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10/28/2017

For the week 10/23-10/27

[Posted 11:30 PM ET]

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Edition 968

What a week...again.  I can’t be the only one who is growing very weary.

But before we get into the latest on the goings on in Washington, there were two major international events this week that should concern every American (or at least the 5% who might give a damn).

I have been saying for the better part of a year that Chinese President Xi Jinping would be consolidating power at the Chinese Communist Party Congress to such an extent that he would be gunning for more than two, five-year terms.

That just happened this week, as I spell out below.  I nailed this one, long before others were bringing up the scenario.  In a nutshell, Xi has no apparent successors for 2022, by his design, and he’s given himself every title in the book.  This is dangerous.  You know my feelings about the man.

But what should really concern you, and as I began writing months ago once we learned President Trump was going to China in November, Trump, already smitten with the power Xi has, was this week effusive in his praise of the Chinese leader after the maneuvering’s at the CPC.  It is sick that Trump is saying and tweeting the things he is. Xi is a dictator!  Freedoms are being taken away from the Chinese people at light speed.

We don’t know what kind of press availability there will be for Trump when he is visiting the country, but I went on the record, to be the first, weeks ago, talking about how Trump will make a total ass of himself in praising Xi while on Chinese soil.  Trump is exceedingly jealous of him.  This is nuts.

Number two, while Trump is trumpeting success over ISIS in Iraq and Syria, as I’ve been also writing for months, this is incredibly short-sighted, because Iran is filling the void in both countries faster than you can say Ayatollah Khamenei.

Trump, in decertifying the Iran nuclear deal, correctly brought up Iran’s mischief in the region as a reason to be wary, but the president’s brain cells aren’t connecting properly...as in ‘Yeah, Iran is doing bad in the region, but you’re letting it in essence take over much of Iraq and Syria without doing anything.’  Much more on this topic below, including the opinion of some who also ‘get it.’

On to....Trump World

Given what is transpiring this week, I need to remind everyone what I wrote last January, before the inauguration.  I’m proud of it.  It’s also a good reminder to those jumping to conclusions with this week’s late-breaking news on the investigations front.

WIR 1/14/17

Late Tuesday came the bombshell, via various media outlets, that U.S. intelligence agencies and the FBI have been investigating explosive (some salacious) claims, compiled by a former Western intelligence official, that Russian government operatives engaged in a conspiracy with advisers to Trump’s presidential campaign and employees of his company.

Senior intelligence officials then shared the claims in a two-page addendum to a classified briefing President-elect Trump received a week ago Friday.

On Wednesday, Kremlin spokesman Dmitry Peskov dismissed the report, denying Russia has compromising material on Donald Trump.

“This is a clear attempt to damage our bilateral relations,” he said.  “Truly, there are those who whip up this hysteria, who will break their necks to support this ‘witch hunt.’”

Trump tweeted after the allegations surfaced publicly Tuesday, “FAKE NEWS – A TOTAL POLITICAL WITCH HUNT!”

U.S. officials did confirm that a summary of the information had been given to Trump out of an abundance of caution to make him aware of the allegations that could become public.

But an early investigation of the claims by the FBI revealed that in one key instance, the allegation that Trump’s attorney Michael Cohen traveled to Prague to meet with Kremlin officials to arrange cash payments to hackers working under Moscow’s direction, the FBI found no evidence that Cohen had traveled to Prague, ever, as Cohen himself asserts.  Then we learned it wasn’t even the same Michael Cohen!

Christopher Steele, 52, was identified as the ex-MI6 agent behind the dossier.  He went into hiding after his name was disclosed.  Steele, who is director of a private security firm, prepared the 35-page report – alleging Russia had compromising information on Trump – and now he fears for his life and expects backlash from Russia, the Daily Telegraph reports.  You made your bed, buddy (though I feel for his innocent family).

But on the issue of fake news (in the case of Russia, propaganda), Tuesday night, Hillary Clinton’s former campaign team ran with the above, the BuzzFeed story, with Brian Fallon and Josh Schwerin, both of whom served as Clinton spokesmen, saying the information meant the Kremlin could be in a position to blackmail Trump.  All of them reacted via Twitter.

“This is only credible theory for why Trump refuses to accept intelligence community’s finding that Russia was behind hacks,” Fallon said.  “No matter what he tweets in next 24 hours, Trump must be interrogated about Russia more than anything else at his (Wednesday) press conference.”

Schwerin also suggested Russia may seek to blackmail Trump with information it may have obtained.  “There’s a reason all presidential candidates traditionally release tax returns and have full financial transparency.  Blackmail should be impossible.”

Jesse Ferguson, also a Clinton campaign spokesman, said “could we really go from our first black male president to our first blackmailed president?”

Former Harry Reid spokesman Adam Jentleson also took to Twitter on Tuesday to say that the former Senate Democratic leader had seen the documents before writing an October letter to FBI Director James Comey about Trump’s ties to Russia.  The letter asserted that Comey was in possession of “explosive information” about close ties and coordination between Trump, his top advisers and the Russian government.

“Now you know,” Jentleson said, in a series of tweets.

But the dossier was fake news!  All the above Clinton team members jumped to conclusions, as is today’s modern politics, I understand.  But you ever wonder why I’m the “wait 24 hours” guy?  It’s because I prefer to be responsible, and as accurate as possible.

I have never, ever, published one of the fake news stories from this past election cycle, or any cycle over the nearly 18 years of this column.  [The only instance I can think of offhand that comes remotely close was in passing along the Judith Miller/New York Times pieces on WMDs in Iraq that proved to be false, but this wasn’t Russian-inspired disinformation.] 

I received all the fake news stories of the last two years in particular from many of my friends, and they should have known when I refused to reply to them what I thought of the garbage.

I like Glenn Kessler’s explanation, Kessler being responsible for the Washington Post’s Fact checker: “People seem to confuse reporting mistakes by established news organizations with obviously fraudulent news produced by Macedonian teenagers.”  There have been reports that young Macedonians were setting up sites on Facebook devoted to click-baity, pro-Trump deception, and reaping advertising profits, as reported by the Post’s Margaret Sullivan.

[Speaking of the Washington Post, I told you the other day how I didn’t include their story about Russian hacking of a Vermont utility because it didn’t meet my standards...and it proved to be false.]

There’s a good reason why I read up to 20 sources a day, from around the world, before I put this column together.  Yes, they are mainstream media outlets, but I get all sides and then use my brain to come up with some conclusions, coupled with giving you both sides on all the major stories of the day to help you in your own decision-making as to what’s right and what’s wrong.  It’s also a “week in review,” not “12 hours in review,” which is what we had the past few days, and sadly may get the next four to eight years.

---

So we move on to today....

Republican congressmen announced they would begin investigating a controversial uranium deal approved during the Obama administration when Hillary Clinton was the secretary of state.

President Trump called the investigation into the uranium deal with Russia “Watergate: modern age,” as he spoke to reporters on Wednesday.

“The uranium sale to Russia and the way it was done was so underhanded. With tremendous amounts of money being passed, I actually think that’s Watergate: modern age.”

Regarding the dossier, Trump said it was “made up” and is one of just several recent examples of how his critics concocted “the whole Russia hoax,” part of “an excuse for losing an election.”

The Washington Post reported on Tuesday that the Clinton campaign and the DNC funded the dossier, though the opposition research work was begun by one of Trump’s GOP opponents before being handed off to the Democrats, but this hasn’t been confirmed, nor do we know the name of the GOP candidate.

David Harsanyi / New York Post

“What’s the difference between the infamous Russian dossier on Donald Trump and that random fake-news story you saw on Facebook last year?  The latter was never used by America’s intelligence community to bolster its case for spying on American citizens nor was it the foundation for a year’s worth of media coverage.

“Then again, you get what you pay for. We now know Hillary Clinton and the Democratic National Committee paid as much as $9 million for the discredited dossier on Trump.

“According to The Washington Post, a lawyer named Marc Elias, who represented both the 2016 Clinton campaign and the Democratic National Committee, had hired Fusion GPS, a DC firm working on behalf of the Russian government to soften sanctions at the time, to provide opposition research for them. The firm then hired a former British spy named Christopher Steele who reportedly purchased salacious rumors about Trump from the Russians.

“Now, you might expect that the scandalous revelation of a political campaign using opposition research that was partially obtained from a hostile foreign power during a national election would ignite shrieks of ‘collusion’ from all patriotic citizens. After all, only last summer, when it was reported that Donald Trump Jr. met with a Kremlin-linked Russian lawyer who claimed to be in possession of damaging information about Clinton, there was widespread condemnation.

“Finally, we were told, a smoking gun tied the Trump campaign to Vladimir Putin. Former Democratic vice presidential candidate Tim Kaine went as far as to suggest that the independent counsel begin investigating treason.

“Treason!  Trump Jr. didn’t even pay for or accept research.

“The Clinton crew, on the other hand, did. They didn’t openly push the contents of the dossier – probably because they knew it was mostly fiction.  Instead, Fusion GPS leaked it to their friends in the media.

“The dossier ended up in the possession of most major news outlets.  Many journalists relied on Fusion GPS to propel coverage. BuzzFeed even posted the entire thing for Americans to read, even though it was more than likely its most scandalous parts were hatched by a foreign government.

“The memo dominated newsrooms that were convinced Trump was a Manchurian candidate.  No fake-news story came close to having this kind of impact....

“The Obama administration reportedly relied on the dossier to bolster its spying on U.S. citizens. We know of at least one case where the information was used to justify a FISA warrant on a Trump adviser. And let’s not forget that Steele had reached an agreement to be compensated for his efforts by the FBI.

“None of this excuses the actions of Paul Manafort and others who may have benefitted from their past relationship with the Russians.  Yet, using the very standards Democrats have constructed over the past year, the Fusion GPS story is now the most tangible evidence we possess of Russian interference in the American election.

“And at some point, Democrats will have to decide whether it’s wrong for a political campaign to work with foreigners when obtaining opposition research or whether it’s acceptable. We can’t have different standards for Democrats and Republicans.

“Otherwise people might start to get the idea that all the histrionics over the past year weren’t really about Russian interference at all, but rather about Hillary losing an election that they assumed she’d win.”

Editorial / Wall Street Journal

“It turns out that Russia has sown distrust in the U.S. political system – aided and abetted by the Democratic Party, and perhaps the FBI. This is an about-face from the dominant media narrative of the last year, and it requires a full investigation.

“The Washington Post revealed Tuesday that the Hillary Clinton campaign and Democratic National Committee jointly paid for that infamous ‘dossier’ full of Russian disinformation against Donald Trump. They filtered the payments through a U.S. law firm (Perkins Coie), which hired the opposition-research hit men at Fusion GPS. Fusion in turn tapped a former British spook, Christopher Steele, to compile the allegations, which are based largely on anonymous, Kremlin-connected sources.

“Strip out the middlemen, and it appears that Democrats paid for Russians to compile wild allegations about a U.S. presidential candidate.  Did someone say ‘collusion’?

“This news is all the more explosive because the DNC and Clinton campaign hid their role, even amid the media furor after BuzzFeed published the Steele dossier in January. Reporters are now saying that Clinton campaign officials lied to them about their role in the dossier.  Current DNC Chair Tom Perez and former Chair Debbie Wasserman-Schultz deny knowing about the dossier arrangement, but someone must have known.

“Perhaps this explains why Congressional Democrats have been keen to protect Fusion from answering dossier questions – disrupting hearings, protesting subpoenas and deriding Republican investigators....

“The more troubling question is whether the FBI played a role, even if inadvertently, in assisting a Russian disinformation campaign.  We know the agency possessed the dossier in 2016, and according to media reports it debated paying Mr. Steele to continue his work in the run-up to the election. This occurred while former FBI Director James Comey was ramping up his probe into supposed ties between the Trump campaign and Russians....

“Congressional investigators need to focus on the FBI’s role, and House Speaker Paul Ryan was correct Wednesday to insist that the bureau comply with Congress’s document demands ‘immediately.’....

“All of this also raises questions about Special Counsel Robert Mueller’s investigation.  The Fusion news means the FBI’s role in Russia’s election interference must now be investigated – even as the FBI and Justice insist that Mr. Mueller’s probe prevents them from cooperating with Congressional investigators....

“The American public deserves a full accounting of the scope and nature of Russia meddling in American democracy, and that means following the trail of the Steele dossier as much as it does the meetings of Trump campaign officials.”

Paul Sperry / New York Post

“Hillary Clinton’s campaign didn’t just pay for the Kremlin-aided smear job on Donald Trump before the election; she continued to use the dirt after the election to frame her humiliating loss as a Russian conspiracy to steal the election.

“Bitter to the core, she and her campaign aides hatched a scheme, just 24 hours after conceding the race, to spoon-feed the dirty rumors to an eager liberal media and manufacture the narrative Russia secretly colluded with her neophyte foe to sabotage her coronation.

“But it was Hillary who was trying to kneecap Trump, even after he licked her, fair and square, in Wisconsin, Pennsylvania, Michigan and other blue states.

“Exhibit A is the book ‘Shattered: Inside Hillary Clinton’s Doomed Campaign,’ by Jonathan Allen and Amie Parnes.  In light of this week’s revelation that Hillary’s campaign funded the dirty anti-Trump ‘Steele’ dossier, the book takes on a new significance.  It reveals:

“ ‘Within 24 hours of her concession speech, [campaign chair John Podesta and manager Robby Mook] assembled her communications team at the Brooklyn headquarters to engineer the case that the election wasn’t entirely on the up-and-up. For a couple of hours, with Shake Shack containers littering the room, they went over the script they would pitch to the press and the public. Already, Russian hacking was the centerpiece of the argument.’

“The plan, according to the book, was to push journalists to cover how ‘Russian hacking was the major unreported story of the campaign,’ and it succeeded to a fare-thee-well. After the election, coverage of the Russian ‘collusion’ story was relentless, and it helped pressure investigations and hearings on Capitol Hill and even the naming of a special counsel, which in turn has triggered virtually nonstop coverage.

“A new Media Research Center study finds that, since the inauguration, major TV news networks have devoted an astonishing 1,000 minutes out of a total 5,015 minutes of Trump administration coverage discussing speculation the Trump campaign may have colluded with Moscow in hacking Clinton campaign e-mails, ‘which means the Russia story alone has comprised almost one-fifth of all Trump news this year.’  In contrast, they so far have devoted just 20 seconds to the more substantive scandal of Hillary and her husband possibly trading U.S. uranium rights for Russian cash....

“In short, Hillary couldn’t beat Trump with the political dirt she secretly purchased during the campaign, so she tried to cripple his presidency with help from an overwhelmingly anti-Trump media. Framing Trump as some sort of modern-day KGB plant was an easy sell, since the pro-Democrat media were also searching for a scapegoat to rationalize the crushing defeat of their shared liberal agenda at the polls.

“The irony is, it may have in fact been Hillary who came closer to colluding with the Russians in smearing Trump as a Russian traitor than anything Trump did in trying to beat Hillary. The information in the dossier she bought for millions came from Russian intelligence sources, and her lawyers brokered the deal with a Kremlin-tied lobbyist. When it failed to stop Trump, the Russia paymaster turned into the Russia spinmeister.

“Now we really know ‘What Happened.’”

Well, Republicans should be careful as to the extent of their gloating as there are growing questions about the digital operations of the Trump campaign after revelations that the head of Cambridge Analytica, a data mining and analysis firm that worked for the campaign, contacted WikiLeaks’ Julian Assange about Hillary Clinton’s emails.

The Trump campaign paid Cambridge millions, but in the aftermath of the Assange revelations, aides appear to be racing to distance the campaign from the firm.

The company is partially owned by the family of billionaire Robert Mercer, a leading Trump supporter.

The House Intelligence Committee has already requested information from Cambridge Analytica.  The Trump campaign is now saying they relied on the voter data of the Republican National Committee, though the campaign did pay Cambridge $5.9 million for data management services between 2015 and 2016.

Steve Bannon and Michael Flynn have past ties to Cambridge (Bannon previously being on the board there).

For its part, WikiLeaks confirmed to The Hill that “a request for information from Cambridge Analytica was rejected” last year, but didn’t confirm the content of the firm’s order.

And now, Friday night, it was reported by multiple sources that the Washington Free Beacon, a conservative website funded in large part by a major Republican donor, hedge fund billionaire Paul Singer, initially retained Fusion GPS to conduct opposition research on Donald Trump – representatives from the website told the House Intelligence Committee on Friday afternoon.

According to people briefed on the conversation, the website hired the firm to unearth damaging information about several Republican presidential candidates, including Trump.  But The Free Beacon told the firm to then stop doing research on Trump in May 2016, as he was clinching the nomination.

Around the same time, the reports read tonight, Hillary Clinton’s campaign hired out Fusion GPS to research any possible connections between Trump, his businesses, his campaign team and Russia.  It’s then that Fusion GPS retained Christopher Steele, who then produced the dossier.

So The Free Beacon, it seems, had nothing to do with this last bit.

Separately, CNN is reporting tonight that Robert Mueller (through the federal grand jury empaneled by him) is close to issuing his first indictment and that there could be an arrest as early as Monday, the charges currently sealed.

Now it gets interesting. 

Tax Reform

House Republicans on Thursday narrowly adopted the Senate’s $4 trillion budget blueprint, despite grumblings about the size of the deficit and the elimination of state and local tax deductions, as 20 Republicans joined all Democrats in voting against it, the budget passing 216 to 212.

The House had previously passed its own budget that directed upcoming tax reform legislation to be deficit neutral, but to speed up the process, the House passed the Senate plan that would allow tax cuts to add $1.5 trillion to the deficit.

So the Republican message is that tax reform is on the way, and Wall Street likes this, but now the two sides, the House and the Senate, with their very different ideas, open up the process of reconciliation that would then allow tax reform legislation to pass the Senate with a simple majority vote – and without any Democrats.

So needless to say the Democrats are blasting the process and the plan as “the billionaires’ budget” that will roll back Medicaid and Medicare spending to deliver tax relief to the wealthiest Americans.

But the thing is the tax plan hasn’t been written yet!  We’ve only heard proposals from generally narrow groups of senators and congressmen.  The devil will be in the details...which no one knows for sure just what those will be yet, at which point the lobbyists will go wild, and proposals such as the elimination of the state and local property tax deduction will be scorched by Republicans (and Democrats) in high tax states such as California, New Jersey and New York, blue states all, but with scores of Republican congressmen facing re-election in these three in particular.  Seven New York Republicans, for example, voted ‘no’ on the House bill for this reason.

And you have the issue of 401(k) plans, of which there are roughly $4.7 trillion worth in the U.S.  How these are to be treated in the search for “offsets,” revenue to offset the tax cuts, will be fiercely debated, and lobbied.  President Trump has already muddied the waters on this topic by making conflicting statements.

Trumpets....

--Flake and Corker vs. the President

Sen. Bob Corker (Tenn.) unloaded on President Trump during the course of multiple interviews Tuesday, accusing him of “debasing” the nation and predicting he’s “not going to rise to the occasion as president.”

He also said in interviews on CNN, NBC and ABC that world leaders don’t trust the president because they are “aware that much of what he says is untrue.”

“He purposely is breaking down relationships we have around the world that have been useful to our nation, but I think at the end of the day, when his term is over, I think the debasing of our nation, the constant non-truth-telling, the name calling...the debasement of our nation will be what he will be remembered most for, and that’s regretful,” Corker said on CNN.

“And it affects young people,” Corker continued. “I mean we have young people who for the first time are, you know, watching a president stating, you know, absolute non-truths, nonstop, personalizing things in the way that he does, and it’s very sad for our nation.”

Trump then tweeted: “Bob Corker, who helped President O give us the bad Iran deal & couldn’t get elected dog catcher in Tennessee, is now fighting Tax Cuts...

“...Corker dropped out of the race in Tennessee when I refused to endorse him, and now is only negative on anything Trump.  Look at his record!”

“Isn’t it sad that lightweight Senator Bob Corker, who couldn’t get re-elected in the Great State of Tennessee, will now fight Tax Cuts plus!”

“Sen. Corker is the incompetent head of the Foreign Relations Committee, & look how poorly the U.S. has done. He doesn’t have a clue as...

“...the entire World WAS laughing and taking advantage of.  People like liddle’ Bob Corker have set the U.S. way back. Now we must move forward!”

So after Corker let loose, Republican Sen. Jeff Flake of Arizona announced Tuesday he won’t be running for re-election, lamenting the “flagrant disregard of truth and decency” in American politics.

“There are times when we must risk our careers in favor of principles. Now is such a time,” he declared from the Senate floor.

Flake said he has “no small measure of regret.”

“Regret because of the state of our disunion,” he said.  “Regret because of the disrepair and destructiveness of our politics. Regret because of the indecency of our discourse. Regret because of the coarseness of our leadership.  Regret for the compromise of our moral authority.”

“And by our I mean all of our complicity in this alarming and dangerous state of affairs,” Flake continued. “It is time for our complicity and our accommodation of the unacceptable to end.  We must never adjust to the present coarseness of our national dialogue with the tone set at the top.”

Trump then tweeted: “The reason Flake and Corker dropped out of the Senate race is very simple, they had zero chance of being elected.  Now act so hurt & wounded!”

“The meeting with Republican Senators yesterday, outside of Flake and Corker, was a love fest with standing ovations and great ideas for USA!”

“Jeff Flake, with an 18% approval rating in Arizona, said ‘a lot of my colleagues have spoken out.’ Really, they just gave me a standing O!”

#ExtremeNarcissist

Editorial / Wall Street Journal

“There is a familiar Washington irony in the praise that the press corps and Democrats are heaping on Jeff Flake for his speech Tuesday announcing that he won’t seek re-election to the Senate in 2018. The same crowd criticized Mr. Flake as a heartless libertarian until he opposed Donald Trump.  But no matter, the Arizonan has still done his party and maybe his cause a public service.

“The first service is making it possible for Republicans to retain the Arizona Senate seat.  Mr. Flake struggled to win election in 2012 and he’s never built a strong state profile.  His approval rating is so low that national Republicans feared he was unlikely to win a primary, much less hold the seat against a Democrat.  Republicans believe they can hold the seat for the party but not for him, so he is taking one for the team.

“Mr. Flake’s departure means that other Republicans have room to jump in against Kelli Ward, the Steve Bannon acolyte who lost to John McCain in 2016.  Ms. Ward, an osteopathic physician, is famous for calling a public hearing to address constituent concerns that the plumes behind jets are an attempt to poison the public.  Her first reaction to news about Mr. McCain’s cancer diagnosis was that he probably wasn’t long for the Senate. She is an odds-on loser if she wins the GOP nomination.

“But Mr. Flake is mainly getting huzzahs because in announcing his departure he denounced Donald Trump....

“Making a virtue of necessity is not uncommon in politics, and it is easier to ‘not be complicit’ when you aren’t running for re-election.  But Mr. Flake is right that far too much of Mr. Trump’s rhetoric is crude, undignified and patently false.

“As we’ve pointed out many times, the impulsive narcissism of Mr. Trump’s mean tweets aren’t bursts of PR genius.  They are by and large politically destructive acts that hurt his ability to persuade and accomplish his policy goals....

“The more important part of Mr. Flake’s speech was his description of the GOP’s divide over ideas: ‘It is clear at this moment that a traditional conservative who believes in limited government and free markets, who is devoted to free trade,  and who is pro-immigration, has a narrower and narrower path to nomination in the Republican Party – the party that for so long has defined itself by belief in those things.’ The GOP, he added, has ‘given up on those core principles in favor of the more viscerally satisfying anger and resentment.’

“In this Mr. Flake is too pessimistic, but he is identifying the battle lines in the GOP.  The Bannon wing wants to redefine the party around hostility to immigration and trade, but its main animating principle is anger against whoever happens to be in power. This isn’t a principle that can govern even if it manages to win a few elections.”

--The president said Wednesday that his recollection of his phone conversation with the widow of an Army sergeant killed in Niger was more reliable than hers because he had “one of the great memories of all time.”

Speaking to reporters at the White House, Trump did not respond to questions about whether he owed Myeshia Johnson an apology after she described his call as disrespectful.

Trump also said during the impromptu news conference that the media creates a different image of him than the man he really is.

“You know people don’t understand. I went to an Ivy League college. I was a nice student. I did  very well.  I’m a very intelligent person.  I think the press creates a different image of Donald Trump than the real person.”

As for the investigation into the four deaths in Niger, it now seems that they were separated from the larger group after the U.S. Special Forces and 30 Nigerien troops were ambushed by militants three weeks ago.

The squad mates immediately alerted commanders that they were under attack, but apparently didn’t call for help until an hour later, according to the Pentagon this week, after which ground forces from Niger’s army and French Mirage jets were dispatched.

But American military officials still don’t know why it took two full days to find Sgt. La David Johnson, discovered in the woods by Nigerien troops near the ambush site.

Sen. John McCain praised the briefing the Pentagon gave him and members of the House and Senate Armed Services Committees, but he said he still had “100 questions” that the officials could not yet answer.

--The president directed the Department of Health and Human Services to declare the opioid crisis a public health emergency, a long-anticipated attempt to combat the escalating epidemic of drug use that claimed 59,000 lives in 2016 and is decimating communities across the land.

Trump said during an emotional ceremony in the East Room of the White House:

“No part of our society – not young or old, rich or poor, urban or rural – has been spared this plague of drug addiction and this horrible, horrible situation that’s taken place with opioids.  This epidemic is a national health emergency.”

Trump said the government would produce “really tough, really big, really great advertising” aimed at persuading Americans not to start using opioids in the first place.

Trump related the story of his brother Fred, who died early of alcoholism, Fred telling his younger brother never to take a drink – advice the president heeded.

The president added re the advertising: “This was an idea that I had, where if we can teach young people not to take drugs, it’s really, really easy not to take them.”

I was surprised he didn’t add, a la Nancy Reagan’s effective “Just Say No” antidrug campaign in the 1980s.  At the time it was ridiculed, but it worked.  [Actually, I wasn’t surprised Trump didn’t mention Nancy’s campaign...Trump being Trump.]

A key to the federal emergency, however, is China, and we’ll see what President Xi Jinping does on his end in stopping the manufacture and distribution of deadly drugs there, specifically fentanyl, that are flooding the U.S.

--The CBO gave a favorable score for the bipartisan deal crafted by Republican Sen. Lamar Alexander (Tenn.) and Democratic Sen. Patty Murray (Wash.) to shore up ObamaCare’s insurance markets, specifically that it would reduce the deficit by nearly $4 billion by 2027, compared with a healthcare plan presented in August that would increase the federal deficit by $194 billion through 2026.

The Alexander-Murray proposal would shore up the insurance markets for a few years, funding ObamaCare insurer subsidies and give states more flexibility to change their ObamaCare programs.

Not funding the payments could cause premiums for the most popular ObamaCare plans to increase 25 percent by 2020.

But many Republicans, including the president, do not want to support the bipartisan agreement because it calls the payments “bailouts” for insurance companies.

Senate Majority Leader Mitch McConnell said he will not present the Alexander-Murray plan without the backing of the White House.

--In Puerto Rico, FEMA officials said today they did not approve a multimillion dollar contract between Puerto Rico’s power utility and a small Montana firm to repair storm damage, and has “significant concerns” about the deal. FEMA also said that after its initial review it “has not confirmed whether the contract prices are reasonable” under the agreement between Puerto Rico Electric Power Authority and Whitefish Energy Holdings.

The $300 million contract was awarded to the two-year-old Whitefish, Montana firm with just two full-time employees and without a competitive bidding process, according to media reports.  Interior Secretary Ryan Zinke, also from Whitefish, assured President Trump he had “no role” in the selection of the company.

As of Thursday, barely 25% of the island has power, though 75% finally have clean water.

Wall Street

The big news of the week was two-fold, the spectacular earnings and share performance of some of the biggest tech names, and the U.S. economy growing at 3% for a second consecutive quarter, the first time for this since Q2 and Q3 2014 (4.6% and 5.2%, respectively, back then).

Gross domestic product had been expected to increase in the third quarter at a 2.5% to 2.7% clip, but came in at 3.0%, after expanding at a 3.1% pace in the second quarter, the Commerce Department reported.

So a look at the last five quarters:

Q3 2017...3.0
Q2 2017...3.1
Q1 2017...1.2
Q4 2016...1.8
Q3 2016...2.8

President Trump can duly crow that this is all him (try to stop him...he’ll fight back), and it is no doubt impressive, and nothing but good for the country.  There is also no reason to believe fourth quarter GDP won’t be at a brisk pace as well.

The Commerce Department said that while it was impossible to estimate the overall impact in the July-September period from hurricanes Harvey and Irma on GDP, preliminary estimates showed that the back-to-back storms had caused losses of $121.0 billion in privately owned fixed assets and $10.4 billion in government-owned fixed assets.

The only ‘fly’ in the ointment, potentially, is an inventory buildup that was substantial, and if you exclude that, the economy grew at a 2.3% rate, slowing from the second quarter’s 2.9% pace (apples to apples).  Eventually, you have to sell the inventory, because if replenishment isn’t needed, that takes away from GDP.

Consumer spending was at a 2.4% rate following a robust 3.3% in the second quarter, but this is where you can perhaps best see the impact of Harvey and Irma, which undercut retail sales in some larger population bases.

[For the record, the Atlanta Fed GDPNow indicator I like to follow had pegged GDP at 2.5% for Q3 as of Thursday, a tick down from Wednesday’s 2.7% forecast.  I don’t have time to look at what they were calling for in terms of an inventory build.]

Separately, staying on the economy, September durable goods orders were up a better-than-expected 2.2%, 0.7% ex-transportation, while September new-home sales came in at 667,000 annualized, far ahead of the 552,000 estimate, and at up 19%, the largest percentage gain in 28 years, while the highest overall level since October 2007.  As Ronald Reagan would have said, ‘Not bad, not bad at all.’

So what will the Federal Reserve do with all this solid data?  They had been on track to hike interest rates again in December at the 12/13-14 confab, and this is now even more of a certainty, even with still low inflation data.

As for the stock market, the major averages once again closed the week at all-time highs, propelled Friday by the performance of the big tech stocks that reported after the bell Thursday.

Shares in Amazon.com rose 13.22%, Google parent Alphabet 4.3%, Microsoft 6.4% and Intel 7.4%.

Collectively, these four had a single-day rise in market cap on Friday of $146 billion, eclipsing the entire value of IBM, at $143 billion.  Staggering.  It definitely, for one day at least, felt like 2000, and that isn’t really a good thing.  We could be entering a euphoria stage...and a blow-off.  Good luck timing it.

I have details on the above-noted stocks’ earnings reports below.

Europe and Asia

Catalonia: Spain was witness to an extraordinary showdown today between the central government in Madrid and the Catalan parliament, Catalonia declaring independence from Spain.

After bitter exchanges between Catalonia’s lawmakers – some strongly backing secession and others calling it a historic mistake (I’m in this latter camp...though I’d say this was beyond idiocy) – the regional parliament endorsed efforts to split from Spain, passing a resolution to “create a Catalan republic as an independent state.”  Lawmakers opposed to independence walked out of the chamber in protest before the vote.

In Madrid, Prime Minister Mariano Rajoy urged the Senate to grant the government unprecedented powers to take control of Catalonia and all of its institutions.  The Senate then did just that, voting 214 to 47 to invoke Article 155 of Spain’s Constitution, granting Rajoy a package of extraordinary powers to suppress the independence drive.  The measure was to go into effect Friday evening, and tonight, Rajoy disbanded the Catalan parliament and set elections for Dec. 21.

In a speech Friday prior to the vote, Rajoy said he had “no alternative” because Catalan leader, Carles Puigdemont, and his separatist cabinet were pursuing an illegal and unilateral path that was “contrary to the normal behavior in any democratic country like ours.”

Rajoy scoffed at Puigdemont’s recent offers of “dialogue” to end the impasse.

“The word dialogue is a lovely word.  It creates good feelings,” Rajoy said.  “But dialogue has two enemies: those who abuse, ignore and forget the laws, and those who only want to listen to themselves, who do not want to understand the other party....

“Catalans must be protected from an intolerant minority that is awarding itself ownership of Catalonia, and is trying to subject all Catalans to the yoke of its own doctrine,” the prime minister added.

Puigdemont had come close on Thursday to calling early regional elections, per Madrid’s request, but dropped the idea and instead told Catalonia’s Parliament that it would make a decision on independence the next day.  His coalition controls just 72 of the 135 seats in the regional body.

So now the government in Madrid will move swiftly to remove Puigdemont, suspend his ministers and assume authority over the region’s public media, police and finances.  Rajoy has called for calm.  I doubt he will get it. [Puigdemont, for his part, also called for calm.]

As I go to post, Puigdemont and the other leaders could be arrested shortly.

Meanwhile, one leader who is reveling in Spain’s dysfunction is Vladimir Putin. Any movement that destabilizes democracy gives him a tingly feeling.

Brexit: Prime Minister Theresa May returned from her European Union summit last Friday feeling good about the prospects for working out a deal in December, that would then bring on trade talks between Britain and the EU, but back home she was quickly reminded how fragile her position is.

The hang-up for many in her own party is the divorce bill, or breakup fee that the EU is demanding, and May had told EU leaders in Brussels that she would pay billions more  in order to move talks on to trade by year-end.

But some want Britain to pay less, while the opposition Labour Party is saying that changes to key Brexit legislation must be made or the prime minister risks defeat at the hands of Tory rebels backing Labour.

So Mrs. May has eight weeks to unblock Brexit talks because if by end of December there is no breakthrough, businesses have already said they would start initiating contingency plans early next year.

Even if trade talks commence in December, the crucial two-year transition agreement May is looking for (post-the March 2019 exit date) hasn’t even been discussed, making it impossible for business to count on it.

And as if this the internal squabbling wasn’t enough, an account of the dinner between Mrs. May and EU Commission President Jean-Claude Juncker (Oct. 12) emerged, leaked to a Frankfurt newspaper, that May was begging for help at her meetings with Juncker, saying her political enemies left her no room for bargaining.  The paper reported, “She seemed anxious, despondent and discouraged, looking like she barely sleeps.”  [Bloomberg]

Meanwhile, Scotland’s first minister Nicola Sturgeon has sought confirmation from Prime Minister May that Britain is urgently seeking a transition agreement with the EU before the end of the year, as Sturgeon told May in a letter that she was increasingly concerned Brexit talks would end in no deal and see Britain crash out, following contradictory indications from the government earlier in the week.

And Irish Foreign Minister Simon Coveney said on Friday that exit talks with the EU can’t progress without more clarity on what will happen with the border between Ireland and Northern Ireland, one of Brussels’ three main issues (aside from the divorce bill and citizens’ rights).

Ireland is considered the EU member most at risk when its neighbor leaves the bloc.  What neither of the two on the border want to see is a return to a “hard” border, which until a 1998 peace deal was the case...military checkpoints because of 30 years of sectarian violence in the North.

On the economic front for the Eurozone....

A flash reading for October on eurozone (EA19) performance revealed a composite reading of 55.9 (50 being the dividing line between growth and contraction) vs. 56.7 in September, with manufacturing at 58.6 vs. 58.1, and services at 54.9 vs. 55.8. All still solid.

Germany’s flash manufacturing reading was 60.5 vs. 60.6 the prior month, with services at 55.2 vs. 55.6.

France’s manufacturing number for October was 56.7 vs. 56.1, services 57.4 vs. 57.0.  [Eurostat]

But the big news concerned the European Central Bank, which on Thursday announced it was cutting its massive stimulus program, though extending it to run until September.

The ECB opted to cut its bond buying from 60bn euro to 30bn a month, as of January, which was expected, but the mild surprise was an extension of the scheme’s lifespan by a further nine months (a lesser extension was in most forecasts), signaling to investors that despite strong growth across the EA19, there is still no real inflation and the ECB wants to see that rise before reversing course.

As I wrote last week, ECB President Mario Draghi was loath to use the term tapering, so he called the changes a “recalibration” and indicated that the bank’s work in boosting inflation was not over.  Interest rates were left unchanged and the ECB kept its guidance that it would keep them unchanged until well after the bond-buying ends.

So the markets took all the news very calmly, with a bullish tone back in vogue given the ‘lower for much longer’ tenor of the comments and actions.  Yields across the eurozone generally fell in relief over the program’s continuation, even if there will be less bond buying.  [The 60bn to 30bn.]

Eurobits....

--Spain’s unemployment rate, which was nearly 27% at the beginning of 2013, the height of the euro crisis, fell to 16.4% in the third quarter (a nine-year low), according to the National Statistics Institute, down from 17.2% in the previous quarter, but as announced last week, the government lowered its growth forecast for next year based on the Catalonia crisis.

--Czech billionaire Andrej Babis won a big victory in Saturday’s parliamentary election, giving the anti-establishment businessman facing fraud charges a strong mandate to cut taxes, lift public investment and fight immigration; the Czech Republic’s Donald Trump.

Babis captured 30% of the vote, but this is better than it seems as no other party received more than 11%. Babis’ ANO movement is the first party to break a quarter century of dominance by two mainstream center-right and center-left parties. The ruling Social Democrats of Prime Minister Sobotka received about 7.5%.  Yikes.  But the far-right, anti-EU SPD party made strong gains, capturing 10%.

It’s possible Babis will form a coalition with the far right, or more likely the center-right Civic Democrats, who captured 11%. 

Czech President Milos Zeman, who controls the timetable, is giving Babis a month for negotiations before calling a new parliament, the trigger for the current administration to leave. Zeman said he has no problem that Babis is under investigation.

--Residents of two powerful northern Italian regions, Lombardy (think Milan) and Veneto (Venice) voted in a referendum on Sunday on whether they would seek more autonomy from Rome.  95% voted ‘yes’, with 57% turnout in Veneto and 39% turnout in Lombardy. 

The two regions represent 30% of Italy’s GDP, and the base of the right-wing populist Northern League party, which had a goal originally of splitting the north from the poorer south, though now it is just desiring more autonomy.

Turning to Asia....

I cover all the goings on politically in China down below.  On the economic front, the 70-major city property index for new-home prices, as released by the National Bureau of Statistics, rose 6.3% in September, a continuation of decelerating growth following last November’s peak of 12.6%.

Prices in Shanghai are down 0.1% from year ago levels, down 3.8% in Shenzhen, and up just 0.5% in Beijing.

In Japan, as expected, Prime Minister Shinzo Abe’s ruling bloc easily won the snap election he had called for in an attempt to take advantage of disarray in the opposition and thus bolster his position in parliament. In Sunday’s vote, Abe’s coalition won a super majority of 2/3s of seats in the lower house, which allows him to push for a revision of the pacifist, post-World War II constitution.

Abe’s Liberal Democratic Party (LDP) and its partner won 312 of the 465 seats (last I saw).  The win also virtually guarantees Abe will have a third three-year term as LDP leader next September and go on to become Japan’s longest-serving premier.

And it means his “Abenomics” growth strategy centered on hyper-easy monetary policy will continue.

The U.S.-drafted constitution’s Article 9, if taken literally, bans the maintenance of armed forces, though Japanese governments have interpreted it to allow a military exclusively for self-defense, which Abe wants to codify, but critics fear it would allow an expanded role overseas for the military.

Abe had also said he needed a new mandate to deal with North Korea, as well as Japan’s rapidly aging population, which will cause a true economic crisis unless quickly addressed, like in finding ways to encourage more children!  The prime minister wants to be able to divert revenue from a planned sales tax hike to education and child care from public debt repayment.

The other big news recently, aside from the election, has been the performance of the Nikkei stock index (Japan’s Dow Jones), which had an all-time record winning streak snapped at 16 consecutive sessions before a loss on Wednesday, but then it resumed the gains on Thursday and Friday and finished the week at 22008, the highest level since Oct. 1996, though still way off the all-time peak of 38915 set on Dec. 29, 1989.

Separately, Japan’s flash manufacturing reading for October came in at 52.5.

The Japanese economy has grown six consecutive quarters, the longest streak since 2006, with most sentiment readings for manufacturers and business in general at their best levels since 2007.

One more...South Korea’s Q3 GDP expanded 1.4% on-quarter, the fastest growth in more than seven years.  GDP growth for the year ended September accelerated to 3.6% from 2.7% in the second quarter. Exports jumped 6.1% on-quarter.

Street Bytes

--The Dow Jones rose another 0.4% to close at a record-high of 23434, on both the earnings news and hopes for tax reform.  The S&P 500 added 0.2% to finish at its new high of 2581, and Nasdaq rose 1.1% to 6701, another record mark.

For the Dow it was its seventh straight weekly advance.

--U.S. Treasury Yields

6-mo. 1.27%  2-yr. 1.59%  10-yr. 2.41%  30-yr. 2.92%

[When I posted last time, I hadn’t seen the release that day of the federal budget deficit for the recently completed fiscal year (9/30), $666 billion, up from $585 billion the prior year and $438 billion for F2015.]

President Trump said he would announce his pick to be the new Fed chairman next week.

--U.S. crude oil stockpiles posted a surprise build last week, while gasoline and distillate fuel inventories dropped far more than expected, according to data from the Energy Information Administration.

But late Friday, the price of West Texas Intermediate soared to $54.19, representing the highest weekly close since July 2015.  [Brent crude passed $60 today, also for the first time since July 2015.]

Also Friday, Exxon Mobil Corp. reported third-quarter net income of $3.97 billion, ahead of expectations.  Revenues of $66.17 billion also beat the Street, but the shares rose just 0.3% and are down about 7% on the year.  If the $54 level sticks, however, that could change on Monday.

--Heading into this week, as reported by Tiernan Ray of Barron’s, Facebook,  Amazon.com and Alphabet (Google) deserve a lot of the credit for the rally of not just 2017 (two percentage points of the S&P 500’s 16% gain), but of the past three years (five points of its 44% gain over that period). 

So would the action continue this week with earnings releases from Amazon and Alphabet on Thursday?  As alluded to above, yes.

A major issue with these three, as Mr. Ray’s story was largely about, is how long the regulators, both in the U.S. and Europe, are going to accept their dominant market positions.  We’ve already seen Europe’s reaction, the European Commission inquiring into Google, which garners 90% of Europe’s search and mobile operating systems markets.  And some of the U.S.’s Federal Trade Commission comments have prompted speculation about the breakup of these companies.

It’s not just antitrust issues, though, but the massive amounts of data on all of us that the three are accumulating.  I sure as hell don’t like it, though I’ve long come to grips with it, as in I’m not losing sleep over it.

A big thing is the influence of Facebook and Google when it comes to political ads, as we’ve seen, and Sen. John McCain joined two Democratic senators in co-sponsoring legislation that would force the two, and other internet providers, to provide information on who was buying the ads on their sites, after the Russian issue that is not going away anytime soon.

--So Amazon.com reported Thursday, along with Alphabet, Microsoft and Intel, and Amazon reported a higher profit than expected, $256 million from $252 million a year earlier, 52 cents per share vs. analysts’ estimates that ranged from 3 to 8 cents.

Sales were $43.74 billion, up from $32.71 billion, and above Amazon’s own forecast, as well as above the Street’s.  Shares soared in response....

Marketing research firm eMarketer estimates that Amazon will command about 43.5% of total e-commerce sales this year, compared with 38.1% last year.

One thing is clear. Amazon’s expenses continue to explode, with the number of employees increasing to 541,900 from 382,400 in the second quarter.  This includes the roughly 87,000 employees at Whole Foods Market Inc., the acquisition of which was completed in late August.  Whole Foods added $21 million in operating income and $1.3 billion in sales.

Subscription fees such as Prime showed unusually strong growth of 59 percent, to $2.4 billion.

What a lot of analysts’ focus on, though, is Amazon Web Services cloud-computing division, and sales there rose 42% to $4.58 billion.  AWS rents computing power to companies of various stripes, from little startups to large corporations.  But AWS is facing increasing competition from Microsoft and Alphabet’s Google, among others.

--Speaking of Microsoft Corp., it too reported a knockout quarter in cloud-computing, as the two biggest pieces of that division – Azure infrastructure services and Office 365 online-productivity business – saw revenue soar 90% and 42%, respectively. [Microsoft, though, doesn’t release specific revenue #s for each of these businesses.]

Revenue in Microsoft’s More Personal Computing segment, which includes Windows as well as the mobile-phone and gaming businesses, stayed flat at about $9.4 billion.  [Earlier in October, International Data Corp. reported worldwide PC shipments fell 0.5% in the third quarter.]

Overall, MSFT reported net income of $6.58 billion, or 84 cents a share, with revenue rising 12% to $24.54 billion.

--On to Google parent Alphabet Inc.’s third-quarter report, profit growing 33% to $6.73 billion, compared with $5.06 billion a year earlier. Net revenue rose 24% to $27.77 billion.  Alphabet’s earnings per share, $9.57, handily beat the Street.

Google’s cloud and hardware sales (as it aims to diversity away from its advertising business, the largest in the world) grew by 40% to $3.41 billion in the quarter; Google investing heavily in the cloud storage business, though it now lags far behind Amazon and Microsoft.

--Intel on Thursday reported Q3 revenue of $16.15 billion, up 2% from year ago levels, which was above estimates. Net income rose 26%, also beating the Street, and the shares surged.

--Apple Inc.’s iPhone 8 (and larger 8 Plus) posted the weakest sales of any of the company’s new smartphones in recent years, according to two market-research firms and the Wall Street Journal, with the higher-priced iPhone X’s advance orders starting on Friday.

The soft iPhone 8 sales seem to be due in part from confusion over the trio of new products from Apple.

But then today, Apple said pre-orders for the iPhone X were “off the charts” in the first hours of its availability, with Apple stock rallying 3.5% in response.

But demand exceeded initial supply within 10 minutes of pre-orders, with the $999 smartphone expected to start shipping out end of next week, though many won’t see it until at least December.

--In a blockbuster deal, CVS Health Corp. announced it was in talks to buy Aetna Inc., that could value the health insurer at upward of $66 billion, which if it is formally struck would be the largest acquisition of the year.

It was in 2015 that Aetna agreed to buy rival insurer Humana for $34 billion, but that deal fell apart amid regulatory opposition.

As Dana Mattioli of the Wall Street Journal reports: “The approach by CVS, a powerhouse in drug retail, underscores the increasingly close ties between health coverage and pharmacy benefits, as the cost and complexity of specialty medications has continued to rise.”

CVS and Aetna already had a pharmacy-benefit services to the insurer relationship going back to 2010.

But the same day of the CVS and Aetna announcement, Amazon, as reported by the St. Louis Post-Dispatch, received approval from at least a dozen states to become a wholesale pharmacy distributor, sending shares of pharmacy companies plunging, including CVS before it made the Aetna announcement, which could lock in major numbers of new members for its pharmacy-benefit management biz, as well as customers for its drugstores.

--Gotta love how successful McDonald’s Corp. has been under CEO Steve Easterbrook.  The company reported third-quarter earnings of $1.88 billion, in-line with expectations, while U.S. same-store growth was a better-than-expected 4.1%, and global comps were up a super 6% (far ahead of forecasts).

McDonald’s recent strategy of special food offers (read ‘cheap’...like McPick 2) and the push into healthier options and customizable premium burgers were beating back the competition from fast-casual chains. The Big Mac is still my favorite fast-food burger, though I do take advantage of Burger King’s two Whoppers for the price of one specials, because I am always passing this one outlet on my way home from my Staples runs (which are also beer runs...but now I’m divulging way too much data that Facebook and Google are accumulating).

--Meanwhile, shares in Chipotle Mexican Grill Inc. had their worst day in five years, Wednesday, down 15%, after the chain reported third-quarter profits that were below analysts’ expectations; the company saying performance was hurt by historically high prices of avocados that are a staple of its guacamole, a series of hurricanes closed hundreds of locations, and a national data breach earlier in the year resulted in hackers stealing customer payment data.

Chipotle has been reducing the number of planned openings to focus on quality, as it struggles to regain customers lost last year after the first norovirus outbreak that captured national attention, the one that affected 135 patrons at one Sterling, Va., location.

Nonetheless, the company does still expect to grow to 5,000 restaurants from roughly 2,300 today.

For the last quarter, restaurant sales for comparable locations edged up 1%, after the staggering 22% slide from a year ago at the height of the norovirus crisis.

--General Motors posted stronger-than-expected pre-tax profit for the third quarter before charges related to the sale of its European operations. The results sent GM shares to a new high since its IPO in 2010. The U.S. No. 1 automaker also announced it expected annual sales of about 17 million light vehicles this year, after the industry’s strong run to a record 17.55 million units in 2016.

GM continues to rely on pickup trucks, SUVs and crossovers for a large share of its profits. Revenue declined to $33.6 billion from $38.9 billion a year earlier, but above the Street.

--Ford Motor Co. reported a 63% increase in third-quarter profit, the results fueled by sales of F-Series trucks, the big vehicles that make up half of Ford’s profit.

The average Ford pickup sold for $45,400 during the July through September period, far ahead of the $31,200 figure that J.D. Power estimates is the average transaction price on vehicles sold in the U.S., and $2,800 higher than F-Series prices during the same period a year ago.

Including the F-150 truck for lighter-duty needs, the F-Series has been the best-selling vehicle in America since 1977.

--Fiat Chrysler Automobiles reported a 50 percent increase in third quarter net earnings of about $1.1 billion (910 million euros), with revenues down 2 percent.

Latin America returned to profits.

--Caterpillar Inc. blew past Wall Street’s profit and revenue forecasts on surprisingly strong demand for its construction equipment in both North America and even more robust sales in China. The company also raised its full-year forecasts for sales and earnings, with construction business expected to surge 20 percent and mining business 30 percent.

Sales in North America, CAT’s biggest market, jumped 27 percent in the third quarter, but maintaining such a pace is impossible.

In the Asia Pacific region, CAT’s third-biggest, sales jumped 57 percent to $1.29 billion, boosted by demand from China, though that nation’s property sector has been cooling.

CAT had revenue in the third-quarter of $11.4 billion, up a whopping 25 percent, and for the full year, expects to book $44bn in sales.

--So I guess I wasn’t the only one who replenished their “post-it” supply this past quarter, as the maker of same, 3M Company, handily exceeded estimates on earnings and sales, with revenue up a solid 6 percent to $8.17 billion. The company raised guidance as well.

--Boeing reported third-quarter earnings were better than expected, ditto revenue, and the aerospace giant raised its guidance slightly for the full year.

CEO Dennis Muilenburg said Boeing delivered “a record 202 commercial airplanes” in the quarter as it increases production of the 737 MAX aircraft. 

Boeing’s trade dispute with Bombardier continues, with 75 Bombardier C Series jets sold to Delta Air Lines; Boeing claiming Delta got an “absurdly low” price, “in violation of U.S. and global trade laws.”  Bombardier has refuted the allegations as “pure hypocrisy.”

--Coca-Cola’s quarterly profit and revenue topped analyst expectations, as sales in North America rose 3%, Coke gaining market share over rival PepsiCo.

While Coca-Cola had a dip in Diet Coke sales, it sold more Sprite, teas and coffees during the quarter.

Earlier, PepsiCo had reported a drop in North American sales for the first time in two years, hit by weak demand for Gatorade.

--According to Beer Marketer’s Insights, the flagship brew of Anheuser-Busch InBev saw U.S. shipments of the famous lager fall to 14.4 million barrels last year – down 60 percent from the 35.2 million barrels it shipped in 1988, the peak year for Bud.

Shipments of best-selling beer Bud Light are down 15 percent from 2008, to 35.2 million barrels last year.

Anheuser-Busch InBev said on Thursday that its third-quarter U.S. revenue for the entire brand fell 2.2 percent, with the ongoing shift to imported and craft beers.

But when you include all of AB InBev’s other brands, including Beck’s, Corona and Stella Artois, U.S. sales fell a whopping 5.6 percent.  [New York Post]

--United Parcel Service Inc. plans to spend more on its facilities and planes next year, in an effort to keep up with the e-commerce boom that clearly shows no sign of slowing.

Atlanta-based UPS is adding new fulfillment and sorting centers, larger planes, and rolling out Saturday delivery in more markets.  The company also announced it would increase rates 4.9% in late December.

During the coming holiday season, UPS expects to make 750 million deliveries, up 5.6% over last year.

Profit in the third quarter fell slightly to $1.26 billion, with revenue rising 7% to $15.98 billion. The company’s stock rose 1.6% in response.

--Shares in Twitter rose sharply Thursday as the company reported a narrower loss for the quarter and raised its earnings guidance for the current period, even though the company said it had overstated its number of users for the past three years.

Twitter said it did add four million monthly users in the third quarter, better than expected, bringing the total to 330 million. Revenue declined 4.2% from a year earlier to $590 million, though this was slightly better than expected.

Twitter also announced it would no longer accept advertising from any account owned by Russian-backed news outlets RT and Sputnik.

--Mattel Inc. said it would suspend its dividend, accelerate cost-cutting and scale back new product launches after reporting a loss for the third-quarter, with a 13% drop in revenues.

Mattel, the maker of Barbie and Hot Wheels, has been struggling to restructure and is on its third CEO in as many years.

Mattel cut down on new launches by 30% this year, with another 20% cut planned for 2018.  The toy industry overall has also been impacted by the Toys ‘R’ Us bankruptcy.

Mattel shares fell 19% on the news in after-hours trading Thursday, after falling 40% this year.

--I live literally across the street from half of Celgene’s headquarters (the other half of which is on the opposite end of this major street here in Summit, N.J.), and so I’m waiting to hear cries of anguish (none thus far) from the employees stationed there after the company on Thursday missed revenue forecasts and dialed back its outlook.

Celgene is now talking about revenue for the year of $13 billion, vs. a previously forecast $13-$13.4 billion, which ordinarily wouldn’t spell disaster in the share price but today is punished after such a big run-up in both CELG stock and the market overall.  So the shares plunged 19% on the news.

One thing I know, though I am far from an expert on the company, is that the new campus (the old Merck North American headquarters before they decided to consolidate elsewhere), has become rapidly populated, and Celgene’s growth seems to be predicated on expansion; buying smaller companies with promising drugs (many of which may just be in the ‘trial’ phase).  It’s kind of a crapshoot...Celgene’s CEO would hate me saying this...but if, say, you hit one out of four and that one is a Revlimid, Celgene’s current big seller, you’re set for another few years, though you have to keep replenishing the pipeline, knowing the patent protections eventually run off and the generics step in.

[I see a lot of their employees because they cross the street to come to the Dunkin’ Donuts in my building.  And then you have the group that hangs out at the entrance to the company’s complex, taking their smoking breaks, which always cracks me up.  One guy is 450 lbs., in a wheelchair, and he seems to be outside, puffing away, every time I exit my parking garage.  Just a bit incongruous.]

--Walgreens is moving rapidly to integrate Rite Aid stores and implement partnerships with the likes of archrival CVS to succeed in a constantly shifting marketplace, as noted above.

Walgreens is closing about 600 stores, mostly Rite Aid locations, the closures to take place over an 18-month period.  This is expected to result in annual savings of $300 million.  All the Rite Aid stores that aren’t closing will be rebranded as Walgreens.

After the closures and integrations, Walgreens will have roughly 9,400 U.S. locations – still behind CVS’s 9,700.

--Merck & Co. reported a third-quarter loss of $56 million, but adjusted for non-recurring costs and costs related to mergers and acquisitions were $1.11 per share, surpassing expectations.  Revenue was $10.33 billion in the period, slightly below the Street’s forecasts.

--JCPenney fell sharply on Friday, down 15% to $3.11, after it issued a surprise profit warning and cautioned about weakening sales, not that this is anything new with them.

But the guidance, to a profit of 2-8 cents a share for the full-year, compared with a previous forecast of 40-50 cents, was rather shocking.

The news sent ripples throughout the department-store sector, with the likes of Macy’s, Kohl’s and Sears down about 5% each.

--Capital One Financial reported adjusted earnings of $2.42 per share in Q3, beating estimates of $2.16, and up from $2.03 a year ago, while revenue rose to $6.99 billion from $6.46 billion year-over-year, also beating the Street.

--Congress overturned a rule by an Obama-appointed financial regulator that would have made it easier for consumers to sue banks in groups, with Vice President Pence breaking a 50-50 tie in the Senate.  It is a big win for the financial industry and a rebuke of Consumer Financial Protection Bureau Director Richard Cordray, who pressed ahead in defiance of Republicans.  Back in July, the House had voted 231-190 to overturn the rule.

--Last Friday, a judge tossed out a $417 million jury award to a woman who claimed she developed ovarian cancer by using Johnson & Johnson talc-based baby powder for feminine hygiene.

Los Angeles County Superior Court Judge Maren Nelson granted J&J’s request for a new trial, saying there were errors and jury misconduct in the previous trial that ended with the record award two months ago.

--Nordea bank, the Nordic region’s biggest, said it would cut at least 6,000 employees and consultants, as it continues to invest heavily in IT, with automation and digitalization meaning it could shed at least 4,000 of its 32,000 employees and some 2,000 consultants.

Nordea posted profit of $1.3 billion for the third quarter, matching forecasts but below year ago levels.

--The Vegas Massacre investigation got murkier as Customs and Border Patrol documents obtained by Fox News show that Mandalay Bay security guard Jesus Campos mysteriously left the country just days after the mass shooting, crossing into Mexico for a few days, and then reentered the U.S. one week after the massacre.

Why the hell did authorities allow Campos to leave the country in the middle of their probe?! And how did Campos manage to drive to Mexico, via California, with a gunshot wound, apparently to his thigh?

Plus the New York Times has now produced a timeline that places the shooting of Campos about one minute into the attack – and not before.  The Times had digital investigators piece together footage that was captured at the scene and apparently discovered that local police were wrong yet again.  Recall, the police have progressed to a third timeline.

No doubt, the Times could be wrong, but their experts used 30 videos filmed by concertgoers, the Las Vegas police and bystanders.  Senior Story Producer Malachy Browne told CBS News, “Ours isn’t the definitive picture of what happened, more information will emerge, but it does give us new insights into what happened.”

Browne said, “We analyzed every single burst of gunfire, which had its own fingerprint,” noting the conclusion of the investigative team was that Stephen Paddock was shooting into this 32nd floor hallway at around 10:10 p.m. – five minutes before he stopped shooting at concertgoers.

Paddock blasted over 900 rounds into the crowd that night, killing 58, wounding hundreds.

This has turned into a total fiasco, with one party in particular, Mandalay Bay (read owner MGM) scared to death over the timeline and what would be the most expensive class-action suit in history.

--Global wine production is expected to fall to its lowest level in more than 50 years, according to the International Organization of Vine and Wine (OIV), with total world output projected to fall 8% from last year.  According to OIV estimates, Italian wine production will fall 23%, 19% in France, and 15% in Spain.

Australian production is expected to rise 6%, and up 25% in Argentina.  “Don’t whine for me, Ar-gen-tinaaa....”

Output in the U.S. is due to fall only 1%, though this was based on data collected before the Napa and Sonoma County fires.  However, we’ve already detailed how 85%+ of the grapes had been harvested beforehand there, and much of the rest is salvageable.  Plus a lot of the production is in the Central Valley, which wasn’t impacted to any great extent.

--Shares in General Electric struggled anew amid fears the dividend would be cut.  GE is having an investor meeting Nov. 13 at which time it will lay out its future plans, including for the dividend.

--A senior Canadian intelligence official said on Monday that the Canadian government is “really worried” about cyberattacks that have been targeting its infrastructure and it has helped companies improve defenses, without disclosing hacks to the public.  A few days earlier, the U.S. warned sophisticated hackers are targeting U.S. infrastructure, including nuclear, energy, aviation, water and manufacturing industries.

--Sears Holdings Corp. will no longer sell Whirlpool Corp. appliances after a dispute between the two fractured a relationship that stretched back more than a century.

So Sears has stopped carrying products made by the biggest U.S. appliance maker, including Maytag and KitchenAid.

Sears has been a top seller of refrigerators, washing machines, dryers and other appliances for decades, but with the retailer closing hundreds of stores, and the likes of Home Depot filling the void, changes were inevitable.

As recently as 2002, Sears sold four of every 10 major appliances in the U.S., far ahead of its rivals.  But according to market research firm TraQline, its market share fell to 22% for the 12 months ended March.

The disagreement had nothing to do with Sear’s credit issues but rather it was just a pricing issue, as Whirlpool tried to take advantage of its dominant market position.

Just recently, Sears could claim it was the only retailer to feature all the major appliance brands, as it had an exclusive on its own popular Kenmore appliances, which Sears then agreed to start selling on Amazon.com this past spring.

Needless to say, this move by Sears isn’t good for Whirlpool either and its shares fell heavily on the news.

--Tesla reached a deal with the government of Shanghai to build a manufacturing facility in the region, according to the Wall Street Journal.  It was in June that Tesla said it was committed to the Chinese market and looking for the right manufacturing site, while China has been aggressively pushing its automakers to speed up the development of electric cars.

--CBS named Jeff Glor as the new anchor of the “CBS Evening News,” an obviously cheap alternative for a job once held by Walter Cronkite, Dan Rather, and Bob Schieffer, and most recently Katie Couric and Scott Pelley.

Glor has been a reporter for 10 years on the network.  CBS remains third in the nightly news race to ABC and NBC.

--The New York Times broke the story that Bill O’Reilly settled a sexual harassment suit by a former Fox New network contributor, Lis Wiehl, reportedly for $32 million, after which Fox still renewed his contract for $25 million a year, only to then fire him in April as the allegations continued to pour in, while details of past settlements became known (five settlements for a reported $13 million).

For his part, O’Reilly fought back, calling the Times story “a malicious smear” and once again denied any misconduct.  “I have been in the broadcast business for 43 years with 12 different companies,” he told former Fox host Glenn Beck on Beck’s radio program on Monday, “and not one time was there any complaint filed against me.  Nothing.  Zero. So I think my track record speaks for itself.”

But, it’s been reported, O’Reilly and Fox have privately settled with six women who alleged harassment, O’Reilly paying three, including Wiehl; Fox paying three others.

O’Reilly said he cannot discuss monetary figures because of the nondisclosure terms of the settlements.  But he has said the figures mentioned in some of the stories were “wildly wrong.”

Meanwhile, Megyn Kelly weighed in on her NBC show Monday that she had complained about O’Reilly while she was an anchor at Fox but was ignored.

In her monologue which was described in the press as “extraordinary,” but since I didn’t see it myself, I can’t say if this is an apt description, Kelly went after O’Reilly, former bosses and colleagues, accusing the network of fostering a toxic culture for female employees.

“O’Reilly’s suggestions that no one ever complained about his behavior is false,” Kelly said.  “I know because I complained.”

Kelly said she wrote to her bosses about O’Reilly’s comments in an interview with CBS News last fall, where O’Reilly said he wasn’t “interested” in discussing a topic – sexual harassment – that “makes my network look bad.”

Kelly’s response to her bosses in part: “Perhaps he didn’t realize his exact attitude of shaming women into shutting the hell up about harassment on grounds that it will disgrace the company is in part how Fox News got into the decade-long [Roger] Ailes mess to begin with.  Perhaps it’s his own history of harassment of women which has, as you both know, resulted in payouts to more than one woman, including recently, that blinded him to the folly of saying anything other than, ‘I am just so sorry for the women of this company, who never should have had to go through that.’”

Kelly said the response was that O’Reilly was “permitted with management’s advance notice and blessing” to appear on his program that night “to attack the company’s harassment victims yet again.”  [New York Times, Washington Post, Los Angeles Times]

Foreign Affairs

China: President Xi Jinping cemented power for the next five years, and probably beyond, when he was re-elected leader with no clear successor.

His name and doctrine have been written into the constitution.  Chinese schoolchildren will soon be studying President Xi’s political ideology, “Xi Jinping Thought” going into every textbook, taught in every class, as the nation’s children are brainwashed.

Any attack on Xi is now the same as an attack on the party.

Xi told party delegates as the meeting came to a close after approving the addition of his ideology of “socialism with Chinese characteristics for a new era” that is now in the party charter, “The Chinese people and nation have a great and bright future ahead.” 

No they don’t.  They are going to continue to flood to the United States.

The reference to “new era” is a way of saying this is the third chapter of the modern era; the first was under Chairman Mao, uniting a country devastated by civil war, the second was the economic boom, ‘getting rich,’ under Deng Xiaoping, and this new era is about more unity and wealth, while making China disciplined at home and strong abroad, including building more artificial islands in the South China Sea with airbases.

“At this great time, we feel more self-confident and proud. At the same time, we also deeply feel a heavy sense of responsibility,” he said.

Only Mao’s name was enshrined in the party ideology while he was still alive.  The Cult of Xi has officially begun.

On Wednesday, at the close of the Communist Party Congress in Beijing, Xi formally received his second term in office.

Five new appointments were made to the all-powerful, seven-member Politburo Standing Committee, joining Xi and Premier Li Keqiang, and while there had been talk Xi might elevate one of his proteges who are in their 50s, all five are in their 60s (all seven skillfully dying their hair black, of course, as is required in China if you ever want to be a top political figure), and because of the ages, this is only fueling speculation that Xi will want to stay in power beyond 2022.  [To be fair, at the next level, the 25-member Politburo, two have photos exhibiting gray hair.]

Importantly, the constitution was also amended to include references to the party’s “absolute” leadership over the armed forces.

If you want a clue as to what is in store for the West the next five years plus, major Western news organizations, including the BBC, Financial Times, Economist, New York Times and Guardian, were barred from Wednesday’s ceremony to reveal the new Standing Committee.  Unofficially, journalists from these outlets were told they were barred because of their past reporting, as Xi is determined to control the message at home and abroad.

Trump tweets: “Spoke to President Xi of China to congratulate him on his extraordinary election. Also discussed NoKo & trade, two very important subjects!”

“Melania and I look forward to being with President Xi & Madame Peng Liyuan in China in two weeks for what will hopefully be a historic trip!”

David Ignatius / Washington Post

“President Xi Jinping’s command at this month’s Communist Party gathering was so complete that President Trump likened him to a ‘king.’  But some China analysts are wondering whether Xi has overreached.

“Xi dominated the stage, literally and figuratively, at the party’s 19th Congress, which ended this week in Beijing.  His consolidation of power has nearly erased the collective leadership style of his recent predecessors and vaulted him into a Chinese pantheon occupied only by Mao Zedong and Deng Xiaoping. ‘Xi Jinping Thought’ is now celebrated as the guide to a ‘new era’ for China.

“Xi’s capture of the commanding heights was summarized in a private report by Pamir Consulting, a leading advisory firm on China. During Xi’s first five years in office, Pamir reported, his anti-corruption campaign has disciplined 1.53 million party members and prosecuted 278,000, including 440 ministerial or provincial officials and 43 Central Committee members, about 11.4 percent of that body.

“Xi has purged the Chinese military, too.  Under his rule, 13,000 officers have been sacked and more than 50 general officers have been imprisoned for corruption, by Pamir’s count.  In place of the ousted generals, Xi has installed new commanders for the joint staff, army, navy and air force of the People’s Liberation Army.  Members of this reshaped force now appear to control nearly 20 percent of the party’s reconstituted Central Committee.

“Xi also reigns supreme in the factional battle at the top of the party leadership. Of the 25 members of the Politburo, 17 are his allies, Pamir estimates. His faction has four seats on the Politburo’s seven-member standing committee. And for the first time in several decades, the leadership hasn’t signaled who will succeed Xi after he completes his second five-year term as party secretary, suggesting that he may ignore the 10-year limit that capped recent Chinese leaders.

“Trump appears to see a kindred spirit in Xi. He made a congratulatory telephone call Wednesday and praised Xi’s ‘extraordinary elevation’ in a tweet.  ‘Some might call him the king of China,’ Trump said in a television interview.”

So what can go wrong?  As David Ignatius writes, “(Xi) owns China’s economic and foreign policies so totally that he’ll get blamed for any setbacks.  Perhaps more important, his power play may worry older Chinese who remember the damage done by Mao’s cult of personality.”

Xi is rolling out the red carpet for Trump when he arrives Nov. 8, and Trump will no doubt eat it up.  #sad

North Korea:  Wednesday, North Korea’s foreign ministry spokesman told CNN that warnings of a possible atmospheric nuclear test over the Pacific Ocean should be taken literally.  “The foreign minister is very well aware of the intentions of our supreme leader, so I think you should take his words literally.”  In September, Foreign Minister Ri Yong Ho said Pyongyang may consider conducting “the most powerful detonation” of a hydrogen bomb over the Pacific.

Speaking in the Philippines, in the company of his U.S. and South Korean counterparts, Japan’s defense minister claimed the nuclear and conventional weapons threat from North Korea has reached a “critical and imminent level.”

“Therefore,” Itsunori Onodera said, “we have to take calibrated and different responses to meet with that level of threat.”

Today, Friday, Defense Secretary Jim Mattis, emphasized diplomatic efforts to resolve the North Korean crisis, while in South Korea meeting with his counterparts, saying in prepared remarks delivered at the DMZ:

“North Korean provocations continue to threaten regional and global security despite unanimous condemnation by the United Nations Security Council.

“As Secretary of State Tillerson has made clear, our goal is not war, but rather the complete, verifiable, and irreversible denuclearization of the Korean Peninsula.”

Iraq / Syria / Iran: Iran’s supreme leader, Ayatollah Ali Khamenei, hosted Iraqi Prime Minister Haidar al-Abadi this week, telling him Iraq cannot rely on the United States in the fight against ISIS, as Iran seeks to drive a wedge between Washington and one of its close allies.

“Unity was the most important factor in your gains against terrorists and their supporters,” Khamenei told Abadi, according to state television, and Reuters.  “Don’t trust America...It will harm you in the future.”

Iraq is that rare country that is closely allied to both the United States and Iran, both with forces in the country.  The U.S. has 5,000 troops, plus it provides air support, training and weapons to the Iraqi army.  Iran funds and trains Iraqi Shiite paramilitaries known as Popular Mobilization, which fight alongside government troops.

But while Iraq has avoided antagonizing either Washington or Tehran over the years, the Iraqi government’s confrontation with the Kurdish minority has threatened to tip the balance in favor of Iran, as the Kurds are funded and trained by the U.S.

The Iraqi military’s offensive against the Kurds has resulted in Iraq seizing considerable territory from Kurdish forces.

So this week, U.S. Secretary of State Rex Tillerson demanded Abadi send Iranian fighters in pro-government Shiite militias “home.” Abadi’s office quickly issued a statement saying no country can give orders to Iraq, calling the paramilitaries “patriots.”

And now Abadi has been traveling to Iran and Turkey, seeking support for his hard line towards the Kurds.

Wednesday, the Kurdish regional government proposed a ceasefire, as well as a suspension of last month’s Kurdish referendum on independence, in order to start an open dialogue with the federal government “based on the Iraqi Constitution.”

But the Abadi government rejected the offer, saying the referendum result must be annulled, rather than merely suspended, as a pre-condition for talks.

Abadi, in his meeting with Khamenei, was quoted as saying, “We will preserve Iraq’s unity and will never allow any secession.”

 [Earlier, Abadi, in an interview with a number of U.S. newspapers, said he had issued a plea to Washington and Tehran not to involve Iraq in their growing confrontation over Iran’s nuclear deal and missile program, and the U.S. threat of renewed sanctions.  Iraq, like Iran, is majority Shiite and Abadi’s predominantly Shiite party has been allied with Tehran for decades.]

Senator John McCain / New York Times

“Clashes this month between elements of the Iraqi security forces and Kurdish fighters around Kirkuk are deeply troubling, in particular because of the United States’ longstanding friendship with the Kurdish people. These clashes are also emblematic of a broader, more troubling reality: Beyond our tactical successes in the fight against the Islamic State, the United States is still dangerously lacking a comprehensive strategy toward the rest of the Middle East in all of its complexity.

“This is the unfortunate legacy that the Obama administration left for its successor.  President Trump’s call this month for a broader strategy to confront Iran’s malign influence across the Middle East was an encouraging indication that the administration recognizes the problem.

“But just days after that speech, reports surfaced that Qassim Suleimani, the commander of the Iranian Revolutionary Guard’s elite Quds Force, was near Kirkuk, preparing military advances on Kurdish positions by Iranian-backed Iraqi militias to augment the broader efforts of Iraqi security forces. When those advances came, some Iraqi forces, according to reports, fought with equipment that had been provided by the United States.

“This is totally unacceptable.  The United States offered some arms and training to the government of Iraq to fight the Islamic State and secure Iraq from external threats – not to attack Iraqi Kurds, who are some of America’s most trusted  and capable partners in the region....

“The clashes in Kirkuk are symptomatic of a deeper problem that the United States has failed to address for many years: Both within countries and between them, the regional order in the Middle East is rapidly collapsing. American power and influence is diminishing there, largely because over the past eight years the United States has withdrawn from the region. The resulting vacuum is being filled by anti-American forces.

“While the current administration, like its predecessor, remains singularly focused on defeating the Islamic State – which is, of course, essential – our adversaries are taking advantage of us everywhere else.”

[See below]

As for Syria, last weekend, U.S.-backed forces said they had captured Syria’s largest oil field from Islamic State who had held it since 2014 and used it as a major source of income.  Regime forces are also racing to seize territory in the oil-rich eastern province of Deir Ezzor.  This is only going to lead to major clashes between the two down the road.

And this week, according to a report sent to the United Nations Security Council on Thursday, the Syrian government is to blame for a chemical attack on the opposition-held town of Khan Sheikhoun that killed dozens last April. The U.N. report also said ISIS was to blame for the use of sulfur mustard in the Syrian town of Umm Hawsh on Sept. 15 and 16, 2016.

The attack by the Assad government prompted the U.S. missile strike against a Syrian air base that Washington said was used to launch the strike.

Editorial / Washington Post

“Mr. Trump may believe he can extract the United States from Iraq and Syria without harming strategic interests. If so, he is repeating the mistake of President Barack Obama. A failure by the United States to defend its allies or promote new political arrangements for the two Arab states will lead only to more war, the rise of new terrorist threats and, ultimately, the necessity of more U.S. intervention.”

Editorial / Wall Street Journal

“Mr. Trump campaigned to defeat ISIS, and he is loath to make U.S. commitments abroad. But this month he also promised a new strategy to deter Iranian designs for regional hegemony. That strategy won’t work if the U.S. declares victory over ISIS and walks away.

“Like Barack Obama, sooner or later Mr. Trump will be pulled back in – either by a reconstituted Sunni jihadist vanguard, or an Iranian threat to Jordan, the Kurds, Israel or the Sunni Arab States. The Trump Administration needs a policy to consolidate the victory against ISIS into a strategic gain for U.S. interests in the Middle East.”

Israel: Israeli Intelligence Minister Israel Katz said in an interview in Tokyo, “If international efforts led these days by President Trump don’t help stop Iran attaining nuclear capabilities, Israel will act militarily by itself. There are changes that can be made (to the nuclear accord) to ensure that they will never have the ability to have a nuclear weapon.”

Separately, in the opening speech of the Knesset’s winter session, Prime Minister Benjamin Netanyahu for the first time classified Iran’s involvement in Syria as a greater and more immediate danger to Israel than the Iranian nuclear threat.

Netanyahu is still stressing the nuclear issue, but in recent months, he has been warning of the danger in Syria.

“We face even greater challenges inside and outside the country, first and foremost to thwart Iran’s attempts to establish itself in Syria....At the same time, we are determined to prevent Iran from obtaining nuclear weapons.”

Israel is hoping President Trump can take care of the Iran nuclear issue, while it focuses on Iran’s actions in Syria, especially in the increasing deployment of Hizbullah and Shiite militias near the border in the Golan Heights.

Egypt: As I was going to post last Friday night, I saw some news on a clash between Egyptian security forces and militants, but details were sketchy so I didn’t write anything. We later learned 59 Egyptian police officers and security officials were killed in an ambush 85 miles from Cairo.

The Egyptians were said to be on their way to attack a militant hideout, but the militants were tipped off and were lying in wake, attacking the Egyptians from positions on higher ground.  There was no claim of responsibility, and it’s unclear if this was an ISIS offshoot, or a Muslim Brotherhood-related group.

Russia: Celebrity and presidential candidate Ksenia Sobchak said in her first press conference since announcing she would run against Vladimir Putin in next March’s election, that “according to international law, Crimea belongs to Ukraine. Period.”

But here’s the thing. It was long thought that Putin would come up with an opponent just to try to make the election look legit, so it’s thought Sobchak, a rather attractive sort who is a television host, was tabbed, though of course she would never admit it, and that the Crimea statement is just part of the act.  In the past, for example, she had tweeted support of the annexation of the piece of Ukraine.

[There is little chance that the real opposition figure, Alexander Navalny, will be allowed to run for president.]

Separately, a new investigative report, the Organized Crime and Corruption Reporting Project, published in Novaya Gazeta on Tuesday, estimated Vladimir Putin’s wealth at $24 billion, which is hidden from the public, with close friends holding the assets for him.

For example, the Panama Papers had previously identified musician and childhood friend Sergei Roldugin as the owner of offshore companies that the president’s inner circle used to channel $2 billion to Russia in a money-laundering scheme.

The new report found that one of Putin’s proxies worth $573 million based on publicly available figures is Mikhail Shelomov, 49, the son of the president’s cousin.  His official salary at a state oil firm is $700 per month, according to the investigation.

Another member of the inner circle is a former butcher and another childhood friend of Putin’s, Pyotr Kolbin, who has an estimated net worth of $550 million.

A 2012 investigation found that Kolbin was a stakeholder in an energy company rumored to be the source of Putin’s private wealth, but Kolbin denied he was a businessman.

The new report quotes an unnamed ex-KGB officer as saying that Putin “will never leave any trace” of his vast assets.

“Why should [he], if there are trusted people from the inner circle or some distant relatives who can keep all the assets?”

Kenya: Police here shot dead at least three people as the bitterly divided country went through another presidential vote.  Heeding a call from their candidate Raila Odinga to boycott the poll, opposition supporters paralyzed his strongholds in western Kenya, while police battled protesters in pockets of the capital, Nairobi.  The electoral commission called off the vote in four of Kenya’s 47 counties, deepening the uncertainty.

Voters in the affected counties will be asked to vote for a third time in under three months on Saturday.

President Uhuru Kenyatta is poised to secure a second five-year term by an overwhelming margin after the only credible opponent, Odinga, pulled out of the rerun of August’s vote that had been ordered by the Supreme Court.

But this means Kenyatta will be dogged by questions of legitimacy in an ethnically divided country.

Random Musings

--Presidential tracking polls:

Gallup: 36% approval of President Trump’s performance, 58% disapproval
Rasmussen: 43% approval, 55% disapproval

--A survey from Harvard-Harris Poll of GOP voters found that the Republican Party’s approval rating has hit a new low, with 56% of Republicans saying Sen. Mitch McConnell should resign as majority leader, McConnell with the worst approval rating of any politician in the survey, at 16% favorable and 52% unfavorable.

29% approve of GOP voters approve of the job Republicans are doing, while only 39% of Republicans say GOP leaders in Congress represent their views.

President Trump’s approval among Republicans is 80%.

--Two U.S. senators appeared at Democratic Sen. Robert Menendez’s (N.J.) federal corruption trial on Thursday in Newark, fellow New Jersey Democratic Sen. Cory Booker, and, surprisingly, Republican Sen. Lindsey Graham (S.C.)

Graham said, “I disagree with him politically, but I think he’s a very honest, honorable guy.  If he gives you his word he sticks with it, no matter how much pressure is put on him to back off. And we need more of that, not less.”

I’m on record as saying that, yes, while Menendez is dirty, I think he is one of the brilliant foreign policy minds in Washington these days and we need him with the issues we face in this sphere.  So it was kind of interesting that clearly Graham, who serves on the Foreign Relations Committee with Menendez, is thinking along the same lines.

--The United States Air Force is taking preparatory steps towards putting nuclear armed B-52 bombers on full-time alert.

Air Force chief of staff Gen. David Goldfein said in an interview with Defense One, “I look at it more as not planning for any specific event, but more for the reality of the global situation we find ourselves in.”  The actual order to put the bombers on alert apparently has not been given yet, but the Air Force is gearing up.

Barksdale Air Force base in northwestern Louisiana is the home of Air Force Global Strike Command, which oversees all nuclear forces the Air Force has under its command.

If a nuclear war was declared, the two planes that would serve as the flying command posts of the current defense secretary and STRATCOM commander would be pre-positioned there for use.  The rest of us would head to the grocery store for Pop Tarts and water, and then hit the liquor store before barricading ourselves in our homes.

--After a global uproar ensued, the World Health Organization decided to rescind the appointment of Zimbabwe President Robert Mugabe as a WHO goodwill ambassador; an appointment so bad even I had to take to Twitter blasting the WHO.  Of course I’m one who has had no problem admitting that back in 1999 and 2000, in these very pages, I was calling for Mugabe to be taken out, and I still maintain that if we (working with the Brits, because of their past ties to the place) had removed him, Osama bin Laden may have gotten the message, prior to 9/11.

[For those of you who don’t remember, Mugabe stole an election and went wild against the opposition, destroying his country in the process and he’s been a dictator ever since.  He was StocksandNews’ first “Dirtball of the Year,” a multiple winner, actually.]

--In an interview on C-SPAN3 last weekend, Sen. John McCain commented on the Vietnam War and a topic that has long ticked him off.

“One aspect of the conflict that I will never ever countenance is that we drafted the lowest income level of America and the highest income level found a doctor that would say that they had a bone spur,” McCain said, alluding to President Trump, who had multiple deferments.

“That is wrong...If we’re going to ask every American to serve, every American should serve.”

--Fred Hiatt / Washington Post

“Larry Diamond, a Hoover and Stanford University democracy expert, said research shows more clearly than ever that democracy is associated with economic growth, personal freedom and civil liberties, and transparency and reduced corruption. He said polls show that demand for democracy remains high, including in regions of Africa where many governments fail to deliver.

“Yes, Diamond said, the world is experiencing a ‘deepening democratic recession’ characterized by fewer nations living freely, as measured annually by Freedom House; by increasing power projection from Russia and China; by the breakdown of democracy from Turkey to Thailand to Hungary; and by a ‘wave of illiberal populism’ and a ‘decay of democratic values and self-confidence in the U.S. and Europe.’....

“You can debate the causes of this democratic decay, which obviously did not begin with Trump.  Blame Bush’s invasion and bungled occupation of Iraq; President Barack Obama’s abandoning Syria to its grisly fate; or deeper, underlying trends of wage stagnation, economic inequality, fracturing social media.

“But Trump’s admiration for strongmen and contempt for democratic values has accelerated the trend and shocked much of the world.....

“The good news is the United States has hardly tried to counter the authoritarian offensive – which means that, if we stirred ourselves to act, we might yet shift the momentum....

“ ‘We will not thrive in a world where our leadership and ideals are absent,’ said McCain.  ‘We wouldn’t deserve to.’”

--Political journalist Mark Halperin’s career has been derailed by a report he sexually harassed five women during his tenure at ABC News, and hours later, following a CNN report, his contributor’s role at MSNBC and NBC News ended, while Penguin Press canceled the publication of his next “Game Change” book about the 2016 presidential campaign, co-authored with John Heilemann, who I imagine is rather torqued off.  Plans for an HBO miniseries were also squelched.

After the initial report, other women began to come forward, though most anonymously.

--The release of secret government documents pertaining to the assassination of John F. Kennedy that was to take place on Thursday per an order from President Trump, after a mandated delay of 25 years, was only partially adhered to, as both the FBI and CIA convinced Trump that they needed more time to redact some of the material.

For decades, the National Archives has been gathering government assassination papers, with 88% of the Archives’ 5 million pages of JFK material already public.

Trump said in a memo released by the White House: “I am ordering today that the veil finally be lifted.  At the same time, executive departments and agencies have proposed to me that certain information should continue to be redacted because of national security, law enforcement, and foreign affairs concerns. I have no choice – today – but to accept  those redactions rather than allow potentially irreversible harm to our nation’s security.”

A 2013 Gallup poll found 61% of Americans believe that Kennedy’s assassination was a conspiracy, and not the lone action of Lee Harvey Oswald.

Watching Jack Ruby kill Oswald, live, was my first vivid television memory as a kid.

---

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

God bless America.

---

Gold $1274
Oil $54.19

Returns for the week 10/23-10/27

Dow Jones  +0.4%  [23434]
S&P 500  +0.2%  [2581]
S&P MidCap  +0.3%
Russell 2000  -0.1%
Nasdaq  +1.1%  [6701]

Returns for the period 1/1/17-10/27/17

Dow Jones  +18.6%
S&P 500  +15.3%
S&P MidCap  +10.7%
Russell 2000  +11.1%
Nasdaq  +24.5%

Bulls 62.3...three weeks in a row above 60 danger level
Bears 15.1  [Source: Investors Intelligence]

Have a great week.

Brian Trumbore



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Week in Review

10/28/2017

For the week 10/23-10/27

[Posted 11:30 PM ET]

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

Edition 968

What a week...again.  I can’t be the only one who is growing very weary.

But before we get into the latest on the goings on in Washington, there were two major international events this week that should concern every American (or at least the 5% who might give a damn).

I have been saying for the better part of a year that Chinese President Xi Jinping would be consolidating power at the Chinese Communist Party Congress to such an extent that he would be gunning for more than two, five-year terms.

That just happened this week, as I spell out below.  I nailed this one, long before others were bringing up the scenario.  In a nutshell, Xi has no apparent successors for 2022, by his design, and he’s given himself every title in the book.  This is dangerous.  You know my feelings about the man.

But what should really concern you, and as I began writing months ago once we learned President Trump was going to China in November, Trump, already smitten with the power Xi has, was this week effusive in his praise of the Chinese leader after the maneuvering’s at the CPC.  It is sick that Trump is saying and tweeting the things he is. Xi is a dictator!  Freedoms are being taken away from the Chinese people at light speed.

We don’t know what kind of press availability there will be for Trump when he is visiting the country, but I went on the record, to be the first, weeks ago, talking about how Trump will make a total ass of himself in praising Xi while on Chinese soil.  Trump is exceedingly jealous of him.  This is nuts.

Number two, while Trump is trumpeting success over ISIS in Iraq and Syria, as I’ve been also writing for months, this is incredibly short-sighted, because Iran is filling the void in both countries faster than you can say Ayatollah Khamenei.

Trump, in decertifying the Iran nuclear deal, correctly brought up Iran’s mischief in the region as a reason to be wary, but the president’s brain cells aren’t connecting properly...as in ‘Yeah, Iran is doing bad in the region, but you’re letting it in essence take over much of Iraq and Syria without doing anything.’  Much more on this topic below, including the opinion of some who also ‘get it.’

On to....Trump World

Given what is transpiring this week, I need to remind everyone what I wrote last January, before the inauguration.  I’m proud of it.  It’s also a good reminder to those jumping to conclusions with this week’s late-breaking news on the investigations front.

WIR 1/14/17

Late Tuesday came the bombshell, via various media outlets, that U.S. intelligence agencies and the FBI have been investigating explosive (some salacious) claims, compiled by a former Western intelligence official, that Russian government operatives engaged in a conspiracy with advisers to Trump’s presidential campaign and employees of his company.

Senior intelligence officials then shared the claims in a two-page addendum to a classified briefing President-elect Trump received a week ago Friday.

On Wednesday, Kremlin spokesman Dmitry Peskov dismissed the report, denying Russia has compromising material on Donald Trump.

“This is a clear attempt to damage our bilateral relations,” he said.  “Truly, there are those who whip up this hysteria, who will break their necks to support this ‘witch hunt.’”

Trump tweeted after the allegations surfaced publicly Tuesday, “FAKE NEWS – A TOTAL POLITICAL WITCH HUNT!”

U.S. officials did confirm that a summary of the information had been given to Trump out of an abundance of caution to make him aware of the allegations that could become public.

But an early investigation of the claims by the FBI revealed that in one key instance, the allegation that Trump’s attorney Michael Cohen traveled to Prague to meet with Kremlin officials to arrange cash payments to hackers working under Moscow’s direction, the FBI found no evidence that Cohen had traveled to Prague, ever, as Cohen himself asserts.  Then we learned it wasn’t even the same Michael Cohen!

Christopher Steele, 52, was identified as the ex-MI6 agent behind the dossier.  He went into hiding after his name was disclosed.  Steele, who is director of a private security firm, prepared the 35-page report – alleging Russia had compromising information on Trump – and now he fears for his life and expects backlash from Russia, the Daily Telegraph reports.  You made your bed, buddy (though I feel for his innocent family).

But on the issue of fake news (in the case of Russia, propaganda), Tuesday night, Hillary Clinton’s former campaign team ran with the above, the BuzzFeed story, with Brian Fallon and Josh Schwerin, both of whom served as Clinton spokesmen, saying the information meant the Kremlin could be in a position to blackmail Trump.  All of them reacted via Twitter.

“This is only credible theory for why Trump refuses to accept intelligence community’s finding that Russia was behind hacks,” Fallon said.  “No matter what he tweets in next 24 hours, Trump must be interrogated about Russia more than anything else at his (Wednesday) press conference.”

Schwerin also suggested Russia may seek to blackmail Trump with information it may have obtained.  “There’s a reason all presidential candidates traditionally release tax returns and have full financial transparency.  Blackmail should be impossible.”

Jesse Ferguson, also a Clinton campaign spokesman, said “could we really go from our first black male president to our first blackmailed president?”

Former Harry Reid spokesman Adam Jentleson also took to Twitter on Tuesday to say that the former Senate Democratic leader had seen the documents before writing an October letter to FBI Director James Comey about Trump’s ties to Russia.  The letter asserted that Comey was in possession of “explosive information” about close ties and coordination between Trump, his top advisers and the Russian government.

“Now you know,” Jentleson said, in a series of tweets.

But the dossier was fake news!  All the above Clinton team members jumped to conclusions, as is today’s modern politics, I understand.  But you ever wonder why I’m the “wait 24 hours” guy?  It’s because I prefer to be responsible, and as accurate as possible.

I have never, ever, published one of the fake news stories from this past election cycle, or any cycle over the nearly 18 years of this column.  [The only instance I can think of offhand that comes remotely close was in passing along the Judith Miller/New York Times pieces on WMDs in Iraq that proved to be false, but this wasn’t Russian-inspired disinformation.] 

I received all the fake news stories of the last two years in particular from many of my friends, and they should have known when I refused to reply to them what I thought of the garbage.

I like Glenn Kessler’s explanation, Kessler being responsible for the Washington Post’s Fact checker: “People seem to confuse reporting mistakes by established news organizations with obviously fraudulent news produced by Macedonian teenagers.”  There have been reports that young Macedonians were setting up sites on Facebook devoted to click-baity, pro-Trump deception, and reaping advertising profits, as reported by the Post’s Margaret Sullivan.

[Speaking of the Washington Post, I told you the other day how I didn’t include their story about Russian hacking of a Vermont utility because it didn’t meet my standards...and it proved to be false.]

There’s a good reason why I read up to 20 sources a day, from around the world, before I put this column together.  Yes, they are mainstream media outlets, but I get all sides and then use my brain to come up with some conclusions, coupled with giving you both sides on all the major stories of the day to help you in your own decision-making as to what’s right and what’s wrong.  It’s also a “week in review,” not “12 hours in review,” which is what we had the past few days, and sadly may get the next four to eight years.

---

So we move on to today....

Republican congressmen announced they would begin investigating a controversial uranium deal approved during the Obama administration when Hillary Clinton was the secretary of state.

President Trump called the investigation into the uranium deal with Russia “Watergate: modern age,” as he spoke to reporters on Wednesday.

“The uranium sale to Russia and the way it was done was so underhanded. With tremendous amounts of money being passed, I actually think that’s Watergate: modern age.”

Regarding the dossier, Trump said it was “made up” and is one of just several recent examples of how his critics concocted “the whole Russia hoax,” part of “an excuse for losing an election.”

The Washington Post reported on Tuesday that the Clinton campaign and the DNC funded the dossier, though the opposition research work was begun by one of Trump’s GOP opponents before being handed off to the Democrats, but this hasn’t been confirmed, nor do we know the name of the GOP candidate.

David Harsanyi / New York Post

“What’s the difference between the infamous Russian dossier on Donald Trump and that random fake-news story you saw on Facebook last year?  The latter was never used by America’s intelligence community to bolster its case for spying on American citizens nor was it the foundation for a year’s worth of media coverage.

“Then again, you get what you pay for. We now know Hillary Clinton and the Democratic National Committee paid as much as $9 million for the discredited dossier on Trump.

“According to The Washington Post, a lawyer named Marc Elias, who represented both the 2016 Clinton campaign and the Democratic National Committee, had hired Fusion GPS, a DC firm working on behalf of the Russian government to soften sanctions at the time, to provide opposition research for them. The firm then hired a former British spy named Christopher Steele who reportedly purchased salacious rumors about Trump from the Russians.

“Now, you might expect that the scandalous revelation of a political campaign using opposition research that was partially obtained from a hostile foreign power during a national election would ignite shrieks of ‘collusion’ from all patriotic citizens. After all, only last summer, when it was reported that Donald Trump Jr. met with a Kremlin-linked Russian lawyer who claimed to be in possession of damaging information about Clinton, there was widespread condemnation.

“Finally, we were told, a smoking gun tied the Trump campaign to Vladimir Putin. Former Democratic vice presidential candidate Tim Kaine went as far as to suggest that the independent counsel begin investigating treason.

“Treason!  Trump Jr. didn’t even pay for or accept research.

“The Clinton crew, on the other hand, did. They didn’t openly push the contents of the dossier – probably because they knew it was mostly fiction.  Instead, Fusion GPS leaked it to their friends in the media.

“The dossier ended up in the possession of most major news outlets.  Many journalists relied on Fusion GPS to propel coverage. BuzzFeed even posted the entire thing for Americans to read, even though it was more than likely its most scandalous parts were hatched by a foreign government.

“The memo dominated newsrooms that were convinced Trump was a Manchurian candidate.  No fake-news story came close to having this kind of impact....

“The Obama administration reportedly relied on the dossier to bolster its spying on U.S. citizens. We know of at least one case where the information was used to justify a FISA warrant on a Trump adviser. And let’s not forget that Steele had reached an agreement to be compensated for his efforts by the FBI.

“None of this excuses the actions of Paul Manafort and others who may have benefitted from their past relationship with the Russians.  Yet, using the very standards Democrats have constructed over the past year, the Fusion GPS story is now the most tangible evidence we possess of Russian interference in the American election.

“And at some point, Democrats will have to decide whether it’s wrong for a political campaign to work with foreigners when obtaining opposition research or whether it’s acceptable. We can’t have different standards for Democrats and Republicans.

“Otherwise people might start to get the idea that all the histrionics over the past year weren’t really about Russian interference at all, but rather about Hillary losing an election that they assumed she’d win.”

Editorial / Wall Street Journal

“It turns out that Russia has sown distrust in the U.S. political system – aided and abetted by the Democratic Party, and perhaps the FBI. This is an about-face from the dominant media narrative of the last year, and it requires a full investigation.

“The Washington Post revealed Tuesday that the Hillary Clinton campaign and Democratic National Committee jointly paid for that infamous ‘dossier’ full of Russian disinformation against Donald Trump. They filtered the payments through a U.S. law firm (Perkins Coie), which hired the opposition-research hit men at Fusion GPS. Fusion in turn tapped a former British spook, Christopher Steele, to compile the allegations, which are based largely on anonymous, Kremlin-connected sources.

“Strip out the middlemen, and it appears that Democrats paid for Russians to compile wild allegations about a U.S. presidential candidate.  Did someone say ‘collusion’?

“This news is all the more explosive because the DNC and Clinton campaign hid their role, even amid the media furor after BuzzFeed published the Steele dossier in January. Reporters are now saying that Clinton campaign officials lied to them about their role in the dossier.  Current DNC Chair Tom Perez and former Chair Debbie Wasserman-Schultz deny knowing about the dossier arrangement, but someone must have known.

“Perhaps this explains why Congressional Democrats have been keen to protect Fusion from answering dossier questions – disrupting hearings, protesting subpoenas and deriding Republican investigators....

“The more troubling question is whether the FBI played a role, even if inadvertently, in assisting a Russian disinformation campaign.  We know the agency possessed the dossier in 2016, and according to media reports it debated paying Mr. Steele to continue his work in the run-up to the election. This occurred while former FBI Director James Comey was ramping up his probe into supposed ties between the Trump campaign and Russians....

“Congressional investigators need to focus on the FBI’s role, and House Speaker Paul Ryan was correct Wednesday to insist that the bureau comply with Congress’s document demands ‘immediately.’....

“All of this also raises questions about Special Counsel Robert Mueller’s investigation.  The Fusion news means the FBI’s role in Russia’s election interference must now be investigated – even as the FBI and Justice insist that Mr. Mueller’s probe prevents them from cooperating with Congressional investigators....

“The American public deserves a full accounting of the scope and nature of Russia meddling in American democracy, and that means following the trail of the Steele dossier as much as it does the meetings of Trump campaign officials.”

Paul Sperry / New York Post

“Hillary Clinton’s campaign didn’t just pay for the Kremlin-aided smear job on Donald Trump before the election; she continued to use the dirt after the election to frame her humiliating loss as a Russian conspiracy to steal the election.

“Bitter to the core, she and her campaign aides hatched a scheme, just 24 hours after conceding the race, to spoon-feed the dirty rumors to an eager liberal media and manufacture the narrative Russia secretly colluded with her neophyte foe to sabotage her coronation.

“But it was Hillary who was trying to kneecap Trump, even after he licked her, fair and square, in Wisconsin, Pennsylvania, Michigan and other blue states.

“Exhibit A is the book ‘Shattered: Inside Hillary Clinton’s Doomed Campaign,’ by Jonathan Allen and Amie Parnes.  In light of this week’s revelation that Hillary’s campaign funded the dirty anti-Trump ‘Steele’ dossier, the book takes on a new significance.  It reveals:

“ ‘Within 24 hours of her concession speech, [campaign chair John Podesta and manager Robby Mook] assembled her communications team at the Brooklyn headquarters to engineer the case that the election wasn’t entirely on the up-and-up. For a couple of hours, with Shake Shack containers littering the room, they went over the script they would pitch to the press and the public. Already, Russian hacking was the centerpiece of the argument.’

“The plan, according to the book, was to push journalists to cover how ‘Russian hacking was the major unreported story of the campaign,’ and it succeeded to a fare-thee-well. After the election, coverage of the Russian ‘collusion’ story was relentless, and it helped pressure investigations and hearings on Capitol Hill and even the naming of a special counsel, which in turn has triggered virtually nonstop coverage.

“A new Media Research Center study finds that, since the inauguration, major TV news networks have devoted an astonishing 1,000 minutes out of a total 5,015 minutes of Trump administration coverage discussing speculation the Trump campaign may have colluded with Moscow in hacking Clinton campaign e-mails, ‘which means the Russia story alone has comprised almost one-fifth of all Trump news this year.’  In contrast, they so far have devoted just 20 seconds to the more substantive scandal of Hillary and her husband possibly trading U.S. uranium rights for Russian cash....

“In short, Hillary couldn’t beat Trump with the political dirt she secretly purchased during the campaign, so she tried to cripple his presidency with help from an overwhelmingly anti-Trump media. Framing Trump as some sort of modern-day KGB plant was an easy sell, since the pro-Democrat media were also searching for a scapegoat to rationalize the crushing defeat of their shared liberal agenda at the polls.

“The irony is, it may have in fact been Hillary who came closer to colluding with the Russians in smearing Trump as a Russian traitor than anything Trump did in trying to beat Hillary. The information in the dossier she bought for millions came from Russian intelligence sources, and her lawyers brokered the deal with a Kremlin-tied lobbyist. When it failed to stop Trump, the Russia paymaster turned into the Russia spinmeister.

“Now we really know ‘What Happened.’”

Well, Republicans should be careful as to the extent of their gloating as there are growing questions about the digital operations of the Trump campaign after revelations that the head of Cambridge Analytica, a data mining and analysis firm that worked for the campaign, contacted WikiLeaks’ Julian Assange about Hillary Clinton’s emails.

The Trump campaign paid Cambridge millions, but in the aftermath of the Assange revelations, aides appear to be racing to distance the campaign from the firm.

The company is partially owned by the family of billionaire Robert Mercer, a leading Trump supporter.

The House Intelligence Committee has already requested information from Cambridge Analytica.  The Trump campaign is now saying they relied on the voter data of the Republican National Committee, though the campaign did pay Cambridge $5.9 million for data management services between 2015 and 2016.

Steve Bannon and Michael Flynn have past ties to Cambridge (Bannon previously being on the board there).

For its part, WikiLeaks confirmed to The Hill that “a request for information from Cambridge Analytica was rejected” last year, but didn’t confirm the content of the firm’s order.

And now, Friday night, it was reported by multiple sources that the Washington Free Beacon, a conservative website funded in large part by a major Republican donor, hedge fund billionaire Paul Singer, initially retained Fusion GPS to conduct opposition research on Donald Trump – representatives from the website told the House Intelligence Committee on Friday afternoon.

According to people briefed on the conversation, the website hired the firm to unearth damaging information about several Republican presidential candidates, including Trump.  But The Free Beacon told the firm to then stop doing research on Trump in May 2016, as he was clinching the nomination.

Around the same time, the reports read tonight, Hillary Clinton’s campaign hired out Fusion GPS to research any possible connections between Trump, his businesses, his campaign team and Russia.  It’s then that Fusion GPS retained Christopher Steele, who then produced the dossier.

So The Free Beacon, it seems, had nothing to do with this last bit.

Separately, CNN is reporting tonight that Robert Mueller (through the federal grand jury empaneled by him) is close to issuing his first indictment and that there could be an arrest as early as Monday, the charges currently sealed.

Now it gets interesting. 

Tax Reform

House Republicans on Thursday narrowly adopted the Senate’s $4 trillion budget blueprint, despite grumblings about the size of the deficit and the elimination of state and local tax deductions, as 20 Republicans joined all Democrats in voting against it, the budget passing 216 to 212.

The House had previously passed its own budget that directed upcoming tax reform legislation to be deficit neutral, but to speed up the process, the House passed the Senate plan that would allow tax cuts to add $1.5 trillion to the deficit.

So the Republican message is that tax reform is on the way, and Wall Street likes this, but now the two sides, the House and the Senate, with their very different ideas, open up the process of reconciliation that would then allow tax reform legislation to pass the Senate with a simple majority vote – and without any Democrats.

So needless to say the Democrats are blasting the process and the plan as “the billionaires’ budget” that will roll back Medicaid and Medicare spending to deliver tax relief to the wealthiest Americans.

But the thing is the tax plan hasn’t been written yet!  We’ve only heard proposals from generally narrow groups of senators and congressmen.  The devil will be in the details...which no one knows for sure just what those will be yet, at which point the lobbyists will go wild, and proposals such as the elimination of the state and local property tax deduction will be scorched by Republicans (and Democrats) in high tax states such as California, New Jersey and New York, blue states all, but with scores of Republican congressmen facing re-election in these three in particular.  Seven New York Republicans, for example, voted ‘no’ on the House bill for this reason.

And you have the issue of 401(k) plans, of which there are roughly $4.7 trillion worth in the U.S.  How these are to be treated in the search for “offsets,” revenue to offset the tax cuts, will be fiercely debated, and lobbied.  President Trump has already muddied the waters on this topic by making conflicting statements.

Trumpets....

--Flake and Corker vs. the President

Sen. Bob Corker (Tenn.) unloaded on President Trump during the course of multiple interviews Tuesday, accusing him of “debasing” the nation and predicting he’s “not going to rise to the occasion as president.”

He also said in interviews on CNN, NBC and ABC that world leaders don’t trust the president because they are “aware that much of what he says is untrue.”

“He purposely is breaking down relationships we have around the world that have been useful to our nation, but I think at the end of the day, when his term is over, I think the debasing of our nation, the constant non-truth-telling, the name calling...the debasement of our nation will be what he will be remembered most for, and that’s regretful,” Corker said on CNN.

“And it affects young people,” Corker continued. “I mean we have young people who for the first time are, you know, watching a president stating, you know, absolute non-truths, nonstop, personalizing things in the way that he does, and it’s very sad for our nation.”

Trump then tweeted: “Bob Corker, who helped President O give us the bad Iran deal & couldn’t get elected dog catcher in Tennessee, is now fighting Tax Cuts...

“...Corker dropped out of the race in Tennessee when I refused to endorse him, and now is only negative on anything Trump.  Look at his record!”

“Isn’t it sad that lightweight Senator Bob Corker, who couldn’t get re-elected in the Great State of Tennessee, will now fight Tax Cuts plus!”

“Sen. Corker is the incompetent head of the Foreign Relations Committee, & look how poorly the U.S. has done. He doesn’t have a clue as...

“...the entire World WAS laughing and taking advantage of.  People like liddle’ Bob Corker have set the U.S. way back. Now we must move forward!”

So after Corker let loose, Republican Sen. Jeff Flake of Arizona announced Tuesday he won’t be running for re-election, lamenting the “flagrant disregard of truth and decency” in American politics.

“There are times when we must risk our careers in favor of principles. Now is such a time,” he declared from the Senate floor.

Flake said he has “no small measure of regret.”

“Regret because of the state of our disunion,” he said.  “Regret because of the disrepair and destructiveness of our politics. Regret because of the indecency of our discourse. Regret because of the coarseness of our leadership.  Regret for the compromise of our moral authority.”

“And by our I mean all of our complicity in this alarming and dangerous state of affairs,” Flake continued. “It is time for our complicity and our accommodation of the unacceptable to end.  We must never adjust to the present coarseness of our national dialogue with the tone set at the top.”

Trump then tweeted: “The reason Flake and Corker dropped out of the Senate race is very simple, they had zero chance of being elected.  Now act so hurt & wounded!”

“The meeting with Republican Senators yesterday, outside of Flake and Corker, was a love fest with standing ovations and great ideas for USA!”

“Jeff Flake, with an 18% approval rating in Arizona, said ‘a lot of my colleagues have spoken out.’ Really, they just gave me a standing O!”

#ExtremeNarcissist

Editorial / Wall Street Journal

“There is a familiar Washington irony in the praise that the press corps and Democrats are heaping on Jeff Flake for his speech Tuesday announcing that he won’t seek re-election to the Senate in 2018. The same crowd criticized Mr. Flake as a heartless libertarian until he opposed Donald Trump.  But no matter, the Arizonan has still done his party and maybe his cause a public service.

“The first service is making it possible for Republicans to retain the Arizona Senate seat.  Mr. Flake struggled to win election in 2012 and he’s never built a strong state profile.  His approval rating is so low that national Republicans feared he was unlikely to win a primary, much less hold the seat against a Democrat.  Republicans believe they can hold the seat for the party but not for him, so he is taking one for the team.

“Mr. Flake’s departure means that other Republicans have room to jump in against Kelli Ward, the Steve Bannon acolyte who lost to John McCain in 2016.  Ms. Ward, an osteopathic physician, is famous for calling a public hearing to address constituent concerns that the plumes behind jets are an attempt to poison the public.  Her first reaction to news about Mr. McCain’s cancer diagnosis was that he probably wasn’t long for the Senate. She is an odds-on loser if she wins the GOP nomination.

“But Mr. Flake is mainly getting huzzahs because in announcing his departure he denounced Donald Trump....

“Making a virtue of necessity is not uncommon in politics, and it is easier to ‘not be complicit’ when you aren’t running for re-election.  But Mr. Flake is right that far too much of Mr. Trump’s rhetoric is crude, undignified and patently false.

“As we’ve pointed out many times, the impulsive narcissism of Mr. Trump’s mean tweets aren’t bursts of PR genius.  They are by and large politically destructive acts that hurt his ability to persuade and accomplish his policy goals....

“The more important part of Mr. Flake’s speech was his description of the GOP’s divide over ideas: ‘It is clear at this moment that a traditional conservative who believes in limited government and free markets, who is devoted to free trade,  and who is pro-immigration, has a narrower and narrower path to nomination in the Republican Party – the party that for so long has defined itself by belief in those things.’ The GOP, he added, has ‘given up on those core principles in favor of the more viscerally satisfying anger and resentment.’

“In this Mr. Flake is too pessimistic, but he is identifying the battle lines in the GOP.  The Bannon wing wants to redefine the party around hostility to immigration and trade, but its main animating principle is anger against whoever happens to be in power. This isn’t a principle that can govern even if it manages to win a few elections.”

--The president said Wednesday that his recollection of his phone conversation with the widow of an Army sergeant killed in Niger was more reliable than hers because he had “one of the great memories of all time.”

Speaking to reporters at the White House, Trump did not respond to questions about whether he owed Myeshia Johnson an apology after she described his call as disrespectful.

Trump also said during the impromptu news conference that the media creates a different image of him than the man he really is.

“You know people don’t understand. I went to an Ivy League college. I was a nice student. I did  very well.  I’m a very intelligent person.  I think the press creates a different image of Donald Trump than the real person.”

As for the investigation into the four deaths in Niger, it now seems that they were separated from the larger group after the U.S. Special Forces and 30 Nigerien troops were ambushed by militants three weeks ago.

The squad mates immediately alerted commanders that they were under attack, but apparently didn’t call for help until an hour later, according to the Pentagon this week, after which ground forces from Niger’s army and French Mirage jets were dispatched.

But American military officials still don’t know why it took two full days to find Sgt. La David Johnson, discovered in the woods by Nigerien troops near the ambush site.

Sen. John McCain praised the briefing the Pentagon gave him and members of the House and Senate Armed Services Committees, but he said he still had “100 questions” that the officials could not yet answer.

--The president directed the Department of Health and Human Services to declare the opioid crisis a public health emergency, a long-anticipated attempt to combat the escalating epidemic of drug use that claimed 59,000 lives in 2016 and is decimating communities across the land.

Trump said during an emotional ceremony in the East Room of the White House:

“No part of our society – not young or old, rich or poor, urban or rural – has been spared this plague of drug addiction and this horrible, horrible situation that’s taken place with opioids.  This epidemic is a national health emergency.”

Trump said the government would produce “really tough, really big, really great advertising” aimed at persuading Americans not to start using opioids in the first place.

Trump related the story of his brother Fred, who died early of alcoholism, Fred telling his younger brother never to take a drink – advice the president heeded.

The president added re the advertising: “This was an idea that I had, where if we can teach young people not to take drugs, it’s really, really easy not to take them.”

I was surprised he didn’t add, a la Nancy Reagan’s effective “Just Say No” antidrug campaign in the 1980s.  At the time it was ridiculed, but it worked.  [Actually, I wasn’t surprised Trump didn’t mention Nancy’s campaign...Trump being Trump.]

A key to the federal emergency, however, is China, and we’ll see what President Xi Jinping does on his end in stopping the manufacture and distribution of deadly drugs there, specifically fentanyl, that are flooding the U.S.

--The CBO gave a favorable score for the bipartisan deal crafted by Republican Sen. Lamar Alexander (Tenn.) and Democratic Sen. Patty Murray (Wash.) to shore up ObamaCare’s insurance markets, specifically that it would reduce the deficit by nearly $4 billion by 2027, compared with a healthcare plan presented in August that would increase the federal deficit by $194 billion through 2026.

The Alexander-Murray proposal would shore up the insurance markets for a few years, funding ObamaCare insurer subsidies and give states more flexibility to change their ObamaCare programs.

Not funding the payments could cause premiums for the most popular ObamaCare plans to increase 25 percent by 2020.

But many Republicans, including the president, do not want to support the bipartisan agreement because it calls the payments “bailouts” for insurance companies.

Senate Majority Leader Mitch McConnell said he will not present the Alexander-Murray plan without the backing of the White House.

--In Puerto Rico, FEMA officials said today they did not approve a multimillion dollar contract between Puerto Rico’s power utility and a small Montana firm to repair storm damage, and has “significant concerns” about the deal. FEMA also said that after its initial review it “has not confirmed whether the contract prices are reasonable” under the agreement between Puerto Rico Electric Power Authority and Whitefish Energy Holdings.

The $300 million contract was awarded to the two-year-old Whitefish, Montana firm with just two full-time employees and without a competitive bidding process, according to media reports.  Interior Secretary Ryan Zinke, also from Whitefish, assured President Trump he had “no role” in the selection of the company.

As of Thursday, barely 25% of the island has power, though 75% finally have clean water.

Wall Street

The big news of the week was two-fold, the spectacular earnings and share performance of some of the biggest tech names, and the U.S. economy growing at 3% for a second consecutive quarter, the first time for this since Q2 and Q3 2014 (4.6% and 5.2%, respectively, back then).

Gross domestic product had been expected to increase in the third quarter at a 2.5% to 2.7% clip, but came in at 3.0%, after expanding at a 3.1% pace in the second quarter, the Commerce Department reported.

So a look at the last five quarters:

Q3 2017...3.0
Q2 2017...3.1
Q1 2017...1.2
Q4 2016...1.8
Q3 2016...2.8

President Trump can duly crow that this is all him (try to stop him...he’ll fight back), and it is no doubt impressive, and nothing but good for the country.  There is also no reason to believe fourth quarter GDP won’t be at a brisk pace as well.

The Commerce Department said that while it was impossible to estimate the overall impact in the July-September period from hurricanes Harvey and Irma on GDP, preliminary estimates showed that the back-to-back storms had caused losses of $121.0 billion in privately owned fixed assets and $10.4 billion in government-owned fixed assets.

The only ‘fly’ in the ointment, potentially, is an inventory buildup that was substantial, and if you exclude that, the economy grew at a 2.3% rate, slowing from the second quarter’s 2.9% pace (apples to apples).  Eventually, you have to sell the inventory, because if replenishment isn’t needed, that takes away from GDP.

Consumer spending was at a 2.4% rate following a robust 3.3% in the second quarter, but this is where you can perhaps best see the impact of Harvey and Irma, which undercut retail sales in some larger population bases.

[For the record, the Atlanta Fed GDPNow indicator I like to follow had pegged GDP at 2.5% for Q3 as of Thursday, a tick down from Wednesday’s 2.7% forecast.  I don’t have time to look at what they were calling for in terms of an inventory build.]

Separately, staying on the economy, September durable goods orders were up a better-than-expected 2.2%, 0.7% ex-transportation, while September new-home sales came in at 667,000 annualized, far ahead of the 552,000 estimate, and at up 19%, the largest percentage gain in 28 years, while the highest overall level since October 2007.  As Ronald Reagan would have said, ‘Not bad, not bad at all.’

So what will the Federal Reserve do with all this solid data?  They had been on track to hike interest rates again in December at the 12/13-14 confab, and this is now even more of a certainty, even with still low inflation data.

As for the stock market, the major averages once again closed the week at all-time highs, propelled Friday by the performance of the big tech stocks that reported after the bell Thursday.

Shares in Amazon.com rose 13.22%, Google parent Alphabet 4.3%, Microsoft 6.4% and Intel 7.4%.

Collectively, these four had a single-day rise in market cap on Friday of $146 billion, eclipsing the entire value of IBM, at $143 billion.  Staggering.  It definitely, for one day at least, felt like 2000, and that isn’t really a good thing.  We could be entering a euphoria stage...and a blow-off.  Good luck timing it.

I have details on the above-noted stocks’ earnings reports below.

Europe and Asia

Catalonia: Spain was witness to an extraordinary showdown today between the central government in Madrid and the Catalan parliament, Catalonia declaring independence from Spain.

After bitter exchanges between Catalonia’s lawmakers – some strongly backing secession and others calling it a historic mistake (I’m in this latter camp...though I’d say this was beyond idiocy) – the regional parliament endorsed efforts to split from Spain, passing a resolution to “create a Catalan republic as an independent state.”  Lawmakers opposed to independence walked out of the chamber in protest before the vote.

In Madrid, Prime Minister Mariano Rajoy urged the Senate to grant the government unprecedented powers to take control of Catalonia and all of its institutions.  The Senate then did just that, voting 214 to 47 to invoke Article 155 of Spain’s Constitution, granting Rajoy a package of extraordinary powers to suppress the independence drive.  The measure was to go into effect Friday evening, and tonight, Rajoy disbanded the Catalan parliament and set elections for Dec. 21.

In a speech Friday prior to the vote, Rajoy said he had “no alternative” because Catalan leader, Carles Puigdemont, and his separatist cabinet were pursuing an illegal and unilateral path that was “contrary to the normal behavior in any democratic country like ours.”

Rajoy scoffed at Puigdemont’s recent offers of “dialogue” to end the impasse.

“The word dialogue is a lovely word.  It creates good feelings,” Rajoy said.  “But dialogue has two enemies: those who abuse, ignore and forget the laws, and those who only want to listen to themselves, who do not want to understand the other party....

“Catalans must be protected from an intolerant minority that is awarding itself ownership of Catalonia, and is trying to subject all Catalans to the yoke of its own doctrine,” the prime minister added.

Puigdemont had come close on Thursday to calling early regional elections, per Madrid’s request, but dropped the idea and instead told Catalonia’s Parliament that it would make a decision on independence the next day.  His coalition controls just 72 of the 135 seats in the regional body.

So now the government in Madrid will move swiftly to remove Puigdemont, suspend his ministers and assume authority over the region’s public media, police and finances.  Rajoy has called for calm.  I doubt he will get it. [Puigdemont, for his part, also called for calm.]

As I go to post, Puigdemont and the other leaders could be arrested shortly.

Meanwhile, one leader who is reveling in Spain’s dysfunction is Vladimir Putin. Any movement that destabilizes democracy gives him a tingly feeling.

Brexit: Prime Minister Theresa May returned from her European Union summit last Friday feeling good about the prospects for working out a deal in December, that would then bring on trade talks between Britain and the EU, but back home she was quickly reminded how fragile her position is.

The hang-up for many in her own party is the divorce bill, or breakup fee that the EU is demanding, and May had told EU leaders in Brussels that she would pay billions more  in order to move talks on to trade by year-end.

But some want Britain to pay less, while the opposition Labour Party is saying that changes to key Brexit legislation must be made or the prime minister risks defeat at the hands of Tory rebels backing Labour.

So Mrs. May has eight weeks to unblock Brexit talks because if by end of December there is no breakthrough, businesses have already said they would start initiating contingency plans early next year.

Even if trade talks commence in December, the crucial two-year transition agreement May is looking for (post-the March 2019 exit date) hasn’t even been discussed, making it impossible for business to count on it.

And as if this the internal squabbling wasn’t enough, an account of the dinner between Mrs. May and EU Commission President Jean-Claude Juncker (Oct. 12) emerged, leaked to a Frankfurt newspaper, that May was begging for help at her meetings with Juncker, saying her political enemies left her no room for bargaining.  The paper reported, “She seemed anxious, despondent and discouraged, looking like she barely sleeps.”  [Bloomberg]

Meanwhile, Scotland’s first minister Nicola Sturgeon has sought confirmation from Prime Minister May that Britain is urgently seeking a transition agreement with the EU before the end of the year, as Sturgeon told May in a letter that she was increasingly concerned Brexit talks would end in no deal and see Britain crash out, following contradictory indications from the government earlier in the week.

And Irish Foreign Minister Simon Coveney said on Friday that exit talks with the EU can’t progress without more clarity on what will happen with the border between Ireland and Northern Ireland, one of Brussels’ three main issues (aside from the divorce bill and citizens’ rights).

Ireland is considered the EU member most at risk when its neighbor leaves the bloc.  What neither of the two on the border want to see is a return to a “hard” border, which until a 1998 peace deal was the case...military checkpoints because of 30 years of sectarian violence in the North.

On the economic front for the Eurozone....

A flash reading for October on eurozone (EA19) performance revealed a composite reading of 55.9 (50 being the dividing line between growth and contraction) vs. 56.7 in September, with manufacturing at 58.6 vs. 58.1, and services at 54.9 vs. 55.8. All still solid.

Germany’s flash manufacturing reading was 60.5 vs. 60.6 the prior month, with services at 55.2 vs. 55.6.

France’s manufacturing number for October was 56.7 vs. 56.1, services 57.4 vs. 57.0.  [Eurostat]

But the big news concerned the European Central Bank, which on Thursday announced it was cutting its massive stimulus program, though extending it to run until September.

The ECB opted to cut its bond buying from 60bn euro to 30bn a month, as of January, which was expected, but the mild surprise was an extension of the scheme’s lifespan by a further nine months (a lesser extension was in most forecasts), signaling to investors that despite strong growth across the EA19, there is still no real inflation and the ECB wants to see that rise before reversing course.

As I wrote last week, ECB President Mario Draghi was loath to use the term tapering, so he called the changes a “recalibration” and indicated that the bank’s work in boosting inflation was not over.  Interest rates were left unchanged and the ECB kept its guidance that it would keep them unchanged until well after the bond-buying ends.

So the markets took all the news very calmly, with a bullish tone back in vogue given the ‘lower for much longer’ tenor of the comments and actions.  Yields across the eurozone generally fell in relief over the program’s continuation, even if there will be less bond buying.  [The 60bn to 30bn.]

Eurobits....

--Spain’s unemployment rate, which was nearly 27% at the beginning of 2013, the height of the euro crisis, fell to 16.4% in the third quarter (a nine-year low), according to the National Statistics Institute, down from 17.2% in the previous quarter, but as announced last week, the government lowered its growth forecast for next year based on the Catalonia crisis.

--Czech billionaire Andrej Babis won a big victory in Saturday’s parliamentary election, giving the anti-establishment businessman facing fraud charges a strong mandate to cut taxes, lift public investment and fight immigration; the Czech Republic’s Donald Trump.

Babis captured 30% of the vote, but this is better than it seems as no other party received more than 11%. Babis’ ANO movement is the first party to break a quarter century of dominance by two mainstream center-right and center-left parties. The ruling Social Democrats of Prime Minister Sobotka received about 7.5%.  Yikes.  But the far-right, anti-EU SPD party made strong gains, capturing 10%.

It’s possible Babis will form a coalition with the far right, or more likely the center-right Civic Democrats, who captured 11%. 

Czech President Milos Zeman, who controls the timetable, is giving Babis a month for negotiations before calling a new parliament, the trigger for the current administration to leave. Zeman said he has no problem that Babis is under investigation.

--Residents of two powerful northern Italian regions, Lombardy (think Milan) and Veneto (Venice) voted in a referendum on Sunday on whether they would seek more autonomy from Rome.  95% voted ‘yes’, with 57% turnout in Veneto and 39% turnout in Lombardy. 

The two regions represent 30% of Italy’s GDP, and the base of the right-wing populist Northern League party, which had a goal originally of splitting the north from the poorer south, though now it is just desiring more autonomy.

Turning to Asia....

I cover all the goings on politically in China down below.  On the economic front, the 70-major city property index for new-home prices, as released by the National Bureau of Statistics, rose 6.3% in September, a continuation of decelerating growth following last November’s peak of 12.6%.

Prices in Shanghai are down 0.1% from year ago levels, down 3.8% in Shenzhen, and up just 0.5% in Beijing.

In Japan, as expected, Prime Minister Shinzo Abe’s ruling bloc easily won the snap election he had called for in an attempt to take advantage of disarray in the opposition and thus bolster his position in parliament. In Sunday’s vote, Abe’s coalition won a super majority of 2/3s of seats in the lower house, which allows him to push for a revision of the pacifist, post-World War II constitution.

Abe’s Liberal Democratic Party (LDP) and its partner won 312 of the 465 seats (last I saw).  The win also virtually guarantees Abe will have a third three-year term as LDP leader next September and go on to become Japan’s longest-serving premier.

And it means his “Abenomics” growth strategy centered on hyper-easy monetary policy will continue.

The U.S.-drafted constitution’s Article 9, if taken literally, bans the maintenance of armed forces, though Japanese governments have interpreted it to allow a military exclusively for self-defense, which Abe wants to codify, but critics fear it would allow an expanded role overseas for the military.

Abe had also said he needed a new mandate to deal with North Korea, as well as Japan’s rapidly aging population, which will cause a true economic crisis unless quickly addressed, like in finding ways to encourage more children!  The prime minister wants to be able to divert revenue from a planned sales tax hike to education and child care from public debt repayment.

The other big news recently, aside from the election, has been the performance of the Nikkei stock index (Japan’s Dow Jones), which had an all-time record winning streak snapped at 16 consecutive sessions before a loss on Wednesday, but then it resumed the gains on Thursday and Friday and finished the week at 22008, the highest level since Oct. 1996, though still way off the all-time peak of 38915 set on Dec. 29, 1989.

Separately, Japan’s flash manufacturing reading for October came in at 52.5.

The Japanese economy has grown six consecutive quarters, the longest streak since 2006, with most sentiment readings for manufacturers and business in general at their best levels since 2007.

One more...South Korea’s Q3 GDP expanded 1.4% on-quarter, the fastest growth in more than seven years.  GDP growth for the year ended September accelerated to 3.6% from 2.7% in the second quarter. Exports jumped 6.1% on-quarter.

Street Bytes

--The Dow Jones rose another 0.4% to close at a record-high of 23434, on both the earnings news and hopes for tax reform.  The S&P 500 added 0.2% to finish at its new high of 2581, and Nasdaq rose 1.1% to 6701, another record mark.

For the Dow it was its seventh straight weekly advance.

--U.S. Treasury Yields

6-mo. 1.27%  2-yr. 1.59%  10-yr. 2.41%  30-yr. 2.92%

[When I posted last time, I hadn’t seen the release that day of the federal budget deficit for the recently completed fiscal year (9/30), $666 billion, up from $585 billion the prior year and $438 billion for F2015.]

President Trump said he would announce his pick to be the new Fed chairman next week.

--U.S. crude oil stockpiles posted a surprise build last week, while gasoline and distillate fuel inventories dropped far more than expected, according to data from the Energy Information Administration.

But late Friday, the price of West Texas Intermediate soared to $54.19, representing the highest weekly close since July 2015.  [Brent crude passed $60 today, also for the first time since July 2015.]

Also Friday, Exxon Mobil Corp. reported third-quarter net income of $3.97 billion, ahead of expectations.  Revenues of $66.17 billion also beat the Street, but the shares rose just 0.3% and are down about 7% on the year.  If the $54 level sticks, however, that could change on Monday.

--Heading into this week, as reported by Tiernan Ray of Barron’s, Facebook,  Amazon.com and Alphabet (Google) deserve a lot of the credit for the rally of not just 2017 (two percentage points of the S&P 500’s 16% gain), but of the past three years (five points of its 44% gain over that period). 

So would the action continue this week with earnings releases from Amazon and Alphabet on Thursday?  As alluded to above, yes.

A major issue with these three, as Mr. Ray’s story was largely about, is how long the regulators, both in the U.S. and Europe, are going to accept their dominant market positions.  We’ve already seen Europe’s reaction, the European Commission inquiring into Google, which garners 90% of Europe’s search and mobile operating systems markets.  And some of the U.S.’s Federal Trade Commission comments have prompted speculation about the breakup of these companies.

It’s not just antitrust issues, though, but the massive amounts of data on all of us that the three are accumulating.  I sure as hell don’t like it, though I’ve long come to grips with it, as in I’m not losing sleep over it.

A big thing is the influence of Facebook and Google when it comes to political ads, as we’ve seen, and Sen. John McCain joined two Democratic senators in co-sponsoring legislation that would force the two, and other internet providers, to provide information on who was buying the ads on their sites, after the Russian issue that is not going away anytime soon.

--So Amazon.com reported Thursday, along with Alphabet, Microsoft and Intel, and Amazon reported a higher profit than expected, $256 million from $252 million a year earlier, 52 cents per share vs. analysts’ estimates that ranged from 3 to 8 cents.

Sales were $43.74 billion, up from $32.71 billion, and above Amazon’s own forecast, as well as above the Street’s.  Shares soared in response....

Marketing research firm eMarketer estimates that Amazon will command about 43.5% of total e-commerce sales this year, compared with 38.1% last year.

One thing is clear. Amazon’s expenses continue to explode, with the number of employees increasing to 541,900 from 382,400 in the second quarter.  This includes the roughly 87,000 employees at Whole Foods Market Inc., the acquisition of which was completed in late August.  Whole Foods added $21 million in operating income and $1.3 billion in sales.

Subscription fees such as Prime showed unusually strong growth of 59 percent, to $2.4 billion.

What a lot of analysts’ focus on, though, is Amazon Web Services cloud-computing division, and sales there rose 42% to $4.58 billion.  AWS rents computing power to companies of various stripes, from little startups to large corporations.  But AWS is facing increasing competition from Microsoft and Alphabet’s Google, among others.

--Speaking of Microsoft Corp., it too reported a knockout quarter in cloud-computing, as the two biggest pieces of that division – Azure infrastructure services and Office 365 online-productivity business – saw revenue soar 90% and 42%, respectively. [Microsoft, though, doesn’t release specific revenue #s for each of these businesses.]

Revenue in Microsoft’s More Personal Computing segment, which includes Windows as well as the mobile-phone and gaming businesses, stayed flat at about $9.4 billion.  [Earlier in October, International Data Corp. reported worldwide PC shipments fell 0.5% in the third quarter.]

Overall, MSFT reported net income of $6.58 billion, or 84 cents a share, with revenue rising 12% to $24.54 billion.

--On to Google parent Alphabet Inc.’s third-quarter report, profit growing 33% to $6.73 billion, compared with $5.06 billion a year earlier. Net revenue rose 24% to $27.77 billion.  Alphabet’s earnings per share, $9.57, handily beat the Street.

Google’s cloud and hardware sales (as it aims to diversity away from its advertising business, the largest in the world) grew by 40% to $3.41 billion in the quarter; Google investing heavily in the cloud storage business, though it now lags far behind Amazon and Microsoft.

--Intel on Thursday reported Q3 revenue of $16.15 billion, up 2% from year ago levels, which was above estimates. Net income rose 26%, also beating the Street, and the shares surged.

--Apple Inc.’s iPhone 8 (and larger 8 Plus) posted the weakest sales of any of the company’s new smartphones in recent years, according to two market-research firms and the Wall Street Journal, with the higher-priced iPhone X’s advance orders starting on Friday.

The soft iPhone 8 sales seem to be due in part from confusion over the trio of new products from Apple.

But then today, Apple said pre-orders for the iPhone X were “off the charts” in the first hours of its availability, with Apple stock rallying 3.5% in response.

But demand exceeded initial supply within 10 minutes of pre-orders, with the $999 smartphone expected to start shipping out end of next week, though many won’t see it until at least December.

--In a blockbuster deal, CVS Health Corp. announced it was in talks to buy Aetna Inc., that could value the health insurer at upward of $66 billion, which if it is formally struck would be the largest acquisition of the year.

It was in 2015 that Aetna agreed to buy rival insurer Humana for $34 billion, but that deal fell apart amid regulatory opposition.

As Dana Mattioli of the Wall Street Journal reports: “The approach by CVS, a powerhouse in drug retail, underscores the increasingly close ties between health coverage and pharmacy benefits, as the cost and complexity of specialty medications has continued to rise.”

CVS and Aetna already had a pharmacy-benefit services to the insurer relationship going back to 2010.

But the same day of the CVS and Aetna announcement, Amazon, as reported by the St. Louis Post-Dispatch, received approval from at least a dozen states to become a wholesale pharmacy distributor, sending shares of pharmacy companies plunging, including CVS before it made the Aetna announcement, which could lock in major numbers of new members for its pharmacy-benefit management biz, as well as customers for its drugstores.

--Gotta love how successful McDonald’s Corp. has been under CEO Steve Easterbrook.  The company reported third-quarter earnings of $1.88 billion, in-line with expectations, while U.S. same-store growth was a better-than-expected 4.1%, and global comps were up a super 6% (far ahead of forecasts).

McDonald’s recent strategy of special food offers (read ‘cheap’...like McPick 2) and the push into healthier options and customizable premium burgers were beating back the competition from fast-casual chains. The Big Mac is still my favorite fast-food burger, though I do take advantage of Burger King’s two Whoppers for the price of one specials, because I am always passing this one outlet on my way home from my Staples runs (which are also beer runs...but now I’m divulging way too much data that Facebook and Google are accumulating).

--Meanwhile, shares in Chipotle Mexican Grill Inc. had their worst day in five years, Wednesday, down 15%, after the chain reported third-quarter profits that were below analysts’ expectations; the company saying performance was hurt by historically high prices of avocados that are a staple of its guacamole, a series of hurricanes closed hundreds of locations, and a national data breach earlier in the year resulted in hackers stealing customer payment data.

Chipotle has been reducing the number of planned openings to focus on quality, as it struggles to regain customers lost last year after the first norovirus outbreak that captured national attention, the one that affected 135 patrons at one Sterling, Va., location.

Nonetheless, the company does still expect to grow to 5,000 restaurants from roughly 2,300 today.

For the last quarter, restaurant sales for comparable locations edged up 1%, after the staggering 22% slide from a year ago at the height of the norovirus crisis.

--General Motors posted stronger-than-expected pre-tax profit for the third quarter before charges related to the sale of its European operations. The results sent GM shares to a new high since its IPO in 2010. The U.S. No. 1 automaker also announced it expected annual sales of about 17 million light vehicles this year, after the industry’s strong run to a record 17.55 million units in 2016.

GM continues to rely on pickup trucks, SUVs and crossovers for a large share of its profits. Revenue declined to $33.6 billion from $38.9 billion a year earlier, but above the Street.

--Ford Motor Co. reported a 63% increase in third-quarter profit, the results fueled by sales of F-Series trucks, the big vehicles that make up half of Ford’s profit.

The average Ford pickup sold for $45,400 during the July through September period, far ahead of the $31,200 figure that J.D. Power estimates is the average transaction price on vehicles sold in the U.S., and $2,800 higher than F-Series prices during the same period a year ago.

Including the F-150 truck for lighter-duty needs, the F-Series has been the best-selling vehicle in America since 1977.

--Fiat Chrysler Automobiles reported a 50 percent increase in third quarter net earnings of about $1.1 billion (910 million euros), with revenues down 2 percent.

Latin America returned to profits.

--Caterpillar Inc. blew past Wall Street’s profit and revenue forecasts on surprisingly strong demand for its construction equipment in both North America and even more robust sales in China. The company also raised its full-year forecasts for sales and earnings, with construction business expected to surge 20 percent and mining business 30 percent.

Sales in North America, CAT’s biggest market, jumped 27 percent in the third quarter, but maintaining such a pace is impossible.

In the Asia Pacific region, CAT’s third-biggest, sales jumped 57 percent to $1.29 billion, boosted by demand from China, though that nation’s property sector has been cooling.

CAT had revenue in the third-quarter of $11.4 billion, up a whopping 25 percent, and for the full year, expects to book $44bn in sales.

--So I guess I wasn’t the only one who replenished their “post-it” supply this past quarter, as the maker of same, 3M Company, handily exceeded estimates on earnings and sales, with revenue up a solid 6 percent to $8.17 billion. The company raised guidance as well.

--Boeing reported third-quarter earnings were better than expected, ditto revenue, and the aerospace giant raised its guidance slightly for the full year.

CEO Dennis Muilenburg said Boeing delivered “a record 202 commercial airplanes” in the quarter as it increases production of the 737 MAX aircraft. 

Boeing’s trade dispute with Bombardier continues, with 75 Bombardier C Series jets sold to Delta Air Lines; Boeing claiming Delta got an “absurdly low” price, “in violation of U.S. and global trade laws.”  Bombardier has refuted the allegations as “pure hypocrisy.”

--Coca-Cola’s quarterly profit and revenue topped analyst expectations, as sales in North America rose 3%, Coke gaining market share over rival PepsiCo.

While Coca-Cola had a dip in Diet Coke sales, it sold more Sprite, teas and coffees during the quarter.

Earlier, PepsiCo had reported a drop in North American sales for the first time in two years, hit by weak demand for Gatorade.

--According to Beer Marketer’s Insights, the flagship brew of Anheuser-Busch InBev saw U.S. shipments of the famous lager fall to 14.4 million barrels last year – down 60 percent from the 35.2 million barrels it shipped in 1988, the peak year for Bud.

Shipments of best-selling beer Bud Light are down 15 percent from 2008, to 35.2 million barrels last year.

Anheuser-Busch InBev said on Thursday that its third-quarter U.S. revenue for the entire brand fell 2.2 percent, with the ongoing shift to imported and craft beers.

But when you include all of AB InBev’s other brands, including Beck’s, Corona and Stella Artois, U.S. sales fell a whopping 5.6 percent.  [New York Post]

--United Parcel Service Inc. plans to spend more on its facilities and planes next year, in an effort to keep up with the e-commerce boom that clearly shows no sign of slowing.

Atlanta-based UPS is adding new fulfillment and sorting centers, larger planes, and rolling out Saturday delivery in more markets.  The company also announced it would increase rates 4.9% in late December.

During the coming holiday season, UPS expects to make 750 million deliveries, up 5.6% over last year.

Profit in the third quarter fell slightly to $1.26 billion, with revenue rising 7% to $15.98 billion. The company’s stock rose 1.6% in response.

--Shares in Twitter rose sharply Thursday as the company reported a narrower loss for the quarter and raised its earnings guidance for the current period, even though the company said it had overstated its number of users for the past three years.

Twitter said it did add four million monthly users in the third quarter, better than expected, bringing the total to 330 million. Revenue declined 4.2% from a year earlier to $590 million, though this was slightly better than expected.

Twitter also announced it would no longer accept advertising from any account owned by Russian-backed news outlets RT and Sputnik.

--Mattel Inc. said it would suspend its dividend, accelerate cost-cutting and scale back new product launches after reporting a loss for the third-quarter, with a 13% drop in revenues.

Mattel, the maker of Barbie and Hot Wheels, has been struggling to restructure and is on its third CEO in as many years.

Mattel cut down on new launches by 30% this year, with another 20% cut planned for 2018.  The toy industry overall has also been impacted by the Toys ‘R’ Us bankruptcy.

Mattel shares fell 19% on the news in after-hours trading Thursday, after falling 40% this year.

--I live literally across the street from half of Celgene’s headquarters (the other half of which is on the opposite end of this major street here in Summit, N.J.), and so I’m waiting to hear cries of anguish (none thus far) from the employees stationed there after the company on Thursday missed revenue forecasts and dialed back its outlook.

Celgene is now talking about revenue for the year of $13 billion, vs. a previously forecast $13-$13.4 billion, which ordinarily wouldn’t spell disaster in the share price but today is punished after such a big run-up in both CELG stock and the market overall.  So the shares plunged 19% on the news.

One thing I know, though I am far from an expert on the company, is that the new campus (the old Merck North American headquarters before they decided to consolidate elsewhere), has become rapidly populated, and Celgene’s growth seems to be predicated on expansion; buying smaller companies with promising drugs (many of which may just be in the ‘trial’ phase).  It’s kind of a crapshoot...Celgene’s CEO would hate me saying this...but if, say, you hit one out of four and that one is a Revlimid, Celgene’s current big seller, you’re set for another few years, though you have to keep replenishing the pipeline, knowing the patent protections eventually run off and the generics step in.

[I see a lot of their employees because they cross the street to come to the Dunkin’ Donuts in my building.  And then you have the group that hangs out at the entrance to the company’s complex, taking their smoking breaks, which always cracks me up.  One guy is 450 lbs., in a wheelchair, and he seems to be outside, puffing away, every time I exit my parking garage.  Just a bit incongruous.]

--Walgreens is moving rapidly to integrate Rite Aid stores and implement partnerships with the likes of archrival CVS to succeed in a constantly shifting marketplace, as noted above.

Walgreens is closing about 600 stores, mostly Rite Aid locations, the closures to take place over an 18-month period.  This is expected to result in annual savings of $300 million.  All the Rite Aid stores that aren’t closing will be rebranded as Walgreens.

After the closures and integrations, Walgreens will have roughly 9,400 U.S. locations – still behind CVS’s 9,700.

--Merck & Co. reported a third-quarter loss of $56 million, but adjusted for non-recurring costs and costs related to mergers and acquisitions were $1.11 per share, surpassing expectations.  Revenue was $10.33 billion in the period, slightly below the Street’s forecasts.

--JCPenney fell sharply on Friday, down 15% to $3.11, after it issued a surprise profit warning and cautioned about weakening sales, not that this is anything new with them.

But the guidance, to a profit of 2-8 cents a share for the full-year, compared with a previous forecast of 40-50 cents, was rather shocking.

The news sent ripples throughout the department-store sector, with the likes of Macy’s, Kohl’s and Sears down about 5% each.

--Capital One Financial reported adjusted earnings of $2.42 per share in Q3, beating estimates of $2.16, and up from $2.03 a year ago, while revenue rose to $6.99 billion from $6.46 billion year-over-year, also beating the Street.

--Congress overturned a rule by an Obama-appointed financial regulator that would have made it easier for consumers to sue banks in groups, with Vice President Pence breaking a 50-50 tie in the Senate.  It is a big win for the financial industry and a rebuke of Consumer Financial Protection Bureau Director Richard Cordray, who pressed ahead in defiance of Republicans.  Back in July, the House had voted 231-190 to overturn the rule.

--Last Friday, a judge tossed out a $417 million jury award to a woman who claimed she developed ovarian cancer by using Johnson & Johnson talc-based baby powder for feminine hygiene.

Los Angeles County Superior Court Judge Maren Nelson granted J&J’s request for a new trial, saying there were errors and jury misconduct in the previous trial that ended with the record award two months ago.

--Nordea bank, the Nordic region’s biggest, said it would cut at least 6,000 employees and consultants, as it continues to invest heavily in IT, with automation and digitalization meaning it could shed at least 4,000 of its 32,000 employees and some 2,000 consultants.

Nordea posted profit of $1.3 billion for the third quarter, matching forecasts but below year ago levels.

--The Vegas Massacre investigation got murkier as Customs and Border Patrol documents obtained by Fox News show that Mandalay Bay security guard Jesus Campos mysteriously left the country just days after the mass shooting, crossing into Mexico for a few days, and then reentered the U.S. one week after the massacre.

Why the hell did authorities allow Campos to leave the country in the middle of their probe?! And how did Campos manage to drive to Mexico, via California, with a gunshot wound, apparently to his thigh?

Plus the New York Times has now produced a timeline that places the shooting of Campos about one minute into the attack – and not before.  The Times had digital investigators piece together footage that was captured at the scene and apparently discovered that local police were wrong yet again.  Recall, the police have progressed to a third timeline.

No doubt, the Times could be wrong, but their experts used 30 videos filmed by concertgoers, the Las Vegas police and bystanders.  Senior Story Producer Malachy Browne told CBS News, “Ours isn’t the definitive picture of what happened, more information will emerge, but it does give us new insights into what happened.”

Browne said, “We analyzed every single burst of gunfire, which had its own fingerprint,” noting the conclusion of the investigative team was that Stephen Paddock was shooting into this 32nd floor hallway at around 10:10 p.m. – five minutes before he stopped shooting at concertgoers.

Paddock blasted over 900 rounds into the crowd that night, killing 58, wounding hundreds.

This has turned into a total fiasco, with one party in particular, Mandalay Bay (read owner MGM) scared to death over the timeline and what would be the most expensive class-action suit in history.

--Global wine production is expected to fall to its lowest level in more than 50 years, according to the International Organization of Vine and Wine (OIV), with total world output projected to fall 8% from last year.  According to OIV estimates, Italian wine production will fall 23%, 19% in France, and 15% in Spain.

Australian production is expected to rise 6%, and up 25% in Argentina.  “Don’t whine for me, Ar-gen-tinaaa....”

Output in the U.S. is due to fall only 1%, though this was based on data collected before the Napa and Sonoma County fires.  However, we’ve already detailed how 85%+ of the grapes had been harvested beforehand there, and much of the rest is salvageable.  Plus a lot of the production is in the Central Valley, which wasn’t impacted to any great extent.

--Shares in General Electric struggled anew amid fears the dividend would be cut.  GE is having an investor meeting Nov. 13 at which time it will lay out its future plans, including for the dividend.

--A senior Canadian intelligence official said on Monday that the Canadian government is “really worried” about cyberattacks that have been targeting its infrastructure and it has helped companies improve defenses, without disclosing hacks to the public.  A few days earlier, the U.S. warned sophisticated hackers are targeting U.S. infrastructure, including nuclear, energy, aviation, water and manufacturing industries.

--Sears Holdings Corp. will no longer sell Whirlpool Corp. appliances after a dispute between the two fractured a relationship that stretched back more than a century.

So Sears has stopped carrying products made by the biggest U.S. appliance maker, including Maytag and KitchenAid.

Sears has been a top seller of refrigerators, washing machines, dryers and other appliances for decades, but with the retailer closing hundreds of stores, and the likes of Home Depot filling the void, changes were inevitable.

As recently as 2002, Sears sold four of every 10 major appliances in the U.S., far ahead of its rivals.  But according to market research firm TraQline, its market share fell to 22% for the 12 months ended March.

The disagreement had nothing to do with Sear’s credit issues but rather it was just a pricing issue, as Whirlpool tried to take advantage of its dominant market position.

Just recently, Sears could claim it was the only retailer to feature all the major appliance brands, as it had an exclusive on its own popular Kenmore appliances, which Sears then agreed to start selling on Amazon.com this past spring.

Needless to say, this move by Sears isn’t good for Whirlpool either and its shares fell heavily on the news.

--Tesla reached a deal with the government of Shanghai to build a manufacturing facility in the region, according to the Wall Street Journal.  It was in June that Tesla said it was committed to the Chinese market and looking for the right manufacturing site, while China has been aggressively pushing its automakers to speed up the development of electric cars.

--CBS named Jeff Glor as the new anchor of the “CBS Evening News,” an obviously cheap alternative for a job once held by Walter Cronkite, Dan Rather, and Bob Schieffer, and most recently Katie Couric and Scott Pelley.

Glor has been a reporter for 10 years on the network.  CBS remains third in the nightly news race to ABC and NBC.

--The New York Times broke the story that Bill O’Reilly settled a sexual harassment suit by a former Fox New network contributor, Lis Wiehl, reportedly for $32 million, after which Fox still renewed his contract for $25 million a year, only to then fire him in April as the allegations continued to pour in, while details of past settlements became known (five settlements for a reported $13 million).

For his part, O’Reilly fought back, calling the Times story “a malicious smear” and once again denied any misconduct.  “I have been in the broadcast business for 43 years with 12 different companies,” he told former Fox host Glenn Beck on Beck’s radio program on Monday, “and not one time was there any complaint filed against me.  Nothing.  Zero. So I think my track record speaks for itself.”

But, it’s been reported, O’Reilly and Fox have privately settled with six women who alleged harassment, O’Reilly paying three, including Wiehl; Fox paying three others.

O’Reilly said he cannot discuss monetary figures because of the nondisclosure terms of the settlements.  But he has said the figures mentioned in some of the stories were “wildly wrong.”

Meanwhile, Megyn Kelly weighed in on her NBC show Monday that she had complained about O’Reilly while she was an anchor at Fox but was ignored.

In her monologue which was described in the press as “extraordinary,” but since I didn’t see it myself, I can’t say if this is an apt description, Kelly went after O’Reilly, former bosses and colleagues, accusing the network of fostering a toxic culture for female employees.

“O’Reilly’s suggestions that no one ever complained about his behavior is false,” Kelly said.  “I know because I complained.”

Kelly said she wrote to her bosses about O’Reilly’s comments in an interview with CBS News last fall, where O’Reilly said he wasn’t “interested” in discussing a topic – sexual harassment – that “makes my network look bad.”

Kelly’s response to her bosses in part: “Perhaps he didn’t realize his exact attitude of shaming women into shutting the hell up about harassment on grounds that it will disgrace the company is in part how Fox News got into the decade-long [Roger] Ailes mess to begin with.  Perhaps it’s his own history of harassment of women which has, as you both know, resulted in payouts to more than one woman, including recently, that blinded him to the folly of saying anything other than, ‘I am just so sorry for the women of this company, who never should have had to go through that.’”

Kelly said the response was that O’Reilly was “permitted with management’s advance notice and blessing” to appear on his program that night “to attack the company’s harassment victims yet again.”  [New York Times, Washington Post, Los Angeles Times]

Foreign Affairs

China: President Xi Jinping cemented power for the next five years, and probably beyond, when he was re-elected leader with no clear successor.

His name and doctrine have been written into the constitution.  Chinese schoolchildren will soon be studying President Xi’s political ideology, “Xi Jinping Thought” going into every textbook, taught in every class, as the nation’s children are brainwashed.

Any attack on Xi is now the same as an attack on the party.

Xi told party delegates as the meeting came to a close after approving the addition of his ideology of “socialism with Chinese characteristics for a new era” that is now in the party charter, “The Chinese people and nation have a great and bright future ahead.” 

No they don’t.  They are going to continue to flood to the United States.

The reference to “new era” is a way of saying this is the third chapter of the modern era; the first was under Chairman Mao, uniting a country devastated by civil war, the second was the economic boom, ‘getting rich,’ under Deng Xiaoping, and this new era is about more unity and wealth, while making China disciplined at home and strong abroad, including building more artificial islands in the South China Sea with airbases.

“At this great time, we feel more self-confident and proud. At the same time, we also deeply feel a heavy sense of responsibility,” he said.

Only Mao’s name was enshrined in the party ideology while he was still alive.  The Cult of Xi has officially begun.

On Wednesday, at the close of the Communist Party Congress in Beijing, Xi formally received his second term in office.

Five new appointments were made to the all-powerful, seven-member Politburo Standing Committee, joining Xi and Premier Li Keqiang, and while there had been talk Xi might elevate one of his proteges who are in their 50s, all five are in their 60s (all seven skillfully dying their hair black, of course, as is required in China if you ever want to be a top political figure), and because of the ages, this is only fueling speculation that Xi will want to stay in power beyond 2022.  [To be fair, at the next level, the 25-member Politburo, two have photos exhibiting gray hair.]

Importantly, the constitution was also amended to include references to the party’s “absolute” leadership over the armed forces.

If you want a clue as to what is in store for the West the next five years plus, major Western news organizations, including the BBC, Financial Times, Economist, New York Times and Guardian, were barred from Wednesday’s ceremony to reveal the new Standing Committee.  Unofficially, journalists from these outlets were told they were barred because of their past reporting, as Xi is determined to control the message at home and abroad.

Trump tweets: “Spoke to President Xi of China to congratulate him on his extraordinary election. Also discussed NoKo & trade, two very important subjects!”

“Melania and I look forward to being with President Xi & Madame Peng Liyuan in China in two weeks for what will hopefully be a historic trip!”

David Ignatius / Washington Post

“President Xi Jinping’s command at this month’s Communist Party gathering was so complete that President Trump likened him to a ‘king.’  But some China analysts are wondering whether Xi has overreached.

“Xi dominated the stage, literally and figuratively, at the party’s 19th Congress, which ended this week in Beijing.  His consolidation of power has nearly erased the collective leadership style of his recent predecessors and vaulted him into a Chinese pantheon occupied only by Mao Zedong and Deng Xiaoping. ‘Xi Jinping Thought’ is now celebrated as the guide to a ‘new era’ for China.

“Xi’s capture of the commanding heights was summarized in a private report by Pamir Consulting, a leading advisory firm on China. During Xi’s first five years in office, Pamir reported, his anti-corruption campaign has disciplined 1.53 million party members and prosecuted 278,000, including 440 ministerial or provincial officials and 43 Central Committee members, about 11.4 percent of that body.

“Xi has purged the Chinese military, too.  Under his rule, 13,000 officers have been sacked and more than 50 general officers have been imprisoned for corruption, by Pamir’s count.  In place of the ousted generals, Xi has installed new commanders for the joint staff, army, navy and air force of the People’s Liberation Army.  Members of this reshaped force now appear to control nearly 20 percent of the party’s reconstituted Central Committee.

“Xi also reigns supreme in the factional battle at the top of the party leadership. Of the 25 members of the Politburo, 17 are his allies, Pamir estimates. His faction has four seats on the Politburo’s seven-member standing committee. And for the first time in several decades, the leadership hasn’t signaled who will succeed Xi after he completes his second five-year term as party secretary, suggesting that he may ignore the 10-year limit that capped recent Chinese leaders.

“Trump appears to see a kindred spirit in Xi. He made a congratulatory telephone call Wednesday and praised Xi’s ‘extraordinary elevation’ in a tweet.  ‘Some might call him the king of China,’ Trump said in a television interview.”

So what can go wrong?  As David Ignatius writes, “(Xi) owns China’s economic and foreign policies so totally that he’ll get blamed for any setbacks.  Perhaps more important, his power play may worry older Chinese who remember the damage done by Mao’s cult of personality.”

Xi is rolling out the red carpet for Trump when he arrives Nov. 8, and Trump will no doubt eat it up.  #sad

North Korea:  Wednesday, North Korea’s foreign ministry spokesman told CNN that warnings of a possible atmospheric nuclear test over the Pacific Ocean should be taken literally.  “The foreign minister is very well aware of the intentions of our supreme leader, so I think you should take his words literally.”  In September, Foreign Minister Ri Yong Ho said Pyongyang may consider conducting “the most powerful detonation” of a hydrogen bomb over the Pacific.

Speaking in the Philippines, in the company of his U.S. and South Korean counterparts, Japan’s defense minister claimed the nuclear and conventional weapons threat from North Korea has reached a “critical and imminent level.”

“Therefore,” Itsunori Onodera said, “we have to take calibrated and different responses to meet with that level of threat.”

Today, Friday, Defense Secretary Jim Mattis, emphasized diplomatic efforts to resolve the North Korean crisis, while in South Korea meeting with his counterparts, saying in prepared remarks delivered at the DMZ:

“North Korean provocations continue to threaten regional and global security despite unanimous condemnation by the United Nations Security Council.

“As Secretary of State Tillerson has made clear, our goal is not war, but rather the complete, verifiable, and irreversible denuclearization of the Korean Peninsula.”

Iraq / Syria / Iran: Iran’s supreme leader, Ayatollah Ali Khamenei, hosted Iraqi Prime Minister Haidar al-Abadi this week, telling him Iraq cannot rely on the United States in the fight against ISIS, as Iran seeks to drive a wedge between Washington and one of its close allies.

“Unity was the most important factor in your gains against terrorists and their supporters,” Khamenei told Abadi, according to state television, and Reuters.  “Don’t trust America...It will harm you in the future.”

Iraq is that rare country that is closely allied to both the United States and Iran, both with forces in the country.  The U.S. has 5,000 troops, plus it provides air support, training and weapons to the Iraqi army.  Iran funds and trains Iraqi Shiite paramilitaries known as Popular Mobilization, which fight alongside government troops.

But while Iraq has avoided antagonizing either Washington or Tehran over the years, the Iraqi government’s confrontation with the Kurdish minority has threatened to tip the balance in favor of Iran, as the Kurds are funded and trained by the U.S.

The Iraqi military’s offensive against the Kurds has resulted in Iraq seizing considerable territory from Kurdish forces.

So this week, U.S. Secretary of State Rex Tillerson demanded Abadi send Iranian fighters in pro-government Shiite militias “home.” Abadi’s office quickly issued a statement saying no country can give orders to Iraq, calling the paramilitaries “patriots.”

And now Abadi has been traveling to Iran and Turkey, seeking support for his hard line towards the Kurds.

Wednesday, the Kurdish regional government proposed a ceasefire, as well as a suspension of last month’s Kurdish referendum on independence, in order to start an open dialogue with the federal government “based on the Iraqi Constitution.”

But the Abadi government rejected the offer, saying the referendum result must be annulled, rather than merely suspended, as a pre-condition for talks.

Abadi, in his meeting with Khamenei, was quoted as saying, “We will preserve Iraq’s unity and will never allow any secession.”

 [Earlier, Abadi, in an interview with a number of U.S. newspapers, said he had issued a plea to Washington and Tehran not to involve Iraq in their growing confrontation over Iran’s nuclear deal and missile program, and the U.S. threat of renewed sanctions.  Iraq, like Iran, is majority Shiite and Abadi’s predominantly Shiite party has been allied with Tehran for decades.]

Senator John McCain / New York Times

“Clashes this month between elements of the Iraqi security forces and Kurdish fighters around Kirkuk are deeply troubling, in particular because of the United States’ longstanding friendship with the Kurdish people. These clashes are also emblematic of a broader, more troubling reality: Beyond our tactical successes in the fight against the Islamic State, the United States is still dangerously lacking a comprehensive strategy toward the rest of the Middle East in all of its complexity.

“This is the unfortunate legacy that the Obama administration left for its successor.  President Trump’s call this month for a broader strategy to confront Iran’s malign influence across the Middle East was an encouraging indication that the administration recognizes the problem.

“But just days after that speech, reports surfaced that Qassim Suleimani, the commander of the Iranian Revolutionary Guard’s elite Quds Force, was near Kirkuk, preparing military advances on Kurdish positions by Iranian-backed Iraqi militias to augment the broader efforts of Iraqi security forces. When those advances came, some Iraqi forces, according to reports, fought with equipment that had been provided by the United States.

“This is totally unacceptable.  The United States offered some arms and training to the government of Iraq to fight the Islamic State and secure Iraq from external threats – not to attack Iraqi Kurds, who are some of America’s most trusted  and capable partners in the region....

“The clashes in Kirkuk are symptomatic of a deeper problem that the United States has failed to address for many years: Both within countries and between them, the regional order in the Middle East is rapidly collapsing. American power and influence is diminishing there, largely because over the past eight years the United States has withdrawn from the region. The resulting vacuum is being filled by anti-American forces.

“While the current administration, like its predecessor, remains singularly focused on defeating the Islamic State – which is, of course, essential – our adversaries are taking advantage of us everywhere else.”

[See below]

As for Syria, last weekend, U.S.-backed forces said they had captured Syria’s largest oil field from Islamic State who had held it since 2014 and used it as a major source of income.  Regime forces are also racing to seize territory in the oil-rich eastern province of Deir Ezzor.  This is only going to lead to major clashes between the two down the road.

And this week, according to a report sent to the United Nations Security Council on Thursday, the Syrian government is to blame for a chemical attack on the opposition-held town of Khan Sheikhoun that killed dozens last April. The U.N. report also said ISIS was to blame for the use of sulfur mustard in the Syrian town of Umm Hawsh on Sept. 15 and 16, 2016.

The attack by the Assad government prompted the U.S. missile strike against a Syrian air base that Washington said was used to launch the strike.

Editorial / Washington Post

“Mr. Trump may believe he can extract the United States from Iraq and Syria without harming strategic interests. If so, he is repeating the mistake of President Barack Obama. A failure by the United States to defend its allies or promote new political arrangements for the two Arab states will lead only to more war, the rise of new terrorist threats and, ultimately, the necessity of more U.S. intervention.”

Editorial / Wall Street Journal

“Mr. Trump campaigned to defeat ISIS, and he is loath to make U.S. commitments abroad. But this month he also promised a new strategy to deter Iranian designs for regional hegemony. That strategy won’t work if the U.S. declares victory over ISIS and walks away.

“Like Barack Obama, sooner or later Mr. Trump will be pulled back in – either by a reconstituted Sunni jihadist vanguard, or an Iranian threat to Jordan, the Kurds, Israel or the Sunni Arab States. The Trump Administration needs a policy to consolidate the victory against ISIS into a strategic gain for U.S. interests in the Middle East.”

Israel: Israeli Intelligence Minister Israel Katz said in an interview in Tokyo, “If international efforts led these days by President Trump don’t help stop Iran attaining nuclear capabilities, Israel will act militarily by itself. There are changes that can be made (to the nuclear accord) to ensure that they will never have the ability to have a nuclear weapon.”

Separately, in the opening speech of the Knesset’s winter session, Prime Minister Benjamin Netanyahu for the first time classified Iran’s involvement in Syria as a greater and more immediate danger to Israel than the Iranian nuclear threat.

Netanyahu is still stressing the nuclear issue, but in recent months, he has been warning of the danger in Syria.

“We face even greater challenges inside and outside the country, first and foremost to thwart Iran’s attempts to establish itself in Syria....At the same time, we are determined to prevent Iran from obtaining nuclear weapons.”

Israel is hoping President Trump can take care of the Iran nuclear issue, while it focuses on Iran’s actions in Syria, especially in the increasing deployment of Hizbullah and Shiite militias near the border in the Golan Heights.

Egypt: As I was going to post last Friday night, I saw some news on a clash between Egyptian security forces and militants, but details were sketchy so I didn’t write anything. We later learned 59 Egyptian police officers and security officials were killed in an ambush 85 miles from Cairo.

The Egyptians were said to be on their way to attack a militant hideout, but the militants were tipped off and were lying in wake, attacking the Egyptians from positions on higher ground.  There was no claim of responsibility, and it’s unclear if this was an ISIS offshoot, or a Muslim Brotherhood-related group.

Russia: Celebrity and presidential candidate Ksenia Sobchak said in her first press conference since announcing she would run against Vladimir Putin in next March’s election, that “according to international law, Crimea belongs to Ukraine. Period.”

But here’s the thing. It was long thought that Putin would come up with an opponent just to try to make the election look legit, so it’s thought Sobchak, a rather attractive sort who is a television host, was tabbed, though of course she would never admit it, and that the Crimea statement is just part of the act.  In the past, for example, she had tweeted support of the annexation of the piece of Ukraine.

[There is little chance that the real opposition figure, Alexander Navalny, will be allowed to run for president.]

Separately, a new investigative report, the Organized Crime and Corruption Reporting Project, published in Novaya Gazeta on Tuesday, estimated Vladimir Putin’s wealth at $24 billion, which is hidden from the public, with close friends holding the assets for him.

For example, the Panama Papers had previously identified musician and childhood friend Sergei Roldugin as the owner of offshore companies that the president’s inner circle used to channel $2 billion to Russia in a money-laundering scheme.

The new report found that one of Putin’s proxies worth $573 million based on publicly available figures is Mikhail Shelomov, 49, the son of the president’s cousin.  His official salary at a state oil firm is $700 per month, according to the investigation.

Another member of the inner circle is a former butcher and another childhood friend of Putin’s, Pyotr Kolbin, who has an estimated net worth of $550 million.

A 2012 investigation found that Kolbin was a stakeholder in an energy company rumored to be the source of Putin’s private wealth, but Kolbin denied he was a businessman.

The new report quotes an unnamed ex-KGB officer as saying that Putin “will never leave any trace” of his vast assets.

“Why should [he], if there are trusted people from the inner circle or some distant relatives who can keep all the assets?”

Kenya: Police here shot dead at least three people as the bitterly divided country went through another presidential vote.  Heeding a call from their candidate Raila Odinga to boycott the poll, opposition supporters paralyzed his strongholds in western Kenya, while police battled protesters in pockets of the capital, Nairobi.  The electoral commission called off the vote in four of Kenya’s 47 counties, deepening the uncertainty.

Voters in the affected counties will be asked to vote for a third time in under three months on Saturday.

President Uhuru Kenyatta is poised to secure a second five-year term by an overwhelming margin after the only credible opponent, Odinga, pulled out of the rerun of August’s vote that had been ordered by the Supreme Court.

But this means Kenyatta will be dogged by questions of legitimacy in an ethnically divided country.

Random Musings

--Presidential tracking polls:

Gallup: 36% approval of President Trump’s performance, 58% disapproval
Rasmussen: 43% approval, 55% disapproval

--A survey from Harvard-Harris Poll of GOP voters found that the Republican Party’s approval rating has hit a new low, with 56% of Republicans saying Sen. Mitch McConnell should resign as majority leader, McConnell with the worst approval rating of any politician in the survey, at 16% favorable and 52% unfavorable.

29% approve of GOP voters approve of the job Republicans are doing, while only 39% of Republicans say GOP leaders in Congress represent their views.

President Trump’s approval among Republicans is 80%.

--Two U.S. senators appeared at Democratic Sen. Robert Menendez’s (N.J.) federal corruption trial on Thursday in Newark, fellow New Jersey Democratic Sen. Cory Booker, and, surprisingly, Republican Sen. Lindsey Graham (S.C.)

Graham said, “I disagree with him politically, but I think he’s a very honest, honorable guy.  If he gives you his word he sticks with it, no matter how much pressure is put on him to back off. And we need more of that, not less.”

I’m on record as saying that, yes, while Menendez is dirty, I think he is one of the brilliant foreign policy minds in Washington these days and we need him with the issues we face in this sphere.  So it was kind of interesting that clearly Graham, who serves on the Foreign Relations Committee with Menendez, is thinking along the same lines.

--The United States Air Force is taking preparatory steps towards putting nuclear armed B-52 bombers on full-time alert.

Air Force chief of staff Gen. David Goldfein said in an interview with Defense One, “I look at it more as not planning for any specific event, but more for the reality of the global situation we find ourselves in.”  The actual order to put the bombers on alert apparently has not been given yet, but the Air Force is gearing up.

Barksdale Air Force base in northwestern Louisiana is the home of Air Force Global Strike Command, which oversees all nuclear forces the Air Force has under its command.

If a nuclear war was declared, the two planes that would serve as the flying command posts of the current defense secretary and STRATCOM commander would be pre-positioned there for use.  The rest of us would head to the grocery store for Pop Tarts and water, and then hit the liquor store before barricading ourselves in our homes.

--After a global uproar ensued, the World Health Organization decided to rescind the appointment of Zimbabwe President Robert Mugabe as a WHO goodwill ambassador; an appointment so bad even I had to take to Twitter blasting the WHO.  Of course I’m one who has had no problem admitting that back in 1999 and 2000, in these very pages, I was calling for Mugabe to be taken out, and I still maintain that if we (working with the Brits, because of their past ties to the place) had removed him, Osama bin Laden may have gotten the message, prior to 9/11.

[For those of you who don’t remember, Mugabe stole an election and went wild against the opposition, destroying his country in the process and he’s been a dictator ever since.  He was StocksandNews’ first “Dirtball of the Year,” a multiple winner, actually.]

--In an interview on C-SPAN3 last weekend, Sen. John McCain commented on the Vietnam War and a topic that has long ticked him off.

“One aspect of the conflict that I will never ever countenance is that we drafted the lowest income level of America and the highest income level found a doctor that would say that they had a bone spur,” McCain said, alluding to President Trump, who had multiple deferments.

“That is wrong...If we’re going to ask every American to serve, every American should serve.”

--Fred Hiatt / Washington Post

“Larry Diamond, a Hoover and Stanford University democracy expert, said research shows more clearly than ever that democracy is associated with economic growth, personal freedom and civil liberties, and transparency and reduced corruption. He said polls show that demand for democracy remains high, including in regions of Africa where many governments fail to deliver.

“Yes, Diamond said, the world is experiencing a ‘deepening democratic recession’ characterized by fewer nations living freely, as measured annually by Freedom House; by increasing power projection from Russia and China; by the breakdown of democracy from Turkey to Thailand to Hungary; and by a ‘wave of illiberal populism’ and a ‘decay of democratic values and self-confidence in the U.S. and Europe.’....

“You can debate the causes of this democratic decay, which obviously did not begin with Trump.  Blame Bush’s invasion and bungled occupation of Iraq; President Barack Obama’s abandoning Syria to its grisly fate; or deeper, underlying trends of wage stagnation, economic inequality, fracturing social media.

“But Trump’s admiration for strongmen and contempt for democratic values has accelerated the trend and shocked much of the world.....

“The good news is the United States has hardly tried to counter the authoritarian offensive – which means that, if we stirred ourselves to act, we might yet shift the momentum....

“ ‘We will not thrive in a world where our leadership and ideals are absent,’ said McCain.  ‘We wouldn’t deserve to.’”

--Political journalist Mark Halperin’s career has been derailed by a report he sexually harassed five women during his tenure at ABC News, and hours later, following a CNN report, his contributor’s role at MSNBC and NBC News ended, while Penguin Press canceled the publication of his next “Game Change” book about the 2016 presidential campaign, co-authored with John Heilemann, who I imagine is rather torqued off.  Plans for an HBO miniseries were also squelched.

After the initial report, other women began to come forward, though most anonymously.

--The release of secret government documents pertaining to the assassination of John F. Kennedy that was to take place on Thursday per an order from President Trump, after a mandated delay of 25 years, was only partially adhered to, as both the FBI and CIA convinced Trump that they needed more time to redact some of the material.

For decades, the National Archives has been gathering government assassination papers, with 88% of the Archives’ 5 million pages of JFK material already public.

Trump said in a memo released by the White House: “I am ordering today that the veil finally be lifted.  At the same time, executive departments and agencies have proposed to me that certain information should continue to be redacted because of national security, law enforcement, and foreign affairs concerns. I have no choice – today – but to accept  those redactions rather than allow potentially irreversible harm to our nation’s security.”

A 2013 Gallup poll found 61% of Americans believe that Kennedy’s assassination was a conspiracy, and not the lone action of Lee Harvey Oswald.

Watching Jack Ruby kill Oswald, live, was my first vivid television memory as a kid.

---

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

God bless America.

---

Gold $1274
Oil $54.19

Returns for the week 10/23-10/27

Dow Jones  +0.4%  [23434]
S&P 500  +0.2%  [2581]
S&P MidCap  +0.3%
Russell 2000  -0.1%
Nasdaq  +1.1%  [6701]

Returns for the period 1/1/17-10/27/17

Dow Jones  +18.6%
S&P 500  +15.3%
S&P MidCap  +10.7%
Russell 2000  +11.1%
Nasdaq  +24.5%

Bulls 62.3...three weeks in a row above 60 danger level
Bears 15.1  [Source: Investors Intelligence]

Have a great week.

Brian Trumbore