  +1.4%  [6448]

Returns for the period 1/1/17-9/15/17

Dow Jones  +12.7%
S&P 500  +11.7%
S&P MidCap  +5.6%
Russell 2000  +5.5%
Nasdaq  +19.8%

Bulls 47.1
Bears 20.2  [Source: Investors Intelligence]

Have a great week.

Brian Trumbore

 



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Week in Review

09/16/2017

For the week 9/11-9/15

[Posted 11:30 PM ET, Friday]

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

Edition 962

Hurricane Irma...Trump World...

I have to start out with historic Hurricane Irma and how, as a nation, we dodged a bullet, or as Miami Beach Mayor Philip Levine put it, “we dodged a cannon,” though the human and financial toll is still tremendous.  As of early Friday, Irma had killed 82,* at least 32 of them in Florida, including the eight elderly patients who died after being exposed to sweltering heat inside their Miami-area nursing home, and seven more combined in Georgia and South Carolina.  The balance died in the Caribbean and the toll in Cuba is unknown.

*The latest death toll from Hurricane Harvey is also 82, as of Friday.

I was out of pocket, off the grid, largely, starting last Friday afternoon for nearly 48 hours, out on the south shore of Long Island at a function with close friends, but I was following Irma and how it went over northern Cuba, which greatly reduced its power and the threat to Florida once it turned north.  Another 40 miles off Cuba and the narrative is greatly different.  We were lucky, while one of the untold stories is how Cuba’s nascent tourism industry on those very shores was dealt a deathblow.  [Not that I’m crying for the Castro regime itself.]

While we’ve all seen the damage to the Keys, another area that suffered a heavy blow to its livelihood, tourism, and the agricultural losses in Florida were pegged at $16 billion alone in Okeechobee County in southern Florida (with a total economic cost of Irma perhaps around $80 billion, according to Moody’s Analytics, vs. $108 billion for Hurricane Harvey), the devastation in the Caribbean is sickening.

All 1,800 residents on Barbuda, for example, have been taken off the island.  You’ve seen the pictures, and satellite images, of how the islands were destroyed, stripped of all vegetation and beauty.

But it’s such a multi-faceted story.  I have never been to the Caribbean myself, Eleuthera in the Bahamas being the closest facsimile, but a day or two after we learned of Barbuda, I was communicating with a good friend, Jeff B., who vacations in neighboring Antigua every March, and he was happy to hear the side of the island where his resort is supposedly escaped largely unscathed.  Only I noted that Antigua, like the others, will be changed forever because where are many of the displaced going to end up?  They only know one region.  They will flock to the islands that have something left. And thus there will be new problems. [There’s nothing for them in Puerto Rico, for example.]

I read all the accounts of the disaster, such as in St. Martin, where residents spoke about a general disintegration of law and order as survivors struggled in the face of severe food and water shortage.  The initial government response from the likes of Britain, France and the Netherlands was hardly robust.

Catherine Clayton, who owns a hotel with her family on Tortola, told the Times of London, “It is like an apocalyptic doomsday scene here.  No trees, leaves or greenery.”

Billionaire Sir Richard Branson summed it up best, Branson seeing his dream island resort of Necker Island (long on my ultimate bucket list...albeit unattainable...) destroyed.  He was there to ride out the storm and the initial photos of him were very sad.  Buildings down, trees uprooted.  The only thing that saved Branson and his workers was “a strong cellar built into Necker’s Great House.”

Today, Branson offers, the only thing that will save the Caribbean is a “Disaster Recovery Marshall Plan.”

I just don’t see it coming to fruition.  But I hope I’m wrong.

So the above is prelude to my missive on the topic of climate change.

I was fuming this week when I heard some influential voices, some of whom I mention in “Random Musings,” say the National Weather Service warnings for Florida, as Irma roared through the Caribbean, were nothing more than scare tactics...designed to gin up action on ‘climate change’ they don’t see as warranted.  What a bunch of a-holes.  It’s the same tune from them every time, too.

Personally, though, I have argued for over a decade that the debate over global climate change is mislabeled; that it should really be called “global pollution.”  There isn’t a soul who can argue that soot spewed from a factory, or gases from an airplane, is good for the environment.  Fine particulate matter is killing millions in China, for example, each year.

And there is no one who can argue that crap in our waterways, including fertilizers, isn’t bad for a different reason, though in this latter example there are tradeoffs.

But when you start talking about temperature change, the debate often hits a brick wall.  You all know the drill...I’m not here to argue it.

It’s also at this point where you get idiots like Beyonce blaming climate change for the Mexico earthquake, as she did the other night at a hurricane aid telethon.

No, the debate has to be over pollution, so that everyone can identify...so that the deniers are stifled.

The other day President Trump reiterated he was deeply skeptical of climate change.  Asked by a reporter if the record-breaking storms had shifted his thinking, Trump replied: “We’ve had bigger storms than this.”  [Hours before, he talked of Irma having “absolutely destructive potential,” but that’s our president. A nudnick.]

It’s frustrating.  Some will never be convinced we have to do all we can to limit the garbage we put in the air and in our waters.  The economy is more important, they say. Greenhouse gas levels were higher before the Industrial Revolution, blah blah blah.

I’m not interested in that battle.  I’m more interested in straight talk.  If it looks like crap, it’s not good for us.  Period.

And then there is the politics.  I said at the time President Trump was an outright idiot to exit the Paris Climate Accord.  Politically, it was one of the dumber moves in recent memory. Why?

What do we lose from being in it?  The targets aren’t enforceable!  But we keep our seat at the table, Trump could send some lower level official to the meetings if he wanted, but we would have looked far better among our allies, especially their people, and these are the same folks who we want to buy our products.

Trumpets....

--Many conservatives erupted in anger after Democrats announced that President Trump had agreed to pursue a legislative deal on DACA (the Deferred Action for Childhood Arrivals program) that would protect the 800,000 Dreamers, the undocumented immigrants who face deportation in six months without legislative action, with nothing for Trump’s signature campaign promise: building the border wall with Mexico.

Democratic leaders Sen. Charles Schumer and Rep. Nancy Pelosi said late Wednesday after dining with Trump that they had agreed with the president on a law that would protect the Dreamers, and that it would include border security, but “exclude the wall.”

“We agreed to enshrine the protections of DACA into law quickly, and to work out a package of border security, excluding the wall, that’s acceptable to both sides,” the two said in a joint statement.

Rep. Steve King (R-Iowa), one of the GOP’s biggest immigration hawks, warned the president in a tweet: “If AP is correct, Trump base is blown up, destroyed, irreparable, and disillusioned beyond repair,” referencing an Associated Press story on the bipartisan agreement following the dinner, with Senate Majority Leader McConnell and House Speaker Ryan not in attendance.

Conservative radio talk show host Laura Ingraham, who is friendly with Trump, mocked him for seeming to shelve his pledge that animated his supporters.

“Exactly what @realDonaldTrump campaigned on.  Not,” she tweeted, adding later, “BUILD THE WALL! BUILD THE WALL!...or...maybe...not really.”

Conservative firebrand Ann Coulter tweeted: “At this point, who DOESN’T want Trump impeached?”

Breitbart News, with Steve Bannon back running the show, called the president “Amnesty Don” in a headline.  Bannon, in a “60 Minutes” interview I delve more into below, said “I’m worried about losing the House now because of Trump’s decision to rescind DACA in six months, with the six-month delay for negotiations.

“My fear is that with this six months down range...if this goes all the way down to its logical conclusion, in February and March, it will be a civil war inside the Republican party that will be every bit as vitriolic as 2013. And to me, doing that in the springboard of primary season for 2018 is extremely unwise.”

Bannon said he wanted Trump to “go full bore” and “focus on the American citizens.”  In other words, rescind DACA immediately.  “As the work permits run out, they self-deport. There’s no path to citizenship, no path to a green card and no amnesty. Amnesty is non-negotiable.”

Thursday morning, Trump tweeted:

“No deal was made last night on DACA.  Massive border security would have to be agreed to in exchange for consent. Would be subject to vote.”

Then he chirped: “Does anybody really want to throw out good, educated and accomplished young people who have jobs, some serving in the military?  Really! [Ed. punctuation correct.]....

“They have been in our country for many years through no fault of their own – brought in by parents at young age.  Plus BIG border security,” he added.

Then late Thursday morning, as he headed to tour hurricane-ravaged Florida, Trump told reporters: “I think we’re fairly close (to a deal), but we have to get massive border security...(but) the wall will come later...The wall is going to be built, it’ll be funded a little bit later.”

Upon his return from Florida, Trump said he was close to a deal with Democratic congressional leaders on the Dreamers, while funding for the wall will “come later” and not be part of any final deal.  But he added, Democrats “cannot obstruct the wall.”

“We have to have an understanding that whether it’s in the budget or some other vehicle in a very short period of time, the wall will be funded.  Otherwise, we’re not doing anything.”

Meanwhile, House Speaker Ryan said, “There is no agreement (on DACA).  I think the president understands that he’s got to work the congressional majority,” adding that “we have not begun negotiations.”

Editorial / Wall Street Journal

“Who knows how this will turn out, but we hope Mr. Trump cuts that deal with the Democrats with few security strings attached. The benefits would be many.

“Congress would codify in law a policy that Barack Obama imposed illegally by executive fiat. Mr. Trump would solve the most politically emotive immigration problem, which is the fate of these young adults who committed no crime in coming here. Some 700,000 people could keep contributing to American society without fear of deportation.

“Mr. Trump would also notch a political success on immigration that eluded George W. Bush and Mr. Obama. He would show, as he promised in the campaign, that he can get things done.  Not a bad day’s work.

“As for the shouts of ‘betrayal’ from Mr. Trump’s restrictionist fans, we hope someone has confiscated the sharp objects at the Breitbart townhouse.  But what did they expect?

“Their desire to deport the Dreamers to countries they left as children is a minority view in the United States, the Republican Party and even among conservatives.  Mr. Trump adopted his anti-immigration positions during the campaign to win the GOP primary, not because they are lifelong beliefs. Mr. Trump’s core political conviction is winning, and the Dreamer deal will be popular.

“Our guess is the Trumpians in the media will soon find a way to blame everyone else – especially the GOP ‘establishment’ – for the President’s switcheroo. This is their political and commercial business model. They’ll be back cheering Mr. Trump soon enough. So go ahead and cut that deal, Mr. President, and include a path to citizenship too.  After Neil Gorsuch’s nomination and deregulation, it would be the biggest achievement of your Presidency.”

--Sen. Bernie Sanders (I-Vt.) introduced a single-payer bill for healthcare in 2013, and didn’t attract a single co-sponsor.  But that’s wasn’t the case Wednesday, as some of the biggest names in the Democratic Party were by his side.

While the bill has zero chance of passing this Congress, and Sanders gave zero details, particularly on the costs, which would be humongous, there is legitimate cause for concern for many of us. 

Editorial / Wall Street Journal

“Hillary Clinton’s memoir of her presidential campaign is getting most of the media attention this week, but that’s the politics of progressive nostalgia.  If you want to know where the Democratic Party is going, Bernie Sanders showed the way Wednesday with his proposal for a complete government takeover of health care.

“ ‘Medicare for all,’ the Vermont Socialist calls it, and what was once a crank idea is fast becoming a progressive litmus test for Democratic candidates.  Fifteen Democratic Senators endorsed it, including possible 2020 presidential candidates Elizabeth Warren (Mass.), Kamala Harris (Calif.) and even Cory Booker (N.J.).  Hard to believe, but not long ago Mr. Booker was posing as a moderate.

“The Sanders bill would expand Medicare – now available to people 65 and older – to the entire U.S. population over four years.  Our readers understand how expensive such ‘free’ medical care would be in runaway costs for taxpayers and rationed care in the form of the long waiting lists that exist in other socialist systems.

“But no one should think this can’t happen here. The Republican failure on health care guarantees the continuing decline of ObamaCare and that creates an opening for Democrats to escalate their designs for more government control.  Barack Obama once told us that he favored such a single-payer system but America wasn’t ready for it.  But in an era of political tumult, anything can happen, all the more so when millennials can’t remember the 1990s, much less the Cold War. All the old battles are new again.”

Meanwhile, Republican Sen. Bill Cassidy (La.) is predicting the ObamaCare alternative he put forward with Republican Sen. Lindsey Graham will win enough votes to pass.

“I am pretty confident we’ll get there on the Republican side,” Cassidy said on Friday.  “We’re probably at 48-49 and talking to two or three more.”

The Cassidy-Graham alternative ends ObamaCare funding for subsidies to help people afford coverage and funding for the Medicaid expansion, instead converting both pots of money into a block grant to the states.

But GOP leadership has not thrown its full weight behind the bill, with Mitch McConnell telling the two they need to find 50 votes on their own.

--Supreme Court Justice Anthony Kennedy temporarily restored President Trump’s refugee travel ban.  The order, issued Monday, allows the administration to block asylum seekers from entering the United States until the Supreme Court can assess the legality of a longer-term ban.

The order puts a hold on a lower court ruling allowing refugees with a formal assurance from a resettlement agency to enter the United States.

Next month, the Supreme Court will consider whether Trump’s travel ban is legal at its core.  It has previously ruled the administration can’t keep out those with a “credible claim of a bona fide relationship” to the United States, such as family members living in the U.S., or those tied in some fashion to a college or university in the country.

Last week’s federal appeals court ruling stipulated that the administration could not legally block grandparents or refugees with assurances.

Opinion....

Gerald F. Seib / Wall Street Journal

“A few weeks after Donald Trump won the presidential election last year, a Wall Street Journal/NBC News poll asked Trump voters why they went for the man who had just shocked the world.

“Four in 10 Trump voters said a primary reason was that he would change business as usual in Washington.  By contrast, only one in 10 said they picked Mr. Trump because they thought he would pursue traditional Republican policies.

“Those two numbers explain why now-President Trump probably is on safe ground in his sudden pivot to wooing Democratic leaders in Congress, while openly scorning those of his own Republican Party.

“A large share of Trump voters picked him because they thought he would rattle the status quo – and by that they meant the status quo of both parties.  Mr. Trump wasn’t a true ideological conservative, and his supporters knew that.

“He was barely a Republican, and his supporters also knew that.  In the first moment of the first Republican primary debate, after all, Mr. Trump alone among the candidates refused to say he would support the eventual GOP nominee or forswear running as an independent if he didn’t get the nomination.

“In sum, Mr. Trump ran as a virtual independent....After he won, he stood on the steps of the Capitol on Inauguration Day and delivered an angry address that attacked the entire Washington power structure arrayed around him, without regard to party.

“Given all that, it’s actually surprising it took Mr. Trump this long to really break with his own party and to exercise an option that was always available to him: the option of trying to govern as he ran, which was an independent in pursuit of working-class Democratic support....

“Still, the limits to bipartisanship are real and significant. Disdain for Mr. Trump among rank-and-file Democrats will put a ceiling on how far Mr. Schumer or any other party leader can go in cooperating with him.  Just 8% of Democrats say they approve of the job the president is doing, the latest Journal/NBC poll found.  That’s half the share of Republicans who approved of Democrat Barack Obama’s performance at this stage of his presidency....

“That means Democrats probably have license to cooperate with Mr. Trump on raising the debt ceiling, funding government and improved infrastructure, and on some trade matters. But the party base figures to rise up against the kind of largescale tax cut and defense spending increases Mr. Trump envisions and revolt if he doesn’t agree to extend legal status for ‘Dreamers’....

“So cooperation with Democrats has distinct boundaries. But nobody should be surprised Mr. Trump is choosing to test those boundaries at this point.”

Wall Street

The stage is set for an important Federal Reserve Open Market Committee meeting next Tues. and Wed., the biggest of the year, as it is expected the Fed will lay out its plan for dealing with its mammoth balance sheet.  While the Fed is not going to raise interest rates, at this time, it will no doubt announce it is going to begin very slowly selling off its Treasury and mortgage-backed positions, which serves as a rate hike of a different order.

And assuming the Fed goes this route, it was bolstered this week by the August inflation data, which had the producer price index rising 0.2%, 0.1% ex-food and energy, though 2.4% year-over-year, 2.0% on core.

The next day consumer price data was released and the CPI rose by 0.4% from the prior month, 1.9% compared with a year earlier, according to the Bureau of Labor Statistics.  The core rate rose 0.2%, 1.7% year-over-year.

So the inflation readings are at a seven-month high, though with higher gas prices a major culprit.  But that should be enough for the Fed, when coupled with solid employment data, to begin their balance sheet normalization.  As for a hike in rates in December, the odds are now 50/50, vs. about 40% a week ago.

We also saw less than expected figures on August retail sales, -0.2% (but up 3.2% year-over-year), with July being revised downward, though last month’s softness was Hurricane Harvey related.

Ditto August industrial production, -0.9% when a slight gain was expected, due to Harvey’s impact on the energy sector.

However, the declines in retail sales and industrial production led the Atlanta Fed to reduce its GDPNow indicator to 2.2% for the third quarter, down from 3.4% on Aug. 25.

On to next Wednesday’s Fed policy statement.

As for the stock market, it was the best week of the year, as Wall Street took relief (in a perverted way) from less than expected damage from Hurricane Irma, while Kim Jong Un hadn’t fired off any ballistic missiles over the weekend, as feared.

Ergo, risk back on, and the safe-haven trade (bonds and gold) reversed.

There was also growing confidence on tax reform, with House Speaker Paul Ryan saying a plan would be released next week that “won’t necessarily be revenue neutral.”

But then President Trump, working with Democrats Schumer and Pelosi, said there would be no cut for the wealthy.  This is an extremely complicated issue, including how you treat partnerships, single proprietorships and the like, and I’ll be very surprised if something is signed by the president come year end.

As for the impact Friday on Wall Street with Lil’ Kim’s latest missile test...zippo, nada.  He’s treated on the Street, and in many markets around the world, as an irritant, a gnat.  That’s a mistake.  The Dow Jones and S&P 500 finished at record highs, with Nasdaq just shy of its own, having reached a new one earlier in the week.

Europe / Asia

There was no major economic news for the eurozone as a whole this week.  But the big story was in the U.K., where the unemployment rate for the three months ending July (they like to do trailing 3-month averages here) dipped to 4.3%, the lowest since 1975.

But wages only rose 2.1%, year-over-year, vs. August inflation which came in at 2.9% annualized (2.7% ex-food and energy), versus 2.6% in July (2.4% on core).

Ergo, the people aren’t keeping up.

But the Bank of England then held a policy meeting after the inflation data was released and it clearly signaled that, unlike the below 2% rates in the eurozone, inflation is a distinct problem in the U.K. and is overtaking Brexit-related slowdown issues as an economic risk.  So the BOE said it is headed toward raising interest rates for the first time in more than a decade.

The pound surged in response, and the yield on the 10-year soared vs. a week earlier to 1.30%, compared with 0.99% last Friday.

The Bank of England voted 7-2 to hold the benchmark rate at 0.25 percent, but while leaving the European Union has cast a shadow over the economic outlook, the resulting drop in the pound, until this week, has pushed up inflation, and the BOE now sees the rate of price gains exceeding 3 percent next month and remaining above the 2 percent target level for years.  So it’s now looking like a hike come November’s meeting of the policy committee.

As for Brexit, Prime Minister Theresa May is now slated to give her key speech on exiting the EU on Sept. 22, in Florence, Italy, as the government tries to reassure the bloc it will not use Brexit to undercut financial regulations.

The point in giving the speech in the heart of Europe is to show that Britain still wants to work closely with the EU after leaving. After the last round of talks in Brussels went poorly, Mrs. May appears to want to take a softer tone.

Brussels had previously announced further negotiations would not take place until after May’s speech, recognizing the importance of it, but this allows little time for progress ahead of a key EU summit Oct. 19-20, at which Britain was hoping the bloc would announce that enough movement had taken place to allow for discussions on a new trade arrangement.  Just ain’t gonna happen, sports fans.

EU leaders will also be anxiously listening on Sept. 22 to the prime minister and whether she addresses the topic of the exit bill...settling future financial obligations to the EU. That is one of the three key sticking points in negotiations so far.

But May isn’t likely to address the topic in detail because she has a critical Conservative Party conference in early October.  The euroskeptics aren’t likely to want to hear about $50 billion or so tabs.

The prime minister did win a key vote in parliament on Brexit, 326-290, in favor of a bill designed to transpose more than 10,000 EU laws onto the U.K. statute book, March 29, 2019, the day the U.K. is scheduled to leave the bloc; the purpose being to prevent a legal vacuum.

But critics charge the bill gives a lot of power to the cabinet, allowing members to make changes to laws without parliamentary approval.  [The government defended the bill, while admitting it gives ministers wide-ranging powers to amend laws to make them work domestically, often by interchanging the word ‘EU’ for Britain.]

Mrs. May’s team says that parliamentary approval will be sought on key issues, but lawmakers are talking about attaching amendments at a later stage and this is a process that is expected to take months.

For his part, European Commission President Jean-Claude Juncker, addressing the European Parliament, said: “Europe can deliver for its citizens when and where it matters.  We’ve been slowly but surely gathering momentum,” despite the political threats posed by Brexit and populism.

Europe is presenting itself as a bastion of stability, with global developments having turned in the EU’s favor, especially with President Trump’s challenging the Atlantic order and Kim Jong Un’s nuclear and missile tests.

“The wind is back in Europe’s sails,” Juncker said.  “We have now a window of opportunity.”

Anne Applebaum / Washington Post

“It is a rare opportunity.  Seldom does the voting public have the chance to watch their elected politicians confront very specific false promises in real time.  Usually campaign promises are either too vague to be contrasted with reality (‘Make America Great Again’) or too long term.  By the time that ‘guaranteed growth’ either arrives or doesn’t, the person who said it would happen is long out of office.

“But in Britain right now, something different is unfolding.  During the referendum last year, politicians advocating their country’s departure from the European Union gave some specific assurances. Some derived from ignorance; as it turned out, few of them really understood how the E.U. works.  Others were lies, which they knew to be lies at the time.

“Because they didn’t expect to win that campaign, they didn’t expect either their ignorance or their dishonesty to be revealed. But then they won – and now it’s happening.

“The most egregious lie was about money. During the campaign, leading Brexiteers drove around the country in large red buses, emblazoned with a slogan: ‘We send the EU 350 million pounds a week, let’s fund our NHS [National Health Service] instead.’  This was a very influential argument, as the Brexit campaign managers have admitted.  It was also an invented number – Britain does not send the E.U. 350 million pounds a week, as fact-checkers showed over and over.  Some of those on the winning side admitted as much after the campaign.

“But now, instead of receiving ‘350 million pounds a week,’ negotiators are trapped in an argument about how much money Britain owes Europe – for budgetary promises not kept, for agreements signed and not honored.  More ominously, the British government is just now realizing that leaving the European single market, which is far more than an ordinary free-trade zone, will cost it in other ways, too.  Jointly designed European agencies and arrangements may now have to be re-created, at vast expense, from scratch: pharmaceutical and nuclear regulators, for example.  It is possible that a vast new customs service, complete with parking lots at the border, computer systems and customs agents, will be needed to cope with new tariff regimes once Britain is outside the European customs union.  In the long term, Britain will have more bureaucracy, and less money to spend on the NHS.

“The second falsehood, frequently repeated during the campaign, was that leaving the single market would be fast, simple and easy.  Liam Fox, now Britain’s top trade negotiator, said a new trade deal with Europe would be ‘the easiest in human history.’  David Davis, now the minister in charge of the whole process, declared that ‘we can do deals...and we can do them quickly.’ With breathtaking insouciance and eye-watering obliviousness, others implied that all sorts of trading arrangements with countries all over the world could be ready in a matter of months.

“In practice, more than a year has passed since the referendum and nearly six months have passed since Britain invoked Article 50, the ‘exiting the E.U.’ procedure.  During that time, almost no progress has been made....

“What happens next is unclear.  We know that the Brexiteers’ promises were hollow. Their assessments were wrong.... During the recent snap elections, (voters) seemed uneasy about the ruling party and refused to give it an absolute majority.  Will the Brexiteers now be further punished at the ballot box?  We’ll see.”

Eurobits....

--President Trump was at it again.  Immediately after news hit of another terrorist attack in London this morning, targeting a train, one that could have been far worse had the bombmaker gotten it right, Trump tweeted:

“Another attack in London by a loser terrorist. These are sick and demented people who were in the sights of Scotland Yard. Must be proactive!”

Clearly implying Scotland Yard wasn’t doing its job.

Prime Minister May and her police officials led the criticism of the president’s intervention, Trump being accused of betraying intelligence details.

The prime minister said in a pool TV interview: “I never think it’s helpful for anybody to speculate about what is an ongoing investigation.” The Metropolitan Police went further, saying in a statement that the tweets “are unhelpful and pure speculation.”

ISIS claimed responsibility and Britain raised its threat level to “critical” in response, meaning there was the risk of an imminent attack.

--Ireland’s second-quarter GDP grew 1.4%, 5.8% year-over-year.  But Ireland’s figures have been highly volatile and the data called into question.  Most economists prefer to look at the unemployment rate, which peaked at 15.1% five years ago and is now down to 6.3%.

[The issue with Ireland and the calculation of GDP is complicated by the large impact of multinational firms re-domiciling, relocating or depreciating their capital assets, so the state statistics office is coming up with a “Modified Gross National Income” that strips this out and is to be phased in by the end of 2018.]

--Support is waning rapidly for Catalonia’s secession from Spain, with Catalonia’s parliament decreeing that a referendum on the topic will be held on Oct. 1.  Surveys now show support for an independent Catalonia is just 35% from a peak of 49%, and it’s largely about the nation’s economy, with Spain on track to record its third year of 3%-plus growth.

Catalonia accounts for one-fifth of Spain’s economic output and is growing faster; powered by construction, tourism and chemical and pharmaceutical manufacturing.  Unemployment is below the national average.  In a nutshell, there’s little reason to take such a big risk.

It also doesn’t help the independence cause that voters can clearly observe how messy Brexit has been.

--A week from Sunday is Germany’s national election, with Chancellor Angela Merkel continuing to hold about a 13-point margin over challenger Martin Schulz.

Schulz has put social justice at the core of his campaign, but that has failed to gain traction and, after all, Germans have had 12 pretty good years under Merkel thus far.

The main issue is who Merkel’s coalition partner will be and that is totally up in the air.

Turning to Asia....

China’s vehicle sales (both cars and trucks) rose a third straight month, 5.3% year-over-year.  Overall sales were 2.19 million vehicles, according to the Chinese Association of Automobile Manufacturers.

Separately, August retail sales grew 10.1% year on year, but this was below expectations, while fixed-asset investment (read infrastructure) grew 7.8% for the eight months ended August, down from 8.3% at the end of July.  [State firms were more active, investment up 11.2% vs. a 6.4% rise from privately owned companies.  Industrial production also slowed, 6% in August, down from July’s 6.4% pace.  [All of the preceding courtesy of the National Bureau of Statistics.]

In line with slowing investment growth in the country, some key industrial indicators moved lower in August.  Steel output slowed while cement production growth nearly halved. Electricity production growth also nearly halved, and coal power growth plunged from 10.5% in July to just 3.5% in August.

Also related to the above, China announced it would blacklist companies that violate overseas investment rules as part of a wider crackdown on “irrational and unauthentic” foreign acquisitions, as reported by China Daily.

The blacklist will be shared across government departments to allow regulators to oversee investment activities.  It’s one thing for Chinese companies to snap up foreign technology and brands to speed their development.  It’s another to spend large sums on sports, entertainment and real estate...so the government believes.

So the Commerce Ministry said Thursday that outbound investment in the first eight months of the year had fallen 41.8 percent from a year earlier to $68.7 billion.  You aren’t likely to hear of more Chinese ownership in, say, Premier League football teams.

In Japan, the mood among manufacturers, as measured by the Reuters Tankan index, turned down for the first time in four months, though the service sector figure rose to its best level in over two years.

In terms of manufacturers, yes, North Korea has to take a toll, while some in Japan are saying capital spending is slowing overseas due to uncertainty on the recovery prospects for Europe, America and China, which isn’t really the case...today.

Street Bytes

--As noted earlier, the Dow Jones closed at a record today, 22268, up 2.2% for the week, its best performance of the year, while the S&P climbed 1.6% to a 2500, and Nasdaq gained 1.4% to 6448, 12 points shy of its record 6460.

--U.S. Treasury Yields

6-mo. 1.17%  2-yr. 1.38%  10-yr. 2.20%  30-yr. 2.77%

The yield on the 10-year rose from 2.05% the prior week as part of the risk-on trade, selling safe havens.

--West Texas Intermediate, the price of which I list at the end of this column each week, topped $50 briefly for the first time since August, before finishing at $49.83, as the situation with Gulf refiners stabilized, while OPEC revised upward its global oil demand growth forecasts for this year and next, with consumption in the second quarter surpassing expectations.

In its monthly oil market report, OPEC cited better-than-expected numbers from industrialized nations in the West and China, with the oil demand growth estimate rising to 1.42m b/d, with total consumption forecast at 96.8m b/d.

Robust demand should lead to further reductions in oil inventories, assuming OPEC and other producers such as Russia adhere to production cuts previously agreed to.

World demand growth in 2018 will increase 1.35m b/d to 98.12m b/d.

--The median U.S. household’s income finally topped pre-recession levels in 2016, according to the U.S. Census Bureau.

Incomes for a typical household, adjusted for inflation, rose 3.2 percent from 2015 to 2016 to $59,039, but only slightly above the previous peak of $58,665, reached in 1999.

Ergo, while incomes have risen solidly the past two years, we are basically where we were 17 years ago (to 2016).  And, officials cautioned the figure was affected by a change in methodology in 2013, and that actual incomes probably had not exceeded the previous peak.

[The Economic Policy Institute, a liberal research organization based in Washington, actually estimates that without the change in methodology, median household income was still 2.3 percent below the ’99 high.]

It also needs to be reported that the income gains fell disproportionately with the most affluent.  The mean household income for the poorest fifth of households fell by $571 over the decade ending last year, adjusted for inflation, while it rose $13,479 for the wealthiest fifth of  households.

Separately, the Census Bureau reported the poverty rate last year fell to 12.7 percent from 13.5 percent, with the number of people living below the poverty line falling 2.5 million to 40.6 million.

The proportion of Americans without health insurance fell to 8.8 percent from 9.1 percent.

--Apple rolled out a new series of products, including its much-anticipated iPhone X.  A decade after the release of the first iPhone, the model X was the highlight of the company’s most important product launch in years on Tuesday.  It won’t ship until Nov. 3, later than usual for new products.

Apple also unveiled the iPhone 8, creating a tiered system: two phones, equally new, one of which is more powerful than the other, with both being more powerful than prior models.

The iPhone X is going to list at $999, the most expensive iPhone ever released, $300 more than the base model iPhone 8 – which is also more expensive than Apple’s previous highest starting price for a base model phone.

The iPhone X is distinguished by an edge-to-edge OLED screen, along with facial recognition technology and a more vibrant display.

Apple is clearly looking to reestablish itself as the premium smartphone brand.

The company’s shares were down just a smidge on the week, Apple having a history of seeing its stock rise ahead of product announcements and then the same folks sell on the news. That wasn’t really the case this time.

--Meanwhile, Apple rival Samsung said pre-orders for its latest premium smartphone Galaxy Note 8 are the highest among the Note series, with Samsung looking to keep its market dominance as it competes with Apple.  The pre-orders are from about 40 countries.  It is being priced at $930 to $960 by U.S. network carriers, including a dialing and data plan.

--Equifax shares continued to plummet after the Massachusetts attorney general announced she was preparing to sue the credit bureau over one of the biggest data breaches in history.  [There are dozens of class-action suits that have been filed overall.]

Maura Healey said in a statement: “In all of our years investigating data breaches, this may be the most brazen failure to protect consumer data we have ever seen.”

Since the announcement of the cyberattack that put the personal data of as many as 143 million Americans at risk, the shares have fallen 35%.  The company, one of the three largest credit bureaus, has had one bungled P.R. move after another, starting with the failure to alert the public for months after first discovering the breach on July 29.  Three top executives sold almost $2 million in stocks days later, but we are being told, ‘Nothing to see here...move along.’

Plus, the company demanded at first that customers give up their right to sue the company in exchange for free credit-monitoring services – and then charged them to put a freeze on their credit; both moves having since been rescinded.

Democratic Sen. Heidi Heitkamp, a member of the Senate Banking Committee, said the data hack and potential insider trading was “disturbing” and if the latter occurred, “somebody needs to go to jail.”  No disagreement here.

But wait...there’s more!

Highly-respected cyber-crime blogger Brian Krebs said that for Equifax’s Argentine operations, an online employee tool could be accessed by typing “admin” as both a login and password.

Krebs added that this gave access to records including thousands of customers’ national identity numbers, as a web application – referred to as Ayuda, Spanish for “help” – was weakly guarded.

“[It] was wide open, protected by perhaps the most easy-to-guess password combination ever: admin/admin,” wrote Krebs.

--In another positive economic sign, Target Corp. announced it would hire about 100,000 seasonal workers for the holiday period, up 43%, from 70,000 last year.  It is also hiring an additional 4,500 at its distribution and fulfillment centers.

Macy’s, though, said it would hire around 80,000 seasonal workers for the holiday season, down from 83,000 last year, though 3,000 more to fulfill online orders.

--Shares in McDonald’s slid a few $s ($161 to $157) on an analyst’s sales forecast for the current quarter which is less than currently forecast due to Hurricanes Harvey and Irma, with McDonald’s having 2,000 locations in Texas and Florida, which were obviously disrupted for decent stretches.

M Science, a data tracker, said domestic revenue and same-store sales would obviously miss expectations.  Makes sense to me, though the Street is now largely discounting the miss.

--JPMorgan Chase CEO Jamie Dimon said trading revenue is likely to fall around 20% in the third quarter compared with the year earlier period.  Dimon said he wasn’t concerned about the lack of volatility in the markets, calling it “definitely cyclical.”

“You will have volatile markets again,” he added.  “People will panic, you will panic – running through the door like everybody else – regulators will panic.”

Nuclear war would do it, I mused.

[Separately, Citigroup announced it expects its trading revenues to fall 15 percent in the third quarter.]

But speaking at a banking industry conference organized by Barclays, Dimon called bitcoin a “fraud,” with the bank issuing a report on the digital currency the following day calling its legitimacy into question, while comparing it to “pyramid schemes.”

On Tuesday, Dimon said, “Bitcoin will eventually blow up.  It’s a fraud.  It’s worse than tulip bulbs and won’t end well.”.

The report said in part: “While we don’t know whether the price of cryptocurrencies will go up or down in the near term, the history of currencies, governments and financial fraud tells us that the future for cryptocurrencies will likely not be bright.”

There have also been reports Chinese authorities are shutting down bitcoin exchanges in the country by month’s end.  Last week, Chinese regulators declared so-called initial coin offerings illegal, dealing a blow to all digital currencies.  Then on Thursday, China’s largest bitcoin exchange said it would immediately stop accepting new account registrations, after “carefully considering” the Sept. 4 announcement. 

China accounts for nearly a quarter of bitcoin trades. 

Since Sept., the cryptocurrency has slumped nearly 30 percent from its recent high.  But while bitcoin fell in value five straight days, after peaking last week at above $5,000, it is still up about 500% the past 12 months.

Separately, in a survey by Bank of America Merrill Lynch, Bitcoin was the most-crowded trade among investors, overtaking Nasdaq Composite.

26 percent of investors polled by BAC identified bitcoin, versus 22 percent voting for the Nasdaq and 21 percent pointing to an anti-dollar wager.  In August, Nasdaq was picked by 30 percent.

Crowded trades normally don’t end well. The dollar was at the top at the start of the year, according to BofA Merrill, but it is down at least 10 percent against six major trading partners in 2017.

--In announcing its earnings for its fiscal first quarter, Oracle indicated slowing growth in its soaring cloud business, though it reported market-beating revenue and profit on Thursday after the close.

Oracle was a late entrant to the cloud market – but has been catching up rapidly as more and more clients ditch the costlier software licensing model.  But the company is facing strong competition from other big cloud players such as Amazon.com, Salesforce.com, Workday and Microsoft.

Oracle forecast total cloud revenue will increase 39% to 43% in the current quarter, lower than the 51% growth it reported in the latest quarter. The company said late last month it was hiring more than 5,000 engineers, consultants, sales and support people this year to boost the fast-growing business.

Overall, Oracle reported revenue climbed 7% to $9.19 billion, with earnings rising 21% to $1.83 billion, higher than expected on an adjusted basis.

The shares had gained 37% this year prior to the release, but fell 8% Friday.

--Ray Dalio of Bridgewater Associates, founder of the world’s largest hedge fund, said that if Gary Cohn were to quit the Trump administration, stock prices would tank.  “It would be terrible if Gary left,” Dalio said at a conference.  “It would be bad for the market,” because it would “undermine” the administration’s economic-reform efforts (presumably tax reform).

On Aug. 17, when it was suggested Cohn might leave on the heels of Charlottesville, the Dow Jones shed 275 points.

--Separately, Mr. Dalio announced that Bridgewater, which manages billions of dollars invested outside China by Chinese institutions and the government itself, is amassing a $multi-billion fund, with a unit based in China, that will buy and sell assets in the country.

Dalio has been a long-time student of Chinese culture, so much so that Bridgewater reflects aspects of Chinese political ideology, according to current and former employees.  China could also be crucial to Bridgewater’s future as investors withdraw money from hedge funds over issues like fees and lousy performance.

--Norway’s sovereign wealth fund, the world’s largest, hit $1 trillion for the first time on Tuesday as booming global stock markets and a rising euro lifted its assets. Established in 1998 to save oil and gas revenues for future generations, the fund is now 2.5 times Norway’s annual gross domestic product, against original projections it would peak at 1.3 times GDP in the 2020s.

As Ronald Reagan would have said, ‘Not bad, not bad at all.’

The fund is run by a unit of the central bank and invests its monies in foreign stocks, bonds and real estate, spread out over 77 countries.  Almost 2/3s of assets were in equities at the end of the second quarter, with stakes in about 9,000 companies, giving it control over 1.3 percent of all globally listed stocks.

Under a revised fiscal rule, the government can spend 3 percent of the fund’s value each year.

--Foot traffic at Whole Foods stores spiked more than 25 percent over two days last week – a week after Amazon.com completed its acquisition of the grocer and slashed prices on some items.  The spike was tracked by Foursquare Labs, which compares shoppers’ mobile whereabouts.

Online sales also soared last week when shoppers were able to purchase more than 2,000 Whole Foods items on Amazon.com.

Top selling items were water, turkey breast lunch meat, frozen berries, canned beans, coconut water and tomato paste.

To be fair, there was bound to be some initial euphoria and exuberance, and Amazon’s price cuts were on like 50 items out of 15,000 carried by a typical Whole Foods store.  And, overall, Whole Foods’ prices are still 25 to 35 percent higher than the competition.  One analyst, Burt Flickinger of Strategic Resource Group, said it will take Amazon a decade to bring the prices down to a competitive level.  [New York Post]

--A report from the Phoenix New Times Wednesday revealed that two Motel 6 locations in the area had been handing over lists of clientele to Immigrations and Customs Enforcement. As a result, from February to August, at least 20 undocumented immigrants were arrested by ICE agents, who were dropping in at the corporate-owned Motel 6s – not franchise locations – every two weeks.

The company issued a statement: “Over the past several days, it was brought to our attention that certain local Motel 6 properties in the Phoenix-area were voluntarily providing daily guest lists to (ICE).  As previously stated, this was undertaken at the local level without the knowledge of senior management. When we became aware of it, it was discontinued.”

But will this hurt the brand...the company best known for its welcoming tagline “We’ll leave the light on for you”?  I’ll say it does.

--Pharma Boy Martin Shkreli was decreed a “danger to society” Wednesday and jailed by a federal judge months before his scheduled January sentencing on his conviction for defrauding hedge fund investors.

The judge, Kiyo Matsumoto, revoked Shkreli’s $5 million bond following Facebook posts in which the jerk said he’d cough up $5,000 per strand of Hillary Clinton’s hair.  This followed a number of similar posts on the former secretary of state. Shkreli said they were an awkward attempt at humor and he never intended to “threaten” Clinton.

--The U.K. government continued to delay approval of 21st Century Fox Inc.’s proposal to consolidate ownership of Sky PLC, referring it to British antitrust regulators, while saying it was likely to broaden the review because of concerns over Fox’s broadcasting standards.

British Culture Secretary Karen Bradley said she was acting partly out of concern about corporate governance at 21st Century Fox after the series of sexual harassment scandals at the Fox News unit.

Officials at both 21st Century Fox and Sky expressed their disappointment and “surprise” with Bradley’s decision, arguing the two have the same records of compliance as other “comparable license holders.”

--Separately, as reported by the New York Times and CNN, right-wing radio host Laura Ingraham is poised to take Sean Hannity’s 10:00 p.m. time slot, with Hannity dropping down to 9 p.m., which would have Hannity facing off against MSNBC’s current cable ratings leader, Rachel Maddow.  [If this goes through, “The Five” goes back to 5 p.m. from 9 p.m.  Tucker Carlson would remain at 8 p.m.]

--Eric Bolling, a former host at Fox News Channel, was officially let go after being suspended in early August following the publication of a Huff Post story detailing allegations he had been sending unsolicited lewd photos.  Then, less than 24 hours after Fox announced it had cut ties with him, Bolling suffered a family tragedy, losing his 19-year-old son (circumstances of the death not being important).

--The horror movie “It” smashed September box office records last weekend with a $117.2 million estimated haul in North America, thus ending a painfully slow period at multiplexes.

This is also the biggest opening for an R-rated horror flick (actually, biggest opening for any horror movie), the film adapted from Stephen King’s 1986 novel about a demonic clown who emerges from a sewer to prey on children.

Needless to say, the picture was pre-marketed brilliantly, and the teaser trailer received 197 million views online in its first 24 hours, the largest in Hollywood history.  Plus Stephen King has a large audience.

Foreign Affairs

North Korea: Pyongyang launched another Hwasong-12 intermediate range ballistic missile Friday morning (local time), the second such launch in just over two weeks.

The missile reached an altitude of 478 miles and flew over 2,300 miles, flying over Japan and landing in the Pacific, 1,200 miles east of Hokkaido, according to Japan’s chief Cabinet Secretary.  According to South Korea’s military the missile flew for about 19 minutes and at a distance more than enough to reach the U.S. territory of Guam (2,100 miles away).

Joseph Dempsey of the International Institute for Strategic Studies said, it was “the furthest over ground any of their ballistic missiles has ever traveled.”

Daryl Kimball, executive director of the Washington-based Arms Control Association, said, “We are in an ever-worsening cycle of escalation and time is on North Korea’s side,” noting the country’s technicians are clearly getting better.  “So long as the war of words continues and the lack of communications continues, there is an increasing risk that one side or another miscalculates and we have a situation that can lead to military conflict.”

Japanese Prime Minister Shinzo Abe said Japan would “never tolerate” what he called North Korea’s “dangerous provocative action that threatens world peace.”

South Korean President Moon Jae-in, using his strongest language yet to condemn the latest test, said, “We have the power to smash North Korea into powder and put it beyond recovery if it provokes us or our alliance.”  [Seoul conducted a drill in which it fired two ballistic missiles into the Sea of Japan as a show of force, but one failed.]

Secretary of State Rex Tillerson demanded China and Russia take “direct actions” against Pyongyang.

“China and Russia must indicate their intolerance for these reckless missile launches by taking direct actions of their own,” he said.

Hours later, China’s Foreign Ministry said it had made enormous sacrifices to implement UN resolutions and that its sincerity could not be doubted.

The Kremlin said on Friday that the latest test was part of a series of unacceptable provocations and that the United Nations Security Council was united in believing such launches should not be taking place.

Australian Prime Minister Malcolm Turnbull said in an interview: “This is a sign, I believe, of their frustration at the increased sanctions on North Korea, recently imposed by the Security Council.  It’s a sign the sanctions are working.”

The UN Security Council had voted unanimously, Monday, on a U.S.-drafted resolution and a new round of sanctions that ban North Korea’s textile exports and cap fuel supplies, but no fuel embargo as the U.S. had hoped for.

Textiles totaled $752 million in exports in 2016, the second-biggest export after coal and other minerals.  The goal is to cut off the funding for the nuclear program, while limiting exports of crude oil and fuel products.  But such previous moves haven’t impacted Kim and his Orcs.  What needs to be done is to cut off the North’s oil and fuel supply totally, while freezing its financial assets overseas.

Thursday, prior to the test, North Korea’s state news agency threatened to use nuclear weapons to “sink” Japan and reduce the United States to “ashes and darkness” for supporting the UN resolution.

“The four islands of the archipelago should be sunken into the sea by the nuclear bomb of Juche. Japan is no longer needed to exist near us,” said the statement from Pyongyang’s Korea Asia-Pacific Peace Committee, which handles the North’s external ties and propaganda.

Juche is the term for North Korea’s ruling ideology that mixes Marxism with an extreme form of go-it-alone nationalism, as preached by founder Kim Il Sung, the grandfather of Kim Jong Un.

Lastly, the respected website 38 North, based in the U.S., has raised its estimate for the yield from the recent hydrogen bomb test to be around 250 kilotons – more than 16 times the size of the device that devastated Hiroshima.

Iran: President Trump tweeted Friday: “We have made more progress in the last nine months against ISIS than the Obama Administration has made in 8 years.  Must be proactive & nasty!”

I had to smile. In light of recent ISIS attacks (see below), the group is clearly still a threat, though the president and the military deserve great credit for being much more aggressive.

The problem is, once again, that we’ve lost the broader war.

To wit...Israel’s intelligence minister said on Monday that President Bashar al-Assad was ready to permit Iran to set up military bases in Syria that would pose a long-term threat to neighboring Israel.

Israeli Prime Minister Benjamin Netanyahu has been urging Russia, Assad’s most powerful backer, and the United States to curb the Iranian presence in Syria, while hinting Israel could launch preemptive strikes against Iran there.  Needless to say, that would be explosive.

My point being, President Trump can take credit for killing a lot of ISIS militants, and this is good, but we’ve lost sight of the big picture.  Iran has a large and growing presence in Syria, Lebanon (through Hizbullah) and Iraq.  Israel’s next war will be on three fronts.

Separately, British Prime Minister May stressed the importance of the 2015 international agreement on Iran’s nuclear program in talks with Secretary of State Rex Tillerson on Thursday.  Britain’s national security adviser said after, “(They) touched on the Iran nuclear deal, the PM underlining its importance in preventing Iran from procuring nuclear weapons.”

The White House is debating a new stance on the accord, with a draft urging consideration of tougher economic sanctions on Iran if it is found in violation. But I’ve been telling you since the agreement was signed by the P5+1 it was too late.

Editorial / The Economist

“When he was running for the presidency, Donald Trump described the agreement that constrained Iran’s nuclear ambitions in return for the relief of sanctions as ‘the worst deal ever negotiated.’  He has yet to find a way out of it. But he gets a chance to do so every 90 days – and the next opportunity is coming up.

“The Iran Nuclear Agreement Review Act (INARA) of 2015 obliges the administration to certify to Congress every three months that Iran is verifiably and fully implementing the Joint Comprehensive Plan of Action (JCPOA), as the Iran deal is formally known; that it has not broken agreed limits on its stockpiles of various nuclear materials; that it has not taken any action that could advance a nuclear-weapons program; and that continued suspension of nuclear-related sanctions is vital to America’s national security.  If the president does not confirm all this the issue is thrown back to Congress, which after 60 days can vote to re-impose sanctions.

“Mr. Trump first certified that Iran was meeting its obligations in April.  When he did so a second time, in July, he reportedly lambasted his national-security team, and in particular his secretary of state, Rex Tillerson, for failing to provide him with a case proving Iran’s bad faith.  When the next review comes up in October, Mr. Trump will be furnished with such arguments, however specious.  The administration will have difficulty withholding certification on the first three grounds.  Though Nikki Haley, America’s ambassador to the UN, has said that Iran is guilty of ‘multiple violations’ of the JCPOA, her assertion does not bear scrutiny. The International Atomic Energy Agency, the UN’s nuclear watchdog, which is responsible for monitoring Iran’s compliance and inspecting its nuclear facilities, said earlier this month that everything was in order and that its inspectors were able to go where they wanted ‘without making distinctions between military and civilian locations.’

“The reference to the sites was in response to complaints by Ms. Haley and others in the administration that Iran is not allowing routine access to some military bases. This is true: but the JCPOA does not require it to. Some sites may be visited only after an (admittedly cumbersome) procedure involving submitting evidence of banned activities to a joint commission of the JCPOA signatories (America, Britain, France, Germany, Russia, China and Iran).  If the Iranians have no satisfactory explanation and continue to deny access to the site in question, the UN Security Council would then be asked to vote on restoring international nuclear-related sanctions.

“There is thus no evidence that Iran is doing anything which would merit decertification.  But the fourth condition INARA imposes – taking a view of what is or is not in America’s national-security interest – is essentially subjective.  Mr. Tillerson, James Mattis, and the national security adviser, H.R. McMaster, all believe that sticking with the JCPOA is in the national interest. But other figures may think otherwise. The CIA director, Mike Pompeo, when a congressman, was a fierce critic of the deal. In taking a hawkish line, Ms. Haley may be positioning herself to replace the lackluster Mr. Tillerson.

“In a speech to a conservative think-tank on September 5, Ms. Haley indicated that Congress should be allowed to debate the issue.  ‘If the president finds that he cannot in good faith certify Iranian compliance, he would initiate a process whereby we move beyond the narrow technicalities and look at the big picture.’ That picture sees Iran, through its ‘destabilizing’ behavior in the region, its support for terrorism and its ballistic-missile tests, as flouting the ‘spirit’ of the JCPOA.

“This is to misunderstand the JCPOA....the deal itself was never presented as anything other than a highly technical arms-control agreement.  It was designed specifically to make it impossible for Iran to produce a nuclear weapon for at least 15 years and, thereafter, to make it prohibitively difficult for it to do so without being exposed.

“The JCPOA’s critics say they want a ‘better deal’ in which the entire nuclear infrastructure is dismantled and Iran stops throwing its weight around in the region. But they have no plausible account of how such a thing might be brought about.  If Mr. Trump blows up the JCPOA, Iran, free of constraints, could crank up its enrichment program and take a chance on developing nuclear weapons.  Iran’s leaders might reasonably calculate that the prospects of Mr. Trump rebuilding the international coalition on sanctions painstakingly put together by Mr. Obama would be slim.....

“(Decertification) on its own would do damage to America’s already shaky relationship with its European allies.  It would delight Iran’s hardliners who need America as a bogeyman.  Iran’s non-nuclear adventurism would continue unchanged. And Iran would from then on be able credibly to blame America if it were at some point to call time on the JCPOA.

“Decertifying could have an outcome typical of Mr. Trump’s presidency. Mr. Trump would feel good about honoring a pledge; and achievement of Mr. Obama’s would be threatened; and America’s reputation overseas would be further diminished. The JCPOA itself might survive.  On the other hand, Mr. Trump’s assault on it could be the first step towards Iran becoming a problem like North Korea. He might reflect that one of those is quite enough.”

Iraq / Syria: At least 60 people were killed in two attacks in southern Iraq on Thursday. A suicide bomber detonated a vest and gunmen opened fire inside a restaurant near Nasiriya, capital of Dhiqar province, security sources said.  Soon after, a car bomb exploded at a nearby checkpoint.  ISIS claimed responsibility.  [ISIS also killed at least 18 policemen in Egypt’s Sinai peninsula this week.]

Meanwhile, Hizbullah leader Nasrallah declared victory in the Syrian war, dismissing remaining fighting as “scattered batteries.”  The comment, as posted in a pro-Hizbullah newspaper, is one of the most confident assessments yet by the government side as it regains large swathes of territory in eastern Syria in an advance against Islamic State.

Israel: The High Court of Justice struck down on Tuesday the law that regulates the exemption of ultra-Orthodox Jews from compulsory military service so long as they are enrolled in religious studies at a yeshiva. The justices’ majority position (8-1) agreed with the petitioners’ position that the law perpetuates inequality between secular youths who are required to enlist in the army and religious youth who are exempted.

Opposition lawmaker Tzipi Livni of the Zionist Union party welcomed the ruling, tweeting: “Equality, gentlemen, equality.  Military, national or civilian service for all, without schticks and tricks. You can keep the yeshiva world without granting full exemptions to everyone.”

Russia: The Zapad military exercises commenced on Thursday and are set to run through next Wednesday.  Russia claims it is deploying under 13,000 troops, NATO says it will be closer to 100,000 in Belarus and western Russia, as well as the Russian enclave of Kaliningrad and in the Baltic Sea. As I’ve been writing for months, the issue is will Russia leave large numbers of troops at the border when the exercises are over, what many are calling a “Trojan Horse,” to make future incursions into Poland and Russian-speaking regions in the Baltics.

Russia accused the West of “whipping up hysteria” and denied that the maneuvers were being conducted with a lack of transparency.  Kremlin spokesman Dmitry Peskov said such talk was “a provocation.”

President Putin was to attend Zapad on Monday, observing the war games from a command center near St. Petersburg.

The U.S. Army moved 600 paratroopers to the Baltics for Zapad and has taken over guardianship of the airspace of Lithuania, Latvia and Estonia, which lack capable air forces and air defense systems.

Separately, the U.S. government banned the use of security software from Kaspersky Labs by federal agencies amid concerns the company has ties to state-sponsored cyberespionage activities.

Acting Homeland Security secretary Elaine Duke gave agencies a timeline to get rid of it, ordering the scrub on the grounds the company has connections to the Russian government and its software poses a security risk.

In a statement: “The Department is concerned about the ties between certain Kaspersky officials and Russian intelligence and other government agencies, and requirements under Russian law that allow Russian intelligence agencies to request or compel assistance from Kaspersky and to intercept communications transiting Russian networks.”  DHS continued: “The risk that the Russian government, whether acting on its own or in collaboration with Kaspersky, could capitalize on access provided by Kaspersky products to compromise federal information and information systems directly implicates U.S. national security.”

Kremlin spokesman Peskov said the U.S. action is designed to undermine the competitive position of Russian firms worldwide and amounts to unfair competition.

Eugene Kasperky denied the cyber-security firm he founded is close to the Russian government and insists it poses no danger to its American customers.

Kaspersky has long maintained that while his firm cooperated with Russian law enforcement on cyber-security, there were no deeper ties.

Best Buy is one American store chain that has now stopped selling Kaspersky products.

Lastly, Russia was targeted by a large number of bomb threats in all its major cities this week, more than a dozen, leading to mass evacuations at train stations, malls and other public places. Around 100,000 people were evacuated from venues in Moscow alone on Wednesday, Interfax news agency reported. Even eight schools in Moscow were targeted.

But state television and prime-time news shows have been ignoring the story.  Thus far, no one seems to know who is pulling this off.

China: James G. Stavridis and Johan Bergenas / Washington Post

“This week, as part of the pending National Defense Authorization Act, Congress asked the Navy to help fight illegal fishing. This is an important step.  Greater military and diplomatic efforts must follow.  Indeed, history is full of natural-resource wars, including over sugar, spices, textiles, minerals, opium and oil.  Looking at current dynamics, fish scarcity could be the next catalyst.

“The decline in nearly half of global fish stocks in recent decades is a growing and existential threat to roughly 1 billion people around the world who rely on seafood as their primary source of protein. No other country is more concerned about the increasingly empty oceans than China, whose people eat twice as much fish as the global average. Beijing is also the world’s largest exporter of fish, with 14 million fishers in a sector producing billions of dollars a year.

“In order to keep its people fed and employed, the Chinese government provides hundreds of millions of dollars a year in subsidies to its distant-water fishing fleet. And in the South China Sea, it is common for its ships to receive Chinese Coast Guard escorts when illegally entering other countries’ fishing waters.  As such, the Chinese government is directly enabling and militarizing the worldwide robbing of ocean resources.

“The deployment of both hard and soft power to acquire natural resources is nothing short of hybrid warfare.  Countries on the receiving end of Chinese actions are responding in kind: Indonesia has blown up hundreds of vessels fishing in their waters illegally; Argentina sank a Chinese vessel illegally fishing in its waters last year; and South Africa continues to clash with Beijing over fishing practices....

“The United States could be next.  Chinese vessels are increasingly fishing near our waters and are seeking to expand their footprint in the Caribbean.  U.S. Coast Guard Capt. Jay Caputo recently underscored this point: ‘It is imperative that the Coast Guard be prepared for when the Chinese fishing militia approaches the U.S. [exclusive economic zone].’

“Emptier oceans also lead to increased transnational crimes. The commander of the Navy’s 5th Fleet noted this year that ‘out-of-work fishermen’ are often involved in weapons smuggling for countries such as Iran.   Drug traffickers also use fishing vessels around the world, including U.S. waters....

“The United States can also revitalize efforts by including fighting illegal fishing as part of the mission of the Combined Maritime Forces, a voluntary maritime security initiative with 32 member nations that operates to combat terrorism and piracy and provide overall maritime security....

“Trump should also recognize illegal fishing as a direct threat to U.S. interests in his National Security Strategy this fall.”

 I couldn’t agree more.

Separately, China’s twice-a-decade Communist Party congress is scheduled to commence Oct. 18.  This year’s event is expected to replace about half the country’s top leadership and reveal the extent of President Xi Jinping’s influence, as he seeks Mao-like status.

I have argued Xi, who normally would be serving two, five-year terms, will attempt to put a structure in place to have him in power well beyond 2022.  His challengers have been sidelined.  There has been an intense crackdown on what people can read and watch just since July.  It’s Xi’s show...100 percent.

The closed-door meetings will also set policies from China’s banking system to its tactics in dealing with the United States and President Trump.

But Xi is no doubt fuming that Kim Jong Un will upstage the meetings in one fashion or another by stealing the headlines.

Lastly, Steve Bannon, in his “60 Minutes” interview, said the U.S. has to take a tougher stance with China over trade and appropriating U.S. technology. Beijing, he declared, was already at “economic war” with the U.S. and it was time for the U.S. to respond in kind.

“Donald Trump, for 30 years, has singled out China as the biggest single problem we have on the world stage,” Bannon said.  “The elites in this country have got us in a situation. We’re not at economic war with China; China is at economic war with us.”

Myanmar: The UN Security Council censured the nation as a push by the military to clear minority Rohingya villages and drive hundreds of thousands of members of the Muslim ethnic group into Bangladesh is a prime example of ethnic cleansing.

The military runs the country alongside Nobel Peace Laureate Aung San Suu Kyi, the latter doing zero to end the tragedy.  But the Security Council didn’t criticize Suu Kyi.

The Myanmar military says it is battling a group of “extremist militant terrorists,” the Arakan Rohingya Salvation Army, or ARSA.

Adding to the conflict, al Qaeda’s central leadership called on Muslims to travel to the country and support the Rohingya.

ARSA says it is defending the Rohingya after decades of repression in Buddhist-majority Myanmar.

More than 370,000 have moved into Bangladesh, which has zero resources to aid them.

Venezuela: The nation’s foreign minister defended his country’s record on Monday, rejecting as “baseless” reports by the United Nations human rights office that found grave violations by its security forces against protesters.  Earlier, UN High Commissioner for Human Rights Zeid Ra’ad al-Hussein warned that the government of President Nicolas Maduro may move further to crush democratic institutions and that crimes against humanity have already been committed.

But Foreign Minister Jorge Arreaza said to applause at the UN Human Rights Council, “Venezuela is back on the path of rule of law and democracy, we will see dialogue emerging thanks to the mediation of our friends.”

Yes, this was applauded. You can stop laughing.

Mexico: Because of President Trump, more Mexicans view the United States unfavorably than at any time in the last two years, as revealed by a new Pew Research Center survey.  65% of Mexicans hold a negative opinion of the U.S. – more than double the share two years ago.

Random Musings

--Presidential tracking polls....

Gallup: 37% approval for President Trump, 57% disapproval
Rasmussen:  43% approval, 55% disapproval

A Marist national poll released today had Trump with a 39% job approval, up from 35% last month.  50% disapprove in this one.

87% of Republicans, an increase from 79%, and 91% of those who supported the president in the 2016 election, view the president’s job performance positively.  86% of Democrats and 53% of independents currently disapprove of how Trump is doing his job, little changed from last month’s survey.

--The Pew Research Center released a poll Wednesday showing a sharp drop in Republican-leaning independents who say the GOP label describes them well.  49% said it describes them “fairly well” back in 2016, but just 33% say it does today.  At the same time, among Democratic-leaning voters who subscribe to the “Democrat” label, it has remained basically steady at 42%.

Other polls, including one from Quinnipiac University, show the percentage of independents rating the GOP brand favorably has been falling.

This is the single most important factor for me, as I’ve been saying since November, and will be the telling figure come the 2018 mid-term elections.

Pew pegs GOP-leaning independents at 17% of the electorate, so while a sharp decline for the GOP would only register a few overall percentage points, that obviously could be telling in the tighter races.

On the other hand, these same voters may come back around with Trump’s latest spirit of bipartisanship.

--Ex-national security adviser Susan Rice told House investigators that she “unmasked” the identities of some senior Trump officials to learn why the crown prince of the United Arab Emirates was in New York late last year.

The New York sitdown was a separate effort by the UAE to set up back-channel communications between Russia and the incoming Trump White House, according to CNN.  The problem was the Obama administration wasn’t told about it and this was December.

The Crown Prince Zayad met with Michael Flynn, Jared Kushner and Steve Bannon.  I understand why the Obama administration felt misled by the UAE, which failed to tell them Zayad was coming to the U.S., which is standard procedure. 

Many Republican members of the House Intelligence Committee seemed satisfied with Rice’s explanation. 

--White House press secretary Sarah Sanders said at a briefing Tuesday that it’s up to the Justice Department to prosecute former FBI Director James Comey, and that the move “should be looked at.”

“I think if there was ever a moment where we feel someone has broken the law, particularly if they are the head of the FBI, I think that’s certainly something that should be looked at,” Sanders said.  She added she’s “not here to ever direct DOJ into actions.”

So this leads us into the topic of former White House adviser/chief strategist Steve Bannon and his interview on “60 Minutes” last weekend.

Trump fired Comey in an effort to block the investigation into whether individuals in his campaign had improper contacts with Russia, or at least this is what special counsel Robert Mueller is looking into.

But Bannon called Comey’s firing the biggest mistake “in modern political history.”

Sanders, in response to a question on Bannon’s claim, said, “The president is proud of the decision that he made. The president was 100 percent right in firing James Comey.  He knew it could be bad for him politically and felt he had an obligation to do what was right for the American people and men and women at the FBI.”

Bannon said that if Comey had not been sacked, a special counsel would not have been appointed to probe alleged Russian election meddling.

Bannon added the special counsel inquiry was a “waste of time” and “a total and complete farce.”

“I don’t think there’s any doubt that if James Comey had not been fired, we would not have a special counsel... We would not have the Mueller investigation, and the breadth that clearly Mr. Mueller is going for.”

And, on a different topic, Bannon said Republican congressional leaders Paul Ryan and Mitch McConnell were “trying to nullify the 2016 election.”

“They do not want Donald Trump’s populist, economic nationalist agenda to be implemented. It’s obvious as night follows day,” Bannon said.

Speaking of the national security team that helped President George W. Bush, and is now critical of Trump, Bannon said: “I hold these people in contempt, total and complete contempt...They’re idiots and they’ve gotten us in this situation [Ed. like North Korea and the Middle East], and they question a good man like Donald Trump.”  Bannon mocked Condoleezza Rice, Colin Powell and Vice President Cheney as the “geniuses” who embroiled the nation in war with Iraq and empowered China economically.

--New Jersey Gov. Chris Christie, a target of Bannon in the interview, said in response to Bannon’s contention that the governor was blocked from a cabinet position for not vigorously defending Trump when the ‘Access Hollywood’ tape was released, “nobody is going to really care” what Bannon has to say “now that he’s been fired.”

Bannon said that Christie was told that he was to get on Trump’s campaign plane at 11 a.m. to help defend Trump and that “if you make the plane, you make the team. ...He didn’t make the plane.”

Bannon said Christie’s disloyalty was noted in his “little black book.”

Christie called that story a lie.

“That conversation that Mr. Bannon references in his interview never happened. Never had any conversations with him,” Christie said on PBS’ New Hour.

And Christie said: “I didn’t need to convey those kinds of feelings to staffers. I was speaking ot the principal, to the man who is now the president of the United States,” Christie said.  He also insisted he “was there the whole Billy Bush weekend” doing debate prep with Trump.

“Third, I was offered cabinet positions by this president. It was widely reported.”

--Maureen Callahan / New York Post

“Among the enduring criticisms of Hillary Clinton: Her sense of entitlement is limitless.  She’s tone-deaf and doesn’t understand the average American – nor does she care to. Her greed is insatiable.

“Add to this a gaping lack of self-awareness, and you have all the ingredients for the New York City launch of Hillary’s nationwide book tour Tuesday morning.

“Thousands of people lined up outside the Barnes & Noble at Union Square in hopes of meeting their idol. Some slept outside the night before....

“For Hillary supporters, this event was meant to be a salve, a corrective, a moment of collective grief and healing....

“Hillary’s attendees were willing to follow any directive. There were many, and here, in part, were the written instructions:

“ ‘A limited number of wristbands for entry will be distributed on a first-come, first-served basis with purchase of the featured title at Barnes & Noble Union Square.  Hillary Rodham Clinton will sign copies of her new release, What Happened and the 2017 illustrated children’s edition of It Takes a Village, no exceptions or personalizing. She will sign up to two books per customer, one of which must be What Happened.  No other books or memorabilia please.  Posed photos or selfies will not be taking place...’ ....

“In other words, everyone was here to serve two purposes: To make sure ‘What Happened’ debuts at No. 1 on the bestseller list and to line Hillary’s pockets.”

She showed up almost an hour late.

--Sen. John McCain returned to the Senate last week after treatment for an aggressive form of brain cancer, and while he said his prognosis is good, “the challenges are very significant.”

“This is a very vicious form of cancer that I’m facing,” he told CNN’s Jake Tapper.  [But then we learned after an MRI on Monday, McCain needs more chemotherapy and radiation.]

McCain said Sunday: “I’m very happy.  I’m very happy with my life.  I’m very happy with what I have been able to do.  And there’s two ways of looking at these things and one of them is to celebrate. I am able to celebrate a wonderful life and I will be grateful for additional time that I have.

“Every life has to end one way or another....So you’ve got to have joy.”

--Speaking of McCain, and his time as a POW in Vietnam, the 10-part, 18-hour Ken Burns documentary “The Vietnam War” commences on PBS this Sunday, Sept. 17.  It is said to be in the style of his prior works on the Civil War and World War II, heavy on retelling personal experiences of combat troops.

--President Trump on Thursday was asked by reporters aboard Air Force Once about his conversation the day before with Republican Sen. Tim Scott (S.C.), during which Scott, the Senate’s only black Republican, said he confronted the president on his claim that “both sides” were responsible for the violence that followed the torchlight protest in Charlottesville.

“Now because of what’s happened since then, with Antifa, you look at really what’s happened since Charlottesville – a lot of people are saying – in fact, a lot of people have actually written, ‘Gee, Trump might have a point,’” the president said.  “I said, ‘You’ve got some very bad people on  the other side, which is true.’”

In his remarks to reporters a day earlier, Sen. Scott said of his visit, and Trump saying there were two sides:

“My response was that, while that’s true, I mean I think if you look at it from a sterile perspective, there was an antagonist on the other side,” Mr. Scott said.  “However, the real picture has nothing to do with who is on the other side....

“I shared my thoughts of the last three centuries of challenges from white supremacists, white nationalists, KKK, Nazis.  So there’s no way to find an equilibrium when you have three centuries of history versus the situation that is occurring today.”

But Thursday, when asked about Trump’s version of the meeting, Scott said, “it’s who he has been.”

“I didn’t go in there to change who he was,” Scott said on Thursday.  “I wanted to inform and educate a different perspective. I think we accomplished that and to assume that immediately thereafter he’s going to have an epiphany is just unrealistic.”

--Conservative pundits Ann Coulter and Rush Limbaugh faced blowback after they expressed skepticism with the warnings on Hurricane Irma as it approached Florida.  Their take was the liberal media had cooked up the storm for ratings, retail sales and politics.

Coulter at one point tweeted that Miami was suffering a “light rain,” while Limbaugh said on his radio show (as he has with every serious storm) that the media was exaggerating the severity as a way to increase fears about climate change.  “They are the ones using it to advance a political agenda, not me.  And all I’m doing is pointing it out.”

Whatever you say, Rush.

--Stats on Hurricane Irma:

The 185 mph winds have been matched or exceeded only by three other Atlantic hurricanes:  Wilma (2005), Gilbert (1988) and Allen (1980), according to Dr. Phil Klotzbach, a tropical scientist at Colorado State University.

Allen had the strongest winds of those four, maxing out at 190 mph in early August 1980.

Irma’s winds were at 185 mph for 37 hours, the longest a tropical cyclone has maintained winds at that level anywhere in the world.

The previous record was Super Typhoon Haiyan (2013) in the northwest Pacific which held winds of that intensity for 24 hours.

Klotzbach says that Irma’s winds of 185 mph that raked the Leeward Islands, including Barbuda and Saint Martin, are the strongest for any hurricane on record to wallop the territory, beating out the Okeechobee Hurricane (1928) and David (1979), both of which had 160 mph winds at their peak in the Leeward Islands.

Hurricane Irma was a Category 5 for 3.25 days total, tying it with the Cuba Hurricane (1932) for the longest lifetime as a Cat 5.

--I imagine all of you were watching the flooding in Texas, and now Florida, thinking the same thing.  ‘Wow, the mosquitoes are going to be worse than ever’ in these two already buggy states.

So I saw a piece in Defense News by Zoe Schlanger on how the Air Force is spraying 6 million acres in Texas with insecticide from its low-flying C-130 cargo planes, an aircraft long used in mosquito-control missions.

The hope is to prevent mosquito-borne illnesses and prevent emergency response slowdowns by workers inundated by biting insects, though Texas health officials say most mosquitoes arriving after flooding don’t carry disease.

The only minor controversy in the operation is the use of the chemical naled, which the European Union banned in 2012 out of concern for human health, but which both the Centers for Disease Control and the U.S. EPA say is harmless in the small amounts humans are exposed to.

--Former CIA Acting Director Michael Morell announced his resignation as a senior fellow at Harvard after the university named U.S. Army soldier-turned-convicted felon Chelsea Manning a visiting fellow.  Manning was to take the role at Harvard’s John F. Kennedy School of Government, the school said on its website.

“She speaks on the social, technological and economic ramifications of Artificial Intelligence,” the Harvard announcement said.  “As a trans woman, she advocates for queer and transgender rights as @xychelsea on Twitter.”

Morell said he couldn’t be part of an organization “that honors convicted felon and leaker of classified information....I have an obligation in my conscience – and I believe to the country – to stand against any efforts to justify leaks of sensitive national security information.”

Current CIA Director Mike Pompeo pulled out of a speech to be made at a forum at Harvard the same day as Manning announcement.  Then, the dean of the Kennedy School, Douglas Elmendorf, withdrew the offer for Manning, calling it a “mistake.”

--A fond farewell to NASA’s Cassini spacecraft, which on Friday reached the end of a remarkable nearly 20-year mission to Saturn.  The pioneering voyage surveyed Saturn’s rings and exposed its moons as prime targets in the search for life beyond Earth.

Today, out of power, it plunged into the surface at about 76,000 miles an hour, which if you have to go, is just about as good a way as I can think of, especially if you’re a Mets and Jets fan.

Said Earl Maize, program manager for the mission at the Jet Propulsion Laboratory, “We left the world informed, but still wondering.  I couldn’t ask for more.”

--Congratulations to the Cleveland Indians, who set a modern-day, major-league record with 22 consecutive wins...a streak stopped tonight by Kansas City, 4-3.  A remarkable run.

--Finally, I was thinking of 9/11...having brought it up with a friend this past weekend...and these are my thoughts on the 10-year anniversary, from my column of 9/10/11.

I blocked my column from the actual week of 9/11, but this suffices.  I did not edit the following, but it’s for new readers, especially those from overseas, who may not have a sense of some of my time on Wall Street, or, if you’re younger, what it was like back then.

9/10/11....

To say the least I have some pretty good archives on the history of our times. I’m not reopening the early years for proprietary reasons, but I have some unique material on the period around 9/11, as I noted earlier like in my current “Wall Street History” column.  I was very upset at what I saw as a lot of shills that stepped forward in the financial industry during that time, or people like Bill O’Reilly who had no business handing out financial advice, as he was prone to do. I was less than charitable to Dick Grasso, for example, and stand by my treatment of him. On the other hand, looking back I had forgotten I was effusive in my praise of Street executive Wick Simmons. I also noted that when it came to Rudy Giuliani, there isn’t one line he said during the whole time that you can remember, he just led, period. Something for some of our politicians to remember when they are looking to be loved.

But in thinking back to 9/11, I just want to note some of the following regarding my own experience.

From 1982-90, save for two years when my employer transferred me six times up and down the east coast, including back to New York after the first year, I worked downtown, in the shadows of Wall Street. I was constantly going through the World Trade Center, thinking of terrorism even back then, and before the first attempt to take down the Towers. After I started with PIMCO (then Thomson Funds) in 1990, I worked out of Stamford, Conn., but I was in New York a few times a month, making my broker/dealer contacts. The Trade Center was the hub for many of us to work out of. For starters, you knew you could find a bathroom! 

The Trade Center also had a good phone bank on the ground floor, by the Vista Hotel, and I would camp out there for an hour or so each time I was in the area, in those pre-cellphone days. After the first attack that was gone, as the Vista never reopened, if I recall correctly. 

So I have different memories of the Twin Towers. Dean Witter was in one of them and I was constantly visiting them and a dear friend of many of us from the business, Jim Bach. If you were having a lousy day, it was always fun going to see him. He was Old School, when Wall Street still had some class.

But what I remember most about the WTC, aside from Philippe Petit and his high-wire act in the 1970s after the Towers had opened, was the restaurant Windows on the World. That was always for special occasions, special business dinners. In my case a few dates as well. The food wasn’t the greatest, but who cared?! It was literally another world being up there, except I do remember my last time, about a year before 9/11, when it was foggy the whole evening, a chance you took when you made your reservation.

The local news networks have been running a lot of segments on the restaurant the past week. 72 died out of a staff of 450. About an hour later it could have been another 100 that would have perished as they trickled in for the lunch shift.

I don’t have a dramatic personal story about 9/11 itself. I was scheduled to play golf with a friend up in Boston, who had set me up with a reporter from Sports Illustrated. I saw the first tower go down from Dave’s office, before he had arrived, and told the secretary, “Tell Dave I’m going home. We’ll catch up later.” My only thought then was get back to New Jersey, but how?

Being in tune as I was, all I wanted to do was take the Mass Pike west (I had my car) and get onto the other side of the Hudson quickly. I didn’t dare drive south, down I-95 and eventually the Tappan Zee, for example. Too big a target. So I crossed the Hudson at the Mass./New York border and headed down the New York State Thruway and then Rt. 287 in New Jersey, where there is a point on that road where you have a far off view of Manhattan, some 30 miles away, at least, but it was such a clear day the silhouette of the skyline was visible, as was the smoke.

When I got home, I first went to my parents’ house and then ran around the surrounding area, checking on my friends and some of their parents who had a spouse in New York who hadn’t come home yet. And once I was assured everyone was OK and there was nothing I could do, I went home, watched the coverage, and cried and cried and cried. In some respects I was kind of glad I was living alone.

I didn’t lose any close friends in the Twin Towers. I knew of one or two from town but we really didn’t know each other well. Professionally, I didn’t lose anyone. Some of my friends who worked downtown, however, were shaken for quite awhile after as they relived what they saw, and the horror of getting off the island that day. I have one friend who knew at least 25 who perished.

In the ten years since, I have been to Moscow twice, Beirut twice, Istanbul twice, China three times, Hong Kong four times, Yap three times, Singapore, South Korea, Slovenia, Romania, Paraguay…but not Ground Zero.

I’ve probably been in Manhattan to visit friends, sight-see, etc. at least 75 times, but never downtown. I have no particular reason for why it’s been this way. There’s just been nothing pulling me to it.

This coming week, though, I’m going to stop in Shanksville, Pa., which I visited in the first few years after 9/11. And then someday I’ll go to the World Trade Center Memorial when it’s fully opened. But I really don’t have to. I know the area well, after all. I actually have good memories. Maybe that’s why I haven’t been.

---

9/15/17:  You won’t believe this, but as I write, 16 years later, I still haven’t been to the site.  But starting the week after that awful day in 2001, I have ended the column thusly:

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

God Bless America.

---

Gold $1323
Oil $49.83

Returns for the week 9/11-9/15

Dow Jones  +2.2%  [22268]
S&P 500  +1.6%  [2500]
S&P MidCap  +2.0%
Russell 2000  +2.3%
Nasdaq  +1.4%  [6448]

Returns for the period 1/1/17-9/15/17

Dow Jones  +12.7%
S&P 500  +11.7%
S&P MidCap  +5.6%
Russell 2000  +5.5%
Nasdaq  +19.8%

Bulls 47.1
Bears 20.2  [Source: Investors Intelligence]

Have a great week.

Brian Trumbore