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12/02/2017

For the week 11/27-12/1

[Posted 11:30 PM ET]

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.  Special thanks to Ken P.

Edition 973

[I have to admit this is one of the more frustrating columns I’ve ever written because of the issues in the Senate...having C-Span on as I go to post without resolution.]

Trump World...Tax Reform...Michael Flynn....

As I go to post, Republican leaders in the Senate have assured President Trump they had the votes to advance tax reform (which it hardly is) one step further, but a final vote is looking like Saturday (early a.m.) at this point.  Assuming it gets done, the Senate and House versions then go to conference and a final bill is hashed out there, with the goal still being to put something on the president’s desk before Christmas for him to sign.

The thing is no one as of this moment really has a clue what’s in the freakin’ thing, let alone, most importantly, what emerges out of the conference between the two.

A number of Senate Republicans had one issue or another with the package, with a nonpartisan analysis released Thursday showing the bill wouldn’t pay for itself with economic growth and would instead add $1 trillion in budget deficits over a decade not helping any as a final vote approached today.

Sen. John McCain (R-Ariz.) was one of those who got on board Thursday in support, saying in part, “I believe this legislation, though far from perfect, would enhance American competitiveness, boost the economy, and provide long overdue tax relief for middle class families.”

McCain’s decision was a reversal from the ObamaCare repeal effort in July, when he joined with GOP Sens. Susan Collins (Maine) and Lisa Murkowski (Alaska) to kill it.  Murkowski and Collins also announced they would support the tax-reform bill.

And you have the government shutdown issue, Dec. 8, with House and Senate Republicans looking at a short-term funding bill through Dec. 22.

House Democrats will no doubt try to pass a spending bill that includes protections for immigrants brought to the U.S. at a young age by their parents, the Dreamers, though President Trump, after ending those protections in September, gave Congress until March to pass legislation preventing them from being deported.

The other big news of the day was the guilty plea from former national security adviser Michael Flynn, who admitted to lying to the FBI about his contacts with the Russian ambassador and agreed to help investigators as they focus on other presidential aides.

I’m the “wait 24 hours” guy.  I am not going off on any rants on the topic until we learn more.  We had a story earlier in the day from ABC News that Flynn had agreed to testify that President Trump himself had directed Flynn talk to the Russians, to cite one example, but ABC seemed to walk that back a bit and as of tonight we don’t know.

Various news sources are reporting the “very senior member” of Trump’s transition team the documents discuss is said to be Jared Kushner, who directed Flynn to contact then-Russian Ambassador Sergey Kislyak.

According to court papers, Flynn “willfully and knowingly” made “false, fictitious and fraudulent” statements to FBI agents when they interviewed him at the White House on Jan. 24, four days after Trump was inaugurated, as part of the investigation into whether any of Trump’s aides had assisted Russian meddling in the 2016 presidential election.

Flynn pleaded guilty to a single count of lying on Friday.

Jonathan Turley, a professor at George Washington Law School, said: “Flynn has been a live torpedo in the water for months. We all agreed that he had the range to hit anyone in the White House. The question is whether he had the load to do any damage. We still don’t know the answer to that question.”

Others feel that special counsel Robert Mueller never would have cut such a sweet deal for Flynn if he couldn’t provide some juicy details.  It certainly stands in contrast to former campaign manager Paul Manafort, and his deputy, who refused to cooperate after they were charged Oct. 30 with a dozen counts of fraud, conspiracy and money laundering.

In a statement Friday, Flynn cited his 33 years of service in the Army, including combat in Iraq and Afghanistan, saying it was painful to have endured “false accusations of ‘treason’ and other outrageous acts” in recent months.

“But I recognize that the actions I acknowledged in court today were wrong... My guilty plea and agreement to cooperate with the special counsel’s office reflect a decision I made in the best interests of my family and of our country.”

President Trump’s lawyer, Ty Cobb, downplayed Flynn’s promise of cooperation. “Nothing about the guilty plea or the charge implicates anyone other than Mr. Flynn.”

Cobb then downplayed Flynn’s importance, saying he was at the White House “for 25 days during the Trump Administration and a former Obama administration official.”

Flynn was fired as head of the Defense Intelligence Agency in 2014, apparently for mismanagement.  He would then become a close adviser to Donald Trump.

After being national security adviser, Flynn was forced to resign after the media disclosed he had misled Vice President Mike Pence on Flynn’s contacts with Kislyak.

Well, the filing from today goes on but you get the gist. Clearly Mueller is trying to get Flynn’s help in building a case against other Trump administration officials.  One key to watch are any stories about Trump’s request of then-FBI Director James Comey to be lenient with Flynn after he was forced to resign.

Far more on this next week when we’ve all had a chance to digest today’s news and see what happens next.

Trumpets....

--Ralph Peters / New York Post...in discussing the imminent departure of Sec. of State Rex Tillerson, who Peters views as simply not the right man for these times, favoring supposed successor Mike Pompeo instead.

[Ignore President Trump’s late tweet today endorsing Tillerson.  “The media has been speculating that I fired Rex Tillerson or that he would be leaving soon – FAKE NEWS!  He’s not leaving and while we disagree on certain subjects, (I call the final shots) we work well together and America is highly respected again!]

Peters:

“With a looming nuclear threat from North Korea, a duplicitous China, Iran triumphant in the Middle East, Vladimir Putin attacking our interests from Syria to Afghanistan to Facebook, the West reeling under vast migration flows and Islamist terror leaping continents, one would think it time for American resolve.”

--President Trump got up Wednesday morning in fine fettle (cough cough) and proceeded to share anti-Muslim videos from a far-right British group, that we later learned he had no idea who they actually were, and it led to a gusher of criticism from British politicos, including Prime Minister Theresa May, after which Trump tweeted to May: “Don’t focus on me, focus on the destructive Radical Islamic Terrorism that is taking place within the United Kingdom.”

For one day, parliament was united, aiming their fire at the American president.

One MP called Trump a “fascist.” Another described him as “stupid.”  A third wondered whether Trump was “racist, incompetent or unthinking – or all three.”

Even loyal Trump supporter Nigel Farage advised the president: “Put your hands up, say ‘I got this wrong,’ and, frankly, try to move on.”

Editorial / Wall Street Journal

“For all of President Trump’s tweeted thunderings about ‘fake news,’ one could be forgiven for thinking that he enjoys spreading it himself. What other explanation can there be for Mr. Trump’s impulse to retweet three half-baked videos from the website of the U.K. fringe group Britain First?

“When this sort of tweeting bubbles out of the fever swamps, hardly anyone notices anymore. Or they pass it off as an emission from Vladimir Putin’s low-rent Russian propaganda shop.  But when it flows from the cellphone of the U.S. President, everyone takes note.  Which is why what happened in the wake of President Trump’s videos wasn’t the least bit fake, but was instead a pretty significant crisis between the U.S. and its primary ally.

“The office of British Prime Minister Theresa May called it ‘wrong’ of Mr. Trump to elevate Britain First. As is now well established, any such critical remark triggers the third-grade playground gene in Mr. Trump, who tweeted to Prime Minister May – after a botched tweet to a woman with the same name – ‘don’t focus on me, focus on the destructive Radical Islamic Terrorism that is taking place within the United Kingdom. We are doing just fine!’

“The U.S. is not doing just fine.  Last month Uzbek terrorist Sayfullo Saipov drove a truck down a sidewalk of New York City, murdering eight people. The U.K. has experienced similar terrorist incidents, notably the same tactic of driving a truck on London Bridge in June to kill eight people.

“The British government regards Britain First’s inflammatory video posts as part of the problem, and given the obvious seriousness of the threat and manifest difficulty containing it, we’d say they were within their rights to tell the U.S. President to butt out. His tweeted videos contributed zero to deterring the next attacks....

“Mr. Trump’s Breitbart base may revel in these Twitter dust-ups, which by now exist as indecipherable background noise to this Presidency. This one, though, could do damage to American interests that extend beyond Mr. Trump’s personality.

“The baseline is that the U.K. is the indispensable ally to the U.S. in the political and economic affairs of the world, and why it’s called ‘the special relationship.’  Right now, Prime Minister May’s leadership is on thin ice, as she struggles to negotiate Britain’s exit from the European Union, which Mr. Trump supported.  President Trump’s twittered mockery of Mrs. May undercuts her standing at a time when her successor, should she fail, could be far-left Labour Party leader Jeremy Corbyn, who is no friend of the U.S.

“A crucial element of Mrs. May’s post-Brexit strategy is the creation of a bilateral free-trade agreement with the U.S., which Mr. Trump predicted would be ‘very big and exciting.’ Without that deal, any Brexit strategy has little chance of succeeding.

“At the moment, there are widespread calls in Britain to disinvite Mr. Trump from a planned state visit, with Prime Minister May saying, ‘We have yet to set a date.’ Should it happen, there will be massive street demonstrations in London against a visiting American President – not least because of his tweets.

“Mr. Trump’s battle with the press over ‘fake news’ is driven by his justifiable belief that he isn’t getting sufficient credit for his achievements, such as his tax bill. But he can’t on one day demand straight coverage of his Presidency, and on another day promote his own favorite fake news like Britain First.  We’d advise M. Trump to rein himself in for the sake of his own Presidency, but by now we know that’s hopeless.”

Rich Lowry / New York Post

“The president of the United States wakes up some mornings seemingly determined to convince as many people as possible that he’s unsuited to high office.

“Fortunately for him, he has a Twitter account allowing him to act on this impulse immediately and without any filter.

“On Wednesday, Trump retweeted three videos from an apparatchik of an extremist party in Britain purporting to show acts of violence by Muslims. One of them is reportedly fake – it’s not clear the perpetrator is a Muslim. He then defended himself in a tweet to U.K. Prime Minister Theresa May – or, at least, he tried. He ended up tagging someone else with the same name.

“He followed up his video retweets with a message calling for the firing of ‘Morning Joe’ host Joe Scarborough on the basis of a noxious conspiracy theory.

“It’s difficult to exaggerate how mind-blowing these tweets are.

“Yet Trump’s presidency operates on a largely separate track than his Twitter feed and his other off-script interjections and pronouncements. His domestic policy is so conventional that it could’ve been cooked up by Paul Ryan and Mitch McConnell – and, in fact, it was. He’s pursued a largely status quo foreign policy, except more cautious than Barack Obama’s and, especially, George W. Bush’s.

“Amid the miasma of manufactured controversies, lurid distractions and conspiracy theories, Trump’s presidency is, as Mark Twin is supposed to have said of Wagner’s music, ‘better than it sounds.’

“A common criticism of Trump is that, via his attacks on offending journalistic outlets and jurists, he’s endangering the Constitution. He’s certainly violating norms, worth preserving in their own right, of how a president should conduct himself and speak. But if you got news only of Trump’s official acts and knew nothing of his ongoing commentary, you’d think a rigorously rules-bound president occupied the White House.

“The defining feature of Neil Gorsuch and Trump’s other judicial nominees is a firm commitment to interpreting the Constitution and the laws as written. Trump has rolled back Obama administrative actions on immigration, the environment and health care that at best pushed the envelope of executive authority and at worst were frankly unconstitutional.

“Just this week, Trump won a court fight confirming that, no matter what his critics might hope, the Consumer Financial Protection Bureau is indeed an executive agency whose director is to be appointed by the president in the event of a vacancy....

“On the legislative front, even as Trump outdoes himself with outlandish tweets, he’s getting closer to this first major victory, in pursuit of a stereotypical Republican policy goal....

“In the real world, the economy is growing at a nice clip, and the stock market is humming along, showing no signs that it believes the republic is about to be destroyed by a Mad King....

“It’s possible Trump sees Twitter – and his other provocations – as a way to stir the pot, entertain himself, stoke his base, flog his enemies and vent his frustrations separate and distinct from decisions of government, undertaken under the influence of, by and large, impressive, well-meaning advisers.

“Trump’s presidency is much better than his Twitter feed. Although he stands ready and willing to convince you otherwise, 280 characters at a time.’

--Edward Luce / Financial Times

“Let me state it upfront: I did not request a photo shoot with Jim Mattis, the U.S. secretary of defense. Nor did he pre-emptively spurn me. That said, the Pentagon chief deserves to be America’s ‘person of the year.’

“In contrast to Donald Trump, who claims to have turned down TIME magazine’s photo request for its upcoming person of the year, Mr. Mattis does not seek media gratification. The retired general is a model of sublimating ego to a larger cause.  He is the second-most important person in the Trump administration. But for Mr. Mattis, we would be sleeping even less soundly at night.

“His worth stems from character. At Mr. Trump’s first full cabinet meeting in June, principals outbid each other in presidential adulation.  Mike Pence, the vice-president, said it was the greatest honor of his life to serve a man who was ‘keeping his word to the American people.’  Reince Priebus, the then chief of staff, thanked Mr. Trump for ‘the blessing that you’ve given us to serve your agenda.’

“Everyone did their best to mimic how a Kim Jong Un cabinet might sound.  To be fair, Mr. Trump did open the meeting in full Pyongyang mode: “Never has there been a president...who’s passed more legislation, who’s done more things than what we’ve done,’ Mr. Trump said.  He still has not passed one significant bill.

“In that context, Mr. Mattis showed guts in stating his actual role: ‘It is an honor to represent the men and women of the department of defense,’ he said. The U.S. military existed so that ‘our diplomats always negotiate from a position of strength,’ he added.  He made no mention of Mr. Trump.

“There – in that Potemkin White House display – was the kernel of how the Trump presidency has unfolded.  The show is all about one man. The others, barring Mr. Mattis, are dispensable.  Indeed, Mr. Trump often taunts his staff about how easily he can fire them. Bullies never respect sycophants.  Not once, however, has Mr. Trump taken that risk with Mr. Mattis. The chances of triggering his resignation would be too high.

“But let us suppose he were to leave or to be fired.  Indeed, it is plausible at some point.  Mr. Mattis has contradicted the president on several critical policies.  Mr. Trump tweeted on North Korea: ‘Talking is not the answer!’  A few hours later Mr. Mattis said: ‘We are never out of diplomatic solutions. We always look for more.’

“When Mr. Trump said the Iran nuclear deal was a disaster, Mr. Mattis told Congress he would recommend the president should stick with the deal. When Mr. Trump said transgender Americans would no longer be eligible to serve in the U.S. military, Mr. Mattis killed the initiative by requesting a review.  Most tellingly, he was overheard reassuring a group of U.S. soldiers overseas to stay strong while the storm rages back home.  ‘You just hold the line until our country gets back to understanding and respecting each other and showing it,’ Mr. Mattis said.  ‘We’ll get the power of inspiration back.’

“Let us hope his forecast is correct.  In the meantime, America’s allies are becoming experts in cognitive dissonance.  On the one hand they hear the U.S. president downgrade their value while heaping praise on America’s adversaries. On the other hand, America’s defense chief tells allies what they want to hear. The U.S. has not changed, he says.  The phrase ‘America first’ has never escaped Mr. Mattis’ lips.

“People around the defense secretary are not shy of stating his role. Abroad that means strategic reassurance. At home it means minding Mr. Trump.

“When I asked a senior Pentagon official to list the department’s three strategic priorities, I expected North Korea would top the list. The response was: ‘Educating the president, educating the president and educating the president.’  America’s allies know Mr. Mattis does this – as do people in Washington....

“At a time when the U.S. foreign service is being dismantled, Mr. Mattis argues that the more the U.S. spends on diplomats the less it would need to spend on ammunition. These are wise precepts.  His nickname may be ‘Mad Dog.’  In reality Mr. Mattis is a rational human.  In these times – and for that alone – he deserves a medal.”

Wall Street

If you wanted a great example of how well it appears the holiday shopping season is going thus far, you need only look at Macy’s announcement today that it was hiring 7,000 additional temporary workers, citing strong traffic in its stores since Thanksgiving.  Back in September, Macy’s said it was hiring 80,000 seasonal workers, compared with last year’s 83,000, of whom 18,000 would work in distribution centers to fulfill online orders.

This is good news, boys and girls.

The Commerce Department also handed President Trump a nice Christmas gift, a GDP for the third quarter that was revised upward to 3.3% from an initial 3.0% estimate, with second-quarter growth at 3.1%; the first back-to-back 3% quarters since 2014, with the 3.3% reading the highest since Q3 2014.

Consumer spending, which makes up 2/3s of the U.S. economy, was revised down to 2.3% in the third quarter, and down from 3.3% in Q2.  Growth in business investment in equipment, on the other hand, was 10.4%, the fastest in three years.

The Fed’s closely watched personal consumption expenditures index (PCE), its preferred inflation barometer, was 1.4% for the third quarter, still well below its 2% target.

The Atlanta Fed’s GDPNow barometer has fourth-quarter growth at 3.5% as of today, with most other economists around 2.5%.

In other economic news....

October new home sales came in at the highest level in 10 years, 685,000, though this was hurricane-rebound aided.

October personal income rose 0.4%, consumption up 0.3%, in line with expectations, with the PCE for the month at 1.4% the last 12 months, same as the third-quarter reading.

October construction spending was a strong 1.4%, well above estimates.

The November Chicago PMI came in at a roaring 63.9 (50 being the dividing line between growth and contraction), while the ISM manufacturing index was a solid 58.2.

Just great numbers all around.

On Wednesday, Fed Chair Janet Yellen in her likely last appearance before the congressional Joint Economic Committee, repeated that she anticipates the Fed will continue gradually raising interest rates and trimming its balance sheet.

“I expect that, with gradual adjustments in the stance of monetary policy, the economy will continue to expand and the job market will strengthen somewhat further, supporting faster growth in wages and incomes,” said Yellen, whose term expires in early February.

Yellen also said it’s up to politicians, not the central bank, to lift the economy’s potential by improving education, business investment and infrastructure spending.

Stocks had rallied earlier in the week partly on word that Yellen’s replacement, Jerome Powell, signaled that he won’t add to financial regulations, and that he supports rolling back some of the sweeping banking regs enacted since the 2008 financial crisis.

In his opening prepared testimony for his confirmation hearing before the Senate Banking Committee, Powell said: “We will continue to consider ways to ease regulatory burdens while preserving core reforms – strong levels of capital and liquidity, stress testing, and resolution planning – so that banks can provide the credit to families and businesses necessary to sustain a prosperous economy.”

On rates, Powell said, “I think the case for raising interest rates at our next meeting is coming together...I think the conditions are supportive of doing that.”

Powell said he was also worried about increasing the deficit, which could sharply push up interest rates, curtailing economic growth.

But he added, “I think the idea would be to get GDP growing faster than the debt over a longer period of time.”

Lastly, valuations in the market aren’t cheap.  As David Rosenberg of Gluskin Sheff writes, they are “on steroids.”  Rosenberg cites the S&P 500 sells at 9.2 times tangible book value, well above the 6.3 times peak in 2007 and even the 1999 dot-com-bubble high of 8.7 times.  [Barron’s]

If you look at price-earnings ratios, the market is selling at about 18 times consensus EPS, vs. an historical 15-16, so stocks are not outrageously high by this metric, though you know I prefer looking at trailing earnings, and the S&P P/E is 25, which is far from cheap.

But the global economic outlook remains solid.  The OECD said growth among the member nations was pegged at 3.6%, and it should accelerate further in 2018.

Europe and Asia

Lots of economic data for the eurozone (EA19).  For starters, the final manufacturing PMI for the club in November was 60.1 (courtesy of IHS Markit).

Germany 62.5 vs. 60.6 in October, 2nd-highest since 1996 when the first survey was released; France 57.7, 7-year high; Spain 56.1, highest since Feb. 2007; Italy 58.3, best since Feb. 2011; Netherlands 62.4, record high; Ireland 58.1, 215-month high; and non-euro U.K. 58.2, best since 2013.

Given the above, it should be no coincidence the eurozone economic confidence index for November, via the European Commission, came in at a 17-year high, with rising confidence in the consumer and construction sectors.

Chris Williamson / Chief Economist, IHS Markit

“November’s surveys produced a clean sheet of improved PMI readings for all countries, resulting in the best performance for eurozone manufacturing since the height of the dot-com boom over 17 years ago. There’s only been one month (April 2000) in the entire 20-year history of the survey with a higher PMI reading.

“Given the surge in demand for inputs caused by the production growth spurt, it’s not surprising that recent months have seen some of the most severe supply chain bottlenecks in the history of the euro. With demand often exceeding supply, we’re seeing a shift to a sellers’ market, with growing numbers of suppliers able to hike prices.  Inflationary pressures are at their highest for over six years....

“Companies are clearly expanding rapidly. Employment growth has hit an all-time high and business investment on machinery is trending sharply upwards, suggesting manufacturers are looking forward to the upturn persisting well into 2018.”

Separately, a flash estimate on Euro area inflation for November from Eurostat was at 1.5%, up a tick from October’s 1.4% annualized.  Inflation has been in the 1.4-1.5 range the past four months.  A year ago it was running at 0.6%.

And readings on unemployment for the EA19 in the month of October were released by Eurostat, 8.8% for the EA19, down from 8.9% in September 2017 and from 9.8% in October 2016. This is the lowest rate recorded in the euro area since January 2009.

The rate in Germany was 3.6% (the government says it’s 5.6%), France 9.4%, Italy 11.1%, Spain 16.7%, Ireland 6.1% and Greece 20.6% (Aug.).

The youth unemployment rate remained high in Italy for October, 34.7%, Spain 38.2% and Greece 40.2% (Aug.)

Brexit: Ireland’s foreign minister has insisted that talks on a post-Brexit trade agreement cannot proceed unless Britain guarantees a solution to the border issue that would somehow require Northern Ireland to remain inside the EU’s customs union.

Simon Coveney, who was also promoted to deputy prime minister amid Ireland’s political crisis this week, said the U.K. needs “to give reassurance that there will not be regulatory divergence between the two jurisdictions on the island of Ireland.”  [BBC News]

The future of the Brexit talks now hinges on this single, highly-complicated issue, Britain and the EU making progress this week on the divorce bill, and earlier having essentially come to an agreement on expatriate citizens’ rights, the third of the three main items to be resolved before talks can advance to negotiations on a future trade relationship.

British Prime Minister Theresa May is meeting Monday with European Commission President Jean-Claude Juncker, ahead of the critical EU summit, and European Council President Donald Tusk said Juncker needs to be convinced ample progress has been made on avoiding a hard border in order to give a green light to the others Dec. 14-15.

Ergo, the border is the critical item, with Foreign Minister Coveney saying he did not agree with suggestions that a hard border could be avoided by developing new technology to remotely handle customs inspections.  Prime Minister May’s responsibility is to convince everyone that regulations would be largely the same on both sides of a border that will be the U.K.’s only land frontier with the bloc after Brexit.

But a policed frontier and customs controls will be needed somewhere, though a return to checkpoints is a non-starter, as this would stir memories of decades of violence and harm the island’s economy.  So May needs to word a commitment to the EU that Brexit won’t mean a hard border between Northern Ireland and the Republic.

Complicating matters is the Democratic Unionist Party (DUP) in Northern Ireland, whose support Mrs. May relies on to keep her government together.

A study from the former head of Swedish Customs gives a few examples of how critical the border issue is.

In the course of production of Guinness, 13,000 border crossings between north and south are made each year, the report states. Bombardier, one of Northern Ireland’s biggest employers, engages more than 60 suppliers in Ireland.

Documentation and compliance requirements at a border can increase transaction costs by 2-24 percent, and the total cost of obtaining a certificate of origin could be more than $500 per consignment.

Border controls can add 30-60 minutes to the border crossing time of a truck and 10-20 minutes for a car.

The study points to the Swedish/Norwegian border, describing it as “the most advanced customs solutions in the world.”

Regulations allow for a 15km control zone on either side of the border where customs controls can take place, by either state on either state’s territory.

But you still have border posts, even with the heavy investment in technology.  [Irish Independent]

*Late word as I go to post...European Council President Donald Tusk said the border is the key issue for all of the EU.

“If the U.K.’s offer is unacceptable for Ireland, it will also be unacceptable for the EU,” he said in Dublin.

On the divorce bill, the Telegraph first reported U.K. and EU negotiators had reached the outline for a deal, 45 to 55 billion euros ($53 billion to $65 billion). The official tally is purposely vague, though Jean-Claude Juncker will want a more formal figure on Monday.

Lastly, on the topic of Ireland, Prime Minister (Taoiseach) Leo Varadkar avoided a snap election when his deputy, Frances Fitzgerald, resigned amid a scandal involving her handling of a whistleblower case, thus meeting the demands of rival political party Fianna Fail.

Germany:  Leaders of Chancellor Angela Merkel’s conservative party (CDU) agreed on Sunday to pursue a “grand coalition” with the Social Democrats (SPD) to break the political deadlock in Europe’s biggest economy, after a proposed coalition with the Free Democrats and Green parties fell apart.

SPD leader Martin Schulz then said on Friday that his party broadly agreed it should not rule out any options for a new coalition with Merkel and her Bavarian ally Horst Seehofer.

The SPD will be looking at investment in education, changes in health insurance and no cap on asylum seekers as some of the conditions it would demand be met before it joined Merkel.

But suddenly, some inside Seehofer’s Christian Social Union (CSU) want to remove him from the leadership slot of their party, the rebel MPs wanting a vote on Monday.  This has the potential to muck things up a bit.

It doesn’t seem like much will be done before January in terms of hard negotiations between Merkel and Schulz, the SPD having its party conference Dec. 7-9.

Catalonia: The new regional election is coming up soon, Dec. 21, and ousted Catalan President Carles Puigdemont is doubling down on his pledge to make Catalonia an independent state, as he campaigns from exile in Belgium.

The independence movement is trying to reshape its message after Prime Minister Mariano Rajoy’s administration took the unprecedented step of ousting the regional government and taking direct control.

Polls so far show a split Catalan parliament with no obvious majorities. It’s going down to the wire, which I find surprising.  I would have expected after Madrid took over that the vote would be 60% for staying with Spain, 40% for independence, certainly 55-45 at worst.

Eurobits....

--French President Macron, in a trip to Africa, said he sought to make a clean break from his predecessors, saying he came from a generation that would not tell Africans what to do and would focus his efforts on bridging ties between Africa and Europe.

“I am from a generation that doesn’t come to tell Africans what to do. I am from a generation for whom Nelson Mandela’s (release) is one of the best political memories,” Macron said at a speech in Burkina Faso.

--Net migration in the U.K. fell to 230,000 in the year to June – back down at levels last seen in 2014 – with EU citizens accounting for the bulk of the slowing inflows in the wake of the Brexit vote.

The Office for National Statistics said on Thursday that overall net migration is down by 106,000, the biggest 12-month decline since records began in 1964, though this comes from a lofty peak in the year to June 2016.

--Royal Bank of Scotland Group announced it was closing 259 bank branches across the U.K. with the loss of 680 jobs.

French bank Societe Generale SA said it was cutting 900 jobs at French retail operations.

--Britain’s closest-watched gauge of consumer sentiment fell this month to its lowest level since just after last year’s Brexit vote, and business morale also softened, as both households and firms took a dimmer view of the economic outlook.

--Germany and France reported surprise declines in retail sales for October over September, down 1.8% and 1.9%, respectively.

In the case of Germany it’s the same old story; exports are surging while the consumer has been kind of punk...very similar to Japan down below.

--Today, an explosive device was found in the German city of Potsdam near a Christmas market and was defused, after police were alerted to a suspicious object.  See something, say something.  [The device was packed with nails and wires but did not appear to have a detonator, last I saw.] 

Turning to Asia, China’s official manufacturing PMI for November came in at 51.8 vs. 51.6 in October, with services at 54.8 vs. 54.3, according to the National Bureau of Statistics.

The private Caixin reading on manufacturing was 50.8 vs. 51.0 the prior month, Caixin focusing on small- and mid-size companies, while the official government readings hone in on state-run enterprises.

In Japan, the manufacturing PMI was 53.6 in November, the best since Feb. 2014, with a surge in new orders.

Inflation for October came in at 0.8% on core, Japan’s core being ex-fresh food, year on year, which has been encouraging, but if you strip out food and energy (“core-core”), it was only running at a 0.2% annualized pace...more concern for the Bank of Japan.

Household spending in October was once again flat, year over year, so like Germany, the surge in manufacturing, with a robust global economy, trumps a weak consumer.

Just a few other manufacturing PMIs in the region....Taiwan came in at 53.5 in November, an 81-month high, while South Korea registered 51.2.

Street Bytes

--What a volatile week, with the Dow Jones ending up 2.9%, its best week since last December, to 24231, while the S&P 500 rose 1.5% and Nasdaq lost 0.6%.

The Dow fell 350 points at one point Friday on news that Flynn was being charged with a crime and the ABC report he might implicate Trump, but then stocks cut their losses on the positive developments on the tax front in the Senate, with the result being just a 40-point loss on the day.

The divergence between the Dow and Nasdaq was reminiscent of 2000, which isn’t a good thing.

--U.S. Treasury Yields

6-mo. 1.44%  2-yr. 1.77%  10-yr. 2.36%  30-yr. 2.76%

Despite the volatility in equities, and the strong economic numbers, Treasuries were essentially unchanged on the week.

--OPEC ministers reached an agreement in Vienna on Thursday to extend production cuts, per an accord first struck in 2016, for another nine months through the end of 2018, when the originally agreed to curbs were to end March 31.

Under the accord with OPEC, 14 members of the cartel and 10 others, including Russia but excluding the United States, production is cut by 1.8 million barrels per day from prior output as the producers seek to continue to reduce still vast global supplies of crude, though many say inventories are now at more normal levels.

Earlier, uncertainty about an extension to production cuts weighed on oil prices, with many believing $60 on West Texas Intermediate (that which I quote below), is a key mark for U.S. production, with Russia among the global producers who don’t want the U.S. to cut into their market share, while they and OPEC are adhering to production targets.  So as a result, Russia insisted on a clause in the latest agreement that producers can review where they stand at their next meeting in June.

In terms of global demand, China’s emergence from its manufacturing recession has helped, it being the biggest net importer of crude in the world. In 2015 and 2016, it was a major contributor to rising global oil inventories.

--Adobe, which tracks retail data, said total online sales for Cyber Monday hit $6.6 billion, or 17% year over year, similar to the strong performance during Thanksgiving and Black Friday.

--November domestic auto sales were released today and despite some hiccups along the way, 2017 is set to be the second-best sales year in history, next to 2016, with Autodata reporting sales at a 17.48 million rate.

GM said November sales fell 2.9% compared with the same month in 2016, primarily due to a planned reduction of sales to rental companies, while Fiat Chrysler reported a 4% decrease last month.  But Ford reported a 7% sales increase, as it chose the fleet sales route GM eschewed, though overall Ford has been dialing back from rental cars this year.

Toyota reported a 3% sales decline, but Honda gained 8%, thriving amid redesigns of its Civic small car, and Nissan sales grew 14% (unofficially).

I got a kick out of the Honda Civic mention because I picked one up for the first time two weeks ago, after 10 straight Honda Accords (true).  Yes, I downsized, but I love the car.

--Last Friday, the director of the Consumer Financial Protection Bureau resigned and named his own successor, while President Trump announced that Mick Mulvaney, currently director of the Office of Management and Budget, would be the acting director.

So that meant you had two acting directors of the CFPB, the other being Leandra English, who was the agency’s chief of staff.

Under the Dodd-Frank Act, which created the CFPB, English is acting director.

Mulvaney has been a long-time critic of the CFPB and has desired the agency’s authority be significantly curtailed.

The original head, Richard Cordray, an Obama appointee, resigned a week before he originally said he would, in order to allow his favored successor to keep running the agency until Trump could appoint someone confirmed by the Senate.  Cordray has been rumored to be lining up a run for governor of Ohio, his home state.

The CFPB was given a broad mandate to be a watchdog for consumers when they deal with banks and credit card, student loan and mortgage companies, as well as debt collectors and the ilk.  It has sweeping powers, but there is no congressional oversight, unlike every other government agency.  It has been targeted by both D.C. lobbyists and Congressional Republicans for its overreaching under Cordray.

For example, it was Cordray who extracted billions in settlements from banks, debt collectors and other financial services companies for wrongdoing, including a $100 million fine for Wells Fargo when it was found to have opened millions of phony accounts for its customers (though it was the Los Angeles Times, not the CFPB, that discovered the chicanery).

Sunday, appearing on “Meet the Press,” Sen. Rob Portman (R-Ohio) said he hopes politicians “won’t play those kinds of games” on dueling appointments to head the CFPB.

Portman criticized Cordray for trying to “circumvent” the president in appointing a new leader of the bureau. 

“First of all, my understanding is that Richard Cordray resigned a week earlier than he was planning to in order to put his deputy in charge, you know, trying to circumvent the normal process [which] would be that the president would have the ability to appoint somebody on an interim basis until Congress confirms a new director,” he said.

Well, a federal judge (a Trump appointee) ruled in favor of the president in his effort to appoint the acting head of the agency.

--John Gapper / Financial Times...on Facebook

“Facebook is not just a newspaper with 2.1bn readers. But being a platform does not absolve them of responsibility. The opposite, in fact – it makes their burden heavier.

“A better way to think of Russian political ads, extremist videos, fake news and all the rest is as the polluters of common resources, albeit ones that are privately owned. The term for this is the tragedy of the commons.  Open ecosystems that are openly shared by entire communities tend to get despoiled.

“Garrett Hardin, the U.S. ecologist and philosopher who coined the phrase in 1968, warned that ‘the inherent logic of the commons remorselessly generates tragedy,’ adding gloomily that, ‘Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons.’

“His prime example was the overgrazing of common land, when the number of farmers and shepherds seeking to use the resource of free feed for animals becomes too high. He also cited companies polluting the environment with sewage, chemical and other waste rather than cleaning up their own mess. Rational self-interest led to the commons becoming barren or dirty.

“Here lies the threat to social networks. They set themselves up as commons, offering open access to hundreds of millions to publish ‘user-generated content’ and share photos with others. That in turn produced a network effect: people needed to use Facebook or others to communicate.

“But they attract bad actors as well – people and organizations who exploit free resources for money or perverted motives. These are polluters of the digital commons and with them come over-grazers: people guilty of lesser sins such as shouting loudly to gain attention or attacking others....

“The fact that YouTube is open and free allows all kinds of creativity to flourish in ways that are not enabled by the entertainment industry.  The tragedy is that it also empowers pornographers and propagandists for terror.

“So when Mark Zuckerberg, Facebook’s founder, denounced Russia’s fake news factory – ‘What they did is wrong and we’re not going to stand for it’ – he sounded like the police chief in Casablanca who professes to be shocked that gambling is going on in a casino.  Mr. Zuckerberg’s mission of ‘bringing us all together as a global community’ is laudable but it invites trouble....

“The vision of an unfettered community is alluring but utopias are always vulnerable.”

--Canada’s job market surged in November, adding 79,500 jobs, well above expectations and the biggest gain since April 2012. The unemployment rate dropped to 5.9 percent, its lowest level since February 2008. Average hourly wages rose 2.7 percent from last year.

That’s Canada...where all the domestic is premium.

--Brazil reported an 81-month high in its manufacturing PMI, 53.5.

--There is a serious flaw in Apple’s Mac operating system (MacOS High Sierra...the most recent version) that makes it possible to gain entry to the machine without a password, and also have access to administrator rights.

Apple said in a statement it was working on a fix that would be available in its next software update.

The bug was discovered by a Turkish developer, who found that by entering the username “root,” leaving the password field blank, and hitting “enter” a few times, he would be granted unrestricted access to the target machine.

It’s not true that if you click your heels three times you gain the same advantage.

The developer came under fire because he didn’t follow proper protocol, which would have been to notify the company first to give it time to fix the flaw, before going public.

So Apple must come up with a fix before criminals can exploit the vulnerability.

--Arby’s owner Roark Capital Group said on Tuesday it would buy Buffalo Wild Wings for $2.4 billion, adding to its growing portfolio of U.S. restaurants.

Roark, which owns bakery chain Cinnabon, paid a 7% premium over Buffalo Wild Wings’ Monday close. The chain will become a unit of Arby’s but will continue to operate as an independent brand.

Buffalo Wild Wings had been in a state of turmoil the past year amidst a board fight with a well-known hedge fund and activist investor Marcato Capital Management, which prompted longtime CEO Sally Smith to announce her retirement.

Roark has invested heavily in promoting Arby’s, running its now well-known “We got the meats” ad campaign. Roark also owns stakes in Hardee’s and Carl’s Jr.

--Grocery-store chain Kroger reported third-quarter sales and earnings that exceeded Wall Street’s expectations on Thursday and the stock rallied 6%.  Same-store nonfuel sales rose 1.1% from a year earlier.

Kroger’s has clearly stabilized after a rocky summer following Amazon’s announcement of its blockbuster acquisition of Whole Foods Market.

But Kroger and its ilk now also face competition from German upstarts Aldi and Lidl, which have been opening their first stores in the U.S., leading to increased pressure on grocery margins. As the Financial Times points out, U.K.-based supermarket chains Tesco and Sainsbury’s have underperformed the FTSE 100 Index by 59 and 43 percentage points, respectively, over the past five years after Aldi and Lidl entered that market.

--Meredith Corp. is exploring a break-up of Time Inc. that would include shedding some of its best-known titles, including TIME magazine and Sports Illustrated, once its $2.8 billion merger with Time Inc. is complete.  Needless to say there will be significant job cuts at Time Inc. once the two are combined.

Meredith is most interested in People, the celebrity weekly that accounts for a significant portion of Time Inc.’s revenue and profit.  Meredith’s own existing stable includes Better Homes and Gardens, Parents and Family Circle, as well as 17 local television stations, as it seeks to bet heavily in digital media and gain scale to compete for advertising dollars that Facebook and Google are picking up the lions’ share of.

--The world’s largest lithium ion battery has begun dispensing power into an electricity grid in South Australia.

The 100-megawatt battery was built by Tesla for a region long-crippled by electricity problems.

What’s funny is Tesla CEO Elon Musk famously vowed to build the battery within 100 days and delivered on the promise, but he can’t come close to achieving any of his production goals for autos.

--Last week I wrote that on Friday, the price of bitcoin had surged to $8,300, so I was startled to find out Monday morning that it was over $9,000, and then it really began to soar...to above $11,000 Wednesday!  And then just as fast it collapsed, to nearly $9,000 by Thursday morning. Yet today, it was back to a close of $10,954!  This is nuts.

--I have long talked of the morning news shows, and evening ones, plus late-night television programming in this space because it is all about the networks and money.

Matt Lauer’s firing at NBC  for “inappropriate workplace conduct” on Wednesday was a shocker, though in today’s environment hardly surprising.  Lauer issued a boilerplate apology on Thursday

I’ve liked Lauer since his days as a co-anchor at local NBC 4 New York, and I have always watched the first 20 minutes of “Today.”

But I wasn’t happy with the way the whole Anne Curry thing was handled, his fingerprints all over that one, and so in the back of my mind there has ever since been a gnawing feeling that he’s not what we see on the screen.  And after the Charlie Rose revelation, the past few days I kept thinking, I wonder what Matt is thinking?

Matt Lauer was indeed part of the ‘old boys club.’  His best friend for years has supposedly been Bryant Gumbel, who was known as a rather major sexist in his network days, and I’ve seen the cabin in south Jersey (at a fine golf course) where Lauer and Gumbel would often play poker with the guys.  Seeing as I with my own poker group from high school, it resonated with us.  [A caddy pointed it out to us.]

But the Matt Lauer story now, aside from the seemingly “gross misconduct” angle, is about money, too. While his reported annual salary was $25 million, the first two hours of “Today” generated $508 million in revenue last year, more than the amount brought in by the other network morning shows, according to Kantar Media and the New York Times.  [$100 million more than the earnings at ABC’s “GMA” and nearly three times greater than the revenue from “CBS This Morning.”]

Stephen Battaglio of the Los Angeles Times:

“In the nearly 66-year history of NBC’s ‘Today,’ the program that invented morning television, all of its stars have been considered part of an extended family.

“Every few years, regardless of whether they were fired or unceremoniously replaced, the hosts reappear to help celebrate a show milestone. Even J. Fred Muggs, the chimp who was removed for biting guests on the program in the 1950s, was invited back.  They were part of the ‘Today’ legacy – a carefully molded, yet intimate, group of personalities welcomed into the homes of millions of Americans each morning.

“But Matt Lauer may never show up in the program’s Rockefeller Plaza studio again....

“Lauer’s departure could have far-reaching reverberations – not just for NBC and ‘Today,’ but for morning television, which has started to see its audience and influence erode after decades of dominance. As audiences become more fragmented and news consumers, especially younger ones, turn to new technology, personalities known to viewers on a first-name basis are increasingly hard to come by.

“One veteran news producer who worked with Lauer predicted his departure would likely cut into the ratings for ‘Today’ by 10% to 15%.”

You already had an ebbing of the importance of network news telecasts in the evening, with the retirement of standard bearers such as Dan Rather, Tom Brokaw, the demotion of Brian Williams and the death of Peter Jennings...and instead you’ve had the rise of the cable networks.  My new routine is instead of watching the entire “NBC Nightly News,” I watch the first 15 minutes before normally switching to the end of Bret Baier on Fox, where he has a lot of commentary the last ten minutes of that one.  [Then you know I watch Fox all night, unless college basketball or the Knicks save me...until a new baseball season.]

The most recent ratings, for the 2016-17 television season, had “Today” declining to 4.2 million viewers, compared with 4.6 million for ABC’s “Good Morning America” and 3.56 million for “CBS This Morning.”  [Though “Today” led in the key 25-to-54-year-old demographic.] But Lauer was the best-known personality on the three, having been with the show 23 years.

But with that came outsized power.

Needless to say the late-night hosts had new fodder:

Jimmy Fallon: “Actually, President Trump tweeted about Matt Lauer being fired and went on to attack NBC News executives and Joe Scarborough. Then Kim Jong Un was like, ‘Uh, did you guys not see that missile yesterday or...?  I mean, I know you’re busy, but I can re-launch it or something.”

Meanwhile, the stage is set for Megyn Kelly to go after Lauer’s chair, offering herself as a role model for younger female staffers at NBC News who may be weighing sexual-harassment claims.

--Speaking of Jimmy Fallon, Stephen Colbert has increased his late-night lead over Fallon, since assuming the top position in the ratings in February with his monologues loaded with material sharply critical of President Trump.

NBC executives, though, have pointed to the fact that Fallon was still in the lead in the 18-to-49 demo, but as of the November sweeps period, Colbert had significantly cut into that lead, narrowing the gap from 364,000 to 57,000, according to Nielsen data and the New York Times.

Just since the fall, Fallon’s 18-to-49-year-old demo has plunged 26 percent.  Fallon is 200,000 ahead of Jimmy Kimmel in this category.

Overall, however, Kimmel has narrowed the gap between him and Fallon for No. 2 with 2.4 million viewers a night to Fallon’s 2.6m.

--Bruce Springsteen is extending his “Springsteen on Broadway” solo show for four months, through June 30, 2018.  [He takes a break from Feb. 3 to 28.]

The initial run through Nov. 26 sold out in a single day, and after its first week of five performances it grossed $2.33 million. After the show was extended through Feb. 3, tickets were quickly snapped up.

Foreign Affairs

North Korea: Mira Rapp-Hooper / Defense News:

“On November 28, after a 74-day weapons-testing hiatus, North Korea launched its third intercontinental ballistic missile.  From a technical standpoint, the ICBM test was impressive, exceeding the performance of North Korea’s two prior long-range missile tests on a number of metrics.  Just as importantly, it laid bare a fundamental flaw in the Trump administration’s approach to Kim Jong Un’s nuclear ambitions: the notion that there remains any window of opportunity in which the United States can keep him from acquiring a mature nuclear capability by ICBM.

“The notion that North Korea has not yet achieved these most advanced capabilities has helped fuel the administration’s apparent interest in preventive military strikes against Pyongyang.  The reality, however, has long been that Kim intends to retain his most dangerous capabilities – including the ability to strike the United States.  It is long past time for Washington to develop a strategy that carefully manages, rather than blithely denies, this state of affairs.

“North’s Korea’s latest missile flew for nearly 1,000 km at an altitude of 4,500 km [Ed. 2,800 miles...more than 10 times the height of the International Space Station] and stayed aloft for over 50 minutes [Ed. 53 by most reports] before splashing down in the Sea of Japan.  By contrast, its previous ICBMs, which were both tested in July, flew for 37 and 47 minutes, respectively.... (If the November 28 missile had been fired on a standard missile trajectory as opposed to a lofted one, it might have flown for 13,000 km or 8,100 miles.) This latest test allows North Korea to claim that it can hit the entire continental United States with a nuclear weapon....

“What this third test does lay bare, however, is a fundamental flaw in the Trump administration’s approach to Pyongyang.  Since the early days of his presidency, the president has sought the total and complete disarmament of North Korea. At the very least, he and his advisers have resolved that North Korea should not gain the ability to strike the United States with a nuclear weapon.  But because few expect North Korea to denuclearize, Trump’s objective strikes many as impossible....

“He and his advisors have also repeated their belief that the North Korean leader is irrational, undeterrable, and suicidal – a logic which, if sincerely believed, would seem to make U.S. military action inevitable.  Importantly, this case for preventive action is premised on the idea that the United States and the world are ‘running out of time’ to halt North Korea from acquiring these gravest of capabilities. According to this narrative, it would be better to strike North Korea now rather than face its most sophisticated capabilities later.”

U.S. Defense Secretary Jim Mattis told reporters at the White House: “It went higher frankly than any previous shot they’ve taken, a research and development effort on their part to continue building ballistic missiles that can threaten everywhere in the world, basically.”

President Trump said: “It is a situation that we will handle.”

Russian Foreign Minister Sergei Lavrov accused the U.S. of seeking to provoke North Korea into stepping up its nuclear missile program.

Lavrov rejected a call by the U.S. UN Ambassador Nikki Haley to sever ties with the North after its latest test.

Amb. Haley said that North Korea’s regime would be “utterly destroyed” if war broke out.

Haley also said, “We need China to do more.  President Trump called President Xi this morning and told him that we’ve come to the point where China must cut off the oil for North Korea.

“We know the main driver of its nuclear production is oil,” she said. “The major supplier of that oil is China.”

Russia argues sanctions don’t work and advocates negotiations instead; this as Russia has stepped up trade with Pyongyang, like the true a-holes they are.

According to a statement from the Kim regime (read by peppy Ri Chun Hee, the world’s most famous newsreader): “After watching the successful launch of the new type ICBM Hwasong-15, Kim Jong Un declared with pride that now we have finally realized the great historic cause of completing the state nuclear force, the cause of building a rocket power.”

Ri said in her strident tone: “With this system, we can load the heaviest warhead and strike anywhere in the mainland United States.”

At a speech in Missouri on Wednesday, Trump derided Kim Jong Un, describing him as a “sick puppy” and “little rocket man.”

Analysts point out that the missile test was not as provocative as it could have been, Pyongyang choosing not to launch it over Japan, for one, as the regime had done in two prior tests.

Editorial / Wall Street Journal

“If North Korea is allowed to perfect its warhead technology, it will be able to hold the U.S. hostage to nuclear ransom. The Trump Administration is right that the U.S. can’t live with this threat, so what more should it do to prevent it?

“Conventional wisdom says that Pyongyang already faces extreme economic and diplomatic pressure. But in reality the United Nations and U.S. only began to impose broad sanctions last year, and even U.S. allies such as Singapore and Thailand have been slow to enforce them.  China and Russia continue to support the Kim regime – China through oil exports and other commerce, and Russia through payments for North Korean slave labor.

“Shutting down those lifelines should be a top priority.  After the North’s intermediate-range missile launch in September, the U.S. circulated a draft resolution at the United Nations Security Council to do just that. But Russia and China resisted and the U.S. caved; Resolution 2375 only capped oil exports and labor contracts. The Trump Administration portrayed the unanimous vote at the UN as a victory, but the resolution kept open many of Pyongyang’s cash lifelines.

“The U.S. even rewarded Beijing for the vote by pausing the process of sanctioning Chinese companies that violate sanctions.  That pause ended last week when the Treasury Department put four companies based in the Chinese city of Dandong on its financial blacklist....

“But China’s internal enforcement of sanctions is patchy. Chinese banks froze the accounts of some North Korean customers while continuing to finance Chinese companies that are breaking sanctions rules. Imports of coal from North Korea have continued in violation of a UN resolution in August that banned all trade in North Korean coal. The Trump Administration can make an example of these firms and expose Beijing’s failure to honor its sanctions promises.

“The U.S. response to Wednesday’s missile tests should also include security measures. The redeployment of tactical nuclear weapons to South Korea is needed to deter a nuclear attack from the North....

“The deployment of more Thaad missile-defense radars and launchers to South Korea would send a strong signal to China that its support for Pyongyang has consequences....

“The Trump Administration has done more than its predecessors to thwart North Korea’s nuclear progress, but it is still far from using maximum pressure. It may not work in the end, but the alternatives are terrible: acquiescence or war.  Wednesday’s ICBM test shows Kim is getting close to his goal of threatening American cities, so why is the U.S. not using all the tools it has to stop him?”

China: The U.S. and China are headed towards major trade battles, with the first potential fight being over solar panels, with the New York Times saying this could begin in January. Senior administration officials have been talking of taking a much tougher trade stance toward China.

American manufacturers have long claimed China’s cheap panels have been unfairly financed by the Chinese government.

China would of course retaliate against American goods sold there.  Look out Apple shareholders, as I’ve been warning for years.

Separately, Taiwanese rights activist Lee Ming-cheh was sentenced on Tuesday to five years in prison for subversion by a mainland Chinese court, making him the first island resident convicted of the offense.

Taiwan issued a statement saying Lee’s sentence was “unacceptable” and demanded the mainland release him as soon as possible.

And a Chinese general who disappeared from public view while under investigation for corruption was found dead at his home in Beijing after apparently hanging himself.  President Xi has used the anti-corruption campaign to remove dozens of generals and tighten his control over the military.

Lastly, from the Wall Street Journal: “The Chinese government is building one of the world’s most sophisticated, high-tech systems to keep watch over its citizens, including surveillance cameras, facial-recognition technology and vast computer systems that comb through terabytes of data. Central to its efforts are the country’s biggest technology companies, which are openly acting as the government’s eyes and ears in cyberspace.

“Companies including Alibaba Group Holdings Ltd., Tencent Holdings Ltd. and Baidu Inc., are required to help China’s government hunt down criminal suspects and silence political dissent. Their technology is also being used to create cities wired for surveillance.

“This assistance is far more extensive than the help Western companies extend to their governments, and the requests are almost impossible to challenge, a Wall Street Journal examination of Chinese practices shows.”

Syria: The United Nations said on Thursday that it was extending a round of Syria peace talks in Geneva, aimed at shaping a political solution to end the war, but the presidency has yet to be discussed, which is rather important...the fate of Bashar Assad. Syria’s opposition has always said that Assad must step down as part of any peace deal, but the Syrian government refuses to discuss the issue and they have been bolstered by military gains on the battlefield that have strengthened Assad’s hand.

Then Friday, Syria’s top government negotiator quit the Geneva talks, blaming the opposition’s rejection of any role for Assad in a transition.  The Syrian envoy also blamed Saudi Arabia, saying it had “mined the way” to the meeting, and did not want a political solution to the conflict.

Meanwhile, Moscow is hosting parallel talks in the Kazakh capital, Astana, meant primarily to carve out “de-escalation zones” in Syria.  But Russia is pressing for talks, together with Iran and Turkey, in Sochi for the purpose of reaching an overall political settlement.

Notice how the United States isn’t mentioned in any of this.

No doubt, Trump and Putin have had phone conversations, but the Russian is securing another platform in the Middle East, with the U.S. continually being marginalized.

And Trump promised President Erdogan of Turkey that he would stop U.S. arms deliveries to the Kurds. According to the Washington Post, this move took Trump’s national security team by surprise.

Editorial / Washington Post

“For now...Russia has supplanted the United States as the convening power of the Middle East’s most important conflict. That Mr. Trump would welcome that development is another testament to his curious deference to the Kremlin. It is also, following the disastrous record in Syria of President Barack Obama, an acceleration of the collapse of U.S. global leadership.”

Sunday, the Syrian Observatory for Human Rights said at least 53 civilians were killed in Russian air strikes in the east Syrian village of Al-Shafah, including 21 children. The village is in Deir al-Zour, one of the last provinces where Islamic State still holds territory.

Russia confirmed six long-range bombers had carried out air strikes in the area, but said they hit militants and their strongholds.

In a rebel-heled enclave on the outskirts of Damascus, Eastern Ghouta, 400,000 residents are in dire shape with reports of people dying of starvation after years of siege. The UN has reported residents have been reduced to eating garbage.

Eastern Ghouta, by the way, is one of the “de-escalation” zones announced by Russia, Iran and Turkey.  I can guarantee President Trump couldn’t answer a single question about the situation here.

Iran: China is financing billions of dollars’ worth of projects in Iran, making deep inroads into the economy while European competitors struggle to find banks willing to fund their ambitions, Iranian government and industry officials said on Friday.

Freed from crippling nuclear sanctions two years ago, Iran is drawing unprecedented funding from Beijing for everything from railways to hospitals.

The head of Iran’s Chamber of Commerce’s investment commission, speaking on the sidelines of an Iran-Italy investment meeting in Rome, said, “They [Western firms] had better come quickly to Iran otherwise China will take over.”  [South China Morning Post]

Separately, Iran’s new naval commander has vowed to dispatch warships to the Gulf of Mexico.

“Our fleet of warships will be sent to the Atlantic Ocean in the near future and will visit one of  the friendly states in South America and the Gulf of Mexico,” Rear Adm. Hossein Khanzadi said, according to the Jerusalem Post.

Venezuela, an ally, is a likely destination if this comes to fruition.

No one is saying Iran’s naval forces pose a threat when up against the U.S. Navy, but Khanzadi said new vessels and submarines are being built to bolster the fleet.

Egypt: One of President Trump’s ‘good friends,’ Egyptian President Abdel Fattah al-Sissi, reached a draft agreement with Russia whereby Russian warplanes will be able to use Egyptian military bases, which would allow Moscow to further increase its military footprint in the Middle East. The deal also allows Egyptian warplanes to use Russian air bases, as if this is happening.

Russia is emphasizing that their access is part of fighting terrorism and it’s true a Russian passenger jet was downed over Sinai in October 2015 by an ISIS affiliate, killing all 224 on board. Russia cut commercial flights to Egypt at the time, a big blow to Egypt’s tourism industry.

No word what President Trump thinks of all this, seeing as he’s never criticized Russia for anything.

Editorial / Washington Post

“Counterterrorism authorities have long been concerned that as the Islamic State loses territory in Iraq and Syria it will seek to establish new bases in other parts of the region.  If so, Egypt’s Sinai Peninsula is looking like fertile ground for the jihadists. For four years, brutal but inept repression by the regime of Abdel Fatah al-Sissi has served only to strengthen the Islamic State’s ‘Sinai province,’ made up of Egyptian as well as foreign militants.  Last Friday it staged its bloodiest assault yet, killing more than 300 worshippers at a mosque in northern Sinai...

“Mr. Sissi’s response was familiar: an angry television speech promising ‘brute force,’ a showy bombing raid, and attacks on media reporting. Following the example of President Trump, the foreign ministry assailed CNN for its ‘deplorable coverage’; the network had the temerity to question why Egyptian authorities have banned most journalists from the Sinai, making independent reporting on the fight against the Islamic State virtually impossible....

“The army patrols Sinai in tanks and armored personnel carriers; rather than protecting the population, it is known for summary executions, torture and wanton destruction of civilian infrastructure. In Cairo, the regime has used terrorism as a pretext for the most severe political repression in Egypt’s modern history. Tens of thousands of political activists, including prominent secular and liberal figures, have been imprisoned, independent civil society stifled and the media silenced....

“Though his administration was compelled by law to cut some aid to Egypt several months ago, Mr. Trump remains a fan of Mr. Sissi. He called the strongman after the Sinai attack and tweeted, inexplicably, that it showed the need for ‘the WALL’ and ‘the BAN.’  When it comes to preventing the growth of the Islamic State in Egypt, Mr. Trump and Mr. Sissi are partners in obtuseness.”

Iraq: Baghdad is preparing to divert most of the Kirkuk oilfield’s future production to local refineries as a conflict with Kurdish regional authorities over the use of an export pipeline to Turkey continues.

Kirkuk’s production stopped in mid-October after Iraqi forces dislodged Kurdish fighters from Kirkuk and took over the northern region’s oilfields.

Lebanon: Prime Minister Saad al-Hariri, back in the saddle after his Saudi adventure, said that Iran-backed Hizbullah must stop interfering overseas and accept a “neutral” policy to bring an end to Lebanon’s political crisis.

In an interview with a French broadcaster, Hariri said: “I don’t want a political party in my government that interferes in Arab countries against other Arab countries.”

Yemen: Editorial / The Economist

“Yemen...has suffered civil wars, tribalism, jihadist violence and appalling poverty. But none of this compares with the misery being inflicted on the country today by the war between a Saudi-led coalition and the Houthis, a Shia militia backed by Iran.

“The UN reckons three-quarters of Yemen’s 28m people need some kind of humanitarian aid.  Mounting rubbish, failing sewerage and wrecked water supplies have led to the worst cholera outbreak in recent history. The country is on the brink of famine. The economy has crumbled, leaving people with impossible choices. Each day the al-Thawra hospital in Hodeida must decide which of the life-saving equipment to run with what little fuel it has.

“Perhaps the worst of it is that much of the world seems unperturbed, calloused by the years of bloodshed in Syria and other parts of the Middle East, and despairing of its ability to effect change. To be cynical, Yemen is farther away from Europe than Syria is; its wretched people do not, on the whole, wash up in the West seeking asylum.

“Yet the world ignores Yemen at its peril. Set aside for a moment the obligation to relieve suffering and protect civilians. Hard security interests are also at stake. The world can ill afford another failed state – a new Afghanistan or Somalia – that becomes a breeding-ground for global terrorism. Yemen, moreover, dominates the Bab al-Mandab strait, a choke-point for ships using the Suez canal.  Like it or not, the West is involved. The Saudi-led coalition is fighting with Western warplanes and munitions. Western satellites guide its bombs....

“The longer the war goes on, the more Saudi Arabia’s Western allies are complicit in its actions.  President Donald Trump has given Saudi Arabia carte blanche to act recklessly. He may think it is all part of confronting Iran; or he may want to support the liberalizing reforms of the Saudi crown prince, Muhammad bin Salman; or he may hope to profit by selling the Saudis ‘lots of beautiful military equipment.’ Whatever the case, he is damaging America’s interests. Precisely because of the importance of Saudi Arabia – the world’s biggest oil exporter and home to Islam’s two holiest places – the West should urge restraint on the impetuous prince and help disentangle him from an unwinnable war.”

How to do this is difficult.

Myanmar: Pope Francis has been on a difficult trip to Myanmar and Bangladesh where he has had to walk a tightrope with regards to the Rohingya refugee catastrophe.  The Pope called on Thursday for decisive measures to resolve the political reasons that caused mostly Muslim refugees in the country to flee to Bangladesh, while urging other countries to help the Dhaka government deal with the crisis.

But during his trip he did not use the word Rohingya to describe the refugees, which is contested by the Yangon government and military.  In a speech in Bangladesh, Francis spoke of “refugees from Rakhine State.”  Previously, in appeals from the Vatican, Francis used the term Rohingya.   In his speech before Bangladeshi President Abdul Hamid, Francis praised the impoverished Bangladeshi’s “spirit of generosity and solidary” in helping “a massive influx of refugees from Rakhine State.”

The exodus is up to 625,000, sparked by a military crackdown in response to Rohingya militant attacks on a Myanmar army base back in August.  The military denies accusations it committed atrocities aimed at “ethnic cleansing.”

The Rohingya are not recognized as Myanmar citizens or as members of a distinct ethnic group, and many are upset the Pope didn’t use their name.  Church officials in the country warned the Pope not to use the term, fearful it would lead the Myanmar military and government to turn against minority Christians.  [Only about 700,000 of Myanmar’s 51 million people are Roman Catholic.]

Well today in Dhaka, the Pope met with survivors of the persecution – 12 men, two women and two young girls – vowing: “We won’t close our hearts or look away.  The presence of God today is also called Rohingya.”

Zimbabwe: The nation’s new president, Emmerson Mnangagwa, named his cabinet and it is filled with senior military figures.  The new foreign minister, for example, is Sibusiso Moyo, the general who appeared on state TV after the recent military takeover.  The head of Zimbabwe’s air force was named the minister of agriculture and land affairs.

In other words, hardly a break with the past that some hoped for but which seemed unlikely with the elevation of Mnangagwa, who until recently looked like Robert Mugabe’s successor.  The opposition condemned the new lineup as a betrayal of the public’s hopes, and proof the security forces remain in control of the country.

Elections are still slated for next year.  It will be ugly. Many will die in the lead-up to it, is my guess.

Random Musings

--Presidential tracking polls....

Gallup: 34% approval of President Trump’s job performance / 60% disapproval
Rasmussen: 44% approval / 55% disapproval

Separately, another Rasmussen survey had voters giving Congress a whopping 13% approval rating.  1-3.

--A JMC Analytics and Polling survey for the Roy Moore-Doug Jones Senate race in Alabama has Republican Moore beating Democrat Jones 49-44.  I have no idea as to the accuracy of this outfit, but it’s the last survey I saw.

A big problem for Jones is the potential turnout for the African American vote.  Many of Jones’ advisers believe this bloc largely doesn’t even know there is a Dec. 12 election.  It’s looking good for Moore.

--Rep. John Conyers (D-Mich.), the longest-serving member of Congress, who was the top Democrat on the House Judiciary Committee until last weekend, was forced to give up the position amid a series of allegations he had made unwanted sexual advances toward former female staffers.

South Carolina Rep. Jim Clyburn (Dem.) at first had a flippant response to reporters when asked about sexual harassment allegations against Rep. Conyers, suggesting he should be held to a different standard than other public figures.

The question was, “Other men in other industries have faced similar accusations...and gotten out of the way, resign, stepped down, far faster than (Conyers) has, right...Harvey Weinstein, Charlie Rose, Matt Lauer?”

Clyburn: “Who elected them?”

But in a statement issued by his office later, Clyburn said: “As elected officials, we ought to be held to a higher standard. Congress must review and improve the current administrative procedure for victims to come forward. All harassment and discrimination allegations must be taken seriously.”

This was clearly in response to the criticism leveled at Clyburn, an old fool like so many in his party.

That was Wednesday. Thursday, House Minority Leader Nancy Pelosi (D-Calif.) said Conyers should resign amid multiple allegations of sexual misconduct, the latest when The Detroit News reported that a former staffer accused Conyers of touching her legs and offering sex against her wishes in the late 1990s.

Pelosi said: “The allegations against Congressman Conyers, as we have learned more since Sunday, are serious, disappointing and very credible. It’s very sad. The brave women who have come forward are owned justice.  I pray for Congressman Conyers and his family, and wish them well.  However, Congressman Conyers should resign.”

The allusion to Sunday was Pelosi’s inexplicably poor, and clueless, performance on “Meet the Press” when questioned on the Conyers allegations.

Rep. Clyburn then also said on Thursday that Conyers should resign.  He is back home supposedly preparing a decision for tomorrow.

--Meanwhile, disgraced Sen. Al Franken (D-Minn.) said Monday that “you have to respect women’s experience” after first disputing a radio host’s version of an incident in which he groped her (Leeann Tweeden) and forced her to kiss him.  Franken apologized to other women who have accused him of sexual misconduct (five at last count) saying he was “tremendously sorry” and that he needed to be “careful and more sensitive” to make sure it doesn’t happen again.

Franken then said he was not resigning and getting back to work. What an amazing creep.

--Garrison Keillor, the former host of “A Prairie Home Companion,” was fired the same day as Matt Lauer, Wednesday, by Minnesota Public Radio over allegations of improper behavior.

Keillor said in a statement that he was let go over “a story that I think is more interesting and more complicated than the version MPR heard,” without giving details of the allegations.

“It’s some sort of poetic irony to be knocked off the air by a story, having told so many of them myself, but I’m 75 and don’t have any interest in arguing about this. And I cannot in conscience bring danger to a great organization I’ve worked hard for since 1969,” he said.

--A Mexican national was acquitted of murder and manslaughter charges Thursday in the 2015 murder of Kate Steinle, a case in San Francisco that became a flashpoint in the national immigration debate, Jose Ines Garcia Zarate having been deported five times and freed under sanctuary laws before the fatal shooting.

The verdict brought a quick response from President Trump, who had cited the slaying during the campaign as a reason for building a wall across the U.S.-Mexico border, while punishing cities he said were failing to cooperate with immigration enforcement.

“A disgraceful verdict in the Kate Steinle case!” Trump tweeted.  “No wonder the people of our Country are so angry with Illegal Immigration.”

It was indeed a disgraceful verdict, but it was awful the parents of Kate had to go through all this in the national spotlight.  Whatever the verdict, they lost their daughter. That’s what matters.

--I was reading a piece in Army Times by Karen Jowers, relating a recent hearing for Defense Department nominees in which Congress made clear it expects action on addressing problems with military personnel readiness.

“I look you in the eye and tell you a 100-hour work week is too long for a young member of our armed forces,” said Sen. John McCain, chairman of the Senate Armed Services Committee.  “They are working 100-hour weeks. It has to stop.  Otherwise you’ll see more tragedies such as took place with the recent collisions.”

McCain described it as a “military readiness crisis” that has affected every branch of service, with ship collisions, air crashes, vehicle accidents and personnel shortages in critical roles like aviation and cybersecurity.

“The department is struggling to make do with budgets that are too small, unpredictable and driven by politics rather than strategy,” said McCain.

--Sen. McCain on a different matter said Hillary Clinton erred in writing her account of the 2016 presidential race so quickly.

“One of the almost irresistible impulses you have when you lose is to somehow justify why you lost and how you were mistreated: ‘I did the right thing!  I did!’ The hardest thing to do is to just shut up,” the Arizona Republican told Esquire magazine in an interview published Sunday.

McCain said Clinton cannot rewrite history.

“What’s the f—king point?  Keep the fight up?  History will judge that campaign, and it’s always a period of time before they do.  You’ve got to move on,” he said.  “This is Hillary’s problem right now: She doesn’t have anything to do.”

McCain’s memoir, “The Restless Wave,” comes out in April, and partially covers his 2008 run for president.

--I’ve said I was glad to see the prosecution of New Jersey Dem. Sen. Robert Menendez collapse in a mistrial because we need his foreign policy smarts in Congress at this critical time, so I was interested to see that my favorite New Jersey politician, State Sen. Jon Bramnick, the Republican minority leader in the State Assembly, agreed.

“Based on everything I’ve seen and heard – from the evidence to the jurors comments – I just think New Jersey should move on....I think (the government) had their shot.  I can’t stay silent for political purposes.”

No Republican has been elected to the U.S. Senate from New Jersey since 1972.  I hope Bramnick eventually changes that.  [He grew up in Plainfield, where I was born, so as I told him the other day we share something in common. Seriously, a good man.]

A new poll from the Eagleton Center for Public Interest Polling at Rutgers University that was released Thursday found Menendez’ favorable rating has fallen to 20%, a low for him.  It was 32% a year ago.  49% of the survey’s respondents said he should resign.

--President Trump hosted an event at the White House for Native American code talkers – and used the occasion to mock Dem. Sen. Elizabeth Warren (Mass.), reminding his audience of World War II heroes that he calls her “Pocahontas.”

“You were here long before any of us were here. Although we have a representative in Congress who they say was here a long time ago.  They call her Pocahontas,” referring to her claim to be descended from Native Americans.

The three Navajo war heroes standing next to Trump had a bemused look on their faces, clearly wondering why this was brought up, while others labeled it a “racial slur.”

White House spokeswoman Sarah Huckabee Sanders said that wasn’t the president’s intent and called on the press to examine Warren’s claim about her background.

“I think the most offensive thing...was when (Sen. Warren) lied about something to advance her career.  I don’t know why no one is asking about that question and why isn’t that constantly covered,” Sanders said.

Well, we covered this topic years ago and Massachusetts voters have weighed in, plus most of us care far more about the College Football Playoffs at this point, Ms. Sanders.

--President Trump: “At least 24 players kneeling this weekend at NFL stadiums that are now having a very hard time filling up. The American public is fed up with the disrespect the NFL is paying to our Country, our Flag and our National Anthem.  Weak and out of control!”

Whatever.

--President Trump: “Melania, our great and very hard working First Lady, who truly loves what she is doing, always thought that ‘If you run, you will win.’ She would tell everyone that, ‘no doubt, he will win.’ I also felt I would win (or I would not have run) – and Country is doing great!”

--President Trump: “@FoxNews is MUCH more important in the United States than CNN, but outside of the U.S., CNN International is still a major source of (Fake) news, and they represent our Nation to the WORLD very poorly. The outside world does not see the truth from them!”

What garbage.  Yes, this is dangerous chatter from the “leader” of the “Free World.”  He never, EVER, criticizes Russia and China for their anti-media moves of the past few years as they squelch the free press in their respective countries. 

In fact Trump’s specific attack on CNN International came the same day that President Putin signed a new law requiring selected foreign news organizations to register as foreign agents – an apparent retaliation for the U.S. Justice Department enforcing its existing Foreign Agent Registration act against Russian propaganda outlet Russia Today, or RT; RT having been identified by the U.S. intel community as being part of the Russian campaign to interfere in the 2016 presidential election.

So Trump’s favorite pollster, Rasmussen, surveyed 1,000 likely voters on Tuesday and Wednesday, after Trump said he wanted the creation of a “fake news trophy,” and 40% thought Fox deserved the non-award!  25% said CNN deserved it; 9% MSNBC; 4% ABC; 3% CBS; 2% NBC.  Republicans picked CNN (40%) over Fox (24%).  53% of Democrats selected Fox.

Trump had specified his contest shouldn’t include Fox.

The survey also found a majority of voters (51%) believe that media coverage of political issues and events is worse than it has been in the past.

---

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

God bless America.

---

Gold $1283
Oil $58.29

Returns for the week 11/27-12/1

Dow Jones  +2.9%  [24231]
S&P 500  +1.5%  [2642]
S&P MidCap  +1.9%
Russell 2000  +1.2%
Nasdaq  -0.6%  [6847]

Returns for the period 1/1/17-12/1/17

Dow Jones  +22.6%
S&P 500  +18.0%
S&P MidCap  +14.1%
Russell 2000  +13.3%
Nasdaq  +27.2%

Bulls 62.3
Bears 15.1 [Source: Investors Intelligence]

Have a great week.

Dr. Bortrum has a new column!

Brian Trumbore



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Week in Review

12/02/2017

For the week 11/27-12/1

[Posted 11:30 PM ET]

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.  Special thanks to Ken P.

Edition 973

[I have to admit this is one of the more frustrating columns I’ve ever written because of the issues in the Senate...having C-Span on as I go to post without resolution.]

Trump World...Tax Reform...Michael Flynn....

As I go to post, Republican leaders in the Senate have assured President Trump they had the votes to advance tax reform (which it hardly is) one step further, but a final vote is looking like Saturday (early a.m.) at this point.  Assuming it gets done, the Senate and House versions then go to conference and a final bill is hashed out there, with the goal still being to put something on the president’s desk before Christmas for him to sign.

The thing is no one as of this moment really has a clue what’s in the freakin’ thing, let alone, most importantly, what emerges out of the conference between the two.

A number of Senate Republicans had one issue or another with the package, with a nonpartisan analysis released Thursday showing the bill wouldn’t pay for itself with economic growth and would instead add $1 trillion in budget deficits over a decade not helping any as a final vote approached today.

Sen. John McCain (R-Ariz.) was one of those who got on board Thursday in support, saying in part, “I believe this legislation, though far from perfect, would enhance American competitiveness, boost the economy, and provide long overdue tax relief for middle class families.”

McCain’s decision was a reversal from the ObamaCare repeal effort in July, when he joined with GOP Sens. Susan Collins (Maine) and Lisa Murkowski (Alaska) to kill it.  Murkowski and Collins also announced they would support the tax-reform bill.

And you have the government shutdown issue, Dec. 8, with House and Senate Republicans looking at a short-term funding bill through Dec. 22.

House Democrats will no doubt try to pass a spending bill that includes protections for immigrants brought to the U.S. at a young age by their parents, the Dreamers, though President Trump, after ending those protections in September, gave Congress until March to pass legislation preventing them from being deported.

The other big news of the day was the guilty plea from former national security adviser Michael Flynn, who admitted to lying to the FBI about his contacts with the Russian ambassador and agreed to help investigators as they focus on other presidential aides.

I’m the “wait 24 hours” guy.  I am not going off on any rants on the topic until we learn more.  We had a story earlier in the day from ABC News that Flynn had agreed to testify that President Trump himself had directed Flynn talk to the Russians, to cite one example, but ABC seemed to walk that back a bit and as of tonight we don’t know.

Various news sources are reporting the “very senior member” of Trump’s transition team the documents discuss is said to be Jared Kushner, who directed Flynn to contact then-Russian Ambassador Sergey Kislyak.

According to court papers, Flynn “willfully and knowingly” made “false, fictitious and fraudulent” statements to FBI agents when they interviewed him at the White House on Jan. 24, four days after Trump was inaugurated, as part of the investigation into whether any of Trump’s aides had assisted Russian meddling in the 2016 presidential election.

Flynn pleaded guilty to a single count of lying on Friday.

Jonathan Turley, a professor at George Washington Law School, said: “Flynn has been a live torpedo in the water for months. We all agreed that he had the range to hit anyone in the White House. The question is whether he had the load to do any damage. We still don’t know the answer to that question.”

Others feel that special counsel Robert Mueller never would have cut such a sweet deal for Flynn if he couldn’t provide some juicy details.  It certainly stands in contrast to former campaign manager Paul Manafort, and his deputy, who refused to cooperate after they were charged Oct. 30 with a dozen counts of fraud, conspiracy and money laundering.

In a statement Friday, Flynn cited his 33 years of service in the Army, including combat in Iraq and Afghanistan, saying it was painful to have endured “false accusations of ‘treason’ and other outrageous acts” in recent months.

“But I recognize that the actions I acknowledged in court today were wrong... My guilty plea and agreement to cooperate with the special counsel’s office reflect a decision I made in the best interests of my family and of our country.”

President Trump’s lawyer, Ty Cobb, downplayed Flynn’s promise of cooperation. “Nothing about the guilty plea or the charge implicates anyone other than Mr. Flynn.”

Cobb then downplayed Flynn’s importance, saying he was at the White House “for 25 days during the Trump Administration and a former Obama administration official.”

Flynn was fired as head of the Defense Intelligence Agency in 2014, apparently for mismanagement.  He would then become a close adviser to Donald Trump.

After being national security adviser, Flynn was forced to resign after the media disclosed he had misled Vice President Mike Pence on Flynn’s contacts with Kislyak.

Well, the filing from today goes on but you get the gist. Clearly Mueller is trying to get Flynn’s help in building a case against other Trump administration officials.  One key to watch are any stories about Trump’s request of then-FBI Director James Comey to be lenient with Flynn after he was forced to resign.

Far more on this next week when we’ve all had a chance to digest today’s news and see what happens next.

Trumpets....

--Ralph Peters / New York Post...in discussing the imminent departure of Sec. of State Rex Tillerson, who Peters views as simply not the right man for these times, favoring supposed successor Mike Pompeo instead.

[Ignore President Trump’s late tweet today endorsing Tillerson.  “The media has been speculating that I fired Rex Tillerson or that he would be leaving soon – FAKE NEWS!  He’s not leaving and while we disagree on certain subjects, (I call the final shots) we work well together and America is highly respected again!]

Peters:

“With a looming nuclear threat from North Korea, a duplicitous China, Iran triumphant in the Middle East, Vladimir Putin attacking our interests from Syria to Afghanistan to Facebook, the West reeling under vast migration flows and Islamist terror leaping continents, one would think it time for American resolve.”

--President Trump got up Wednesday morning in fine fettle (cough cough) and proceeded to share anti-Muslim videos from a far-right British group, that we later learned he had no idea who they actually were, and it led to a gusher of criticism from British politicos, including Prime Minister Theresa May, after which Trump tweeted to May: “Don’t focus on me, focus on the destructive Radical Islamic Terrorism that is taking place within the United Kingdom.”

For one day, parliament was united, aiming their fire at the American president.

One MP called Trump a “fascist.” Another described him as “stupid.”  A third wondered whether Trump was “racist, incompetent or unthinking – or all three.”

Even loyal Trump supporter Nigel Farage advised the president: “Put your hands up, say ‘I got this wrong,’ and, frankly, try to move on.”

Editorial / Wall Street Journal

“For all of President Trump’s tweeted thunderings about ‘fake news,’ one could be forgiven for thinking that he enjoys spreading it himself. What other explanation can there be for Mr. Trump’s impulse to retweet three half-baked videos from the website of the U.K. fringe group Britain First?

“When this sort of tweeting bubbles out of the fever swamps, hardly anyone notices anymore. Or they pass it off as an emission from Vladimir Putin’s low-rent Russian propaganda shop.  But when it flows from the cellphone of the U.S. President, everyone takes note.  Which is why what happened in the wake of President Trump’s videos wasn’t the least bit fake, but was instead a pretty significant crisis between the U.S. and its primary ally.

“The office of British Prime Minister Theresa May called it ‘wrong’ of Mr. Trump to elevate Britain First. As is now well established, any such critical remark triggers the third-grade playground gene in Mr. Trump, who tweeted to Prime Minister May – after a botched tweet to a woman with the same name – ‘don’t focus on me, focus on the destructive Radical Islamic Terrorism that is taking place within the United Kingdom. We are doing just fine!’

“The U.S. is not doing just fine.  Last month Uzbek terrorist Sayfullo Saipov drove a truck down a sidewalk of New York City, murdering eight people. The U.K. has experienced similar terrorist incidents, notably the same tactic of driving a truck on London Bridge in June to kill eight people.

“The British government regards Britain First’s inflammatory video posts as part of the problem, and given the obvious seriousness of the threat and manifest difficulty containing it, we’d say they were within their rights to tell the U.S. President to butt out. His tweeted videos contributed zero to deterring the next attacks....

“Mr. Trump’s Breitbart base may revel in these Twitter dust-ups, which by now exist as indecipherable background noise to this Presidency. This one, though, could do damage to American interests that extend beyond Mr. Trump’s personality.

“The baseline is that the U.K. is the indispensable ally to the U.S. in the political and economic affairs of the world, and why it’s called ‘the special relationship.’  Right now, Prime Minister May’s leadership is on thin ice, as she struggles to negotiate Britain’s exit from the European Union, which Mr. Trump supported.  President Trump’s twittered mockery of Mrs. May undercuts her standing at a time when her successor, should she fail, could be far-left Labour Party leader Jeremy Corbyn, who is no friend of the U.S.

“A crucial element of Mrs. May’s post-Brexit strategy is the creation of a bilateral free-trade agreement with the U.S., which Mr. Trump predicted would be ‘very big and exciting.’ Without that deal, any Brexit strategy has little chance of succeeding.

“At the moment, there are widespread calls in Britain to disinvite Mr. Trump from a planned state visit, with Prime Minister May saying, ‘We have yet to set a date.’ Should it happen, there will be massive street demonstrations in London against a visiting American President – not least because of his tweets.

“Mr. Trump’s battle with the press over ‘fake news’ is driven by his justifiable belief that he isn’t getting sufficient credit for his achievements, such as his tax bill. But he can’t on one day demand straight coverage of his Presidency, and on another day promote his own favorite fake news like Britain First.  We’d advise M. Trump to rein himself in for the sake of his own Presidency, but by now we know that’s hopeless.”

Rich Lowry / New York Post

“The president of the United States wakes up some mornings seemingly determined to convince as many people as possible that he’s unsuited to high office.

“Fortunately for him, he has a Twitter account allowing him to act on this impulse immediately and without any filter.

“On Wednesday, Trump retweeted three videos from an apparatchik of an extremist party in Britain purporting to show acts of violence by Muslims. One of them is reportedly fake – it’s not clear the perpetrator is a Muslim. He then defended himself in a tweet to U.K. Prime Minister Theresa May – or, at least, he tried. He ended up tagging someone else with the same name.

“He followed up his video retweets with a message calling for the firing of ‘Morning Joe’ host Joe Scarborough on the basis of a noxious conspiracy theory.

“It’s difficult to exaggerate how mind-blowing these tweets are.

“Yet Trump’s presidency operates on a largely separate track than his Twitter feed and his other off-script interjections and pronouncements. His domestic policy is so conventional that it could’ve been cooked up by Paul Ryan and Mitch McConnell – and, in fact, it was. He’s pursued a largely status quo foreign policy, except more cautious than Barack Obama’s and, especially, George W. Bush’s.

“Amid the miasma of manufactured controversies, lurid distractions and conspiracy theories, Trump’s presidency is, as Mark Twin is supposed to have said of Wagner’s music, ‘better than it sounds.’

“A common criticism of Trump is that, via his attacks on offending journalistic outlets and jurists, he’s endangering the Constitution. He’s certainly violating norms, worth preserving in their own right, of how a president should conduct himself and speak. But if you got news only of Trump’s official acts and knew nothing of his ongoing commentary, you’d think a rigorously rules-bound president occupied the White House.

“The defining feature of Neil Gorsuch and Trump’s other judicial nominees is a firm commitment to interpreting the Constitution and the laws as written. Trump has rolled back Obama administrative actions on immigration, the environment and health care that at best pushed the envelope of executive authority and at worst were frankly unconstitutional.

“Just this week, Trump won a court fight confirming that, no matter what his critics might hope, the Consumer Financial Protection Bureau is indeed an executive agency whose director is to be appointed by the president in the event of a vacancy....

“On the legislative front, even as Trump outdoes himself with outlandish tweets, he’s getting closer to this first major victory, in pursuit of a stereotypical Republican policy goal....

“In the real world, the economy is growing at a nice clip, and the stock market is humming along, showing no signs that it believes the republic is about to be destroyed by a Mad King....

“It’s possible Trump sees Twitter – and his other provocations – as a way to stir the pot, entertain himself, stoke his base, flog his enemies and vent his frustrations separate and distinct from decisions of government, undertaken under the influence of, by and large, impressive, well-meaning advisers.

“Trump’s presidency is much better than his Twitter feed. Although he stands ready and willing to convince you otherwise, 280 characters at a time.’

--Edward Luce / Financial Times

“Let me state it upfront: I did not request a photo shoot with Jim Mattis, the U.S. secretary of defense. Nor did he pre-emptively spurn me. That said, the Pentagon chief deserves to be America’s ‘person of the year.’

“In contrast to Donald Trump, who claims to have turned down TIME magazine’s photo request for its upcoming person of the year, Mr. Mattis does not seek media gratification. The retired general is a model of sublimating ego to a larger cause.  He is the second-most important person in the Trump administration. But for Mr. Mattis, we would be sleeping even less soundly at night.

“His worth stems from character. At Mr. Trump’s first full cabinet meeting in June, principals outbid each other in presidential adulation.  Mike Pence, the vice-president, said it was the greatest honor of his life to serve a man who was ‘keeping his word to the American people.’  Reince Priebus, the then chief of staff, thanked Mr. Trump for ‘the blessing that you’ve given us to serve your agenda.’

“Everyone did their best to mimic how a Kim Jong Un cabinet might sound.  To be fair, Mr. Trump did open the meeting in full Pyongyang mode: “Never has there been a president...who’s passed more legislation, who’s done more things than what we’ve done,’ Mr. Trump said.  He still has not passed one significant bill.

“In that context, Mr. Mattis showed guts in stating his actual role: ‘It is an honor to represent the men and women of the department of defense,’ he said. The U.S. military existed so that ‘our diplomats always negotiate from a position of strength,’ he added.  He made no mention of Mr. Trump.

“There – in that Potemkin White House display – was the kernel of how the Trump presidency has unfolded.  The show is all about one man. The others, barring Mr. Mattis, are dispensable.  Indeed, Mr. Trump often taunts his staff about how easily he can fire them. Bullies never respect sycophants.  Not once, however, has Mr. Trump taken that risk with Mr. Mattis. The chances of triggering his resignation would be too high.

“But let us suppose he were to leave or to be fired.  Indeed, it is plausible at some point.  Mr. Mattis has contradicted the president on several critical policies.  Mr. Trump tweeted on North Korea: ‘Talking is not the answer!’  A few hours later Mr. Mattis said: ‘We are never out of diplomatic solutions. We always look for more.’

“When Mr. Trump said the Iran nuclear deal was a disaster, Mr. Mattis told Congress he would recommend the president should stick with the deal. When Mr. Trump said transgender Americans would no longer be eligible to serve in the U.S. military, Mr. Mattis killed the initiative by requesting a review.  Most tellingly, he was overheard reassuring a group of U.S. soldiers overseas to stay strong while the storm rages back home.  ‘You just hold the line until our country gets back to understanding and respecting each other and showing it,’ Mr. Mattis said.  ‘We’ll get the power of inspiration back.’

“Let us hope his forecast is correct.  In the meantime, America’s allies are becoming experts in cognitive dissonance.  On the one hand they hear the U.S. president downgrade their value while heaping praise on America’s adversaries. On the other hand, America’s defense chief tells allies what they want to hear. The U.S. has not changed, he says.  The phrase ‘America first’ has never escaped Mr. Mattis’ lips.

“People around the defense secretary are not shy of stating his role. Abroad that means strategic reassurance. At home it means minding Mr. Trump.

“When I asked a senior Pentagon official to list the department’s three strategic priorities, I expected North Korea would top the list. The response was: ‘Educating the president, educating the president and educating the president.’  America’s allies know Mr. Mattis does this – as do people in Washington....

“At a time when the U.S. foreign service is being dismantled, Mr. Mattis argues that the more the U.S. spends on diplomats the less it would need to spend on ammunition. These are wise precepts.  His nickname may be ‘Mad Dog.’  In reality Mr. Mattis is a rational human.  In these times – and for that alone – he deserves a medal.”

Wall Street

If you wanted a great example of how well it appears the holiday shopping season is going thus far, you need only look at Macy’s announcement today that it was hiring 7,000 additional temporary workers, citing strong traffic in its stores since Thanksgiving.  Back in September, Macy’s said it was hiring 80,000 seasonal workers, compared with last year’s 83,000, of whom 18,000 would work in distribution centers to fulfill online orders.

This is good news, boys and girls.

The Commerce Department also handed President Trump a nice Christmas gift, a GDP for the third quarter that was revised upward to 3.3% from an initial 3.0% estimate, with second-quarter growth at 3.1%; the first back-to-back 3% quarters since 2014, with the 3.3% reading the highest since Q3 2014.

Consumer spending, which makes up 2/3s of the U.S. economy, was revised down to 2.3% in the third quarter, and down from 3.3% in Q2.  Growth in business investment in equipment, on the other hand, was 10.4%, the fastest in three years.

The Fed’s closely watched personal consumption expenditures index (PCE), its preferred inflation barometer, was 1.4% for the third quarter, still well below its 2% target.

The Atlanta Fed’s GDPNow barometer has fourth-quarter growth at 3.5% as of today, with most other economists around 2.5%.

In other economic news....

October new home sales came in at the highest level in 10 years, 685,000, though this was hurricane-rebound aided.

October personal income rose 0.4%, consumption up 0.3%, in line with expectations, with the PCE for the month at 1.4% the last 12 months, same as the third-quarter reading.

October construction spending was a strong 1.4%, well above estimates.

The November Chicago PMI came in at a roaring 63.9 (50 being the dividing line between growth and contraction), while the ISM manufacturing index was a solid 58.2.

Just great numbers all around.

On Wednesday, Fed Chair Janet Yellen in her likely last appearance before the congressional Joint Economic Committee, repeated that she anticipates the Fed will continue gradually raising interest rates and trimming its balance sheet.

“I expect that, with gradual adjustments in the stance of monetary policy, the economy will continue to expand and the job market will strengthen somewhat further, supporting faster growth in wages and incomes,” said Yellen, whose term expires in early February.

Yellen also said it’s up to politicians, not the central bank, to lift the economy’s potential by improving education, business investment and infrastructure spending.

Stocks had rallied earlier in the week partly on word that Yellen’s replacement, Jerome Powell, signaled that he won’t add to financial regulations, and that he supports rolling back some of the sweeping banking regs enacted since the 2008 financial crisis.

In his opening prepared testimony for his confirmation hearing before the Senate Banking Committee, Powell said: “We will continue to consider ways to ease regulatory burdens while preserving core reforms – strong levels of capital and liquidity, stress testing, and resolution planning – so that banks can provide the credit to families and businesses necessary to sustain a prosperous economy.”

On rates, Powell said, “I think the case for raising interest rates at our next meeting is coming together...I think the conditions are supportive of doing that.”

Powell said he was also worried about increasing the deficit, which could sharply push up interest rates, curtailing economic growth.

But he added, “I think the idea would be to get GDP growing faster than the debt over a longer period of time.”

Lastly, valuations in the market aren’t cheap.  As David Rosenberg of Gluskin Sheff writes, they are “on steroids.”  Rosenberg cites the S&P 500 sells at 9.2 times tangible book value, well above the 6.3 times peak in 2007 and even the 1999 dot-com-bubble high of 8.7 times.  [Barron’s]

If you look at price-earnings ratios, the market is selling at about 18 times consensus EPS, vs. an historical 15-16, so stocks are not outrageously high by this metric, though you know I prefer looking at trailing earnings, and the S&P P/E is 25, which is far from cheap.

But the global economic outlook remains solid.  The OECD said growth among the member nations was pegged at 3.6%, and it should accelerate further in 2018.

Europe and Asia

Lots of economic data for the eurozone (EA19).  For starters, the final manufacturing PMI for the club in November was 60.1 (courtesy of IHS Markit).

Germany 62.5 vs. 60.6 in October, 2nd-highest since 1996 when the first survey was released; France 57.7, 7-year high; Spain 56.1, highest since Feb. 2007; Italy 58.3, best since Feb. 2011; Netherlands 62.4, record high; Ireland 58.1, 215-month high; and non-euro U.K. 58.2, best since 2013.

Given the above, it should be no coincidence the eurozone economic confidence index for November, via the European Commission, came in at a 17-year high, with rising confidence in the consumer and construction sectors.

Chris Williamson / Chief Economist, IHS Markit

“November’s surveys produced a clean sheet of improved PMI readings for all countries, resulting in the best performance for eurozone manufacturing since the height of the dot-com boom over 17 years ago. There’s only been one month (April 2000) in the entire 20-year history of the survey with a higher PMI reading.

“Given the surge in demand for inputs caused by the production growth spurt, it’s not surprising that recent months have seen some of the most severe supply chain bottlenecks in the history of the euro. With demand often exceeding supply, we’re seeing a shift to a sellers’ market, with growing numbers of suppliers able to hike prices.  Inflationary pressures are at their highest for over six years....

“Companies are clearly expanding rapidly. Employment growth has hit an all-time high and business investment on machinery is trending sharply upwards, suggesting manufacturers are looking forward to the upturn persisting well into 2018.”

Separately, a flash estimate on Euro area inflation for November from Eurostat was at 1.5%, up a tick from October’s 1.4% annualized.  Inflation has been in the 1.4-1.5 range the past four months.  A year ago it was running at 0.6%.

And readings on unemployment for the EA19 in the month of October were released by Eurostat, 8.8% for the EA19, down from 8.9% in September 2017 and from 9.8% in October 2016. This is the lowest rate recorded in the euro area since January 2009.

The rate in Germany was 3.6% (the government says it’s 5.6%), France 9.4%, Italy 11.1%, Spain 16.7%, Ireland 6.1% and Greece 20.6% (Aug.).

The youth unemployment rate remained high in Italy for October, 34.7%, Spain 38.2% and Greece 40.2% (Aug.)

Brexit: Ireland’s foreign minister has insisted that talks on a post-Brexit trade agreement cannot proceed unless Britain guarantees a solution to the border issue that would somehow require Northern Ireland to remain inside the EU’s customs union.

Simon Coveney, who was also promoted to deputy prime minister amid Ireland’s political crisis this week, said the U.K. needs “to give reassurance that there will not be regulatory divergence between the two jurisdictions on the island of Ireland.”  [BBC News]

The future of the Brexit talks now hinges on this single, highly-complicated issue, Britain and the EU making progress this week on the divorce bill, and earlier having essentially come to an agreement on expatriate citizens’ rights, the third of the three main items to be resolved before talks can advance to negotiations on a future trade relationship.

British Prime Minister Theresa May is meeting Monday with European Commission President Jean-Claude Juncker, ahead of the critical EU summit, and European Council President Donald Tusk said Juncker needs to be convinced ample progress has been made on avoiding a hard border in order to give a green light to the others Dec. 14-15.

Ergo, the border is the critical item, with Foreign Minister Coveney saying he did not agree with suggestions that a hard border could be avoided by developing new technology to remotely handle customs inspections.  Prime Minister May’s responsibility is to convince everyone that regulations would be largely the same on both sides of a border that will be the U.K.’s only land frontier with the bloc after Brexit.

But a policed frontier and customs controls will be needed somewhere, though a return to checkpoints is a non-starter, as this would stir memories of decades of violence and harm the island’s economy.  So May needs to word a commitment to the EU that Brexit won’t mean a hard border between Northern Ireland and the Republic.

Complicating matters is the Democratic Unionist Party (DUP) in Northern Ireland, whose support Mrs. May relies on to keep her government together.

A study from the former head of Swedish Customs gives a few examples of how critical the border issue is.

In the course of production of Guinness, 13,000 border crossings between north and south are made each year, the report states. Bombardier, one of Northern Ireland’s biggest employers, engages more than 60 suppliers in Ireland.

Documentation and compliance requirements at a border can increase transaction costs by 2-24 percent, and the total cost of obtaining a certificate of origin could be more than $500 per consignment.

Border controls can add 30-60 minutes to the border crossing time of a truck and 10-20 minutes for a car.

The study points to the Swedish/Norwegian border, describing it as “the most advanced customs solutions in the world.”

Regulations allow for a 15km control zone on either side of the border where customs controls can take place, by either state on either state’s territory.

But you still have border posts, even with the heavy investment in technology.  [Irish Independent]

*Late word as I go to post...European Council President Donald Tusk said the border is the key issue for all of the EU.

“If the U.K.’s offer is unacceptable for Ireland, it will also be unacceptable for the EU,” he said in Dublin.

On the divorce bill, the Telegraph first reported U.K. and EU negotiators had reached the outline for a deal, 45 to 55 billion euros ($53 billion to $65 billion). The official tally is purposely vague, though Jean-Claude Juncker will want a more formal figure on Monday.

Lastly, on the topic of Ireland, Prime Minister (Taoiseach) Leo Varadkar avoided a snap election when his deputy, Frances Fitzgerald, resigned amid a scandal involving her handling of a whistleblower case, thus meeting the demands of rival political party Fianna Fail.

Germany:  Leaders of Chancellor Angela Merkel’s conservative party (CDU) agreed on Sunday to pursue a “grand coalition” with the Social Democrats (SPD) to break the political deadlock in Europe’s biggest economy, after a proposed coalition with the Free Democrats and Green parties fell apart.

SPD leader Martin Schulz then said on Friday that his party broadly agreed it should not rule out any options for a new coalition with Merkel and her Bavarian ally Horst Seehofer.

The SPD will be looking at investment in education, changes in health insurance and no cap on asylum seekers as some of the conditions it would demand be met before it joined Merkel.

But suddenly, some inside Seehofer’s Christian Social Union (CSU) want to remove him from the leadership slot of their party, the rebel MPs wanting a vote on Monday.  This has the potential to muck things up a bit.

It doesn’t seem like much will be done before January in terms of hard negotiations between Merkel and Schulz, the SPD having its party conference Dec. 7-9.

Catalonia: The new regional election is coming up soon, Dec. 21, and ousted Catalan President Carles Puigdemont is doubling down on his pledge to make Catalonia an independent state, as he campaigns from exile in Belgium.

The independence movement is trying to reshape its message after Prime Minister Mariano Rajoy’s administration took the unprecedented step of ousting the regional government and taking direct control.

Polls so far show a split Catalan parliament with no obvious majorities. It’s going down to the wire, which I find surprising.  I would have expected after Madrid took over that the vote would be 60% for staying with Spain, 40% for independence, certainly 55-45 at worst.

Eurobits....

--French President Macron, in a trip to Africa, said he sought to make a clean break from his predecessors, saying he came from a generation that would not tell Africans what to do and would focus his efforts on bridging ties between Africa and Europe.

“I am from a generation that doesn’t come to tell Africans what to do. I am from a generation for whom Nelson Mandela’s (release) is one of the best political memories,” Macron said at a speech in Burkina Faso.

--Net migration in the U.K. fell to 230,000 in the year to June – back down at levels last seen in 2014 – with EU citizens accounting for the bulk of the slowing inflows in the wake of the Brexit vote.

The Office for National Statistics said on Thursday that overall net migration is down by 106,000, the biggest 12-month decline since records began in 1964, though this comes from a lofty peak in the year to June 2016.

--Royal Bank of Scotland Group announced it was closing 259 bank branches across the U.K. with the loss of 680 jobs.

French bank Societe Generale SA said it was cutting 900 jobs at French retail operations.

--Britain’s closest-watched gauge of consumer sentiment fell this month to its lowest level since just after last year’s Brexit vote, and business morale also softened, as both households and firms took a dimmer view of the economic outlook.

--Germany and France reported surprise declines in retail sales for October over September, down 1.8% and 1.9%, respectively.

In the case of Germany it’s the same old story; exports are surging while the consumer has been kind of punk...very similar to Japan down below.

--Today, an explosive device was found in the German city of Potsdam near a Christmas market and was defused, after police were alerted to a suspicious object.  See something, say something.  [The device was packed with nails and wires but did not appear to have a detonator, last I saw.] 

Turning to Asia, China’s official manufacturing PMI for November came in at 51.8 vs. 51.6 in October, with services at 54.8 vs. 54.3, according to the National Bureau of Statistics.

The private Caixin reading on manufacturing was 50.8 vs. 51.0 the prior month, Caixin focusing on small- and mid-size companies, while the official government readings hone in on state-run enterprises.

In Japan, the manufacturing PMI was 53.6 in November, the best since Feb. 2014, with a surge in new orders.

Inflation for October came in at 0.8% on core, Japan’s core being ex-fresh food, year on year, which has been encouraging, but if you strip out food and energy (“core-core”), it was only running at a 0.2% annualized pace...more concern for the Bank of Japan.

Household spending in October was once again flat, year over year, so like Germany, the surge in manufacturing, with a robust global economy, trumps a weak consumer.

Just a few other manufacturing PMIs in the region....Taiwan came in at 53.5 in November, an 81-month high, while South Korea registered 51.2.

Street Bytes

--What a volatile week, with the Dow Jones ending up 2.9%, its best week since last December, to 24231, while the S&P 500 rose 1.5% and Nasdaq lost 0.6%.

The Dow fell 350 points at one point Friday on news that Flynn was being charged with a crime and the ABC report he might implicate Trump, but then stocks cut their losses on the positive developments on the tax front in the Senate, with the result being just a 40-point loss on the day.

The divergence between the Dow and Nasdaq was reminiscent of 2000, which isn’t a good thing.

--U.S. Treasury Yields

6-mo. 1.44%  2-yr. 1.77%  10-yr. 2.36%  30-yr. 2.76%

Despite the volatility in equities, and the strong economic numbers, Treasuries were essentially unchanged on the week.

--OPEC ministers reached an agreement in Vienna on Thursday to extend production cuts, per an accord first struck in 2016, for another nine months through the end of 2018, when the originally agreed to curbs were to end March 31.

Under the accord with OPEC, 14 members of the cartel and 10 others, including Russia but excluding the United States, production is cut by 1.8 million barrels per day from prior output as the producers seek to continue to reduce still vast global supplies of crude, though many say inventories are now at more normal levels.

Earlier, uncertainty about an extension to production cuts weighed on oil prices, with many believing $60 on West Texas Intermediate (that which I quote below), is a key mark for U.S. production, with Russia among the global producers who don’t want the U.S. to cut into their market share, while they and OPEC are adhering to production targets.  So as a result, Russia insisted on a clause in the latest agreement that producers can review where they stand at their next meeting in June.

In terms of global demand, China’s emergence from its manufacturing recession has helped, it being the biggest net importer of crude in the world. In 2015 and 2016, it was a major contributor to rising global oil inventories.

--Adobe, which tracks retail data, said total online sales for Cyber Monday hit $6.6 billion, or 17% year over year, similar to the strong performance during Thanksgiving and Black Friday.

--November domestic auto sales were released today and despite some hiccups along the way, 2017 is set to be the second-best sales year in history, next to 2016, with Autodata reporting sales at a 17.48 million rate.

GM said November sales fell 2.9% compared with the same month in 2016, primarily due to a planned reduction of sales to rental companies, while Fiat Chrysler reported a 4% decrease last month.  But Ford reported a 7% sales increase, as it chose the fleet sales route GM eschewed, though overall Ford has been dialing back from rental cars this year.

Toyota reported a 3% sales decline, but Honda gained 8%, thriving amid redesigns of its Civic small car, and Nissan sales grew 14% (unofficially).

I got a kick out of the Honda Civic mention because I picked one up for the first time two weeks ago, after 10 straight Honda Accords (true).  Yes, I downsized, but I love the car.

--Last Friday, the director of the Consumer Financial Protection Bureau resigned and named his own successor, while President Trump announced that Mick Mulvaney, currently director of the Office of Management and Budget, would be the acting director.

So that meant you had two acting directors of the CFPB, the other being Leandra English, who was the agency’s chief of staff.

Under the Dodd-Frank Act, which created the CFPB, English is acting director.

Mulvaney has been a long-time critic of the CFPB and has desired the agency’s authority be significantly curtailed.

The original head, Richard Cordray, an Obama appointee, resigned a week before he originally said he would, in order to allow his favored successor to keep running the agency until Trump could appoint someone confirmed by the Senate.  Cordray has been rumored to be lining up a run for governor of Ohio, his home state.

The CFPB was given a broad mandate to be a watchdog for consumers when they deal with banks and credit card, student loan and mortgage companies, as well as debt collectors and the ilk.  It has sweeping powers, but there is no congressional oversight, unlike every other government agency.  It has been targeted by both D.C. lobbyists and Congressional Republicans for its overreaching under Cordray.

For example, it was Cordray who extracted billions in settlements from banks, debt collectors and other financial services companies for wrongdoing, including a $100 million fine for Wells Fargo when it was found to have opened millions of phony accounts for its customers (though it was the Los Angeles Times, not the CFPB, that discovered the chicanery).

Sunday, appearing on “Meet the Press,” Sen. Rob Portman (R-Ohio) said he hopes politicians “won’t play those kinds of games” on dueling appointments to head the CFPB.

Portman criticized Cordray for trying to “circumvent” the president in appointing a new leader of the bureau. 

“First of all, my understanding is that Richard Cordray resigned a week earlier than he was planning to in order to put his deputy in charge, you know, trying to circumvent the normal process [which] would be that the president would have the ability to appoint somebody on an interim basis until Congress confirms a new director,” he said.

Well, a federal judge (a Trump appointee) ruled in favor of the president in his effort to appoint the acting head of the agency.

--John Gapper / Financial Times...on Facebook

“Facebook is not just a newspaper with 2.1bn readers. But being a platform does not absolve them of responsibility. The opposite, in fact – it makes their burden heavier.

“A better way to think of Russian political ads, extremist videos, fake news and all the rest is as the polluters of common resources, albeit ones that are privately owned. The term for this is the tragedy of the commons.  Open ecosystems that are openly shared by entire communities tend to get despoiled.

“Garrett Hardin, the U.S. ecologist and philosopher who coined the phrase in 1968, warned that ‘the inherent logic of the commons remorselessly generates tragedy,’ adding gloomily that, ‘Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons.’

“His prime example was the overgrazing of common land, when the number of farmers and shepherds seeking to use the resource of free feed for animals becomes too high. He also cited companies polluting the environment with sewage, chemical and other waste rather than cleaning up their own mess. Rational self-interest led to the commons becoming barren or dirty.

“Here lies the threat to social networks. They set themselves up as commons, offering open access to hundreds of millions to publish ‘user-generated content’ and share photos with others. That in turn produced a network effect: people needed to use Facebook or others to communicate.

“But they attract bad actors as well – people and organizations who exploit free resources for money or perverted motives. These are polluters of the digital commons and with them come over-grazers: people guilty of lesser sins such as shouting loudly to gain attention or attacking others....

“The fact that YouTube is open and free allows all kinds of creativity to flourish in ways that are not enabled by the entertainment industry.  The tragedy is that it also empowers pornographers and propagandists for terror.

“So when Mark Zuckerberg, Facebook’s founder, denounced Russia’s fake news factory – ‘What they did is wrong and we’re not going to stand for it’ – he sounded like the police chief in Casablanca who professes to be shocked that gambling is going on in a casino.  Mr. Zuckerberg’s mission of ‘bringing us all together as a global community’ is laudable but it invites trouble....

“The vision of an unfettered community is alluring but utopias are always vulnerable.”

--Canada’s job market surged in November, adding 79,500 jobs, well above expectations and the biggest gain since April 2012. The unemployment rate dropped to 5.9 percent, its lowest level since February 2008. Average hourly wages rose 2.7 percent from last year.

That’s Canada...where all the domestic is premium.

--Brazil reported an 81-month high in its manufacturing PMI, 53.5.

--There is a serious flaw in Apple’s Mac operating system (MacOS High Sierra...the most recent version) that makes it possible to gain entry to the machine without a password, and also have access to administrator rights.

Apple said in a statement it was working on a fix that would be available in its next software update.

The bug was discovered by a Turkish developer, who found that by entering the username “root,” leaving the password field blank, and hitting “enter” a few times, he would be granted unrestricted access to the target machine.

It’s not true that if you click your heels three times you gain the same advantage.

The developer came under fire because he didn’t follow proper protocol, which would have been to notify the company first to give it time to fix the flaw, before going public.

So Apple must come up with a fix before criminals can exploit the vulnerability.

--Arby’s owner Roark Capital Group said on Tuesday it would buy Buffalo Wild Wings for $2.4 billion, adding to its growing portfolio of U.S. restaurants.

Roark, which owns bakery chain Cinnabon, paid a 7% premium over Buffalo Wild Wings’ Monday close. The chain will become a unit of Arby’s but will continue to operate as an independent brand.

Buffalo Wild Wings had been in a state of turmoil the past year amidst a board fight with a well-known hedge fund and activist investor Marcato Capital Management, which prompted longtime CEO Sally Smith to announce her retirement.

Roark has invested heavily in promoting Arby’s, running its now well-known “We got the meats” ad campaign. Roark also owns stakes in Hardee’s and Carl’s Jr.

--Grocery-store chain Kroger reported third-quarter sales and earnings that exceeded Wall Street’s expectations on Thursday and the stock rallied 6%.  Same-store nonfuel sales rose 1.1% from a year earlier.

Kroger’s has clearly stabilized after a rocky summer following Amazon’s announcement of its blockbuster acquisition of Whole Foods Market.

But Kroger and its ilk now also face competition from German upstarts Aldi and Lidl, which have been opening their first stores in the U.S., leading to increased pressure on grocery margins. As the Financial Times points out, U.K.-based supermarket chains Tesco and Sainsbury’s have underperformed the FTSE 100 Index by 59 and 43 percentage points, respectively, over the past five years after Aldi and Lidl entered that market.

--Meredith Corp. is exploring a break-up of Time Inc. that would include shedding some of its best-known titles, including TIME magazine and Sports Illustrated, once its $2.8 billion merger with Time Inc. is complete.  Needless to say there will be significant job cuts at Time Inc. once the two are combined.

Meredith is most interested in People, the celebrity weekly that accounts for a significant portion of Time Inc.’s revenue and profit.  Meredith’s own existing stable includes Better Homes and Gardens, Parents and Family Circle, as well as 17 local television stations, as it seeks to bet heavily in digital media and gain scale to compete for advertising dollars that Facebook and Google are picking up the lions’ share of.

--The world’s largest lithium ion battery has begun dispensing power into an electricity grid in South Australia.

The 100-megawatt battery was built by Tesla for a region long-crippled by electricity problems.

What’s funny is Tesla CEO Elon Musk famously vowed to build the battery within 100 days and delivered on the promise, but he can’t come close to achieving any of his production goals for autos.

--Last week I wrote that on Friday, the price of bitcoin had surged to $8,300, so I was startled to find out Monday morning that it was over $9,000, and then it really began to soar...to above $11,000 Wednesday!  And then just as fast it collapsed, to nearly $9,000 by Thursday morning. Yet today, it was back to a close of $10,954!  This is nuts.

--I have long talked of the morning news shows, and evening ones, plus late-night television programming in this space because it is all about the networks and money.

Matt Lauer’s firing at NBC  for “inappropriate workplace conduct” on Wednesday was a shocker, though in today’s environment hardly surprising.  Lauer issued a boilerplate apology on Thursday

I’ve liked Lauer since his days as a co-anchor at local NBC 4 New York, and I have always watched the first 20 minutes of “Today.”

But I wasn’t happy with the way the whole Anne Curry thing was handled, his fingerprints all over that one, and so in the back of my mind there has ever since been a gnawing feeling that he’s not what we see on the screen.  And after the Charlie Rose revelation, the past few days I kept thinking, I wonder what Matt is thinking?

Matt Lauer was indeed part of the ‘old boys club.’  His best friend for years has supposedly been Bryant Gumbel, who was known as a rather major sexist in his network days, and I’ve seen the cabin in south Jersey (at a fine golf course) where Lauer and Gumbel would often play poker with the guys.  Seeing as I with my own poker group from high school, it resonated with us.  [A caddy pointed it out to us.]

But the Matt Lauer story now, aside from the seemingly “gross misconduct” angle, is about money, too. While his reported annual salary was $25 million, the first two hours of “Today” generated $508 million in revenue last year, more than the amount brought in by the other network morning shows, according to Kantar Media and the New York Times.  [$100 million more than the earnings at ABC’s “GMA” and nearly three times greater than the revenue from “CBS This Morning.”]

Stephen Battaglio of the Los Angeles Times:

“In the nearly 66-year history of NBC’s ‘Today,’ the program that invented morning television, all of its stars have been considered part of an extended family.

“Every few years, regardless of whether they were fired or unceremoniously replaced, the hosts reappear to help celebrate a show milestone. Even J. Fred Muggs, the chimp who was removed for biting guests on the program in the 1950s, was invited back.  They were part of the ‘Today’ legacy – a carefully molded, yet intimate, group of personalities welcomed into the homes of millions of Americans each morning.

“But Matt Lauer may never show up in the program’s Rockefeller Plaza studio again....

“Lauer’s departure could have far-reaching reverberations – not just for NBC and ‘Today,’ but for morning television, which has started to see its audience and influence erode after decades of dominance. As audiences become more fragmented and news consumers, especially younger ones, turn to new technology, personalities known to viewers on a first-name basis are increasingly hard to come by.

“One veteran news producer who worked with Lauer predicted his departure would likely cut into the ratings for ‘Today’ by 10% to 15%.”

You already had an ebbing of the importance of network news telecasts in the evening, with the retirement of standard bearers such as Dan Rather, Tom Brokaw, the demotion of Brian Williams and the death of Peter Jennings...and instead you’ve had the rise of the cable networks.  My new routine is instead of watching the entire “NBC Nightly News,” I watch the first 15 minutes before normally switching to the end of Bret Baier on Fox, where he has a lot of commentary the last ten minutes of that one.  [Then you know I watch Fox all night, unless college basketball or the Knicks save me...until a new baseball season.]

The most recent ratings, for the 2016-17 television season, had “Today” declining to 4.2 million viewers, compared with 4.6 million for ABC’s “Good Morning America” and 3.56 million for “CBS This Morning.”  [Though “Today” led in the key 25-to-54-year-old demographic.] But Lauer was the best-known personality on the three, having been with the show 23 years.

But with that came outsized power.

Needless to say the late-night hosts had new fodder:

Jimmy Fallon: “Actually, President Trump tweeted about Matt Lauer being fired and went on to attack NBC News executives and Joe Scarborough. Then Kim Jong Un was like, ‘Uh, did you guys not see that missile yesterday or...?  I mean, I know you’re busy, but I can re-launch it or something.”

Meanwhile, the stage is set for Megyn Kelly to go after Lauer’s chair, offering herself as a role model for younger female staffers at NBC News who may be weighing sexual-harassment claims.

--Speaking of Jimmy Fallon, Stephen Colbert has increased his late-night lead over Fallon, since assuming the top position in the ratings in February with his monologues loaded with material sharply critical of President Trump.

NBC executives, though, have pointed to the fact that Fallon was still in the lead in the 18-to-49 demo, but as of the November sweeps period, Colbert had significantly cut into that lead, narrowing the gap from 364,000 to 57,000, according to Nielsen data and the New York Times.

Just since the fall, Fallon’s 18-to-49-year-old demo has plunged 26 percent.  Fallon is 200,000 ahead of Jimmy Kimmel in this category.

Overall, however, Kimmel has narrowed the gap between him and Fallon for No. 2 with 2.4 million viewers a night to Fallon’s 2.6m.

--Bruce Springsteen is extending his “Springsteen on Broadway” solo show for four months, through June 30, 2018.  [He takes a break from Feb. 3 to 28.]

The initial run through Nov. 26 sold out in a single day, and after its first week of five performances it grossed $2.33 million. After the show was extended through Feb. 3, tickets were quickly snapped up.

Foreign Affairs

North Korea: Mira Rapp-Hooper / Defense News:

“On November 28, after a 74-day weapons-testing hiatus, North Korea launched its third intercontinental ballistic missile.  From a technical standpoint, the ICBM test was impressive, exceeding the performance of North Korea’s two prior long-range missile tests on a number of metrics.  Just as importantly, it laid bare a fundamental flaw in the Trump administration’s approach to Kim Jong Un’s nuclear ambitions: the notion that there remains any window of opportunity in which the United States can keep him from acquiring a mature nuclear capability by ICBM.

“The notion that North Korea has not yet achieved these most advanced capabilities has helped fuel the administration’s apparent interest in preventive military strikes against Pyongyang.  The reality, however, has long been that Kim intends to retain his most dangerous capabilities – including the ability to strike the United States.  It is long past time for Washington to develop a strategy that carefully manages, rather than blithely denies, this state of affairs.

“North’s Korea’s latest missile flew for nearly 1,000 km at an altitude of 4,500 km [Ed. 2,800 miles...more than 10 times the height of the International Space Station] and stayed aloft for over 50 minutes [Ed. 53 by most reports] before splashing down in the Sea of Japan.  By contrast, its previous ICBMs, which were both tested in July, flew for 37 and 47 minutes, respectively.... (If the November 28 missile had been fired on a standard missile trajectory as opposed to a lofted one, it might have flown for 13,000 km or 8,100 miles.) This latest test allows North Korea to claim that it can hit the entire continental United States with a nuclear weapon....

“What this third test does lay bare, however, is a fundamental flaw in the Trump administration’s approach to Pyongyang.  Since the early days of his presidency, the president has sought the total and complete disarmament of North Korea. At the very least, he and his advisers have resolved that North Korea should not gain the ability to strike the United States with a nuclear weapon.  But because few expect North Korea to denuclearize, Trump’s objective strikes many as impossible....

“He and his advisors have also repeated their belief that the North Korean leader is irrational, undeterrable, and suicidal – a logic which, if sincerely believed, would seem to make U.S. military action inevitable.  Importantly, this case for preventive action is premised on the idea that the United States and the world are ‘running out of time’ to halt North Korea from acquiring these gravest of capabilities. According to this narrative, it would be better to strike North Korea now rather than face its most sophisticated capabilities later.”

U.S. Defense Secretary Jim Mattis told reporters at the White House: “It went higher frankly than any previous shot they’ve taken, a research and development effort on their part to continue building ballistic missiles that can threaten everywhere in the world, basically.”

President Trump said: “It is a situation that we will handle.”

Russian Foreign Minister Sergei Lavrov accused the U.S. of seeking to provoke North Korea into stepping up its nuclear missile program.

Lavrov rejected a call by the U.S. UN Ambassador Nikki Haley to sever ties with the North after its latest test.

Amb. Haley said that North Korea’s regime would be “utterly destroyed” if war broke out.

Haley also said, “We need China to do more.  President Trump called President Xi this morning and told him that we’ve come to the point where China must cut off the oil for North Korea.

“We know the main driver of its nuclear production is oil,” she said. “The major supplier of that oil is China.”

Russia argues sanctions don’t work and advocates negotiations instead; this as Russia has stepped up trade with Pyongyang, like the true a-holes they are.

According to a statement from the Kim regime (read by peppy Ri Chun Hee, the world’s most famous newsreader): “After watching the successful launch of the new type ICBM Hwasong-15, Kim Jong Un declared with pride that now we have finally realized the great historic cause of completing the state nuclear force, the cause of building a rocket power.”

Ri said in her strident tone: “With this system, we can load the heaviest warhead and strike anywhere in the mainland United States.”

At a speech in Missouri on Wednesday, Trump derided Kim Jong Un, describing him as a “sick puppy” and “little rocket man.”

Analysts point out that the missile test was not as provocative as it could have been, Pyongyang choosing not to launch it over Japan, for one, as the regime had done in two prior tests.

Editorial / Wall Street Journal

“If North Korea is allowed to perfect its warhead technology, it will be able to hold the U.S. hostage to nuclear ransom. The Trump Administration is right that the U.S. can’t live with this threat, so what more should it do to prevent it?

“Conventional wisdom says that Pyongyang already faces extreme economic and diplomatic pressure. But in reality the United Nations and U.S. only began to impose broad sanctions last year, and even U.S. allies such as Singapore and Thailand have been slow to enforce them.  China and Russia continue to support the Kim regime – China through oil exports and other commerce, and Russia through payments for North Korean slave labor.

“Shutting down those lifelines should be a top priority.  After the North’s intermediate-range missile launch in September, the U.S. circulated a draft resolution at the United Nations Security Council to do just that. But Russia and China resisted and the U.S. caved; Resolution 2375 only capped oil exports and labor contracts. The Trump Administration portrayed the unanimous vote at the UN as a victory, but the resolution kept open many of Pyongyang’s cash lifelines.

“The U.S. even rewarded Beijing for the vote by pausing the process of sanctioning Chinese companies that violate sanctions.  That pause ended last week when the Treasury Department put four companies based in the Chinese city of Dandong on its financial blacklist....

“But China’s internal enforcement of sanctions is patchy. Chinese banks froze the accounts of some North Korean customers while continuing to finance Chinese companies that are breaking sanctions rules. Imports of coal from North Korea have continued in violation of a UN resolution in August that banned all trade in North Korean coal. The Trump Administration can make an example of these firms and expose Beijing’s failure to honor its sanctions promises.

“The U.S. response to Wednesday’s missile tests should also include security measures. The redeployment of tactical nuclear weapons to South Korea is needed to deter a nuclear attack from the North....

“The deployment of more Thaad missile-defense radars and launchers to South Korea would send a strong signal to China that its support for Pyongyang has consequences....

“The Trump Administration has done more than its predecessors to thwart North Korea’s nuclear progress, but it is still far from using maximum pressure. It may not work in the end, but the alternatives are terrible: acquiescence or war.  Wednesday’s ICBM test shows Kim is getting close to his goal of threatening American cities, so why is the U.S. not using all the tools it has to stop him?”

China: The U.S. and China are headed towards major trade battles, with the first potential fight being over solar panels, with the New York Times saying this could begin in January. Senior administration officials have been talking of taking a much tougher trade stance toward China.

American manufacturers have long claimed China’s cheap panels have been unfairly financed by the Chinese government.

China would of course retaliate against American goods sold there.  Look out Apple shareholders, as I’ve been warning for years.

Separately, Taiwanese rights activist Lee Ming-cheh was sentenced on Tuesday to five years in prison for subversion by a mainland Chinese court, making him the first island resident convicted of the offense.

Taiwan issued a statement saying Lee’s sentence was “unacceptable” and demanded the mainland release him as soon as possible.

And a Chinese general who disappeared from public view while under investigation for corruption was found dead at his home in Beijing after apparently hanging himself.  President Xi has used the anti-corruption campaign to remove dozens of generals and tighten his control over the military.

Lastly, from the Wall Street Journal: “The Chinese government is building one of the world’s most sophisticated, high-tech systems to keep watch over its citizens, including surveillance cameras, facial-recognition technology and vast computer systems that comb through terabytes of data. Central to its efforts are the country’s biggest technology companies, which are openly acting as the government’s eyes and ears in cyberspace.

“Companies including Alibaba Group Holdings Ltd., Tencent Holdings Ltd. and Baidu Inc., are required to help China’s government hunt down criminal suspects and silence political dissent. Their technology is also being used to create cities wired for surveillance.

“This assistance is far more extensive than the help Western companies extend to their governments, and the requests are almost impossible to challenge, a Wall Street Journal examination of Chinese practices shows.”

Syria: The United Nations said on Thursday that it was extending a round of Syria peace talks in Geneva, aimed at shaping a political solution to end the war, but the presidency has yet to be discussed, which is rather important...the fate of Bashar Assad. Syria’s opposition has always said that Assad must step down as part of any peace deal, but the Syrian government refuses to discuss the issue and they have been bolstered by military gains on the battlefield that have strengthened Assad’s hand.

Then Friday, Syria’s top government negotiator quit the Geneva talks, blaming the opposition’s rejection of any role for Assad in a transition.  The Syrian envoy also blamed Saudi Arabia, saying it had “mined the way” to the meeting, and did not want a political solution to the conflict.

Meanwhile, Moscow is hosting parallel talks in the Kazakh capital, Astana, meant primarily to carve out “de-escalation zones” in Syria.  But Russia is pressing for talks, together with Iran and Turkey, in Sochi for the purpose of reaching an overall political settlement.

Notice how the United States isn’t mentioned in any of this.

No doubt, Trump and Putin have had phone conversations, but the Russian is securing another platform in the Middle East, with the U.S. continually being marginalized.

And Trump promised President Erdogan of Turkey that he would stop U.S. arms deliveries to the Kurds. According to the Washington Post, this move took Trump’s national security team by surprise.

Editorial / Washington Post

“For now...Russia has supplanted the United States as the convening power of the Middle East’s most important conflict. That Mr. Trump would welcome that development is another testament to his curious deference to the Kremlin. It is also, following the disastrous record in Syria of President Barack Obama, an acceleration of the collapse of U.S. global leadership.”

Sunday, the Syrian Observatory for Human Rights said at least 53 civilians were killed in Russian air strikes in the east Syrian village of Al-Shafah, including 21 children. The village is in Deir al-Zour, one of the last provinces where Islamic State still holds territory.

Russia confirmed six long-range bombers had carried out air strikes in the area, but said they hit militants and their strongholds.

In a rebel-heled enclave on the outskirts of Damascus, Eastern Ghouta, 400,000 residents are in dire shape with reports of people dying of starvation after years of siege. The UN has reported residents have been reduced to eating garbage.

Eastern Ghouta, by the way, is one of the “de-escalation” zones announced by Russia, Iran and Turkey.  I can guarantee President Trump couldn’t answer a single question about the situation here.

Iran: China is financing billions of dollars’ worth of projects in Iran, making deep inroads into the economy while European competitors struggle to find banks willing to fund their ambitions, Iranian government and industry officials said on Friday.

Freed from crippling nuclear sanctions two years ago, Iran is drawing unprecedented funding from Beijing for everything from railways to hospitals.

The head of Iran’s Chamber of Commerce’s investment commission, speaking on the sidelines of an Iran-Italy investment meeting in Rome, said, “They [Western firms] had better come quickly to Iran otherwise China will take over.”  [South China Morning Post]

Separately, Iran’s new naval commander has vowed to dispatch warships to the Gulf of Mexico.

“Our fleet of warships will be sent to the Atlantic Ocean in the near future and will visit one of  the friendly states in South America and the Gulf of Mexico,” Rear Adm. Hossein Khanzadi said, according to the Jerusalem Post.

Venezuela, an ally, is a likely destination if this comes to fruition.

No one is saying Iran’s naval forces pose a threat when up against the U.S. Navy, but Khanzadi said new vessels and submarines are being built to bolster the fleet.

Egypt: One of President Trump’s ‘good friends,’ Egyptian President Abdel Fattah al-Sissi, reached a draft agreement with Russia whereby Russian warplanes will be able to use Egyptian military bases, which would allow Moscow to further increase its military footprint in the Middle East. The deal also allows Egyptian warplanes to use Russian air bases, as if this is happening.

Russia is emphasizing that their access is part of fighting terrorism and it’s true a Russian passenger jet was downed over Sinai in October 2015 by an ISIS affiliate, killing all 224 on board. Russia cut commercial flights to Egypt at the time, a big blow to Egypt’s tourism industry.

No word what President Trump thinks of all this, seeing as he’s never criticized Russia for anything.

Editorial / Washington Post

“Counterterrorism authorities have long been concerned that as the Islamic State loses territory in Iraq and Syria it will seek to establish new bases in other parts of the region.  If so, Egypt’s Sinai Peninsula is looking like fertile ground for the jihadists. For four years, brutal but inept repression by the regime of Abdel Fatah al-Sissi has served only to strengthen the Islamic State’s ‘Sinai province,’ made up of Egyptian as well as foreign militants.  Last Friday it staged its bloodiest assault yet, killing more than 300 worshippers at a mosque in northern Sinai...

“Mr. Sissi’s response was familiar: an angry television speech promising ‘brute force,’ a showy bombing raid, and attacks on media reporting. Following the example of President Trump, the foreign ministry assailed CNN for its ‘deplorable coverage’; the network had the temerity to question why Egyptian authorities have banned most journalists from the Sinai, making independent reporting on the fight against the Islamic State virtually impossible....

“The army patrols Sinai in tanks and armored personnel carriers; rather than protecting the population, it is known for summary executions, torture and wanton destruction of civilian infrastructure. In Cairo, the regime has used terrorism as a pretext for the most severe political repression in Egypt’s modern history. Tens of thousands of political activists, including prominent secular and liberal figures, have been imprisoned, independent civil society stifled and the media silenced....

“Though his administration was compelled by law to cut some aid to Egypt several months ago, Mr. Trump remains a fan of Mr. Sissi. He called the strongman after the Sinai attack and tweeted, inexplicably, that it showed the need for ‘the WALL’ and ‘the BAN.’  When it comes to preventing the growth of the Islamic State in Egypt, Mr. Trump and Mr. Sissi are partners in obtuseness.”

Iraq: Baghdad is preparing to divert most of the Kirkuk oilfield’s future production to local refineries as a conflict with Kurdish regional authorities over the use of an export pipeline to Turkey continues.

Kirkuk’s production stopped in mid-October after Iraqi forces dislodged Kurdish fighters from Kirkuk and took over the northern region’s oilfields.

Lebanon: Prime Minister Saad al-Hariri, back in the saddle after his Saudi adventure, said that Iran-backed Hizbullah must stop interfering overseas and accept a “neutral” policy to bring an end to Lebanon’s political crisis.

In an interview with a French broadcaster, Hariri said: “I don’t want a political party in my government that interferes in Arab countries against other Arab countries.”

Yemen: Editorial / The Economist

“Yemen...has suffered civil wars, tribalism, jihadist violence and appalling poverty. But none of this compares with the misery being inflicted on the country today by the war between a Saudi-led coalition and the Houthis, a Shia militia backed by Iran.

“The UN reckons three-quarters of Yemen’s 28m people need some kind of humanitarian aid.  Mounting rubbish, failing sewerage and wrecked water supplies have led to the worst cholera outbreak in recent history. The country is on the brink of famine. The economy has crumbled, leaving people with impossible choices. Each day the al-Thawra hospital in Hodeida must decide which of the life-saving equipment to run with what little fuel it has.

“Perhaps the worst of it is that much of the world seems unperturbed, calloused by the years of bloodshed in Syria and other parts of the Middle East, and despairing of its ability to effect change. To be cynical, Yemen is farther away from Europe than Syria is; its wretched people do not, on the whole, wash up in the West seeking asylum.

“Yet the world ignores Yemen at its peril. Set aside for a moment the obligation to relieve suffering and protect civilians. Hard security interests are also at stake. The world can ill afford another failed state – a new Afghanistan or Somalia – that becomes a breeding-ground for global terrorism. Yemen, moreover, dominates the Bab al-Mandab strait, a choke-point for ships using the Suez canal.  Like it or not, the West is involved. The Saudi-led coalition is fighting with Western warplanes and munitions. Western satellites guide its bombs....

“The longer the war goes on, the more Saudi Arabia’s Western allies are complicit in its actions.  President Donald Trump has given Saudi Arabia carte blanche to act recklessly. He may think it is all part of confronting Iran; or he may want to support the liberalizing reforms of the Saudi crown prince, Muhammad bin Salman; or he may hope to profit by selling the Saudis ‘lots of beautiful military equipment.’ Whatever the case, he is damaging America’s interests. Precisely because of the importance of Saudi Arabia – the world’s biggest oil exporter and home to Islam’s two holiest places – the West should urge restraint on the impetuous prince and help disentangle him from an unwinnable war.”

How to do this is difficult.

Myanmar: Pope Francis has been on a difficult trip to Myanmar and Bangladesh where he has had to walk a tightrope with regards to the Rohingya refugee catastrophe.  The Pope called on Thursday for decisive measures to resolve the political reasons that caused mostly Muslim refugees in the country to flee to Bangladesh, while urging other countries to help the Dhaka government deal with the crisis.

But during his trip he did not use the word Rohingya to describe the refugees, which is contested by the Yangon government and military.  In a speech in Bangladesh, Francis spoke of “refugees from Rakhine State.”  Previously, in appeals from the Vatican, Francis used the term Rohingya.   In his speech before Bangladeshi President Abdul Hamid, Francis praised the impoverished Bangladeshi’s “spirit of generosity and solidary” in helping “a massive influx of refugees from Rakhine State.”

The exodus is up to 625,000, sparked by a military crackdown in response to Rohingya militant attacks on a Myanmar army base back in August.  The military denies accusations it committed atrocities aimed at “ethnic cleansing.”

The Rohingya are not recognized as Myanmar citizens or as members of a distinct ethnic group, and many are upset the Pope didn’t use their name.  Church officials in the country warned the Pope not to use the term, fearful it would lead the Myanmar military and government to turn against minority Christians.  [Only about 700,000 of Myanmar’s 51 million people are Roman Catholic.]

Well today in Dhaka, the Pope met with survivors of the persecution – 12 men, two women and two young girls – vowing: “We won’t close our hearts or look away.  The presence of God today is also called Rohingya.”

Zimbabwe: The nation’s new president, Emmerson Mnangagwa, named his cabinet and it is filled with senior military figures.  The new foreign minister, for example, is Sibusiso Moyo, the general who appeared on state TV after the recent military takeover.  The head of Zimbabwe’s air force was named the minister of agriculture and land affairs.

In other words, hardly a break with the past that some hoped for but which seemed unlikely with the elevation of Mnangagwa, who until recently looked like Robert Mugabe’s successor.  The opposition condemned the new lineup as a betrayal of the public’s hopes, and proof the security forces remain in control of the country.

Elections are still slated for next year.  It will be ugly. Many will die in the lead-up to it, is my guess.

Random Musings

--Presidential tracking polls....

Gallup: 34% approval of President Trump’s job performance / 60% disapproval
Rasmussen: 44% approval / 55% disapproval

Separately, another Rasmussen survey had voters giving Congress a whopping 13% approval rating.  1-3.

--A JMC Analytics and Polling survey for the Roy Moore-Doug Jones Senate race in Alabama has Republican Moore beating Democrat Jones 49-44.  I have no idea as to the accuracy of this outfit, but it’s the last survey I saw.

A big problem for Jones is the potential turnout for the African American vote.  Many of Jones’ advisers believe this bloc largely doesn’t even know there is a Dec. 12 election.  It’s looking good for Moore.

--Rep. John Conyers (D-Mich.), the longest-serving member of Congress, who was the top Democrat on the House Judiciary Committee until last weekend, was forced to give up the position amid a series of allegations he had made unwanted sexual advances toward former female staffers.

South Carolina Rep. Jim Clyburn (Dem.) at first had a flippant response to reporters when asked about sexual harassment allegations against Rep. Conyers, suggesting he should be held to a different standard than other public figures.

The question was, “Other men in other industries have faced similar accusations...and gotten out of the way, resign, stepped down, far faster than (Conyers) has, right...Harvey Weinstein, Charlie Rose, Matt Lauer?”

Clyburn: “Who elected them?”

But in a statement issued by his office later, Clyburn said: “As elected officials, we ought to be held to a higher standard. Congress must review and improve the current administrative procedure for victims to come forward. All harassment and discrimination allegations must be taken seriously.”

This was clearly in response to the criticism leveled at Clyburn, an old fool like so many in his party.

That was Wednesday. Thursday, House Minority Leader Nancy Pelosi (D-Calif.) said Conyers should resign amid multiple allegations of sexual misconduct, the latest when The Detroit News reported that a former staffer accused Conyers of touching her legs and offering sex against her wishes in the late 1990s.

Pelosi said: “The allegations against Congressman Conyers, as we have learned more since Sunday, are serious, disappointing and very credible. It’s very sad. The brave women who have come forward are owned justice.  I pray for Congressman Conyers and his family, and wish them well.  However, Congressman Conyers should resign.”

The allusion to Sunday was Pelosi’s inexplicably poor, and clueless, performance on “Meet the Press” when questioned on the Conyers allegations.

Rep. Clyburn then also said on Thursday that Conyers should resign.  He is back home supposedly preparing a decision for tomorrow.

--Meanwhile, disgraced Sen. Al Franken (D-Minn.) said Monday that “you have to respect women’s experience” after first disputing a radio host’s version of an incident in which he groped her (Leeann Tweeden) and forced her to kiss him.  Franken apologized to other women who have accused him of sexual misconduct (five at last count) saying he was “tremendously sorry” and that he needed to be “careful and more sensitive” to make sure it doesn’t happen again.

Franken then said he was not resigning and getting back to work. What an amazing creep.

--Garrison Keillor, the former host of “A Prairie Home Companion,” was fired the same day as Matt Lauer, Wednesday, by Minnesota Public Radio over allegations of improper behavior.

Keillor said in a statement that he was let go over “a story that I think is more interesting and more complicated than the version MPR heard,” without giving details of the allegations.

“It’s some sort of poetic irony to be knocked off the air by a story, having told so many of them myself, but I’m 75 and don’t have any interest in arguing about this. And I cannot in conscience bring danger to a great organization I’ve worked hard for since 1969,” he said.

--A Mexican national was acquitted of murder and manslaughter charges Thursday in the 2015 murder of Kate Steinle, a case in San Francisco that became a flashpoint in the national immigration debate, Jose Ines Garcia Zarate having been deported five times and freed under sanctuary laws before the fatal shooting.

The verdict brought a quick response from President Trump, who had cited the slaying during the campaign as a reason for building a wall across the U.S.-Mexico border, while punishing cities he said were failing to cooperate with immigration enforcement.

“A disgraceful verdict in the Kate Steinle case!” Trump tweeted.  “No wonder the people of our Country are so angry with Illegal Immigration.”

It was indeed a disgraceful verdict, but it was awful the parents of Kate had to go through all this in the national spotlight.  Whatever the verdict, they lost their daughter. That’s what matters.

--I was reading a piece in Army Times by Karen Jowers, relating a recent hearing for Defense Department nominees in which Congress made clear it expects action on addressing problems with military personnel readiness.

“I look you in the eye and tell you a 100-hour work week is too long for a young member of our armed forces,” said Sen. John McCain, chairman of the Senate Armed Services Committee.  “They are working 100-hour weeks. It has to stop.  Otherwise you’ll see more tragedies such as took place with the recent collisions.”

McCain described it as a “military readiness crisis” that has affected every branch of service, with ship collisions, air crashes, vehicle accidents and personnel shortages in critical roles like aviation and cybersecurity.

“The department is struggling to make do with budgets that are too small, unpredictable and driven by politics rather than strategy,” said McCain.

--Sen. McCain on a different matter said Hillary Clinton erred in writing her account of the 2016 presidential race so quickly.

“One of the almost irresistible impulses you have when you lose is to somehow justify why you lost and how you were mistreated: ‘I did the right thing!  I did!’ The hardest thing to do is to just shut up,” the Arizona Republican told Esquire magazine in an interview published Sunday.

McCain said Clinton cannot rewrite history.

“What’s the f—king point?  Keep the fight up?  History will judge that campaign, and it’s always a period of time before they do.  You’ve got to move on,” he said.  “This is Hillary’s problem right now: She doesn’t have anything to do.”

McCain’s memoir, “The Restless Wave,” comes out in April, and partially covers his 2008 run for president.

--I’ve said I was glad to see the prosecution of New Jersey Dem. Sen. Robert Menendez collapse in a mistrial because we need his foreign policy smarts in Congress at this critical time, so I was interested to see that my favorite New Jersey politician, State Sen. Jon Bramnick, the Republican minority leader in the State Assembly, agreed.

“Based on everything I’ve seen and heard – from the evidence to the jurors comments – I just think New Jersey should move on....I think (the government) had their shot.  I can’t stay silent for political purposes.”

No Republican has been elected to the U.S. Senate from New Jersey since 1972.  I hope Bramnick eventually changes that.  [He grew up in Plainfield, where I was born, so as I told him the other day we share something in common. Seriously, a good man.]

A new poll from the Eagleton Center for Public Interest Polling at Rutgers University that was released Thursday found Menendez’ favorable rating has fallen to 20%, a low for him.  It was 32% a year ago.  49% of the survey’s respondents said he should resign.

--President Trump hosted an event at the White House for Native American code talkers – and used the occasion to mock Dem. Sen. Elizabeth Warren (Mass.), reminding his audience of World War II heroes that he calls her “Pocahontas.”

“You were here long before any of us were here. Although we have a representative in Congress who they say was here a long time ago.  They call her Pocahontas,” referring to her claim to be descended from Native Americans.

The three Navajo war heroes standing next to Trump had a bemused look on their faces, clearly wondering why this was brought up, while others labeled it a “racial slur.”

White House spokeswoman Sarah Huckabee Sanders said that wasn’t the president’s intent and called on the press to examine Warren’s claim about her background.

“I think the most offensive thing...was when (Sen. Warren) lied about something to advance her career.  I don’t know why no one is asking about that question and why isn’t that constantly covered,” Sanders said.

Well, we covered this topic years ago and Massachusetts voters have weighed in, plus most of us care far more about the College Football Playoffs at this point, Ms. Sanders.

--President Trump: “At least 24 players kneeling this weekend at NFL stadiums that are now having a very hard time filling up. The American public is fed up with the disrespect the NFL is paying to our Country, our Flag and our National Anthem.  Weak and out of control!”

Whatever.

--President Trump: “Melania, our great and very hard working First Lady, who truly loves what she is doing, always thought that ‘If you run, you will win.’ She would tell everyone that, ‘no doubt, he will win.’ I also felt I would win (or I would not have run) – and Country is doing great!”

--President Trump: “@FoxNews is MUCH more important in the United States than CNN, but outside of the U.S., CNN International is still a major source of (Fake) news, and they represent our Nation to the WORLD very poorly. The outside world does not see the truth from them!”

What garbage.  Yes, this is dangerous chatter from the “leader” of the “Free World.”  He never, EVER, criticizes Russia and China for their anti-media moves of the past few years as they squelch the free press in their respective countries. 

In fact Trump’s specific attack on CNN International came the same day that President Putin signed a new law requiring selected foreign news organizations to register as foreign agents – an apparent retaliation for the U.S. Justice Department enforcing its existing Foreign Agent Registration act against Russian propaganda outlet Russia Today, or RT; RT having been identified by the U.S. intel community as being part of the Russian campaign to interfere in the 2016 presidential election.

So Trump’s favorite pollster, Rasmussen, surveyed 1,000 likely voters on Tuesday and Wednesday, after Trump said he wanted the creation of a “fake news trophy,” and 40% thought Fox deserved the non-award!  25% said CNN deserved it; 9% MSNBC; 4% ABC; 3% CBS; 2% NBC.  Republicans picked CNN (40%) over Fox (24%).  53% of Democrats selected Fox.

Trump had specified his contest shouldn’t include Fox.

The survey also found a majority of voters (51%) believe that media coverage of political issues and events is worse than it has been in the past.

---

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

God bless America.

---

Gold $1283
Oil $58.29

Returns for the week 11/27-12/1

Dow Jones  +2.9%  [24231]
S&P 500  +1.5%  [2642]
S&P MidCap  +1.9%
Russell 2000  +1.2%
Nasdaq  -0.6%  [6847]

Returns for the period 1/1/17-12/1/17

Dow Jones  +22.6%
S&P 500  +18.0%
S&P MidCap  +14.1%
Russell 2000  +13.3%
Nasdaq  +27.2%

Bulls 62.3
Bears 15.1 [Source: Investors Intelligence]

Have a great week.

Dr. Bortrum has a new column!

Brian Trumbore