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11/18/2017

For the week 11/13-11/17

[Posted 11:30 PM ET]

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Edition 971

The president returned from his big trip, optics largely good throughout. Substance?  Save for the speech to the South Korean Assembly on North Korea, zero.

I just firmly believe, a la David Ignatius down below, that when it comes to foreign policy our leader is largely clueless.  Yes, some of his ‘instincts,’ his ‘gut reactions,’ may prove to be right, but in the case of, say, Syria, he has no idea how the United States lost....it’s over....it’s Iran’s (and Russia’s to the extent they want it to be be...mainly for a seaport on the Mediterranean and an airbase).  As I wrote of last time, we are hurtling towards another Mid-East disaster.  Trump’s cuddling up to the Saudis also spells nothing but trouble.

And watch Israel.  Prime Minister Benjamin Netanyahu, who I have long called the brightest man on the planet, I also add in the same sentence is the most corrupt person walking the earth today.  Many in Israel have been waiting months and months for an indictment (or seven) on the many investigations swirling around him (and his wife).

But this is bad...because Netanyahu desperately needs a distraction.  And the United States, not just Trump, but Barack Obama, has given him one in Syria, which is all about Iran, while the Saudis are suddenly buddy-buddy, wanting Netanyahu to go after Lebanon (also read Iran and its support of Hizbullah).

What did I tell you in the summer of 2012, and incessantly since then?  If we had worked with Turkish President Erdogan on a no-fly zone in Syria, as he desperately wanted, but President Obama ignored, there would have been no ISIS, no massive Iranian involvement, for sure no Russians, 480,000 lives saved, and NO refugee crisis in Europe!

But it was GM is alive, bin Laden is dead...the mantra for Obama during that election year.  If you are a new reader, I have long said my goal in life at this point is to ensure that history recalls this time, 2012, as the year that changed everything for the worse....and it’s all on him.

Now, though, we have a different leader.  Read on....

Trump World....

Trump tweet: “Our great country is respected again in Asia.  You will see the fruits of our long but successful trip for many years to come!”

Upon his return from his Asian adventure, President Trump addressed the people Wednesday.

“Last night, I returned from an historic 12-day trip to Asia.  This journey took us to five nations to meet with dozens of foreign leaders, participate in three formal state visits, and attend three key regional summits.  It was the longest visit to the region by an American President in more than a quarter of a century.

“Everywhere we went, our foreign hosts greeted the American delegation, myself included, with incredible warmth, hospitality, and most importantly respect. And this great respect....was further evidence that America’s renewed confidence and standing in the world has never been stronger than it is right now.

“When we are confident in ourselves, our strength, our flag, our history, our values – other nations are confident in us.  And when we treat our citizens with the respect they deserve, other countries treat America with the respect that our country so richly deserves....

“Our trip was defined by three core goals. First: to unite the world against the nuclear menace posed by the North Korean regime, a threat that has increased steadily through many administrations and now requires urgent action.

“Second: to strengthen America’s alliances and economic partnerships in a free and open Indo-Pacific, made up of thriving, independent nations, respectful of other countries and their own citizens, and safe from foreign domination and economic servitude.

“And third: to finally – after many years – insist on fair and reciprocal trade. Fair and reciprocal trade – so important. These two words – fairness and reciprocity – are an open invitation to every country that seeks to do business with the United States, and they are a firm warning to every country that cheats, breaks the rules, and engages in economic aggression – like they’ve been doing in the past, especially in the recent past.

“That is why we have almost an $800-billion-a-year trade deficit with other nations.  Unacceptable.  We are going to start whittling that down, and as fast as possible.

“With these goals, it was my profound honor to travel on this journey as your representative....

“Once again our country is optimistic about the future, confident in our values, and proud of our history and role in the world....

“From South Korea, Melania and I traveled to China, where, as in Japan and South Korea, we were greatly honored by the splendor of our reception.  Our trip included the first official dinner held for a foreign leader in the Forbidden City since the founding of the modern China, where we enjoyed a very productive evening hosted by President Xi and his wonderful wife, Madam Peng....”

[Source: Whitehouse.gov]

Yes, as I wrote months before the trip, he’d be smitten by Xi, the dictator.

David Ignatius / Washington Post

“As President Trump ends his Asia trip, he might sum up the 12-day journey with a revision of the remark attributed to Julius Caesar: Veni, vidi, blandivi.  I came, I saw, I flattered.

“Trump’s trip was closer to a pilgrimage than a projection of power. The president rarely explained details of U.S. policy. Instead, he mostly asked other leaders for help, lauded their virtues and embraced their worldviews.

“Along the adulation tour, Trump spoke of his ‘really extraordinary’ relationship with Japanese Prime Minister Shinzo Abe; his ‘incredibly warm’ feeling for Chinese President Xi Jinping, whom he called ‘a very special man’; his ‘great relationship’ with the ‘very successful’ Philippine President Rodrigo Duterte; and his empathy for Russian President Vladimir Putin, whose nation is ‘an asset to our country, not a liability.’

“And the president praised himself at nearly every stop, telling reporters on the way home that the trip had been ‘tremendously successful’ with ‘incredible’ achievements.

“Trump’s trip may indeed prove to be historic, but probably not in the way he intends. It may signal a U.S. accommodation to rising Chinese power, a desire to mend fences with a belligerent Russia – with few evident security gains for the United States. If the 1945 Yalta summit marked U.S. acceptance of the Soviet Union’s hegemony in Eastern Europe, this trip seemed to validate China’s arrival as a Pacific power.  As Xi put it to Trump, ‘The Pacific Ocean is big enough to accommodate both China and the United States.’....

“The most worrying thing about Trump isn’t his impulsive military threats (though there’s reason to be concerned there, too).  The deeper fear is that in national security, this administration is an empty suit. It doesn’t make decisions. It doesn’t set priorities.

“Trump is a vain man who flatters others so that he will be stroked himself. If there’s a strategic concept underlying his approach, it may be realism married to acquiescence. The Asia trip left me feeling that we’re watching an American retreat, accompanied by a shiny brass band.”

As noted, Trump constantly brought up Trade....

Editorial / Wall Street Journal

“Donald Trump was having a successful Pacific sojourn this week, and then came Friday’s speech to the Asia Pacific Economic Cooperation confab in Vietnam. This was supposed to lay out his vision for a free and open Indo-Pacific, but instead he went on a tear against multilateral trade agreements.  This dismays America’s friends, gives a new opening to China, and threatens the rules-based order Mr. Trump says he wants. The biggest victim will be the United States.

“ ‘I will make bilateral trade agreements with any Indo-Pacific nation that wants to be our partner and that will abide by the principles of fair and reciprocal trade,’ the President said.  ‘What we will no longer do is enter into large agreements that tie our hands, surrender our sovereignty, and make meaningful enforcement practically impossible.’

“Mr. Trump is wrong that multilateral agreements have allowed other countries to ‘take advantage of’ the U.S.  The multilateral trading system the U.S. created after World War II has built foreign markets for American exports, which now represent 12.3% of U.S. GDP and an estimated 11.3 million jobs.  Mr. Trump is also wrong to believe he can force Asian nations to go along with his plan. They are already on the way to proving that his decision in January to pull out of the Trans-Pacific Partnership (TPP) trade pact was a strategic and economic mistake.

“Evidence is growing that the U.S. is already losing out. The remaining 11 countries party to the TPP reached partial agreement on the deal without the U.S. at the APEC summit this week.  If they succeed and the U.S. doesn’t rejoin, American exporters will be disadvantaged in markets that represent 16% of global GDP....

“The U.S. simply doesn’t have the economic leverage to force Asian nations to make big concessions in bilateral agreements. Perhaps it did in the 1980s, when Mr. Trump’s understanding of world trade seems to have stopped. Then the U.S. was the destination market for the bulk of Asia’s production.  Countries have many other destinations for goods and services, and companies are focused on trade within the rapidly growing region....

“As the U.S. is left behind, the biggest American losers will be the President’s supporters in the Midwest and farm states. TPP remains America’s best chance to benefit from Asia’s growth, and the deal addresses many of the President’s complaints about intellectual property theft, predatory industrial policy and enforcement of rules. America’s friends at APEC were disappointed by Friday’s speech, but their commitment to multilateral trade can force Mr. Trump or his successor to change course.”

Tax Reform

We are inching closer to a final tax cut package, but there is still a ton of uncertainty.  That said, House Republicans passed legislation that is a crucial step forward in their effort to enact a centerpiece of President Trump’s economic agenda, the bill passing 227-205, with 13 Republicans against, while no Democrats voted for it.

Trump and Republican leaders are rushing to pass legislation by year’s end that would simplify the code and deliver $1.5 trillion in tax cuts over a decade.  Both the House and Senate versions focus more on corporate tax cuts than on individuals, but there are significant differences between the two versions that, assuming the Senate passes their own shortly, would then have to be hashed out in conference between the two.

At least for now House Speaker Paul Ryan and House leaders can claim victory.

But the effort faces major uncertainty in the Senate, where with but a 52-48 edge, Republicans are struggling to find enough support, particularly among the deficit hawks, the bill increasing the deficit $1.5 trillion over ten years...on paper.

Some Republicans in the Senate are also not happy that while the reductions to the corporate tax rate are permanent, those for individuals would expire (Republicans saying they expect the tax cuts for individuals to be extended in future legislation). The Senate plan would also repeal the  Affordable Care Act’s individual mandate to purchase health insurance, a difference from the House plan that gives Senate leaders more revenue to work with but cuts out millions of Americans from health coverage (until they find alternative plans).

Congress’ nonpartisan tax analysts (the Joint Committee on Taxation) also dealt a blow to the Senate plan when it concluded the bill would, by the end of the decade, raise the average tax burden for the middle class, owing largely to changes in the healthcare law, because many would no longer get subsidies to help them afford health insurance.

The Senate bill would eliminate Americans’ ability to deduct state and local taxes from their federal tax bills, which was a reason why the 13 Republicans voted ‘no’ on the House version. All were from New Jersey, New York and California, even though the House bill contained a compromise, eliminating most breaks for many state and local payments but allowing Americans to deduct up to $10,000 in property taxes.  That said, 13 was far fewer than feared.

Kimberley A. Strassel / Wall Street Journal

“Hell hath no fury like a swamp creature scorned, and that ferocity was trained almost exclusively these past few weeks on California House Republicans. The attack was a case study in standing up to entrenched special interests, and a lesson to other Republicans in the virtues of having the backbone to go on offense.

“The House GOP passed its tax-reform bill on Thursday, and special medals of valor go to the 11 of 14 California Republicans who voted in support. The lobbyist brigade had joined with Democrats to target the Golden State delegation, seeing it as their best shot at peeling off enough Republicans to kill the bill. The assault was brutal, dishonest and all-out....

“Gov. Jerry Brown unleashed on state Republicans, calling them ‘sheep’ for supporting an end to most state and local tax, or SALT, deductions, and sending them letters deploring the tax hit on residents of high-tax California. Minority Leader Nancy Pelosi accused them of ‘looting’ the state. Her Senate counterpart, New York’s Charles Schumer, warned of ‘political fallout’ that would be ‘catastrophic.’....

“This is the reward for attempting to simplify the tax code – the forces of distortion scurry to protect their privileges. Democrats had hoped Republican infighting would tank tax reform.  But as the GOP kept marching, the left and special interests instead turned to picking off blue-state Republicans with scare campaigns about mortgage interest and SALT.  Most of the New York and New Jersey GOP contingencies quickly caved, which left the Californians to field all the incoming fire.  Had they defected in the same manner as their Northeastern colleagues, the bill would have failed....

“But tax writers made sure state Republicans came armed with analyses showing how other reforms – cuts in individual rates, the doubling of the standard deduction, the elimination of the alternative minimum tax – would more than offset a SALT elimination, and members forcefully made the case.”

Trumpets....

--President Trump said Russian President Vladimir Putin once again denied meddling in the 2016 election during their brief conversations Saturday on the sidelines of a summit in Vietnam.  Trump told reporters aboard Air Force One that every time Putin sees him he says: “I didn’t do that.”

Trump said: “And I believe, I really believe that when he tells me that he means it.”

Multiple U.S. intelligence agencies have concluded Moscow did meddle in the 2016 election to try to help Trump win.  Trump dismissed the heads of those agencies as “political hacks.”

Trump then backtracked the next day, telling reporters: “As currently led by fine people, I believe very much in our intelligence agencies.”  He said he didn’t want to “stand and start arguing” the point with Putin during their meeting, adding that it was “very important” to get along with Russia, China and other countries to address global problems.

Separately, the Kremlin said that inflexibility on the part of the United States was to blame for the lack of a bilateral meeting between Putin and Trump during the Vietnam summit.

--Sen. Al Franken (D-Minn.) called for an ethics investigation into his own behavior, following a revelation by television host and broadcaster Leeann Tweeden, who came forward with accusations Franken groped her while on a USO Tour in 2006, a photo of the incident splashed all over the country and social media.

Franken said: “I understand why we need to listen to and believe women’s experiences. I am asking that an ethics investigation be undertaken, and I will gladly cooperate....

“The truth is, what people think of me in light of this is far less important than what people think of women who continue to come forward to tell their stories.  They deserve to be heard, and believed.”

Senate Majority Leader Mitch McConnell, Senate Minority Leader Charles Schumer (D-N.Y.) and Sen. Claire McCaskill (D-Mo.) have called for an investigation.

In a piece on KABC, Los Angeles, Tweeden also said Franken forcibly kissed her while they were rehearsing a sketch for a performance.  [Franken denied her version of this part.]

Meanwhile, Wednesday, Rep. Jackie Speier (D-Calif.), who is spearheading a bill to overhaul how Congress deals with sexual harassment allegations on Capitol Hill, along with Sen. Kirsten Gillibrand* (D-N.Y.), said at a hearing that two current lawmakers have been accused of sexual harassment, but declined to identify them out of concern for the victims.  [One is said to be a Democrat, the other a Republican.]

Trump tweet: “The Al Frankenstien (sic) picture is really bad, speaks a thousand words.  Where do his hands go in pictures 2, 3, 4, 5 & 6 while she sleeps?”

Trump added: “And to think that just last week he was lecturing anyone who would listen about sexual harassment and respect for women. Lesley Stahl tape.”

This last reference is to a New York magazine article in 1995 that quoted Franken, then an “SNL” writer, as offering a disturbing joke about Stahl while writing a sketch depicting broadcaster Andy Rooney finding an empty bottle of sedatives.

“When Lesley’s passed out, I take her to the closet and rape her,” he suggests the Rooney impersonator say. Yikes.

*The aforementioned Gillibrand also said this week that Bill Clinton should have resigned amid the sexual assault allegations against him.  Clinton supporters, a dwindling crowd, then went after Gillibrand because she had inherited Hillary’s Senate seat.

Back to Trump, he stayed mum on Roy Moore, let alone the elephant in the room...that being his own behavior.

--Trump tweet: “While in the Philippines I was forced to watch @CNN, which I have not done in months, and again realized how bad, and FAKE, it is.  Loser!”

--John Solomon / The Hill

“Sen. Dianne Feinstein (D-Calif.) has sought access to an undercover informant who helped the FBI chronicle bribery, kickbacks and money laundering inside Moscow’s nuclear industry as part of an Obama-era Russia corruption case.

“Heather Sawyer, the general counsel for Feinstein – the top Democrat on the Senate Judiciary Committee – sent an email this week to the lawyer for the former FBI informant, William Campbell, seeking to be included in conversations involving the committee.

“Sen. Chuck Grassley (R-Iowa), the chairman of the committee, secured an agreement with the Justice Department to allow Campbell to talk to Congress about the evidence he gathered for the FBI from 2009 to 2014 when he worked as a consultant for Rosatom Tenex, Russia’s state-owned commercial nuclear arm.

“Campbell’s work led to the indictments of three major players, including Tenex official Vadim Mikerin, a key Russian nuclear figure inside the United States who was sentenced to 48 months in prison in December 2015.

“Grassley wants to know what the FBI did with the evidence it first gathered in 2009 that Mikerin and others inside the Russian nuclear industry were engaged in illegal activity....

“Some Republicans are pressing the Justice Department to name a special counsel to re-investigate the Mikerin matter....

“Republicans have noted that former President Bill Clinton received a $500,000 speech fee and millions in charitable donations from parties interested in the Russia nuclear company during the time his wife Hillary Clinton served as secretary of state.

“Hillary Clinton has scoffed at those requests, suggesting they are nothing more than a partisan distraction from the current federal probe into Russia meddling in the 2016 election.”

--I’m cutting Donald Trump Jr. and Jared Kushner some slack this week on the Russia investigation, as in my interest in the topic is waning in terms of looking for collusion.  It has never been about collusion with me...I’ve just reported the stories.  That said, re: Jared Kushner, the apple doesn’t fall far from the tree, if you know your New Jersey history.

What it is about is Russian meddling, period.  We have to stop the bastards.  And there is no reason to feel confident when President Trump continues to pay Vlad the Impaler lip service.

I never did tell you my own prostitute story(s) from my two stays at the Metropol Hotel in Moscow, did I.....

[It’s funny....nothing more.  Not real friendly bartenders there, by the way...but I digress....]

--The head of Puerto Rico’s indebted utility resigned today following criticism of the slow restoration of power to the island after Hurricane Maria.  Unbelievably, only 50% of the island, like seven weeks after the storm hit, has power.  Plus there have been intermittent power outages to the populated areas that have been “restored.”  San Juan was kept in the dark for most of this past week, for example.

Wall Street

Stocks finished mixed, the second consecutive down week for the Dow and S&P 500, with Nasdaq gaining some.  Uncertainty over the tax bill didn’t help, even with the House approving its version. 

The inflation data for October was also generally higher than expected, which led many to believe another Federal Reserve rate hike is now a certainty when it next meets Dec. 12-13.

The producer price index jumped 0.4% last month over September, more than expected, also 0.4% ex-food and energy, with the two readings up 2.8% and 2.4% vs. year ago levels, respectfully.

Consumer prices were tamer...in line at 0.1%, 2.0% year-over-year, and 0.2% on core, 1.8% yoy, this last figure down 0.2% from the prior month.

October retail sales were slightly ahead of forecast, 0.2%, 0.1% ex-autos, while October industrial production was up a strong 0.9%.

October housing starts came in much stronger than expected at 1.290 million units (ann.).

Globally, stocks have been backing off their highs, with European equities down 7 sessions in a row until a bounce on Wednesday, and Tokyo’s Nikkei index falling for the first week in ten.

Europe and Asia

A few economic notes from the eurozone (EA19):

A flash estimate for third-quarter GDP came in at a strong 0.6%, 2.5% annualized.

France was at 0.5% (2.2% ann.), Spain 0.8% (3.1% ann.), Germany 0.8% (3.3% ann.), and Italy 0.5% (1.8% ann.). Germany and Italy’s statistics confirmed by their various stats agencies, the other two through Eurostat.

In Germany, Q4 growth is estimated to come in at a 3.6% annualized pace, though future growth could be hit by the uncertainty over Merkel’s coalition. 

Italy’s 1.8% ann. pace is the biggest year-over-year jump since 2011.

Annual inflation in the EA19 fell to 1.4% in October, down from 1.5% in September and well off the European Central Bank’s 2.0% target, so there remains zero reason for the ECB to change its loose monetary policy, beyond the reduction in its monthly bond purchases.

Inflation was at 1.5% in Germany, 1.2% in France, 1.7% in Spain and 1.1% in Italy.

All of these are up substantially, however, over year ago levels, including the EA19 then annualized pace of 0.5%.

Eurozone industrial production in September was down 0.6% over August, but up 3.3% year-over-year.

In the U.K., October inflation came in at 3%, well above the Bank of England’s 2% target, the BoE talking of two more rate hikes after this month’s, which was the first in a decade.

British retail sales recorded their first year-on-year decline since 2013 last month, down 0.3%, though this is partly because of a comparison with a very strong October 2016.  Looking at the three months to October, which smooths out the monthly volatility, sales grew 0.9% from 0.7% in the three months to September.

Brexit: European leaders set a deadline for British Prime Minister Theresa May to give ground on the divorce (exit) bill and the future of the Irish border if the discussion is to move on to trade before year end.

EU president Donald Tusk, after meeting with EU leaders in Gothenburg, Sweden today, said, “I made clear to Theresa May that this progress needs to happen at the beginning of December at the latest,” an important deadline because of the critical EU summit later in the month.

May’s Brexit secretary David Davis called on the EU to compromise, saying Britain has “made all the running” in negotiations thus far.  “So far in this negotiation we’ve made quite a lot of compromises.  We haven’t always got that back,” Davis said.

If EU leaders aren’t satisfied with Britain’s offer on the divorce bill and a satisfactory solution to the Irish border, then come the next summit, the fear is the negotiations would fall apart, though there are other possible dates in January and February to fall back on.

Mrs. May has agreed to pay into the EU budget for two years after leaving, a positive step for the EU, but the leaders say this doesn’t go far enough. 

As for Davis’ comment that the EU isn’t meeting Britain halfway, the EU says it doesn’t think it’s up to them to make concessions.  [Can’t disagree with that...at least at this stage.]

Both May and Davis dodged questions on Friday in various forums, Davis speaking to German business leaders, where he admitted that from here to the December summit, “we will have pretty much continuous negotiations.”

Prime Minister May and her Foreign Secretary Boris Johnson held separate talks with their Irish counterparts on the question of the post-Brexit border between Ireland, which stays in the bloc, and Northern Ireland, which leaves with the U.K.

Irish Prime Minister Leo Varadkar said, “We won’t go back to the borders of the past,” separating the south from the north.  “We want that written down.”

The Brits are largely blaming Germany and France for the stalemates.

The only encouraging news this week was that Donald Tusk said there had been “good progress on citizens’ rights” in the negotiations, the third of the initial deal points prior to trade, along with the financial settlement and Ireland.

Germany: Chancellor Angela Merkel continues to push for a new governing coalition agreement with the Free Democrats and the Green parties.  But the parties are said to be far apart on the issues.

Specifically, the three (including Merkel’s Christian Democratic-bloc) can’t come to an agreement on policies such as the sharing of financial risks in the euro area (see Greek debt crisis), cutting carbon emissions and limiting immigration.

On immigration, a key point is over a moratorium on family members joining asylum seekers in Germany, which the Greens want lifted and Merkel’s Bavarian ally, the Christian Social Union, wants kept in place.

A preliminary agreement is only the prelude to coming up with a detailed policy blueprint for the next four years.  Yes, this is an example of how the parliamentary form of government can really muck things up vs. a two-party system that at least leads to uniform majorities.

The problems Merkel are having, though, impact Brexit talks, and other euro-area policy issues because she is solely focused on putting the new government together and little else.

Again, while it is just assumed that Merkel and the other two parties will reach some agreement, it’s not guaranteed and another election isn’t out of the question, to the benefit of the far-right Alternative for Germany party no doubt.

The Greens have their party convention Nov. 25 and it’s hoped then that for their part they’ll vote to proceed with talks.

Catalonia: A relatively calm week here, with Spanish Prime Minister Mariano Rajoy visiting the region for the first time since he imposed direct rule; Rajoy calling for regional elections Dec. 21.

Some 750,000 people protested in Barcelona last weekend against the detention of Catalan leaders, but it was peaceful.

Catalonia’s sacked President Carles Puigdemont remains in self-imposed exile in Belgium, and his top aides have been prosecuted, their situation made worse by Puigdemont’s decision to flee, like a true coward.

Some of those imprisoned, as well as Puigdemont, will stand for election.

Meanwhile, the mayor of Barcelona, Ada Colau, has condemned the pro-independence movement.

A majority of people across Spain agree with the Madrid government’s handling of the situation, but only 28 percent of Catalans share this view, according to a poll for newspaper El Pais.

Turning to Asia, some news from Japan, as the government announced GDP grew a seventh consecutive quarter – the longest streak in nearly two decades, third-quarter growth at a 1.4% annualized pace.

Japan’s businesses have been benefiting from rising global demand, with foreign trade the main driver recently, helped by a weak yen.  Household consumption, though, remains punk, down 1.9% in the quarter.

Separately, the government, and Bank of Japan, would seem to be nearing a call to officially pronounce the era of ‘deflation’ in Japan over.  Prices were largely falling since the 1990s, but core prices are now running at a 0.7% pace and have been positive for months.

Street Bytes

--As noted above, the Dow Jones fell 0.3% to 23358, the S&P lost 0.1% and Nasdaq gained 0.5%.  The earnings news was very solid, particularly in the case of one very large retailer, details below.

--U.S. Treasury Yields

6-mo. 1.41%  2-yr. 1.72%  10-yr. 2.34%  30-yr. 2.78%

--The International Energy Agency on Tuesday lowered its oil demand forecast for this year and next, saying the rally in prices since June would likely crimp consumption.

While we’re only talking a small cut of about 200,000 barrels a day, the IEA did say the risk is for rapidly increasing supplies outside OPEC, double this year’s 0.7mb/d growth.

The Paris-based organization also said growth in U.S. output will be the strongest seen by any country until 2025, making it the “undisputed” leader among global producers.

Fatih Birol, IEA executive director, said the U.S. is expected to account for 80% of the increase in global supply over the period 2010 to 2025.

--Richard Cordray, head of the Consumer Financial Protection Bureau since it was established by the Dodd-Frank Wall Street reform act after the financial crisis, announced he is stepping down this month.  His term was not set to expire until July.

Cordray has been fiercely opposed by the Street and now President Trump can nominate a replacement much more friendly to it, including one who favors deregulation.

The rumor is that Cordray, a Democrat, will run for governor of his home state of Ohio, but he has yet to comment on his future.

--Wal-Mart shares rose a shocking 11% on Thursday after the company reported earnings and sales that exceeded expectations for the quarter ending Oct. 31.

Total revenue reached $123.2 billion, an increase of $5 billion, or 4.2%, over the third quarter of 2016.

Wal-Mart is determined to give Amazon a run for its money, adding products, partners and perks, with a 50% increase in U.S. online sales during the quarter, while same-store sales at U.S. stores rose a very solid 2.7%, traffic up 1.5%.

Wal-Mart had acquired online marketplace Jet, as well as niche menswear retailer Bonobos, to attract a more affluent, fashion-conscious shopper. The company now has more than 70 million items available on its website.

Walmart is also getting customers to visit the stores because some items are cheaper there than online, a difference that Walmart.com displays by putting the prices side by side.

According to research firm eMarketer, Amazon is on track to capture 44% of U.S. online sales this year, up from 38% last year. Wal-Mart is projected to grow to about 3.6% from 2.8% last year, the firm said.

Finally, Justin Lahart had the following in his Wall Street Journal column.

“Wal-Mart Stores Inc. still can learn a lot from Amazon.com, but it has the online retailer beat in one important category: profits....

“Wal-Mart’s vast network of stores – it says it has a location within 10 miles of about 90% of the U.S. population – paired with its e-commerce arm could count as an advantage here.  With sales that are more than four times what Amazon gets from its retail operations, it has considerable heft with suppliers and existing logistics operations that should not be discounted.

“One of Wal-Mart’s biggest challenges is that its investors demand profits, while Amazon has been allowed to run its retail operations at a near loss, or an outright one, as long as it keeps growing rapidly.

“On the other hand, sales growth is accelerating at Wal-Mart, and if the chain keeps boosting online sales and maintains solid profits, investors might be less willing to give Amazon a pass.  Wal-Mart has a market capitalization approaching $300 billion and a price-to-sales ratio of 0.6. Amazon is worth nearly $550 billion and has a price-to-sales ratio of 3.5. Which stock is more vulnerable?”

--Home Depot’s revenue and earnings in the fiscal third quarter topped expectations, with sales rising 8.1% to $25 billion and earnings per share increasing to $1.84 from $1.60 a year earlier, with consensus at $1.82 and sales of $24.5 billion.

Comparable store sales rose 7.9%, with U.S. sales up 7.7%, vs. year ago figures of 5.5% and 5.9%, respectively, though this was aided by hurricane and wildfire sales. [Hurricanes Harvey and Irma added $282 million to the sales total, the company said.]  The company upped guidance as well for the full year, with comp-store sales now predicted to climb 6.5% vs. a prior estimate of 5.5%.  Just a tremendous success story.

--Target failed to meet Wall Street’s expectations, shares slumping after the department store chain issued a gloomy forecast for the holiday season, investors concerned that the company’s “high-low” strategy of building up higher margin in-house brands has come at the expense of actual margins, as the company stays aggressive on prices for basics.

Sales rose 1.4% in the quarter ended October to $16.7bn, while net income fell 21% to $480m.  Same-store sales up 0.9% (up 24% online vs. year ago).

The issue was the company is forecasting earnings for the fourth-quarter of $1.05 to $1.25, when consensus was at $1.24.

But, hey, Target did just release its exclusive version of Taylor Swift’s new album, Reputation, so at least it has that going for it.

--Shares in Best Buy fell 6% Thursday on disappointing third-quarter results and guidance for the holiday-quarter below Wall Street’s estimates as it cut prices to match those offered by rivals including Amazon.

Best Buy added to its long-term policy of price-matching by offering free shipping for the Thanksgiving to Christmas period.

Same-store sales rose 4.4% in the quarter ended Oct. 2, missing analysts’ estimates, hurt by the late launch of Apple’s iPhone X and the hurricane season. Overall revenue rose 4.2%, also below expectations.

--Dick’s Sporting Goods Inc. reported earnings per share of 30 cents, above the Street’s forecasts, but even though revenue of $1.94 billion in the third quarter also beat expectations, the stock fell as it gave lackluster guidance, with same-store sales falling 1% vs. last year.

--Shares in Abercrombie & Fitch surged 20% Friday after the company far exceeded expectations for its third quarter, with revenues up 4.5% to $859.1 million, and same-store sales increasing 4%.  Pretty, pretty good....for this otherwise lackluster retailer.

--Shares in General Electric continued to tumble, GE’s new CEO, John Flannery, unveiling a long-awaited turnaround plan on Monday that included a cut in the dividend in half while shedding multiple divisions.  The bottom line is no one expects a dramatic immediate turnaround.  This one will take years and in the meantime, little cause for optimism if you’re a shareholder; Flannery also lowering the earnings targets for 2018, while cautioning that in 2019, conditions will remain difficult.

The CEO laid out a future for three core markets – power, aviation and health care, while looking to shed smaller divisions such as transportation and lighting.

2018 is “a reset year,” Flannery said.

For the year, GE shares are down over 40%.

--Amazon.com, through its new Whole Foods subsidiary, announced a new round of price cuts, including on turkeys, and the supermarket chain stocks shuddered anew; peak turkey season being from now through year end.

--Last Saturday was Alibaba’s Singles Day in China and the e-commerce giant said it racked up more than $25.3 billion in sales vs. last year’s $17.8 billion.  Goodness gracious.  Smartphones and appliances were among the top-selling items.

Deals are at the heart of the holiday, such as a $1,500 big-screen Sharp TV going for a little over $500.

But one article I saw talked of “discounted lobster.”  Boy, that doesn’t do a helluva lot for Larry’s self-esteem, one would think.  I mean it’s taken ‘Lobster,’ No. 76 on the All-Species List, like 100 years to work up to a luxury item from steerage.

--Nice few days for Boeing, if the orders come to fruition.  Dubai’s Emirates unveiled a provisional order for 40 Boeing 787-10 jet liners, worth $12.5 billion at list prices, Emirates saying the carrier selected Boeing after comparing it with the Airbus A350.

And then a Kuwaiti leasing and finance company, Alafco, ordered 20 737 MAX 8 passenger planes, that deal worth $2.2 billion.

--Shares in Cisco Systems rose on its fiscal Q1 report that showed revenue met expectations, while guiding higher for revenue and profits the current quarter.  The company said it is seeing the benefit of a broad transformation to the cloud, what it refers to as its “multi-cloud” initiative, working with different cloud computing vendors, including a partnership with Alphabet’s Google cloud operation and with Alibaba.

Cisco’s transformation includes receiving more subscriptions and recurring revenue, with “deferred revenue” at $5.2 billion, up 37% from a year ago.  The company is in the process of reducing head count by at least 7%, as announced summer of 2016.

--Last week I wrote of the travails of Deutsche Bank, the CEO saying half the employees would be losing their jobs owing to automation, but this week Cerberus Capital Management, a private-equity firm, bought into both Deutsche and Commerzbank, the two biggest German banks; 3% in the former, 5% in the latter.

Some say Cerberus isn’t looking for a turnaround at the two, but rather a merger between them, the two having held talks on such a move last year.  Both then decided to focus on their respective restructuring efforts.

--German manufacturing conglomerate Siemens is laying off 6,900 jobs worldwide, half in Germany, amid changes in the energy and commodity sectors.

--Nelson Peltz, after the most expensive proxy fight in history, won a seat on the board of Procter & Gamble Co. after all, with an independent vote tally showing that of more than 2 billion votes cast, Peltz had 42,780 more than a P&G director he ran against.  The margin is 0.0016% of the shares outstanding.

Initially, an unofficial count had Peltz losing by mere thousands.

Peltz declared victory and called on P&G to concede and let him into the boardroom, but the company said the tally was still just preliminary, and that P&G can still challenge the result.  Talk about stupid.

--Elon Musk unveiled the new Tesla Semi on Thursday night, along with a working prototype of a new Roadster sports car that he claims will rocket from zero to 60 in 1.9 seconds – the first production car to perform the feat in under 2 seconds. Top speed is 250 mph. Price: $200,000. Whatever.

“It’s just stupid,” he said excitedly.  Yes, indeed it is.

But guys, if you’re looking to impress your girl, and get in a ton of trouble with the law, production is aimed at 2020, which in Elon Musk time means 2025.

The new Tesla Semi supposedly will have a range of 500 miles, far more than expected, but no other details were released, including on battery size. The truck is scheduled for production in 2019.  Other truck makers are also developing electric trucks.

The Semi will be able to go from zero to 60 mph in 5 seconds compared with 15 seconds for a diesel truck.  It will also require a “megacharger” that can recharge trucks to a 400-mile range in 30 minutes.  Again, no details, however.  And Musk said nothing about Model 3 production issues.

--TransCanada Corp.’s Keystone pipeline leaked an estimated 210,000 gallons of oil onto agricultural land in northeastern South Dakota, as reported by the company and state regulators on Thursday, though state officials don’t believe the oil polluted any surface water bodies or drinking water systems.  Crews shut down the pipeline yesterday and activated an emergency response.

The timing of the incident couldn’t have been worse, as Nebraska regulators are scheduled to announce their decision Monday on whether to approve the proposed Keystone XL oil pipeline there, an expansion that would boost the amount of oil TransCanada is now shipping through the existing line.

--This is nuts...a bitcoin exchange in Zimbabwe (Golix), saw its prices jump to something like $13,500 after the country’s armed forces seized power (see below), or almost double the rate at which the cryptocurrency trades in international markets.  Demand is said to have surged due to a shortage of hard currency.

What’s really stupid is sellers of it are paid in U.S. dollars deposited electronically, but to convert this into hard cash, you have to accept a steep discount on the black market.

Bitcoin itself slumped 29% early this week, after touching a record high of $7,900 last week; the fifth decline of 20% or more this year.  But then by late Friday it was all the way back to $7,875, last I checked.

Three years ago the currency was at $300, and six years ago $2.

--A painting of Christ by Renaissance master Leonardo da Vinci sold for a record $450 million at auction at Christie’s in New York, smashing the previous record of $179.4 million for a Picasso work.  [There was a private sale for a Willem de Kooning painting, $300 million, to hedge fund manager Kenneth Griffin in 2015.]

The da Vinci, one of fewer than 20 known paintings by him, saw bidding start at $100 million and lasted 19 minutes.

The work, called “Salvator Mundi,” Italian for “Savior of the World,” dates from around 1500 and was once owned by King Charles I of England, though it disappeared from view until 1900, at which point it was acquired by a British collector.  At that time it was attributed to a da Vinci disciple.

Eventually, a Russian billionaire acquired it in 2013 for $127.5 million in a private sale.

The painting underwent a lot of restoration work  in the mid-1900s by art dealers and while most scholars agree that it is by Leonardo, there are questions.

Which leaves me with one....why the heck would you take such a risk, and at that price?!

[Latest rumor is the buyer is a reckless Chinese billionaire.]

Foreign Affairs

Saudi Arabia / Lebanon: It’s been two weeks since Lebanese Prime Minister Saad Hariri announced his resignation, from Saudi Arabia, hours after which Saudi authorities under Crown Prince Mohammed bin Salam (MBS) rounded up some of the kingdom’s leading billionaires in a corruption investigation.  Since then, the billionaires are holed up at the Ritz-Carlton in Riyadh, while Hariri is on his way to France, literally as I post, according to his own television station.    

French President Emmanuel Macron on Wednesday invited Hariri and his family to move to France after the Lebanese prime minister resigned, amid allegations the Saudis are holding him under house arrest.  Macron said he was not offering Hariri asylum or political “exile,” but rather he was making the offer to dispel fears that Saudi Arabia had taken Hariri prisoner.

Friday, Lebanon’s Foreign Minister Gebran Bassil said the crisis triggered by Hariri’s resignation was part of an “attempt to create chaos in the region.”

Saudi authorities are negotiating settlements with the princes and businessmen that were rounded up, offering deals to pay for their freedom as the kingdom looks to refill its depleted coffers.

According to the Financial Times, the government is seeking to appropriate as much as 70 percent of the princes’ wealth.  Literally, “Cough up the cash and you will go home,” one adviser told the FT.

No word on what Prince Alwaleed will do in terms of his assets, he being the most familiar figure arrested to Westerners.

And as everyone who is observing all this can’t help but muse, how do the actions of MBS help investor confidence in Saudi Arabia?  If international investors are going to come in a big way, they need to know the rules of the game, and that the new leadership will stick with them, and not appropriate their own holdings down the road.

Separately, Israel Defense Force Chief of Staff Lt.-Gen. Gadi Eisenkot stated in an interview with a Saudi newspaper that Israel was willing to share intelligence with the kingdom to confront Iran, Eisenkot adding “there are many shared interests between us and Saudi Arabia.”

“Under U.S. President Donald Trump there is an opportunity to form a new international alliance in the region.  We need to carry out a large, comprehensive strategic plan to stop the Iranian threat,” Eisenkot said. 

“The Iranian plan is to control the Middle East through two Shiite crescents,” Eisenkot told Elaph newspaper. “The first is from Iran through Iraq to Syria and Lebanon and the second across the Gulf from Bahrain to Yemen to the Red Sea.  We must stop that from happening.” [Anna Ahronheim / Jerusalem Post]

Last week Hizbullah Secretary General Hassan Nasrallah accused Saudi Arabia of having appealed to Israel to launch an attack against the group in Lebanon, offering the Jewish State “billions of dollars” to do so.

Wednesday, Iranian President Hassan Rouhani was quoted by state media as saying that “It is very reprehensible and shameful for a Muslim country in the region to beg the Zionist regime [of Israel] to bomb the people of Lebanon.”

David Ignatius / Washington Post

“Nearly two weeks after the double political explosion that rocked Riyadh, Crown Prince Mohammed bin Salman appears to be doing damage control in ways that may help stabilize Saudi Arabia and the region.

“The first bombshell in the Saudi capital was the Nov. 4 arrests on corruption charges of 201 prominent Saudis, including princes and government ministers. Now MBS, as the 32-year-old crown prince is known, is beginning a resolution process that may settle many of these cases out of court.

“A senior Saudi official told me Thursday that the kingdom’s anti-corruption commission would follow the standard ‘plea-bargain process’ that is ‘usually conducted by the public prosecutor prior to transferring a case to the relevant court.’ The commission’s overall aim, he said, was to ‘send a strong message’ that corruption won’t be allowed, ‘irrespective of rank or status.’

“The crackdown may have consolidated support for MBS among younger Saudis who resent older, wealthy princes and palace insiders.  But his power play risked a backlash within the royal family because it violated the kingdom’s traditional consensual politics.  Resolution of corruption cases out of court may dampen such high-level dissension.

“The second Nov. 4 explosion was Saad Hariri’s announcement from Riyadh that he was quitting as Lebanon’s prime minister....

“Hariri’s resignation and seeming house arrest made him a hero in Lebanon and a symbol of the country’s yearning for sovereignty. This may give him some new leverage when he returns to Beirut.  Lebanese sources told me Thursday that Hariri’s supporters may urge Hizbullah to withdraw its fighters from Yemen as a gesture of solidarity.  Hariri will also campaign anew for international support for Lebanon’s economy and military....

“MBS’s purge looked to many outsiders like a high-risk political move. But a senior prince cautioned me the country isn’t as fragile as it may look.  One of MBS’s key backers put it this way: ‘Corruption can’t keep the country stable. Having a corruption-free country will keep us stable.’

“That’s a worthy ambition, but as MBS detonates his bombs, he must avoid blowing himself up.”

Ralph Peters / New York Post

“While our eyes are fixed on North Korea, the Middle East threatens to explode. If it does, we’ll be drawn in – and the carnage and cost will make Iraq seem like spring break.

“Choose your powder keg, starting with Yemen. Ruptured by civil war, the entire country’s running out of water;* famine is biting; and cholera’s spreading like a medieval plague. Yemeni factions fight like rabid dogs let loose in a butcher’s shop, while Islamist fanatics spread through the desolate hinterlands.

*Ed. The International Committee of the Red Cross today said three cities in Yemen have run out of clean water because a Saudi blockade has cut imports of fuel needed for pumping and sanitation.  One million in the three cities are impacted, just as Yemen emerges from the world’s worst cholera outbreak in modern times.  The capital, Sanaa, is expected to be in the same situation shortly.

“Worsening all, Iran has backed the Shia-aligned Houthi rebels to gain a foothold on the Arabian Peninsula. Two-and-a-half years ago, Iran’s involvement drew in the Saudi military. Today, neither side is winning; the dying continues; and the frustrated Saudis have blocked not only trade but relief supplies.

“Yemen is dying, the plaything of powerful neighbors, and we can’t even find it on a map. But Yemen may well find us....

“Given their triumphs in Syria and Iraq, Iran’s militants feel invincible. No sentiment is more dangerous.

“By contrast, Saudi Arabia is reeling. Riyadh’s struggling to find an effective response to Iran’s empire-building. In its latest – appallingly clumsy – move, the kingdom essentially kidnapped Saad Hariri, the man the Saudis themselves had backed as Lebanon’s prime minister. Riyadh forced the younger Hariri to resign on Saudi soil and continues to hold Hariri under apparent house arrest.

“As Lebanon’s senior Sunni political leader, Hariri’s sin was that he failed to stand up to Iran as Lebanon-based Hizbullah provided shock troops to Syria’s Assad regime. But there was little Hariri could do. Hizbullah’s now the strongest force in Lebanon – its veterans far overmatch the Lebanese military.  And the Lebanese, recalling their own brutal civil war, don’t want their country torn apart again.

“The Saudis simply don’t know what to do.  Riyadh had bet that we’d take care of Iran, that Tehran would push us too far and our military would whip Iran’s Quds Force and the region’s Shia militias back into their pens. But we backed down again and again, while the Iranians consistently stepped up.

“Long viewed as the keystone Arab power, Saudi Arabia’s now strategically destitute....

“Tehran has been building a web of alliances, while the Saudis have never excelled at attracting friends.

“Our principle Middle Eastern ally outside of Israel, Saudi Arabia could, with one grand misstep, provoke a regional war it could not win.  And we’d be forced to save the kingdom, a repugnant use of American blood.”

Syria: Russia vetoed a UN Security Council resolution that would have extended an inquiry into Syria’s use of chemical weapons; the 10th time Moscow has exercised its veto powers in support of its ally, the Assad regime.  Beyond pathetic.

U.S. ambassador to the UN, Nikki Haley, described the latest Russian veto as “a deep blow.”

“Russia has killed the investigative mechanism which has overwhelming support of this council.”

Last weekend, Russian President Putin and President Trump reached an agreement on supporting political reconciliation in Syria, while maintaining the existing two-nation communication channels used to fight Islamic State, the two leaders meeting briefly on the sidelines of the Asia-Pacific Economic Cooperation summit in Vietnam.

Editorial / Wall Street Journal

“The press corps spent the weekend obsessing about what Donald Trump thinks about what Vladimir Putin believes about Russian meddling in the U.S. election.  The real news is Mr. Trump’s deal announced in Vietnam with the Russian strongman for the ‘deconfliction’ of Syria. This is ceding the regional advantage to Russia and Iran.

“That’s the take-away of the joint statement issued Saturday by the U.S. and Russia that ‘builds on months of fairly intense discussions’ and ‘behind-the-scenes diplomacy,’ according to State Department officials. The three-part strategy aims to achieve an ‘enduring defeat’ of Islamic State, ‘de-escalate the civil war’ and hold ‘U.N.-supervised and organized parliamentary and presidential elections.’

“ISIS is nearly ousted from its caliphate, not that the Russians helped much. The dirty work was done by Arab and Kurdish fighters backed by U.S. air power and special forces on the ground.  As Secretary of Defense Jim Mattis told NATO in Brussels last week, 95% of the territory that Islamic State held in Iraq and Syria has now been reclaimed.

“The question is what comes next.  In July President Trump agreed with the Russians to enforce a deconfliction zone in southwestern Syria near the Israeli and Jordanian borders. The point was to stop the fighting, address the humanitarian crisis, and allow U.S.-backed forces to crush the Islamic State in the north and eastern parts of Syria.

“Instead, the cease-fire solidified the gains that Bashar Assad’s Syrian government forces had already made in western Syria. And it freed up Russian and Iranian-backed fighters to divert resources eastward, where the Syrian Democratic Forces allied with the U.S. had made progress against Islamic State.  The Institute for the Study of War’s Christopher Kozak noted Saturday that the compact also ‘has preserved – rather than limited – the freedom of movement of Iran and Hizbullah along the Golan Heights and Syrian-Jordanian border.’

“Yet the State Department claims the deconfliction experiment, ‘while not perfect,’ has been a success because ‘violence in the area has been significantly reduced, and thousands of Syrian families have returned to their homes.’ The U.S., Russia and Jordan have now signed a Memorandum of Principles that calls for the ‘reduction and ultimate elimination of foreign forces’ in Syria, especially in the south. But there’s no evidence that Iran or Hizbullah are leaving the area....

“The big picture is that Mr. Trump and Secretary of State Rex Tillerson seem to be using the diplomacy of deconfliction to justify a retreat from post-ISIS Syria. Where that leaves America’s Kurdish and Syrian allies isn’t clear, though perhaps they’re on their own. Mr. Putin is winning in Syria no matter his deceptions about election meddling.”

Israel is not happy with the new reconciliation agreement.  Sunday, it signaled it would keep up military strikes across its frontier with Syria to prevent any encroachment by Iranian-allied forces.

And despite all the happy talk, the death toll in Syria continues to mount.  Monday, at least 53 were killed in airstrikes on a market in the northern part of the country, on the outskirts of Aleppo, according to the Syrian Observatory for Human Rights; the Observatory unable to determine whether the Syrian government or Russia was behind the attack.

So much for the “de-escalation” agreement.

China / North Korea: Beijing sent a high-level special envoy to North Korea amid an extended chill in relations between the neighbors over Pyongyang’s nuclear weapons and missile programs.

The ostensible purpose of Song Tao, the head of China’s ruling Communist Party’s International Department, is to report on outcomes of the party’s national congress held last month, according to the official Xinhua News Agency.  No other details were provided.

Song is the first ministerial-level Chinese official to visit North Korea since October 2015.  He has already visited Vietnam and Laos to brief officials on the Communist Party congress.

I wouldn’t read too much into Song’s visit to Pyongyang, other than China wants to make sure Kim Jong Un doesn’t add it to his list of enemies.

Earlier, President Trump tweeted that he would never call Kim “short and fat,” after Pyongyang’s foreign ministry called Trump “old.”

“Oh well,” Trump added, “I try so hard to be his friend – and maybe someday that will happen.”

Trump then volunteered his services over maritime claims in the South China Sea.

“I’m a very good mediator,” he said.

Thomas L. Friedman / New York Times

“There is a saying – ‘When you don’t know where you’re going, any road will get you there’ – and it perfectly sums up the contrast between China’s President Xi Jinping and President Trump.

“Xi has been brilliant at playing Trump, plying him with flattery and short-term trade concessions and deflecting him from the real structural trade imbalances with China. All along, Xi keeps his eye on the long-term prize of making China great again. Trump, meanwhile, touts every minor victory as historic and proceeds down any road that will give him a quick sugar high.

“Trump literally has no idea what he’s doing and has no integrated strategy – because, unlike Xi, Trump’s given no thought to the big questions every effective leader starts his day with: ‘What world am I living in? What are the biggest trends in this world? And how do I align my country so more of my citizens get the most out of these trends and cushion the worst?

“What world are we in?  One in which we’re going through three ‘climate changes’ at once.

“We’re going through a change in the actual climate: Destructive weather events and the degradation of ecosystems are steadily accelerating.

“We’re going through a change in the ‘climate’ of globalization: from an interconnected world to an interdependent one; from a world of walls, where you build your wealth by hoarding resources, to a world of webs, where you thrive by connecting your citizens to the most flows of ideas, trade, innovation and education.

“And, finally, we’re going through a change in the ‘climate’ of technology and work: Machines are acquiring all five senses, and with big data and artificial intelligence, every company can now analyze, optimize, prophesize, customize, digitize and automatize more and more jobs, products and services. And those companies that don’t will wither....

“In response to a more interdependent world, China is deepening its trade ties to all the fast-growing Asian markets around it through its ‘One Belt, One Road’ project and its Asian Development Bank, while tightly controlling its own market. I call it ‘globalization for me but not for you.’....

“In technology, China has embarked on a plan called ‘Made in China 2025’ that’s plowing government funds and research into commercializing 10 strategic industries while creating regulations and swiping intellectual property from abroad to make them all grow faster.  These industries include electric vehicles, new materials, artificial intelligence, integrated circuits, biopharmacy, quantum computing, 5G mobile telecommunications, and robotics.

“And Trump? ...While China is run by engineers, Trump doesn’t even have a science adviser.  He’s refused to fill the White House Office of Science and Technology, which, as Newsweek reported, ‘has been without a boss for the longest stretch since its establishment in 1976.’

“On globalization, Trump tore up the Trans-Pacific Partnership (TPP) deal, which would have put him at the helm of a 12-nation Pacific trading bloc (without China), built on U.S. interests and values, and would have eliminated as many as 18,000 tariffs on U.S. exports to countries that, together with the U.S., control 40 percent of global GDP. And then he went to China and praised Beijing for beating us at our own game! Well, Donald, when you unilaterally disarm, that tends to happen.

“By the way, the 11 other TPP nations are now trying to create their own free-trade zone – without the U.S.  So after decades of America trying to push all their markets open, they’re going to open without us. Nice going, Mr. President, China thanks you, because these countries will be much more vulnerable to Chinese economic pressure with our presence diminished.”

A somewhat differing view....Andrew Browne / Wall Street Journal:

“Mr. Xi’s China, Mr. Trump said, paying fulsome tribute to the omnipotence of the newly crowned supreme leader standing next to him, could fix the Korean nuclear crisis ‘easily and quickly.’

“On Chinese trade abuses, he appeared to absolve Mr. Xi of all responsibility, provocatively suggesting there is honor in the way Chinese leaders game the global trading system to win advantage for their people.  ‘I give China great credit,’ he said.

“Look beyond the flattery, however, and a harder-edged strategy comes into focus.

“As Mr. Trump lavished praise on the Chinese president – ‘you’re a very special man,’ he purred – three U.S. aircraft-carrier strike groups prowled the Western Pacific. They are a reminder of the military options the Pentagon is weighing against Pyongyang, knowing that while China could do more to pressure Kim Jong Un to slow his nuclear buildup, Mr. Xi’s leverage is in fact limited....

“(Empty) summitry may have been part of the White House game plan.

“Both sides normally strain for agreements to show progress toward the all-round engagement that has been the Holy Grail of successive U.S. presidents since Nixon. This time was different.  Nobody was fooled by the $250 billion in commercial deals signed. Some were already in the works, hastily packaged up for the occasion, while others were memorandums of understanding that mean just that – paper promises that often end up in the bin.

“Focus exclusively on his gushing personal diplomacy and the view might be Mr. Trump was played like a fiddle.

“Dwell on the modest takeaways and the White House appears to have used the summit to signal it is no longer playing the old game of pretend.  Is this why, after Mr. Trump had left Beijing, his hosts figuratively ran after their guest with a more substantial offer – improved market access for U.S. securities firms and banks?  White House aides suggest this concession was granted, not demanded.

“In this more nuanced reading of the summit from Washington’s perspective, Mr. Trump’s assigned role was to enhance a rapport with Mr. Xi that will help anchor the relationship in advance of expected turbulence ahead....

“There was nothing subtle, though, about Mr. Trump’s address to Asian leaders gathered in the Vietnamese coastal resort of Da Nang.  In front of a group dedicated to multilateral trade, he thundered his insistence on one-on-one agreements. Instead of offering a sweeping American vision for the region to compete with Mr. Xi’s ‘China Dream,’ which often overrides the ideals and ambitions of smaller Asian nations, he came up with a slogan coined in Japan – a ‘free and open Indo-Pacific’ – with hardly any elaboration....

“There’s his problem: The marketing of nationalism, each country for itself, creates fissures in Asia. Whether Mr. Trump is confronting North Korean nuclear terror, or Chinese territorial assertiveness, he needs an Asian coalition behind him, which means first of all promoting common values in a region of traders.  Mr. Xi understands this, at least rhetorically. He got a standing ovation for his speech that spoke of ‘building a community with a shared future for mankind.’

“Mr. Xi’s attempts to pose as the savior of open markets and globalization draw as much skepticism today as when he first pitched himself in that role at Davos earlier this year. But what he offers is inclusion, not retreat.

“Having forged the region in its own image – a free-trading and substantially democratic dynamo – the U.S. now risks bequeathing the fruits to a rising China.”

Philippines: President Duterte attacked Canada’s Justin Trudeau at the end of the summit last weekend for raising questions about his war on drugs, a topic skirted by other leaders, including President Trump.

At the traditional news conference by the host nation at the end of the summit, Duterte was asked how he had responded to the Canadian prime minister raising the issue of human rights and extra-judicial killings in his anti-drugs drive.

“I said I will not explain. It is a personal and official insult,” the Philippines president said, though he did not refer to Mr. Trudeau by name.

“I only answer to the Filipino. I will not answer to any other bulls---, especially foreigners. Lay off.”

Zimbabwe: Well, well, well....wasn’t that special...the military seizing President Robert Mugabe as part of a takeover (not officially a coup, as yet), ending his 37-year rule.

Maj. Gen. Sibusiso Moyo went on air to say the military wished to “assure the nation that his Excellency the president...and his family are safe and sound and their security is guaranteed.”

The United States, long a critic over Mugabe’s human rights abuses, called for “a new era” for the country.

But Thursday, Mugabe was shown driving from his lavish “Blue Roof” compound, where he had been confined, to State House, where official media pictured him meeting with military boss Constantino Chiwenga and South African mediators.

As of Friday, Mugabe’s fate hung in the balance as he apparently resisted efforts to make him step down, as talk of him remaining in power during a transitional phase seemed nonsensical.

The army appears to want a smooth and bloodless transition to Emmerson Mnangagwa, the vice president Mugabe (and his wife, Grace) sacked last week.

Mugabe’s ruling ZANU-PF party was to meet today to draft a resolution to dismiss Mugabe over the weekend and lay the grounds for his impeachment next week if he refuses to stand down, specifically Tuesday.

Mugabe deserves to be executed (Grace too...yup, just go full-blown Ceausescu on this sorry lot) for ruining the country, especially after the seizure of white-owned farms in the early 2000s (after he stole an election), which led to economic collapse for this one-time breadbasket of Africa, inflation reaching 500 “billion” percent in 2008.

As for Mnangagwa, he is said to be just as repressive as Mugabe.

Madagascar: The death toll from pneumonic plague, the worst outbreak here in 50 years, reached 171 as of Nov. 10, according to the country’s health ministry.  Pneumonic plague, the cause of the majority of the deaths, is the most virulent form and can easily spread from one person to another through droplets in the air, which is what most concerns researchers at the World Health Organization.  It can spread quickly in high-density areas.

The only good news is that the number of cases being reported has been declining.

Random Musings.

--Presidential tracking polls....

Gallup: 37% approve of President Trump’s performance / 56% disapprove
Rasmussen: 42% approve / 56% disapprove

--President Trump’s job approval rating hit a new low in November and has declined for three straight months, according to the latest Harvard CAPS/Harris Poll.

41% approve of the job Trump is doing, 59% disapprove, down from 45% and 42% the prior two months. [The 41% is better than the RealClearPolitics average of 38%.]

79% of Republicans and 86% of Trump voters approve of the job he is doing.  Only 38% of independents do.

Meanwhile, in this survey, Congress’ job approval is 28%, with only 52% of Republicans approving of the job their leaders are doing.

54% of voters oppose the GOP’s tax-reform bill.

76% of voters say Trump should stop tweeting.

65% say there should be an investigation into the $145 million contribution the Clinton Foundation received from the owners of Uranium One, the Canadian firm that was sold to Russian investors when Hillary Clinton was secretary of State.

--Editorial / Wall Street Journal

“A famous country song aptly summed up where the Republicans are with Senate candidate Roy Moore in Alabama: You’ve got to know when to fold ‘em.

“There is no doubt a sense in which Mr. Moore deserves the opportunity to challenge accusations against him for acts alleged to have happened more than 30 years ago.  Though too many women were too easily ignored in the past, we do not want to live in a country or political culture in which every accusation of sexual misconduct is automatically accepted as true. Accusers can be liars too.

“But Mr. Moore isn’t in a courtroom today. He’s in the political arena in which a candidate has to maintain a minimal level of public credibility to survive.  And his political situation has moved well beyond a more familiar she said/he said predicament.

“Several women have made detailed accusations of sexual misconduct against Mr. Moore, and multiple people now say he was known for trolling shopping malls for young girls while in his 30s.  Mr. Moore’s public defenses have also been less than convincing, not least that he doesn’t know his latest accuser, though he signed her yearbook.

“Mr. Moore’s credibility has fallen below the level of survivability. Some of Mr. Moore’s presumed colleagues in the Senate have said they believe the women and that the judge should withdraw.  Colorado’s Cory Gardner has suggested that even if Mr. Moore wins, the Senate should vote to expel him from the body. It’s a rare candidate who achieves that degree of political abandonment.

“The sensible move would be for Mr. Moore to step away from the campaign and allow Alabama’s Republicans to put forth a more credible candidate to run as a write-in against Democrat Doug Jones.  Most likely, Mr. Moore won’t do that. He made his reputation as an Alabama state judge by openly defying valid court orders, which twice cost him his court seat....

“Alabama’s Republican voters are in a tough spot, and ideally they’d at least get the chance to choose between a prominent write-in candidate from their party or opt for sending a message by voting for the Democrat. For 25 years Democrats and feminists euphemized and apologized for Bill Clinton, starting with Gennifer Flowers before he was President.  Republicans can show their standards are better.

“There is one other obvious loser in this debacle: Former White House aide Steve Bannon. Some have argued that the Bannon insurgency against the Republican ‘establishment’ is in the mode of earlier party challenges led by Ronald Reagan or Newt Gingrich. This one isn’t close. The populism of Reagan and Mr. Gingrich was always about building the conservative movement into a majority that could govern and change the country.

“The Bannonites have given no evidence or argument that they are aiming that high.  They want to defeat the existing majority – a conservative majority by any historical standard – mainly to show that they can depose Majority Leader Mitch McConnell.

“They have no discernible governing agenda beyond trade protectionism and slashing immigration, and those often appear to be convictions of convenience.  It is hardly a surprise therefore that instead of recruiting talented candidates, Mr. Bannon is collecting cranks and outliers like Roy Moore who, demonstrably, will take the GOP into the minority.

“The lesson Republican voters should draw from the Moore mess is that their future lies with nominating candidates who want to achieve substantive policy goals, such as a serious reform of the tax code or confirming originalist judges, rather than pouring their emotions into a political fringe that will always find a way to lose.

“Raging against the establishment for the sake of raging is an agenda for losers, and it will cost conservatives the votes in Congress they need to achieve conservative goals.”

George Will / Washington Post

“Moore campaigns almost entirely on social issues – National Football League protests, the transgender menace – and the wild liberalism of (Democratic opponent Doug) Jones, a law-and-order prosecutor and deer and turkey hunter who says he has ‘a safe full of guns.’  Jones’ grandfathers were members of the mineworkers’ and steelworkers’ unions: Birmingham, surrounded by coal and iron ore, was Pittsburgh – a steel city – almost before Pittsburgh was.  Jones hopes economic and health-care issues matter more.

“Evangelical Christians who embrace Moore are serving the public good by making ridiculous their pose as uniquely moral Americans, and by revealing their leaders to be especially grotesque specimens of the vanity – vanity about virtue – that is curdling politics.  Another public benefit from the Moore spectacle is the embarrassment of national Republicans. Their party having made the star of the ‘Access Hollywood’ tape president, they now are horrified that Moore might become 1 percent of the Senate....

“Nothing about Moore’s political, financial or glandular history will shake his base, unless the credible accusations of serial pursuit of underage girls are suddenly overshadowed by something his voters consider serious, such as taking sides in the Alabama-Auburn game.”

The latest polls as of this writing have Doug Jones in the lead with 46-50 percent of the vote, and Roy Moore around 42 percent. [A Fox News poll on Thursday had it 50-42 for Jones.]  For his part, Moore continues to deny the claims, while threatening to sue the Washington Post.

Sen. Mitch McConnell has said Moore will face an immediate ethics investigation if elected.

--New Jersey Democratic Sen. Robert Menendez will be on Capitol Hill following a mistrial in his federal corruption and bribery case.  After a week of deliberations, the jury said it could not reach a consensus on whether Menendez committed bribery by accepting gifts, campaign donations and vacations from a wealthy Florida eye doctor in exchange for political favors...or was this just a result of a longtime friendship between the two.

Weighing on all such cases these days is the 2016 Supreme Court ruling overturning the corruption conviction of former Virginia Gov. Bob McDonnell, a decision narrowing the definition of what counts as corruption by a public official.

But Menendez’s problems aren’t over. The feds could still retry him, and hours after the mistrial was declared, Senate Majority Mitch McConnell called for a Senate Ethics Committee investigation into the New Jersey Democrat, an act that had been put on hold awaiting the result of the court proceedings.

McConnell said in a statement: “Senator Menendez was indicted on numerous federal felonies.  He is one of only twelve U.S. Senators to have been indicted in our history.”

I am probably one of just a handful of New Jersey Republicans who are glad Menendez is back in the Senate, even if temporarily, because he is too valuable on the many foreign policy debates at hand; Menendez being one of the three or four best minds in this field.

--Ellen Mitchell of The Hill had a story on how “Top Air Force leaders and lawmakers are warning that a pilot shortage of 2,000 could cripple the service, leaving it unready to handle its responsibilities.

“ ‘With 2,000 pilots short, it’ll break the force. It’ll break it,’ Air Force Secretary Heather Wilson said during the annual State of the Air Force news conference.

“The Air Force needs 20,000 pilots minimum to fly its wide range of aircraft, including fighter jets, helicopters, transport planes... At the start of the year, it said it had 18,500 pilots, well short of its minimum....

“The problem is not that the Air Force is having trouble recruiting. It’s that airlines are offering bigger paychecks, and pilots are leaving when they are up for reenlistment.”

So the Air Force has been issuing big bonuses with just a one- or two-year contract extension, vs. the usual five- and nine-year extensions typically offered.

Sen. John McCain, Chairman of the Senate Armed Services Committee, said it’s not always the money difference, a lot of it is they don’t get to fly, partly because of sequestration, the automatic budget cuts that have grounded nearly one-third of Air Force planes.

“It’s a lifestyle,” said McCain, himself a Naval pilot when he was shot down over Vietnam.

“I talk to too many [pilots] all the time. They say, ‘Senator McCain, all I want to do is fly.  I want to be in combat.’ That’s what they’re all about.”

--Last week I talked of how the U.S. military must do a better job of protecting its own, and us; whether it’s deadly naval accidents or the failure to report violent service members who then aren’t put on the FBI’s list restricting gun ownership.

After I posted, we then learned that the strangulation death of Army Sgt. Logan Melgar was being investigated, two Navy SEALs perhaps responsible after Melgar discovered a scheme to launder dirty money, as first reported by the Daily Beast.

Apparently, the two tried to get Melgar to go along with them, he declined, and then he ended up dead.

--Republican and Democratic leaders of the U.S. Senate Foreign Relations Committee blasted the State Department on Tuesday for cuts in staff and what they described as a failure to have a plan for a proposed reorganization.  Sec. of State Rex Tillerson has embraced the White House proposal to slash the department’s budget by about 30 percent.  Tillerson has instituted a hiring freeze, but there is no reasoning behind it.  And as to talk of “cost savings,” which is what President Trump told Laura Ingraham on her first show with Fox the other week, when she questioned him on the State Department’s lack of expertise, as in there are so few positions filled at the deputy secretary of state level, for starters, this is nuts.

As to Trump’s statement, which Tillerson has picked up on, that this is about “cost savings,” we’re talking about $4 to $5 million to fill some needed senior positions, immediately, while Trump supports a tax plan that, on paper, would increase the deficit $1.5 trillion over 10 years.  I mean, c’mon, Mr. President.

If you want to get rid of the Dept. of Education, be my guest.  But in these incredibly complex times, you freakin’ need experts out in the field to obtain the best intelligence and advice, and to act as frontline diplomats.

Both Republican Sen. Bob Corker, chairman of the Foreign Relations Committee, and Sen. Ben Cardin, the top Democrat on the committee, are right.  The staff reductions at a high level are a risk to national security and a “high-level decapitation of leadership.”

--Southern California’s smog worsened for a second straight year, despite efforts to clean up the nation’s most polluted air, as reported by Tony Barboza of the Los Angeles Times.

This is disappointing to officials who had been succeeding in the battle against smog, but ozone levels violated federal health standards 145 days this year, up from 132 ozone violation days last year and 113 in 2015 across Los Angeles, Orange, Riverside and San Bernardino counties.

The last time the region had 140 bad air days was 2004.

Some experts say it’s about warmer, hotter weather that traps pollution near the ground.

On the other hand, there is a possibility the calculations are just wrong.

--We note the passing of gossip columnist Liz Smith, 94. Smith worked for the New York Daily News for years before jumping to the New York Post and Newsday, and for 11 years had a segment on the local NBC affiliate, during which time she won an Emmy for reporting. She also had a syndicated column.

Smith famously covered the high-profile divorce between then-real estate mogul Donald Trump and wife Ivana, Smith openly siding with her.

“She still wants to be his wife,” Smith wrote at the time, “But the bottom line is, she won’t give up her self-respect to do it....

“Intimates say she had every chance to continue being Mrs. Trump by allowing her husband to live in an open marriage.”

--Notorious Sicilian Mafia Boss Salvatore “Toto” Riina died at the age of 87.  He had been in a medically induced coma at a hospital in Parma, northern Italy. 

Riina was jailed in 1993, serving 26 life sentences for the ordering of more than 150 murders.

Riina was born in 1930 to poor farmers in Corleone, Sicily – the birthplace of Don Corleone, the fictional Godfather from Francis Ford Coppola’s film trilogy.

Salvatore Riina joined the local Mafia at 19, committing his first murder to gain entry.  He seized control of the Cosa Nostra crime group in the 1970s, spending nearly a quarter of a century evading justice, all while on Sicily.

In 1992, two anti-Mafia judges, who had brought scores of mobsters to trial in the 1980s, were killed in Riina’s “war against the state.”

He was captured a year later.  Yet even in jail, he ordered the killing of a 13-year-old boy to try to prevent his father revealing information about the Mob.

Partly in protest for his arrest, Riina’s associates also carried out a series of bombings in Rome, Milan and Florence in 1993, killing 10.

Riina’s eldest son, Giovanni, is serving a life sentence for four murders.

--Well, I can’t end on that note....so let’s move on to Michelle Cortez’ piece in Bloomberg News from today, shall we?

“Having a dog can bring a lot of love into your life. It could also make it last a little longer.

“A group of academics from Uppsala University in Sweden analyzed the health records of 3.4 million people in that northern European country, where databases contain detailed information on everyone’s hospitalizations, medical history and even whether they own a dog.  Such detailed records made it relatively easy to suss out the impact of having a canine companion.

“The results were heartwarming.

“People in possession of a pooch were less likely to have cardiovascular disease or die from any cause during the 12 years covered by the research, according to the study published in Scientific Reports. The impact was greatest for single people, said Mwenya Mubanga, (an author of the study).”

Hunting dogs seemed to offer the most protection when it came to staying alive.

Tove Fall, the senior author of the study, said it’s not clear exactly how the dogs helped avert heart disease, or whether getting one directly led to better health.

“We know that dog owners in general have a higher level of physical activity, which could be one explanation,” Fall said.  “Other explanations include an increased well-being and social contacts or effects of the dog on the bacterial microbiome in the owner.”

Or as Ms. Cortez concludes: “Either way, maybe an extra treat for that doting Lab waiting for you at home is in order.”

---

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

God bless America.

---

Gold $1294
Oil $56.68

Returns for the week 11/13-11/17

Dow Jones  -0.3% [23358]
S&P 500  -0.1% [2578]
S&P MidCap  +0.8%
Russell 2000  +1.2%
Nasdaq  +0.5%  [6782]

Returns for the period 1/1/17-11/17/17

Dow Jones  +18.2%
S&P 500  +15.2%
S&P MidCap  +10.8%
Russell 2000  +10.0%
Nasdaq   +26.0%

Bulls 63.5
Bears 15.4 [Source: Investors Intelligence]

Have a good week.

Happy Thanksgiving! 

Brian Trumbore



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Week in Review

11/18/2017

For the week 11/13-11/17

[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 971

The president returned from his big trip, optics largely good throughout. Substance?  Save for the speech to the South Korean Assembly on North Korea, zero.

I just firmly believe, a la David Ignatius down below, that when it comes to foreign policy our leader is largely clueless.  Yes, some of his ‘instincts,’ his ‘gut reactions,’ may prove to be right, but in the case of, say, Syria, he has no idea how the United States lost....it’s over....it’s Iran’s (and Russia’s to the extent they want it to be be...mainly for a seaport on the Mediterranean and an airbase).  As I wrote of last time, we are hurtling towards another Mid-East disaster.  Trump’s cuddling up to the Saudis also spells nothing but trouble.

And watch Israel.  Prime Minister Benjamin Netanyahu, who I have long called the brightest man on the planet, I also add in the same sentence is the most corrupt person walking the earth today.  Many in Israel have been waiting months and months for an indictment (or seven) on the many investigations swirling around him (and his wife).

But this is bad...because Netanyahu desperately needs a distraction.  And the United States, not just Trump, but Barack Obama, has given him one in Syria, which is all about Iran, while the Saudis are suddenly buddy-buddy, wanting Netanyahu to go after Lebanon (also read Iran and its support of Hizbullah).

What did I tell you in the summer of 2012, and incessantly since then?  If we had worked with Turkish President Erdogan on a no-fly zone in Syria, as he desperately wanted, but President Obama ignored, there would have been no ISIS, no massive Iranian involvement, for sure no Russians, 480,000 lives saved, and NO refugee crisis in Europe!

But it was GM is alive, bin Laden is dead...the mantra for Obama during that election year.  If you are a new reader, I have long said my goal in life at this point is to ensure that history recalls this time, 2012, as the year that changed everything for the worse....and it’s all on him.

Now, though, we have a different leader.  Read on....

Trump World....

Trump tweet: “Our great country is respected again in Asia.  You will see the fruits of our long but successful trip for many years to come!”

Upon his return from his Asian adventure, President Trump addressed the people Wednesday.

“Last night, I returned from an historic 12-day trip to Asia.  This journey took us to five nations to meet with dozens of foreign leaders, participate in three formal state visits, and attend three key regional summits.  It was the longest visit to the region by an American President in more than a quarter of a century.

“Everywhere we went, our foreign hosts greeted the American delegation, myself included, with incredible warmth, hospitality, and most importantly respect. And this great respect....was further evidence that America’s renewed confidence and standing in the world has never been stronger than it is right now.

“When we are confident in ourselves, our strength, our flag, our history, our values – other nations are confident in us.  And when we treat our citizens with the respect they deserve, other countries treat America with the respect that our country so richly deserves....

“Our trip was defined by three core goals. First: to unite the world against the nuclear menace posed by the North Korean regime, a threat that has increased steadily through many administrations and now requires urgent action.

“Second: to strengthen America’s alliances and economic partnerships in a free and open Indo-Pacific, made up of thriving, independent nations, respectful of other countries and their own citizens, and safe from foreign domination and economic servitude.

“And third: to finally – after many years – insist on fair and reciprocal trade. Fair and reciprocal trade – so important. These two words – fairness and reciprocity – are an open invitation to every country that seeks to do business with the United States, and they are a firm warning to every country that cheats, breaks the rules, and engages in economic aggression – like they’ve been doing in the past, especially in the recent past.

“That is why we have almost an $800-billion-a-year trade deficit with other nations.  Unacceptable.  We are going to start whittling that down, and as fast as possible.

“With these goals, it was my profound honor to travel on this journey as your representative....

“Once again our country is optimistic about the future, confident in our values, and proud of our history and role in the world....

“From South Korea, Melania and I traveled to China, where, as in Japan and South Korea, we were greatly honored by the splendor of our reception.  Our trip included the first official dinner held for a foreign leader in the Forbidden City since the founding of the modern China, where we enjoyed a very productive evening hosted by President Xi and his wonderful wife, Madam Peng....”

[Source: Whitehouse.gov]

Yes, as I wrote months before the trip, he’d be smitten by Xi, the dictator.

David Ignatius / Washington Post

“As President Trump ends his Asia trip, he might sum up the 12-day journey with a revision of the remark attributed to Julius Caesar: Veni, vidi, blandivi.  I came, I saw, I flattered.

“Trump’s trip was closer to a pilgrimage than a projection of power. The president rarely explained details of U.S. policy. Instead, he mostly asked other leaders for help, lauded their virtues and embraced their worldviews.

“Along the adulation tour, Trump spoke of his ‘really extraordinary’ relationship with Japanese Prime Minister Shinzo Abe; his ‘incredibly warm’ feeling for Chinese President Xi Jinping, whom he called ‘a very special man’; his ‘great relationship’ with the ‘very successful’ Philippine President Rodrigo Duterte; and his empathy for Russian President Vladimir Putin, whose nation is ‘an asset to our country, not a liability.’

“And the president praised himself at nearly every stop, telling reporters on the way home that the trip had been ‘tremendously successful’ with ‘incredible’ achievements.

“Trump’s trip may indeed prove to be historic, but probably not in the way he intends. It may signal a U.S. accommodation to rising Chinese power, a desire to mend fences with a belligerent Russia – with few evident security gains for the United States. If the 1945 Yalta summit marked U.S. acceptance of the Soviet Union’s hegemony in Eastern Europe, this trip seemed to validate China’s arrival as a Pacific power.  As Xi put it to Trump, ‘The Pacific Ocean is big enough to accommodate both China and the United States.’....

“The most worrying thing about Trump isn’t his impulsive military threats (though there’s reason to be concerned there, too).  The deeper fear is that in national security, this administration is an empty suit. It doesn’t make decisions. It doesn’t set priorities.

“Trump is a vain man who flatters others so that he will be stroked himself. If there’s a strategic concept underlying his approach, it may be realism married to acquiescence. The Asia trip left me feeling that we’re watching an American retreat, accompanied by a shiny brass band.”

As noted, Trump constantly brought up Trade....

Editorial / Wall Street Journal

“Donald Trump was having a successful Pacific sojourn this week, and then came Friday’s speech to the Asia Pacific Economic Cooperation confab in Vietnam. This was supposed to lay out his vision for a free and open Indo-Pacific, but instead he went on a tear against multilateral trade agreements.  This dismays America’s friends, gives a new opening to China, and threatens the rules-based order Mr. Trump says he wants. The biggest victim will be the United States.

“ ‘I will make bilateral trade agreements with any Indo-Pacific nation that wants to be our partner and that will abide by the principles of fair and reciprocal trade,’ the President said.  ‘What we will no longer do is enter into large agreements that tie our hands, surrender our sovereignty, and make meaningful enforcement practically impossible.’

“Mr. Trump is wrong that multilateral agreements have allowed other countries to ‘take advantage of’ the U.S.  The multilateral trading system the U.S. created after World War II has built foreign markets for American exports, which now represent 12.3% of U.S. GDP and an estimated 11.3 million jobs.  Mr. Trump is also wrong to believe he can force Asian nations to go along with his plan. They are already on the way to proving that his decision in January to pull out of the Trans-Pacific Partnership (TPP) trade pact was a strategic and economic mistake.

“Evidence is growing that the U.S. is already losing out. The remaining 11 countries party to the TPP reached partial agreement on the deal without the U.S. at the APEC summit this week.  If they succeed and the U.S. doesn’t rejoin, American exporters will be disadvantaged in markets that represent 16% of global GDP....

“The U.S. simply doesn’t have the economic leverage to force Asian nations to make big concessions in bilateral agreements. Perhaps it did in the 1980s, when Mr. Trump’s understanding of world trade seems to have stopped. Then the U.S. was the destination market for the bulk of Asia’s production.  Countries have many other destinations for goods and services, and companies are focused on trade within the rapidly growing region....

“As the U.S. is left behind, the biggest American losers will be the President’s supporters in the Midwest and farm states. TPP remains America’s best chance to benefit from Asia’s growth, and the deal addresses many of the President’s complaints about intellectual property theft, predatory industrial policy and enforcement of rules. America’s friends at APEC were disappointed by Friday’s speech, but their commitment to multilateral trade can force Mr. Trump or his successor to change course.”

Tax Reform

We are inching closer to a final tax cut package, but there is still a ton of uncertainty.  That said, House Republicans passed legislation that is a crucial step forward in their effort to enact a centerpiece of President Trump’s economic agenda, the bill passing 227-205, with 13 Republicans against, while no Democrats voted for it.

Trump and Republican leaders are rushing to pass legislation by year’s end that would simplify the code and deliver $1.5 trillion in tax cuts over a decade.  Both the House and Senate versions focus more on corporate tax cuts than on individuals, but there are significant differences between the two versions that, assuming the Senate passes their own shortly, would then have to be hashed out in conference between the two.

At least for now House Speaker Paul Ryan and House leaders can claim victory.

But the effort faces major uncertainty in the Senate, where with but a 52-48 edge, Republicans are struggling to find enough support, particularly among the deficit hawks, the bill increasing the deficit $1.5 trillion over ten years...on paper.

Some Republicans in the Senate are also not happy that while the reductions to the corporate tax rate are permanent, those for individuals would expire (Republicans saying they expect the tax cuts for individuals to be extended in future legislation). The Senate plan would also repeal the  Affordable Care Act’s individual mandate to purchase health insurance, a difference from the House plan that gives Senate leaders more revenue to work with but cuts out millions of Americans from health coverage (until they find alternative plans).

Congress’ nonpartisan tax analysts (the Joint Committee on Taxation) also dealt a blow to the Senate plan when it concluded the bill would, by the end of the decade, raise the average tax burden for the middle class, owing largely to changes in the healthcare law, because many would no longer get subsidies to help them afford health insurance.

The Senate bill would eliminate Americans’ ability to deduct state and local taxes from their federal tax bills, which was a reason why the 13 Republicans voted ‘no’ on the House version. All were from New Jersey, New York and California, even though the House bill contained a compromise, eliminating most breaks for many state and local payments but allowing Americans to deduct up to $10,000 in property taxes.  That said, 13 was far fewer than feared.

Kimberley A. Strassel / Wall Street Journal

“Hell hath no fury like a swamp creature scorned, and that ferocity was trained almost exclusively these past few weeks on California House Republicans. The attack was a case study in standing up to entrenched special interests, and a lesson to other Republicans in the virtues of having the backbone to go on offense.

“The House GOP passed its tax-reform bill on Thursday, and special medals of valor go to the 11 of 14 California Republicans who voted in support. The lobbyist brigade had joined with Democrats to target the Golden State delegation, seeing it as their best shot at peeling off enough Republicans to kill the bill. The assault was brutal, dishonest and all-out....

“Gov. Jerry Brown unleashed on state Republicans, calling them ‘sheep’ for supporting an end to most state and local tax, or SALT, deductions, and sending them letters deploring the tax hit on residents of high-tax California. Minority Leader Nancy Pelosi accused them of ‘looting’ the state. Her Senate counterpart, New York’s Charles Schumer, warned of ‘political fallout’ that would be ‘catastrophic.’....

“This is the reward for attempting to simplify the tax code – the forces of distortion scurry to protect their privileges. Democrats had hoped Republican infighting would tank tax reform.  But as the GOP kept marching, the left and special interests instead turned to picking off blue-state Republicans with scare campaigns about mortgage interest and SALT.  Most of the New York and New Jersey GOP contingencies quickly caved, which left the Californians to field all the incoming fire.  Had they defected in the same manner as their Northeastern colleagues, the bill would have failed....

“But tax writers made sure state Republicans came armed with analyses showing how other reforms – cuts in individual rates, the doubling of the standard deduction, the elimination of the alternative minimum tax – would more than offset a SALT elimination, and members forcefully made the case.”

Trumpets....

--President Trump said Russian President Vladimir Putin once again denied meddling in the 2016 election during their brief conversations Saturday on the sidelines of a summit in Vietnam.  Trump told reporters aboard Air Force One that every time Putin sees him he says: “I didn’t do that.”

Trump said: “And I believe, I really believe that when he tells me that he means it.”

Multiple U.S. intelligence agencies have concluded Moscow did meddle in the 2016 election to try to help Trump win.  Trump dismissed the heads of those agencies as “political hacks.”

Trump then backtracked the next day, telling reporters: “As currently led by fine people, I believe very much in our intelligence agencies.”  He said he didn’t want to “stand and start arguing” the point with Putin during their meeting, adding that it was “very important” to get along with Russia, China and other countries to address global problems.

Separately, the Kremlin said that inflexibility on the part of the United States was to blame for the lack of a bilateral meeting between Putin and Trump during the Vietnam summit.

--Sen. Al Franken (D-Minn.) called for an ethics investigation into his own behavior, following a revelation by television host and broadcaster Leeann Tweeden, who came forward with accusations Franken groped her while on a USO Tour in 2006, a photo of the incident splashed all over the country and social media.

Franken said: “I understand why we need to listen to and believe women’s experiences. I am asking that an ethics investigation be undertaken, and I will gladly cooperate....

“The truth is, what people think of me in light of this is far less important than what people think of women who continue to come forward to tell their stories.  They deserve to be heard, and believed.”

Senate Majority Leader Mitch McConnell, Senate Minority Leader Charles Schumer (D-N.Y.) and Sen. Claire McCaskill (D-Mo.) have called for an investigation.

In a piece on KABC, Los Angeles, Tweeden also said Franken forcibly kissed her while they were rehearsing a sketch for a performance.  [Franken denied her version of this part.]

Meanwhile, Wednesday, Rep. Jackie Speier (D-Calif.), who is spearheading a bill to overhaul how Congress deals with sexual harassment allegations on Capitol Hill, along with Sen. Kirsten Gillibrand* (D-N.Y.), said at a hearing that two current lawmakers have been accused of sexual harassment, but declined to identify them out of concern for the victims.  [One is said to be a Democrat, the other a Republican.]

Trump tweet: “The Al Frankenstien (sic) picture is really bad, speaks a thousand words.  Where do his hands go in pictures 2, 3, 4, 5 & 6 while she sleeps?”

Trump added: “And to think that just last week he was lecturing anyone who would listen about sexual harassment and respect for women. Lesley Stahl tape.”

This last reference is to a New York magazine article in 1995 that quoted Franken, then an “SNL” writer, as offering a disturbing joke about Stahl while writing a sketch depicting broadcaster Andy Rooney finding an empty bottle of sedatives.

“When Lesley’s passed out, I take her to the closet and rape her,” he suggests the Rooney impersonator say. Yikes.

*The aforementioned Gillibrand also said this week that Bill Clinton should have resigned amid the sexual assault allegations against him.  Clinton supporters, a dwindling crowd, then went after Gillibrand because she had inherited Hillary’s Senate seat.

Back to Trump, he stayed mum on Roy Moore, let alone the elephant in the room...that being his own behavior.

--Trump tweet: “While in the Philippines I was forced to watch @CNN, which I have not done in months, and again realized how bad, and FAKE, it is.  Loser!”

--John Solomon / The Hill

“Sen. Dianne Feinstein (D-Calif.) has sought access to an undercover informant who helped the FBI chronicle bribery, kickbacks and money laundering inside Moscow’s nuclear industry as part of an Obama-era Russia corruption case.

“Heather Sawyer, the general counsel for Feinstein – the top Democrat on the Senate Judiciary Committee – sent an email this week to the lawyer for the former FBI informant, William Campbell, seeking to be included in conversations involving the committee.

“Sen. Chuck Grassley (R-Iowa), the chairman of the committee, secured an agreement with the Justice Department to allow Campbell to talk to Congress about the evidence he gathered for the FBI from 2009 to 2014 when he worked as a consultant for Rosatom Tenex, Russia’s state-owned commercial nuclear arm.

“Campbell’s work led to the indictments of three major players, including Tenex official Vadim Mikerin, a key Russian nuclear figure inside the United States who was sentenced to 48 months in prison in December 2015.

“Grassley wants to know what the FBI did with the evidence it first gathered in 2009 that Mikerin and others inside the Russian nuclear industry were engaged in illegal activity....

“Some Republicans are pressing the Justice Department to name a special counsel to re-investigate the Mikerin matter....

“Republicans have noted that former President Bill Clinton received a $500,000 speech fee and millions in charitable donations from parties interested in the Russia nuclear company during the time his wife Hillary Clinton served as secretary of state.

“Hillary Clinton has scoffed at those requests, suggesting they are nothing more than a partisan distraction from the current federal probe into Russia meddling in the 2016 election.”

--I’m cutting Donald Trump Jr. and Jared Kushner some slack this week on the Russia investigation, as in my interest in the topic is waning in terms of looking for collusion.  It has never been about collusion with me...I’ve just reported the stories.  That said, re: Jared Kushner, the apple doesn’t fall far from the tree, if you know your New Jersey history.

What it is about is Russian meddling, period.  We have to stop the bastards.  And there is no reason to feel confident when President Trump continues to pay Vlad the Impaler lip service.

I never did tell you my own prostitute story(s) from my two stays at the Metropol Hotel in Moscow, did I.....

[It’s funny....nothing more.  Not real friendly bartenders there, by the way...but I digress....]

--The head of Puerto Rico’s indebted utility resigned today following criticism of the slow restoration of power to the island after Hurricane Maria.  Unbelievably, only 50% of the island, like seven weeks after the storm hit, has power.  Plus there have been intermittent power outages to the populated areas that have been “restored.”  San Juan was kept in the dark for most of this past week, for example.

Wall Street

Stocks finished mixed, the second consecutive down week for the Dow and S&P 500, with Nasdaq gaining some.  Uncertainty over the tax bill didn’t help, even with the House approving its version. 

The inflation data for October was also generally higher than expected, which led many to believe another Federal Reserve rate hike is now a certainty when it next meets Dec. 12-13.

The producer price index jumped 0.4% last month over September, more than expected, also 0.4% ex-food and energy, with the two readings up 2.8% and 2.4% vs. year ago levels, respectfully.

Consumer prices were tamer...in line at 0.1%, 2.0% year-over-year, and 0.2% on core, 1.8% yoy, this last figure down 0.2% from the prior month.

October retail sales were slightly ahead of forecast, 0.2%, 0.1% ex-autos, while October industrial production was up a strong 0.9%.

October housing starts came in much stronger than expected at 1.290 million units (ann.).

Globally, stocks have been backing off their highs, with European equities down 7 sessions in a row until a bounce on Wednesday, and Tokyo’s Nikkei index falling for the first week in ten.

Europe and Asia

A few economic notes from the eurozone (EA19):

A flash estimate for third-quarter GDP came in at a strong 0.6%, 2.5% annualized.

France was at 0.5% (2.2% ann.), Spain 0.8% (3.1% ann.), Germany 0.8% (3.3% ann.), and Italy 0.5% (1.8% ann.). Germany and Italy’s statistics confirmed by their various stats agencies, the other two through Eurostat.

In Germany, Q4 growth is estimated to come in at a 3.6% annualized pace, though future growth could be hit by the uncertainty over Merkel’s coalition. 

Italy’s 1.8% ann. pace is the biggest year-over-year jump since 2011.

Annual inflation in the EA19 fell to 1.4% in October, down from 1.5% in September and well off the European Central Bank’s 2.0% target, so there remains zero reason for the ECB to change its loose monetary policy, beyond the reduction in its monthly bond purchases.

Inflation was at 1.5% in Germany, 1.2% in France, 1.7% in Spain and 1.1% in Italy.

All of these are up substantially, however, over year ago levels, including the EA19 then annualized pace of 0.5%.

Eurozone industrial production in September was down 0.6% over August, but up 3.3% year-over-year.

In the U.K., October inflation came in at 3%, well above the Bank of England’s 2% target, the BoE talking of two more rate hikes after this month’s, which was the first in a decade.

British retail sales recorded their first year-on-year decline since 2013 last month, down 0.3%, though this is partly because of a comparison with a very strong October 2016.  Looking at the three months to October, which smooths out the monthly volatility, sales grew 0.9% from 0.7% in the three months to September.

Brexit: European leaders set a deadline for British Prime Minister Theresa May to give ground on the divorce (exit) bill and the future of the Irish border if the discussion is to move on to trade before year end.

EU president Donald Tusk, after meeting with EU leaders in Gothenburg, Sweden today, said, “I made clear to Theresa May that this progress needs to happen at the beginning of December at the latest,” an important deadline because of the critical EU summit later in the month.

May’s Brexit secretary David Davis called on the EU to compromise, saying Britain has “made all the running” in negotiations thus far.  “So far in this negotiation we’ve made quite a lot of compromises.  We haven’t always got that back,” Davis said.

If EU leaders aren’t satisfied with Britain’s offer on the divorce bill and a satisfactory solution to the Irish border, then come the next summit, the fear is the negotiations would fall apart, though there are other possible dates in January and February to fall back on.

Mrs. May has agreed to pay into the EU budget for two years after leaving, a positive step for the EU, but the leaders say this doesn’t go far enough. 

As for Davis’ comment that the EU isn’t meeting Britain halfway, the EU says it doesn’t think it’s up to them to make concessions.  [Can’t disagree with that...at least at this stage.]

Both May and Davis dodged questions on Friday in various forums, Davis speaking to German business leaders, where he admitted that from here to the December summit, “we will have pretty much continuous negotiations.”

Prime Minister May and her Foreign Secretary Boris Johnson held separate talks with their Irish counterparts on the question of the post-Brexit border between Ireland, which stays in the bloc, and Northern Ireland, which leaves with the U.K.

Irish Prime Minister Leo Varadkar said, “We won’t go back to the borders of the past,” separating the south from the north.  “We want that written down.”

The Brits are largely blaming Germany and France for the stalemates.

The only encouraging news this week was that Donald Tusk said there had been “good progress on citizens’ rights” in the negotiations, the third of the initial deal points prior to trade, along with the financial settlement and Ireland.

Germany: Chancellor Angela Merkel continues to push for a new governing coalition agreement with the Free Democrats and the Green parties.  But the parties are said to be far apart on the issues.

Specifically, the three (including Merkel’s Christian Democratic-bloc) can’t come to an agreement on policies such as the sharing of financial risks in the euro area (see Greek debt crisis), cutting carbon emissions and limiting immigration.

On immigration, a key point is over a moratorium on family members joining asylum seekers in Germany, which the Greens want lifted and Merkel’s Bavarian ally, the Christian Social Union, wants kept in place.

A preliminary agreement is only the prelude to coming up with a detailed policy blueprint for the next four years.  Yes, this is an example of how the parliamentary form of government can really muck things up vs. a two-party system that at least leads to uniform majorities.

The problems Merkel are having, though, impact Brexit talks, and other euro-area policy issues because she is solely focused on putting the new government together and little else.

Again, while it is just assumed that Merkel and the other two parties will reach some agreement, it’s not guaranteed and another election isn’t out of the question, to the benefit of the far-right Alternative for Germany party no doubt.

The Greens have their party convention Nov. 25 and it’s hoped then that for their part they’ll vote to proceed with talks.

Catalonia: A relatively calm week here, with Spanish Prime Minister Mariano Rajoy visiting the region for the first time since he imposed direct rule; Rajoy calling for regional elections Dec. 21.

Some 750,000 people protested in Barcelona last weekend against the detention of Catalan leaders, but it was peaceful.

Catalonia’s sacked President Carles Puigdemont remains in self-imposed exile in Belgium, and his top aides have been prosecuted, their situation made worse by Puigdemont’s decision to flee, like a true coward.

Some of those imprisoned, as well as Puigdemont, will stand for election.

Meanwhile, the mayor of Barcelona, Ada Colau, has condemned the pro-independence movement.

A majority of people across Spain agree with the Madrid government’s handling of the situation, but only 28 percent of Catalans share this view, according to a poll for newspaper El Pais.

Turning to Asia, some news from Japan, as the government announced GDP grew a seventh consecutive quarter – the longest streak in nearly two decades, third-quarter growth at a 1.4% annualized pace.

Japan’s businesses have been benefiting from rising global demand, with foreign trade the main driver recently, helped by a weak yen.  Household consumption, though, remains punk, down 1.9% in the quarter.

Separately, the government, and Bank of Japan, would seem to be nearing a call to officially pronounce the era of ‘deflation’ in Japan over.  Prices were largely falling since the 1990s, but core prices are now running at a 0.7% pace and have been positive for months.

Street Bytes

--As noted above, the Dow Jones fell 0.3% to 23358, the S&P lost 0.1% and Nasdaq gained 0.5%.  The earnings news was very solid, particularly in the case of one very large retailer, details below.

--U.S. Treasury Yields

6-mo. 1.41%  2-yr. 1.72%  10-yr. 2.34%  30-yr. 2.78%

--The International Energy Agency on Tuesday lowered its oil demand forecast for this year and next, saying the rally in prices since June would likely crimp consumption.

While we’re only talking a small cut of about 200,000 barrels a day, the IEA did say the risk is for rapidly increasing supplies outside OPEC, double this year’s 0.7mb/d growth.

The Paris-based organization also said growth in U.S. output will be the strongest seen by any country until 2025, making it the “undisputed” leader among global producers.

Fatih Birol, IEA executive director, said the U.S. is expected to account for 80% of the increase in global supply over the period 2010 to 2025.

--Richard Cordray, head of the Consumer Financial Protection Bureau since it was established by the Dodd-Frank Wall Street reform act after the financial crisis, announced he is stepping down this month.  His term was not set to expire until July.

Cordray has been fiercely opposed by the Street and now President Trump can nominate a replacement much more friendly to it, including one who favors deregulation.

The rumor is that Cordray, a Democrat, will run for governor of his home state of Ohio, but he has yet to comment on his future.

--Wal-Mart shares rose a shocking 11% on Thursday after the company reported earnings and sales that exceeded expectations for the quarter ending Oct. 31.

Total revenue reached $123.2 billion, an increase of $5 billion, or 4.2%, over the third quarter of 2016.

Wal-Mart is determined to give Amazon a run for its money, adding products, partners and perks, with a 50% increase in U.S. online sales during the quarter, while same-store sales at U.S. stores rose a very solid 2.7%, traffic up 1.5%.

Wal-Mart had acquired online marketplace Jet, as well as niche menswear retailer Bonobos, to attract a more affluent, fashion-conscious shopper. The company now has more than 70 million items available on its website.

Walmart is also getting customers to visit the stores because some items are cheaper there than online, a difference that Walmart.com displays by putting the prices side by side.

According to research firm eMarketer, Amazon is on track to capture 44% of U.S. online sales this year, up from 38% last year. Wal-Mart is projected to grow to about 3.6% from 2.8% last year, the firm said.

Finally, Justin Lahart had the following in his Wall Street Journal column.

“Wal-Mart Stores Inc. still can learn a lot from Amazon.com, but it has the online retailer beat in one important category: profits....

“Wal-Mart’s vast network of stores – it says it has a location within 10 miles of about 90% of the U.S. population – paired with its e-commerce arm could count as an advantage here.  With sales that are more than four times what Amazon gets from its retail operations, it has considerable heft with suppliers and existing logistics operations that should not be discounted.

“One of Wal-Mart’s biggest challenges is that its investors demand profits, while Amazon has been allowed to run its retail operations at a near loss, or an outright one, as long as it keeps growing rapidly.

“On the other hand, sales growth is accelerating at Wal-Mart, and if the chain keeps boosting online sales and maintains solid profits, investors might be less willing to give Amazon a pass.  Wal-Mart has a market capitalization approaching $300 billion and a price-to-sales ratio of 0.6. Amazon is worth nearly $550 billion and has a price-to-sales ratio of 3.5. Which stock is more vulnerable?”

--Home Depot’s revenue and earnings in the fiscal third quarter topped expectations, with sales rising 8.1% to $25 billion and earnings per share increasing to $1.84 from $1.60 a year earlier, with consensus at $1.82 and sales of $24.5 billion.

Comparable store sales rose 7.9%, with U.S. sales up 7.7%, vs. year ago figures of 5.5% and 5.9%, respectively, though this was aided by hurricane and wildfire sales. [Hurricanes Harvey and Irma added $282 million to the sales total, the company said.]  The company upped guidance as well for the full year, with comp-store sales now predicted to climb 6.5% vs. a prior estimate of 5.5%.  Just a tremendous success story.

--Target failed to meet Wall Street’s expectations, shares slumping after the department store chain issued a gloomy forecast for the holiday season, investors concerned that the company’s “high-low” strategy of building up higher margin in-house brands has come at the expense of actual margins, as the company stays aggressive on prices for basics.

Sales rose 1.4% in the quarter ended October to $16.7bn, while net income fell 21% to $480m.  Same-store sales up 0.9% (up 24% online vs. year ago).

The issue was the company is forecasting earnings for the fourth-quarter of $1.05 to $1.25, when consensus was at $1.24.

But, hey, Target did just release its exclusive version of Taylor Swift’s new album, Reputation, so at least it has that going for it.

--Shares in Best Buy fell 6% Thursday on disappointing third-quarter results and guidance for the holiday-quarter below Wall Street’s estimates as it cut prices to match those offered by rivals including Amazon.

Best Buy added to its long-term policy of price-matching by offering free shipping for the Thanksgiving to Christmas period.

Same-store sales rose 4.4% in the quarter ended Oct. 2, missing analysts’ estimates, hurt by the late launch of Apple’s iPhone X and the hurricane season. Overall revenue rose 4.2%, also below expectations.

--Dick’s Sporting Goods Inc. reported earnings per share of 30 cents, above the Street’s forecasts, but even though revenue of $1.94 billion in the third quarter also beat expectations, the stock fell as it gave lackluster guidance, with same-store sales falling 1% vs. last year.

--Shares in Abercrombie & Fitch surged 20% Friday after the company far exceeded expectations for its third quarter, with revenues up 4.5% to $859.1 million, and same-store sales increasing 4%.  Pretty, pretty good....for this otherwise lackluster retailer.

--Shares in General Electric continued to tumble, GE’s new CEO, John Flannery, unveiling a long-awaited turnaround plan on Monday that included a cut in the dividend in half while shedding multiple divisions.  The bottom line is no one expects a dramatic immediate turnaround.  This one will take years and in the meantime, little cause for optimism if you’re a shareholder; Flannery also lowering the earnings targets for 2018, while cautioning that in 2019, conditions will remain difficult.

The CEO laid out a future for three core markets – power, aviation and health care, while looking to shed smaller divisions such as transportation and lighting.

2018 is “a reset year,” Flannery said.

For the year, GE shares are down over 40%.

--Amazon.com, through its new Whole Foods subsidiary, announced a new round of price cuts, including on turkeys, and the supermarket chain stocks shuddered anew; peak turkey season being from now through year end.

--Last Saturday was Alibaba’s Singles Day in China and the e-commerce giant said it racked up more than $25.3 billion in sales vs. last year’s $17.8 billion.  Goodness gracious.  Smartphones and appliances were among the top-selling items.

Deals are at the heart of the holiday, such as a $1,500 big-screen Sharp TV going for a little over $500.

But one article I saw talked of “discounted lobster.”  Boy, that doesn’t do a helluva lot for Larry’s self-esteem, one would think.  I mean it’s taken ‘Lobster,’ No. 76 on the All-Species List, like 100 years to work up to a luxury item from steerage.

--Nice few days for Boeing, if the orders come to fruition.  Dubai’s Emirates unveiled a provisional order for 40 Boeing 787-10 jet liners, worth $12.5 billion at list prices, Emirates saying the carrier selected Boeing after comparing it with the Airbus A350.

And then a Kuwaiti leasing and finance company, Alafco, ordered 20 737 MAX 8 passenger planes, that deal worth $2.2 billion.

--Shares in Cisco Systems rose on its fiscal Q1 report that showed revenue met expectations, while guiding higher for revenue and profits the current quarter.  The company said it is seeing the benefit of a broad transformation to the cloud, what it refers to as its “multi-cloud” initiative, working with different cloud computing vendors, including a partnership with Alphabet’s Google cloud operation and with Alibaba.

Cisco’s transformation includes receiving more subscriptions and recurring revenue, with “deferred revenue” at $5.2 billion, up 37% from a year ago.  The company is in the process of reducing head count by at least 7%, as announced summer of 2016.

--Last week I wrote of the travails of Deutsche Bank, the CEO saying half the employees would be losing their jobs owing to automation, but this week Cerberus Capital Management, a private-equity firm, bought into both Deutsche and Commerzbank, the two biggest German banks; 3% in the former, 5% in the latter.

Some say Cerberus isn’t looking for a turnaround at the two, but rather a merger between them, the two having held talks on such a move last year.  Both then decided to focus on their respective restructuring efforts.

--German manufacturing conglomerate Siemens is laying off 6,900 jobs worldwide, half in Germany, amid changes in the energy and commodity sectors.

--Nelson Peltz, after the most expensive proxy fight in history, won a seat on the board of Procter & Gamble Co. after all, with an independent vote tally showing that of more than 2 billion votes cast, Peltz had 42,780 more than a P&G director he ran against.  The margin is 0.0016% of the shares outstanding.

Initially, an unofficial count had Peltz losing by mere thousands.

Peltz declared victory and called on P&G to concede and let him into the boardroom, but the company said the tally was still just preliminary, and that P&G can still challenge the result.  Talk about stupid.

--Elon Musk unveiled the new Tesla Semi on Thursday night, along with a working prototype of a new Roadster sports car that he claims will rocket from zero to 60 in 1.9 seconds – the first production car to perform the feat in under 2 seconds. Top speed is 250 mph. Price: $200,000. Whatever.

“It’s just stupid,” he said excitedly.  Yes, indeed it is.

But guys, if you’re looking to impress your girl, and get in a ton of trouble with the law, production is aimed at 2020, which in Elon Musk time means 2025.

The new Tesla Semi supposedly will have a range of 500 miles, far more than expected, but no other details were released, including on battery size. The truck is scheduled for production in 2019.  Other truck makers are also developing electric trucks.

The Semi will be able to go from zero to 60 mph in 5 seconds compared with 15 seconds for a diesel truck.  It will also require a “megacharger” that can recharge trucks to a 400-mile range in 30 minutes.  Again, no details, however.  And Musk said nothing about Model 3 production issues.

--TransCanada Corp.’s Keystone pipeline leaked an estimated 210,000 gallons of oil onto agricultural land in northeastern South Dakota, as reported by the company and state regulators on Thursday, though state officials don’t believe the oil polluted any surface water bodies or drinking water systems.  Crews shut down the pipeline yesterday and activated an emergency response.

The timing of the incident couldn’t have been worse, as Nebraska regulators are scheduled to announce their decision Monday on whether to approve the proposed Keystone XL oil pipeline there, an expansion that would boost the amount of oil TransCanada is now shipping through the existing line.

--This is nuts...a bitcoin exchange in Zimbabwe (Golix), saw its prices jump to something like $13,500 after the country’s armed forces seized power (see below), or almost double the rate at which the cryptocurrency trades in international markets.  Demand is said to have surged due to a shortage of hard currency.

What’s really stupid is sellers of it are paid in U.S. dollars deposited electronically, but to convert this into hard cash, you have to accept a steep discount on the black market.

Bitcoin itself slumped 29% early this week, after touching a record high of $7,900 last week; the fifth decline of 20% or more this year.  But then by late Friday it was all the way back to $7,875, last I checked.

Three years ago the currency was at $300, and six years ago $2.

--A painting of Christ by Renaissance master Leonardo da Vinci sold for a record $450 million at auction at Christie’s in New York, smashing the previous record of $179.4 million for a Picasso work.  [There was a private sale for a Willem de Kooning painting, $300 million, to hedge fund manager Kenneth Griffin in 2015.]

The da Vinci, one of fewer than 20 known paintings by him, saw bidding start at $100 million and lasted 19 minutes.

The work, called “Salvator Mundi,” Italian for “Savior of the World,” dates from around 1500 and was once owned by King Charles I of England, though it disappeared from view until 1900, at which point it was acquired by a British collector.  At that time it was attributed to a da Vinci disciple.

Eventually, a Russian billionaire acquired it in 2013 for $127.5 million in a private sale.

The painting underwent a lot of restoration work  in the mid-1900s by art dealers and while most scholars agree that it is by Leonardo, there are questions.

Which leaves me with one....why the heck would you take such a risk, and at that price?!

[Latest rumor is the buyer is a reckless Chinese billionaire.]

Foreign Affairs

Saudi Arabia / Lebanon: It’s been two weeks since Lebanese Prime Minister Saad Hariri announced his resignation, from Saudi Arabia, hours after which Saudi authorities under Crown Prince Mohammed bin Salam (MBS) rounded up some of the kingdom’s leading billionaires in a corruption investigation.  Since then, the billionaires are holed up at the Ritz-Carlton in Riyadh, while Hariri is on his way to France, literally as I post, according to his own television station.    

French President Emmanuel Macron on Wednesday invited Hariri and his family to move to France after the Lebanese prime minister resigned, amid allegations the Saudis are holding him under house arrest.  Macron said he was not offering Hariri asylum or political “exile,” but rather he was making the offer to dispel fears that Saudi Arabia had taken Hariri prisoner.

Friday, Lebanon’s Foreign Minister Gebran Bassil said the crisis triggered by Hariri’s resignation was part of an “attempt to create chaos in the region.”

Saudi authorities are negotiating settlements with the princes and businessmen that were rounded up, offering deals to pay for their freedom as the kingdom looks to refill its depleted coffers.

According to the Financial Times, the government is seeking to appropriate as much as 70 percent of the princes’ wealth.  Literally, “Cough up the cash and you will go home,” one adviser told the FT.

No word on what Prince Alwaleed will do in terms of his assets, he being the most familiar figure arrested to Westerners.

And as everyone who is observing all this can’t help but muse, how do the actions of MBS help investor confidence in Saudi Arabia?  If international investors are going to come in a big way, they need to know the rules of the game, and that the new leadership will stick with them, and not appropriate their own holdings down the road.

Separately, Israel Defense Force Chief of Staff Lt.-Gen. Gadi Eisenkot stated in an interview with a Saudi newspaper that Israel was willing to share intelligence with the kingdom to confront Iran, Eisenkot adding “there are many shared interests between us and Saudi Arabia.”

“Under U.S. President Donald Trump there is an opportunity to form a new international alliance in the region.  We need to carry out a large, comprehensive strategic plan to stop the Iranian threat,” Eisenkot said. 

“The Iranian plan is to control the Middle East through two Shiite crescents,” Eisenkot told Elaph newspaper. “The first is from Iran through Iraq to Syria and Lebanon and the second across the Gulf from Bahrain to Yemen to the Red Sea.  We must stop that from happening.” [Anna Ahronheim / Jerusalem Post]

Last week Hizbullah Secretary General Hassan Nasrallah accused Saudi Arabia of having appealed to Israel to launch an attack against the group in Lebanon, offering the Jewish State “billions of dollars” to do so.

Wednesday, Iranian President Hassan Rouhani was quoted by state media as saying that “It is very reprehensible and shameful for a Muslim country in the region to beg the Zionist regime [of Israel] to bomb the people of Lebanon.”

David Ignatius / Washington Post

“Nearly two weeks after the double political explosion that rocked Riyadh, Crown Prince Mohammed bin Salman appears to be doing damage control in ways that may help stabilize Saudi Arabia and the region.

“The first bombshell in the Saudi capital was the Nov. 4 arrests on corruption charges of 201 prominent Saudis, including princes and government ministers. Now MBS, as the 32-year-old crown prince is known, is beginning a resolution process that may settle many of these cases out of court.

“A senior Saudi official told me Thursday that the kingdom’s anti-corruption commission would follow the standard ‘plea-bargain process’ that is ‘usually conducted by the public prosecutor prior to transferring a case to the relevant court.’ The commission’s overall aim, he said, was to ‘send a strong message’ that corruption won’t be allowed, ‘irrespective of rank or status.’

“The crackdown may have consolidated support for MBS among younger Saudis who resent older, wealthy princes and palace insiders.  But his power play risked a backlash within the royal family because it violated the kingdom’s traditional consensual politics.  Resolution of corruption cases out of court may dampen such high-level dissension.

“The second Nov. 4 explosion was Saad Hariri’s announcement from Riyadh that he was quitting as Lebanon’s prime minister....

“Hariri’s resignation and seeming house arrest made him a hero in Lebanon and a symbol of the country’s yearning for sovereignty. This may give him some new leverage when he returns to Beirut.  Lebanese sources told me Thursday that Hariri’s supporters may urge Hizbullah to withdraw its fighters from Yemen as a gesture of solidarity.  Hariri will also campaign anew for international support for Lebanon’s economy and military....

“MBS’s purge looked to many outsiders like a high-risk political move. But a senior prince cautioned me the country isn’t as fragile as it may look.  One of MBS’s key backers put it this way: ‘Corruption can’t keep the country stable. Having a corruption-free country will keep us stable.’

“That’s a worthy ambition, but as MBS detonates his bombs, he must avoid blowing himself up.”

Ralph Peters / New York Post

“While our eyes are fixed on North Korea, the Middle East threatens to explode. If it does, we’ll be drawn in – and the carnage and cost will make Iraq seem like spring break.

“Choose your powder keg, starting with Yemen. Ruptured by civil war, the entire country’s running out of water;* famine is biting; and cholera’s spreading like a medieval plague. Yemeni factions fight like rabid dogs let loose in a butcher’s shop, while Islamist fanatics spread through the desolate hinterlands.

*Ed. The International Committee of the Red Cross today said three cities in Yemen have run out of clean water because a Saudi blockade has cut imports of fuel needed for pumping and sanitation.  One million in the three cities are impacted, just as Yemen emerges from the world’s worst cholera outbreak in modern times.  The capital, Sanaa, is expected to be in the same situation shortly.

“Worsening all, Iran has backed the Shia-aligned Houthi rebels to gain a foothold on the Arabian Peninsula. Two-and-a-half years ago, Iran’s involvement drew in the Saudi military. Today, neither side is winning; the dying continues; and the frustrated Saudis have blocked not only trade but relief supplies.

“Yemen is dying, the plaything of powerful neighbors, and we can’t even find it on a map. But Yemen may well find us....

“Given their triumphs in Syria and Iraq, Iran’s militants feel invincible. No sentiment is more dangerous.

“By contrast, Saudi Arabia is reeling. Riyadh’s struggling to find an effective response to Iran’s empire-building. In its latest – appallingly clumsy – move, the kingdom essentially kidnapped Saad Hariri, the man the Saudis themselves had backed as Lebanon’s prime minister. Riyadh forced the younger Hariri to resign on Saudi soil and continues to hold Hariri under apparent house arrest.

“As Lebanon’s senior Sunni political leader, Hariri’s sin was that he failed to stand up to Iran as Lebanon-based Hizbullah provided shock troops to Syria’s Assad regime. But there was little Hariri could do. Hizbullah’s now the strongest force in Lebanon – its veterans far overmatch the Lebanese military.  And the Lebanese, recalling their own brutal civil war, don’t want their country torn apart again.

“The Saudis simply don’t know what to do.  Riyadh had bet that we’d take care of Iran, that Tehran would push us too far and our military would whip Iran’s Quds Force and the region’s Shia militias back into their pens. But we backed down again and again, while the Iranians consistently stepped up.

“Long viewed as the keystone Arab power, Saudi Arabia’s now strategically destitute....

“Tehran has been building a web of alliances, while the Saudis have never excelled at attracting friends.

“Our principle Middle Eastern ally outside of Israel, Saudi Arabia could, with one grand misstep, provoke a regional war it could not win.  And we’d be forced to save the kingdom, a repugnant use of American blood.”

Syria: Russia vetoed a UN Security Council resolution that would have extended an inquiry into Syria’s use of chemical weapons; the 10th time Moscow has exercised its veto powers in support of its ally, the Assad regime.  Beyond pathetic.

U.S. ambassador to the UN, Nikki Haley, described the latest Russian veto as “a deep blow.”

“Russia has killed the investigative mechanism which has overwhelming support of this council.”

Last weekend, Russian President Putin and President Trump reached an agreement on supporting political reconciliation in Syria, while maintaining the existing two-nation communication channels used to fight Islamic State, the two leaders meeting briefly on the sidelines of the Asia-Pacific Economic Cooperation summit in Vietnam.

Editorial / Wall Street Journal

“The press corps spent the weekend obsessing about what Donald Trump thinks about what Vladimir Putin believes about Russian meddling in the U.S. election.  The real news is Mr. Trump’s deal announced in Vietnam with the Russian strongman for the ‘deconfliction’ of Syria. This is ceding the regional advantage to Russia and Iran.

“That’s the take-away of the joint statement issued Saturday by the U.S. and Russia that ‘builds on months of fairly intense discussions’ and ‘behind-the-scenes diplomacy,’ according to State Department officials. The three-part strategy aims to achieve an ‘enduring defeat’ of Islamic State, ‘de-escalate the civil war’ and hold ‘U.N.-supervised and organized parliamentary and presidential elections.’

“ISIS is nearly ousted from its caliphate, not that the Russians helped much. The dirty work was done by Arab and Kurdish fighters backed by U.S. air power and special forces on the ground.  As Secretary of Defense Jim Mattis told NATO in Brussels last week, 95% of the territory that Islamic State held in Iraq and Syria has now been reclaimed.

“The question is what comes next.  In July President Trump agreed with the Russians to enforce a deconfliction zone in southwestern Syria near the Israeli and Jordanian borders. The point was to stop the fighting, address the humanitarian crisis, and allow U.S.-backed forces to crush the Islamic State in the north and eastern parts of Syria.

“Instead, the cease-fire solidified the gains that Bashar Assad’s Syrian government forces had already made in western Syria. And it freed up Russian and Iranian-backed fighters to divert resources eastward, where the Syrian Democratic Forces allied with the U.S. had made progress against Islamic State.  The Institute for the Study of War’s Christopher Kozak noted Saturday that the compact also ‘has preserved – rather than limited – the freedom of movement of Iran and Hizbullah along the Golan Heights and Syrian-Jordanian border.’

“Yet the State Department claims the deconfliction experiment, ‘while not perfect,’ has been a success because ‘violence in the area has been significantly reduced, and thousands of Syrian families have returned to their homes.’ The U.S., Russia and Jordan have now signed a Memorandum of Principles that calls for the ‘reduction and ultimate elimination of foreign forces’ in Syria, especially in the south. But there’s no evidence that Iran or Hizbullah are leaving the area....

“The big picture is that Mr. Trump and Secretary of State Rex Tillerson seem to be using the diplomacy of deconfliction to justify a retreat from post-ISIS Syria. Where that leaves America’s Kurdish and Syrian allies isn’t clear, though perhaps they’re on their own. Mr. Putin is winning in Syria no matter his deceptions about election meddling.”

Israel is not happy with the new reconciliation agreement.  Sunday, it signaled it would keep up military strikes across its frontier with Syria to prevent any encroachment by Iranian-allied forces.

And despite all the happy talk, the death toll in Syria continues to mount.  Monday, at least 53 were killed in airstrikes on a market in the northern part of the country, on the outskirts of Aleppo, according to the Syrian Observatory for Human Rights; the Observatory unable to determine whether the Syrian government or Russia was behind the attack.

So much for the “de-escalation” agreement.

China / North Korea: Beijing sent a high-level special envoy to North Korea amid an extended chill in relations between the neighbors over Pyongyang’s nuclear weapons and missile programs.

The ostensible purpose of Song Tao, the head of China’s ruling Communist Party’s International Department, is to report on outcomes of the party’s national congress held last month, according to the official Xinhua News Agency.  No other details were provided.

Song is the first ministerial-level Chinese official to visit North Korea since October 2015.  He has already visited Vietnam and Laos to brief officials on the Communist Party congress.

I wouldn’t read too much into Song’s visit to Pyongyang, other than China wants to make sure Kim Jong Un doesn’t add it to his list of enemies.

Earlier, President Trump tweeted that he would never call Kim “short and fat,” after Pyongyang’s foreign ministry called Trump “old.”

“Oh well,” Trump added, “I try so hard to be his friend – and maybe someday that will happen.”

Trump then volunteered his services over maritime claims in the South China Sea.

“I’m a very good mediator,” he said.

Thomas L. Friedman / New York Times

“There is a saying – ‘When you don’t know where you’re going, any road will get you there’ – and it perfectly sums up the contrast between China’s President Xi Jinping and President Trump.

“Xi has been brilliant at playing Trump, plying him with flattery and short-term trade concessions and deflecting him from the real structural trade imbalances with China. All along, Xi keeps his eye on the long-term prize of making China great again. Trump, meanwhile, touts every minor victory as historic and proceeds down any road that will give him a quick sugar high.

“Trump literally has no idea what he’s doing and has no integrated strategy – because, unlike Xi, Trump’s given no thought to the big questions every effective leader starts his day with: ‘What world am I living in? What are the biggest trends in this world? And how do I align my country so more of my citizens get the most out of these trends and cushion the worst?

“What world are we in?  One in which we’re going through three ‘climate changes’ at once.

“We’re going through a change in the actual climate: Destructive weather events and the degradation of ecosystems are steadily accelerating.

“We’re going through a change in the ‘climate’ of globalization: from an interconnected world to an interdependent one; from a world of walls, where you build your wealth by hoarding resources, to a world of webs, where you thrive by connecting your citizens to the most flows of ideas, trade, innovation and education.

“And, finally, we’re going through a change in the ‘climate’ of technology and work: Machines are acquiring all five senses, and with big data and artificial intelligence, every company can now analyze, optimize, prophesize, customize, digitize and automatize more and more jobs, products and services. And those companies that don’t will wither....

“In response to a more interdependent world, China is deepening its trade ties to all the fast-growing Asian markets around it through its ‘One Belt, One Road’ project and its Asian Development Bank, while tightly controlling its own market. I call it ‘globalization for me but not for you.’....

“In technology, China has embarked on a plan called ‘Made in China 2025’ that’s plowing government funds and research into commercializing 10 strategic industries while creating regulations and swiping intellectual property from abroad to make them all grow faster.  These industries include electric vehicles, new materials, artificial intelligence, integrated circuits, biopharmacy, quantum computing, 5G mobile telecommunications, and robotics.

“And Trump? ...While China is run by engineers, Trump doesn’t even have a science adviser.  He’s refused to fill the White House Office of Science and Technology, which, as Newsweek reported, ‘has been without a boss for the longest stretch since its establishment in 1976.’

“On globalization, Trump tore up the Trans-Pacific Partnership (TPP) deal, which would have put him at the helm of a 12-nation Pacific trading bloc (without China), built on U.S. interests and values, and would have eliminated as many as 18,000 tariffs on U.S. exports to countries that, together with the U.S., control 40 percent of global GDP. And then he went to China and praised Beijing for beating us at our own game! Well, Donald, when you unilaterally disarm, that tends to happen.

“By the way, the 11 other TPP nations are now trying to create their own free-trade zone – without the U.S.  So after decades of America trying to push all their markets open, they’re going to open without us. Nice going, Mr. President, China thanks you, because these countries will be much more vulnerable to Chinese economic pressure with our presence diminished.”

A somewhat differing view....Andrew Browne / Wall Street Journal:

“Mr. Xi’s China, Mr. Trump said, paying fulsome tribute to the omnipotence of the newly crowned supreme leader standing next to him, could fix the Korean nuclear crisis ‘easily and quickly.’

“On Chinese trade abuses, he appeared to absolve Mr. Xi of all responsibility, provocatively suggesting there is honor in the way Chinese leaders game the global trading system to win advantage for their people.  ‘I give China great credit,’ he said.

“Look beyond the flattery, however, and a harder-edged strategy comes into focus.

“As Mr. Trump lavished praise on the Chinese president – ‘you’re a very special man,’ he purred – three U.S. aircraft-carrier strike groups prowled the Western Pacific. They are a reminder of the military options the Pentagon is weighing against Pyongyang, knowing that while China could do more to pressure Kim Jong Un to slow his nuclear buildup, Mr. Xi’s leverage is in fact limited....

“(Empty) summitry may have been part of the White House game plan.

“Both sides normally strain for agreements to show progress toward the all-round engagement that has been the Holy Grail of successive U.S. presidents since Nixon. This time was different.  Nobody was fooled by the $250 billion in commercial deals signed. Some were already in the works, hastily packaged up for the occasion, while others were memorandums of understanding that mean just that – paper promises that often end up in the bin.

“Focus exclusively on his gushing personal diplomacy and the view might be Mr. Trump was played like a fiddle.

“Dwell on the modest takeaways and the White House appears to have used the summit to signal it is no longer playing the old game of pretend.  Is this why, after Mr. Trump had left Beijing, his hosts figuratively ran after their guest with a more substantial offer – improved market access for U.S. securities firms and banks?  White House aides suggest this concession was granted, not demanded.

“In this more nuanced reading of the summit from Washington’s perspective, Mr. Trump’s assigned role was to enhance a rapport with Mr. Xi that will help anchor the relationship in advance of expected turbulence ahead....

“There was nothing subtle, though, about Mr. Trump’s address to Asian leaders gathered in the Vietnamese coastal resort of Da Nang.  In front of a group dedicated to multilateral trade, he thundered his insistence on one-on-one agreements. Instead of offering a sweeping American vision for the region to compete with Mr. Xi’s ‘China Dream,’ which often overrides the ideals and ambitions of smaller Asian nations, he came up with a slogan coined in Japan – a ‘free and open Indo-Pacific’ – with hardly any elaboration....

“There’s his problem: The marketing of nationalism, each country for itself, creates fissures in Asia. Whether Mr. Trump is confronting North Korean nuclear terror, or Chinese territorial assertiveness, he needs an Asian coalition behind him, which means first of all promoting common values in a region of traders.  Mr. Xi understands this, at least rhetorically. He got a standing ovation for his speech that spoke of ‘building a community with a shared future for mankind.’

“Mr. Xi’s attempts to pose as the savior of open markets and globalization draw as much skepticism today as when he first pitched himself in that role at Davos earlier this year. But what he offers is inclusion, not retreat.

“Having forged the region in its own image – a free-trading and substantially democratic dynamo – the U.S. now risks bequeathing the fruits to a rising China.”

Philippines: President Duterte attacked Canada’s Justin Trudeau at the end of the summit last weekend for raising questions about his war on drugs, a topic skirted by other leaders, including President Trump.

At the traditional news conference by the host nation at the end of the summit, Duterte was asked how he had responded to the Canadian prime minister raising the issue of human rights and extra-judicial killings in his anti-drugs drive.

“I said I will not explain. It is a personal and official insult,” the Philippines president said, though he did not refer to Mr. Trudeau by name.

“I only answer to the Filipino. I will not answer to any other bulls---, especially foreigners. Lay off.”

Zimbabwe: Well, well, well....wasn’t that special...the military seizing President Robert Mugabe as part of a takeover (not officially a coup, as yet), ending his 37-year rule.

Maj. Gen. Sibusiso Moyo went on air to say the military wished to “assure the nation that his Excellency the president...and his family are safe and sound and their security is guaranteed.”

The United States, long a critic over Mugabe’s human rights abuses, called for “a new era” for the country.

But Thursday, Mugabe was shown driving from his lavish “Blue Roof” compound, where he had been confined, to State House, where official media pictured him meeting with military boss Constantino Chiwenga and South African mediators.

As of Friday, Mugabe’s fate hung in the balance as he apparently resisted efforts to make him step down, as talk of him remaining in power during a transitional phase seemed nonsensical.

The army appears to want a smooth and bloodless transition to Emmerson Mnangagwa, the vice president Mugabe (and his wife, Grace) sacked last week.

Mugabe’s ruling ZANU-PF party was to meet today to draft a resolution to dismiss Mugabe over the weekend and lay the grounds for his impeachment next week if he refuses to stand down, specifically Tuesday.

Mugabe deserves to be executed (Grace too...yup, just go full-blown Ceausescu on this sorry lot) for ruining the country, especially after the seizure of white-owned farms in the early 2000s (after he stole an election), which led to economic collapse for this one-time breadbasket of Africa, inflation reaching 500 “billion” percent in 2008.

As for Mnangagwa, he is said to be just as repressive as Mugabe.

Madagascar: The death toll from pneumonic plague, the worst outbreak here in 50 years, reached 171 as of Nov. 10, according to the country’s health ministry.  Pneumonic plague, the cause of the majority of the deaths, is the most virulent form and can easily spread from one person to another through droplets in the air, which is what most concerns researchers at the World Health Organization.  It can spread quickly in high-density areas.

The only good news is that the number of cases being reported has been declining.

Random Musings.

--Presidential tracking polls....

Gallup: 37% approve of President Trump’s performance / 56% disapprove
Rasmussen: 42% approve / 56% disapprove

--President Trump’s job approval rating hit a new low in November and has declined for three straight months, according to the latest Harvard CAPS/Harris Poll.

41% approve of the job Trump is doing, 59% disapprove, down from 45% and 42% the prior two months. [The 41% is better than the RealClearPolitics average of 38%.]

79% of Republicans and 86% of Trump voters approve of the job he is doing.  Only 38% of independents do.

Meanwhile, in this survey, Congress’ job approval is 28%, with only 52% of Republicans approving of the job their leaders are doing.

54% of voters oppose the GOP’s tax-reform bill.

76% of voters say Trump should stop tweeting.

65% say there should be an investigation into the $145 million contribution the Clinton Foundation received from the owners of Uranium One, the Canadian firm that was sold to Russian investors when Hillary Clinton was secretary of State.

--Editorial / Wall Street Journal

“A famous country song aptly summed up where the Republicans are with Senate candidate Roy Moore in Alabama: You’ve got to know when to fold ‘em.

“There is no doubt a sense in which Mr. Moore deserves the opportunity to challenge accusations against him for acts alleged to have happened more than 30 years ago.  Though too many women were too easily ignored in the past, we do not want to live in a country or political culture in which every accusation of sexual misconduct is automatically accepted as true. Accusers can be liars too.

“But Mr. Moore isn’t in a courtroom today. He’s in the political arena in which a candidate has to maintain a minimal level of public credibility to survive.  And his political situation has moved well beyond a more familiar she said/he said predicament.

“Several women have made detailed accusations of sexual misconduct against Mr. Moore, and multiple people now say he was known for trolling shopping malls for young girls while in his 30s.  Mr. Moore’s public defenses have also been less than convincing, not least that he doesn’t know his latest accuser, though he signed her yearbook.

“Mr. Moore’s credibility has fallen below the level of survivability. Some of Mr. Moore’s presumed colleagues in the Senate have said they believe the women and that the judge should withdraw.  Colorado’s Cory Gardner has suggested that even if Mr. Moore wins, the Senate should vote to expel him from the body. It’s a rare candidate who achieves that degree of political abandonment.

“The sensible move would be for Mr. Moore to step away from the campaign and allow Alabama’s Republicans to put forth a more credible candidate to run as a write-in against Democrat Doug Jones.  Most likely, Mr. Moore won’t do that. He made his reputation as an Alabama state judge by openly defying valid court orders, which twice cost him his court seat....

“Alabama’s Republican voters are in a tough spot, and ideally they’d at least get the chance to choose between a prominent write-in candidate from their party or opt for sending a message by voting for the Democrat. For 25 years Democrats and feminists euphemized and apologized for Bill Clinton, starting with Gennifer Flowers before he was President.  Republicans can show their standards are better.

“There is one other obvious loser in this debacle: Former White House aide Steve Bannon. Some have argued that the Bannon insurgency against the Republican ‘establishment’ is in the mode of earlier party challenges led by Ronald Reagan or Newt Gingrich. This one isn’t close. The populism of Reagan and Mr. Gingrich was always about building the conservative movement into a majority that could govern and change the country.

“The Bannonites have given no evidence or argument that they are aiming that high.  They want to defeat the existing majority – a conservative majority by any historical standard – mainly to show that they can depose Majority Leader Mitch McConnell.

“They have no discernible governing agenda beyond trade protectionism and slashing immigration, and those often appear to be convictions of convenience.  It is hardly a surprise therefore that instead of recruiting talented candidates, Mr. Bannon is collecting cranks and outliers like Roy Moore who, demonstrably, will take the GOP into the minority.

“The lesson Republican voters should draw from the Moore mess is that their future lies with nominating candidates who want to achieve substantive policy goals, such as a serious reform of the tax code or confirming originalist judges, rather than pouring their emotions into a political fringe that will always find a way to lose.

“Raging against the establishment for the sake of raging is an agenda for losers, and it will cost conservatives the votes in Congress they need to achieve conservative goals.”

George Will / Washington Post

“Moore campaigns almost entirely on social issues – National Football League protests, the transgender menace – and the wild liberalism of (Democratic opponent Doug) Jones, a law-and-order prosecutor and deer and turkey hunter who says he has ‘a safe full of guns.’  Jones’ grandfathers were members of the mineworkers’ and steelworkers’ unions: Birmingham, surrounded by coal and iron ore, was Pittsburgh – a steel city – almost before Pittsburgh was.  Jones hopes economic and health-care issues matter more.

“Evangelical Christians who embrace Moore are serving the public good by making ridiculous their pose as uniquely moral Americans, and by revealing their leaders to be especially grotesque specimens of the vanity – vanity about virtue – that is curdling politics.  Another public benefit from the Moore spectacle is the embarrassment of national Republicans. Their party having made the star of the ‘Access Hollywood’ tape president, they now are horrified that Moore might become 1 percent of the Senate....

“Nothing about Moore’s political, financial or glandular history will shake his base, unless the credible accusations of serial pursuit of underage girls are suddenly overshadowed by something his voters consider serious, such as taking sides in the Alabama-Auburn game.”

The latest polls as of this writing have Doug Jones in the lead with 46-50 percent of the vote, and Roy Moore around 42 percent. [A Fox News poll on Thursday had it 50-42 for Jones.]  For his part, Moore continues to deny the claims, while threatening to sue the Washington Post.

Sen. Mitch McConnell has said Moore will face an immediate ethics investigation if elected.

--New Jersey Democratic Sen. Robert Menendez will be on Capitol Hill following a mistrial in his federal corruption and bribery case.  After a week of deliberations, the jury said it could not reach a consensus on whether Menendez committed bribery by accepting gifts, campaign donations and vacations from a wealthy Florida eye doctor in exchange for political favors...or was this just a result of a longtime friendship between the two.

Weighing on all such cases these days is the 2016 Supreme Court ruling overturning the corruption conviction of former Virginia Gov. Bob McDonnell, a decision narrowing the definition of what counts as corruption by a public official.

But Menendez’s problems aren’t over. The feds could still retry him, and hours after the mistrial was declared, Senate Majority Mitch McConnell called for a Senate Ethics Committee investigation into the New Jersey Democrat, an act that had been put on hold awaiting the result of the court proceedings.

McConnell said in a statement: “Senator Menendez was indicted on numerous federal felonies.  He is one of only twelve U.S. Senators to have been indicted in our history.”

I am probably one of just a handful of New Jersey Republicans who are glad Menendez is back in the Senate, even if temporarily, because he is too valuable on the many foreign policy debates at hand; Menendez being one of the three or four best minds in this field.

--Ellen Mitchell of The Hill had a story on how “Top Air Force leaders and lawmakers are warning that a pilot shortage of 2,000 could cripple the service, leaving it unready to handle its responsibilities.

“ ‘With 2,000 pilots short, it’ll break the force. It’ll break it,’ Air Force Secretary Heather Wilson said during the annual State of the Air Force news conference.

“The Air Force needs 20,000 pilots minimum to fly its wide range of aircraft, including fighter jets, helicopters, transport planes... At the start of the year, it said it had 18,500 pilots, well short of its minimum....

“The problem is not that the Air Force is having trouble recruiting. It’s that airlines are offering bigger paychecks, and pilots are leaving when they are up for reenlistment.”

So the Air Force has been issuing big bonuses with just a one- or two-year contract extension, vs. the usual five- and nine-year extensions typically offered.

Sen. John McCain, Chairman of the Senate Armed Services Committee, said it’s not always the money difference, a lot of it is they don’t get to fly, partly because of sequestration, the automatic budget cuts that have grounded nearly one-third of Air Force planes.

“It’s a lifestyle,” said McCain, himself a Naval pilot when he was shot down over Vietnam.

“I talk to too many [pilots] all the time. They say, ‘Senator McCain, all I want to do is fly.  I want to be in combat.’ That’s what they’re all about.”

--Last week I talked of how the U.S. military must do a better job of protecting its own, and us; whether it’s deadly naval accidents or the failure to report violent service members who then aren’t put on the FBI’s list restricting gun ownership.

After I posted, we then learned that the strangulation death of Army Sgt. Logan Melgar was being investigated, two Navy SEALs perhaps responsible after Melgar discovered a scheme to launder dirty money, as first reported by the Daily Beast.

Apparently, the two tried to get Melgar to go along with them, he declined, and then he ended up dead.

--Republican and Democratic leaders of the U.S. Senate Foreign Relations Committee blasted the State Department on Tuesday for cuts in staff and what they described as a failure to have a plan for a proposed reorganization.  Sec. of State Rex Tillerson has embraced the White House proposal to slash the department’s budget by about 30 percent.  Tillerson has instituted a hiring freeze, but there is no reasoning behind it.  And as to talk of “cost savings,” which is what President Trump told Laura Ingraham on her first show with Fox the other week, when she questioned him on the State Department’s lack of expertise, as in there are so few positions filled at the deputy secretary of state level, for starters, this is nuts.

As to Trump’s statement, which Tillerson has picked up on, that this is about “cost savings,” we’re talking about $4 to $5 million to fill some needed senior positions, immediately, while Trump supports a tax plan that, on paper, would increase the deficit $1.5 trillion over 10 years.  I mean, c’mon, Mr. President.

If you want to get rid of the Dept. of Education, be my guest.  But in these incredibly complex times, you freakin’ need experts out in the field to obtain the best intelligence and advice, and to act as frontline diplomats.

Both Republican Sen. Bob Corker, chairman of the Foreign Relations Committee, and Sen. Ben Cardin, the top Democrat on the committee, are right.  The staff reductions at a high level are a risk to national security and a “high-level decapitation of leadership.”

--Southern California’s smog worsened for a second straight year, despite efforts to clean up the nation’s most polluted air, as reported by Tony Barboza of the Los Angeles Times.

This is disappointing to officials who had been succeeding in the battle against smog, but ozone levels violated federal health standards 145 days this year, up from 132 ozone violation days last year and 113 in 2015 across Los Angeles, Orange, Riverside and San Bernardino counties.

The last time the region had 140 bad air days was 2004.

Some experts say it’s about warmer, hotter weather that traps pollution near the ground.

On the other hand, there is a possibility the calculations are just wrong.

--We note the passing of gossip columnist Liz Smith, 94. Smith worked for the New York Daily News for years before jumping to the New York Post and Newsday, and for 11 years had a segment on the local NBC affiliate, during which time she won an Emmy for reporting. She also had a syndicated column.

Smith famously covered the high-profile divorce between then-real estate mogul Donald Trump and wife Ivana, Smith openly siding with her.

“She still wants to be his wife,” Smith wrote at the time, “But the bottom line is, she won’t give up her self-respect to do it....

“Intimates say she had every chance to continue being Mrs. Trump by allowing her husband to live in an open marriage.”

--Notorious Sicilian Mafia Boss Salvatore “Toto” Riina died at the age of 87.  He had been in a medically induced coma at a hospital in Parma, northern Italy. 

Riina was jailed in 1993, serving 26 life sentences for the ordering of more than 150 murders.

Riina was born in 1930 to poor farmers in Corleone, Sicily – the birthplace of Don Corleone, the fictional Godfather from Francis Ford Coppola’s film trilogy.

Salvatore Riina joined the local Mafia at 19, committing his first murder to gain entry.  He seized control of the Cosa Nostra crime group in the 1970s, spending nearly a quarter of a century evading justice, all while on Sicily.

In 1992, two anti-Mafia judges, who had brought scores of mobsters to trial in the 1980s, were killed in Riina’s “war against the state.”

He was captured a year later.  Yet even in jail, he ordered the killing of a 13-year-old boy to try to prevent his father revealing information about the Mob.

Partly in protest for his arrest, Riina’s associates also carried out a series of bombings in Rome, Milan and Florence in 1993, killing 10.

Riina’s eldest son, Giovanni, is serving a life sentence for four murders.

--Well, I can’t end on that note....so let’s move on to Michelle Cortez’ piece in Bloomberg News from today, shall we?

“Having a dog can bring a lot of love into your life. It could also make it last a little longer.

“A group of academics from Uppsala University in Sweden analyzed the health records of 3.4 million people in that northern European country, where databases contain detailed information on everyone’s hospitalizations, medical history and even whether they own a dog.  Such detailed records made it relatively easy to suss out the impact of having a canine companion.

“The results were heartwarming.

“People in possession of a pooch were less likely to have cardiovascular disease or die from any cause during the 12 years covered by the research, according to the study published in Scientific Reports. The impact was greatest for single people, said Mwenya Mubanga, (an author of the study).”

Hunting dogs seemed to offer the most protection when it came to staying alive.

Tove Fall, the senior author of the study, said it’s not clear exactly how the dogs helped avert heart disease, or whether getting one directly led to better health.

“We know that dog owners in general have a higher level of physical activity, which could be one explanation,” Fall said.  “Other explanations include an increased well-being and social contacts or effects of the dog on the bacterial microbiome in the owner.”

Or as Ms. Cortez concludes: “Either way, maybe an extra treat for that doting Lab waiting for you at home is in order.”

---

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

God bless America.

---

Gold $1294
Oil $56.68

Returns for the week 11/13-11/17

Dow Jones  -0.3% [23358]
S&P 500  -0.1% [2578]
S&P MidCap  +0.8%
Russell 2000  +1.2%
Nasdaq  +0.5%  [6782]

Returns for the period 1/1/17-11/17/17

Dow Jones  +18.2%
S&P 500  +15.2%
S&P MidCap  +10.8%
Russell 2000  +10.0%
Nasdaq   +26.0%

Bulls 63.5
Bears 15.4 [Source: Investors Intelligence]

Have a good week.

Happy Thanksgiving! 

Brian Trumbore