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10/07/2017

For the week 10/2-10/6

[Posted 11:30 PM ET, Friday]

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Edition 965

I have little to say on the massacre in Las Vegas, perpetrated by Stephen Paddock, that took out 58 innocents at the country music festival.  I have to admit...when I first saw the news as I opened up my computer at 4:30 a.m. Monday morning, I didn’t feel a lot.  Many of us have become desensitized to these tragedies.  Nothing surprises us.  A great friend of mine lost a beautiful daughter last Saturday night in Greensboro, N.C., in an awful accident.  Police stopped a car for an investigation, it sped away, and crashed into my friend’s daughter’s car at an intersection, killing all five occupants of both vehicles.  I was getting this news from a mutual friend all Sunday, my heart ached for Phil, and his family, and then the next morning, unspeakable tragedy on a scale never before seen in our country.

But we don’t as yet have a real motive for Vegas.

The only time I teared up this week, though, was while in the car on Monday, and a certain country song by Florida Georgia Line was played on the great 94.7 FM, and then it kind of hit me.

There are millions of bad people in the world, and that’s no exaggeration.  As I allude to below, however, it can get a lot worse.

We just have to soldier on.  Americans, Europeans, Asians, all of us.  We rely on our leaders to try to keep us safe.

But we also have a duty, as citizens, regardless of where we are, to constantly be on guard. And if we see something that doesn’t seem right, speak up.  Look up from your freakin’ ‘not so smart’ phone now and then.

Someone could have said something about Stephen Paddock.  Someone knew something wasn’t right.  We all suspect one person in particular, perhaps, but that isn’t right just yet.  There were others.

I live in an interesting building here in Summit, New Jersey, one of the more upscale communities in the state.  But in almost eight years in this location, I’ve called the cops at least eight times over suspicious activity I’ve observed outside. I then go out and talk to them and often apologize when it seems like my call wasn’t that necessary.  But they always say, ‘Hey, no problem. This is our job.  Keep us informed.’

Some of us, be it Mesquite, Nevada, Las Vegas, or Paris, aren’t doing so.

One final note.  Like I’m sure 99% of the rest of you, I had no idea what a bump stock was until Monday.  If I were the government, I would not wait for legislative action to eliminate these devices that turn legal arms into illegal weapons.  I would have raided all the domestic manufacturers of bump stocks and taken the inventory.  This isn’t about the Second Amendment.  We can’t wait for Congress to do something.  They’re all on their smartphones.

Trump World....

Tax Reform

The House passed its 2018 budget resolution Thursday in a party-line vote, 219-206, that represents a step toward its goal of sending tax-reform legislation to President Trump.

A total of 18 Republicans voted against the resolution, along with all the Democrats.

House Speaker Paul Ryan, during House floor debate: “We haven’t reformed this tax system since 1986. We need to pass this budget so we can help bring more jobs, fairer taxes and bigger paychecks for people across this country.”

Democrats countered: “This budget isn’t about conservative policy or reducing the size of our debt and deficits. It’s not even about American families. This budget is about one thing – using budget reconciliation to ram through giant tax giveaways to the wealthy and big corporations – and to do it without bipartisan support,” said Rep. John Yarmuth (D-Ky.), the ranking member of the House Budget Committee.

Under budget reconciliation rules, Republicans in the Senate can pass tax reform without any Democratic votes, but they can afford only two GOP defections.  They failed to repeal ObamaCare using the same strategy.

The Senate’s budget resolution is expected to move to the Senate floor in two weeks, after which the two versions would go to conference to sort out the differences between the House and Senate.

But there are two sticking points.  The amount the deficit would increase under the existing proposal, and, as I wrote last week would be the key one, plans to eliminate a deduction for state and local taxes.

Some Fed officials are already weighing in, with San Francisco Fed President John Williams saying a tax cut could feed “unsustainable” growth that would ultimately be undone by asset price bubbles, inflation and possible recession.  Other Fed officials are concerned over exploding debt levels.

Estimates on the increase in the debt from the tax plan released by the administration range from $1.5 trillion to $2.4 trillion over the next decade.

Republican Sen. Bob Corker (Tenn.), a fiscal hawk who is retiring at the end of this Congress, has vowed he won’t vote for “one penny’s worth of deficits.”

“I want the tax reform to reduce the deficit,” he said.  “I want it to be pro-growth, and I want it to be permanent.”

As for the expensive tax break used by more than 40 million tax filers to deduct state and local taxes, this is big because it impacts about 33 House Republicans whose residents make heavy use of the deduction and would be more likely to see their tax bills rise if the provision is eliminated.

So Republicans are looking for compromise on the issue, which is a key to the tax cut because repealing the deduction brings in $1-$1.25 trillion in revenue over 10 years.  Preserving it thus adds $1 trillion over 10 years to the cost.

Preserving the state and local deduction would also make it more difficult to slash corporate taxes as much as Republicans are proposing.

One possible alternative is to allow taxpayers to choose between deducting their mortgage interest or state and local taxes, a limit on the deduction, or a special tax break for middle-class families living in areas with high property taxes.

But the whole debate pits Republican vs. Republican.  Those in high tax states vs. those in low ones, the latter not wanting to subsidize wealthy taxpayers in the likes of California, New York and New Jersey.

My own congressman, Republican Leonard Lance, is one of the most vulnerable GOP lawmakers and his district is among those with the greatest percentage of people claiming the state and local tax deduction.  Republican Rep. Rodney Frelinghuysen, who has the neighboring district, is another under the gun, already facing a tough election challenge from the Democrats.

So for now, call it a work in progress.

Puerto Rico

President Trump stuck to his script when first condemning the mass shooting in Las Vegas as an “act of pure evil,” and then in his visit to Vegas on Wednesday to meet with first responders and victims’ families.

But he went off script in Puerto Rico on Tuesday and it was pathetic.

During a televised meeting there with emergency responders and officials, Trump went out of his way to praise – and seek compliments for – the federal response.

“Every death is a horror,” the president said, “but if you look at a real catastrophe like Katrina, and you look at the tremendous – hundreds and hundreds and hundreds of people that died, and you look at what happened here, with really a storm that was just totally overpowering, nobody’s ever seen anything like this.”

Trump then turned to the governor of Puerto Rico, Ricardo Rossello, and asked how many people had died in the storm.

“Seventeen?  Sixteen people certified, 16 people versus in the thousands,” Trump said, referring to the 1,833 who died in New Orleans.  “You can be very proud of your people and all of our people working together.”

He then said, “I hate to tell you, Puerto Rico, but you’ve thrown our budget a little out of whack.”

Trump heaped praise on federal and local officials for their response to Maria – but pointedly left out San Juan Mayor Carmen Yulin Cruz, who had criticized him days before.

Trump sat at a table between Gov. Rossello (D) and first lady Melania Trump.  In his remarks to Rossello, he seemed to be taking a shot at Cruz.

“He’s not even from my party, but he started right from the beginning appreciating what we did. This governor did not play politics. He didn’t play it at all.  He was saying it like it was and he was giving us the highest grades.”

Cruz attended the briefing, but sat far away from the president. The two shook hands upon Trump’s arrival.  Speaking at the White House Tuesday before traveling to the island, the president said, “I think she’s come back a long way. I think it’s now acknowledged what a great job we’ve done, and people are looking at that,” he told reporters.  “And in Texas and Florida, we get an A-plus.  And I’ll tell you what, I think we’ve done just as good in Puerto Rico, and it’s actually a much tougher situation.  But now the roads are cleared, communications is starting to come back. We need their truck drivers to start driving trucks.”

After the president had left the island, Mayor Cruz described the televised meeting with officials as a “PR, 17-minute meeting.”

The sight of him throwing paper towels to people in the crowd was “terrible and abominable,” she added.  Ditto from yours truly.

Trump tweeted after it had been a “great day” in Puerto Rico.

With only 7% of the island having power, as of Thursday, there are many parts still lacking food, water and basic medical aid.  The crisis for much of the island is growing, not diminishing.

Of course without power, or in most cases phone communications, millions of Puerto Ricans didn’t hear President Trump’s remarks, such as on how much the disaster is costing the U.S.

Among Trump’s tweets on PR this week:

“The Fake News Networks are working overtime in Puerto Rico doing their best to take the spirit away from our soldiers and first R’s. Shame!”

“Fake News CNN and NBC are going out of their way to disparage our great First Responders as a way to ‘get Trump.’ Not fair to FR or effort!”

“The Mayor of San Juan, who was very complimentary only a few days ago, has now been told by the Democrats that you must be nasty to Trump.”

“Such poor leadership ability by the Mayor of San Juan, and others in Puerto Rico, who are not able to get their workers to help.... They want everything to be done for them when it should be a community effort. 10,000 Federal workers now on island doing a fantastic job.”

Shortly after Trump’s visit, the official death toll for Hurricane Maria climbed to 34.  It’s now 36.

Mary Anastasia O’Grady / Wall Street Journal

“The emergency plan centered on the use of diesel generators to replace lost electricity for hospitals and to pump drinking water. But a week after the storm 44% of the island was still without agua potable and public-health services were deteriorating.

“Amid the chaos, Alejandro de la Campa, the local head of FEMA, tried to explain away the agency’s responsibility.  ‘We have no control over diesel in Puerto Rico,’ he said.  ‘We have contracts with certain companies that are giving us service.’

“Right. And the fire department has no control over water.

“The troubles went beyond diesel and turned into a supply-chain nightmare in which chaos reigned. Gasoline lines stretched miles.  Merchandise at the port couldn’t be delivered due to driver shortages and the collapse of the communications infrastructure.

“Emergency management is all about anticipating disruptions and establishing contingencies. The failure of the local FEMA office to do so is organizational negligence, not a mainland plot against our Spanish-speaking brethren.”

Tillerson

The Trump administration acknowledged for the first time Saturday that it is in direct communications with the government of North Korea over its missile and nuclear tests.

Secretary of State Rex Tillerson, when pressed on how a conversation with Pyongyang might begin, said: “We are probing, so stay tuned.  We ask, ‘Would you like to talk?’  We have lines of communications to Pyongyang – we’re not in a dark situation, a blackout. We have a couple, three channels open,” he said, speaking in Beijing after a meeting with China’s top leadership, including President Xi Jinping.

Tillerson didn’t say if the North Koreans had responded (Pyongyang later said it wasn’t interested in talks), beyond the exchange of threats. But he added: “The whole situation is a bit overheated right now. If North Korea would stop firing its missiles that would calm things down a lot.”

When asked whether that caution applied as well to Mr. Trump, who tweeted last weekend that if the North were to keep issuing threats, “they won’t be around much longer,” Tillerson replied:

“I think everyone would like for it to calm down.”

So the above hit the wires, and the New York Times and others issued quick reports, and then President Trump, in a stunning contradiction of Tillerson’s position, tweeted:

“I told Rex Tillerson, our wonderful Secretary of State, that he is wasting his time trying to negotiate with Little Rocket Man....Save your energy Rex, we’ll do what has to be done!

“Being nice to Rocket Man hasn’t worked in 25 years, why would it work now?  Clinton failed, Bush failed, and Obama failed.  I won’t fail.”

NBC News then reported that at a meeting in July, Tillerson called President Trump a “moron,” which other news networks then confirmed.

Tillerson was forced to suddenly address the press (Bob Schieffer called it a “hostage tape”), refuting the NBC report, which had also said Tillerson was about to resign in the summer, but Vice President Mike Pence talked him out of it.

“The vice president has never had to persuade me to remain as secretary of State because I have never considered leaving,” he said.

But Tillerson refused to directly address the report he had referred to Trump as a moron, saying he didn’t “deal with petty stuff like that.”

State Department spokeswoman Heather Nauert, who was not at the meeting in question, strongly denied Tillerson had used the term.  “The secretary does not use that type of language,” she said during a press briefing.

Nauert then said that Tillerson assured her that all was good between the president and himself.

NBC reported that Tillerson exploded and was ready to resign following Trump’s appearance before the Boy Scouts of America – an organization Tillerson used to lead.  And then he called him a moron after a July 20 meeting on the president’s Afghan policy.

Trump, needless to say, was furious with the report.

Trump tweet: “NBC News is #FakeNews and more dishonest than even CNN. They are a disgrace to good reporting. No wonder their news ratings are way down!”

And....

“Rex Tillerson never threatened to resign. This is Fake News put out by @NBCNews. Low news and reporting standards. No verification from me.”

[Minutes before this last one, Trump tweeted: “Stock Market hits an ALL-TIME high! Unemployment lowest in 16 years! Business and manufacturing enthusiasm at highest level in decades!”]

David Ignatius / Washington Post

“Secretary of State Rex Tillerson symbolically kissed the ring of President Trump on Wednesday in affirming his desire to remain in his post, despite reports of sharp friction between him and the White House. But how long will this gesture of loyalty secure his position?

“Tillerson’s desire to remain on the job is a stabilizing move, at a moment when the United States is locked in a potential nuclear confrontation with North Korea and Trump is headed for a key November meeting in Beijing. Although Tillerson has been a poor public communicator at the State Department, he knows the world and can speak the language of America’s global partners and potential adversaries.  His departure now would be widely seen as damaging to America’s already fragile positon in a world disrupted by Trump’s erratic policies.

“The question, as always with Trump, is whether this profession of loyalty will appease what has appeared to be the president’s growing anger with his chief diplomat. For Tillerson, the question is whether, after humbling himself in such a public manner, he can remain an effective and confident representative for the United States abroad....

“(Tillerson) said he had never considered resigning. But on the ‘moron’ comment, he refused to answer such ‘petty nonsense,’ a non-answer that to some ears will sound like a confirmation.

“Tillerson rang all the bells in his adulatory comments about Trump.  He said he had learned that Trump ‘loves his country,’ is ‘smart’ and properly insists on ‘accountability.’

“Tillerson also listed the administration’s foreign-policy accomplishments, including working with China to pressure North Korea, traveling to the Riyadh summit in May and strengthening the commitment of Saudi Arabia and its neighbors to fight terrorism, pushing NATO to spend more on defense, recommitting to remain in Afghanistan and being on the brink of extinguishing the Islamic State. That’s probably the same list that the White House would draw to assert Trump’s ‘wins.’

“ ‘ What we have accomplished, we have done as a team,’ Tillerson said....

“But presidential pique has been growing in recent weeks.  It’s said that the president felt undercut by Tillerson’s separate positions on the Qatar-Saudi dispute, by his public statement that Trump ‘speaks for himself’ after the Charlottesville unrest, and by his lean toward keeping the Iran nuclear deal intact.  Tillerson’s public discussion of diplomatic channels with North Korea last weekend in Beijing also angered the White House, since it came at a time when Trump was advertising his confrontation with ‘Little Rocket man,’ his mocking description of North Korean leader Kim Jong Un.  Trump was upset that Tillerson hadn’t cleared his comments with the White House.

“Whether Tillerson’s recommitment to the job is temporary – sufficient to get the president through the Beijing meeting in November, but not long-term – remains to be seen.  In a sense, Tillerson faces a paradox: To be effective as secretary of state, he must communicate better with the country and the world; but to maintain the confidence of this prickly president, he must avoid comments that seem to question the president’s personality or policies.

“Tillerson, like everyone else in Trump’s world, is living under a volcano....He probably should be taken at his word when he says that he remains in his post at the State Department, despite the constant nastiness and occasional humiliation, because he’s trying to serve his country.”

The Russia Investigation

Editorial / Wall Street Journal

“As the Republican Chairman of the Senate Intelligence Committee and the Democratic Ranking Member held a press conference Wednesday about their investigation into Russia’s role in the 2016 presidential election, a nearby sign highlighted their effort: 11 open hearings, 100-plus people interviewed, 4,000 transcript pages and 100,000 pages of documents.

“As for results, Senators Richard Burr (R-N.C.) and Mark Warner (D-Va.) didn’t disclose much more than we already knew.  First, Russia was meddling in the elections.  Second, there are no ‘initial findings’ about Donald Trump’s alleged collusion with the Russians because they don’t have any. The investigation remains ‘open.’

“Meanwhile, for all the supposed concern about Moscow undermining American democracy – from the same folks who mocked Mitt Romney in 2012 for calling Russia our biggest geopolitical foe – the findings about what Vladimir Putin is doing elicit barely a yawn unless the word ‘Trump’ is attached.

“But for people not driven by an agenda, there’s still plenty to worry about.  Messrs. Burr and Warner report that though the Russians failed in penetrating the electoral systems in 21 states, they were knocking at the door.  The Senators also report that social media companies such as Twitter and Facebook were unprepared for Russian manipulation, via political advertising and fake accounts.  Mr. Warner said the goal seemed to be to ‘sow chaos and drive division in our country.’ And if you add up all they spent, he said, the Russians got ‘a decent rate of return’ for their investments.  Both agree that Mr. Putin’s interference continues.

“Perhaps the committee will still turn up evidence of the missing link between Mr. Trump and the Russians, but for now it remains as elusive as the Yeti.”

Trump tweet: “Why Isn’t the Senate Intel Committee looking into the Fake News Networks in OUR country to see why so much of our news is just made up-FAKE!”

Trumpets....

--The House Homeland Security Committee approved a border security bill. “The Border Security for America Act,” that includes $10 billion for a border wall.  The measure was passed along party lines, 18-12.

The bill now heads to the House floor where some will attempt to attach security provisions, such as protection for recipients of the rescinded Deferred Action for Childhood Arrivals (DACA) program.

Under the legislation, Border Patrol and Customs and Border Protection, the agencies in charge of border security and port-of-entry security, would each receive 5,000 extra agents.

But the bill, which is expected to clear the House, needs 60 votes in the Senate and that won’t happen.  

--Editorial / Wall Street Journal

“The Trans-Pacific Partnership trade pact is regaining momentum despite the Trump Administration’s January decision to withdraw.  Representatives of the remaining 11 TPP members met last month in Japan to push for ratification as early as November in the hope that Washington will rejoin.  But even without the U.S., members stand to make significant gains.

“A January study by Tokyo’s National Graduate Institute for Policy Studies makes the economic case for the smaller pact.  Vietnam, originally expecting a 30% increase in exports under TPP by 2030, would still get a bump in textiles and apparel, as trade in those products is expected to grow $3 billion among the 11 member states.  Malaysia would see a 20% increase in GDP due to reductions in nontariff barriers...New Zealand, Australia and Canada would actually enjoy bigger GDP boosts if the U.S. stays on the TPP sidelines. Their beef producers would secure preferential access to Japan’s market and take market share from American ranchers.

“That shows how the Trump Administration has set back U.S. exporters by withdrawing from TPP. The U.S. is now seeking to renegotiate the North American Free  Trade Agreement to obtain market-opening provisions that are part of the TPP. But Mexico and Canada don’t want to make concessions that were given in return for the broader benefits of TPP.

“Keeping TPP alive hasn’t been easy.  The lack of a U.S. market carrot let members to backtrack on some commitments....

“(But) leaders seem to recognize that TPP is even more important in the Trump era. The common goal of the 11 nations is to convince the U.S. that TPP is essential to its influence in Asia.  While Mr. Trump is unlikely to have a free-trade epiphany, the deal offers benefits to American exporters that the U.S. will struggle to secure on a bilateral basis.  If the 11 remaining members hold out for a U.S. return, it’s possible that rational American self-interest will prevail over protectionist bluster.”

Wall Street

Stocks continued to rise, with the market up more than 24% since the election in November.  There are geopolitical issues out there that could upset the apple cart and shatter investor and consumer confidence, but until Russia makes another play on Eastern Europe, or China and the U.S. have an accidental confrontation in the South China Sea, or North Korea shows real signs of attacking its neighbors, South Korea and Japan (or crosses a line with the U.S.), or terrorists take out two commercial aircraft in two different parts of the world, simultaneously (something I have been shocked hasn’t occurred post-9/11), there is little not to like on Wall Street.  Earnings are solid, and all 25 major developed countries are in growth mode at the same time.  Central banks also remain accommodative.

And let’s face it; even with our Federal Reserve about to hike interest rates anew in December, you are still talking historically low rates, let alone the ongoing massive accommodation taking place in Europe and Japan.

On the economic front, the big news was Friday’s jobs report and most of it you can simply dismiss, as it was severely impacted by Hurricanes Harvey and Irma and the mess in heavy population areas of Texas and Florida, which prevented hundreds of thousands from getting to work.

For the record, 33,000 jobs were lost in September, the first time in seven years there was a loss, when a gain of 75,000 was expected, but at the same time, the unemployment rate fell from 4.4% to 4.2%, the lowest since February 2011.

What did matter in the report was that average hourly earnings rose 0.5% to an annualized rate of 2.9%, reversing a trend that had this stuck around 2.5% for a long spell.  I’ve written constantly that in a robust recovery we should have wage gains of around 3.5% and, in fits and starts, we could be heading there.  Which means the Fed for sure is hiking rates at its December Federal Open Market Committee meeting.

As for the jobs figure for last month, it will quickly reverse with the October report.  111,000 in the food services, leisure, hospitality sectors were out of work due to the storms, which also happened to fall in the Department of Labor’s reporting period.

One more.  U6, the underemployment rate, fell to 8.3%, the lowest since June 2007.

In other economic news that the Fed would be looking at, the ISM manufacturing PMI for September was a whopping 60.8, a 13-year high (50 being the dividing line between growth and contraction), with the services reading a robust 55.3. The former’s figure was also hurricane impacted with a surge in construction spending afterwards.

[Separately, construction spending in August rose 0.5%, and factory orders that month were up 1.2%, both better-than-expected. Ergo, not a bad number in the bunch.]

Europe and Asia

Before I get to Catalonia and Brexit, there was a slew of economic news on the eurozone (EA19).

Markit released its final PMIs on manufacturing and the service sector for September and for the eurozone as a whole, the manufacturing figure was 58.1 vs. 57.4 in August, while the non-manufacturing/services reading was 55.8 vs. 54.7.

Germany was 60.6 on manufacturing, 77-month high / 55.6 service sector
France 56.1 mfg., also a 77-mo. high / 57.9 services
Italy 56.3 mfg. / 53.2 services
Spain 54.3 / 56.7
Ireland 55.4 / 58.7
Greece 52.8 mfg.

And non-euro U.K. 55.9 mfg. / 53.6 services in September.

Chris Williamson / IHS Markit

“The eurozone manufacturing boom kicked into an even higher gear in September, with the PMI rising to a level surpassed only once in the past 17 years. The recovery is also looking increasingly broad-based, with rising demand across the region lifting all boats.  Greece is the latest good news story, enjoying its strongest growth since June 2008....

“With the upturn being accompanied by rising inflationary pressures, expectations of an imminent announcement from the ECB in relation to tapering of policy stimulus will intensify.”

Eurostat released the jobs data for August and the EA19 unemployment rate was 9.1%, unchanged over July but still the lowest since Feb. 2009.

Germany 3.6%; France 9.8%; Spain 17.1%; Italy 11.2%; Ireland 6.3%; Greece 21.2% (June).

Among the still-high youth unemployment rates we have: Spain 38.7%; Italy 35.1%; and Greece 43.3% (June).

Catalonia

I wrote the following last week ahead of Sunday’s referendum on independence in Catalonia, which the national government in Madrid opposed.

“(While) the latest polls have showed only about 40% favoring independence, IF a legitimate referendum is held, they are the ones who will vote, not those in opposition, so it’s likely it would be approved.”

Saturday and Sunday, nearly 900 were then hurt as police violently tried to enforce a Spanish court order suspending the vote.  Some police were seen pulling women by their hair as they stormed into polling stations.

Spanish Prime Minister Mariano Rajoy said Catalans had been fooled into taking part, calling it a “mockery” of democracy.

“At this hour I can tell you in the strongest terms what you already know and what we have seen throughout this day.  There has not been a referendum on self-determination in Catalonia,” he said.

Organizers put the turnout at 42%, with 2.2 million people taking part, 90% voting to back independence.  As I stated above, it was pretty clear who went to cast their ballots, the 40% favoring secession.

The Spanish government’s representative in Catalonia apologized to those injured during Sunday’s referendum.

Addressing the nation in a rare television appearance on Tuesday, Spain’s King Felipe VI said Catalan authorities had deliberately bent the law with “irresponsible conduct” and the state needs to ensure constitutional order and the rule of law.

Spain’s stock market fell and bond yields rose, with the yield on the 10-year rising from 1.59% on Friday to 1.76% Wednesday on the uncertainty, though it recovered somewhat to 1.70% after the government apology to the Catalans soothed the market.

The king said the bid for independence has “undermined coexistence” in Catalonia.

“Today, Catalan society is fractured and confronted,” referring to the political crisis as “very serious moments for our democratic life.”

The conservative government said it would respond with “all necessary measures” to counter the Catalan defiance.

Tuesday, tens of thousands took to the streets to protest against the violent crackdown.

Addressing his people Wednesday night, Catalan President Carles Puigdemont reiterated an offer for mediated talks while attacking King Felipe’s condemnation 24 hours earlier of Catalonia’s illegal referendum.

A Catalan minister said his government would go ahead with an independence debate in parliament on Tuesday, with Puigdemont now planning to address the body that evening – later than was expected.

Spain’s Constitutional Court had suspended the parliament session that was planned for Monday.

Catalonia accounts for a fifth of Spain’s economy, with factories for companies including Volkswagen and Nestle as well as Europe’s fastest-growing sea port of Barcelona.

Businesses have said they will now move their legal bases out of the region.  Sabadell, Spain’s fifth-biggest bank, said it would start the process on Friday to move its legal domicile to Alicante from Barcelona (though the headquarters and employees will remain in Barcelona).

The board of CaixaBank, the third-largest accounting for about half of Catalonia’s banking sector, is considering a similar move.

The banks want to operate under the supervision of the European Central Bank and the regulations of the European Banking Authority, which wouldn’t be the case were Catalonia to declare independence.

The Spanish government issued a decree making it easier for companies to move their legal base out of the region.

Prime Minister Rajoy convened his Cabinet and his minority government recognizes it needs to avoid a repeat of Sunday’s chaos that drew international condemnation and inflamed the separatist cause.

Anti-independence organizers plan rallies for this weekend in Madrid and Barcelona.

The separatists are divided in their leadership, with most wanting to create more time for a negotiated settlement.

There will be a rational solution when all is said and done.

Editorial / The Economist

“When a democracy sends riot police to beat old ladies over  the head with batons and stop them voting, something has gone badly wrong.  Catalans say that almost 900 people were hurt by police in the referendum for independence on October 1st.  Whatever the provocation from Catalan leaders in staging an unconstitutional poll, the reaction of Mariano Rajoy, the prime minister, has thrown Spain into its worst constitutional crisis since an attempted coup in 1981.

“If Mr. Rajoy thought that cracking heads would put a stop to secessionism, he could not have been more wrong.  He has only created a standoff that has energized his enemies and shocked his friends.  On October 3rd Catalonia, one of Spain’s richest regions, was paralyzed by a protest strike.  Hundreds of thousands of demonstrators have marched to express their outrage.

“Secession would be a disaster for Spain. The country would lose its second city and risk the further loss of the Basque region.  Secession would also hurt Catalans, which is why a majority of them probably oppose it. And Catalan independence might stir up separatism elsewhere in Europe – in Scotland again, no doubt, but also in northern Italy, in Corsica, perhaps even in Bavaria.  To prevent the crisis deepening, both sides need to seek a new constitutional settlement. Instead, they are digging in and Catalonia is on the brink of unilaterally – and illegally – declaring independence.”

Editorial / Bloomberg

“Spanish Prime Minister Mariano Rajoy’s reaction to Catalonia’s independence referendum was as foolish as the vote was reckless.  Catalan officials should never have scheduled the vote – but once they did, Spanish officials should not have tried to stop it.  Resolving this conflict just got harder.

“Rajoy has tried to portray the referendum...purely as a matter of law enforcement: Spain’s constitutional court had declared it illegal, so he deployed police to attempt to stop the vote from going forward – arresting politicians, beating voters, seizing ballot boxes. The violence that broke out was shocking to see in western Europe; Iraqi Kurdistan’s recent independence referendum was more peaceful.

“A seditionist challenge to an elected national government cannot be taken lightly, and the Catalan independence movement’s blithe disregard for the rule of law is inexcusable. At the same time, it’s important to remember that the separatists are a vocal minority in one of Spain’s most economically important regions. Rajoy’s goal should be to address issues important to all Catalans, most of whom oppose independence (or at least did before Sunday’s vote)....

“Whether Sunday’s violence represents a point of no return for Catalonia’s independence bid is unclear. But it has significantly increased tensions and left two sides deeply entrenched.  Stuck in the middle is a large majority of Spaniards – including most Catalans themselves.  Sparing Spain from major political and economic upheaval will require tolerance, patience and no small amount of political skill.”

Brexit

Last weekend, British Prime Minister Theresa apologized for last June’s election when she lost her Conservative Party’s majority, but she responded to her critics saying she had the right strategy to lead Britain and win a Brexit deal.

She then went to the Conservatives’ (Tories’) annual conference in Manchester to try to reset her agenda, offering to ramp up social programs related to education and housing in particular.

May on Sunday told the BBC: “We’ve listened to the message that came from that election. But I’ve been very clear, I called the election, I led the campaign, I take my responsibility and I’m sorry that some very good members of parliament lost their seats.

“What I have is a cabinet that is united in the mission of this government – and agreed on the approach that we took in Florence,” referring to a speech she made in Italy recently to try to kick-start Brexit talks that had all but stalled.

Mrs. May insisted Foreign Secretary, and rival, Boris Johnson was on board.

But her party has a vocal pro-Brexit wing that is fearful the prime minister is going off course in talks with the EU. 

The Bank of England warned the U.K. and EU must agree on a Brexit transition deal by Christmas or risk banks triggering their contingency plans.

The problem is with both sides.  There is tremendous uncertainty with the U.K.’s position, and the EU’s position isn’t clear either.  The EU insists on resolving Ireland’s border with Britain and Britain’s financial commitments to the EU first before moving on to trade and a transition arrangement.

Without a transition deal, where, say, for two years after the March 2019 exit, both sides operate under existing rules while the new regime is implemented, it’s chaos. Banks, for one, would have to begin shifting their operations overseas. And this would make them harder to supervise, from the Bank of England’s standpoint.

Sterling fell to its weakest level in a month on speculation Theresa May was about to be taken out in a coup after her disastrous speech Wednesday.  The Daily Telegraph reported up to 30 Tory MPs are prepared to sign a letter calling for the Prime Minister’s resignation as the party struggles to manage Brexit.

The speech, in which she apologized again for the election result, while promising help for struggling families, optically was terrible, as the prime minister dealt with  a bad cough and hoarse voice that forced her to pause repeatedly.

And compounding matters, midway through the speech a prankster walked up and handed May a P45, the form given to those being laid off.

The joker, known as comedian Simon Brodkin, said “Boris told me to do it” as he was led away (and embarrassed security officials attempted to figure out how the heck the guy got into the audience for such a high-security event).

But the message of May’s speech was overshadowed to a great extent by comments made by Boris Johnson earlier that a Libyan city could become a tourism hub once they “clear the dead bodies away.”  Several conservative lawmakers called for Johnson to be fired.

Mrs. May then intervened in the private market, announcing she would impose a price cap on energy to help millions of households deal with rising prices, which hit the shares in the leading providers hard, but also represented the biggest market intervention since privatization nearly 30 years ago.

Back to the EU, Chief Brexit Negotiator Michel Barnier and European Commission President Jean-Claude Juncker reiterated Britain must give more details about what kind of divorce terms it’s willing to accept – particularly on the financial settlement – before talks can begin on trade.

In a nutshell, Brexit talks have gone nowhere, and there will be virtually zero progress to announce when European Union leaders hold a summit in less than two weeks. This was to be the time when the EU announced agreement on a transition period. This will hardly be the case now.

Eurobits....

--The French parliament on Tuesday overwhelmingly approved a controversial national security bill that significantly expands the state’s power to fight terrorism, as the new administration of President Emmanuel Macron attempts to stop a wave of violence that has claimed 239 lives in France since 2015.  Just last Sunday, a man who ISIS later claimed was a “soldier” of the group – fatally stabbed two women at a Marseilles train station.

France has been under an official “state of emergency” since 2015 and the legislation makes many of the security measures permanent, including heightened powers to arrest and detain suspects without judicial oversight.  Under the bill, French police will be able to conduct home searches and place suspects under house arrest with limited involvement by the courts.

The law also allows a version of stop-and-frisk policing and authorities will be empowered to close “places of worship in which are disseminated the writings, ideas or theories that provoke violence, hatred and discrimination.”

Turning to Asia, China’s PMIs were released for September. The official National Bureau of Statistics figures had manufacturing at 52.4 vs. 51.7 in August, with non-manufacturing at 55.4 vs. 53.4.  The former figure was the fastest since September 2012 (just ahead of the Communist Party Congress...how conveeeenient...)

The private sector Caixin readings had manufacturing at 51.0 vs. 51.6; services at 52.7.

Caixin focuses on private businesses, while the government readings are largely about activity in state enterprises.

In Japan, the manufacturing PMI for September was 52.9 vs. 52.2 in August; services 51.0 vs. 51.6.

Readings on business confidence continue to rise as Prime Minister Abe’s snap election draws near, Oct. 22.

Lastly, the manufacturing PMI for Taiwan was 51.2 in September; 50.6 in South Korea, which is an improvement over recent sub-50 readings (contraction).

Street Bytes

--As alluded to above, stocks continued to rock ‘n’ roll, with the Dow, S&P 500 and Nasdaq hitting one all-time high after another, before the Dow and S&P had minor losses on Friday, Nasdaq powering to another record.

Through Thursday, the S&P’s six consecutive records was the best streak since the heady days of 1997.  The market didn’t peak then until March 24, 2000, for this index.  [You should see my handwritten, daily tallies of the S&P close going back to the beginning of 1997, ironically.]

For the week, the Dow rose 1.6% to 22773 (22775 the new record); the S&P was up 1.2% to 2549 (2552 the high mark), and Nasdaq 1.4% to a record 6590.

--U.S. Treasury Yields

6-mo. 1.22% 2-yr. 1.50%  10-yr. 2.36%  30-yr. 2.89%

Yields continuing to inch up, a fourth straight week, but the 10-year is still below year end’s 2.44%.

Separately, the Congressional Budget Office announced late Friday that the federal government deficit for the just-completed 2017 fiscal year (Sept. 30) was $668 billion, $82 billion more than the previous year.

--Saudi Arabia’s Energy Minister Khalid al-Falih said his country is committed to oil production curbs. Speaking from an energy conference in Moscow, he added Russia had significantly over-contributed to the supply cuts.  Falih also said the market can handle supplies of U.S. shale oil as demand is rising.

Earlier, President Putin said oil production cuts could be extended until the end of 2018, in a bid to curb a supply glut. The pact between OPEC and Russia and other producers on cutting output by about 1.8 million barrels per day is currently due to expire in March.

Saudi King Salman met with Putin at the Kremlin, and Putin accepted an invitation to visit Saudi Arabia. It was the first time a Saudi monarch visited Russia, the two historic enemies

Meanwhile, U.S. crude inventories showed a larger-than-expected drop last week, as reported by the Energy Information Administration.  The American Petroleum Institute also reported a greater-than-expected decline.  But at the end of the week, oil was back below $50 at $49.25.

--U.S. auto sales in September hit their best monthly pace of the year, thanks to Labor Day discounts, higher fleet sales and hurricane-related replacements.

The car companies had been suffering a string of monthly declines, as demand plateaued, after years of gains.

But in September, Autodata Corp. reports vehicle sales rose 6.1% compared with the same period a year earlier.

Nearly all major auto makers posted solid gains, with the adjusted annual sales rate up to 18.6 million, well ahead of analysts’ estimates of 17.5 million.

General Motors’ sales rose 12% last month, Ford’s rose 9%, Toyota’s 15%, Honda 7%, and Nissan Motor 9.5%.  Ford and GM were helped by fleet sales, no doubt hurricane related.

The exception was Fiat Chrysler, which saw its sales drop 10%, following a planned reduction in sales to rental-car companies.

For the year, sales are still expected to fall short of last year’s record 17.55 million, but the industry hopes to stabilize at around 17 million, which is still darn good.

As for the impact of the hurricanes in Texas and Florida, an estimated 600,000 vehicles need to be in replaced in those two states and the bulk of the sales following hurricanes typically occurs in the first two months of recovery.

The most popular vehicle in the U.S., by the way, the Ford F-series pickup, saw its sales soar 21% last month to 82,302 units.  Chevy Silverado rose 22% to 55,236 vehicles.

--Tesla reported efforts to ramp up production of its Model 3 are off to a slow start, with the electric carmaker saying on Monday it had produced only 260 of the new vehicles in the third quarter – well below the target of “above 1,500” that CEO Elon Musk had touted earlier for the month of September alone.

So Tesla stock dropped sharply in response Tuesday morning, but then the Teslareans took it right back up and it closed the week at $355...investors trusting the company when it said it expected to deal with the problems “in the near term.”

The key is synching up the California car plant and the Nevada Gigafactory to operate at a high rate, and Musk is still claiming production will be 20,000 a month in December.

To be fair, though, one reason the stock recovered is Tesla’s assertion second half 2017 sales of the S and X models would be substantially higher than forecast.

Electric cars, however, including Chevy Bolt EV, still account for only 1% of total passenger vehicle sales in the U.S.

But Monday, General Motors announced it would begin selling two new all-electric vehicles in the next 18 months, and will have at least 20 new zero-emission electric vehicles in its lineup by 2023.

Previously, Volkswagen Group said it would offer 80 new electric vehicles by 2025, and will electrify its entire fleet by 2030.

In the case of GM, their move is spurred more by China than the U.S., for now, as they sell more of their cars in China these days and China’s government is targeting zero-emission vehicles for 10% of its passenger car sales in 2019, increasing every year thereafter.

--Investors were grappling with the impact of Hurricane Maria on Puerto Rico and its bonds the past few weeks, and then on Wednesday, the first trading session after President Trump called into question whether investors would be wiped out, the benchmark general obligation paper maturing in 2035 traded at record lows of 30 cents on the dollar, down from 44 the day before and 56 cents before Maria hit.

Tuesday evening, in an interview with Fox News while he was in Puerto Rico, Trump said, when addressing Puerto Rico’s $73 billion debt load, “You can say goodbye to that.”

This incredibly stupid statement to unilaterally forgive the debt, when there are has been a negotiating process in place for years between the territory and its creditors to restructure the debt, was immediately walked back by budget director Mick Mulvaney, but the damage has been done. 

Puerto Rico was placed under court protection in May in the largest-ever U.S. municipal bankruptcy, and a federal judge is presiding over the restructuring under a structure approved by Congress.

--The European Union stepped up its attack on U.S. tech giants in a bid to collect taxes, with the European Commission, the bloc’s antitrust negotiator, pressing a case on Wednesday against Amazon, seeking $294 million from the company, which is domiciled in Luxembourg, so Luxembourg needs to collect it.

And the EC is now referring Ireland to the European Court of Justice for failing to implement an order last year that Dublin collect $15 billion from Apple in uncollected taxes; the regulator arguing Apple had been granted illegal tax benefits.

The EU is also after Google and Facebook to pay more taxes in Europe.

EU antitrust chief Margrethe Vestager said Amazon was effectively taxed at one-fourth the rate for other local companies subject to the same national tax rules.

Luxembourg asserts that Amazon has been taxed in accordance with the tax rules applicable at the time. Both parties can appeal.

--Separately, Jeff Bezos’ e-commerce giant has been quietly delivering packages from third-party retailers who operate stores on Amazon’s platform, giving investors in FedEx and UPS the jitters because they now handle such orders.  Bloomberg first reported on the test program being conducted on the West Coast.

Amazon said in a statement: “We are using the same carrier partners to offer this program that we’ve used for years, including UPS, USPS and FedEx,” but no doubt Amazon wants greater control over the last mile to shoppers’ doorsteps.

--Canada’s economy added 10,000 jobs in September, with the jobless rate remaining unchanged at 6.2%.

--Netflix Inc. is raising prices for its streaming-video services in the U.S., betting  subscribers won’t leave in droves with higher monthly fees (8% higher) as the company makes bigger and bigger investments in TV and movie programming. 

Netflix’s budget for content is expected to be $7 billion next year as it battles other streaming rivals, such as Hulu, which took home best drama at this year’s Emmy Awards for “The Handmaid’s Tale” – becoming the first streaming service to win the coveted prize.  Amazon is also increasing its spending to create original shows.  And Apple is looking to spend roughly a $1 billion to produce content.

--PepsiCo third-quarter earnings topped Wall Street expectations, despite weak sales at its North American beverage business, which led to a miss on sales.

Revenue for the owner of Frito-Lay snacks and Pepsi cola was $16.24 billion, up 1.7 percent when you take out the impact of foreign exchange translation, and the company trimmed its full year revenue growth target to 2.3 percent.

But the North American beverage business, which includes Mountain Dew and Gatorade, had revenue of $5.33 billion, compared with $5.52 billion for the same period last year.  Operating profit dropped 10 percent.  Gatorade hasn’t been doing as well.

--Costco Wholesale Corp. announced it was starting two-day delivery on shelf-stable food from its own website and expanded a fresh-food delivery partnership with Instacart, a startup that delivers groceries from retailers in one day.  Both services allow Costco members to buy food online at lower prices.

Yes, Costco is responding to Amazon and its recent acquisition of Whole Foods.

--Editorial / San Diego Union-Tribune

“Many Americans have spent months stewing about ‘fake news’ and how social media can pump falsehoods and mean-spirited myths into everyday life. Yet the giants of modern information dissemination – Facebook, Google, YouTube and Twitter, for starters – were slow to address – and, in Facebook’s case, downright dismissive of – the idea that they were to blame for mushrooming fictitious or inflammatory posts.  They did so even as it became clear some posts were part of covert Russian attempts to divide Americans in the 2016 presidential campaign and in other political skirmishes.

“It was only Saturday, while marking the end of Yom Kippur, the Jewish holy day of atonement, that Facebook founder Mark Zuckerberg apologized for how his company was used: ‘For the ways my work was used to divide people rather than bring us together, I ask for forgiveness and I will work to do better,’ he wrote on Facebook.

“The next night, the deadliest mass shooting in modern U.S. history happened in Las Vegas, and once again, users of the tech platforms were sharing untruths and malign speculation.  As BuzzFeed’s deputy global news director noted on Twitter, Google’s ‘top stories’ results at one point featured posts from the notorious 4chan forum speculating inaccurately about the identity of the Mandalay Bay shooter.  A reporter for The New York Times documented how Facebook’s Trending Stories highlighted news from Sputnik, a Russian propaganda site, and featured a false post asserting the FBI blamed the slaughter on Muslim terrorists. At the same time, a ‘Las Vegas Shooting/Massacre’ Facebook group sprung up and quickly grew to more than 5,000 members after the killings; it was run by Jonathan Lee Riches, a serial harasser with a criminal background and a history of farcical lawsuits, as The Atlantic pointed out.

“All of this raises some doubt about whether Google and Facebook – among the richest and most successful companies in global history – can create foolproof algorithms that instantly evaluate what content is worth promoting and what content is best ignored in a time of crisis.  It also raises some questions about whether the two companies, which have spent vast sums on artificial intelligence research, can develop reliable, smart AI to protect the public from being manipulated and incited....

“Ultimately, news literacy matters. Algorithms and better corporate monitoring of social media content will never be enough, and everyone needs to develop the tools for evaluating what content is credible, what is junk and what absolutely needs confirmation before being shared.”

Or just read this column.

--Related to the above, in an interview with Barron’s, New York University professor Scott Galloway, a former Morgan Stanley analyst and author of a new book, “The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google,” was asked about Facebook’s fake news controversy, Galloway calling the company “the most successful thing in human history, period.”

“This could be, if they handle it poorly, the moment Facebook goes into structural decline. I don’t think they are owning up to the fact that they are a media company. You produce content. You run advertising against it.  You have large influence over society. Boom, congratulations.  You’re a media company. The fourth estate has extraordinary influence and, with that, some responsibilities.  Facebook seems to be comfortable with the former, not the latter....

“Martha Stewart wasn’t put in prison for insider trading. She was put in prison for denying the issue.”

--Yahoo announced on Tuesday that the 2013 data theft, the largest breach in history, had really impacted all 3 billion of its accounts, not the 1 billion it reported as comprised last December. Now the company is saying “recently obtained new intelligence” showed all user accounts had been affected, though the company says the stolen information did not include passwords in clear text, payment card data, or bank account information.

The new revelation follows months of scrutiny by Yahoo, Verizon (which acquired most of Yahoo’s assets), cybersecurity firms and law enforcement that failed to initially identify the scope of the 2013 hack.

--Wells Fargo CEO Tim Sloan apologized Tuesday for the bank’s fake accounts scandal but was peppered with criticism from several members of the Senate Banking Committee Wednesday, including Sen. Elizabeth Warren (D-Mass.), who called for him to be fired.

Warren accused Sloan of repeatedly promoting the bank’s ability to open new accounts in the years before the scandal was exposed by the Los Angeles Times.

“You made money personally off of it,” she said.  “At best you were incompetent. At worst you were complicit.”

Sloan challenged Warren numerous times, saying “You’re wrong,” when she reported his past remarks.

--Pork futures prices have fallen nearly 40% since mid-July, as more hogs than ever head to U.S. slaughterhouses.

Farmers have been expanding their herds to meet the demands of new meatpacking plants in the Midwest – 73.5 million hogs and pigs, according to the Department of Agriculture.

But Americans aren’t eating enough pork and ham to keep up. The slaughterhouse owners are thus hoping to sell the surplus outside the U.S., like to Asia and Mexico, where demand for U.S. pork is climbing.

A fifth of the pork produced in the U.S. this year will be exported, the USDA projects.  Exports were up 11% in the first seven months of the year vs. 2016.

The new plants that opened in Iowa and Michigan can process 10,000 or more hogs a day.  Goodness gracious.

As prices stand today, Iowa hog farmers are losing $3.89 per hog, according to Iowa State University, and they are projected to lose $11.21 a hog in October, though this doesn’t account for hedging prices with futures, for example.  [Benjamin Parkin / Wall Street Journal]

--I’m a little surprised the following didn’t get more play in the business press this week, albeit it happened overseas, but about 860,000 people lost bookings and more than 30 planes were sent to return 110,000 holidaymakers who were overseas when Britain’s fifth-largest air carrier, discount airline Monarch, went out of business suddenly.  It was placed in ‘administration’ at a time, 4:00 a.m., when it had no planes in the air.

Passengers were then sent text messages informing them their flights had been canceled – but some customers were already at airports.

As reported in the BBC, one passenger was due to get married in Gran Canaria (Canary Islands) on Saturday and arrived at Gatwick airport with 30 members of his family.

“I have spent ($18,000) on my wedding and now I can’t even go and get married,” he said. “I am gutted, absolutely gutted, and my missus is in tears, an emotional wreck.”

I’d be more than gutted, I think.

Monarch had 2,100 employees and it was severely impacted when two of its most popular destinations, Egypt and Tunisia, were the victims of a wave of terror attacks that led to a severe drop in business. Then when Monarch shifted to other markets, they were dealing with far more carriers and resultant price pressures. The losses exploded.  This would be a good MBA case study, boys and girls.

--Megyn Kelly is off to a rocky start as host of the 9 a.m. hour of “Today,” averaging 2.5 million viewers her first week, according to Nielsen, with 765,000 of them in the 25-to-54-year-old demographic favored by advertisers.

The total audience was roughly in line with what “Today” was doing in that slot before the change, but 5 percent less for the key demo than the previous week.

So you’re like, you paid her $17 million a year to bring in the same audience as before.

Plus the network shut her out of the Vegas massacre coverage this Monday.

And Kelly’s “likeability” is already tumbling. In fact, E-Poll found Kelly had a “dislike” score of 45, twice that of Matt Lauer a month after the 2012 Ann Curry debacle.

--S.I. Newhouse Jr., who together with his brother, Donald, built a media empire under Advance Publications, died at the age of 89.  Advance Publications had properties such as Conde Nast, publisher of Vogue, The New Yorker and Vanity Fair, and scores of newspapers, including the Star-Ledger, which was pillaged by Advance. 

Newhouse was known to be shy and socially awkward, and the following was a typical story, as reported in NJ.com.

Newhouse’s personality led to messy dismissals.  “Louis Gropp learned he was being fired as editor of House & Garden in 1987 while vacationing in California.  Newhouse called and asked if he’d been reading Women’s Wear Daily while on holiday.

“When Gross said no, Newhouse got to the point.

“ ‘There have been a lot of stories in WWD that Anna Wintour is going to become the editor of House & Garden,’ his boss told him, according to Carol Felsenthal’s 1998 book, ‘Citizen Newhouse: Portrait of a Media Merchant.’

“ ‘Well, is that true?’ Gropp asked.

“ ‘Yes,’ Newhouse replied.

“Val Weaver was let go as head of Self magazine in 1988 when Newhouse knocked on her door and asked, ‘Would you mind if we made a change in editors in chief?’, according to a 1995 biography of Newhouse by Thomas Maier.”

--An investigation by the New York Times found numerous allegations of sexual harassment and unwanted physical contact against Hollywood producer Harvey Weinstein stretching over nearly three decades.  At least eight settlements with women were reached, according to two company officials speaking on the condition of anonymity.

In a statement to The Times on Thursday afternoon, after the story had been released, Weinstein said: “I appreciate the way I’ve behaved with colleagues in the past has caused a lot of pain, and I sincerely apologize for it.  Though I’m trying to do better, I know I have a long way to go.”

Weinstein then took a leave of absence to “deal with this issue head on.”

But then he sued the paper, citing its reckless reporting, sniveling that the Times  “never wrote about the documentary I did with Jay-Z about Rikers Island, they never write that I raised $50 million for amfAR (AIDS research), nor my work with Robin Hood – instead they focus on trying to bring me down.  This is a vendetta....” 

Weinstein told the New York Post Thursday night: “I came of age in the ‘60s and ‘70s, when all the rules about behavior and workplaces were different. I worked at a record company that, if you were five minutes late, they’d hit you with a baseball bat.

“I also have the worst temper known to mankind, my system is all wrong, and sometimes I create too much tension.”

A judge should throw the suit out of court.  This guy always struck me as an obnoxious jerk, though Democrats loved hoovering up his donations to their causes and election campaigns.

Among the movies Weinstein produced were Oscar winners “The English Patient” and “Shakespeare in Love,” along with films like “Pulp Fiction” and “Good Will Hunting.”

But talk about hypocrisy. As Meg James of the Los Angeles Times wrote: “When the infamous ‘Access Hollywood’ tape leaked one year ago, capturing then-candidate, now-President Trump bragging in coarse terms in 2005 about being allowed to grab women because he was a celebrity, Hollywood had a meltdown.

“Cher called Trump a ‘scumbag carny barker’ on Twitter....

“This week, amid revelations that...Weinsteain had a long history of sexually harassing women, Hollywood’s response was largely muted.  Film studios on Friday all declined to comment.”

To her credit, actress-writer-producer Lena Dunham wrote on Twitter: “Yup. Hollywood shines light on Catholic Church, sex trafficking – let’s shine it on ourselves a second and what we’ve condoned.”

--The newspaper where my brother used to work covered the Millburn-Short Hills area, next to where I live in Summit, and I loved reading the local crime blotter because it always had a rundown of the massive shoplifting taking place at The Mall at Short Hills, one of the two or three most upscale malls in America.

So we all know Neiman Marcus’ moniker, Needless Markup, but in the span of two days in mid-September: a woman took shirts, jeans, shoes and two wallets valued at $1,715; another woman took a shirt and shorts that hid 12 scarves valued at $6,930; a guy took sunglasses valued at $345; and another guy lifted a shirt, shorts, sneakers and a Chanel handbag valued at $6,500.

Only the man who stole the sunglasses was caught.

I’ve known this stuff for ages, and it always cracks me up walking around the place because you can spot the shoplifters a mile away, carrying their booster bags.

Anyway, there’s one reason for your markup, sports fans.

Foreign Affairs

Iran: President Trump is expected to announce next week that he will “decertify” the nuclear deal with Iran, saying it is not in the United States interest, but kicking it to Congress.

This is just a first step, but an important one, in a process that could eventually result in the resumption of U.S. sanctions against Iran, which no doubt would derail the deal limiting Iran’s nuclear activities.

The thing is, the 2015 deal was not just between the U.S. and Iran, but five other nations (Russia, China, Britain, France and Germany...the P5+1).

But according to reports, Trump will hold off on recommending that Congress reimpose sanctions for now.

This week, Defense Secretary Jim Mattis and Gen. Joseph Dunford, chairman of the Joint Chiefs of Staff, expressed support for the deal during congressional testimony, but Mattis added taking the step to decertify would not scuttle the agreement.

Trump is supposed to lay out his thinking in a speech later next week, and he will no doubt highlight Iran’s rapidly spreading influence in the Middle East and ongoing support for terrorism.

But this is all subject to change. Trump has an Oct. 15 deadline to report to Congress on whether Iran is complying with the agreement, which Mattis and others believe it is doing.

Iranian President Hassan Rouhani said last month he would not reopen the agreement for negotiation.  You can be sure Russia and China won’t want to reopen it either.

Arkansas Republican Sen. Tom Cotton, a leading opponent of the deal, said he will lay out proposals to pass new stipulations for U.S. participation in the accord, including the elimination of the “sunset clauses” under which restrictions on some Iranian nuclear activities expire after several years, as well as tougher inspections requirements and curbs on Iran’s ballistic and cruise missile programs.

But many Republican leaders in Congress aren’t eager to take on the Iran issue when there are so many other items on the plate, and with the midterm elections now just a year off.

Dennis Ross / Wall Street Journal

“President Trump has never made a secret of his opposition to the Iran nuclear deal, which he called ‘an embarrassment’ in his speech to the United Nations General Assembly last month.  Yet so far the Trump administration has certified the deal twice.  ‘If it was up to me,’ Mr. Trump said in July, ‘I would have had them noncompliant 180 days ago.’  It is, of course, up to him – and given his recent comments, one expects he will refuse to certify by the next deadline, Oct. 15.

“That wouldn’t necessarily spell the end of the deal.  Certification is not part of the Joint Comprehensive Plan of Action, the agreement between Iran and the ‘5+1’ nations....

“On the other hand, refusing to certify would create pressure in Congress to reimpose the sanctions on Iran that were waived as part of the deal. If lawmakers did so, the U.S. would no longer be fulfilling its side of the JCPOA....

“Simply declaring Iran ‘noncompliant,’ in Mr. Trump’s words, presents a basic problem.  The International Atomic Energy Agency, the body responsible for monitoring whether Iran is living up to the JCPOA, has said Tehran is meeting its obligations.  Even Secretary of State Rex Tillerson acknowledged, on Sept. 20, that Iran is in ‘technical compliance.’

“Mr. Tillerson’s words suggest that any decertification will be justified on the second point: whether Iran is taking ‘any action that could significantly advance its nuclear weapons program.’  The administration would likely offer two explanations for why it cannot certify on this point: First, the IAEA has no access to Iranian military facilities. Second, Iran is continuing to develop ballistic missiles, which seems to make sense only as a way to deliver nuclear warheads.

“Neither argument is likely to persuade the other members of the 5+1. They will say the onus is on the U.S. to identify suspect sites and make a case that access to them is needed – which the administration has apparently not done.  On the second point, although ballistic missiles are a danger that needs to be addressed, they are not part of the JCPOA. Nor, for that matter, is Iran’s behavior in the region, which is unquestionably destabilizing.

“That is why the administration needs to explain the distinction it is drawing: It must emphasize that it is not pulling out of the JCPOA and is not asking Congress to restore the sanctions that were waived under the deal.  But it should say that the U.S. is not going to acquiesce in Iran’s dangerous behavior and is, therefore, decertifying to put the world on notice that at some point in the next six to 12 months, the U.S. will walk away from the deal if the JCPOA’s sunset provisions, Iran’s testing of ballistic missiles, and its regional misbehavior are not addressed....

“America need not, and should not, give in to Iranian demands.  But the Trump administration should be under no illusions that the Europeans will simply accept its terms.”

I long said, before the deal was signed, it was too late.  You couldn’t change it.  The other five players jumped at the business opportunities and wouldn’t go back.

For example, French energy giant Total announced earlier in the week it plans to continue developing a huge Iranian gasfield despite concerns over U.S. actions with the nuclear deal.

Said Total’s CEO, Patrick Pouyanne: “We knew when we signed that it will not be an easy road.  But I prefer to have a problem to solve and to have the opportunity rather than having not signed [and] no opportunities.” [Financial Times]

Late Friday, Iran signaled it may be open to talks about its ballistic missile arsenal, seeking to reduce tension over the disputed program, but now there are conflicting statements from Tehran as I go to post.

Iraq / Syria: Iraqi forces said they had recaptured the center of the town of Hawija, one of the last enclaves of Islamic State in the country.  Hawija, where tens of thousands of civilians live, has been under the militant group’s control since 2014.  ISIS is now left controlling only a stretch of land along the border with Syria, while it does still control some territory in Syria itself.

In Syria, Russia’s military said its airstrikes in the eastern part of the country had taken out 300 ISIS fighters.  As with all Russian claims, I have seen nothing to verify the huge total.  A few weeks ago they claimed to have killed 800 in airstrikes.

In northwestern Syria, in Idlib province near the Turkish border, the Syrian Observatory for Human Rights (a credible source), said at least 28 civilians were killed in air strikes in what was supposed to be a safe zone; hit either by Syrian government planes or Russian aircraft.

The Observatory also reported  that, overall, 955 civilians were killed (207 children) in Syria in September, 3,000 people in all, in the deadliest month of the conflict this year.

Turkey: In the first high-profile verdict against those accused of plotting to overthrow President Erdogan in a failed coup last year, 40 men, including senior military officers, were handed life sentences.  The trial is one of 40 mass proceedings being conducted across the country.

North Korea: Pyongyang threatened to bring “nuclear clouds” to Japan and mocked Prime Minister Shinzo Abe for acting like a “headless chicken” at the U.N. General Assembly when he urged U.N. members to force North Korea to end its nuclear and missile programs.

In a statement released Monday by the state’s official Korean Central News Agency:

“Japan’s such rackets inciting the tension of the Korean peninsula is a suicidal deed that will bring nuclear clouds to the Japanese archipelago.  No one knows when the touch-and-go situation will lead to a nuclear war, but if so, the Japanese archipelago will be engulfed in flames in a moment. This is too self-evident.”

Speaking at The Korea Society roundtable in New York Thursday, Bruce Klingner, a former CIA Deputy Division chief for Korea, said he’s hearing “military options are increasing, not decreasing” in the Trump administration.

“The probability of a military option is not zero,” Klingner said, adding there is talk “inside government” of the “five options to solve North Korea in 18 months.”

Klingner, who is as plugged in as anyone on the topic and has been asked by North Korea to tell them about Trump’s personality, added, “I’m pretty sure (Pyongyang) is going to do an ICBM test” of a missile that could fly further than the one launched July 4.

Friday, a Russian official who had just returned from Pyongyang, said he heard the North was preparing for a new test.

Such a provocation could set the wheels in motion at the Pentagon to take more forceful measures.

But Klingner said a “nuclear airburst,” as the North Koreans have threatened, is “over the top” and unlikely.

Meanwhile, Reuters reported that Russia is quietly boosting economic support for North Korea to try to prevent regime change in Pyongyang, as Moscow fears his fall would sap  its regional clout and allow U.S. troops to deploy on Russia’s eastern border.

Last month, Vladimir Putin said at the Vladivostok summit, “We need to gradually integrate North Korea into regional cooperation.”

And the Washington Post’s Joby Warrick first reported the other day that last August, “a secret message was passed from Washington to Cairo warning about a mysterious vessel steaming toward the Suez Canal. The bulk freighter named Jie Shun was flying Cambodian colors but had sailed from North Korea, the warning said, with a North Korean crew and an unknown cargo shrouded by heavy tarps.

“Armed with this tip, customs agents were waiting when the ship entered Egyptian waters. They swarmed the vessel and discovered, concealed under bins of iron ore, a cache of more than 30,000 rocket-propelled grenades.  It was, as a United Nations report later concluded, the ‘largest seizure of ammunition in the history of sanctions against the Democratic People’s Republic of Korea.’”  [Worth an estimated $23 million.]

Who the weapons were for would take months to resolve, but a U.N. investigation concluded it was the Egyptians themselves, specifically Egyptian business executives. The government said it destroyed the shipment to comply with sanctions, but Egypt has had ties with North Korea since the 1970s.

Recently, the U.S. cut military aid to Cairo. The message being us or them.

China: President Xi Jinping will begin his second five-year terms with the start of the Communist Party’s national congress, due to start in Beijing on October 18, with no apparent successors.  One supposed rising star, 54-year-old Sun Zhengcai of Chongqing, was expelled from the party last Friday after being taken away for questioning by anti-graft inspectors in July.

If, after the congress, no heir is elevated, there’s your signal Xi is going to be gunning for a third term, which would start in 2022, possibly under a new title, such as general secretary.

The last two leadership transitions have been orderly – Jiang Zemin making way for Hu Jintao in 2002, and Hu making way for Xi in 2012, but that hasn’t always been the case.

Separately, this story crossed the wires this week: “Americans buying seafood for dinner may inadvertently have subsidized the North Korean government as it builds its nuclear weapons program, an Associated Press investigation has found.  Their purchases may also have supported forced labor.”

AP also tracked products made by North Korean workers to Canada, Germany and elsewhere in the European Union.

This is actually gross.  I have long said I would never buy fish knowingly that is labeled as coming from China, and now there is possibly a North Korean element?  I’m just talking from a health standpoint.  Forget violation of U.N. sanctions and such.

Russia: The Wall Street Journal had a most troubling report on Friday: “Hackers working for the Russian government stole details of how the U.S. penetrates foreign computer networks and defends against cyberattacks after a National Security Agency contractor removed the highly classified material and put it on his home computer, according to multiple people with knowledge of the matter.

“The hackers appear to have targeted the contractor after identifying the files through the contractor’s use of a popular antivirus software made by Russia-based Kaspersky Lab, these people said.

“The theft, which hasn’t been disclosed, is considered by experts to be one of the most significant security breaches in recent years.  It offers a rare glimpse into how the intelligence community thinks Russian intelligence exploits a widely available commercial software product to spy on the U.S.

“The incident occurred in 2015 but wasn’t discovered until spring of last year, said the people familiar with the matter.”

The stolen material includes the computer code the NSA uses for spying on foreign computer networks, which helps give the Russian government information on how to protect its own networks, as well as giving it methods to infiltrate U.S. networks.

Recently, the U.S. banned all Kaspersky software from being used in government agencies.

Separately, Saudi Arabia, during King Salman’s visit, signed an historic arms deal between Russia and the Kingdom for advanced S-400 air-defense systems as well as anti-tank weapons and multiple-rocket launchers.

But this week the Saudis also inked a deal with the U.S. worth $15 billion to purchase the advanced Terminal High-Altitude Defense (Thaad) missile defense system.

Afghanistan: Defense Secretary Mattis said the U.S. wants to embolden the Afghan forces by providing close air support and intelligence, surveillance, and reconnaissance assets, with the Pentagon’s new strategy including an intensification of the air campaign in order to drive the Taliban to the negotiating table.

Mattis told the Senate and House Armed Services Committees: “NATO airstrikes overhead denies the enemy ever having the high ground and in turn the dominating terrain.  That’s a tactical effect that...will give them militarily more opportunities to take the fight to the enemy.”

More Afghan forces will have U.S. troops with them capable of requesting air strikes around the country, with the target list expanded.

Niger: Four American Green Berets were killed, two injured, in an ISIS, al-Qaida-inspired ambush in southwest Niger.  The soldiers were part of a training operation and are elements of a longstanding U.S. force of 800 in the country that is aiding the government, and others in the area, in the fight against al-Qaida and other militants, including Boko Harem.  The force is primarily providing training and security assistance, including heavy surveillance with drones.

[At first, we heard three had been killed, not knowing the military was looking for a fourth who had gone missing and somehow wasn’t evacuated with the others initially.  After 48 hours of searching, Niger’s army found him.]

Cuba:

Editorial / Washington Post

“A central premise of President Barack Obama’s initiative to open relations with Cuba was that more U.S. engagement would lead to change on the island.  Change is certainly needed, but recent events suggest that the unpleasant reality of Fidel Castro’s dictatorship remains in place, even in the twilight of rule by his 86-year-old brother Raul.

“Twenty-one U.S. diplomats in Cuba have reported being hit with unexplained illnesses, including hearing loss, dizziness, tinnitus, visual difficulties, headaches, fatigue and cognitive, balance and sleeping difficulties. Some accounts have attributed the illnesses to strange ‘sonic’ attacks that surfaced 10 months ago.  Originally described by the State Department as an ‘incident,’ they are now being called an ‘attack,’ and Post staff writer Carol Morello reports that U.S. officials say specific Americans were targeted, that the assaults are ongoing and that they occurred in at least one case in a Havana hotel....

“In a meeting Tuesday in Washington, Cuba’s foreign minister, Bruno Rodriguez, told Secretary of State Rex Tillerson that Cuba wasn’t at fault for the illnesses.  Cuba said it had investigated but so far found no origin or cause....It begs disbelief that Cuba does not know what is going on.  Unfortunately, this kind of deception and denial is all too familiar behavior. The regime took the same ‘don’t blame us’ coverup pose when the dissident Oswaldo Paya was killed in a suspicious car wreck five years ago....

“If Cuba sincerely wants better relations with the United States, it could start by revealing who did this, and hold them to account.”

This is one area where President Trump would be totally in his right blasting the Cuban regime on Twitter.  He would have my full support.  I never supported reestablishing diplomatic relations, and I complained when Obama did so, as he received zero in return from these bastards.

Random Musings

--Presidential tracking polls....

Gallup:  39% approve of President Trump’s performance, 57% disapprove
Rasmussen:  46% approve, 53% disapprove

Both show slight improvements over recent weeks.

--Rep. Tim Murphy (R-Pa.) is resigning later this month following a report this week that he urged a woman with whom he was having an affair to have an abortion.  Speaker Paul Ryan confirmed he had received Murphy’s letter of resignation, after Murphy first said he would serve out his term. 

Murphy was known for his pro-life stances and on Tuesday cast a vote to ban abortions after 20 weeks shortly after the Pittsburgh Post-Gazette’s story about his leaked text messages was posted.

--A Washington Post-Schar School Poll finds Democrat Ralph Northam leading Republican Ed Gillespie 53-40 in the Virginia governor’s race, though one in four voters say they could still change their mind.

--Trump tweet on Alabama Senate primary (a week after the fact), where his candidate, Luther Strange, lost by ten points.

“In analyzing the Alabama Primary race, FAKE NEWS always fails to mention that the candidate I endorsed went up MANY points after endorsement!”

--So given the above...Chemi Shalev / Haaretz...on Trump

“Some psychiatrists describe the existence of a narcissistic-masochistic personality disorder. The narcissist-masochist sees the hatred and resentment that he or she arouses in others as confirmation of their own greatness.  Perhaps this can provide an explanation for Donald Trump’s seemingly inexplicable conduct in recent days in connection with the destruction sown by Hurricane Maria in Puerto Rico.  In his racist-sounding rants against Puerto Ricans and with his unworthy attacks on San Juan Mayor Carmen Cruz, who begged for federal help, Trump has sparked widespread public disgust. Through the more distorted prism of his problematic personality, perhaps he views this as proof that he is the greatest.

“Trump actually benefited from his administration’s well-regarded responses to the hurricanes that hit Texas and Florida last month, but Puerto Rico is a different story. Not only is the damage heavy, the geography challenging, the local government less functioning and the local economy more desperate, Trump at first preferred to tackle protesting NFL players rather than lead a vigorous rescue effort for the demolished island.  When criticism and complaints surfaced about failing federal operations, he reacted – as usual – with a spate of personal insults and aggressive, racially tinged tweets.  ‘They want everything to be done for them,’ he wrote of Puerto Ricans, evoking a classic dog-whistle line that racists – as well as their victims – identified all too well.

“Trump’s offensive tweets, some of which have been deleted, emphasized once again his inability to deal with criticism, his tendency to make every conflict personal, his inability to grasp the essentials of leadership or to act ‘presidential.’  Trump’s Puerto Rico tweets reinforced from day one of his presidential run when he described Mexican immigrants as rapists and murderers.  Puerto Ricans, it seems, are worth just a little bit less than Texans or Floridians or other ‘authentic’ Americans....

“Puerto Rican residents may not be able to vote directly for representation in Washington but they are nonetheless eligible for the U.S. citizenship that was given to them exactly 100 years ago. As such, they have the right to leave the island whenever they want and to live in America wherever they wish, an option that has already been used by the parents and grandparents of the estimated five million Puerto Ricans who live on the mainland.  In recent years, the island has been losing population at a faster rate than ever, decreasing by over 10 percent in comparison to 2004.  It’s not unreasonable to assume that the combination of the damage caused by Maria, the prospects of a protracted recovery and the sense that they are being targeted and vilified by their president could now persuade many more Puerto Ricans to leave the island and to join their compatriots in New York, Florida and other locales.

“Such a development would highlight the irony of history.  Trump, who based his campaign on incitement against Hispanics and on his pledge to keep them out, will oversee a tremendous Hispanic migration – and he won’t be able to stop it.  And since most Hispanics, especially Puerto Ricans, especially now, will be voting for Democrats, Trump will be delivering yet another harsh blow – one of many – to the party that sent him to the White House.  Republicans might hate him for it, but Trump will be that much happier, convinced he has shown everyone just what a genius he is.”

--Sen. Bob Corker (R-Tenn.) said on “Meet the Press” last Sunday that he would not have shared his opinion on NFL players who choose to kneel, rather than stand, during the national anthem.

“I would not have weighed in. I know it plays well to the base. I know that’s a constant thing that’s on the president’s mind.”

Corker said it is “best” to allow the private sector to make its own decision on these matters.

--David Von Drehle / Washington Post

“Terrorist drones.

“Two years ago, you would have had a tough time getting a meeting with a junior staffer in Washington to discuss the subject.  A year ago, people had begun furrowing brows.  Now, this is Topic A for an entire ‘community of experts that has emerged inside the federal government,’ as National Counterterrorism Center chief Nicholas Rasmussen told a panel of senators Wednesday.  ‘It’s a real problem,’ he said.

“How real?  Islamic State fighters in Iraq and Syria, using off-the-shelf aircraft modified to drop grenades, have repeatedly menaced U.S. Special Operations forces.  If they can do it in Raqqa, surely someone will try to do it here.

FBI Director Christopher A. Wray, testifying to the same panel, said the threat is palpable and immediate: ‘The expectation is it’s coming here imminently.’  Drones are ‘relatively easy to acquire, relatively easy to operate, and quite difficult to disrupt and monitor.’....

“You don’t need to be a Hollywood screenwriter to imagine what might come next: A nearly silent, low-altitude little helicopter bearing a small bomb or supply of toxic material hums over metal detectors and barriers and bodyguards to strike a public gathering or senior official or hallowed landmark....

“If autonomous drones are able to execute complex simulated combat missions today – and they are – you can bet that technology will eventually be widely and cheaply available in smaller forms to ordinary buyers. And one thing we know about terrorists: They love gadgets. They’ve learned to detonate bombs using cellphones, toy cars, garage door openers and so on. Once they have access to nearly undetectable flying machines big enough to carry substantial payloads, we can be confident they will use them to wreak havoc.  Which is a threat worth all the attention the community of experts can give to it.”

--Princeton Professor / Historian Allen C. Guelzo / Wall Street Journal

On the Robert E. Lee statue in Charlottesville, Va., now swathed in black, mostly to prevent defacement.

“Monuments can...be deceptive. Because the Charlottesville Lee went up in 1924, at the apex of Jim Crow, it is easy to suppose that it was designed to reinforce white supremacy. But the dedication ceremonies featured high-school bands, cadets from the Virginia Military Institute, university faculty and the American Legion – not the Ku Klux Klan.

“One of the dedication speeches celebrated Lee for surrendering at Appomattox and averting ‘scattered guerrilla warfare for many years’ and for pointing Southerners ‘in the shadows of the defeat of war’ toward ‘the star of hope with its radiant promise and prophecy of the triumphs of peace.’  Those words came from the Rev. M. Ashby Jones, a Baptist minister whose opposition to lynching made him a target of the Klan. The pedestal read only ‘Robert Edward Lee,’ and the statue itself was sculpted by Italian-born Leo Lentelli and cast in Brooklyn, N.Y.

“There is a difference between monuments and memorials.  Monuments invite us to see exemplars.  Memorials are simply remembrances that something happened in this place.  Often memorials are statements of mourning, occasionally of repentance, but they are not about power or approval. That’s why we don’t take the Donner Party Monument in Donner Memorial State Park as an incitement to cannibalism.

“The line between memorials and monuments is not always clear.  The Union statuary that populates the Gettysburg battlefield was originally intended as a monument to the righteousness of the Union cause. At the dedication of the monument to the 84th Pennsylvania Infantry in 1889, the speaker described the Civil War as ‘the greatest of rebellions against the grandest of governments.’  By the middle of the 20th century, visitors were more inclined to regard the monuments as memorials of a great and tragic sacrifice. Today they are mostly used by tourists and history buffs as markers of unit positions during the battle.....

“There have been times and places where monuments really were assertions of white Southern defiance, like the cemetery obelisk in Colfax, La., celebrating the perpetrators of the 1873 Colfax Massacre who were ‘fighting for white supremacy,’ as the monument proclaims unashamedly.

“But does the Lee monument serve the same purpose? The answer would be yes only if we believed that 1865 and 1873 were yesterday, and that everything about the past is a statement of power (or a clever concealment of power) in the present.  This is what links the monument-smashers to the campus deniers of free-speech: They understand monuments and speech solely as manifestations of power, which only can be confronted and silenced by power.

“On a recent humid evening in Charlottesville, I walked past the Lee statue, huddled in its improvised burqa. He fought for a cause that rankles me to the soles of my abolitionist boots. But the armies that marched at his orders also melted away at his orders a long time ago; and the statue is immobilized, solitary, powerless.  As Jefferson once said about the religious dissenter, he neither picks my pocket nor breaks my leg.  So with Lee.  I can let him alone.”

--The Nobel Peace Prize was awarded to the International Campaign to Abolish Nuclear Weapons.  The Geneva-based organization “has been a driving force in prevailing upon the world’s nations to pledge to cooperate...in efforts to stigmatize, prohibit and eliminate nuclear weapons,” committee chairwoman Berit Reiss-Andersen said in the announcement.

Gee, they’ve been really successful. Even journalists in Oslo were like, ‘WTF?  No international measures against nuclear weapons have been reached!’

--Chris Mooney / Washington Post

“When it comes to climate change, we know where the most important warming agent – carbon dioxide – is coming from.  Most of it is coming from the burning of fossil fuels, with additional contributions from deforestation and other causes.

“But the second-most potent greenhouse warming agent – the hard-hitting, if short-lived, gas known as methane – presents more of a mystery. There has clearly been an alarming uptick in atmospheric methane in recent years, following a flattening of concentrations from 2000 to around 2007. But the cause of this particular pattern has been hotly debated, with some blaming the fracked natural gas boom (natural gas is primarily composed of methane) and others pointing to causes such as agriculture.

“Now, new research published Thursday [Ed. Sept. 28] in the journal Carbon Balance and Management by three scientists with the Joint Global Change Research Institute...point the finger at agriculture once again – and, more specifically, at cattle and other livestock. ‘Just from livestock methane emissions, our revisions resulted in 11 percent more methane in a recent year than what we were previously estimating,’ said Julie Wolf, lead author of the study who completed the work while a postdoc at the institute and now works at the Department of Agriculture. ‘It’s not the biggest contributor to the annual methane budget in the atmosphere, but it may be the biggest contributor to increases in the atmospheric budget over recent years.’”

Well, the technical aspects of this topic are really pretty disgusting, such as “manure management.”  But the study has concluded global emissions from same are 36.7 percent higher than a guideline introduced by the United Nations’ Intergovernmental Panel on Climate Change in 2006 to estimate methane emissions, which the new study seeks to update.  Livestock are living longer, being bred to be larger, and eating more and the manure management involves “huge ‘anaerobic’ waste lagoons that give off large volumes of methane.”

Actually, oftentimes the world itself resembles an anaerobic waste lagoon.

---

Pray for the men and women of our armed forces...and all the fallen, including the Green Berets in Niger.

Pray for the victims of the Las Vegas massacre.

God bless America.

---

Gold $1278
Oil $49.25

Returns for the week 10/2-10/6

Dow Jones  +1.6%  [22773]
S&P 500  +1.2%  [2549]
S&P MidCap  +1.2%
Russell 2000  +1.3%
Nasdaq  +1.4%  [6590]

Returns for the period 1/1/17-10/6/17

Dow Jones  +15.2%
S&P 500  +13.9%
S&P MidCap  +9.5%
Russell 2000  +11.3%
Nasdaq  +22.4%

Bulls 57.5
Bears 17.0  [Source: Investors Intelligence]

Dr. Bortrum posted a new column!

Have a great week.

Brian Trumbore



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Week in Review

10/07/2017

For the week 10/2-10/6

[Posted 11:30 PM ET, Friday]

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

Edition 965

I have little to say on the massacre in Las Vegas, perpetrated by Stephen Paddock, that took out 58 innocents at the country music festival.  I have to admit...when I first saw the news as I opened up my computer at 4:30 a.m. Monday morning, I didn’t feel a lot.  Many of us have become desensitized to these tragedies.  Nothing surprises us.  A great friend of mine lost a beautiful daughter last Saturday night in Greensboro, N.C., in an awful accident.  Police stopped a car for an investigation, it sped away, and crashed into my friend’s daughter’s car at an intersection, killing all five occupants of both vehicles.  I was getting this news from a mutual friend all Sunday, my heart ached for Phil, and his family, and then the next morning, unspeakable tragedy on a scale never before seen in our country.

But we don’t as yet have a real motive for Vegas.

The only time I teared up this week, though, was while in the car on Monday, and a certain country song by Florida Georgia Line was played on the great 94.7 FM, and then it kind of hit me.

There are millions of bad people in the world, and that’s no exaggeration.  As I allude to below, however, it can get a lot worse.

We just have to soldier on.  Americans, Europeans, Asians, all of us.  We rely on our leaders to try to keep us safe.

But we also have a duty, as citizens, regardless of where we are, to constantly be on guard. And if we see something that doesn’t seem right, speak up.  Look up from your freakin’ ‘not so smart’ phone now and then.

Someone could have said something about Stephen Paddock.  Someone knew something wasn’t right.  We all suspect one person in particular, perhaps, but that isn’t right just yet.  There were others.

I live in an interesting building here in Summit, New Jersey, one of the more upscale communities in the state.  But in almost eight years in this location, I’ve called the cops at least eight times over suspicious activity I’ve observed outside. I then go out and talk to them and often apologize when it seems like my call wasn’t that necessary.  But they always say, ‘Hey, no problem. This is our job.  Keep us informed.’

Some of us, be it Mesquite, Nevada, Las Vegas, or Paris, aren’t doing so.

One final note.  Like I’m sure 99% of the rest of you, I had no idea what a bump stock was until Monday.  If I were the government, I would not wait for legislative action to eliminate these devices that turn legal arms into illegal weapons.  I would have raided all the domestic manufacturers of bump stocks and taken the inventory.  This isn’t about the Second Amendment.  We can’t wait for Congress to do something.  They’re all on their smartphones.

Trump World....

Tax Reform

The House passed its 2018 budget resolution Thursday in a party-line vote, 219-206, that represents a step toward its goal of sending tax-reform legislation to President Trump.

A total of 18 Republicans voted against the resolution, along with all the Democrats.

House Speaker Paul Ryan, during House floor debate: “We haven’t reformed this tax system since 1986. We need to pass this budget so we can help bring more jobs, fairer taxes and bigger paychecks for people across this country.”

Democrats countered: “This budget isn’t about conservative policy or reducing the size of our debt and deficits. It’s not even about American families. This budget is about one thing – using budget reconciliation to ram through giant tax giveaways to the wealthy and big corporations – and to do it without bipartisan support,” said Rep. John Yarmuth (D-Ky.), the ranking member of the House Budget Committee.

Under budget reconciliation rules, Republicans in the Senate can pass tax reform without any Democratic votes, but they can afford only two GOP defections.  They failed to repeal ObamaCare using the same strategy.

The Senate’s budget resolution is expected to move to the Senate floor in two weeks, after which the two versions would go to conference to sort out the differences between the House and Senate.

But there are two sticking points.  The amount the deficit would increase under the existing proposal, and, as I wrote last week would be the key one, plans to eliminate a deduction for state and local taxes.

Some Fed officials are already weighing in, with San Francisco Fed President John Williams saying a tax cut could feed “unsustainable” growth that would ultimately be undone by asset price bubbles, inflation and possible recession.  Other Fed officials are concerned over exploding debt levels.

Estimates on the increase in the debt from the tax plan released by the administration range from $1.5 trillion to $2.4 trillion over the next decade.

Republican Sen. Bob Corker (Tenn.), a fiscal hawk who is retiring at the end of this Congress, has vowed he won’t vote for “one penny’s worth of deficits.”

“I want the tax reform to reduce the deficit,” he said.  “I want it to be pro-growth, and I want it to be permanent.”

As for the expensive tax break used by more than 40 million tax filers to deduct state and local taxes, this is big because it impacts about 33 House Republicans whose residents make heavy use of the deduction and would be more likely to see their tax bills rise if the provision is eliminated.

So Republicans are looking for compromise on the issue, which is a key to the tax cut because repealing the deduction brings in $1-$1.25 trillion in revenue over 10 years.  Preserving it thus adds $1 trillion over 10 years to the cost.

Preserving the state and local deduction would also make it more difficult to slash corporate taxes as much as Republicans are proposing.

One possible alternative is to allow taxpayers to choose between deducting their mortgage interest or state and local taxes, a limit on the deduction, or a special tax break for middle-class families living in areas with high property taxes.

But the whole debate pits Republican vs. Republican.  Those in high tax states vs. those in low ones, the latter not wanting to subsidize wealthy taxpayers in the likes of California, New York and New Jersey.

My own congressman, Republican Leonard Lance, is one of the most vulnerable GOP lawmakers and his district is among those with the greatest percentage of people claiming the state and local tax deduction.  Republican Rep. Rodney Frelinghuysen, who has the neighboring district, is another under the gun, already facing a tough election challenge from the Democrats.

So for now, call it a work in progress.

Puerto Rico

President Trump stuck to his script when first condemning the mass shooting in Las Vegas as an “act of pure evil,” and then in his visit to Vegas on Wednesday to meet with first responders and victims’ families.

But he went off script in Puerto Rico on Tuesday and it was pathetic.

During a televised meeting there with emergency responders and officials, Trump went out of his way to praise – and seek compliments for – the federal response.

“Every death is a horror,” the president said, “but if you look at a real catastrophe like Katrina, and you look at the tremendous – hundreds and hundreds and hundreds of people that died, and you look at what happened here, with really a storm that was just totally overpowering, nobody’s ever seen anything like this.”

Trump then turned to the governor of Puerto Rico, Ricardo Rossello, and asked how many people had died in the storm.

“Seventeen?  Sixteen people certified, 16 people versus in the thousands,” Trump said, referring to the 1,833 who died in New Orleans.  “You can be very proud of your people and all of our people working together.”

He then said, “I hate to tell you, Puerto Rico, but you’ve thrown our budget a little out of whack.”

Trump heaped praise on federal and local officials for their response to Maria – but pointedly left out San Juan Mayor Carmen Yulin Cruz, who had criticized him days before.

Trump sat at a table between Gov. Rossello (D) and first lady Melania Trump.  In his remarks to Rossello, he seemed to be taking a shot at Cruz.

“He’s not even from my party, but he started right from the beginning appreciating what we did. This governor did not play politics. He didn’t play it at all.  He was saying it like it was and he was giving us the highest grades.”

Cruz attended the briefing, but sat far away from the president. The two shook hands upon Trump’s arrival.  Speaking at the White House Tuesday before traveling to the island, the president said, “I think she’s come back a long way. I think it’s now acknowledged what a great job we’ve done, and people are looking at that,” he told reporters.  “And in Texas and Florida, we get an A-plus.  And I’ll tell you what, I think we’ve done just as good in Puerto Rico, and it’s actually a much tougher situation.  But now the roads are cleared, communications is starting to come back. We need their truck drivers to start driving trucks.”

After the president had left the island, Mayor Cruz described the televised meeting with officials as a “PR, 17-minute meeting.”

The sight of him throwing paper towels to people in the crowd was “terrible and abominable,” she added.  Ditto from yours truly.

Trump tweeted after it had been a “great day” in Puerto Rico.

With only 7% of the island having power, as of Thursday, there are many parts still lacking food, water and basic medical aid.  The crisis for much of the island is growing, not diminishing.

Of course without power, or in most cases phone communications, millions of Puerto Ricans didn’t hear President Trump’s remarks, such as on how much the disaster is costing the U.S.

Among Trump’s tweets on PR this week:

“The Fake News Networks are working overtime in Puerto Rico doing their best to take the spirit away from our soldiers and first R’s. Shame!”

“Fake News CNN and NBC are going out of their way to disparage our great First Responders as a way to ‘get Trump.’ Not fair to FR or effort!”

“The Mayor of San Juan, who was very complimentary only a few days ago, has now been told by the Democrats that you must be nasty to Trump.”

“Such poor leadership ability by the Mayor of San Juan, and others in Puerto Rico, who are not able to get their workers to help.... They want everything to be done for them when it should be a community effort. 10,000 Federal workers now on island doing a fantastic job.”

Shortly after Trump’s visit, the official death toll for Hurricane Maria climbed to 34.  It’s now 36.

Mary Anastasia O’Grady / Wall Street Journal

“The emergency plan centered on the use of diesel generators to replace lost electricity for hospitals and to pump drinking water. But a week after the storm 44% of the island was still without agua potable and public-health services were deteriorating.

“Amid the chaos, Alejandro de la Campa, the local head of FEMA, tried to explain away the agency’s responsibility.  ‘We have no control over diesel in Puerto Rico,’ he said.  ‘We have contracts with certain companies that are giving us service.’

“Right. And the fire department has no control over water.

“The troubles went beyond diesel and turned into a supply-chain nightmare in which chaos reigned. Gasoline lines stretched miles.  Merchandise at the port couldn’t be delivered due to driver shortages and the collapse of the communications infrastructure.

“Emergency management is all about anticipating disruptions and establishing contingencies. The failure of the local FEMA office to do so is organizational negligence, not a mainland plot against our Spanish-speaking brethren.”

Tillerson

The Trump administration acknowledged for the first time Saturday that it is in direct communications with the government of North Korea over its missile and nuclear tests.

Secretary of State Rex Tillerson, when pressed on how a conversation with Pyongyang might begin, said: “We are probing, so stay tuned.  We ask, ‘Would you like to talk?’  We have lines of communications to Pyongyang – we’re not in a dark situation, a blackout. We have a couple, three channels open,” he said, speaking in Beijing after a meeting with China’s top leadership, including President Xi Jinping.

Tillerson didn’t say if the North Koreans had responded (Pyongyang later said it wasn’t interested in talks), beyond the exchange of threats. But he added: “The whole situation is a bit overheated right now. If North Korea would stop firing its missiles that would calm things down a lot.”

When asked whether that caution applied as well to Mr. Trump, who tweeted last weekend that if the North were to keep issuing threats, “they won’t be around much longer,” Tillerson replied:

“I think everyone would like for it to calm down.”

So the above hit the wires, and the New York Times and others issued quick reports, and then President Trump, in a stunning contradiction of Tillerson’s position, tweeted:

“I told Rex Tillerson, our wonderful Secretary of State, that he is wasting his time trying to negotiate with Little Rocket Man....Save your energy Rex, we’ll do what has to be done!

“Being nice to Rocket Man hasn’t worked in 25 years, why would it work now?  Clinton failed, Bush failed, and Obama failed.  I won’t fail.”

NBC News then reported that at a meeting in July, Tillerson called President Trump a “moron,” which other news networks then confirmed.

Tillerson was forced to suddenly address the press (Bob Schieffer called it a “hostage tape”), refuting the NBC report, which had also said Tillerson was about to resign in the summer, but Vice President Mike Pence talked him out of it.

“The vice president has never had to persuade me to remain as secretary of State because I have never considered leaving,” he said.

But Tillerson refused to directly address the report he had referred to Trump as a moron, saying he didn’t “deal with petty stuff like that.”

State Department spokeswoman Heather Nauert, who was not at the meeting in question, strongly denied Tillerson had used the term.  “The secretary does not use that type of language,” she said during a press briefing.

Nauert then said that Tillerson assured her that all was good between the president and himself.

NBC reported that Tillerson exploded and was ready to resign following Trump’s appearance before the Boy Scouts of America – an organization Tillerson used to lead.  And then he called him a moron after a July 20 meeting on the president’s Afghan policy.

Trump, needless to say, was furious with the report.

Trump tweet: “NBC News is #FakeNews and more dishonest than even CNN. They are a disgrace to good reporting. No wonder their news ratings are way down!”

And....

“Rex Tillerson never threatened to resign. This is Fake News put out by @NBCNews. Low news and reporting standards. No verification from me.”

[Minutes before this last one, Trump tweeted: “Stock Market hits an ALL-TIME high! Unemployment lowest in 16 years! Business and manufacturing enthusiasm at highest level in decades!”]

David Ignatius / Washington Post

“Secretary of State Rex Tillerson symbolically kissed the ring of President Trump on Wednesday in affirming his desire to remain in his post, despite reports of sharp friction between him and the White House. But how long will this gesture of loyalty secure his position?

“Tillerson’s desire to remain on the job is a stabilizing move, at a moment when the United States is locked in a potential nuclear confrontation with North Korea and Trump is headed for a key November meeting in Beijing. Although Tillerson has been a poor public communicator at the State Department, he knows the world and can speak the language of America’s global partners and potential adversaries.  His departure now would be widely seen as damaging to America’s already fragile positon in a world disrupted by Trump’s erratic policies.

“The question, as always with Trump, is whether this profession of loyalty will appease what has appeared to be the president’s growing anger with his chief diplomat. For Tillerson, the question is whether, after humbling himself in such a public manner, he can remain an effective and confident representative for the United States abroad....

“(Tillerson) said he had never considered resigning. But on the ‘moron’ comment, he refused to answer such ‘petty nonsense,’ a non-answer that to some ears will sound like a confirmation.

“Tillerson rang all the bells in his adulatory comments about Trump.  He said he had learned that Trump ‘loves his country,’ is ‘smart’ and properly insists on ‘accountability.’

“Tillerson also listed the administration’s foreign-policy accomplishments, including working with China to pressure North Korea, traveling to the Riyadh summit in May and strengthening the commitment of Saudi Arabia and its neighbors to fight terrorism, pushing NATO to spend more on defense, recommitting to remain in Afghanistan and being on the brink of extinguishing the Islamic State. That’s probably the same list that the White House would draw to assert Trump’s ‘wins.’

“ ‘ What we have accomplished, we have done as a team,’ Tillerson said....

“But presidential pique has been growing in recent weeks.  It’s said that the president felt undercut by Tillerson’s separate positions on the Qatar-Saudi dispute, by his public statement that Trump ‘speaks for himself’ after the Charlottesville unrest, and by his lean toward keeping the Iran nuclear deal intact.  Tillerson’s public discussion of diplomatic channels with North Korea last weekend in Beijing also angered the White House, since it came at a time when Trump was advertising his confrontation with ‘Little Rocket man,’ his mocking description of North Korean leader Kim Jong Un.  Trump was upset that Tillerson hadn’t cleared his comments with the White House.

“Whether Tillerson’s recommitment to the job is temporary – sufficient to get the president through the Beijing meeting in November, but not long-term – remains to be seen.  In a sense, Tillerson faces a paradox: To be effective as secretary of state, he must communicate better with the country and the world; but to maintain the confidence of this prickly president, he must avoid comments that seem to question the president’s personality or policies.

“Tillerson, like everyone else in Trump’s world, is living under a volcano....He probably should be taken at his word when he says that he remains in his post at the State Department, despite the constant nastiness and occasional humiliation, because he’s trying to serve his country.”

The Russia Investigation

Editorial / Wall Street Journal

“As the Republican Chairman of the Senate Intelligence Committee and the Democratic Ranking Member held a press conference Wednesday about their investigation into Russia’s role in the 2016 presidential election, a nearby sign highlighted their effort: 11 open hearings, 100-plus people interviewed, 4,000 transcript pages and 100,000 pages of documents.

“As for results, Senators Richard Burr (R-N.C.) and Mark Warner (D-Va.) didn’t disclose much more than we already knew.  First, Russia was meddling in the elections.  Second, there are no ‘initial findings’ about Donald Trump’s alleged collusion with the Russians because they don’t have any. The investigation remains ‘open.’

“Meanwhile, for all the supposed concern about Moscow undermining American democracy – from the same folks who mocked Mitt Romney in 2012 for calling Russia our biggest geopolitical foe – the findings about what Vladimir Putin is doing elicit barely a yawn unless the word ‘Trump’ is attached.

“But for people not driven by an agenda, there’s still plenty to worry about.  Messrs. Burr and Warner report that though the Russians failed in penetrating the electoral systems in 21 states, they were knocking at the door.  The Senators also report that social media companies such as Twitter and Facebook were unprepared for Russian manipulation, via political advertising and fake accounts.  Mr. Warner said the goal seemed to be to ‘sow chaos and drive division in our country.’ And if you add up all they spent, he said, the Russians got ‘a decent rate of return’ for their investments.  Both agree that Mr. Putin’s interference continues.

“Perhaps the committee will still turn up evidence of the missing link between Mr. Trump and the Russians, but for now it remains as elusive as the Yeti.”

Trump tweet: “Why Isn’t the Senate Intel Committee looking into the Fake News Networks in OUR country to see why so much of our news is just made up-FAKE!”

Trumpets....

--The House Homeland Security Committee approved a border security bill. “The Border Security for America Act,” that includes $10 billion for a border wall.  The measure was passed along party lines, 18-12.

The bill now heads to the House floor where some will attempt to attach security provisions, such as protection for recipients of the rescinded Deferred Action for Childhood Arrivals (DACA) program.

Under the legislation, Border Patrol and Customs and Border Protection, the agencies in charge of border security and port-of-entry security, would each receive 5,000 extra agents.

But the bill, which is expected to clear the House, needs 60 votes in the Senate and that won’t happen.  

--Editorial / Wall Street Journal

“The Trans-Pacific Partnership trade pact is regaining momentum despite the Trump Administration’s January decision to withdraw.  Representatives of the remaining 11 TPP members met last month in Japan to push for ratification as early as November in the hope that Washington will rejoin.  But even without the U.S., members stand to make significant gains.

“A January study by Tokyo’s National Graduate Institute for Policy Studies makes the economic case for the smaller pact.  Vietnam, originally expecting a 30% increase in exports under TPP by 2030, would still get a bump in textiles and apparel, as trade in those products is expected to grow $3 billion among the 11 member states.  Malaysia would see a 20% increase in GDP due to reductions in nontariff barriers...New Zealand, Australia and Canada would actually enjoy bigger GDP boosts if the U.S. stays on the TPP sidelines. Their beef producers would secure preferential access to Japan’s market and take market share from American ranchers.

“That shows how the Trump Administration has set back U.S. exporters by withdrawing from TPP. The U.S. is now seeking to renegotiate the North American Free  Trade Agreement to obtain market-opening provisions that are part of the TPP. But Mexico and Canada don’t want to make concessions that were given in return for the broader benefits of TPP.

“Keeping TPP alive hasn’t been easy.  The lack of a U.S. market carrot let members to backtrack on some commitments....

“(But) leaders seem to recognize that TPP is even more important in the Trump era. The common goal of the 11 nations is to convince the U.S. that TPP is essential to its influence in Asia.  While Mr. Trump is unlikely to have a free-trade epiphany, the deal offers benefits to American exporters that the U.S. will struggle to secure on a bilateral basis.  If the 11 remaining members hold out for a U.S. return, it’s possible that rational American self-interest will prevail over protectionist bluster.”

Wall Street

Stocks continued to rise, with the market up more than 24% since the election in November.  There are geopolitical issues out there that could upset the apple cart and shatter investor and consumer confidence, but until Russia makes another play on Eastern Europe, or China and the U.S. have an accidental confrontation in the South China Sea, or North Korea shows real signs of attacking its neighbors, South Korea and Japan (or crosses a line with the U.S.), or terrorists take out two commercial aircraft in two different parts of the world, simultaneously (something I have been shocked hasn’t occurred post-9/11), there is little not to like on Wall Street.  Earnings are solid, and all 25 major developed countries are in growth mode at the same time.  Central banks also remain accommodative.

And let’s face it; even with our Federal Reserve about to hike interest rates anew in December, you are still talking historically low rates, let alone the ongoing massive accommodation taking place in Europe and Japan.

On the economic front, the big news was Friday’s jobs report and most of it you can simply dismiss, as it was severely impacted by Hurricanes Harvey and Irma and the mess in heavy population areas of Texas and Florida, which prevented hundreds of thousands from getting to work.

For the record, 33,000 jobs were lost in September, the first time in seven years there was a loss, when a gain of 75,000 was expected, but at the same time, the unemployment rate fell from 4.4% to 4.2%, the lowest since February 2011.

What did matter in the report was that average hourly earnings rose 0.5% to an annualized rate of 2.9%, reversing a trend that had this stuck around 2.5% for a long spell.  I’ve written constantly that in a robust recovery we should have wage gains of around 3.5% and, in fits and starts, we could be heading there.  Which means the Fed for sure is hiking rates at its December Federal Open Market Committee meeting.

As for the jobs figure for last month, it will quickly reverse with the October report.  111,000 in the food services, leisure, hospitality sectors were out of work due to the storms, which also happened to fall in the Department of Labor’s reporting period.

One more.  U6, the underemployment rate, fell to 8.3%, the lowest since June 2007.

In other economic news that the Fed would be looking at, the ISM manufacturing PMI for September was a whopping 60.8, a 13-year high (50 being the dividing line between growth and contraction), with the services reading a robust 55.3. The former’s figure was also hurricane impacted with a surge in construction spending afterwards.

[Separately, construction spending in August rose 0.5%, and factory orders that month were up 1.2%, both better-than-expected. Ergo, not a bad number in the bunch.]

Europe and Asia

Before I get to Catalonia and Brexit, there was a slew of economic news on the eurozone (EA19).

Markit released its final PMIs on manufacturing and the service sector for September and for the eurozone as a whole, the manufacturing figure was 58.1 vs. 57.4 in August, while the non-manufacturing/services reading was 55.8 vs. 54.7.

Germany was 60.6 on manufacturing, 77-month high / 55.6 service sector
France 56.1 mfg., also a 77-mo. high / 57.9 services
Italy 56.3 mfg. / 53.2 services
Spain 54.3 / 56.7
Ireland 55.4 / 58.7
Greece 52.8 mfg.

And non-euro U.K. 55.9 mfg. / 53.6 services in September.

Chris Williamson / IHS Markit

“The eurozone manufacturing boom kicked into an even higher gear in September, with the PMI rising to a level surpassed only once in the past 17 years. The recovery is also looking increasingly broad-based, with rising demand across the region lifting all boats.  Greece is the latest good news story, enjoying its strongest growth since June 2008....

“With the upturn being accompanied by rising inflationary pressures, expectations of an imminent announcement from the ECB in relation to tapering of policy stimulus will intensify.”

Eurostat released the jobs data for August and the EA19 unemployment rate was 9.1%, unchanged over July but still the lowest since Feb. 2009.

Germany 3.6%; France 9.8%; Spain 17.1%; Italy 11.2%; Ireland 6.3%; Greece 21.2% (June).

Among the still-high youth unemployment rates we have: Spain 38.7%; Italy 35.1%; and Greece 43.3% (June).

Catalonia

I wrote the following last week ahead of Sunday’s referendum on independence in Catalonia, which the national government in Madrid opposed.

“(While) the latest polls have showed only about 40% favoring independence, IF a legitimate referendum is held, they are the ones who will vote, not those in opposition, so it’s likely it would be approved.”

Saturday and Sunday, nearly 900 were then hurt as police violently tried to enforce a Spanish court order suspending the vote.  Some police were seen pulling women by their hair as they stormed into polling stations.

Spanish Prime Minister Mariano Rajoy said Catalans had been fooled into taking part, calling it a “mockery” of democracy.

“At this hour I can tell you in the strongest terms what you already know and what we have seen throughout this day.  There has not been a referendum on self-determination in Catalonia,” he said.

Organizers put the turnout at 42%, with 2.2 million people taking part, 90% voting to back independence.  As I stated above, it was pretty clear who went to cast their ballots, the 40% favoring secession.

The Spanish government’s representative in Catalonia apologized to those injured during Sunday’s referendum.

Addressing the nation in a rare television appearance on Tuesday, Spain’s King Felipe VI said Catalan authorities had deliberately bent the law with “irresponsible conduct” and the state needs to ensure constitutional order and the rule of law.

Spain’s stock market fell and bond yields rose, with the yield on the 10-year rising from 1.59% on Friday to 1.76% Wednesday on the uncertainty, though it recovered somewhat to 1.70% after the government apology to the Catalans soothed the market.

The king said the bid for independence has “undermined coexistence” in Catalonia.

“Today, Catalan society is fractured and confronted,” referring to the political crisis as “very serious moments for our democratic life.”

The conservative government said it would respond with “all necessary measures” to counter the Catalan defiance.

Tuesday, tens of thousands took to the streets to protest against the violent crackdown.

Addressing his people Wednesday night, Catalan President Carles Puigdemont reiterated an offer for mediated talks while attacking King Felipe’s condemnation 24 hours earlier of Catalonia’s illegal referendum.

A Catalan minister said his government would go ahead with an independence debate in parliament on Tuesday, with Puigdemont now planning to address the body that evening – later than was expected.

Spain’s Constitutional Court had suspended the parliament session that was planned for Monday.

Catalonia accounts for a fifth of Spain’s economy, with factories for companies including Volkswagen and Nestle as well as Europe’s fastest-growing sea port of Barcelona.

Businesses have said they will now move their legal bases out of the region.  Sabadell, Spain’s fifth-biggest bank, said it would start the process on Friday to move its legal domicile to Alicante from Barcelona (though the headquarters and employees will remain in Barcelona).

The board of CaixaBank, the third-largest accounting for about half of Catalonia’s banking sector, is considering a similar move.

The banks want to operate under the supervision of the European Central Bank and the regulations of the European Banking Authority, which wouldn’t be the case were Catalonia to declare independence.

The Spanish government issued a decree making it easier for companies to move their legal base out of the region.

Prime Minister Rajoy convened his Cabinet and his minority government recognizes it needs to avoid a repeat of Sunday’s chaos that drew international condemnation and inflamed the separatist cause.

Anti-independence organizers plan rallies for this weekend in Madrid and Barcelona.

The separatists are divided in their leadership, with most wanting to create more time for a negotiated settlement.

There will be a rational solution when all is said and done.

Editorial / The Economist

“When a democracy sends riot police to beat old ladies over  the head with batons and stop them voting, something has gone badly wrong.  Catalans say that almost 900 people were hurt by police in the referendum for independence on October 1st.  Whatever the provocation from Catalan leaders in staging an unconstitutional poll, the reaction of Mariano Rajoy, the prime minister, has thrown Spain into its worst constitutional crisis since an attempted coup in 1981.

“If Mr. Rajoy thought that cracking heads would put a stop to secessionism, he could not have been more wrong.  He has only created a standoff that has energized his enemies and shocked his friends.  On October 3rd Catalonia, one of Spain’s richest regions, was paralyzed by a protest strike.  Hundreds of thousands of demonstrators have marched to express their outrage.

“Secession would be a disaster for Spain. The country would lose its second city and risk the further loss of the Basque region.  Secession would also hurt Catalans, which is why a majority of them probably oppose it. And Catalan independence might stir up separatism elsewhere in Europe – in Scotland again, no doubt, but also in northern Italy, in Corsica, perhaps even in Bavaria.  To prevent the crisis deepening, both sides need to seek a new constitutional settlement. Instead, they are digging in and Catalonia is on the brink of unilaterally – and illegally – declaring independence.”

Editorial / Bloomberg

“Spanish Prime Minister Mariano Rajoy’s reaction to Catalonia’s independence referendum was as foolish as the vote was reckless.  Catalan officials should never have scheduled the vote – but once they did, Spanish officials should not have tried to stop it.  Resolving this conflict just got harder.

“Rajoy has tried to portray the referendum...purely as a matter of law enforcement: Spain’s constitutional court had declared it illegal, so he deployed police to attempt to stop the vote from going forward – arresting politicians, beating voters, seizing ballot boxes. The violence that broke out was shocking to see in western Europe; Iraqi Kurdistan’s recent independence referendum was more peaceful.

“A seditionist challenge to an elected national government cannot be taken lightly, and the Catalan independence movement’s blithe disregard for the rule of law is inexcusable. At the same time, it’s important to remember that the separatists are a vocal minority in one of Spain’s most economically important regions. Rajoy’s goal should be to address issues important to all Catalans, most of whom oppose independence (or at least did before Sunday’s vote)....

“Whether Sunday’s violence represents a point of no return for Catalonia’s independence bid is unclear. But it has significantly increased tensions and left two sides deeply entrenched.  Stuck in the middle is a large majority of Spaniards – including most Catalans themselves.  Sparing Spain from major political and economic upheaval will require tolerance, patience and no small amount of political skill.”

Brexit

Last weekend, British Prime Minister Theresa apologized for last June’s election when she lost her Conservative Party’s majority, but she responded to her critics saying she had the right strategy to lead Britain and win a Brexit deal.

She then went to the Conservatives’ (Tories’) annual conference in Manchester to try to reset her agenda, offering to ramp up social programs related to education and housing in particular.

May on Sunday told the BBC: “We’ve listened to the message that came from that election. But I’ve been very clear, I called the election, I led the campaign, I take my responsibility and I’m sorry that some very good members of parliament lost their seats.

“What I have is a cabinet that is united in the mission of this government – and agreed on the approach that we took in Florence,” referring to a speech she made in Italy recently to try to kick-start Brexit talks that had all but stalled.

Mrs. May insisted Foreign Secretary, and rival, Boris Johnson was on board.

But her party has a vocal pro-Brexit wing that is fearful the prime minister is going off course in talks with the EU. 

The Bank of England warned the U.K. and EU must agree on a Brexit transition deal by Christmas or risk banks triggering their contingency plans.

The problem is with both sides.  There is tremendous uncertainty with the U.K.’s position, and the EU’s position isn’t clear either.  The EU insists on resolving Ireland’s border with Britain and Britain’s financial commitments to the EU first before moving on to trade and a transition arrangement.

Without a transition deal, where, say, for two years after the March 2019 exit, both sides operate under existing rules while the new regime is implemented, it’s chaos. Banks, for one, would have to begin shifting their operations overseas. And this would make them harder to supervise, from the Bank of England’s standpoint.

Sterling fell to its weakest level in a month on speculation Theresa May was about to be taken out in a coup after her disastrous speech Wednesday.  The Daily Telegraph reported up to 30 Tory MPs are prepared to sign a letter calling for the Prime Minister’s resignation as the party struggles to manage Brexit.

The speech, in which she apologized again for the election result, while promising help for struggling families, optically was terrible, as the prime minister dealt with  a bad cough and hoarse voice that forced her to pause repeatedly.

And compounding matters, midway through the speech a prankster walked up and handed May a P45, the form given to those being laid off.

The joker, known as comedian Simon Brodkin, said “Boris told me to do it” as he was led away (and embarrassed security officials attempted to figure out how the heck the guy got into the audience for such a high-security event).

But the message of May’s speech was overshadowed to a great extent by comments made by Boris Johnson earlier that a Libyan city could become a tourism hub once they “clear the dead bodies away.”  Several conservative lawmakers called for Johnson to be fired.

Mrs. May then intervened in the private market, announcing she would impose a price cap on energy to help millions of households deal with rising prices, which hit the shares in the leading providers hard, but also represented the biggest market intervention since privatization nearly 30 years ago.

Back to the EU, Chief Brexit Negotiator Michel Barnier and European Commission President Jean-Claude Juncker reiterated Britain must give more details about what kind of divorce terms it’s willing to accept – particularly on the financial settlement – before talks can begin on trade.

In a nutshell, Brexit talks have gone nowhere, and there will be virtually zero progress to announce when European Union leaders hold a summit in less than two weeks. This was to be the time when the EU announced agreement on a transition period. This will hardly be the case now.

Eurobits....

--The French parliament on Tuesday overwhelmingly approved a controversial national security bill that significantly expands the state’s power to fight terrorism, as the new administration of President Emmanuel Macron attempts to stop a wave of violence that has claimed 239 lives in France since 2015.  Just last Sunday, a man who ISIS later claimed was a “soldier” of the group – fatally stabbed two women at a Marseilles train station.

France has been under an official “state of emergency” since 2015 and the legislation makes many of the security measures permanent, including heightened powers to arrest and detain suspects without judicial oversight.  Under the bill, French police will be able to conduct home searches and place suspects under house arrest with limited involvement by the courts.

The law also allows a version of stop-and-frisk policing and authorities will be empowered to close “places of worship in which are disseminated the writings, ideas or theories that provoke violence, hatred and discrimination.”

Turning to Asia, China’s PMIs were released for September. The official National Bureau of Statistics figures had manufacturing at 52.4 vs. 51.7 in August, with non-manufacturing at 55.4 vs. 53.4.  The former figure was the fastest since September 2012 (just ahead of the Communist Party Congress...how conveeeenient...)

The private sector Caixin readings had manufacturing at 51.0 vs. 51.6; services at 52.7.

Caixin focuses on private businesses, while the government readings are largely about activity in state enterprises.

In Japan, the manufacturing PMI for September was 52.9 vs. 52.2 in August; services 51.0 vs. 51.6.

Readings on business confidence continue to rise as Prime Minister Abe’s snap election draws near, Oct. 22.

Lastly, the manufacturing PMI for Taiwan was 51.2 in September; 50.6 in South Korea, which is an improvement over recent sub-50 readings (contraction).

Street Bytes

--As alluded to above, stocks continued to rock ‘n’ roll, with the Dow, S&P 500 and Nasdaq hitting one all-time high after another, before the Dow and S&P had minor losses on Friday, Nasdaq powering to another record.

Through Thursday, the S&P’s six consecutive records was the best streak since the heady days of 1997.  The market didn’t peak then until March 24, 2000, for this index.  [You should see my handwritten, daily tallies of the S&P close going back to the beginning of 1997, ironically.]

For the week, the Dow rose 1.6% to 22773 (22775 the new record); the S&P was up 1.2% to 2549 (2552 the high mark), and Nasdaq 1.4% to a record 6590.

--U.S. Treasury Yields

6-mo. 1.22% 2-yr. 1.50%  10-yr. 2.36%  30-yr. 2.89%

Yields continuing to inch up, a fourth straight week, but the 10-year is still below year end’s 2.44%.

Separately, the Congressional Budget Office announced late Friday that the federal government deficit for the just-completed 2017 fiscal year (Sept. 30) was $668 billion, $82 billion more than the previous year.

--Saudi Arabia’s Energy Minister Khalid al-Falih said his country is committed to oil production curbs. Speaking from an energy conference in Moscow, he added Russia had significantly over-contributed to the supply cuts.  Falih also said the market can handle supplies of U.S. shale oil as demand is rising.

Earlier, President Putin said oil production cuts could be extended until the end of 2018, in a bid to curb a supply glut. The pact between OPEC and Russia and other producers on cutting output by about 1.8 million barrels per day is currently due to expire in March.

Saudi King Salman met with Putin at the Kremlin, and Putin accepted an invitation to visit Saudi Arabia. It was the first time a Saudi monarch visited Russia, the two historic enemies

Meanwhile, U.S. crude inventories showed a larger-than-expected drop last week, as reported by the Energy Information Administration.  The American Petroleum Institute also reported a greater-than-expected decline.  But at the end of the week, oil was back below $50 at $49.25.

--U.S. auto sales in September hit their best monthly pace of the year, thanks to Labor Day discounts, higher fleet sales and hurricane-related replacements.

The car companies had been suffering a string of monthly declines, as demand plateaued, after years of gains.

But in September, Autodata Corp. reports vehicle sales rose 6.1% compared with the same period a year earlier.

Nearly all major auto makers posted solid gains, with the adjusted annual sales rate up to 18.6 million, well ahead of analysts’ estimates of 17.5 million.

General Motors’ sales rose 12% last month, Ford’s rose 9%, Toyota’s 15%, Honda 7%, and Nissan Motor 9.5%.  Ford and GM were helped by fleet sales, no doubt hurricane related.

The exception was Fiat Chrysler, which saw its sales drop 10%, following a planned reduction in sales to rental-car companies.

For the year, sales are still expected to fall short of last year’s record 17.55 million, but the industry hopes to stabilize at around 17 million, which is still darn good.

As for the impact of the hurricanes in Texas and Florida, an estimated 600,000 vehicles need to be in replaced in those two states and the bulk of the sales following hurricanes typically occurs in the first two months of recovery.

The most popular vehicle in the U.S., by the way, the Ford F-series pickup, saw its sales soar 21% last month to 82,302 units.  Chevy Silverado rose 22% to 55,236 vehicles.

--Tesla reported efforts to ramp up production of its Model 3 are off to a slow start, with the electric carmaker saying on Monday it had produced only 260 of the new vehicles in the third quarter – well below the target of “above 1,500” that CEO Elon Musk had touted earlier for the month of September alone.

So Tesla stock dropped sharply in response Tuesday morning, but then the Teslareans took it right back up and it closed the week at $355...investors trusting the company when it said it expected to deal with the problems “in the near term.”

The key is synching up the California car plant and the Nevada Gigafactory to operate at a high rate, and Musk is still claiming production will be 20,000 a month in December.

To be fair, though, one reason the stock recovered is Tesla’s assertion second half 2017 sales of the S and X models would be substantially higher than forecast.

Electric cars, however, including Chevy Bolt EV, still account for only 1% of total passenger vehicle sales in the U.S.

But Monday, General Motors announced it would begin selling two new all-electric vehicles in the next 18 months, and will have at least 20 new zero-emission electric vehicles in its lineup by 2023.

Previously, Volkswagen Group said it would offer 80 new electric vehicles by 2025, and will electrify its entire fleet by 2030.

In the case of GM, their move is spurred more by China than the U.S., for now, as they sell more of their cars in China these days and China’s government is targeting zero-emission vehicles for 10% of its passenger car sales in 2019, increasing every year thereafter.

--Investors were grappling with the impact of Hurricane Maria on Puerto Rico and its bonds the past few weeks, and then on Wednesday, the first trading session after President Trump called into question whether investors would be wiped out, the benchmark general obligation paper maturing in 2035 traded at record lows of 30 cents on the dollar, down from 44 the day before and 56 cents before Maria hit.

Tuesday evening, in an interview with Fox News while he was in Puerto Rico, Trump said, when addressing Puerto Rico’s $73 billion debt load, “You can say goodbye to that.”

This incredibly stupid statement to unilaterally forgive the debt, when there are has been a negotiating process in place for years between the territory and its creditors to restructure the debt, was immediately walked back by budget director Mick Mulvaney, but the damage has been done. 

Puerto Rico was placed under court protection in May in the largest-ever U.S. municipal bankruptcy, and a federal judge is presiding over the restructuring under a structure approved by Congress.

--The European Union stepped up its attack on U.S. tech giants in a bid to collect taxes, with the European Commission, the bloc’s antitrust negotiator, pressing a case on Wednesday against Amazon, seeking $294 million from the company, which is domiciled in Luxembourg, so Luxembourg needs to collect it.

And the EC is now referring Ireland to the European Court of Justice for failing to implement an order last year that Dublin collect $15 billion from Apple in uncollected taxes; the regulator arguing Apple had been granted illegal tax benefits.

The EU is also after Google and Facebook to pay more taxes in Europe.

EU antitrust chief Margrethe Vestager said Amazon was effectively taxed at one-fourth the rate for other local companies subject to the same national tax rules.

Luxembourg asserts that Amazon has been taxed in accordance with the tax rules applicable at the time. Both parties can appeal.

--Separately, Jeff Bezos’ e-commerce giant has been quietly delivering packages from third-party retailers who operate stores on Amazon’s platform, giving investors in FedEx and UPS the jitters because they now handle such orders.  Bloomberg first reported on the test program being conducted on the West Coast.

Amazon said in a statement: “We are using the same carrier partners to offer this program that we’ve used for years, including UPS, USPS and FedEx,” but no doubt Amazon wants greater control over the last mile to shoppers’ doorsteps.

--Canada’s economy added 10,000 jobs in September, with the jobless rate remaining unchanged at 6.2%.

--Netflix Inc. is raising prices for its streaming-video services in the U.S., betting  subscribers won’t leave in droves with higher monthly fees (8% higher) as the company makes bigger and bigger investments in TV and movie programming. 

Netflix’s budget for content is expected to be $7 billion next year as it battles other streaming rivals, such as Hulu, which took home best drama at this year’s Emmy Awards for “The Handmaid’s Tale” – becoming the first streaming service to win the coveted prize.  Amazon is also increasing its spending to create original shows.  And Apple is looking to spend roughly a $1 billion to produce content.

--PepsiCo third-quarter earnings topped Wall Street expectations, despite weak sales at its North American beverage business, which led to a miss on sales.

Revenue for the owner of Frito-Lay snacks and Pepsi cola was $16.24 billion, up 1.7 percent when you take out the impact of foreign exchange translation, and the company trimmed its full year revenue growth target to 2.3 percent.

But the North American beverage business, which includes Mountain Dew and Gatorade, had revenue of $5.33 billion, compared with $5.52 billion for the same period last year.  Operating profit dropped 10 percent.  Gatorade hasn’t been doing as well.

--Costco Wholesale Corp. announced it was starting two-day delivery on shelf-stable food from its own website and expanded a fresh-food delivery partnership with Instacart, a startup that delivers groceries from retailers in one day.  Both services allow Costco members to buy food online at lower prices.

Yes, Costco is responding to Amazon and its recent acquisition of Whole Foods.

--Editorial / San Diego Union-Tribune

“Many Americans have spent months stewing about ‘fake news’ and how social media can pump falsehoods and mean-spirited myths into everyday life. Yet the giants of modern information dissemination – Facebook, Google, YouTube and Twitter, for starters – were slow to address – and, in Facebook’s case, downright dismissive of – the idea that they were to blame for mushrooming fictitious or inflammatory posts.  They did so even as it became clear some posts were part of covert Russian attempts to divide Americans in the 2016 presidential campaign and in other political skirmishes.

“It was only Saturday, while marking the end of Yom Kippur, the Jewish holy day of atonement, that Facebook founder Mark Zuckerberg apologized for how his company was used: ‘For the ways my work was used to divide people rather than bring us together, I ask for forgiveness and I will work to do better,’ he wrote on Facebook.

“The next night, the deadliest mass shooting in modern U.S. history happened in Las Vegas, and once again, users of the tech platforms were sharing untruths and malign speculation.  As BuzzFeed’s deputy global news director noted on Twitter, Google’s ‘top stories’ results at one point featured posts from the notorious 4chan forum speculating inaccurately about the identity of the Mandalay Bay shooter.  A reporter for The New York Times documented how Facebook’s Trending Stories highlighted news from Sputnik, a Russian propaganda site, and featured a false post asserting the FBI blamed the slaughter on Muslim terrorists. At the same time, a ‘Las Vegas Shooting/Massacre’ Facebook group sprung up and quickly grew to more than 5,000 members after the killings; it was run by Jonathan Lee Riches, a serial harasser with a criminal background and a history of farcical lawsuits, as The Atlantic pointed out.

“All of this raises some doubt about whether Google and Facebook – among the richest and most successful companies in global history – can create foolproof algorithms that instantly evaluate what content is worth promoting and what content is best ignored in a time of crisis.  It also raises some questions about whether the two companies, which have spent vast sums on artificial intelligence research, can develop reliable, smart AI to protect the public from being manipulated and incited....

“Ultimately, news literacy matters. Algorithms and better corporate monitoring of social media content will never be enough, and everyone needs to develop the tools for evaluating what content is credible, what is junk and what absolutely needs confirmation before being shared.”

Or just read this column.

--Related to the above, in an interview with Barron’s, New York University professor Scott Galloway, a former Morgan Stanley analyst and author of a new book, “The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google,” was asked about Facebook’s fake news controversy, Galloway calling the company “the most successful thing in human history, period.”

“This could be, if they handle it poorly, the moment Facebook goes into structural decline. I don’t think they are owning up to the fact that they are a media company. You produce content. You run advertising against it.  You have large influence over society. Boom, congratulations.  You’re a media company. The fourth estate has extraordinary influence and, with that, some responsibilities.  Facebook seems to be comfortable with the former, not the latter....

“Martha Stewart wasn’t put in prison for insider trading. She was put in prison for denying the issue.”

--Yahoo announced on Tuesday that the 2013 data theft, the largest breach in history, had really impacted all 3 billion of its accounts, not the 1 billion it reported as comprised last December. Now the company is saying “recently obtained new intelligence” showed all user accounts had been affected, though the company says the stolen information did not include passwords in clear text, payment card data, or bank account information.

The new revelation follows months of scrutiny by Yahoo, Verizon (which acquired most of Yahoo’s assets), cybersecurity firms and law enforcement that failed to initially identify the scope of the 2013 hack.

--Wells Fargo CEO Tim Sloan apologized Tuesday for the bank’s fake accounts scandal but was peppered with criticism from several members of the Senate Banking Committee Wednesday, including Sen. Elizabeth Warren (D-Mass.), who called for him to be fired.

Warren accused Sloan of repeatedly promoting the bank’s ability to open new accounts in the years before the scandal was exposed by the Los Angeles Times.

“You made money personally off of it,” she said.  “At best you were incompetent. At worst you were complicit.”

Sloan challenged Warren numerous times, saying “You’re wrong,” when she reported his past remarks.

--Pork futures prices have fallen nearly 40% since mid-July, as more hogs than ever head to U.S. slaughterhouses.

Farmers have been expanding their herds to meet the demands of new meatpacking plants in the Midwest – 73.5 million hogs and pigs, according to the Department of Agriculture.

But Americans aren’t eating enough pork and ham to keep up. The slaughterhouse owners are thus hoping to sell the surplus outside the U.S., like to Asia and Mexico, where demand for U.S. pork is climbing.

A fifth of the pork produced in the U.S. this year will be exported, the USDA projects.  Exports were up 11% in the first seven months of the year vs. 2016.

The new plants that opened in Iowa and Michigan can process 10,000 or more hogs a day.  Goodness gracious.

As prices stand today, Iowa hog farmers are losing $3.89 per hog, according to Iowa State University, and they are projected to lose $11.21 a hog in October, though this doesn’t account for hedging prices with futures, for example.  [Benjamin Parkin / Wall Street Journal]

--I’m a little surprised the following didn’t get more play in the business press this week, albeit it happened overseas, but about 860,000 people lost bookings and more than 30 planes were sent to return 110,000 holidaymakers who were overseas when Britain’s fifth-largest air carrier, discount airline Monarch, went out of business suddenly.  It was placed in ‘administration’ at a time, 4:00 a.m., when it had no planes in the air.

Passengers were then sent text messages informing them their flights had been canceled – but some customers were already at airports.

As reported in the BBC, one passenger was due to get married in Gran Canaria (Canary Islands) on Saturday and arrived at Gatwick airport with 30 members of his family.

“I have spent ($18,000) on my wedding and now I can’t even go and get married,” he said. “I am gutted, absolutely gutted, and my missus is in tears, an emotional wreck.”

I’d be more than gutted, I think.

Monarch had 2,100 employees and it was severely impacted when two of its most popular destinations, Egypt and Tunisia, were the victims of a wave of terror attacks that led to a severe drop in business. Then when Monarch shifted to other markets, they were dealing with far more carriers and resultant price pressures. The losses exploded.  This would be a good MBA case study, boys and girls.

--Megyn Kelly is off to a rocky start as host of the 9 a.m. hour of “Today,” averaging 2.5 million viewers her first week, according to Nielsen, with 765,000 of them in the 25-to-54-year-old demographic favored by advertisers.

The total audience was roughly in line with what “Today” was doing in that slot before the change, but 5 percent less for the key demo than the previous week.

So you’re like, you paid her $17 million a year to bring in the same audience as before.

Plus the network shut her out of the Vegas massacre coverage this Monday.

And Kelly’s “likeability” is already tumbling. In fact, E-Poll found Kelly had a “dislike” score of 45, twice that of Matt Lauer a month after the 2012 Ann Curry debacle.

--S.I. Newhouse Jr., who together with his brother, Donald, built a media empire under Advance Publications, died at the age of 89.  Advance Publications had properties such as Conde Nast, publisher of Vogue, The New Yorker and Vanity Fair, and scores of newspapers, including the Star-Ledger, which was pillaged by Advance. 

Newhouse was known to be shy and socially awkward, and the following was a typical story, as reported in NJ.com.

Newhouse’s personality led to messy dismissals.  “Louis Gropp learned he was being fired as editor of House & Garden in 1987 while vacationing in California.  Newhouse called and asked if he’d been reading Women’s Wear Daily while on holiday.

“When Gross said no, Newhouse got to the point.

“ ‘There have been a lot of stories in WWD that Anna Wintour is going to become the editor of House & Garden,’ his boss told him, according to Carol Felsenthal’s 1998 book, ‘Citizen Newhouse: Portrait of a Media Merchant.’

“ ‘Well, is that true?’ Gropp asked.

“ ‘Yes,’ Newhouse replied.

“Val Weaver was let go as head of Self magazine in 1988 when Newhouse knocked on her door and asked, ‘Would you mind if we made a change in editors in chief?’, according to a 1995 biography of Newhouse by Thomas Maier.”

--An investigation by the New York Times found numerous allegations of sexual harassment and unwanted physical contact against Hollywood producer Harvey Weinstein stretching over nearly three decades.  At least eight settlements with women were reached, according to two company officials speaking on the condition of anonymity.

In a statement to The Times on Thursday afternoon, after the story had been released, Weinstein said: “I appreciate the way I’ve behaved with colleagues in the past has caused a lot of pain, and I sincerely apologize for it.  Though I’m trying to do better, I know I have a long way to go.”

Weinstein then took a leave of absence to “deal with this issue head on.”

But then he sued the paper, citing its reckless reporting, sniveling that the Times  “never wrote about the documentary I did with Jay-Z about Rikers Island, they never write that I raised $50 million for amfAR (AIDS research), nor my work with Robin Hood – instead they focus on trying to bring me down.  This is a vendetta....” 

Weinstein told the New York Post Thursday night: “I came of age in the ‘60s and ‘70s, when all the rules about behavior and workplaces were different. I worked at a record company that, if you were five minutes late, they’d hit you with a baseball bat.

“I also have the worst temper known to mankind, my system is all wrong, and sometimes I create too much tension.”

A judge should throw the suit out of court.  This guy always struck me as an obnoxious jerk, though Democrats loved hoovering up his donations to their causes and election campaigns.

Among the movies Weinstein produced were Oscar winners “The English Patient” and “Shakespeare in Love,” along with films like “Pulp Fiction” and “Good Will Hunting.”

But talk about hypocrisy. As Meg James of the Los Angeles Times wrote: “When the infamous ‘Access Hollywood’ tape leaked one year ago, capturing then-candidate, now-President Trump bragging in coarse terms in 2005 about being allowed to grab women because he was a celebrity, Hollywood had a meltdown.

“Cher called Trump a ‘scumbag carny barker’ on Twitter....

“This week, amid revelations that...Weinsteain had a long history of sexually harassing women, Hollywood’s response was largely muted.  Film studios on Friday all declined to comment.”

To her credit, actress-writer-producer Lena Dunham wrote on Twitter: “Yup. Hollywood shines light on Catholic Church, sex trafficking – let’s shine it on ourselves a second and what we’ve condoned.”

--The newspaper where my brother used to work covered the Millburn-Short Hills area, next to where I live in Summit, and I loved reading the local crime blotter because it always had a rundown of the massive shoplifting taking place at The Mall at Short Hills, one of the two or three most upscale malls in America.

So we all know Neiman Marcus’ moniker, Needless Markup, but in the span of two days in mid-September: a woman took shirts, jeans, shoes and two wallets valued at $1,715; another woman took a shirt and shorts that hid 12 scarves valued at $6,930; a guy took sunglasses valued at $345; and another guy lifted a shirt, shorts, sneakers and a Chanel handbag valued at $6,500.

Only the man who stole the sunglasses was caught.

I’ve known this stuff for ages, and it always cracks me up walking around the place because you can spot the shoplifters a mile away, carrying their booster bags.

Anyway, there’s one reason for your markup, sports fans.

Foreign Affairs

Iran: President Trump is expected to announce next week that he will “decertify” the nuclear deal with Iran, saying it is not in the United States interest, but kicking it to Congress.

This is just a first step, but an important one, in a process that could eventually result in the resumption of U.S. sanctions against Iran, which no doubt would derail the deal limiting Iran’s nuclear activities.

The thing is, the 2015 deal was not just between the U.S. and Iran, but five other nations (Russia, China, Britain, France and Germany...the P5+1).

But according to reports, Trump will hold off on recommending that Congress reimpose sanctions for now.

This week, Defense Secretary Jim Mattis and Gen. Joseph Dunford, chairman of the Joint Chiefs of Staff, expressed support for the deal during congressional testimony, but Mattis added taking the step to decertify would not scuttle the agreement.

Trump is supposed to lay out his thinking in a speech later next week, and he will no doubt highlight Iran’s rapidly spreading influence in the Middle East and ongoing support for terrorism.

But this is all subject to change. Trump has an Oct. 15 deadline to report to Congress on whether Iran is complying with the agreement, which Mattis and others believe it is doing.

Iranian President Hassan Rouhani said last month he would not reopen the agreement for negotiation.  You can be sure Russia and China won’t want to reopen it either.

Arkansas Republican Sen. Tom Cotton, a leading opponent of the deal, said he will lay out proposals to pass new stipulations for U.S. participation in the accord, including the elimination of the “sunset clauses” under which restrictions on some Iranian nuclear activities expire after several years, as well as tougher inspections requirements and curbs on Iran’s ballistic and cruise missile programs.

But many Republican leaders in Congress aren’t eager to take on the Iran issue when there are so many other items on the plate, and with the midterm elections now just a year off.

Dennis Ross / Wall Street Journal

“President Trump has never made a secret of his opposition to the Iran nuclear deal, which he called ‘an embarrassment’ in his speech to the United Nations General Assembly last month.  Yet so far the Trump administration has certified the deal twice.  ‘If it was up to me,’ Mr. Trump said in July, ‘I would have had them noncompliant 180 days ago.’  It is, of course, up to him – and given his recent comments, one expects he will refuse to certify by the next deadline, Oct. 15.

“That wouldn’t necessarily spell the end of the deal.  Certification is not part of the Joint Comprehensive Plan of Action, the agreement between Iran and the ‘5+1’ nations....

“On the other hand, refusing to certify would create pressure in Congress to reimpose the sanctions on Iran that were waived as part of the deal. If lawmakers did so, the U.S. would no longer be fulfilling its side of the JCPOA....

“Simply declaring Iran ‘noncompliant,’ in Mr. Trump’s words, presents a basic problem.  The International Atomic Energy Agency, the body responsible for monitoring whether Iran is living up to the JCPOA, has said Tehran is meeting its obligations.  Even Secretary of State Rex Tillerson acknowledged, on Sept. 20, that Iran is in ‘technical compliance.’

“Mr. Tillerson’s words suggest that any decertification will be justified on the second point: whether Iran is taking ‘any action that could significantly advance its nuclear weapons program.’  The administration would likely offer two explanations for why it cannot certify on this point: First, the IAEA has no access to Iranian military facilities. Second, Iran is continuing to develop ballistic missiles, which seems to make sense only as a way to deliver nuclear warheads.

“Neither argument is likely to persuade the other members of the 5+1. They will say the onus is on the U.S. to identify suspect sites and make a case that access to them is needed – which the administration has apparently not done.  On the second point, although ballistic missiles are a danger that needs to be addressed, they are not part of the JCPOA. Nor, for that matter, is Iran’s behavior in the region, which is unquestionably destabilizing.

“That is why the administration needs to explain the distinction it is drawing: It must emphasize that it is not pulling out of the JCPOA and is not asking Congress to restore the sanctions that were waived under the deal.  But it should say that the U.S. is not going to acquiesce in Iran’s dangerous behavior and is, therefore, decertifying to put the world on notice that at some point in the next six to 12 months, the U.S. will walk away from the deal if the JCPOA’s sunset provisions, Iran’s testing of ballistic missiles, and its regional misbehavior are not addressed....

“America need not, and should not, give in to Iranian demands.  But the Trump administration should be under no illusions that the Europeans will simply accept its terms.”

I long said, before the deal was signed, it was too late.  You couldn’t change it.  The other five players jumped at the business opportunities and wouldn’t go back.

For example, French energy giant Total announced earlier in the week it plans to continue developing a huge Iranian gasfield despite concerns over U.S. actions with the nuclear deal.

Said Total’s CEO, Patrick Pouyanne: “We knew when we signed that it will not be an easy road.  But I prefer to have a problem to solve and to have the opportunity rather than having not signed [and] no opportunities.” [Financial Times]

Late Friday, Iran signaled it may be open to talks about its ballistic missile arsenal, seeking to reduce tension over the disputed program, but now there are conflicting statements from Tehran as I go to post.

Iraq / Syria: Iraqi forces said they had recaptured the center of the town of Hawija, one of the last enclaves of Islamic State in the country.  Hawija, where tens of thousands of civilians live, has been under the militant group’s control since 2014.  ISIS is now left controlling only a stretch of land along the border with Syria, while it does still control some territory in Syria itself.

In Syria, Russia’s military said its airstrikes in the eastern part of the country had taken out 300 ISIS fighters.  As with all Russian claims, I have seen nothing to verify the huge total.  A few weeks ago they claimed to have killed 800 in airstrikes.

In northwestern Syria, in Idlib province near the Turkish border, the Syrian Observatory for Human Rights (a credible source), said at least 28 civilians were killed in air strikes in what was supposed to be a safe zone; hit either by Syrian government planes or Russian aircraft.

The Observatory also reported  that, overall, 955 civilians were killed (207 children) in Syria in September, 3,000 people in all, in the deadliest month of the conflict this year.

Turkey: In the first high-profile verdict against those accused of plotting to overthrow President Erdogan in a failed coup last year, 40 men, including senior military officers, were handed life sentences.  The trial is one of 40 mass proceedings being conducted across the country.

North Korea: Pyongyang threatened to bring “nuclear clouds” to Japan and mocked Prime Minister Shinzo Abe for acting like a “headless chicken” at the U.N. General Assembly when he urged U.N. members to force North Korea to end its nuclear and missile programs.

In a statement released Monday by the state’s official Korean Central News Agency:

“Japan’s such rackets inciting the tension of the Korean peninsula is a suicidal deed that will bring nuclear clouds to the Japanese archipelago.  No one knows when the touch-and-go situation will lead to a nuclear war, but if so, the Japanese archipelago will be engulfed in flames in a moment. This is too self-evident.”

Speaking at The Korea Society roundtable in New York Thursday, Bruce Klingner, a former CIA Deputy Division chief for Korea, said he’s hearing “military options are increasing, not decreasing” in the Trump administration.

“The probability of a military option is not zero,” Klingner said, adding there is talk “inside government” of the “five options to solve North Korea in 18 months.”

Klingner, who is as plugged in as anyone on the topic and has been asked by North Korea to tell them about Trump’s personality, added, “I’m pretty sure (Pyongyang) is going to do an ICBM test” of a missile that could fly further than the one launched July 4.

Friday, a Russian official who had just returned from Pyongyang, said he heard the North was preparing for a new test.

Such a provocation could set the wheels in motion at the Pentagon to take more forceful measures.

But Klingner said a “nuclear airburst,” as the North Koreans have threatened, is “over the top” and unlikely.

Meanwhile, Reuters reported that Russia is quietly boosting economic support for North Korea to try to prevent regime change in Pyongyang, as Moscow fears his fall would sap  its regional clout and allow U.S. troops to deploy on Russia’s eastern border.

Last month, Vladimir Putin said at the Vladivostok summit, “We need to gradually integrate North Korea into regional cooperation.”

And the Washington Post’s Joby Warrick first reported the other day that last August, “a secret message was passed from Washington to Cairo warning about a mysterious vessel steaming toward the Suez Canal. The bulk freighter named Jie Shun was flying Cambodian colors but had sailed from North Korea, the warning said, with a North Korean crew and an unknown cargo shrouded by heavy tarps.

“Armed with this tip, customs agents were waiting when the ship entered Egyptian waters. They swarmed the vessel and discovered, concealed under bins of iron ore, a cache of more than 30,000 rocket-propelled grenades.  It was, as a United Nations report later concluded, the ‘largest seizure of ammunition in the history of sanctions against the Democratic People’s Republic of Korea.’”  [Worth an estimated $23 million.]

Who the weapons were for would take months to resolve, but a U.N. investigation concluded it was the Egyptians themselves, specifically Egyptian business executives. The government said it destroyed the shipment to comply with sanctions, but Egypt has had ties with North Korea since the 1970s.

Recently, the U.S. cut military aid to Cairo. The message being us or them.

China: President Xi Jinping will begin his second five-year terms with the start of the Communist Party’s national congress, due to start in Beijing on October 18, with no apparent successors.  One supposed rising star, 54-year-old Sun Zhengcai of Chongqing, was expelled from the party last Friday after being taken away for questioning by anti-graft inspectors in July.

If, after the congress, no heir is elevated, there’s your signal Xi is going to be gunning for a third term, which would start in 2022, possibly under a new title, such as general secretary.

The last two leadership transitions have been orderly – Jiang Zemin making way for Hu Jintao in 2002, and Hu making way for Xi in 2012, but that hasn’t always been the case.

Separately, this story crossed the wires this week: “Americans buying seafood for dinner may inadvertently have subsidized the North Korean government as it builds its nuclear weapons program, an Associated Press investigation has found.  Their purchases may also have supported forced labor.”

AP also tracked products made by North Korean workers to Canada, Germany and elsewhere in the European Union.

This is actually gross.  I have long said I would never buy fish knowingly that is labeled as coming from China, and now there is possibly a North Korean element?  I’m just talking from a health standpoint.  Forget violation of U.N. sanctions and such.

Russia: The Wall Street Journal had a most troubling report on Friday: “Hackers working for the Russian government stole details of how the U.S. penetrates foreign computer networks and defends against cyberattacks after a National Security Agency contractor removed the highly classified material and put it on his home computer, according to multiple people with knowledge of the matter.

“The hackers appear to have targeted the contractor after identifying the files through the contractor’s use of a popular antivirus software made by Russia-based Kaspersky Lab, these people said.

“The theft, which hasn’t been disclosed, is considered by experts to be one of the most significant security breaches in recent years.  It offers a rare glimpse into how the intelligence community thinks Russian intelligence exploits a widely available commercial software product to spy on the U.S.

“The incident occurred in 2015 but wasn’t discovered until spring of last year, said the people familiar with the matter.”

The stolen material includes the computer code the NSA uses for spying on foreign computer networks, which helps give the Russian government information on how to protect its own networks, as well as giving it methods to infiltrate U.S. networks.

Recently, the U.S. banned all Kaspersky software from being used in government agencies.

Separately, Saudi Arabia, during King Salman’s visit, signed an historic arms deal between Russia and the Kingdom for advanced S-400 air-defense systems as well as anti-tank weapons and multiple-rocket launchers.

But this week the Saudis also inked a deal with the U.S. worth $15 billion to purchase the advanced Terminal High-Altitude Defense (Thaad) missile defense system.

Afghanistan: Defense Secretary Mattis said the U.S. wants to embolden the Afghan forces by providing close air support and intelligence, surveillance, and reconnaissance assets, with the Pentagon’s new strategy including an intensification of the air campaign in order to drive the Taliban to the negotiating table.

Mattis told the Senate and House Armed Services Committees: “NATO airstrikes overhead denies the enemy ever having the high ground and in turn the dominating terrain.  That’s a tactical effect that...will give them militarily more opportunities to take the fight to the enemy.”

More Afghan forces will have U.S. troops with them capable of requesting air strikes around the country, with the target list expanded.

Niger: Four American Green Berets were killed, two injured, in an ISIS, al-Qaida-inspired ambush in southwest Niger.  The soldiers were part of a training operation and are elements of a longstanding U.S. force of 800 in the country that is aiding the government, and others in the area, in the fight against al-Qaida and other militants, including Boko Harem.  The force is primarily providing training and security assistance, including heavy surveillance with drones.

[At first, we heard three had been killed, not knowing the military was looking for a fourth who had gone missing and somehow wasn’t evacuated with the others initially.  After 48 hours of searching, Niger’s army found him.]

Cuba:

Editorial / Washington Post

“A central premise of President Barack Obama’s initiative to open relations with Cuba was that more U.S. engagement would lead to change on the island.  Change is certainly needed, but recent events suggest that the unpleasant reality of Fidel Castro’s dictatorship remains in place, even in the twilight of rule by his 86-year-old brother Raul.

“Twenty-one U.S. diplomats in Cuba have reported being hit with unexplained illnesses, including hearing loss, dizziness, tinnitus, visual difficulties, headaches, fatigue and cognitive, balance and sleeping difficulties. Some accounts have attributed the illnesses to strange ‘sonic’ attacks that surfaced 10 months ago.  Originally described by the State Department as an ‘incident,’ they are now being called an ‘attack,’ and Post staff writer Carol Morello reports that U.S. officials say specific Americans were targeted, that the assaults are ongoing and that they occurred in at least one case in a Havana hotel....

“In a meeting Tuesday in Washington, Cuba’s foreign minister, Bruno Rodriguez, told Secretary of State Rex Tillerson that Cuba wasn’t at fault for the illnesses.  Cuba said it had investigated but so far found no origin or cause....It begs disbelief that Cuba does not know what is going on.  Unfortunately, this kind of deception and denial is all too familiar behavior. The regime took the same ‘don’t blame us’ coverup pose when the dissident Oswaldo Paya was killed in a suspicious car wreck five years ago....

“If Cuba sincerely wants better relations with the United States, it could start by revealing who did this, and hold them to account.”

This is one area where President Trump would be totally in his right blasting the Cuban regime on Twitter.  He would have my full support.  I never supported reestablishing diplomatic relations, and I complained when Obama did so, as he received zero in return from these bastards.

Random Musings

--Presidential tracking polls....

Gallup:  39% approve of President Trump’s performance, 57% disapprove
Rasmussen:  46% approve, 53% disapprove

Both show slight improvements over recent weeks.

--Rep. Tim Murphy (R-Pa.) is resigning later this month following a report this week that he urged a woman with whom he was having an affair to have an abortion.  Speaker Paul Ryan confirmed he had received Murphy’s letter of resignation, after Murphy first said he would serve out his term. 

Murphy was known for his pro-life stances and on Tuesday cast a vote to ban abortions after 20 weeks shortly after the Pittsburgh Post-Gazette’s story about his leaked text messages was posted.

--A Washington Post-Schar School Poll finds Democrat Ralph Northam leading Republican Ed Gillespie 53-40 in the Virginia governor’s race, though one in four voters say they could still change their mind.

--Trump tweet on Alabama Senate primary (a week after the fact), where his candidate, Luther Strange, lost by ten points.

“In analyzing the Alabama Primary race, FAKE NEWS always fails to mention that the candidate I endorsed went up MANY points after endorsement!”

--So given the above...Chemi Shalev / Haaretz...on Trump

“Some psychiatrists describe the existence of a narcissistic-masochistic personality disorder. The narcissist-masochist sees the hatred and resentment that he or she arouses in others as confirmation of their own greatness.  Perhaps this can provide an explanation for Donald Trump’s seemingly inexplicable conduct in recent days in connection with the destruction sown by Hurricane Maria in Puerto Rico.  In his racist-sounding rants against Puerto Ricans and with his unworthy attacks on San Juan Mayor Carmen Cruz, who begged for federal help, Trump has sparked widespread public disgust. Through the more distorted prism of his problematic personality, perhaps he views this as proof that he is the greatest.

“Trump actually benefited from his administration’s well-regarded responses to the hurricanes that hit Texas and Florida last month, but Puerto Rico is a different story. Not only is the damage heavy, the geography challenging, the local government less functioning and the local economy more desperate, Trump at first preferred to tackle protesting NFL players rather than lead a vigorous rescue effort for the demolished island.  When criticism and complaints surfaced about failing federal operations, he reacted – as usual – with a spate of personal insults and aggressive, racially tinged tweets.  ‘They want everything to be done for them,’ he wrote of Puerto Ricans, evoking a classic dog-whistle line that racists – as well as their victims – identified all too well.

“Trump’s offensive tweets, some of which have been deleted, emphasized once again his inability to deal with criticism, his tendency to make every conflict personal, his inability to grasp the essentials of leadership or to act ‘presidential.’  Trump’s Puerto Rico tweets reinforced from day one of his presidential run when he described Mexican immigrants as rapists and murderers.  Puerto Ricans, it seems, are worth just a little bit less than Texans or Floridians or other ‘authentic’ Americans....

“Puerto Rican residents may not be able to vote directly for representation in Washington but they are nonetheless eligible for the U.S. citizenship that was given to them exactly 100 years ago. As such, they have the right to leave the island whenever they want and to live in America wherever they wish, an option that has already been used by the parents and grandparents of the estimated five million Puerto Ricans who live on the mainland.  In recent years, the island has been losing population at a faster rate than ever, decreasing by over 10 percent in comparison to 2004.  It’s not unreasonable to assume that the combination of the damage caused by Maria, the prospects of a protracted recovery and the sense that they are being targeted and vilified by their president could now persuade many more Puerto Ricans to leave the island and to join their compatriots in New York, Florida and other locales.

“Such a development would highlight the irony of history.  Trump, who based his campaign on incitement against Hispanics and on his pledge to keep them out, will oversee a tremendous Hispanic migration – and he won’t be able to stop it.  And since most Hispanics, especially Puerto Ricans, especially now, will be voting for Democrats, Trump will be delivering yet another harsh blow – one of many – to the party that sent him to the White House.  Republicans might hate him for it, but Trump will be that much happier, convinced he has shown everyone just what a genius he is.”

--Sen. Bob Corker (R-Tenn.) said on “Meet the Press” last Sunday that he would not have shared his opinion on NFL players who choose to kneel, rather than stand, during the national anthem.

“I would not have weighed in. I know it plays well to the base. I know that’s a constant thing that’s on the president’s mind.”

Corker said it is “best” to allow the private sector to make its own decision on these matters.

--David Von Drehle / Washington Post

“Terrorist drones.

“Two years ago, you would have had a tough time getting a meeting with a junior staffer in Washington to discuss the subject.  A year ago, people had begun furrowing brows.  Now, this is Topic A for an entire ‘community of experts that has emerged inside the federal government,’ as National Counterterrorism Center chief Nicholas Rasmussen told a panel of senators Wednesday.  ‘It’s a real problem,’ he said.

“How real?  Islamic State fighters in Iraq and Syria, using off-the-shelf aircraft modified to drop grenades, have repeatedly menaced U.S. Special Operations forces.  If they can do it in Raqqa, surely someone will try to do it here.

FBI Director Christopher A. Wray, testifying to the same panel, said the threat is palpable and immediate: ‘The expectation is it’s coming here imminently.’  Drones are ‘relatively easy to acquire, relatively easy to operate, and quite difficult to disrupt and monitor.’....

“You don’t need to be a Hollywood screenwriter to imagine what might come next: A nearly silent, low-altitude little helicopter bearing a small bomb or supply of toxic material hums over metal detectors and barriers and bodyguards to strike a public gathering or senior official or hallowed landmark....

“If autonomous drones are able to execute complex simulated combat missions today – and they are – you can bet that technology will eventually be widely and cheaply available in smaller forms to ordinary buyers. And one thing we know about terrorists: They love gadgets. They’ve learned to detonate bombs using cellphones, toy cars, garage door openers and so on. Once they have access to nearly undetectable flying machines big enough to carry substantial payloads, we can be confident they will use them to wreak havoc.  Which is a threat worth all the attention the community of experts can give to it.”

--Princeton Professor / Historian Allen C. Guelzo / Wall Street Journal

On the Robert E. Lee statue in Charlottesville, Va., now swathed in black, mostly to prevent defacement.

“Monuments can...be deceptive. Because the Charlottesville Lee went up in 1924, at the apex of Jim Crow, it is easy to suppose that it was designed to reinforce white supremacy. But the dedication ceremonies featured high-school bands, cadets from the Virginia Military Institute, university faculty and the American Legion – not the Ku Klux Klan.

“One of the dedication speeches celebrated Lee for surrendering at Appomattox and averting ‘scattered guerrilla warfare for many years’ and for pointing Southerners ‘in the shadows of the defeat of war’ toward ‘the star of hope with its radiant promise and prophecy of the triumphs of peace.’  Those words came from the Rev. M. Ashby Jones, a Baptist minister whose opposition to lynching made him a target of the Klan. The pedestal read only ‘Robert Edward Lee,’ and the statue itself was sculpted by Italian-born Leo Lentelli and cast in Brooklyn, N.Y.

“There is a difference between monuments and memorials.  Monuments invite us to see exemplars.  Memorials are simply remembrances that something happened in this place.  Often memorials are statements of mourning, occasionally of repentance, but they are not about power or approval. That’s why we don’t take the Donner Party Monument in Donner Memorial State Park as an incitement to cannibalism.

“The line between memorials and monuments is not always clear.  The Union statuary that populates the Gettysburg battlefield was originally intended as a monument to the righteousness of the Union cause. At the dedication of the monument to the 84th Pennsylvania Infantry in 1889, the speaker described the Civil War as ‘the greatest of rebellions against the grandest of governments.’  By the middle of the 20th century, visitors were more inclined to regard the monuments as memorials of a great and tragic sacrifice. Today they are mostly used by tourists and history buffs as markers of unit positions during the battle.....

“There have been times and places where monuments really were assertions of white Southern defiance, like the cemetery obelisk in Colfax, La., celebrating the perpetrators of the 1873 Colfax Massacre who were ‘fighting for white supremacy,’ as the monument proclaims unashamedly.

“But does the Lee monument serve the same purpose? The answer would be yes only if we believed that 1865 and 1873 were yesterday, and that everything about the past is a statement of power (or a clever concealment of power) in the present.  This is what links the monument-smashers to the campus deniers of free-speech: They understand monuments and speech solely as manifestations of power, which only can be confronted and silenced by power.

“On a recent humid evening in Charlottesville, I walked past the Lee statue, huddled in its improvised burqa. He fought for a cause that rankles me to the soles of my abolitionist boots. But the armies that marched at his orders also melted away at his orders a long time ago; and the statue is immobilized, solitary, powerless.  As Jefferson once said about the religious dissenter, he neither picks my pocket nor breaks my leg.  So with Lee.  I can let him alone.”

--The Nobel Peace Prize was awarded to the International Campaign to Abolish Nuclear Weapons.  The Geneva-based organization “has been a driving force in prevailing upon the world’s nations to pledge to cooperate...in efforts to stigmatize, prohibit and eliminate nuclear weapons,” committee chairwoman Berit Reiss-Andersen said in the announcement.

Gee, they’ve been really successful. Even journalists in Oslo were like, ‘WTF?  No international measures against nuclear weapons have been reached!’

--Chris Mooney / Washington Post

“When it comes to climate change, we know where the most important warming agent – carbon dioxide – is coming from.  Most of it is coming from the burning of fossil fuels, with additional contributions from deforestation and other causes.

“But the second-most potent greenhouse warming agent – the hard-hitting, if short-lived, gas known as methane – presents more of a mystery. There has clearly been an alarming uptick in atmospheric methane in recent years, following a flattening of concentrations from 2000 to around 2007. But the cause of this particular pattern has been hotly debated, with some blaming the fracked natural gas boom (natural gas is primarily composed of methane) and others pointing to causes such as agriculture.

“Now, new research published Thursday [Ed. Sept. 28] in the journal Carbon Balance and Management by three scientists with the Joint Global Change Research Institute...point the finger at agriculture once again – and, more specifically, at cattle and other livestock. ‘Just from livestock methane emissions, our revisions resulted in 11 percent more methane in a recent year than what we were previously estimating,’ said Julie Wolf, lead author of the study who completed the work while a postdoc at the institute and now works at the Department of Agriculture. ‘It’s not the biggest contributor to the annual methane budget in the atmosphere, but it may be the biggest contributor to increases in the atmospheric budget over recent years.’”

Well, the technical aspects of this topic are really pretty disgusting, such as “manure management.”  But the study has concluded global emissions from same are 36.7 percent higher than a guideline introduced by the United Nations’ Intergovernmental Panel on Climate Change in 2006 to estimate methane emissions, which the new study seeks to update.  Livestock are living longer, being bred to be larger, and eating more and the manure management involves “huge ‘anaerobic’ waste lagoons that give off large volumes of methane.”

Actually, oftentimes the world itself resembles an anaerobic waste lagoon.

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Pray for the men and women of our armed forces...and all the fallen, including the Green Berets in Niger.

Pray for the victims of the Las Vegas massacre.

God bless America.

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Gold $1278
Oil $49.25

Returns for the week 10/2-10/6

Dow Jones  +1.6%  [22773]
S&P 500  +1.2%  [2549]
S&P MidCap  +1.2%
Russell 2000  +1.3%
Nasdaq  +1.4%  [6590]

Returns for the period 1/1/17-10/6/17

Dow Jones  +15.2%
S&P 500  +13.9%
S&P MidCap  +9.5%
Russell 2000  +11.3%
Nasdaq  +22.4%

Bulls 57.5
Bears 17.0  [Source: Investors Intelligence]

Dr. Bortrum posted a new column!

Have a great week.

Brian Trumbore