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08/11/2018

For the week 8/6-8/10

[Posted 11:30 PM ET]

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Special thanks to Bob P.

Edition 1,009

Trump World

Frankly, there is an unbelievable amount of information below in what is without a doubt my longest column ever. And I have other items that lie on the cutting room floor. There is everything here from Turkey to Tesla.

But in a little over three weeks we will be at Labor Day and the official beginning of the mad dash to the midterm elections.

Imagine if President Trump had taken office in January 2017 and just chilled out after a presidential campaign that left bodies strewn on the pavement and debate stages.  He has a great story to tell, focusing on the economy.  His approval rating, across the board, should be 55%+.  All he had to do was act even somewhat presidential and stay off Twitter.

But of course the Great Divider didn’t, and, incredibly, despite strong growth and decades low, if not record low, unemployment figures, it’s clear after this week’s primary results that the “stable genius” and the Republican Party have their work cut out for them to maintain both chambers in Congress.

We’ve learned you can’t stop the president, but Republican leaders Trump respects must jack him up against the wall about three weeks before November and tell him to cut the crap.

I couldn’t help but say this after his blatantly racist tweet blasting LeBron James and Don Lemon last Friday after I went to post.  There are still a lot of key voters on the fence who acknowledge the good that has happened in this administration, but can’t stand the messenger.  They will go either way at the last minute.  The economic numbers will remain strong these final months, but in so many districts across the country, such as Ohio-12, one screw-up could spell the difference between Republicans keeping the House and Democrats taking it back.

And as for Trump’s foil, the “Fake News,” of which he has said on occasion: “When I say it they can’t say anything against it,” this is one scribe who will continue to tell the truth, on all topics.  I’ll give the facts, often having ‘waited 24 hours’ to accumulate them, and I’ll give an opinion based on one helluva lifetime of experience... from Wall Street to Main Street...from the Bekaa Valley to Red Square.

In the meantime, I hope you can enjoy the rest of your summer.  Fall could truly suck.

Trumpets....

--Trump tweet Saturday morning that rocked the political establishment.

“Fake News reporting, a complete fabrication, that I am concerned about the meeting my wonderful son, Donald, had in Trump Tower.  This was a meeting to get information on an opponent, totally legal and done all the time in politics – and it went nowhere.  I did not know about it!”

Trump had fallen into a trap of the Washington Post’s making, the Post reporting that although the president doesn’t think Don Jr. intentionally broke the law with the meeting, he is worried that Trump Jr. may have unintentionally stumbled into legal jeopardy.

President Trump on Sunday then offered his most definitive and clear public acknowledgement that Donnie Jr. met with a Kremlin-aligned lawyer at Trump Tower during the 2016 campaign to “get information on an opponent.”

It’s against the law for U.S. campaigns to receive items of value from foreigners, and it’s why special counsel Robert Mueller III’s Russia investigation would appear to be so focused on it.

Yes, as the president and Rudy Giuliani et al now constantly say, “collusion” is not mentioned in U.S. criminal statutes, but Mueller is investigating whether anyone associated with Trump was entering a conspiracy to break the law, including through cyberhacking or interfering with the election.

Trump attorney Jay Sekulow asked on ABC’s “This Week” Sunday, “The question is: How would it be illegal?”

Trump’s tweet, however, conflicts with Trump Jr.’s statement in July 2017 that the meeting with the Russian lawyer and others was “primarily” about the issue of adoption of Russian children by Americans.  It then escalated from there.

The president wrote something similar to what he did last weekend in July 2017.

“Most politicians would have gone to a meeting like the one Don jr attended in order to get info on an opponent. That’s politics!”

And you know the rest...the “dictated” statement by Trump etc., which the president’s attorneys at first denied, but months later, in a letter to Mueller, agreed the president had, in fact, been the author of Don Jr.’s initial statement.

--Trump tweet on Sunday: “The Fake News hates me saying that they are the Enemy of the People only because they know it’s TRUE. I am providing a great service by explaining this to the American People. They purposely cause great division & distrust. They can also cause War! They are very dangerous & sick!”

National Security Adviser John Bolton was then questioned by Fox News’ Chris Wallace shortly thereafter.

“What wars have we started?” Wallace asked Bolton on “Fox News Sunday.”

Bolton failed to answer that question directly and attempted to redirect the conversation, saying that “the issue of press bias has been around for a long, long time.”

“There is press bias,” Wallace interrupted.  “People get stories wrong, and people are called out for it. And we should be called out if we make a mistake.”

But then, citing the language in Trump’s tweet, Wallace said, “ ‘Cause war,’ ‘sick,’ ‘divisive’ – this is taking it to a completely different level.”

But Bolton continued to defend Trump’s repeated attacks on the media and journalists.

“That’s the president’s view based on the attacks that the media made on him,” Bolton said.  “There have been other administrations that have been highly critical of the press.”

--In a speech at the Pentagon on Thursday, Vice President Mike Pence laid out the administration’s plan to create a military command dedicated to space that will eventually lead to the establishment of a “Space Force” as the sixth branch of the U.S. military.

Pence warned of the advancements that potential adversaries (read Russia and China) are making in this arena and issued a call to arms to preserve the military’s dominance in space.

“Just as we’ve done in ages past, the United States will meet the emerging threats on this new battlefield,” he said. “The time has come to establish the United States Space Force.”

The Space Force would be tasked with defending space, the way the Pentagon’s Pacific Command oversees the ocean.

Now this is a popular theme at President Trump’s rallies, but the Air Force has already been working on this for decades, and some within the military and national security apparatus fiercely oppose the creation of a sixth branch of the military...and a new bureaucracy.

For starters the White House has pushed for Congress to invest an additional $8 billion in national security space systems over the next five years.

Last year, Defense Secretary Jim Mattis told Sen. John McCain he opposed “the creation of a new military service and additional organizational layers at a time when we are focused on reducing overhead and integrating joint warfighting functions.”

But Thursday, Mattis was the good soldier, offering his full support.

No one has ever said space isn’t vital.  We rely on satellites for everything, including missile-defense warnings, guiding precision munitions and providing communications and reconnaissance.  And as China has already demonstrated, it has the ability to hit satellites in a much deeper orbit where the U.S. has many of its most sensitive assets.  It’s just how best to defend them and is a sixth branch needed.

--The bank and tax fraud trial of former Trump campaign chairman Paul Manafort was abruptly recessed Friday morning, casting doubt that the government would be able to wrap up its case by day’s end...and it didn’t.  On to Monday.

U.S. District Judge T.S. Ellis III, who is really a very strange guy, huddled privately with prosecutors and defense lawyers at the bench for most of the morning, then excused the jury at 1:45 p.m., and did not reveal the reason for the delay when the trial reconvened later.

Before adjourning, Ellis offered an unusually emphatic instruction to the jurors that they should not discuss the case with others or among themselves until all the evidence was in.

Ellis also reminded the panel that Manafort, who was seated at the defense table, is presumed innocent of the 18 criminal counts lodged against him.

Some of the witnesses the prosecution planned to call before wrapping it up were expected to provide testimony about the terms of a disputed 2016 loan from a Chicago bank, which I get a kick out of because every freakin’ night, when discussing the Manafort trial, Sean Hannity says it’s a case about tax and bank fraud from 2005!  Sorry, Sean, it gets closer to today than that.

Beyond this, I have little to say.  In the trial we’ve had an IRS agent reveal Manafort had at least $16 million in unreported taxable business income over four years.  IRS agent Michael Welch said Manafort received $15.5 million from Ukraine which he then used to pay for clothes, homes and landscaping between 2010 and 2014.

In addition to the unreported income, Welch said that Manafort listed dubious business expenses such as 132,000 euros to a yacht company, $49,000 for an Italian villa rental, $45,000 for cosmetic dentistry and $19,800 for a riding academy, as reported by the Washington Post.

Meanwhile, Manafort’s protégé Rick Gates wrapped up his three days of testimony after admitting he lied, committed crimes with Manafort, stole money from the boss and cheated multiple times on his wife.

Otherwise, if you want more details, read the Washington Post.

--More Trump tweets: “This is an illegally brought Rigged Witch Hunt run by people who are totally corrupt and/or conflicted. It was started and paid for by Crooked Hillary and the Democrats.  Phony Dossier, FISA disgrace and so many lying and dishonest people already fired. 17 Angry Dems?  Stay tuned.”

“As long as I campaign and/or support Senate and House candidates (within reason), they will win!  I LOVE the people, & they certainly seem to like the job I’m doing. If I find the time, in between China, Iran, the Economy and much more, which I must, we will have a giant Red Wave!”

“The Republicans have now won 8 out of 9 House Seats, yet if you listen to the Fake News Media you would think we are being clobbered. Why can’t they play it straight, so unfair to the Republican Party and in particular, your favorite President!”

“Thank you to Kanye West and the fact that he is willing to tell the TRUTH. One new and great FACT – African American unemployment is the lowest ever recorded in the history of our Country. So honored by this. Thank you Kanye for your support. It is making a big difference!”

[Beyond pathetic]

“The NFL players are at it again – taking a knee when they should be standing proudly for the National Anthem. Numerous players, from different teams, wanted to show their ‘outrage’ at something that most of them are unable to define. They make a fortune doing what they love...

“...Be happy, be cool!  A football game, that fans are paying soooo much money to watch and enjoy, is not place to protest.  Most of that money goes to the players anyway.  Find another way to protest. Stand proudly for your National Anthem or be Suspended Without Pay!”

--According to a report from Politico’s Annie Karni on the dinner Trump had with 13 CEOs and senior White House staff in Bedminster, N.J., on Tuesday, Trump spent most of the time railing about China, including at one point saying of an unnamed country that the attendee said was clearly China, “almost every student that comes over to this country is a spy.”

--Daniel Henninger / Wall Street Journal

“It is no doubt true that Mr. Trump, with his insistently constant public presence, has disrupted the already weak standard model of America’s political parties as arbiters of candidates and ideas.

“If so, we shouldn’t let Mr. Trump’s feud with Charles and David Koch get flushed like so many others. It was a significant event.

“In an interview, Charles Koch said trade wars and prosperity were incompatible and that his organization’s financial support wouldn’t depend on party affiliation.

“This prompted the Trump Twitter ICBM to launch on warning, because naturally Mr. Trump took Mr. Koch’s opinion as a personal insult and threat.  Professional Republicans cracked back because the Koch network, considered conservative, made clear its support would transcend party affiliation, for example praising North Dakota’s Democratic Sen. Heidi Heitkamp on financial deregulation.

“This goes down hard in the trenches. Democrats like Sen. Heitkamp are marginalized outliers in a party wholly at odds with the Koch-backed advocacy group Americans for Prosperity. On the left, nothing like these Koch party-crossings is imaginable.

“That said, the Koch feud is a portent of more fractures in the party system.  Mr. Trump tried to dismiss the Kochs as ‘a total joke in real Republican circles.’ One has to ask: What exactly are ‘real Republican circles’?  Or for that matter, real Democratic circles?

“The Trump camp has taken to insisting that Mr. Trump personally embodies both the Republican Party and conservatism.  The only people largely forced to opt in to this choice are elected Republican politicians.  But what about anyone else who self-identifies as a right-of-center voter?....

“Independent and ideological groups are increasingly setting norms for party-affiliated politicians, not the other way around. The parties look more and more like inert vessels or financial institutions....

“The traditional parties provided stability and predictability, a comfort level. Their competitors – from Trumpism to Netroots – now offer instability and perhaps a period of chaos. Some would call this healthy democratic ferment. Others may doubt the health benefits.

“If it is Donald Trump’s strategy to suck all the political oxygen out of the room and choke off his competitors, many voters will be driven elsewhere to get air. Amid major disruption, anything’s possible. It may be that Democrats are drifting left toward Alexandria Ocasio-Cortez, but it’s not beyond imagining that a Mike Bloomberg could emerge as a liberal opt-out version of Charles Koch.

“One encounters conservative and even liberal voters who say they couldn’t get enough of politics in 2016, but now they’ve largely tuned out. They are Never Trumpers. They’ve become Fair Weather Tumpers who like some of the policy results but can’t stand the daily hailstorms. Troy Balderson’s near-death experience (see below) after his formerly safe Ohio House race was ‘nationalized’ suggests that nonvoting Fair Weather Trumpers are a bad omen for the Republicans.

“Beyond a likely GOP loss of the House, what lies ahead isn’t clear. This is Donald Trump’s ultimate disruption: an American electorate in a state of constant agitation and flux. Some voters will tie themselves to the Trump mast and ride it out. But Charles and David Koch aren’t a joke, That feud was a warning shot.”

--Late last Friday night, President Trump tweeted: “Lebron James was just interviewed by the dumbest man on television, Don Lemon. He made Lebron look smart, which isn’t easy to do. I like Mike!”

This last part alluding to Michael Jordan and his old ad campaign.  Jordan quickly jumped to James’ defense.

“I support LeBron James. He’s doing an amazing job for his community,” Jordan said in a statement to the Associated Press.

Scores of other athletes rushed to LeBron’s defense.

James had just opened up a school for underprivileged children in his hometown of Akron, which was part of the discussion with Don Lemon.  Every student at the “I Promise” school receives free tuition, as well as free food, a uniform and even a free bike.

In the interview, James said he “would never sit across” from Trump, though he would talk to former President Barack Obama.  Clearly, that set Trump off.

Ohio Gov. John Kasich, a critic of Trump at times, tweeted: “Rather than criticizing #KingJames, we should be celebrating him for his charity work and efforts to help kids.”

Michael Powell / New York Times

“There was a breathtaking quality to this attack, and not just because white men demeaning the intelligence of black people is one of the oldest and ugliest tropes in American history.”

Melania Trump, though, praised LeBron and spoke of her desire to visit his I Promise school.

The next day, Saturday, Trump attended a political rally in Ohio and skipped over James.

Wall Street and Trade

A survey of economists by the Wall Street Journal has them raising their 2018 growth projections after a strong second quarter, but disputes with U.S. trading partners, a fading boost from fiscal stimulus and rising interest rates are cause for a more cautious outlook in 2019 and beyond.

The average estimate for economic growth this year increased to 3%, up from 2.4% a year ago, with the unemployment rate falling to 3.6% by next June, which would be the lowest rate in nearly 50 years.  [It was 3.9% in July.]

Consumer spending and business investment have been leading the way, and this will continue, it’s just the benefits from the stimulus will begin to fade and if the trade situation deteriorates further the effects will be decidedly negative. The biggest immediate impact is on business confidence, which is hardly conducive to increased capital spending.

The average forecast for growth in 2019 is 2.4%.  The White House has said 3% or better growth can be sustained, and maintaining the level is necessary to help the economy begin to grow out of looming trillion-dollar budget deficits.

The wild card when talking about the domestic economy is the Fed and inflation.  On this the Fed got a break with tame inflation data the past few days. The producer price index was unchanged, when a rise of 0.3% was forecast, 0.1% ex-food and energy, with the numbers being 3.3% and 2.7%, respectively, year over year.  Consumer prices for last month rose as expected 0.2%, ditto on core, with the year-over-year numbers being 2.9%, 2.4% ex-the things we use.

But late in the week the focus was overseas as the diplomatic spat between the United States and Turkey (described further below) led to the Turkish lira losing more than 20% over the week as international markets soured on the country’s capacity to repay its foreign-currency debts, with the European Central Bank examining the Turkish exposure of several Euro banks, the shares of which fell sharply on Friday.

President Trump tweeted Friday morning: “I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar!  Aluminum will now be 20% and Steel 50%.  Our relations with Turkey are not good at this time!”

Turkey’s foreign exchange reserves are minimal, which could prompt a bailout from the International Monetary Fund, which would come only with the IMF’s strict demands.  This story could be just boiling over after simmering for a while.

On the trade front more broadly...first, some further tweets from the president this week:

“Tariffs are working far better than anyone ever anticipated.  China market has dropped 27% in last 4 months, and they are talking to us.  Our market is stronger than ever, and will go up dramatically when these horrible Trade Deals are successfully renegotiated.  America First....”

“...Tariffs will make our country much richer than it is today.  Only fools would disagree.  We are using them to negotiate fair trade deals and, if countries are still unwilling to negotiate, they will pay us vast sums of money in the form of Tariffs. We win either way....”

“....China, which is for the first time doing poorly against us, is spending a fortune on ads and P.R. trying to convince and scare our politicians to fight me on Tariffs – because they are really hurting their economy.  Likewise other countries. We are Winning, but must be strong!”

“....Tariffs have had a tremendous positive impact on our Steel Industry.  Plants are opening all over the U.S., Steelworkers are working again, and big dollars are flowing into our Treasury.  Other countries use Tariffs against, but when we use them, foolish people scream!”

“Tariffs are working big time.  Every country on earth wants to take wealth out of the U.S., always to our detriment.  I say, as they come, Tax them.  If they don’t want to be taxed, let them make or build the product in the U.S.  In either event, it means jobs and great wealth....

“Because of Tariffs we will be able to start paying down large amounts of the $21 Trillion in debt that has been accumulated, much by the Obama Administration, while at the same time reducing taxes for our people. At minimum, we will make much better Trade Deals for our country!”

Much of the above are outright lies and distortions.  Speaking of this last one and paying down the debt, U.S. Treasury data released this afternoon showed the budget deficit widened to $76.6 billion last month from a gap of $42.9 billion in July 2017.

And this one Friday night: “Deal with Mexico is coming along nicely. Autoworkers and farmers must be taken care of or there will be no deal. New President of Mexico has been an absolute gentleman. Canada  must wait. Their Tariffs and Trade Barriers are far too high. Will tax cars if we can’t make a deal!”

Time is running out for a resolution of negotiations over the North American Free Trade Agreement, with the players recognizing the need to wrap up a new deal by December, when Mexico’s new president is inaugurated, which could muck things up. And the administration continues to impose new tariffs and consider imposing others on autos and auto parts, though we’ll see how negotiations go with the European Union.

In the battle with China, the U.S. said on Tuesday it will start collecting tariffs on $16bn of Chinese imports on Aug. 23, releasing a final list of 279 products that will be subject to 25 percent tariffs, following on from the first batch of tariffs on $34bn of Chinese imports imposed in July.

On Friday, Beijing threatened to impose new tariffs on $60bn worth of imports from the U.S. after the Trump administration proposed raising threatened tariffs on $200bn to 25 percent from an original plan of 10 percent.

Chinese state media on Monday lashed out at the policies of Donald Trump, accusing him of “starring in his own carefully orchestrated street fighter-style deceitful drama.”  Trump’s wish for others to play along with his drama is “wishful thinking,” the People’s Daily newspaper said in an editorial.

Top U.S. and Japanese trade officials said they better understood each other’s positions after talks on Thursday, while Tokyo appeared to stick to its stance of avoiding a bilateral tree-trade agreement.  “We had a frank exchange of views and deepened mutual understanding,” Economy Minister Toshimitsu Motegi told reporters after several hours of meeting with U.S. Trade Representative Robert Lighthizer.

Tokyo is looking to avoid a bilateral free-trade agreement – which Lighthizer has called for in the past – where it could come under pressure over access to its auto and agricultural markets.

Trump’s threats to impose higher tariffs on auto imports, including those from Japan, raised concerns such a step would harm both economies.

As for the impact to date of the trade issue on the U.S. economy, there is plenty of anecdotal evidence across the country of real pain in certain sectors, it’s just not widespread enough to warrant headlines on the network newscasts...yet.  Let’s hope it stays that way.  Nonetheless....

Editorial / Wall Street Journal

“America lost more than three-fourths of its textile-mill jobs between 1991 and 2016.  ‘One of my main objectives was to bring those opportunities back,’ says Gary Heiman, president and CEO of Cincinnati-based Standard Textile.  Mr. Heiman has succeeded, creating around 400 jobs in two Southern towns, but now the Trump tariffs are threatening to drive those jobs back overseas.  That’s the opposite of what Mr. Trump claims is happening due to his tariffs.

“Standard Textile specializes in making sheets, towels and other reusable fabric products for hospitals and hotels.  Since 2002 the company has invested some $66 million in American manufacturing facilities and equipment in Union, S.C., and Thomaston, Ga.

“Workers don’t need a college degree, and Standard Textile provides on-the-job training for anyone who shows the right attitude and aptitude to work.  Employees earn an average of $44,000 a year in salary and benefits – well above the median household income of $35,000 in Union and $27,500 in Thomaston.

“A raw fabric known as greige is Standard Textile’s main input, and the company buys about $30 million worth from China each year. Workers at the Union facility scour, bleach, dye and finish the cotton material, sending rolls of the fabric to Thomaston for cutting, sewing and packaging. But in July the Trump Administration proposed raising tariffs by 10% on $200 billon of Chinese goods – greige included.  On Aug. 1 President Trump directed the U.S. Trade Representative to lift the tariff to 25%.

“That increase would put Standard Textile at a major disadvantage against foreign competition. The company paid $2.9 million in duties for greige last year, and this would add up to $7.5 million more to its manufacturing costs. Finished textiles made by Chinese workers would continue to face the old tariff of 6.7%.

“Mr. Heiman says the increased tariffs on greige would be such a burden that it could force him to shut down some of his American manufacturing plants, lay off hundreds of workers, and move operations overseas.

“Mr. Trump won a majority of votes in Union and Thomaston in 2016. Russ Ogle, a plant manager at Standard Textile’s Union facility, says the president’s proposed tariffs have left his workers feeling bewildered.  ‘The mantra for the Trump election, the promises, were bring back jobs to the United States, and particularly, manufacturing jobs,’ Mr. Ogle says, adding:

“ ‘We’re here trying to fight the battle, to be competitive against lower-wage-paying countries around the world.  And this tariff and its possible consequences would be devastating – absolutely devastating.  Not only the loss of income, but the senselessness of it.  This policy creates an unfair advantage for companies that are sourcing finished products from overseas at the expense of American manufacturers and jobs. We aren’t asking for any handouts, just a level playing field.’

“Hundreds of companies are asking similar questions as they cope with the harmful consequences of his tariffs that Donald Trump doesn’t like to talk about.”

One other quick one...from Bob Tita of the Wall Street Journal:

“The largest U.S. aluminum maker wants an exemption from tariffs designed to bolster domestic metal production.

“Alcoa Corp. on Monday asked the Trump administration for an exemption from tariffs on aluminum imported from Canada, where the company makes a raw form of the metal that it rolls into sheet for beverage cans at a U.S. plant.

“Some smelting lines have since restarted in the U.S. since the Trump administration imposed a 10% duty on imported aluminum in March. But Pittsburgh-based Alcoa said it can’t find enough specialty aluminum alloys for beverage cans in the U.S.

“ ‘Even if all the curtailed smelting capacity in the U.S. was back online and producing metal, the United States would still need to import the majority of its aluminum,’ said Tim Reyes, president of Alcoa’s aluminum business.

“Alcoa operates three smelting plants in Canada that supply Alcoa operations and customers in the U.S.

“U.S. companies have filed thousands of tariff-exclusion requests since the tariffs on steel and aluminum began this spring.  Most use specialized metals or components that aren’t readily available in the U.S.  The aluminum tariff has snarled production of aluminum parts and products in recent months because most of the aluminum consumed by U.S. manufacturers is imported or remelted scrap....

“Alcoa is the largest producer of raw aluminum in the U.S., but the U.S. accounted for only 14% of the aluminum Alcoa produced globally last year.”

Editorial / Wall Street Journal

“Tariffs are taxes, which distort investment and limit growth. And like taxes, when tariffs are high they create a political incentive for exemptions and favoritism. Behold the Commerce Department’s new and tortuous process for reviewing exemptions to steel and aluminum tariffs. This is everything Republicans typically claim to hate...

“Commerce has granted more than 1,300 steel exemptions – about twice as many as it has rejected – but it has yet to approve a request challenged by U.S. Steel, Nucor or AK Steel Holding Corp., which have the ear of Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer.

“Domestic steel manufacturers say that they have the capacity to produce the steel products that are being imported.  But as California Steel Industries noted in its exemption request, domestic mills ‘can and do choke off the supply of slab and thus can largely eliminate the competition.’

“Turkish steel-pipe manufacturer Borusan Mannesmann had pledged to invest up to $75 million in expanding production in Texas if it won an exemption. The new factory would have allowed the company to produce the products it now imports. But Commerce rejected its applications after U.S. Steel and a domestic tube manufacturer complained that the imports would endanger ‘the precarious U.S. industry situation.’....

“This Commerce mess illustrates that in addition to the harm tariffs do economically, they also create new opportunities for crony capitalism and corruption. Far from draining the swamp, tariffs feed the swamp.”

Europe and Asia

There were no broad economic data points for the eurozone this week, but the European Central Bank said the eurozone’s jobs recovery looks set to play an increasingly important role in keeping growth in the region on track as export trade slows.

“Private consumption has clearly recovered from the losses during the financial crisis,” a paper from the ECB notes.  “This has been largely driven by the recovery in the labor market, even though unemployment in some countries and some groups of workers remains higher than before the crisis.”

The U.K. released its report on second quarter GDP and the economy expanded by 0.4 percent, bouncing back from 0.2 percent in the first, according to the Office for National Statistics.  Retail sales and construction spending was a little better than expected, but trade tensions may have restricted growth from being stronger, as the production of cars, electronics and metal all fell during the three-month period.

The service sector expanded by 0.5 percent during Q2 and construction grew by 0.9 percent, even as manufacturing contracted 0.9 percent.

The service sector accounts for 80 percent of the U.K. economy, while construction is 6 percent, and manufacturing 10 percent.

And the above all has something to do with Brexit, with negotiations more likely to end in failure than success, according to U.K. International Labor Secretary Liam Fox, who added there’s a growing sense that Britain is heading for a messy divorce from the European Union.

“There’s a 60 percent likelihood of a no-deal outcome,” Fox told the Sunday Times in an interview. He blamed the European Commission for a lack of flexibility in fraught talks for 16 months.  Prime Minister Theresa May hopes to conclude a divorce deal and the broad outline of one by October’s EU summit, giving the U.K. and European parliament until Britain’s scheduled departure in March to debate and vote on the package.

“(But) the intransigence of the commission is pushing us towards no deal,” Fox told the paper. “We have set out the basis in which a deal can happen but if the EU decides that the theological obsession of the unelected is to take priority over the economic wellbeing of the people of Europe then it’s a bureaucrats’ Brexit – not a people’s Brexit,” and “there is only going to be one outcome.

The May government has ratcheted up pressure on the EU in recent weeks, urging the bloc to loosen its red lines and come to an accommodation, but I go back to the theory, why would the EU do this and risk others in the bloc pursuing the same path?

Mrs. May has said Britain will publish some 70 technical notes to lay out domestic plans for coping with a scenario without an accord, while Foreign Secretary Jeremy Hunt warned last week ahead of visits to Paris and Vienna that “we potentially face the prospect of a no-deal by accident.”

This really is a slow-motion train wreck, passengers just kind of being lulled to sleep, as the train goes through the Chunnel, only to crash when it hits a brick wall...upending in one form or another tens of millions of lives.

[According to a new YouGov poll, the proportion of voters who favor a referendum on the final terms of any Brexit deal has overtaken those who do not for the first time...42 percent say there should be a fresh vote while 40 percent said there should not.]

Eurobits

--Italy’s parliament has passed 5-Star Movement-led labor reform that aims to crack down on short-term employment and precarious labor practices, although critics say it will cause many people to lose their jobs.

The law, approved Tuesday in the Italian Senate, shortens the maximum duration of temporary employment contracts and decreases the number of times an employer can renew such contracts. But a recent report by Italy’s social security institute suggested that thousands of workers will lose their jobs because of the new legislation.

Turning to Asia...Japan’s economy expanded at a solid annualized rate of 1.9 percent in the second quarter, bouncing back from a revised 0.9 percent contraction in the first.  The Q2 figure was better than the forecast of 1.4 percent in a Reuters poll of economists.

But the GDP report’s measure of inflation slowed to 0.1% from 0.5% in the previous three months, far from the Bank of Japan’s 2% target.

That said, Japanese workers’ inflation-adjusted real wages rose in June at the fastest pace in more than 21 years, fueled by an increase in summer bonuses, government data showed, in an encouraging sign that consumer spending and inflation will eventually pick up. The 2.8 percent rise in real wages in June from a year earlier was the biggest gain since January 1997, and followed a 1.3 percent annual increase in May, the Labor Ministry reported.

But Japanese consumers refuse to spend as they still exhibit caution over the future.

In China, exports grew at a faster pace than forecast in July even as the U.S. kicked off a trade war by imposing tariffs on $34 billion worth of imports from China at the beginning of the month.

The dollar value of exports rose 12.2 percent in July vs. a year earlier, which was an acceleration from June’s 11.2 percent, according to figures from China’s General Administration of Customs.

Imports jumped 27.3 percent last month, far greater than forecast.  Together the figures resulted in a trade surplus of $28.1bn, falling from a $41.5bn surplus in June.

The U.S. accounted for 19.3 percent of China’s exports in July, down from 19.7 percent in June.  Shipments from the U.S. represented 7.2 percent of total imports, the lowest level for the year to date.  The surplus with the U.S. is the same as the overall tally, $28.1bn, down from a record $28.97bn in June.

Street Bytes

--Stocks finished mixed owing to Friday’s fall as geopolitical fears worked their way into the market amid the plunge in Turkey’s lira, which sent bourses around the world into the red.  Earlier, the Nasdaq had stretched its winning streak to eight sessions, and new all-time highs.

On the week the Dow Jones fell 0.8% to 25313, ending a five-week winning streak, while the S&P 500 lost 0.2%, but Nasdaq managed a gain of 0.4%, having hit an all-time closing high of 7891 Thursday.

--U.S. Treasury Yield

6-mo. 2.22%  2-yr. 2.60%  10-yr. 2.87%  30-yr. 3.03%

The yield on the 10- and 30-year fell in a classic flight to safety by week’s end.

--Oil fell as U.S. stockpiles of oil and fuel hit a seven-month high. The relatively tame inflation news helped as well.

The U.S. Energy Information Administration announced Wednesday that while crude-oil inventories declined slightly, total combined stockpiles of crude and fuels such as gasoline rose by 3.3 million barrels, to 1.21 billion barrels, the highest since early January.  Ergo, demand isn’t keeping up with supply.

The EIA report also indicated another weekly decline in U.S. oil production, to 10.8 million barrels a day, from 10.9m the week before.  Experts say this suggests infrastructure issues, such as insufficient pipelines.

But, globally, oil is certainly not helped by trade tensions that could lead to softer economic growth and thus less demand for crude.  And the International Energy Agency warned on Friday that the growing U.S.-China trade spat could result in just that.

At the same time, the IEA still says that renewed U.S. sanctions on Iran remain a major risk to global supplies, and with Russia and Saudi Arabia raising oil output, there are still fears global spare capacity is at very low levels.

Separately, the national gasoline price at the pump is at $2.87, which is the most expensive seen in August since 2014.  Hawaii ($3.76) and California ($3.62) are the most expensive.

--What a freakin’ week for Tesla and CEO Elon Musk.  It started Tuesday when Musk tweeted, “Am considering taking Tesla private at $420. Funding secured.”

He later said the “only reason why this is not certain is that it’s contingent on a shareholder vote.”

Shares of the electric-car make soared 11 percent on the shocking utterance, with exchanges halting trading until just 15 minutes before the close, ending the day at $379.50 vs. Monday’s close of $342.

But it quickly became clear that Musk hadn’t recently reached out to any known bank about a deal to take it private. Wednesday, six of Tesla’s nine board members said Musk had discussed taking the company private “last week,” and they are taking the next steps – but there was no talk of funding, outside of addressing “the funding for this to occur,” the six board members said in a statement. Wednesday, the stock fell a little over 2 percent to $370.

In an email to employees, Musk said, “I think this is the best path forward,” further clarifying that “a final decision has not yet been made, but the reason for doing this is all about creating the environment for Tesla to operate best.”

The Securities and Exchange Commission has made inquiries into the truthfulness of Musk’s Tuesday tweets, specifically on the backing to take his company private at $420 a share.

Regulators also asked why Musk made his comments over Twitter and whether they had followed investor protection rules, according to the Wall Street Journal.

Tesla representatives have yet to comment on the SEC inquiry.

Cornell Law School professor Robert C. Hockett told The New York Post that as to the phrase “funding secured”: “If someone said, ‘Yeah, I might be willing to do that,’ that probably wouldn’t count.  It would have to be something at least semi-formal,” adding that the key terms of a contract would have had to have been agreed upon.

John Coffee, a securities law professor at Columbia University, told the Journal, if Musk doesn’t offer proof to back up his claim that he has money to take the company private at $420 a share, his statement “could be seen as manipulation” of the share price.  “That’s a factual statement, and if it’s material, that’s the kind of lawsuit plaintiffs’ lawyers regard as Christmas in August,” said Coffee.

Thomas Farley, a former president of the New York Stock Exchange, said it would be relatively straightforward for regulators to fact-check some of Mr. Musk’s statements.  Farley told the Journal that regulators could ask to see any legal agreements that Tesla has with financial partners or backers on the going-private deal.

“If funding is certain, there is documentation to demonstrate that,” Farley said.  ‘This is a very easy one to manage, and they should manage it.”

As to the issue of releasing Musk’s potential deal via tweet, the SEC generally allows companies to disseminate news using social media as long as they have told shareholders they might use those channels in addition to regulatory filings.  Tesla did tell investors in a November 2013 filing to follow Musk’s Twitter feed for “additional information” about the company.

The company filed its regular quarterly report with the SEC Monday evening, days after the board discussions had begun, but it said nothing in the report about a potential buyout.

Musk has always wanted to go after the short sellers, his detractors, and in his behavior he is very Trump-like.  In an email to employees on Tuesday, Musk cited short sellers and other pressures public markets put on companies as factors in announcing his intention to take the company private.  In subsequent tweets, Musk wrote that going private would end “negative propaganda” from short sellers.

“The short position is the best thing the stock has going for it.  ‘Musk vs. The Shorts’ is a far better narrative than ‘Tesla vs. Mercedes/Audi/Porsche,’’ Jim Chanos, an investor who’s been vocal about his bet against Tesla, said on CNBC.

Should Tesla indeed go private, Tesla would not be subjected to all of the disclosure requirements or trading volatility that affect publicly traded companies.  In the email to employees, Musk said:

“As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders. Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term,” he wrote.

“Finally, as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company.”

Musk’s stake in Tesla is worth about $12 billion, according to S&P Global Market Intelligence. He owns about 20 percent of the company, which is valued at about $60 billion at week’s end.

Investors would have a choice on whether to sell out or maintain their shares.

“My hope is for all shareholders to remain, but if they prefer to be bought out, then this would enable that to happen at a nice premium,” he wrote.

The original tweet came shortly after the Financial Times reported that the investment arm of Saudi Arabia has acquired a substantial stake in Tesla, said to be between 3 and 5 percent.

The kingdom has been actively trying to diversify its economy, in part by using some of the more than $250 billion in assets in its sovereign wealth fund to invest in alternative assets.

Musk said his other big company, Space Exploration Technologies, or SpaceX, would not be merged into Tesla.

Tesla has $920 million in convertible bonds that come due in March, with a conversion price of $359.87.  If Tesla stock is below that level at the time, the company will have to spend cash to redeem the bonds; if the stock price is above that level, the convertible holders will convert them into Tesla shares, relieving the company of the need to lay out cash.  So clearly keeping ‘talk’ at the $420 level could benefit the company in this regard.

Tesla currently has about $10.9 billion of debt and its bonds are rated junk by credit ratings agencies.

Charley Grant / Wall Street Journal

“(What) would seem like great news for its shareholders comes with plenty of unanswered questions.  This would be twice the size of the biggest buyout in history, one that ended in bankruptcy.  And Tesla is the exact opposite of the type of company buyout firms want: It burns rather than generates cash and it is already neck deep in liabilities. If Mr. Musk hasn’t lined up the financing he claimed, he could be accused of trying to drive up Tesla’s stock to make the company’s many naysaysers suffer. Tesla didn’t respond to questions about the nature of this committed financing.

“Mr. Musk suggested in a blog post that the buyout was needed to get out of the public markets, which force the company into short-term thinking. That claim borders on bizarre: Tesla has benefited hugely from public markets, which have given it a huge valuation that allowed it to raise significant amounts of capital. Those public investors have also been willing to look past years of operating losses.

“Tuesday’s tweet could be the start of one of the greatest financial dramas in history.  But given Tesla’s history of dramas, don’t be surprised if the frenzy turns out to be just another weird day in the life of the world’s craziest car company.”

Editorial / Wall Street Journal

“Elon Musk is known for disrupting convention, and his midday tweet Tuesday that he may take his Tesla car company private is a classic.  Many people have lost money betting against the Tesla CEO.  Then again, nearly $70 billion is a lot to borrow to escape the needling of short sellers and stock-analyst grunts.

“But that does seem to be Mr. Musk’s overriding motivation for wanting to go private, judging from his email to employees that Tesla released after his tweet....

“If Mr. Musk does go private, he’d face no more questions from stock jocks, journalists and other pains in the posterior who ask about the Tesla Model 3 production line and cash flow. He could put a sign out front that says ‘Genius at Work’ and tell everyone to buzz off unless they want to test drive one of the cars.

“Everyone, that is, except the lenders who finance what would be the most expensive leveraged buyout in history.  Calculating from the 20% or so of Tesla shares that Mr. Musk already owns, and his target LBO price of $420 a share, he’d have to raise tens of billions of dollars.  Mr. Musk tweeted that he has ‘funding secured,’ without naming the sources.

“One theory is that Mr. Musk is trying to flush out a strategic buyer with ready cash (Google or Apple?) or auto manufacturing expertise (Daimler?).  If Mr. Musk intends to lure bond investors, he may find they can be even more annoying than journalists. With so much leverage, Tesla would need the Model 3 to be a consumer hit and a long enough economic expansion to generate cash to pay down debt.  We wouldn’t bet against him, but lenders will need a high tolerance for ego.”

Thursday, amid talk of an SEC probe into Musk’s tweets, Tesla traded as low as $345, below its level before he took to Twitter on Tuesday.  It finished the week at $355, up only $7 from the prior week’s close. All that trouble for this?

--Walt Disney Co. missed Wall Street’s profit targets as new technology costs rose during the quarter ended June 30, but CEO Bob Iger said the exodus of consumers from its television channels was slowing. The shares fell about 3% on the week.

Disney is trying to transform itself into a broad-based digital entertainment company as ESPN and its other networks lose viewers to Netflix Inc. and other streaming options.  It is on the verge of gaining new film, television and entertainment properties in a $71 billion purchase of assets from Twenty-First Century Fox Inc.  Iger, on the earnings conference call, said growth of smaller channel bundles delivered online had helped make up for customers dumping larger cable packages.  Disney has seen “noticeable improvement in the rate of (subscriber) loss in each of the last four quarters,” he said.

The company plans to launch its own streaming service for family entertainment in late 2019 that will incorporate Disney and Fox content.  The service will not, however, carry the volume of content found on Netflix, Iger added.   The cost to build streaming services contributed to a profit decline at Disney’s media networks, the company’s largest unit, in the quarter.

Overall, Disney posted earnings of $1.87 per share ex- certain items, an increase from a year earlier but below the Street’s consensus of $1.95.  Total revenue rose 7 percent to $15.23 billion, which was slightly below forecasts.

Disney’s movie studio enjoyed blockbuster success with “Avengers: Infinity War” and “The Incredibles 2.”  Operating income at the studio rose 11 percent to $708 million.

The theme parks division reported a 15-percnet rise in profit to $1.3 billion with increases at domestic and international resorts.  Disney has been pushing up prices at its theme parks in recent years, with the latest price leading to just a 1 percent gain in attendance at U.S. parks – down from an 8 percent increase last year – while hotel occupancy rates dropped to 86 percent from 88 percent.

--Samsung announced it will invest more than $22 billion over the next three years to target areas such as artificial intelligence and auto-tech components as it hunts for new growth drivers beyond phones and memory chips.

The bulk of the spending will be earmarked for Samsung Electronics Co., the conglomerate’s crown jewel and the world’s No. 1 maker of smartphones, semiconductors and televisions. The company said it will invest in four key areas through 2020: auto tech; artificial intelligence; and new fifth-generation, or 5G, cellular technology, all of which fall under the Samsung umbrella, with other funds going into its nascent drug ventures.

Samsung spent more on cap-ex than any publicly traded company in 2017, according to S&P Global Market Intelligence and the Wall Street Journal. Samsung announced its new investments would create 40,000 jobs over the next three years.

The company has opened new research centers in Cambridge, U.K., Toronto and Moscow in May, specifically to build up its AI capabilities. By 2020, Samsung wants to put AI features and internet connectivity into all its products.

--Snap Inc.’s second-quarter revenue beat projections, but the number of users declined for the first time. The mixed results came the same day Prince Alwaleed bin Talal of Saudi Arabia announced he had acquired a 2.3% stake in Snap, made earlier at an average price of $11 a share.

Snapchat saw its daily average users fall 1.5% in the second quarter to 188 million, down from 191 million the previous quarter, missing the average analyst estimate of 193 million.

The company blamed the decline on the controversial redesign, which was unveiled nine months ago. The redesign sparked a major backlash by influential celebrities such as Kylie Jenner.

The unpopularity of Snapchat’s redesign is believed to have driven more users to the Facebook-owned Instagram, which has copied many of Snapchat’s features such as Stories.

Snap CEO Evan Spiegel continues to defend the move.  “We believe that this is an important evolution of our product that will help drive future growth in engagement,” he said in a statement Tuesday.

A more positive development was in the company’s revenue growth, which climbed 44% from a year earlier to $262 million, easily beating analyst projections.

But back to the key metric, average daily users, some analysts now say Snapchat is destined to serve a small but loyal following, a la Twitter, rather than become a serious threat to Facebook.

Overall, though, the fact is even Facebook revealed late last month that its number of users in the United States was flat from earlier this year and that its users in Europe had fallen over the same period, while Twitter said in late July that its monthly active users had decreased from earlier this year.

So it’s easy to conclude that social media has reached a saturation point in some markets, especially in developed countries.  I know I’m using one particular platform far less.

--Speaking of which, the good folks at Facebook just informed me that my Page’s template will be changing.  “This new design will help you connect with the people who care most about your business on Facebook.... ‘Restaurants & Cafes’” !!!

Eegads.  “The new layout is specifically for businesses like yours and will showcase important information about your business – like hours, prices and your menu – making it easier for people to connect with Stocksandnews.com.”

Bet you didn’t know I’m really all about food...farm to table, as we say here in the global headquarters of S&N.  What a bunch of freakin’ idiots.  And spell the company name right, FB.

By the way, my hours are 4:30 a.m. to 11:00 p.m., Saturday through Friday.  And employees don’t get any paid time off, save for about five hours on Christmas Day.  All federal labor laws are broken regularly. 

--Facebook and Twitter were in the spotlight for a different reason this week, the handling of misinformation spread by Alex Jones, the internet’s notorious conspiracy theorist.  On Monday, Facebook removed four pages belonging to Jones for violating its policies by “glorifying violence,” among other things. Twitter said Jones’ accounts and that of his right-wing site, Infowars, did not violate its rules.

Apple, Google and Spotify also severely restricted the reach of Jones and Infowars, further proof that while the tech companies are taking a stance against misinformation online, they are becoming the arbiters of truth, leading to accusations of political bias, largely from conservatives.  Nigel Farage, the British conservative politician, said on Twitter: “Whether you like @RealAlexJones and Infowars or not, he is undeniably the victim today of collusion by the big tech giants.  What price free speech?”

In its statement removing five of the six Infowars podcasts on its Podcasts app, Apple said it “does not tolerate hate speech.”

--The Canadian economy created far more jobs than expected in July and the country’s unemployment rate ticked down to 5.8%, matching the more than 40-year low it touched last year and earlier in 2018.

Employment rose by 54,100, well ahead of June’s gain of about 31,800. The jobless rate fell 0.2%.

--Berkshire Hathaway Inc., the conglomerate run by Warren Buffett, reported its quarterly earnings on Saturday and operating profit rose a whopping 67 percent, as insurance underwriting rebounded and several business units benefited from a surging economy.

Underwriting profit at the GEICO auto insurance unit more than quintupled, the BNSF railroad benefited from demand to ship consumer products, grain, petroleum and steel, and the Berkshire Hathaway Automotive car dealership financed more vehicle purchases.

Net income rose to $12.01 billion, up from $4.26bn  a year earlier.  A decline in Berkshire’s effective tax rate from 28.9 percent to 20 percent certainly helped.  And the company was helped bigly by its $47.2 billion stake in Apple Inc.

--Indra Nooyi is exiting as CEO of PepsiCo Inc. after 12 years, one of the highest-profile women in a small circle of female CEOs of Fortune 500 companies.  Plus Nooyi, born in India, was a minority. She oversaw the company during a turbulent time in the industry that has forced heavyweights like PepsiCo, Coca-Cola and Campbell Soup Co. to adapt to changing tastes.

Nooyi, 62, has been with PepsiCo for 24 years overall and held the top job the last 12.  Another PepsiCo veteran, Ramon Laguarta, will take over in October.  Nooyi will remain as chairwoman for a few months thereafter.

Depending on your benchmark, Fortune 500 or S&P 500, the percentage of female CEOs is about 5%.

--Adidas, the world’s second-largest sportswear maker after Nike, confirmed its full-year guidance after beating analysts’ expectations for growth and profits in the second quarter of 2018 as the group increased internet sales and made headway in North America and Asia.

Adidas increased quarterly sales by 4.4 percent year-on-year to 5.3bn euro.  Operating profit was 17.2 percent higher than a year ago to 592m euro.

Adidas said it is on track to meet its full-year guidance of 10 percent revenue growth excluding foreign exchange movements, as sales in North America and the Asia-Pacific are increasing at double-digit rates; 16% in the former and 19% in in the latter, driven by 26% sales growth in China.  Rival Nike just returned to growth in the U.S.

--The New York Times added 109,000 digital subscribers in its latest quarter, but a slide in advertising sales hindered profits.

Digital advertising dropped 7.5 percent to $51million in the quarter, which the Times says “reflected a smaller audience.”  Print advertising fell 11.5 percent.  Together this led to adjusted operating profits of $59.4m, down 8 percent from a year ago.

The newspaper now has 3.8m total subscribers, with 2.9m of these digital-only.  The Times now makes two-thirds of revenues from subscriptions – “a trend we expect to continue,” CEO Mark Thompson said.

Digital subscriber growth has been slowing, however, the 109,000 additions in the second quarter comparing with 139,000 in the first quarter, and 157,000 in the fourth quarter of 2017.

--As part of News Corp.’s earnings release, it was reported that the news unit was boosted by a 9% increase in revenue at Dow Jones, the Wall Street Journal’s publisher.  The Journal added 100,000 digital subscribers in the quarter.  In the June quarter, the Journal averaged 1.59 million digital subscribers.

Advertising revenue for the entire news unit declined 2%, while circulation and subscription revenue increased 5%.

Separately, revenue in News Corp.’s book-publishing segment rose 20% to $490 million, boosted by strong sales of “Magnolia Table,” by Joanna Gaines, “I’ll Be Gone in the Dark,” by Michelle McNamara and “Girl Wash Your Face,” by Rachel Hollis....in case you wanted some book ideas for end of summer.

--Papa John’s International Inc. saw its shares fall anew on Tuesday (though the stock largely recovered by week’s end) as the company posted its third consecutive quarterly sales decline since founder John Schnatter made remarks last fall that the company said turned off the pizza chain’s customers.

Same-store sales fell 6.1% in the second quarter (19.5% in North America), executives attributing the hefty decline to “recent events.”

Papa John’s wrote in its earnings report: “The company cannot predict how long and the extent to which the negative customer sentiment will continue to impact future sales.”

Schnatter stepped down as CEO in December and as chairman in July.  In a statement he said: “The company is trying to deflect attention from the source of the problem – management’s ongoing failures with regard to financial performance – and blame me for its problems.”

A Papa John’s spokeswoman countered: “We have received strong support from our stakeholders for the actions under way, including the decision to remove Mr. Schnatter from the brand. We remain focused on the important work under way to move the company forward.”

Schnatter, who founded the company 34 years ago, has been at odds with the board since he ignored their advice and blamed a sales decline on the National Football League’s handling of the national-anthem protests.  Schnatter’s criticism of the NFL, of which Papa John’s was a major sponsor, was taken to mean he disapproved of the protests, and some then called for a boycott of the world’s third-largest pizza-delivery chain.

In December, he stepped down as CEO. Then in May he used a racial slur during a media-training session, after which he was forced to apologize and step down as chairman.

Papa John’s plans to introduce a new marketing campaign in the fourth quarter that doesn’t include Schnatter.  “We need to move on,” CEO Steve Ritchie told investors this week.

The company last month adopted a “poison pill” provision to prevent Schnatter, who owns 29% of the shares, from gaining a controlling interest in the company.

--Rite Aid is abandoning its merger with supermarket giant Albertsons after facing opposition from certain investors and advisers, further clouding the ailing drugstore giant’s future.

As its two biggest rivals, CVS and Walgreens, keep getting bigger and more diversified, Rite Aid was hoping to do the same by arranging a tie-up with Albertsons. Privately held Albertsons was hoping to use the deal to go public.

But the deal’s demise calls into question the future of Rite Aid, as the company has struggled to find its footing in an industry facing cost pressures in the health care industry.  The bottom line is the company doesn’t have the balance sheet to compete with well-capitalized rivals CVS and Walgreens.

Walgreens has 9,964 U.S. locations, CVS 8,130 standalone stores and 1,702 pharmacies inside Target locations, while Rite Aid has 2.533 stores left, having recently sold 1,900 to Walgreens.

In the wake of the implosion of the deal, Rite Aid shares plunged 13.8 percent to $1.50.

--For the second quarter in a row, SeaWorld Entertainment reported notable gains in attendance and revenues, signaling a possible rebound from years of steep losses in visitation.

Attendance jumped nearly 5 percent in the second quarter ending June 30, with 290,000 more guests visiting SeaWorld’s 12 parks than in the same quarter last year.  During Q2, revenue also rose nearly 5 percent – to $391.9 million.

SeaWorld shares rose over 20 percent on the news to the highest level in four years, although at $25, still far from the high $30s peak reached in 2013.

At the same time the company reported it reached an initial settlement with the SEC related to possible violations of federal securities laws, related to executives’ disclosures and public statements in August 2014 and earlier about the impact of the anti-captivity “Blackfish” documentary and trading in the company’s securities.  SeaWorld is also in the midst of a class-action suit accusing it of misleading shareholders about how the film contributed to falling attendance and revenue.

But back to the earnings results, it seems SeaWorld was helped by the return of free beer to its Orlando park and Busch Gardens Tampa, which harkened back to a time when the parks were owned by Anheuser-Busch.

--How bad is the divorce battle between legendary bond investor Bill Gross and wife Sue?  It made the cover of the New York Post this week, of all things.    It’s gotten so bad that in the past two months, Sue Gross forked over $37.8 million for pricey pads in Laguna Beach’s exclusive Irvine Cove community, where Bill spent most of his adult life – just so he couldn’t get his hands on them to begin putting down new roots there, according to court papers and sources.  Bill had lived in Irvine Cover for 30 years, before being booted from their home, according to the New York Post.

So Bill bought a $36 million, 5,500-square-foot waterfront property – right across the street from Sue’s sister and brother-in-law – as return fire at Sue, according to court documents.

But wait, there’s more!  Court documents also show the two got into a bitter dispute over who would become the rightful owner of their three cats. Sue won custody, but Bill managed to score visitation rights – with a veterinary professional being put in charge of transporting them.

--The Academy of Motion Picture Arts and Sciences announced a few changes to future Oscars telecasts, designed to limit the ceremony to three hours, rather than the current four, after this year’s telecast, hosted again by Jimmy Kimmel, dropped 19 percent from the previous year to just 26.5 million viewers, according to the Hollywood Reporter – an all-time low.

Certain categories, which have yet to be announced – will be presented during commercial breaks, but we’re obviously talking technical awards.  As in outside of immediate family, I really don’t think a single soul around the world cares about sound mixing.

But to the disdain of many, a new category will recognize achievement in “popular film,” which critics say lessens the stature of the best picture category, though there were no details on what really qualifies for the new award, or whether the voting would be open to the general public.

--The Los Angeles house featured on the U.S. sitcom The Brady Bunch has been bought by cable TV network HGTV, its parent company has announced.

The network, which specializes in home improvement and gardening shows, will “restore the home to its 1970s glory,” Discovery said.

Only the exterior of the house in Studio City appeared on the show.  Indoor scenes were shot in a studio.

Foreign Affairs

Iran: Trump tweet: “The Iran sanctions have officially been cast.  These are the most biting sanctions ever imposed, and in November they ratchet up to yet another level.  Anyone doing business with Iran will NOT be doing business with the United States. I am asking for WORLD PEACE, nothing less!”

A set of sanctions on Iran, previously lifted under the Iran nuclear deal, went back into effect this week as part of President Trump’s complete withdrawal from the accord.  Thus far, Iran has avoided rash action, instead seeking to secure concessions from Europe, Russia, and China that could reduce their impact.

Iranian President Hassan Rouhani accused the U.S. of waging “Psychological warfare” with the reimposed sanctions, with a second, harsher round slated for November.

The first round targets Iran’s access to U.S. banknotes and key industries, including cars and carpets.

“If you’re an enemy and you stab the other person with a knife, and then you say you want negotiations, then the first thing you have to do is remove the knife,” Rouhani said in an interview on state television.

“They want to launch psychological warfare against the Iranian nation. Negotiations with sanctions doesn’t make sense.”

Iranians are already seeing the effects of the sanctions, with Iran’s rial currency losing around half its value since Trump announced the U.S. would withdraw from the 2015 nuclear accord.

President Trump again blasted the agreement on Monday, calling it a “horrible, one-sided deal (that) failed to achieve the fundamental objective of blocking all paths to an Iranian nuclear bomb.”

The unilateral decision to withdraw came despite other parties to the agreement – Britain, France, Germany, Russia and China – pleading with Trump not to abandon the pact.

The European Union’s diplomatic chief Federica Mogherini said the bloc deeply regretted Washington’s move.

“We are determined to protect European economic operators engaged in legitimate business with Iran,” she said in a statement.  The EU said it sought to protect European companies from any penalties imposed by the United States for doing business with or in Iran.

But many large European firms are leaving Iran for fear of the U.S. penalties (the most severe of which would kick in in November, including the blocking of Iran’s oil sales), and Trump warned of “severe consequences” against firms and individuals that continued to do business with Iran.

The impact of the sanctions and restrictions has ramped up protests inside Iran over water shortages, high prices and wider anger at the political system.  But owing to severe restrictions on outside reporting, confirmation of the scope of the protests is hard to come by.

Secretary of State Mike Pompeo demanded that Iran end all nuclear enrichment and development of nuclear-capable missiles, release all American citizens, end its support for Hezbollah, Hamas, Islamic Jihad and Houthi militias and withdraw its forces from Syria.

Syria: An anticipated Syrian government offensive against rebels in Idlib province could displace more than 700,000 people, far more than were uprooted in a recent battle in the southwest of Syria, according to the U.N.

Many of Syria’s battles have ended with agreements for fighters and their families to depart for Idlib governorate, where an influx of displaced people has roughly doubled the population to around 2.5 million.  The U.N. has said the province has become a “dumping ground” for evacuees.

The U.N. children agency UNICEF says a battle for Idlib (in the northwest of the country) could affect the lives of more than 1 million children, many of whom live in refugee camps.  UNICEF said food, water and medicine are already in short supply and a battle would exacerbate an already dire humanitarian situation and potentially displace 350,000 children.

Separately, Israel is believed to be behind the assassination of a top Syrian scientist as he left his house in Hama, the victim of a car bomb.  The scientist, Dr. Aziz Asbar, was allegedly a key part of Syria’s Scientific Studies and Research Center, which is involved in the development of chemical weapons and long-range missiles that are produced near Hama.  Asbar was also linked to Iran.

This was at least the fourth time in three years that Israel has assassinated an enemy weapons engineer on foreign soil, as reported by the New York Times, through a senior official from a Middle Eastern intelligence agency.

Saudi Arabia / Canada: In a bizarre diplomatic crisis, Saudi Arabia, infuriated by Canada’s demand last week that jailed activists in the kingdom be released immediately, expelled the Canadian ambassador on Sunday, suspended direct flights to Toronto, blocked imports of Canadian grain and ended state-backed educational and medical programs in Canada.

The dispute began when Canadian Foreign Minister, Chrystia Freeland, tweeted her concern for the arrest of Saudi women’s rights activist Samar Badawi and her brother, Raif Badawi, who was sentenced in 2014 to 100 lashes and 10 years in prison for political activism.  His wife and children fled to Canada after his arrest, and were granted Canadian citizenship on July 1, 2018.

Saudi Arabia recalled some students, and all Saudi medical patients and resident physicians (a reported 800) in Canada are to be transferred back to the kingdom.

In the meantime, Saudi Arabia crucified a man from Myanmar for breaking into a woman’s home and killing her.  While capital punishment is commonplace in the kingdom, crucifixion is not, though it has been used against homosexuals and political activists.

Western governments expressing concerns about human rights issues in the kingdom isn’t new, but what set off the Saudi leadership this time may have been that the call was so public.

Saudi Arabia has in recent months detained several women’s rights activists, some of whom had previously campaigned for the right to drive and an end to the kingdom’s male guardianship system, the latest to be swept up in a government crackdown on activists, clerics and journalists.

Since rising to power in 2015, de facto ruler Crown Prince Mohammed bin Salman (MBS) has courted Western allies to support his reform plans to modernize and open up his kingdom, offering to buy billions in arms and promising to fight radicalism, but while he has launched a campaign of social and economic change, he has not eased the kingdom’s total ban on activism.

The Financial Times reported on Wednesday that the Saudi central bank and state pension funds had instructed their overseas asset managers to sell their Canadian equities, bonds and cash holdings.  [The Saudi government at first denied this in a tweet, but then deleted the post without providing an explanation.]

Foreign Minister Adel al-Jubeir on Wednesday ruled out any mediation efforts and called on Ottawa to “fix its big mistake,” saying the kingdom was considering implementing more measures against Canada for interfering in Saudi Arabia’s domestic affairs, without elaborating.

Canadian Prime Minister Justin Trudeau later appeared to extend an olive branch, saying he would keep pressing Saudi Arabia on civil liberties but also saying the kingdom had made some progress on human rights.

The dispute will not have any impact on Saudi oil supplies to Canada, its energy minister said on Thursday, reassuring customers after Riyadh froze new trade with Canada.  Energy Minister Khalid al-Falih said in a statement that Saudi Arabia has a “firm and longstanding policy” that petroleum supplies are not influenced by political considerations.

The dispute has threatened to undermine Riyadh’s foreign investment drive, a campaign already unsettled by a series of assertive political and diplomatic initiatives by the top oil exporter.

Separately, an airstrike from the Saudi-led coalition struck a school bus in northern Yemen on Thursday, killing at least 43, most of them children, local medical officials and international aid groups said.  The injured were sent to hospitals already struggling with one of the worst humanitarian crises in the world.

The coalition said it had hit missile launchers and called the attack a “legitimate military operation,” but the attack drew worldwide condemnation and was a reminder of the tremendous human toll in the war in Yemen.

The attack in a busy market area in Sada Province hit a bus carrying students on a recreational trip. The United States, which has been providing arms and intelligence to the coalition denied any involvement in the atrocity.

Turkey: As alluded to above, the U.S. failed to secure assurances on Wednesday from Turkey to immediately free an American pastor held for nearly two years on disputed terrorism charges, U.S. officials said, deepening a crisis between the two countries and setting stage for the Trump administration to take new punitive steps.

High-level talks in Washington between U.S. and Turkish officials produced no breakthrough in an impasse that has pushed Turkey’s economy into turmoil.  Turkey’s currency has plunged as a result of the crisis, and then on Friday, President Trump doubled down, doubling tariffs on Turkish steel and aluminum.

Turkish President Erdogan told his people today to exchange their gold and dollars into lira, with the currency in freefall.  The lira has long been falling on worries about Erdogan’s influence over monetary policy and worsening relations with the United States.  Erdogan told a crowd in the northeastern city of Bayburt, “The dollar cannot block our path. Don’t worry.”

The fate of pastor Andrew Brunson has been a cause celebre for evangelical Christians in the U.S., with Brunson represented by Jay Sekulow, one of Trump’s attorneys.  Vice President Pence has also championed his case.

The U.S. thought it had an agreement with Turkey to free Brunson, but he was given house arrest instead. 

North Korea: The U.N. released a report that concluded North Korea has not stopped its nuclear and missile programs and is violating sanctions including by “a massive increase in illicit ship-to-ship transfers of petroleum products.”  The 149-page report also says the country is violating sanctions by transferring coal at sea and flouting an arms embargo and financial sanctions.

Clearly, there is no doubt China is violating the sanctions left and right.

But Pyongyang lashed out again at the U.S. for not lifting sanctions against the country.

The foreign ministry said it had made various goodwill gestures, and yet the U.S. was still following an “outdated acting script” and jeopardizing any moves towards denuclearization.

North Korea remains under a range of international and U.S. sanctions over its nuclear program and missile tests.

The U.S. insists full denuclearization take place before sanctions are lifted.

The details of any nuclear disarmament agreement reached at the Singapore summit are still vague, as North Korea did not commit to unilaterally giving up its nuclear weapons.

The foreign ministry instead has been citing various conciliatory gestures it says the country has already taken, such as halting missile tests, the return of some remains of U.S. soldiers killed in the Korean War and the dismantling of a nuclear site, though there are serious doubts as to this last supposed step.

Pyongyang also accused U.S. officials of “going against the intention of President Trump” by “making baseless allegations” and “desperate attempts at intensifying the international sanctions and pressure.”

It said “expecting any result, while insulting the dialogue partner” was a “foolish act that amounts to waiting to see a boiled egg hatch out.” [BBC News]

Foreign Minister Ri Yong-ho is currently on a visit to Iran where President Hassan Rouhani warned the U.S. could not be trusted after Tehran’s experience of having the Trump administration tear up the Obama-era Iran deal.

According to Iranian media, Mr. Ri said his country would seek to retain its nuclear know-how for when the U.S. reverts to a more aggressive position against Pyongyang.

Earlier, White House National Security Adviser John Bolton accused Pyongyang of not adhering to the deal reached by Trump and Kim Jong Un in June, in the latest sign that the president was a wee bit premature in proclaiming North Korea no longer posed a nuclear threat.

Bolton said North Korea was to blame for the lack of progress towards denuclearization.  What we really need is not more rhetoric, but performance from North Korea,” he said in a television interview.

But the president, in his statements, continues to say “We have a good relationship with North Korea,” as he told business leaders this week in Bedminster, New Jersey.

Bolton said, though, that “The idea that we’re going to relax the sanctions just on North Korea’s say-so is something that isn’t under consideration. We’re going to continue to apply maximum pressure to North Korea until they denuclearize.”

Bolton added that the fact Pyongyang didn’t return more than 55 boxes of remains that North Korea said are U.S. soldiers from the war (out of an estimated 5,300+ still missing) showed that it was not serious about improving relations with the West and its neighbors in Asia, and on this I couldn’t agree more.  “There is no point in withholding the remains from a conflict that long ago,” Bolton said.  Just one dog tag was returned among the first 55 boxes.

Last weekend, at an ASEAN summit in Singapore, Secretary of State Mike Pompeo said Washington took very seriously any relaxation of U.N. sanctions, calling out Russia for  possibly violating a U.N. resolution by issuing work visas to North Korea workers.

“I want to remind every nation that has supported these resolutions that this is a serious issue and something that we will discuss with Moscow,” Pompeo said.  “We expect the Russians and all countries to abide by the U.N. Security Council resolutions and enforce sanctions on North Korea.”

Russia denied a report by the Wall Street Journal that said Moscow was allowing thousands of fresh North Korean laborers into the country and granting them work permits in a potential breach of U.N. sanctions.  Russia also denied it was flouting restrictions on oil supplies to North Korea.

Pompeo had a chance to sit down with North Korean Foreign Minister Ri but the two only exchanged a handshake, which speaks volumes.  Ri then delivered an address in which he said Pyongyang was alarmed by U.S. intentions.

China: China’s top newspaper, People’s Daily, rebutted growing criticism in government circles that Beijing should have taken a lower profile to head off its trade war with the United States, saying on Friday that, like an elephant, China cannot hide its size and strength.

The growing trade dispute is causing rifts within China’s Communist Party, with some critics saying that an overly nationalistic Chinese stance may have hardened the U.S. position, sources close to the government have said.

In an unusually public rebuttal to a debate that has been happening largely behind closed doors in policy-making circles in China, the newspaper took direct aim at those it said were naysayers.

While condemnation of the White House has come at home and abroad, there are those who have spread “specious” views on the internet, it said in a lengthy commentary.

“One of these puts the blame on China, saying that ‘China’s strategy is too confident and high profile,’ incurring a one-two punch from the United States,” it said.

“Another of these criticizes China saying that it shouldn’t strike back,” the paper said.  “The meaning is – as long as China caves in, the United States will raise its hand high in mercy, and the Sino-U.S. trade war won’t happen.”

However, the paper points out, history shows the U.S. has always gone after countries, such as the former Soviet Union, Britain or Japan, that were perceived as threats to its global dominance.  That had brought China into the firing line with its enormous and growing economy, the People’s Daily said.

“After more than a century of hard work, China has returned to the center of the world stage, and this is the basic fact we must observe in the China-U.S. trade friction,” the paper wrote.

“Such a large size, such a heavy thing, can’t be hidden by ‘being low key,’ just like an elephant can’t hide behind a sapling,’ it said.

The paper said Beijing was emerging as an “unprecedented opponent” for the United States.

“No matter what China does, in the eyes of the United States, China’s development has already ‘damaged the supremacy of the United States,’” it wrote.

“Against this kind of ‘opponent,’ the United States must adopt two methods – first, use the opponent to encourage itself and exhort mass political support for ‘making American great again,’ and second, curb the opponent’s supremacy at every level,” it said.

Separately, Wang Yiming, deputy director of the State Council Development Research Center, wrote in a column in the People’s Daily on Friday that rising trade tensions with the United States have become the biggest threat to the stability of the Chinese economy. Wang called for  a slew of measures to stabilize exports, including improving a state tax subsidy policy that provides tax incentives for Chinese companies to increase their exports, as well as stepping up funding support for Chinese exporters.

China on Wednesday revamped a national leadership group that was seen as a boost for the technology sector, which could see more assistance to ensure its ongoing growth.

Editorial / The Economist

“No evidence that Mr. Xi’s position is in peril has come to light. Yet the capital’s political classes, including Chinese academics who advise the government, business leaders, foreign diplomats and journalists, have spent weeks swapping rumors of bruising internal disputes about how to handle a trade war with America and generally protect a slowing economy. Some predict that Mr. Xi and his inner circle will face unprecedented criticism at gatherings such as Beidaihe [Ed. a leadership conclave].  Many rumors have a recurring theme: namely, that retired leaders such as Hu Jintao, his predecessor, Jiang Zemin and the former premier Zhu Rongji, are demanding an end to propaganda campaigns exalting Mr. Xi as the ‘eternal core’ of the party and ‘the country’s helmsman.’ Such sycophancy revolts a lot of older, educated Chinese, reminding them of the personality cult around Mao that so harmed China. Related rumors have such elder statesmen demanding a reversal of last year’s decision to allow Mr. Xi, in effect, to rule China for life, by abolishing the ten-year term limit that applied to his post as president. Finally, Beijing seethes with talk that retired and serving members of the government accuse Team Xi of ill-judged boasting about the country’s rise, as when state media talked up a ‘Made In China 2025’ plan to dominate such high-tech sectors as robotics and artificial intelligence. Xi critics blame such bragging for provoking a backlash across the West.

“This summer’s wildest rumors, involving purported plots against and sackings of senior figures, probably reveal more about the longings of Xi critics than anything else.  They also point to the downsides of opacity. Beidaihe’s very agenda is a secret. Comings and goings of leaders must be guessed at from sightings of motorcades and presidential trains, and terse state media reports of side events at the resort.  In an age when America’s president tweets his innermost thoughts, China-watchers spent the summer counting fawning references to Mr. Xi on the front page of People’s Daily, to see if they had become less numerous (they had not).

“It is true that by playing the all-knowing father of the nation, dispensing guidance on everything from military strategy to the building of public lavatories, Mr. Xi is vulnerable when things go wrong. It is genuinely damaging that China’s leaders look paralyzed in the face of Mr. Trump’s attacks over trade. But it is also the case that somebody cannot be beaten by nobody, and Mr. Xi faces no obvious single challenger. What he does face is widespread disgruntlement among political and business elites.  Mr. Xi has not just accrued power for himself, in part by locking up a lot of corrupt officials.  He has spent six years making explicit the primacy of the Communist Party, a state-above-the-state that operates a parallel chain of command at every level of government, from the smallest village to the largest ministry or state-owned enterprise.  Communist Party secretaries and party committees are increasingly visible, as they sideline bureaucratic figureheads, from city mayors to provincial governors, right up to the premier, Li Keqiang, who runs the State Council, a body that oversees many government ministries and agencies. A recurring theme of Beijing rumors has Mr. Li and the State Council apparatus ready to stand up to Mr. Xi and his inner circle, and rebuke them for such errors as bungling relations with Mr. Trump. That seems a stretch.  At any rate Mr.  Li has been damaged by a scandal involving defective vaccines given to hundreds of thousands of children, dampening such talk....

“Amid the rumors some facts lurk.  Team Xi did misjudge Mr. Trump, wrongly assuming that this businessman-president, so charming in private with Mr. Xi, could be bought off with the sort of tactical concessions that China has long used to placate angry foreigners. At a dinner for a foreign leader visiting Beijing this spring, sources relate, Mr. Xi and aides confidently predicted that trade tensions with America would not escalate because both countries had too much to lose, while Mr. Trump’s threats were called so much theatre.  Other insiders say Team Xi was getting advice from the wrong Americans, notably business titans with long China careers, and putting too much faith in such Trump aides as Steven Mnuchin, the treasury secretary.

“Yet Xi critics can be correct without posing him any tangible threat.  Chinese intellectuals have been transfixed by a coruscating, erudite essay by a Tsinghua university law professor, Xu Zhangrun. The essay, which draws on centuries-old traditions of scholars petitioning the mighty, condemns the Communist leader for his draconian security policies, for eliminating term limits on the presidency, and for reviving Maoist-style propaganda, political campaigns and purges.  Mr. Xu charges China’s ruler with breaking the bargain underpinning the post-Mao era, that the people will tolerate one-party rule as long as they are left alone to seek prosperity and personal contentment.  But its bravery is tinged with something close to snobbery.  As masterfully translated by Geremie Barme, an Australian sinologist, Mr. Xu calls urban China ‘all very comfy and petit-bourgeois.’  It is a telling line.  Many Chinese reformists of the sort that foreigners meet loathe Mr. Xi’s upending of post-Mao norms. But their grumbles are eerily similar to those that can be heard at Washington dinner parties, when academics or veterans of the Bush and Obama White Houses deplore Mr. Trump and those voters taken in by him. Those Beltway critics don’t wield much clout....

“(But) one Western expert reflecting on this febrile summer wrote an essay asking whether we have reached peak Xi Jinping. Nobody knows. But China may have reached peak boasting.”

It’s true that China has taken steps recently to rein in its swagger, with state media being told to downplay the Made in China 2025 industrial initiative to become the world’s foremost power in 10 important industries, including artificial intelligence and pharmaceuticals, a plan the U.S. has identified as a key threat. They were also instructed to avoid talking about China’s greatness. The push is to focus more on how China has helped other nations.

Russia: The Trump administration announced it was imposing new sanctions on Russia to punish it for violating American and international laws by attempting to assassinate a former Russian spy living in the U.K. using a nerve agent.

In the wake of the March 4 poisoning of former Russian spy Sergei Skripal and his daughter, two dozen Western countries expelled more than 150 Russian diplomats, including 60 from the U.S.

Russia responded with a similar number of diplomatic expulsions and ordered the closure of the American Consulate in St. Petersburg.

But the new measures are part of Congress’ anti-Russian plan despite President Trump’s personal efforts to forge warmer ties.  While the latest round of sanctions allows Trump to say he has been tougher on Vladimir Putin than any past American president, the truth is it’s an example of Congress at its best, with just five members...in both Houses...voting against the sanctions, Trump unable to block them, though he wanted to.

Britain praised the United States’ move: “The strong international response to the use of a chemical weapon on the streets of Salisbury sends an unequivocal message to Russia that its provocative, reckless behavior will not go unchallenged.”

The biggest impact of the latest U.S. sanctions is expected to come from a ban on granting licenses to export sensitive national security goods to Russia, which have included electronic devices and components, along with test and calibration equipment for avionics.

The new prohibitions go into effect on August 22, and a second, more painful round will kick in three months later unless Russia provides “reliable assurances” that it will not use chemical weapons in the future and agrees to “on-site inspections” by the UN – conditions unlikely to be accepted.

The U.S. already has sanctions in place against Russia, in retaliation for its annexation of Crimea and allegations of interference in the 2016 election.

Editorial / Wall Street Journal

“The U.S. determined under the Chemical and Biological Weapons Control and Warfare Elimination Act that Russia ‘used chemical or biological weapons in violation of international law.’  House Foreign Affairs Chairman Ed Royce (R-Calif.) has campaigned for this designation and deserves credit for prodding the Administration into action.

“The White House might have been reluctant to act because the 1991 law packs a punch – and doesn’t give the executive much wiggle room.  The law imposes mandatory sanctions on ‘exports of national security-sensitive goods and technology.’  If Russia doesn’t meet certain conditions...the law mandates further punishment, which could include export and import controls, a ban on Russian flights to the U.S. and a downgrade of diplomatic relations.

“The Salisbury attack has changed the attitude of the British public and Prime Minister Theresa May toward Russia, and the Kremlin’s disregard for the norms of spycraft (you don’t kill agents after they’re released in spy swaps) and civilized nations warrants U.S. support.  After the Helsinki summit when President Trump was so solicitous of Vladimir Putin, the new sanctions are also a useful message to Moscow that reckless behavior has costs.”

Michael Morell / Washington Post

“Putin is afraid of one thing. He is afraid that one day the Russian middle class will finally rebel against his regime and rush into the streets demanding change. It happened in Tunis, Cairo and other Middle Eastern and North African cities between 2010 and 2012, and it happened most alarmingly, from Putin’s perspective, four years ago in Kiev when Ukrainians threw out a government beholden to Moscow. Sanctions that bite at the heart of the Russian economy – sanctions that increase the risk that Russia’s middle class will become restive – will get Putin’s attention.

“The leaders that the United States has chosen, and the security experts they have appointed and confirmed, are aware of the threat. A failure to defend the nation as well as possible, and failure to impose severe costs on those attacking our democracy, would be seen by history as a major abdication of responsibility. The statements from intelligence officials at the White House last week were an excellent first step. 

“More steps, and stronger ones, are urgently needed.”

Venezuela: Six people were arrested for involvement in an apparent assassination attempt on President Nicolas Maduro last weekend.  The interior minister, Nestor Reverol, said they were part of a group that loaded two drones with explosives and set them off during a military parade in the capital Caracas.

Maduro has warned the perpetrators face “maximum punishment.”  He has blamed Colombia for the incident but provided no evidence.  Colombia said the accusation was “baseless.”

The government has also pointed the finger at the opposition, prompting fears of a new crackdown.  There are reported to be more than 200 political prisoners in the country’s jails, which I imagine are not like America’s Club Feds.

U.S. National Security Adviser John Bolton denied any U.S. involvement in the incident.

Curiously, two days later, government sympathizers rallied to show support for Maduro, but he surprised the crowd by skipping the event. [Picture Trump touting a rally in, say, Tampa, and not showing up...it wouldn’t look real good.]

Malaysia: France reopened the investigation into the fate of missing Malaysia Airlines Flight MH370 after Malaysia’s long-awaited ‘final report’ failed to provide an explanation for the aircraft’s disappearance.

French newspaper LeParisien reports that investigators are keen to verify data from Inmarsat – the British operator of a global satellite network – which tracked the aircraft’s pings to the southern Indian Ocean off Western Australia, where it is believed to have crashed.

Malaysia’s 449-page report into MH370’s disappearance, released on July 30, was universally condemned and sparked accusations by victims’ families of a cover-up at worst and incompetence at best.

They were particularly critical of the decision to rule out a sophisticated murder-suicide plot by the chief pilot, Captain Zaharie Shah, despite evidence showing someone intentionally disabled the plane’s communication systems before manually rerouting it.

Boeing has also been uncooperative in the investigation.  France has four victims of the crash, thus its interest, plus the lone large piece of debris was found on the French-owned island of Reunion in the Indian Ocean.

Random Musings

--Presidential tracking polls....

Gallup: 41% approve of President Trump, 54% disapprove (Aug. 5).  89% of Republicans approve, a figure that has consistently been between 85% and 90%.  But just 33% of Independents do, the lowest since April 22 and to me a big key to the midterms.
Rasmussen: 46% approval, 52% disapproval.

--House Democrats can take heart, at least morale wise, from the special election for Ohio’s 12th Congressional District in the northern Columbus suburbs, Tuesday, that wasn’t supposed to be competitive, but as I go to post is still too close to call between Democrat Danny O’Connor and Republican Troy Balderson.  This is a district that has been in Republican hands for 80 years (save for a single term in the 1980s) and voted for Trump by 11 points in 2016, but whether O’Connor wins or loses (after thousands of provisional ballots are counted), Democrats can take heart that at least some voters in Republican-leaning districts could be souring on Trump, and perhaps early talk of a blue wave that had been fading some of late, is back in play.

The winner will hold the seat for only five months, until January 2019, to serve out the term of Rep. Patrick Tiberi, who resigned last October to take a private-sector job.

But a victory will let the temporary congressman run as an incumbent in November’s midterm election, a significant advantage at the ballot box.

--President Trump endorsed conservative firebrand Kris Kobach, secretary of state in Kansas, over the current governor, and Republican incumbent, Jeff Colyer, and the race remains too close to call in this primary. 

--New York Republican Congressman Christopher Collins, who represents the Buffalo area, his son, Cameron, and the father of Cameron’s fiancée, were indicted for insider trading in the shares of an Australian biotech startup, Innate Immunotherapeutics Ltd., federal prosecutors in Manhattan unveiled on Wednesday.

Collins was on the board of Innate, one of its largest shareholders, and had access to nonpublic information about the company.  Prosecutors laid out the wrongdoing in great detail, including evidence that Collins was at the White House for a congressional picnic when he took a call from the company on a failed drug test, that allowed Collins to alert his son (who alerted others) to sell their shares before the dire news became public...the very essence of insider trading. It is so cut and dry from what was presented.  [The shares fell more than 92% when the bad news was released days later.]

Collins was the clear favorite to win this fall, and he announced Wednesday evening he was not stepping down and would fight the charges.  He last won by 34 points in 2016, with Trump winning Collins’ district by 25 points.

The National Republican Congressional Committee called the allegations against Mr. Collins “very serious charges.”

“We will let the facts come to light and trust the judicial system as we continue to assess his re-election campaign,” a spokesman for the NRCC said.  Collins’ Democratic opponent is an unknown, Nate McMurray, who now has a chance to capitalize on a gift just handed him.

Former Health and Human Services Secretary Tom Price was grilled during his confirmation hearing on whether he purchased shares in Innate after receiving a tip from Collins. Price said he never received information that could be considered a stock tip and denied any wrongdoing.  The share price rose as media reported on the men’s holdings in the Australian company.

--Editorial / Wall Street Journal

“Republicans on present trend are poised in November to lose their majority in the House of Representatives and a slew of governorships. That’s the clear message from Tuesday’s election contests and a growing body of evidence. The President’s persona is trumping positive policy results among voters, and without some intervening news or a change in strategy the result is likely to be a national left turn.

“Republicans appear to have won a narrow victory in the special House election in Ohio, with provisional and absentee ballots still to be counted.  But a win of less than 1% in a heavily Republican district is hardly a show of strength.  The Democratic share of the two-party vote surged as it has in every special election this year, while GOP State Senator Troy Balderson was crushed in Franklin County around Columbus by 2 to 1.

“The ominous news for Republicans is that they hold about 68 House seats that are less Republican than this Ohio district.  Most include stretches of suburbia that have been GOP strongholds but where many voters dislike Mr. Trump’s abrasive style and polarizing governance.  Democrats need to pick up 23 seats to regain the majority they lost in 2010, and three or four times as many seats could be in play in November.

“Further evidence came Tuesday in Washington State, where Republicans underperformed in two districts they currently hold. Cathy McMorris Rodgers, a member of the House leadership, barely led the top Democratic vote-getter in a jungle primary in her Spokane seat with 47.5%. She remains a modest favorite in the autumn, but the seven-term incumbent will have to spend heavily to win.

“As for the statehouses, Democrats won 137,000 more votes than Republicans in the primary for Governor. Michigan Attorney General Bill Schuette wrapped himself around Mr. Trump to defeat Lt. Gov. Brian Calley for the GOP nomination, but Mr. Trump’s approval rating in the state was 35% in the latest Marist poll.  Democrats nominated career politician Gretchen Whitmer over a leftist candidate favored by Bernie Sanders.  Lansing is now a prime Democratic pickup opportunity this fall despite the state’s stellar economic revival under Governor Rick Snyder.

“The same goes for Kansas, of all places, if Trump-endorsed Kris Kobach maintains his 191 vote lead [Ed. now 91] over Jeff Colyer in the GOP Governor’s race... Mr. Kobach will have to persuade Republicans in Johnson County in the Kansas City suburbs that he cares about more than deporting illegal immigrants.

“Tuesday’s results cast doubt on the current White House strategy to make the election a referendum on Donald J. Trump.  The President took credit late Tuesday for Mr. Balderson’s apparent Ohio victory, and perhaps his visit to the district Saturday evening motivated some GOP voters.  But his omnipresence also motivates Democrats, while it may de-motivate soft Republicans and independents who dislike Mr. Trump.

“Pollster Ed Goeas of the Tarrance Group says that his surveys show about 31% to 33% of voters are solidly in Mr. Trump’s camp.  Another 11% or so have some doubt about his persona but put a priority on his policies and their success so far. This explains the President’s approval rating of 44% or so.  But another 10% of voters like his results but emphasize his persona and thus disapprove of his job performance.

“This last group are the swing voters GOP candidates need in suburban districts to keep the House. They aren’t impressed by Mr. Trump’s name-calling, his brawls with the media or taunts of LeBron James.  They don’t like the debacle of family separations driven by immigration-enforcement obsessives inside the White House.

“Trade protectionism also doesn’t help among Republicans who work in large companies (and live in those swing districts) and are beginning to see the cost of tariffs.  GOP policy successes on the economy and taxes are drowned out by the Trump cacophony....

“Our sense is that Republican voters haven’t recognized how much jeopardy the party is in.  Many are content to listen only to their safe media spaces that repeat illusions about a ‘red wave’ and invoke 2016 when the media said Mr. Trump couldn’t win. Nearly all of the media does want Democrats to win again, and humility was one of the lessons we learned from the surprises of 2016.

“But that’s not an excuse for ignoring the evidence of GOP trouble.  Mr. Trump barely won in 2016 against the weakest Democratic candidate since Michael Dukakis, and Hillary isn’t on the ballot this year. Mr. Calley, who lost his Michigan primary for Governor, said Wednesday by way of explanation that ‘this is President Trump’s Republican Party.’  The question to be answered in November is whether it remains a majority governing party.”

--President Trump said at his dinner with business leaders in Bedminster on Tuesday that his administration was in contact with officials in California over wildfires burning in the state, this after the following tweet that he then repeated a few times over the week.

“California wildfires are being magnified & made so much worse by the bad environmental laws which aren’t allowing massive amounts of readily available water to be properly utilized.  It is being diverted into the Pacific Ocean.  Must also tree clear to stop fire from spreading!”

The fact is the availability of water is not an issue in the least for battling the fires.  Major reservoirs are near the worst fire zones and all are at or near their historical levels, as reported by the Los Angeles Times.

“There have been no issues getting water from them,” a spokesman for Cal Fire told the Times’ Michael Hiltzik.

But it is true water has been pumped into the valley at the expense of the river ecosystem and the state’s salmon fishery.

As to the “Must also tree clear to stop fire spreading!” there is a “truth nugget of the blind squirrel variety,” as Hiltzik put it.

“If Trump means ‘tree clear’ to mean more logging, then he’s merely putting his oar in for more commercial exploitation of the forests. If he means the construction of fire breaks to contain fires, that’s correct but it’s  a well understood technique and is exactly the technique being applied as a matter of course.

“If Trump means better forest management by consistent clearing of the underbrush that becomes tinder for wildfires, that’s true – but it’s not a novel concept. The suppression of smaller fires over the decades, in part to protect residences that have encroached into woodland, has increased the opportunities for bigger fires to take hold.

“But those policies fall within the jurisdiction of the federal government, as well as the state, since national forests and their environs are where much of the encroachment – the co-called wildland-urban interface – has taken place.  Among other factors, federal spending on fire suppression in the national forests has effectively subsidized the expansion of the interface, by taking the costs of fire control off the shoulders of the residents.

“But if Trump intends to address this factor, there’s no sign of it in any government policy statement. Its absence tells the story behind Trump’s fire tweet: He has no idea what’s causing the wildfires this season, no conception of how to fight them and no plan in place to alter the trend of more fires or more severity. Doing so means devoting attention to a complex problem that involves science, nature and government action. That can’t be accomplished via a Sunday night tweet.”

Editorial / Wall Street Journal

“Liberals exploit natural disasters – drought, hurricane, blizzard, you name it – to promote their anti-fossil fuels agenda.   Yet now they’re outraged that President Trump is daring to fight fire with fire by making a connection between California’s wildfires and destructive green policies.

“The President on Sunday tweeted that ‘bad environmental laws’ are magnifying California’s horrific wildfires by not ‘allowing massive amount of readily available water to be properly utilized.’  He added: ‘Tree clear to stop fire spreading!,’ and on Monday he complained that ‘vast amounts of water’ were being ‘diverted into the Pacific Ocean’ that could be used for ‘fires, farming and everything else.’

“As usual when Mr. Trump fires his scattergun, he hits deserving and undeserving targets. The state firefighting agency Cal Fire says it has plenty of water to battle the 16 or so large blazes that have broken out across the state in recent weeks... But every gallon of water used to extinguish fires won’t be available for Californians amid a severe water shortage, which has been exacerbated by wasteful environmental policies....

“Governor Jerry Brown keeps lecturing Californians that they need to adapt to a new ‘climate normal,’ yet the state government has done little to prepare for warmer and drier times if that is the future.  Lawmakers instead have subordinated fire prevention to pleasing the green lobby.

“Nearly 130 million trees in the state have died from drought, providing fuel for fast-spreading fires, and about half of the state’s 33 million acres of forestland need restoration.  The Little Hoover Commission, an independent state oversight agency, explained in a February report that ‘a century of fire suppression remains firmly entrenched within federal and state firefighting agencies and has left forest floors deep in flammable groundcover.’...

“Another challenge is state politicians who’d rather spend money on green pork. This year the Democratic legislature appropriated a mere $30 million of cap-and-trade revenues for fuel reductions on 60,000 acres of forest land. They allocated $335 million for electric vehicle subsidies.  Democrats have also spent billions on high-speed rail, but only this year did they get around to appropriating $101 million to replace a dozen or so Vietnam War-era helicopters unequipped with modern technology that enables night-flying for fire-fighting.

“Imagine the damage that could have been averted – and lives saved – if the state had replaced the antiques earlier and cleared millions of dead trees in lieu of building the train whose costs are careening toward $100 billion and may never be finished. But instead of examining their own priorities, the state’s’ politicians will blame the damaging fires on climate change and Donald Trump.”

--Michael Gerson / Washington Post

“In November, many Republican leaners and independents will face a difficult decision.  The national Democratic Party under Nancy Pelosi and Charles E. Schumer doesn’t share their views or values. But President Trump is a rolling disaster of mendacity, corruption and prejudice. What should they do?

“They should vote Democratic in their House race, no matter who the Democrats put forward. And they should vote Republican in Senate races with mainstream candidates (unlike, say, Corey Stewart in Virginia).

“Why vote strategically in this case? Because American politics is in the midst of an emergency.

“If Democrats gain control of the House but not the Senate, they will be a check on the president without becoming a threat to his best policies (from a Republican perspective) or able to enact their worst policies. The tax cut will stand. The Senate will still approve conservative judges. But the House will conduct real oversight hearings and expose both Russian influence and administration corruption. Under Republican control, important committees – such as Chairman Devin Nunes’ House Intelligence Committee – have become scraping, sniveling, panting and pathetic tools of the executive branch.  Only Democratic control can drain this particular swamp.

“Alternatively: If Republicans retain control of the House in November, Trump will (correctly) claim victory and vindication. He will have beaten the political performances of Bill Clinton and Barack Obama in their first midterms. He will have proved the electoral value of racial and ethnic stereotyping. He will have demonstrated the effectiveness of circuslike distraction. He will have shown the political power of bold, constant, uncorrected lies. And he will gain many more enablers and imitators.

“Perhaps worst of all, a victorious Trump will complete his takeover of the Republican Party (which is already far along). Ever murmured dissent will be silenced. The GOP will be fully committed to a 2020 presidential campaign conducted in the spirit of George C. Wallace – a campaign of racial division, of rural/urban division, of religious division, of party division that metastasizes into mutual contempt.”

Personally, I am still going to vote for my Republican representative, Congressman Leonard Lance, but I agree with Gerson’s thoughts on 2020.

--Ellis Close / USA TODAY

“A year ago, it seemed unfathomable: an American president defiantly defending ‘very fine people on both sides’ of neo-Nazism; an American president suggesting moral equivalency between fighting for racial equality and championing white supremacy.

“To be fair, President Donald Trump was making a somewhat subtler point.  In his colloquy with the press, he was not calling neo-Nazis great folks but arguing that many of the Confederate-statue-loving protesters in Charlottesville, Virginia, were not neo-Nazis at all. Somehow, these ‘fine people’ got mixed in with white supremacists shouting, ‘Jews will not replace us,’ and never noticed their compatriots were not fine people, too.

“As for Heather Heyer, the 32-year-old idealist plowed down and killed in Charlottesville by a 21-year-old driver said to idolize Adolf Hitler, Trump tweeted on Aug. 16: ‘Memorial service today for beautiful and incredible Heather Heyer, a truly special young woman.  She will be long remembered by all!’

“More than a year-and-a-half into the Trump presidency, many have accepted the reality that Trump is unlike any U.S. president previously seen, that he wallows in divisive rhetoric and tolerates odious behavior because he so often indulges in it.

“His recent assault on LeBron James as stupid and CNN host Don Lemon as stupider (‘low IQ’ is his go-to insult for blacks) is par for the course. It’s impossible, at this point, to be surprised by boorish behavior in someone who consistently acts like a boob.  The trap – and one that Trump could easily lead us into – is to start thinking such behavior is not just normal for Trump but normal.

“In his press availability addressing Charlottesville last year, Trump was asked whether race relations had gotten worse. He replied that they were ‘better or the same,’ but added, ‘They have been frayed for a long time.’  In other words, although he predicted race relations would improve, he emphasized how fraught and ‘frayed’ they were. Who could blame him if they stayed that way – or got worse? Despite promising racial harmony through job creation, he was betting the opposite.

“Indeed, his political career was built on betting the opposite.  It effectively began with birtherism, blossomed with talk of Mexican rapists and Muslim terrorists, and flourished with allusions to gang-bangers spilling over the border.

“At a recent rally in Tampa, Florida, he fired up the crowd by ridiculing Democrats’ desire for ‘open borders, which equals massive crime.’ They ‘want to let MS-13 rule our country,’ he declared, adding, ‘Every day the brave men and women of ICE are liberating communities and towns from savage gangs like MS-13 that are occupying our country like another nation would.’

“Benjamin Wittes, editor in chief of the Lawfare blog, spent more than a year chasing down one of Trump’s statistics.  In a speech before Congress in February 2017, Trump cited a Justice Department study showing ‘the vast majority of individuals convicted of terrorism and terrorism-related offenses since 9/11 came here from outside of our country.’  After repeated requests for information from the Justice Department, Wittes concluded that the president was lying. Justice never generated such a statistic.

“Nor, as fact-checkers have confirmed, is there evidence of Immigration and Customs Enforcement liberating towns across America from savage, immigrant gangs.

“Such falsehoods have a transparent purpose – one aligned with neo-Nazi propaganda. They are designed to make us believe that hatred, suspicion and dread of marginalized populations is not just normal but noble....

“In 2009, I visited Rwanda and talked to men who had participated in the attempted genocide 15 years earlier, many of whom were in prison. Why, I asked, had they tortured and killed their Tutsi neighbors? Some refused to give a direct answer.

“Others claimed they were wrongly accused. But the typical response among those who answered was that they thought they were doing what the state wanted them to do. They thought they were doing good.  They thought they were performing a service by ridding the world of people the government called ‘cockroaches.’

“Thank God we have gotten nowhere near that point in America – yet – although one could argue that putting immigrant children considered part of an infestation in cages is a step in that direction.”

--The Puerto Rican government acknowledged in a document filed to Congress Wednesday that the death toll from Hurricane Maria last year may have exceeded 1,400, though the official count stands at 64.

The administration of Gov. Ricardo Rossello has faced criticism that it severely undercounted the number of fatalities stemming from the storm, with other studies by academic researchers and news organizations coming up with figures in excess of 4,000.

Based on the government’s new findings, “there were 1,427 more deaths in the four months after the hurricanes than normal (based on the previous four years).”

--As reported by Betsy McKay of the Wall Street Journal: “About one in seven children born to women with Zika in U.S. territories had serious health problems linked to the mosquito-borne virus, such as brain damage or impaired vision, federal public-health researchers reported Tuesday.

“Many of the health issues emerged in children who appeared healthy at birth, suggesting just how heavy the virus’s long-term toll is, according to the Centers for Disease Control and Prevention researchers.

“The study...roughly two years after the Zika epidemic swept through the Americas, is the largest to date on the disease’s long-term impact, the agency said.

“The findings also confirm the fears of medical experts about Zika’s toll on children....

“The results ‘could be an underestimate’ of Zika’s impact because many children born to mothers infected with Zika haven’t had follow-up medical care reported...

“A recent CDC study of 7- and 8-year-olds born with birth defects to women infected with Zika in Cambodia found the children required extensive care.... Identifying problems early is critical so that the children can get physical therapy or other care to help them manage or lessen the symptoms....

“The new CDC study included 1,450 babies in the agency’s U.S. Zika Pregnancy and Infant Registry, who were at least one year old by Feb. 1, 2018 and had received some follow-up care after birth.

Of them, 203, or 14%, had either a Zika-associated birth defect, or neurological problems affecting children’s ability to see, hear or move their arms and legs that appeared after birth – or both....

“While Zika isn’t causing the huge epidemic that it did in 2016, and local transmission of the virus hasn’t been identified in the U.S. since 2017, the CDC said, Zika continues to spread at low levels and poses a risk to pregnant women who live in or travel to nearly 100 countries and territories.”

--In Chicago last weekend, at least 72 people were shot, including 12 fatally, with a 13th homicide uncovered later...a woman found dead in a bathtub with her hands and feet bound.

This comes after Chicago had actually seen an improvement in the murder rate through July, down 23% compared with the same point last year (though the total was still over 300 – more than any other U.S. city).

A huge problem not just in Chicago but around the country is very few murder cases are being solved (cleared) in the big cities.  Baltimore, Chicago and New Orleans, for example, only clear about 25% of their homicides.  There was a story in USA Today, for example, that in one case last September in Indianapolis, where the murder rate has surged, Indianapolis Police said that 10 young people were present when 13-year-old Matthew McGee was gunned down in the parking lot of a fast food restaurant.  No one spoke up.  That’s sick.

--Finally, with just four weeks left before the 2018 pageant gets underway in Atlantic City, a group of 11 former Miss America titleholders have issued a letter calling for the immediate resignation of Gretchen Carlson, chairwoman of the pageant’s board of trustees, along with pageant CEO Regina Hopper.

“We insist that our current Chairwoman and CEO resign now, not after September 9 (the date of the pageant),” the letter says.

In June, Carlson (ex-of Fox News and a leader of the #MeToo movement) announced that Miss America would no longer be judging contestants – she now calls them “candidates” – on physical appearance.  Those competing for the crown would not be required to wear bathing suits and heels.

I’ve previously expressed my opinion. Carlson should go.

---

Golf $1219
Oil $67.75

Returns for the week 8/6-8/10

Dow Jones  -0.8%  [25313]
S&P 500  -0.3%  [2873]
S&P MidCap  -0.2%
Russell 2000  +0.8%
Nasdaq  +0.4%  [7839]

Returns for the period 1/1/18-8/10/18

Dow Jones  +2.4%
S&P 500  +6.0%
S&P MidCap  +5.0%
Russell 2000  +9.9%
Nasdaq  +13.6%

Bulls 54.9
Bears 18.6

Have a great week.

Brian Trumbore



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Week in Review

08/11/2018

For the week 8/6-8/10

[Posted 11:30 PM ET]

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

Special thanks to Bob P.

Edition 1,009

Trump World

Frankly, there is an unbelievable amount of information below in what is without a doubt my longest column ever. And I have other items that lie on the cutting room floor. There is everything here from Turkey to Tesla.

But in a little over three weeks we will be at Labor Day and the official beginning of the mad dash to the midterm elections.

Imagine if President Trump had taken office in January 2017 and just chilled out after a presidential campaign that left bodies strewn on the pavement and debate stages.  He has a great story to tell, focusing on the economy.  His approval rating, across the board, should be 55%+.  All he had to do was act even somewhat presidential and stay off Twitter.

But of course the Great Divider didn’t, and, incredibly, despite strong growth and decades low, if not record low, unemployment figures, it’s clear after this week’s primary results that the “stable genius” and the Republican Party have their work cut out for them to maintain both chambers in Congress.

We’ve learned you can’t stop the president, but Republican leaders Trump respects must jack him up against the wall about three weeks before November and tell him to cut the crap.

I couldn’t help but say this after his blatantly racist tweet blasting LeBron James and Don Lemon last Friday after I went to post.  There are still a lot of key voters on the fence who acknowledge the good that has happened in this administration, but can’t stand the messenger.  They will go either way at the last minute.  The economic numbers will remain strong these final months, but in so many districts across the country, such as Ohio-12, one screw-up could spell the difference between Republicans keeping the House and Democrats taking it back.

And as for Trump’s foil, the “Fake News,” of which he has said on occasion: “When I say it they can’t say anything against it,” this is one scribe who will continue to tell the truth, on all topics.  I’ll give the facts, often having ‘waited 24 hours’ to accumulate them, and I’ll give an opinion based on one helluva lifetime of experience... from Wall Street to Main Street...from the Bekaa Valley to Red Square.

In the meantime, I hope you can enjoy the rest of your summer.  Fall could truly suck.

Trumpets....

--Trump tweet Saturday morning that rocked the political establishment.

“Fake News reporting, a complete fabrication, that I am concerned about the meeting my wonderful son, Donald, had in Trump Tower.  This was a meeting to get information on an opponent, totally legal and done all the time in politics – and it went nowhere.  I did not know about it!”

Trump had fallen into a trap of the Washington Post’s making, the Post reporting that although the president doesn’t think Don Jr. intentionally broke the law with the meeting, he is worried that Trump Jr. may have unintentionally stumbled into legal jeopardy.

President Trump on Sunday then offered his most definitive and clear public acknowledgement that Donnie Jr. met with a Kremlin-aligned lawyer at Trump Tower during the 2016 campaign to “get information on an opponent.”

It’s against the law for U.S. campaigns to receive items of value from foreigners, and it’s why special counsel Robert Mueller III’s Russia investigation would appear to be so focused on it.

Yes, as the president and Rudy Giuliani et al now constantly say, “collusion” is not mentioned in U.S. criminal statutes, but Mueller is investigating whether anyone associated with Trump was entering a conspiracy to break the law, including through cyberhacking or interfering with the election.

Trump attorney Jay Sekulow asked on ABC’s “This Week” Sunday, “The question is: How would it be illegal?”

Trump’s tweet, however, conflicts with Trump Jr.’s statement in July 2017 that the meeting with the Russian lawyer and others was “primarily” about the issue of adoption of Russian children by Americans.  It then escalated from there.

The president wrote something similar to what he did last weekend in July 2017.

“Most politicians would have gone to a meeting like the one Don jr attended in order to get info on an opponent. That’s politics!”

And you know the rest...the “dictated” statement by Trump etc., which the president’s attorneys at first denied, but months later, in a letter to Mueller, agreed the president had, in fact, been the author of Don Jr.’s initial statement.

--Trump tweet on Sunday: “The Fake News hates me saying that they are the Enemy of the People only because they know it’s TRUE. I am providing a great service by explaining this to the American People. They purposely cause great division & distrust. They can also cause War! They are very dangerous & sick!”

National Security Adviser John Bolton was then questioned by Fox News’ Chris Wallace shortly thereafter.

“What wars have we started?” Wallace asked Bolton on “Fox News Sunday.”

Bolton failed to answer that question directly and attempted to redirect the conversation, saying that “the issue of press bias has been around for a long, long time.”

“There is press bias,” Wallace interrupted.  “People get stories wrong, and people are called out for it. And we should be called out if we make a mistake.”

But then, citing the language in Trump’s tweet, Wallace said, “ ‘Cause war,’ ‘sick,’ ‘divisive’ – this is taking it to a completely different level.”

But Bolton continued to defend Trump’s repeated attacks on the media and journalists.

“That’s the president’s view based on the attacks that the media made on him,” Bolton said.  “There have been other administrations that have been highly critical of the press.”

--In a speech at the Pentagon on Thursday, Vice President Mike Pence laid out the administration’s plan to create a military command dedicated to space that will eventually lead to the establishment of a “Space Force” as the sixth branch of the U.S. military.

Pence warned of the advancements that potential adversaries (read Russia and China) are making in this arena and issued a call to arms to preserve the military’s dominance in space.

“Just as we’ve done in ages past, the United States will meet the emerging threats on this new battlefield,” he said. “The time has come to establish the United States Space Force.”

The Space Force would be tasked with defending space, the way the Pentagon’s Pacific Command oversees the ocean.

Now this is a popular theme at President Trump’s rallies, but the Air Force has already been working on this for decades, and some within the military and national security apparatus fiercely oppose the creation of a sixth branch of the military...and a new bureaucracy.

For starters the White House has pushed for Congress to invest an additional $8 billion in national security space systems over the next five years.

Last year, Defense Secretary Jim Mattis told Sen. John McCain he opposed “the creation of a new military service and additional organizational layers at a time when we are focused on reducing overhead and integrating joint warfighting functions.”

But Thursday, Mattis was the good soldier, offering his full support.

No one has ever said space isn’t vital.  We rely on satellites for everything, including missile-defense warnings, guiding precision munitions and providing communications and reconnaissance.  And as China has already demonstrated, it has the ability to hit satellites in a much deeper orbit where the U.S. has many of its most sensitive assets.  It’s just how best to defend them and is a sixth branch needed.

--The bank and tax fraud trial of former Trump campaign chairman Paul Manafort was abruptly recessed Friday morning, casting doubt that the government would be able to wrap up its case by day’s end...and it didn’t.  On to Monday.

U.S. District Judge T.S. Ellis III, who is really a very strange guy, huddled privately with prosecutors and defense lawyers at the bench for most of the morning, then excused the jury at 1:45 p.m., and did not reveal the reason for the delay when the trial reconvened later.

Before adjourning, Ellis offered an unusually emphatic instruction to the jurors that they should not discuss the case with others or among themselves until all the evidence was in.

Ellis also reminded the panel that Manafort, who was seated at the defense table, is presumed innocent of the 18 criminal counts lodged against him.

Some of the witnesses the prosecution planned to call before wrapping it up were expected to provide testimony about the terms of a disputed 2016 loan from a Chicago bank, which I get a kick out of because every freakin’ night, when discussing the Manafort trial, Sean Hannity says it’s a case about tax and bank fraud from 2005!  Sorry, Sean, it gets closer to today than that.

Beyond this, I have little to say.  In the trial we’ve had an IRS agent reveal Manafort had at least $16 million in unreported taxable business income over four years.  IRS agent Michael Welch said Manafort received $15.5 million from Ukraine which he then used to pay for clothes, homes and landscaping between 2010 and 2014.

In addition to the unreported income, Welch said that Manafort listed dubious business expenses such as 132,000 euros to a yacht company, $49,000 for an Italian villa rental, $45,000 for cosmetic dentistry and $19,800 for a riding academy, as reported by the Washington Post.

Meanwhile, Manafort’s protégé Rick Gates wrapped up his three days of testimony after admitting he lied, committed crimes with Manafort, stole money from the boss and cheated multiple times on his wife.

Otherwise, if you want more details, read the Washington Post.

--More Trump tweets: “This is an illegally brought Rigged Witch Hunt run by people who are totally corrupt and/or conflicted. It was started and paid for by Crooked Hillary and the Democrats.  Phony Dossier, FISA disgrace and so many lying and dishonest people already fired. 17 Angry Dems?  Stay tuned.”

“As long as I campaign and/or support Senate and House candidates (within reason), they will win!  I LOVE the people, & they certainly seem to like the job I’m doing. If I find the time, in between China, Iran, the Economy and much more, which I must, we will have a giant Red Wave!”

“The Republicans have now won 8 out of 9 House Seats, yet if you listen to the Fake News Media you would think we are being clobbered. Why can’t they play it straight, so unfair to the Republican Party and in particular, your favorite President!”

“Thank you to Kanye West and the fact that he is willing to tell the TRUTH. One new and great FACT – African American unemployment is the lowest ever recorded in the history of our Country. So honored by this. Thank you Kanye for your support. It is making a big difference!”

[Beyond pathetic]

“The NFL players are at it again – taking a knee when they should be standing proudly for the National Anthem. Numerous players, from different teams, wanted to show their ‘outrage’ at something that most of them are unable to define. They make a fortune doing what they love...

“...Be happy, be cool!  A football game, that fans are paying soooo much money to watch and enjoy, is not place to protest.  Most of that money goes to the players anyway.  Find another way to protest. Stand proudly for your National Anthem or be Suspended Without Pay!”

--According to a report from Politico’s Annie Karni on the dinner Trump had with 13 CEOs and senior White House staff in Bedminster, N.J., on Tuesday, Trump spent most of the time railing about China, including at one point saying of an unnamed country that the attendee said was clearly China, “almost every student that comes over to this country is a spy.”

--Daniel Henninger / Wall Street Journal

“It is no doubt true that Mr. Trump, with his insistently constant public presence, has disrupted the already weak standard model of America’s political parties as arbiters of candidates and ideas.

“If so, we shouldn’t let Mr. Trump’s feud with Charles and David Koch get flushed like so many others. It was a significant event.

“In an interview, Charles Koch said trade wars and prosperity were incompatible and that his organization’s financial support wouldn’t depend on party affiliation.

“This prompted the Trump Twitter ICBM to launch on warning, because naturally Mr. Trump took Mr. Koch’s opinion as a personal insult and threat.  Professional Republicans cracked back because the Koch network, considered conservative, made clear its support would transcend party affiliation, for example praising North Dakota’s Democratic Sen. Heidi Heitkamp on financial deregulation.

“This goes down hard in the trenches. Democrats like Sen. Heitkamp are marginalized outliers in a party wholly at odds with the Koch-backed advocacy group Americans for Prosperity. On the left, nothing like these Koch party-crossings is imaginable.

“That said, the Koch feud is a portent of more fractures in the party system.  Mr. Trump tried to dismiss the Kochs as ‘a total joke in real Republican circles.’ One has to ask: What exactly are ‘real Republican circles’?  Or for that matter, real Democratic circles?

“The Trump camp has taken to insisting that Mr. Trump personally embodies both the Republican Party and conservatism.  The only people largely forced to opt in to this choice are elected Republican politicians.  But what about anyone else who self-identifies as a right-of-center voter?....

“Independent and ideological groups are increasingly setting norms for party-affiliated politicians, not the other way around. The parties look more and more like inert vessels or financial institutions....

“The traditional parties provided stability and predictability, a comfort level. Their competitors – from Trumpism to Netroots – now offer instability and perhaps a period of chaos. Some would call this healthy democratic ferment. Others may doubt the health benefits.

“If it is Donald Trump’s strategy to suck all the political oxygen out of the room and choke off his competitors, many voters will be driven elsewhere to get air. Amid major disruption, anything’s possible. It may be that Democrats are drifting left toward Alexandria Ocasio-Cortez, but it’s not beyond imagining that a Mike Bloomberg could emerge as a liberal opt-out version of Charles Koch.

“One encounters conservative and even liberal voters who say they couldn’t get enough of politics in 2016, but now they’ve largely tuned out. They are Never Trumpers. They’ve become Fair Weather Tumpers who like some of the policy results but can’t stand the daily hailstorms. Troy Balderson’s near-death experience (see below) after his formerly safe Ohio House race was ‘nationalized’ suggests that nonvoting Fair Weather Trumpers are a bad omen for the Republicans.

“Beyond a likely GOP loss of the House, what lies ahead isn’t clear. This is Donald Trump’s ultimate disruption: an American electorate in a state of constant agitation and flux. Some voters will tie themselves to the Trump mast and ride it out. But Charles and David Koch aren’t a joke, That feud was a warning shot.”

--Late last Friday night, President Trump tweeted: “Lebron James was just interviewed by the dumbest man on television, Don Lemon. He made Lebron look smart, which isn’t easy to do. I like Mike!”

This last part alluding to Michael Jordan and his old ad campaign.  Jordan quickly jumped to James’ defense.

“I support LeBron James. He’s doing an amazing job for his community,” Jordan said in a statement to the Associated Press.

Scores of other athletes rushed to LeBron’s defense.

James had just opened up a school for underprivileged children in his hometown of Akron, which was part of the discussion with Don Lemon.  Every student at the “I Promise” school receives free tuition, as well as free food, a uniform and even a free bike.

In the interview, James said he “would never sit across” from Trump, though he would talk to former President Barack Obama.  Clearly, that set Trump off.

Ohio Gov. John Kasich, a critic of Trump at times, tweeted: “Rather than criticizing #KingJames, we should be celebrating him for his charity work and efforts to help kids.”

Michael Powell / New York Times

“There was a breathtaking quality to this attack, and not just because white men demeaning the intelligence of black people is one of the oldest and ugliest tropes in American history.”

Melania Trump, though, praised LeBron and spoke of her desire to visit his I Promise school.

The next day, Saturday, Trump attended a political rally in Ohio and skipped over James.

Wall Street and Trade

A survey of economists by the Wall Street Journal has them raising their 2018 growth projections after a strong second quarter, but disputes with U.S. trading partners, a fading boost from fiscal stimulus and rising interest rates are cause for a more cautious outlook in 2019 and beyond.

The average estimate for economic growth this year increased to 3%, up from 2.4% a year ago, with the unemployment rate falling to 3.6% by next June, which would be the lowest rate in nearly 50 years.  [It was 3.9% in July.]

Consumer spending and business investment have been leading the way, and this will continue, it’s just the benefits from the stimulus will begin to fade and if the trade situation deteriorates further the effects will be decidedly negative. The biggest immediate impact is on business confidence, which is hardly conducive to increased capital spending.

The average forecast for growth in 2019 is 2.4%.  The White House has said 3% or better growth can be sustained, and maintaining the level is necessary to help the economy begin to grow out of looming trillion-dollar budget deficits.

The wild card when talking about the domestic economy is the Fed and inflation.  On this the Fed got a break with tame inflation data the past few days. The producer price index was unchanged, when a rise of 0.3% was forecast, 0.1% ex-food and energy, with the numbers being 3.3% and 2.7%, respectively, year over year.  Consumer prices for last month rose as expected 0.2%, ditto on core, with the year-over-year numbers being 2.9%, 2.4% ex-the things we use.

But late in the week the focus was overseas as the diplomatic spat between the United States and Turkey (described further below) led to the Turkish lira losing more than 20% over the week as international markets soured on the country’s capacity to repay its foreign-currency debts, with the European Central Bank examining the Turkish exposure of several Euro banks, the shares of which fell sharply on Friday.

President Trump tweeted Friday morning: “I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar!  Aluminum will now be 20% and Steel 50%.  Our relations with Turkey are not good at this time!”

Turkey’s foreign exchange reserves are minimal, which could prompt a bailout from the International Monetary Fund, which would come only with the IMF’s strict demands.  This story could be just boiling over after simmering for a while.

On the trade front more broadly...first, some further tweets from the president this week:

“Tariffs are working far better than anyone ever anticipated.  China market has dropped 27% in last 4 months, and they are talking to us.  Our market is stronger than ever, and will go up dramatically when these horrible Trade Deals are successfully renegotiated.  America First....”

“...Tariffs will make our country much richer than it is today.  Only fools would disagree.  We are using them to negotiate fair trade deals and, if countries are still unwilling to negotiate, they will pay us vast sums of money in the form of Tariffs. We win either way....”

“....China, which is for the first time doing poorly against us, is spending a fortune on ads and P.R. trying to convince and scare our politicians to fight me on Tariffs – because they are really hurting their economy.  Likewise other countries. We are Winning, but must be strong!”

“....Tariffs have had a tremendous positive impact on our Steel Industry.  Plants are opening all over the U.S., Steelworkers are working again, and big dollars are flowing into our Treasury.  Other countries use Tariffs against, but when we use them, foolish people scream!”

“Tariffs are working big time.  Every country on earth wants to take wealth out of the U.S., always to our detriment.  I say, as they come, Tax them.  If they don’t want to be taxed, let them make or build the product in the U.S.  In either event, it means jobs and great wealth....

“Because of Tariffs we will be able to start paying down large amounts of the $21 Trillion in debt that has been accumulated, much by the Obama Administration, while at the same time reducing taxes for our people. At minimum, we will make much better Trade Deals for our country!”

Much of the above are outright lies and distortions.  Speaking of this last one and paying down the debt, U.S. Treasury data released this afternoon showed the budget deficit widened to $76.6 billion last month from a gap of $42.9 billion in July 2017.

And this one Friday night: “Deal with Mexico is coming along nicely. Autoworkers and farmers must be taken care of or there will be no deal. New President of Mexico has been an absolute gentleman. Canada  must wait. Their Tariffs and Trade Barriers are far too high. Will tax cars if we can’t make a deal!”

Time is running out for a resolution of negotiations over the North American Free Trade Agreement, with the players recognizing the need to wrap up a new deal by December, when Mexico’s new president is inaugurated, which could muck things up. And the administration continues to impose new tariffs and consider imposing others on autos and auto parts, though we’ll see how negotiations go with the European Union.

In the battle with China, the U.S. said on Tuesday it will start collecting tariffs on $16bn of Chinese imports on Aug. 23, releasing a final list of 279 products that will be subject to 25 percent tariffs, following on from the first batch of tariffs on $34bn of Chinese imports imposed in July.

On Friday, Beijing threatened to impose new tariffs on $60bn worth of imports from the U.S. after the Trump administration proposed raising threatened tariffs on $200bn to 25 percent from an original plan of 10 percent.

Chinese state media on Monday lashed out at the policies of Donald Trump, accusing him of “starring in his own carefully orchestrated street fighter-style deceitful drama.”  Trump’s wish for others to play along with his drama is “wishful thinking,” the People’s Daily newspaper said in an editorial.

Top U.S. and Japanese trade officials said they better understood each other’s positions after talks on Thursday, while Tokyo appeared to stick to its stance of avoiding a bilateral tree-trade agreement.  “We had a frank exchange of views and deepened mutual understanding,” Economy Minister Toshimitsu Motegi told reporters after several hours of meeting with U.S. Trade Representative Robert Lighthizer.

Tokyo is looking to avoid a bilateral free-trade agreement – which Lighthizer has called for in the past – where it could come under pressure over access to its auto and agricultural markets.

Trump’s threats to impose higher tariffs on auto imports, including those from Japan, raised concerns such a step would harm both economies.

As for the impact to date of the trade issue on the U.S. economy, there is plenty of anecdotal evidence across the country of real pain in certain sectors, it’s just not widespread enough to warrant headlines on the network newscasts...yet.  Let’s hope it stays that way.  Nonetheless....

Editorial / Wall Street Journal

“America lost more than three-fourths of its textile-mill jobs between 1991 and 2016.  ‘One of my main objectives was to bring those opportunities back,’ says Gary Heiman, president and CEO of Cincinnati-based Standard Textile.  Mr. Heiman has succeeded, creating around 400 jobs in two Southern towns, but now the Trump tariffs are threatening to drive those jobs back overseas.  That’s the opposite of what Mr. Trump claims is happening due to his tariffs.

“Standard Textile specializes in making sheets, towels and other reusable fabric products for hospitals and hotels.  Since 2002 the company has invested some $66 million in American manufacturing facilities and equipment in Union, S.C., and Thomaston, Ga.

“Workers don’t need a college degree, and Standard Textile provides on-the-job training for anyone who shows the right attitude and aptitude to work.  Employees earn an average of $44,000 a year in salary and benefits – well above the median household income of $35,000 in Union and $27,500 in Thomaston.

“A raw fabric known as greige is Standard Textile’s main input, and the company buys about $30 million worth from China each year. Workers at the Union facility scour, bleach, dye and finish the cotton material, sending rolls of the fabric to Thomaston for cutting, sewing and packaging. But in July the Trump Administration proposed raising tariffs by 10% on $200 billon of Chinese goods – greige included.  On Aug. 1 President Trump directed the U.S. Trade Representative to lift the tariff to 25%.

“That increase would put Standard Textile at a major disadvantage against foreign competition. The company paid $2.9 million in duties for greige last year, and this would add up to $7.5 million more to its manufacturing costs. Finished textiles made by Chinese workers would continue to face the old tariff of 6.7%.

“Mr. Heiman says the increased tariffs on greige would be such a burden that it could force him to shut down some of his American manufacturing plants, lay off hundreds of workers, and move operations overseas.

“Mr. Trump won a majority of votes in Union and Thomaston in 2016. Russ Ogle, a plant manager at Standard Textile’s Union facility, says the president’s proposed tariffs have left his workers feeling bewildered.  ‘The mantra for the Trump election, the promises, were bring back jobs to the United States, and particularly, manufacturing jobs,’ Mr. Ogle says, adding:

“ ‘We’re here trying to fight the battle, to be competitive against lower-wage-paying countries around the world.  And this tariff and its possible consequences would be devastating – absolutely devastating.  Not only the loss of income, but the senselessness of it.  This policy creates an unfair advantage for companies that are sourcing finished products from overseas at the expense of American manufacturers and jobs. We aren’t asking for any handouts, just a level playing field.’

“Hundreds of companies are asking similar questions as they cope with the harmful consequences of his tariffs that Donald Trump doesn’t like to talk about.”

One other quick one...from Bob Tita of the Wall Street Journal:

“The largest U.S. aluminum maker wants an exemption from tariffs designed to bolster domestic metal production.

“Alcoa Corp. on Monday asked the Trump administration for an exemption from tariffs on aluminum imported from Canada, where the company makes a raw form of the metal that it rolls into sheet for beverage cans at a U.S. plant.

“Some smelting lines have since restarted in the U.S. since the Trump administration imposed a 10% duty on imported aluminum in March. But Pittsburgh-based Alcoa said it can’t find enough specialty aluminum alloys for beverage cans in the U.S.

“ ‘Even if all the curtailed smelting capacity in the U.S. was back online and producing metal, the United States would still need to import the majority of its aluminum,’ said Tim Reyes, president of Alcoa’s aluminum business.

“Alcoa operates three smelting plants in Canada that supply Alcoa operations and customers in the U.S.

“U.S. companies have filed thousands of tariff-exclusion requests since the tariffs on steel and aluminum began this spring.  Most use specialized metals or components that aren’t readily available in the U.S.  The aluminum tariff has snarled production of aluminum parts and products in recent months because most of the aluminum consumed by U.S. manufacturers is imported or remelted scrap....

“Alcoa is the largest producer of raw aluminum in the U.S., but the U.S. accounted for only 14% of the aluminum Alcoa produced globally last year.”

Editorial / Wall Street Journal

“Tariffs are taxes, which distort investment and limit growth. And like taxes, when tariffs are high they create a political incentive for exemptions and favoritism. Behold the Commerce Department’s new and tortuous process for reviewing exemptions to steel and aluminum tariffs. This is everything Republicans typically claim to hate...

“Commerce has granted more than 1,300 steel exemptions – about twice as many as it has rejected – but it has yet to approve a request challenged by U.S. Steel, Nucor or AK Steel Holding Corp., which have the ear of Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer.

“Domestic steel manufacturers say that they have the capacity to produce the steel products that are being imported.  But as California Steel Industries noted in its exemption request, domestic mills ‘can and do choke off the supply of slab and thus can largely eliminate the competition.’

“Turkish steel-pipe manufacturer Borusan Mannesmann had pledged to invest up to $75 million in expanding production in Texas if it won an exemption. The new factory would have allowed the company to produce the products it now imports. But Commerce rejected its applications after U.S. Steel and a domestic tube manufacturer complained that the imports would endanger ‘the precarious U.S. industry situation.’....

“This Commerce mess illustrates that in addition to the harm tariffs do economically, they also create new opportunities for crony capitalism and corruption. Far from draining the swamp, tariffs feed the swamp.”

Europe and Asia

There were no broad economic data points for the eurozone this week, but the European Central Bank said the eurozone’s jobs recovery looks set to play an increasingly important role in keeping growth in the region on track as export trade slows.

“Private consumption has clearly recovered from the losses during the financial crisis,” a paper from the ECB notes.  “This has been largely driven by the recovery in the labor market, even though unemployment in some countries and some groups of workers remains higher than before the crisis.”

The U.K. released its report on second quarter GDP and the economy expanded by 0.4 percent, bouncing back from 0.2 percent in the first, according to the Office for National Statistics.  Retail sales and construction spending was a little better than expected, but trade tensions may have restricted growth from being stronger, as the production of cars, electronics and metal all fell during the three-month period.

The service sector expanded by 0.5 percent during Q2 and construction grew by 0.9 percent, even as manufacturing contracted 0.9 percent.

The service sector accounts for 80 percent of the U.K. economy, while construction is 6 percent, and manufacturing 10 percent.

And the above all has something to do with Brexit, with negotiations more likely to end in failure than success, according to U.K. International Labor Secretary Liam Fox, who added there’s a growing sense that Britain is heading for a messy divorce from the European Union.

“There’s a 60 percent likelihood of a no-deal outcome,” Fox told the Sunday Times in an interview. He blamed the European Commission for a lack of flexibility in fraught talks for 16 months.  Prime Minister Theresa May hopes to conclude a divorce deal and the broad outline of one by October’s EU summit, giving the U.K. and European parliament until Britain’s scheduled departure in March to debate and vote on the package.

“(But) the intransigence of the commission is pushing us towards no deal,” Fox told the paper. “We have set out the basis in which a deal can happen but if the EU decides that the theological obsession of the unelected is to take priority over the economic wellbeing of the people of Europe then it’s a bureaucrats’ Brexit – not a people’s Brexit,” and “there is only going to be one outcome.

The May government has ratcheted up pressure on the EU in recent weeks, urging the bloc to loosen its red lines and come to an accommodation, but I go back to the theory, why would the EU do this and risk others in the bloc pursuing the same path?

Mrs. May has said Britain will publish some 70 technical notes to lay out domestic plans for coping with a scenario without an accord, while Foreign Secretary Jeremy Hunt warned last week ahead of visits to Paris and Vienna that “we potentially face the prospect of a no-deal by accident.”

This really is a slow-motion train wreck, passengers just kind of being lulled to sleep, as the train goes through the Chunnel, only to crash when it hits a brick wall...upending in one form or another tens of millions of lives.

[According to a new YouGov poll, the proportion of voters who favor a referendum on the final terms of any Brexit deal has overtaken those who do not for the first time...42 percent say there should be a fresh vote while 40 percent said there should not.]

Eurobits

--Italy’s parliament has passed 5-Star Movement-led labor reform that aims to crack down on short-term employment and precarious labor practices, although critics say it will cause many people to lose their jobs.

The law, approved Tuesday in the Italian Senate, shortens the maximum duration of temporary employment contracts and decreases the number of times an employer can renew such contracts. But a recent report by Italy’s social security institute suggested that thousands of workers will lose their jobs because of the new legislation.

Turning to Asia...Japan’s economy expanded at a solid annualized rate of 1.9 percent in the second quarter, bouncing back from a revised 0.9 percent contraction in the first.  The Q2 figure was better than the forecast of 1.4 percent in a Reuters poll of economists.

But the GDP report’s measure of inflation slowed to 0.1% from 0.5% in the previous three months, far from the Bank of Japan’s 2% target.

That said, Japanese workers’ inflation-adjusted real wages rose in June at the fastest pace in more than 21 years, fueled by an increase in summer bonuses, government data showed, in an encouraging sign that consumer spending and inflation will eventually pick up. The 2.8 percent rise in real wages in June from a year earlier was the biggest gain since January 1997, and followed a 1.3 percent annual increase in May, the Labor Ministry reported.

But Japanese consumers refuse to spend as they still exhibit caution over the future.

In China, exports grew at a faster pace than forecast in July even as the U.S. kicked off a trade war by imposing tariffs on $34 billion worth of imports from China at the beginning of the month.

The dollar value of exports rose 12.2 percent in July vs. a year earlier, which was an acceleration from June’s 11.2 percent, according to figures from China’s General Administration of Customs.

Imports jumped 27.3 percent last month, far greater than forecast.  Together the figures resulted in a trade surplus of $28.1bn, falling from a $41.5bn surplus in June.

The U.S. accounted for 19.3 percent of China’s exports in July, down from 19.7 percent in June.  Shipments from the U.S. represented 7.2 percent of total imports, the lowest level for the year to date.  The surplus with the U.S. is the same as the overall tally, $28.1bn, down from a record $28.97bn in June.

Street Bytes

--Stocks finished mixed owing to Friday’s fall as geopolitical fears worked their way into the market amid the plunge in Turkey’s lira, which sent bourses around the world into the red.  Earlier, the Nasdaq had stretched its winning streak to eight sessions, and new all-time highs.

On the week the Dow Jones fell 0.8% to 25313, ending a five-week winning streak, while the S&P 500 lost 0.2%, but Nasdaq managed a gain of 0.4%, having hit an all-time closing high of 7891 Thursday.

--U.S. Treasury Yield

6-mo. 2.22%  2-yr. 2.60%  10-yr. 2.87%  30-yr. 3.03%

The yield on the 10- and 30-year fell in a classic flight to safety by week’s end.

--Oil fell as U.S. stockpiles of oil and fuel hit a seven-month high. The relatively tame inflation news helped as well.

The U.S. Energy Information Administration announced Wednesday that while crude-oil inventories declined slightly, total combined stockpiles of crude and fuels such as gasoline rose by 3.3 million barrels, to 1.21 billion barrels, the highest since early January.  Ergo, demand isn’t keeping up with supply.

The EIA report also indicated another weekly decline in U.S. oil production, to 10.8 million barrels a day, from 10.9m the week before.  Experts say this suggests infrastructure issues, such as insufficient pipelines.

But, globally, oil is certainly not helped by trade tensions that could lead to softer economic growth and thus less demand for crude.  And the International Energy Agency warned on Friday that the growing U.S.-China trade spat could result in just that.

At the same time, the IEA still says that renewed U.S. sanctions on Iran remain a major risk to global supplies, and with Russia and Saudi Arabia raising oil output, there are still fears global spare capacity is at very low levels.

Separately, the national gasoline price at the pump is at $2.87, which is the most expensive seen in August since 2014.  Hawaii ($3.76) and California ($3.62) are the most expensive.

--What a freakin’ week for Tesla and CEO Elon Musk.  It started Tuesday when Musk tweeted, “Am considering taking Tesla private at $420. Funding secured.”

He later said the “only reason why this is not certain is that it’s contingent on a shareholder vote.”

Shares of the electric-car make soared 11 percent on the shocking utterance, with exchanges halting trading until just 15 minutes before the close, ending the day at $379.50 vs. Monday’s close of $342.

But it quickly became clear that Musk hadn’t recently reached out to any known bank about a deal to take it private. Wednesday, six of Tesla’s nine board members said Musk had discussed taking the company private “last week,” and they are taking the next steps – but there was no talk of funding, outside of addressing “the funding for this to occur,” the six board members said in a statement. Wednesday, the stock fell a little over 2 percent to $370.

In an email to employees, Musk said, “I think this is the best path forward,” further clarifying that “a final decision has not yet been made, but the reason for doing this is all about creating the environment for Tesla to operate best.”

The Securities and Exchange Commission has made inquiries into the truthfulness of Musk’s Tuesday tweets, specifically on the backing to take his company private at $420 a share.

Regulators also asked why Musk made his comments over Twitter and whether they had followed investor protection rules, according to the Wall Street Journal.

Tesla representatives have yet to comment on the SEC inquiry.

Cornell Law School professor Robert C. Hockett told The New York Post that as to the phrase “funding secured”: “If someone said, ‘Yeah, I might be willing to do that,’ that probably wouldn’t count.  It would have to be something at least semi-formal,” adding that the key terms of a contract would have had to have been agreed upon.

John Coffee, a securities law professor at Columbia University, told the Journal, if Musk doesn’t offer proof to back up his claim that he has money to take the company private at $420 a share, his statement “could be seen as manipulation” of the share price.  “That’s a factual statement, and if it’s material, that’s the kind of lawsuit plaintiffs’ lawyers regard as Christmas in August,” said Coffee.

Thomas Farley, a former president of the New York Stock Exchange, said it would be relatively straightforward for regulators to fact-check some of Mr. Musk’s statements.  Farley told the Journal that regulators could ask to see any legal agreements that Tesla has with financial partners or backers on the going-private deal.

“If funding is certain, there is documentation to demonstrate that,” Farley said.  ‘This is a very easy one to manage, and they should manage it.”

As to the issue of releasing Musk’s potential deal via tweet, the SEC generally allows companies to disseminate news using social media as long as they have told shareholders they might use those channels in addition to regulatory filings.  Tesla did tell investors in a November 2013 filing to follow Musk’s Twitter feed for “additional information” about the company.

The company filed its regular quarterly report with the SEC Monday evening, days after the board discussions had begun, but it said nothing in the report about a potential buyout.

Musk has always wanted to go after the short sellers, his detractors, and in his behavior he is very Trump-like.  In an email to employees on Tuesday, Musk cited short sellers and other pressures public markets put on companies as factors in announcing his intention to take the company private.  In subsequent tweets, Musk wrote that going private would end “negative propaganda” from short sellers.

“The short position is the best thing the stock has going for it.  ‘Musk vs. The Shorts’ is a far better narrative than ‘Tesla vs. Mercedes/Audi/Porsche,’’ Jim Chanos, an investor who’s been vocal about his bet against Tesla, said on CNBC.

Should Tesla indeed go private, Tesla would not be subjected to all of the disclosure requirements or trading volatility that affect publicly traded companies.  In the email to employees, Musk said:

“As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders. Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term,” he wrote.

“Finally, as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company.”

Musk’s stake in Tesla is worth about $12 billion, according to S&P Global Market Intelligence. He owns about 20 percent of the company, which is valued at about $60 billion at week’s end.

Investors would have a choice on whether to sell out or maintain their shares.

“My hope is for all shareholders to remain, but if they prefer to be bought out, then this would enable that to happen at a nice premium,” he wrote.

The original tweet came shortly after the Financial Times reported that the investment arm of Saudi Arabia has acquired a substantial stake in Tesla, said to be between 3 and 5 percent.

The kingdom has been actively trying to diversify its economy, in part by using some of the more than $250 billion in assets in its sovereign wealth fund to invest in alternative assets.

Musk said his other big company, Space Exploration Technologies, or SpaceX, would not be merged into Tesla.

Tesla has $920 million in convertible bonds that come due in March, with a conversion price of $359.87.  If Tesla stock is below that level at the time, the company will have to spend cash to redeem the bonds; if the stock price is above that level, the convertible holders will convert them into Tesla shares, relieving the company of the need to lay out cash.  So clearly keeping ‘talk’ at the $420 level could benefit the company in this regard.

Tesla currently has about $10.9 billion of debt and its bonds are rated junk by credit ratings agencies.

Charley Grant / Wall Street Journal

“(What) would seem like great news for its shareholders comes with plenty of unanswered questions.  This would be twice the size of the biggest buyout in history, one that ended in bankruptcy.  And Tesla is the exact opposite of the type of company buyout firms want: It burns rather than generates cash and it is already neck deep in liabilities. If Mr. Musk hasn’t lined up the financing he claimed, he could be accused of trying to drive up Tesla’s stock to make the company’s many naysaysers suffer. Tesla didn’t respond to questions about the nature of this committed financing.

“Mr. Musk suggested in a blog post that the buyout was needed to get out of the public markets, which force the company into short-term thinking. That claim borders on bizarre: Tesla has benefited hugely from public markets, which have given it a huge valuation that allowed it to raise significant amounts of capital. Those public investors have also been willing to look past years of operating losses.

“Tuesday’s tweet could be the start of one of the greatest financial dramas in history.  But given Tesla’s history of dramas, don’t be surprised if the frenzy turns out to be just another weird day in the life of the world’s craziest car company.”

Editorial / Wall Street Journal

“Elon Musk is known for disrupting convention, and his midday tweet Tuesday that he may take his Tesla car company private is a classic.  Many people have lost money betting against the Tesla CEO.  Then again, nearly $70 billion is a lot to borrow to escape the needling of short sellers and stock-analyst grunts.

“But that does seem to be Mr. Musk’s overriding motivation for wanting to go private, judging from his email to employees that Tesla released after his tweet....

“If Mr. Musk does go private, he’d face no more questions from stock jocks, journalists and other pains in the posterior who ask about the Tesla Model 3 production line and cash flow. He could put a sign out front that says ‘Genius at Work’ and tell everyone to buzz off unless they want to test drive one of the cars.

“Everyone, that is, except the lenders who finance what would be the most expensive leveraged buyout in history.  Calculating from the 20% or so of Tesla shares that Mr. Musk already owns, and his target LBO price of $420 a share, he’d have to raise tens of billions of dollars.  Mr. Musk tweeted that he has ‘funding secured,’ without naming the sources.

“One theory is that Mr. Musk is trying to flush out a strategic buyer with ready cash (Google or Apple?) or auto manufacturing expertise (Daimler?).  If Mr. Musk intends to lure bond investors, he may find they can be even more annoying than journalists. With so much leverage, Tesla would need the Model 3 to be a consumer hit and a long enough economic expansion to generate cash to pay down debt.  We wouldn’t bet against him, but lenders will need a high tolerance for ego.”

Thursday, amid talk of an SEC probe into Musk’s tweets, Tesla traded as low as $345, below its level before he took to Twitter on Tuesday.  It finished the week at $355, up only $7 from the prior week’s close. All that trouble for this?

--Walt Disney Co. missed Wall Street’s profit targets as new technology costs rose during the quarter ended June 30, but CEO Bob Iger said the exodus of consumers from its television channels was slowing. The shares fell about 3% on the week.

Disney is trying to transform itself into a broad-based digital entertainment company as ESPN and its other networks lose viewers to Netflix Inc. and other streaming options.  It is on the verge of gaining new film, television and entertainment properties in a $71 billion purchase of assets from Twenty-First Century Fox Inc.  Iger, on the earnings conference call, said growth of smaller channel bundles delivered online had helped make up for customers dumping larger cable packages.  Disney has seen “noticeable improvement in the rate of (subscriber) loss in each of the last four quarters,” he said.

The company plans to launch its own streaming service for family entertainment in late 2019 that will incorporate Disney and Fox content.  The service will not, however, carry the volume of content found on Netflix, Iger added.   The cost to build streaming services contributed to a profit decline at Disney’s media networks, the company’s largest unit, in the quarter.

Overall, Disney posted earnings of $1.87 per share ex- certain items, an increase from a year earlier but below the Street’s consensus of $1.95.  Total revenue rose 7 percent to $15.23 billion, which was slightly below forecasts.

Disney’s movie studio enjoyed blockbuster success with “Avengers: Infinity War” and “The Incredibles 2.”  Operating income at the studio rose 11 percent to $708 million.

The theme parks division reported a 15-percnet rise in profit to $1.3 billion with increases at domestic and international resorts.  Disney has been pushing up prices at its theme parks in recent years, with the latest price leading to just a 1 percent gain in attendance at U.S. parks – down from an 8 percent increase last year – while hotel occupancy rates dropped to 86 percent from 88 percent.

--Samsung announced it will invest more than $22 billion over the next three years to target areas such as artificial intelligence and auto-tech components as it hunts for new growth drivers beyond phones and memory chips.

The bulk of the spending will be earmarked for Samsung Electronics Co., the conglomerate’s crown jewel and the world’s No. 1 maker of smartphones, semiconductors and televisions. The company said it will invest in four key areas through 2020: auto tech; artificial intelligence; and new fifth-generation, or 5G, cellular technology, all of which fall under the Samsung umbrella, with other funds going into its nascent drug ventures.

Samsung spent more on cap-ex than any publicly traded company in 2017, according to S&P Global Market Intelligence and the Wall Street Journal. Samsung announced its new investments would create 40,000 jobs over the next three years.

The company has opened new research centers in Cambridge, U.K., Toronto and Moscow in May, specifically to build up its AI capabilities. By 2020, Samsung wants to put AI features and internet connectivity into all its products.

--Snap Inc.’s second-quarter revenue beat projections, but the number of users declined for the first time. The mixed results came the same day Prince Alwaleed bin Talal of Saudi Arabia announced he had acquired a 2.3% stake in Snap, made earlier at an average price of $11 a share.

Snapchat saw its daily average users fall 1.5% in the second quarter to 188 million, down from 191 million the previous quarter, missing the average analyst estimate of 193 million.

The company blamed the decline on the controversial redesign, which was unveiled nine months ago. The redesign sparked a major backlash by influential celebrities such as Kylie Jenner.

The unpopularity of Snapchat’s redesign is believed to have driven more users to the Facebook-owned Instagram, which has copied many of Snapchat’s features such as Stories.

Snap CEO Evan Spiegel continues to defend the move.  “We believe that this is an important evolution of our product that will help drive future growth in engagement,” he said in a statement Tuesday.

A more positive development was in the company’s revenue growth, which climbed 44% from a year earlier to $262 million, easily beating analyst projections.

But back to the key metric, average daily users, some analysts now say Snapchat is destined to serve a small but loyal following, a la Twitter, rather than become a serious threat to Facebook.

Overall, though, the fact is even Facebook revealed late last month that its number of users in the United States was flat from earlier this year and that its users in Europe had fallen over the same period, while Twitter said in late July that its monthly active users had decreased from earlier this year.

So it’s easy to conclude that social media has reached a saturation point in some markets, especially in developed countries.  I know I’m using one particular platform far less.

--Speaking of which, the good folks at Facebook just informed me that my Page’s template will be changing.  “This new design will help you connect with the people who care most about your business on Facebook.... ‘Restaurants & Cafes’” !!!

Eegads.  “The new layout is specifically for businesses like yours and will showcase important information about your business – like hours, prices and your menu – making it easier for people to connect with Stocksandnews.com.”

Bet you didn’t know I’m really all about food...farm to table, as we say here in the global headquarters of S&N.  What a bunch of freakin’ idiots.  And spell the company name right, FB.

By the way, my hours are 4:30 a.m. to 11:00 p.m., Saturday through Friday.  And employees don’t get any paid time off, save for about five hours on Christmas Day.  All federal labor laws are broken regularly. 

--Facebook and Twitter were in the spotlight for a different reason this week, the handling of misinformation spread by Alex Jones, the internet’s notorious conspiracy theorist.  On Monday, Facebook removed four pages belonging to Jones for violating its policies by “glorifying violence,” among other things. Twitter said Jones’ accounts and that of his right-wing site, Infowars, did not violate its rules.

Apple, Google and Spotify also severely restricted the reach of Jones and Infowars, further proof that while the tech companies are taking a stance against misinformation online, they are becoming the arbiters of truth, leading to accusations of political bias, largely from conservatives.  Nigel Farage, the British conservative politician, said on Twitter: “Whether you like @RealAlexJones and Infowars or not, he is undeniably the victim today of collusion by the big tech giants.  What price free speech?”

In its statement removing five of the six Infowars podcasts on its Podcasts app, Apple said it “does not tolerate hate speech.”

--The Canadian economy created far more jobs than expected in July and the country’s unemployment rate ticked down to 5.8%, matching the more than 40-year low it touched last year and earlier in 2018.

Employment rose by 54,100, well ahead of June’s gain of about 31,800. The jobless rate fell 0.2%.

--Berkshire Hathaway Inc., the conglomerate run by Warren Buffett, reported its quarterly earnings on Saturday and operating profit rose a whopping 67 percent, as insurance underwriting rebounded and several business units benefited from a surging economy.

Underwriting profit at the GEICO auto insurance unit more than quintupled, the BNSF railroad benefited from demand to ship consumer products, grain, petroleum and steel, and the Berkshire Hathaway Automotive car dealership financed more vehicle purchases.

Net income rose to $12.01 billion, up from $4.26bn  a year earlier.  A decline in Berkshire’s effective tax rate from 28.9 percent to 20 percent certainly helped.  And the company was helped bigly by its $47.2 billion stake in Apple Inc.

--Indra Nooyi is exiting as CEO of PepsiCo Inc. after 12 years, one of the highest-profile women in a small circle of female CEOs of Fortune 500 companies.  Plus Nooyi, born in India, was a minority. She oversaw the company during a turbulent time in the industry that has forced heavyweights like PepsiCo, Coca-Cola and Campbell Soup Co. to adapt to changing tastes.

Nooyi, 62, has been with PepsiCo for 24 years overall and held the top job the last 12.  Another PepsiCo veteran, Ramon Laguarta, will take over in October.  Nooyi will remain as chairwoman for a few months thereafter.

Depending on your benchmark, Fortune 500 or S&P 500, the percentage of female CEOs is about 5%.

--Adidas, the world’s second-largest sportswear maker after Nike, confirmed its full-year guidance after beating analysts’ expectations for growth and profits in the second quarter of 2018 as the group increased internet sales and made headway in North America and Asia.

Adidas increased quarterly sales by 4.4 percent year-on-year to 5.3bn euro.  Operating profit was 17.2 percent higher than a year ago to 592m euro.

Adidas said it is on track to meet its full-year guidance of 10 percent revenue growth excluding foreign exchange movements, as sales in North America and the Asia-Pacific are increasing at double-digit rates; 16% in the former and 19% in in the latter, driven by 26% sales growth in China.  Rival Nike just returned to growth in the U.S.

--The New York Times added 109,000 digital subscribers in its latest quarter, but a slide in advertising sales hindered profits.

Digital advertising dropped 7.5 percent to $51million in the quarter, which the Times says “reflected a smaller audience.”  Print advertising fell 11.5 percent.  Together this led to adjusted operating profits of $59.4m, down 8 percent from a year ago.

The newspaper now has 3.8m total subscribers, with 2.9m of these digital-only.  The Times now makes two-thirds of revenues from subscriptions – “a trend we expect to continue,” CEO Mark Thompson said.

Digital subscriber growth has been slowing, however, the 109,000 additions in the second quarter comparing with 139,000 in the first quarter, and 157,000 in the fourth quarter of 2017.

--As part of News Corp.’s earnings release, it was reported that the news unit was boosted by a 9% increase in revenue at Dow Jones, the Wall Street Journal’s publisher.  The Journal added 100,000 digital subscribers in the quarter.  In the June quarter, the Journal averaged 1.59 million digital subscribers.

Advertising revenue for the entire news unit declined 2%, while circulation and subscription revenue increased 5%.

Separately, revenue in News Corp.’s book-publishing segment rose 20% to $490 million, boosted by strong sales of “Magnolia Table,” by Joanna Gaines, “I’ll Be Gone in the Dark,” by Michelle McNamara and “Girl Wash Your Face,” by Rachel Hollis....in case you wanted some book ideas for end of summer.

--Papa John’s International Inc. saw its shares fall anew on Tuesday (though the stock largely recovered by week’s end) as the company posted its third consecutive quarterly sales decline since founder John Schnatter made remarks last fall that the company said turned off the pizza chain’s customers.

Same-store sales fell 6.1% in the second quarter (19.5% in North America), executives attributing the hefty decline to “recent events.”

Papa John’s wrote in its earnings report: “The company cannot predict how long and the extent to which the negative customer sentiment will continue to impact future sales.”

Schnatter stepped down as CEO in December and as chairman in July.  In a statement he said: “The company is trying to deflect attention from the source of the problem – management’s ongoing failures with regard to financial performance – and blame me for its problems.”

A Papa John’s spokeswoman countered: “We have received strong support from our stakeholders for the actions under way, including the decision to remove Mr. Schnatter from the brand. We remain focused on the important work under way to move the company forward.”

Schnatter, who founded the company 34 years ago, has been at odds with the board since he ignored their advice and blamed a sales decline on the National Football League’s handling of the national-anthem protests.  Schnatter’s criticism of the NFL, of which Papa John’s was a major sponsor, was taken to mean he disapproved of the protests, and some then called for a boycott of the world’s third-largest pizza-delivery chain.

In December, he stepped down as CEO. Then in May he used a racial slur during a media-training session, after which he was forced to apologize and step down as chairman.

Papa John’s plans to introduce a new marketing campaign in the fourth quarter that doesn’t include Schnatter.  “We need to move on,” CEO Steve Ritchie told investors this week.

The company last month adopted a “poison pill” provision to prevent Schnatter, who owns 29% of the shares, from gaining a controlling interest in the company.

--Rite Aid is abandoning its merger with supermarket giant Albertsons after facing opposition from certain investors and advisers, further clouding the ailing drugstore giant’s future.

As its two biggest rivals, CVS and Walgreens, keep getting bigger and more diversified, Rite Aid was hoping to do the same by arranging a tie-up with Albertsons. Privately held Albertsons was hoping to use the deal to go public.

But the deal’s demise calls into question the future of Rite Aid, as the company has struggled to find its footing in an industry facing cost pressures in the health care industry.  The bottom line is the company doesn’t have the balance sheet to compete with well-capitalized rivals CVS and Walgreens.

Walgreens has 9,964 U.S. locations, CVS 8,130 standalone stores and 1,702 pharmacies inside Target locations, while Rite Aid has 2.533 stores left, having recently sold 1,900 to Walgreens.

In the wake of the implosion of the deal, Rite Aid shares plunged 13.8 percent to $1.50.

--For the second quarter in a row, SeaWorld Entertainment reported notable gains in attendance and revenues, signaling a possible rebound from years of steep losses in visitation.

Attendance jumped nearly 5 percent in the second quarter ending June 30, with 290,000 more guests visiting SeaWorld’s 12 parks than in the same quarter last year.  During Q2, revenue also rose nearly 5 percent – to $391.9 million.

SeaWorld shares rose over 20 percent on the news to the highest level in four years, although at $25, still far from the high $30s peak reached in 2013.

At the same time the company reported it reached an initial settlement with the SEC related to possible violations of federal securities laws, related to executives’ disclosures and public statements in August 2014 and earlier about the impact of the anti-captivity “Blackfish” documentary and trading in the company’s securities.  SeaWorld is also in the midst of a class-action suit accusing it of misleading shareholders about how the film contributed to falling attendance and revenue.

But back to the earnings results, it seems SeaWorld was helped by the return of free beer to its Orlando park and Busch Gardens Tampa, which harkened back to a time when the parks were owned by Anheuser-Busch.

--How bad is the divorce battle between legendary bond investor Bill Gross and wife Sue?  It made the cover of the New York Post this week, of all things.    It’s gotten so bad that in the past two months, Sue Gross forked over $37.8 million for pricey pads in Laguna Beach’s exclusive Irvine Cove community, where Bill spent most of his adult life – just so he couldn’t get his hands on them to begin putting down new roots there, according to court papers and sources.  Bill had lived in Irvine Cover for 30 years, before being booted from their home, according to the New York Post.

So Bill bought a $36 million, 5,500-square-foot waterfront property – right across the street from Sue’s sister and brother-in-law – as return fire at Sue, according to court documents.

But wait, there’s more!  Court documents also show the two got into a bitter dispute over who would become the rightful owner of their three cats. Sue won custody, but Bill managed to score visitation rights – with a veterinary professional being put in charge of transporting them.

--The Academy of Motion Picture Arts and Sciences announced a few changes to future Oscars telecasts, designed to limit the ceremony to three hours, rather than the current four, after this year’s telecast, hosted again by Jimmy Kimmel, dropped 19 percent from the previous year to just 26.5 million viewers, according to the Hollywood Reporter – an all-time low.

Certain categories, which have yet to be announced – will be presented during commercial breaks, but we’re obviously talking technical awards.  As in outside of immediate family, I really don’t think a single soul around the world cares about sound mixing.

But to the disdain of many, a new category will recognize achievement in “popular film,” which critics say lessens the stature of the best picture category, though there were no details on what really qualifies for the new award, or whether the voting would be open to the general public.

--The Los Angeles house featured on the U.S. sitcom The Brady Bunch has been bought by cable TV network HGTV, its parent company has announced.

The network, which specializes in home improvement and gardening shows, will “restore the home to its 1970s glory,” Discovery said.

Only the exterior of the house in Studio City appeared on the show.  Indoor scenes were shot in a studio.

Foreign Affairs

Iran: Trump tweet: “The Iran sanctions have officially been cast.  These are the most biting sanctions ever imposed, and in November they ratchet up to yet another level.  Anyone doing business with Iran will NOT be doing business with the United States. I am asking for WORLD PEACE, nothing less!”

A set of sanctions on Iran, previously lifted under the Iran nuclear deal, went back into effect this week as part of President Trump’s complete withdrawal from the accord.  Thus far, Iran has avoided rash action, instead seeking to secure concessions from Europe, Russia, and China that could reduce their impact.

Iranian President Hassan Rouhani accused the U.S. of waging “Psychological warfare” with the reimposed sanctions, with a second, harsher round slated for November.

The first round targets Iran’s access to U.S. banknotes and key industries, including cars and carpets.

“If you’re an enemy and you stab the other person with a knife, and then you say you want negotiations, then the first thing you have to do is remove the knife,” Rouhani said in an interview on state television.

“They want to launch psychological warfare against the Iranian nation. Negotiations with sanctions doesn’t make sense.”

Iranians are already seeing the effects of the sanctions, with Iran’s rial currency losing around half its value since Trump announced the U.S. would withdraw from the 2015 nuclear accord.

President Trump again blasted the agreement on Monday, calling it a “horrible, one-sided deal (that) failed to achieve the fundamental objective of blocking all paths to an Iranian nuclear bomb.”

The unilateral decision to withdraw came despite other parties to the agreement – Britain, France, Germany, Russia and China – pleading with Trump not to abandon the pact.

The European Union’s diplomatic chief Federica Mogherini said the bloc deeply regretted Washington’s move.

“We are determined to protect European economic operators engaged in legitimate business with Iran,” she said in a statement.  The EU said it sought to protect European companies from any penalties imposed by the United States for doing business with or in Iran.

But many large European firms are leaving Iran for fear of the U.S. penalties (the most severe of which would kick in in November, including the blocking of Iran’s oil sales), and Trump warned of “severe consequences” against firms and individuals that continued to do business with Iran.

The impact of the sanctions and restrictions has ramped up protests inside Iran over water shortages, high prices and wider anger at the political system.  But owing to severe restrictions on outside reporting, confirmation of the scope of the protests is hard to come by.

Secretary of State Mike Pompeo demanded that Iran end all nuclear enrichment and development of nuclear-capable missiles, release all American citizens, end its support for Hezbollah, Hamas, Islamic Jihad and Houthi militias and withdraw its forces from Syria.

Syria: An anticipated Syrian government offensive against rebels in Idlib province could displace more than 700,000 people, far more than were uprooted in a recent battle in the southwest of Syria, according to the U.N.

Many of Syria’s battles have ended with agreements for fighters and their families to depart for Idlib governorate, where an influx of displaced people has roughly doubled the population to around 2.5 million.  The U.N. has said the province has become a “dumping ground” for evacuees.

The U.N. children agency UNICEF says a battle for Idlib (in the northwest of the country) could affect the lives of more than 1 million children, many of whom live in refugee camps.  UNICEF said food, water and medicine are already in short supply and a battle would exacerbate an already dire humanitarian situation and potentially displace 350,000 children.

Separately, Israel is believed to be behind the assassination of a top Syrian scientist as he left his house in Hama, the victim of a car bomb.  The scientist, Dr. Aziz Asbar, was allegedly a key part of Syria’s Scientific Studies and Research Center, which is involved in the development of chemical weapons and long-range missiles that are produced near Hama.  Asbar was also linked to Iran.

This was at least the fourth time in three years that Israel has assassinated an enemy weapons engineer on foreign soil, as reported by the New York Times, through a senior official from a Middle Eastern intelligence agency.

Saudi Arabia / Canada: In a bizarre diplomatic crisis, Saudi Arabia, infuriated by Canada’s demand last week that jailed activists in the kingdom be released immediately, expelled the Canadian ambassador on Sunday, suspended direct flights to Toronto, blocked imports of Canadian grain and ended state-backed educational and medical programs in Canada.

The dispute began when Canadian Foreign Minister, Chrystia Freeland, tweeted her concern for the arrest of Saudi women’s rights activist Samar Badawi and her brother, Raif Badawi, who was sentenced in 2014 to 100 lashes and 10 years in prison for political activism.  His wife and children fled to Canada after his arrest, and were granted Canadian citizenship on July 1, 2018.

Saudi Arabia recalled some students, and all Saudi medical patients and resident physicians (a reported 800) in Canada are to be transferred back to the kingdom.

In the meantime, Saudi Arabia crucified a man from Myanmar for breaking into a woman’s home and killing her.  While capital punishment is commonplace in the kingdom, crucifixion is not, though it has been used against homosexuals and political activists.

Western governments expressing concerns about human rights issues in the kingdom isn’t new, but what set off the Saudi leadership this time may have been that the call was so public.

Saudi Arabia has in recent months detained several women’s rights activists, some of whom had previously campaigned for the right to drive and an end to the kingdom’s male guardianship system, the latest to be swept up in a government crackdown on activists, clerics and journalists.

Since rising to power in 2015, de facto ruler Crown Prince Mohammed bin Salman (MBS) has courted Western allies to support his reform plans to modernize and open up his kingdom, offering to buy billions in arms and promising to fight radicalism, but while he has launched a campaign of social and economic change, he has not eased the kingdom’s total ban on activism.

The Financial Times reported on Wednesday that the Saudi central bank and state pension funds had instructed their overseas asset managers to sell their Canadian equities, bonds and cash holdings.  [The Saudi government at first denied this in a tweet, but then deleted the post without providing an explanation.]

Foreign Minister Adel al-Jubeir on Wednesday ruled out any mediation efforts and called on Ottawa to “fix its big mistake,” saying the kingdom was considering implementing more measures against Canada for interfering in Saudi Arabia’s domestic affairs, without elaborating.

Canadian Prime Minister Justin Trudeau later appeared to extend an olive branch, saying he would keep pressing Saudi Arabia on civil liberties but also saying the kingdom had made some progress on human rights.

The dispute will not have any impact on Saudi oil supplies to Canada, its energy minister said on Thursday, reassuring customers after Riyadh froze new trade with Canada.  Energy Minister Khalid al-Falih said in a statement that Saudi Arabia has a “firm and longstanding policy” that petroleum supplies are not influenced by political considerations.

The dispute has threatened to undermine Riyadh’s foreign investment drive, a campaign already unsettled by a series of assertive political and diplomatic initiatives by the top oil exporter.

Separately, an airstrike from the Saudi-led coalition struck a school bus in northern Yemen on Thursday, killing at least 43, most of them children, local medical officials and international aid groups said.  The injured were sent to hospitals already struggling with one of the worst humanitarian crises in the world.

The coalition said it had hit missile launchers and called the attack a “legitimate military operation,” but the attack drew worldwide condemnation and was a reminder of the tremendous human toll in the war in Yemen.

The attack in a busy market area in Sada Province hit a bus carrying students on a recreational trip. The United States, which has been providing arms and intelligence to the coalition denied any involvement in the atrocity.

Turkey: As alluded to above, the U.S. failed to secure assurances on Wednesday from Turkey to immediately free an American pastor held for nearly two years on disputed terrorism charges, U.S. officials said, deepening a crisis between the two countries and setting stage for the Trump administration to take new punitive steps.

High-level talks in Washington between U.S. and Turkish officials produced no breakthrough in an impasse that has pushed Turkey’s economy into turmoil.  Turkey’s currency has plunged as a result of the crisis, and then on Friday, President Trump doubled down, doubling tariffs on Turkish steel and aluminum.

Turkish President Erdogan told his people today to exchange their gold and dollars into lira, with the currency in freefall.  The lira has long been falling on worries about Erdogan’s influence over monetary policy and worsening relations with the United States.  Erdogan told a crowd in the northeastern city of Bayburt, “The dollar cannot block our path. Don’t worry.”

The fate of pastor Andrew Brunson has been a cause celebre for evangelical Christians in the U.S., with Brunson represented by Jay Sekulow, one of Trump’s attorneys.  Vice President Pence has also championed his case.

The U.S. thought it had an agreement with Turkey to free Brunson, but he was given house arrest instead. 

North Korea: The U.N. released a report that concluded North Korea has not stopped its nuclear and missile programs and is violating sanctions including by “a massive increase in illicit ship-to-ship transfers of petroleum products.”  The 149-page report also says the country is violating sanctions by transferring coal at sea and flouting an arms embargo and financial sanctions.

Clearly, there is no doubt China is violating the sanctions left and right.

But Pyongyang lashed out again at the U.S. for not lifting sanctions against the country.

The foreign ministry said it had made various goodwill gestures, and yet the U.S. was still following an “outdated acting script” and jeopardizing any moves towards denuclearization.

North Korea remains under a range of international and U.S. sanctions over its nuclear program and missile tests.

The U.S. insists full denuclearization take place before sanctions are lifted.

The details of any nuclear disarmament agreement reached at the Singapore summit are still vague, as North Korea did not commit to unilaterally giving up its nuclear weapons.

The foreign ministry instead has been citing various conciliatory gestures it says the country has already taken, such as halting missile tests, the return of some remains of U.S. soldiers killed in the Korean War and the dismantling of a nuclear site, though there are serious doubts as to this last supposed step.

Pyongyang also accused U.S. officials of “going against the intention of President Trump” by “making baseless allegations” and “desperate attempts at intensifying the international sanctions and pressure.”

It said “expecting any result, while insulting the dialogue partner” was a “foolish act that amounts to waiting to see a boiled egg hatch out.” [BBC News]

Foreign Minister Ri Yong-ho is currently on a visit to Iran where President Hassan Rouhani warned the U.S. could not be trusted after Tehran’s experience of having the Trump administration tear up the Obama-era Iran deal.

According to Iranian media, Mr. Ri said his country would seek to retain its nuclear know-how for when the U.S. reverts to a more aggressive position against Pyongyang.

Earlier, White House National Security Adviser John Bolton accused Pyongyang of not adhering to the deal reached by Trump and Kim Jong Un in June, in the latest sign that the president was a wee bit premature in proclaiming North Korea no longer posed a nuclear threat.

Bolton said North Korea was to blame for the lack of progress towards denuclearization.  What we really need is not more rhetoric, but performance from North Korea,” he said in a television interview.

But the president, in his statements, continues to say “We have a good relationship with North Korea,” as he told business leaders this week in Bedminster, New Jersey.

Bolton said, though, that “The idea that we’re going to relax the sanctions just on North Korea’s say-so is something that isn’t under consideration. We’re going to continue to apply maximum pressure to North Korea until they denuclearize.”

Bolton added that the fact Pyongyang didn’t return more than 55 boxes of remains that North Korea said are U.S. soldiers from the war (out of an estimated 5,300+ still missing) showed that it was not serious about improving relations with the West and its neighbors in Asia, and on this I couldn’t agree more.  “There is no point in withholding the remains from a conflict that long ago,” Bolton said.  Just one dog tag was returned among the first 55 boxes.

Last weekend, at an ASEAN summit in Singapore, Secretary of State Mike Pompeo said Washington took very seriously any relaxation of U.N. sanctions, calling out Russia for  possibly violating a U.N. resolution by issuing work visas to North Korea workers.

“I want to remind every nation that has supported these resolutions that this is a serious issue and something that we will discuss with Moscow,” Pompeo said.  “We expect the Russians and all countries to abide by the U.N. Security Council resolutions and enforce sanctions on North Korea.”

Russia denied a report by the Wall Street Journal that said Moscow was allowing thousands of fresh North Korean laborers into the country and granting them work permits in a potential breach of U.N. sanctions.  Russia also denied it was flouting restrictions on oil supplies to North Korea.

Pompeo had a chance to sit down with North Korean Foreign Minister Ri but the two only exchanged a handshake, which speaks volumes.  Ri then delivered an address in which he said Pyongyang was alarmed by U.S. intentions.

China: China’s top newspaper, People’s Daily, rebutted growing criticism in government circles that Beijing should have taken a lower profile to head off its trade war with the United States, saying on Friday that, like an elephant, China cannot hide its size and strength.

The growing trade dispute is causing rifts within China’s Communist Party, with some critics saying that an overly nationalistic Chinese stance may have hardened the U.S. position, sources close to the government have said.

In an unusually public rebuttal to a debate that has been happening largely behind closed doors in policy-making circles in China, the newspaper took direct aim at those it said were naysayers.

While condemnation of the White House has come at home and abroad, there are those who have spread “specious” views on the internet, it said in a lengthy commentary.

“One of these puts the blame on China, saying that ‘China’s strategy is too confident and high profile,’ incurring a one-two punch from the United States,” it said.

“Another of these criticizes China saying that it shouldn’t strike back,” the paper said.  “The meaning is – as long as China caves in, the United States will raise its hand high in mercy, and the Sino-U.S. trade war won’t happen.”

However, the paper points out, history shows the U.S. has always gone after countries, such as the former Soviet Union, Britain or Japan, that were perceived as threats to its global dominance.  That had brought China into the firing line with its enormous and growing economy, the People’s Daily said.

“After more than a century of hard work, China has returned to the center of the world stage, and this is the basic fact we must observe in the China-U.S. trade friction,” the paper wrote.

“Such a large size, such a heavy thing, can’t be hidden by ‘being low key,’ just like an elephant can’t hide behind a sapling,’ it said.

The paper said Beijing was emerging as an “unprecedented opponent” for the United States.

“No matter what China does, in the eyes of the United States, China’s development has already ‘damaged the supremacy of the United States,’” it wrote.

“Against this kind of ‘opponent,’ the United States must adopt two methods – first, use the opponent to encourage itself and exhort mass political support for ‘making American great again,’ and second, curb the opponent’s supremacy at every level,” it said.

Separately, Wang Yiming, deputy director of the State Council Development Research Center, wrote in a column in the People’s Daily on Friday that rising trade tensions with the United States have become the biggest threat to the stability of the Chinese economy. Wang called for  a slew of measures to stabilize exports, including improving a state tax subsidy policy that provides tax incentives for Chinese companies to increase their exports, as well as stepping up funding support for Chinese exporters.

China on Wednesday revamped a national leadership group that was seen as a boost for the technology sector, which could see more assistance to ensure its ongoing growth.

Editorial / The Economist

“No evidence that Mr. Xi’s position is in peril has come to light. Yet the capital’s political classes, including Chinese academics who advise the government, business leaders, foreign diplomats and journalists, have spent weeks swapping rumors of bruising internal disputes about how to handle a trade war with America and generally protect a slowing economy. Some predict that Mr. Xi and his inner circle will face unprecedented criticism at gatherings such as Beidaihe [Ed. a leadership conclave].  Many rumors have a recurring theme: namely, that retired leaders such as Hu Jintao, his predecessor, Jiang Zemin and the former premier Zhu Rongji, are demanding an end to propaganda campaigns exalting Mr. Xi as the ‘eternal core’ of the party and ‘the country’s helmsman.’ Such sycophancy revolts a lot of older, educated Chinese, reminding them of the personality cult around Mao that so harmed China. Related rumors have such elder statesmen demanding a reversal of last year’s decision to allow Mr. Xi, in effect, to rule China for life, by abolishing the ten-year term limit that applied to his post as president. Finally, Beijing seethes with talk that retired and serving members of the government accuse Team Xi of ill-judged boasting about the country’s rise, as when state media talked up a ‘Made In China 2025’ plan to dominate such high-tech sectors as robotics and artificial intelligence. Xi critics blame such bragging for provoking a backlash across the West.

“This summer’s wildest rumors, involving purported plots against and sackings of senior figures, probably reveal more about the longings of Xi critics than anything else.  They also point to the downsides of opacity. Beidaihe’s very agenda is a secret. Comings and goings of leaders must be guessed at from sightings of motorcades and presidential trains, and terse state media reports of side events at the resort.  In an age when America’s president tweets his innermost thoughts, China-watchers spent the summer counting fawning references to Mr. Xi on the front page of People’s Daily, to see if they had become less numerous (they had not).

“It is true that by playing the all-knowing father of the nation, dispensing guidance on everything from military strategy to the building of public lavatories, Mr. Xi is vulnerable when things go wrong. It is genuinely damaging that China’s leaders look paralyzed in the face of Mr. Trump’s attacks over trade. But it is also the case that somebody cannot be beaten by nobody, and Mr. Xi faces no obvious single challenger. What he does face is widespread disgruntlement among political and business elites.  Mr. Xi has not just accrued power for himself, in part by locking up a lot of corrupt officials.  He has spent six years making explicit the primacy of the Communist Party, a state-above-the-state that operates a parallel chain of command at every level of government, from the smallest village to the largest ministry or state-owned enterprise.  Communist Party secretaries and party committees are increasingly visible, as they sideline bureaucratic figureheads, from city mayors to provincial governors, right up to the premier, Li Keqiang, who runs the State Council, a body that oversees many government ministries and agencies. A recurring theme of Beijing rumors has Mr. Li and the State Council apparatus ready to stand up to Mr. Xi and his inner circle, and rebuke them for such errors as bungling relations with Mr. Trump. That seems a stretch.  At any rate Mr.  Li has been damaged by a scandal involving defective vaccines given to hundreds of thousands of children, dampening such talk....

“Amid the rumors some facts lurk.  Team Xi did misjudge Mr. Trump, wrongly assuming that this businessman-president, so charming in private with Mr. Xi, could be bought off with the sort of tactical concessions that China has long used to placate angry foreigners. At a dinner for a foreign leader visiting Beijing this spring, sources relate, Mr. Xi and aides confidently predicted that trade tensions with America would not escalate because both countries had too much to lose, while Mr. Trump’s threats were called so much theatre.  Other insiders say Team Xi was getting advice from the wrong Americans, notably business titans with long China careers, and putting too much faith in such Trump aides as Steven Mnuchin, the treasury secretary.

“Yet Xi critics can be correct without posing him any tangible threat.  Chinese intellectuals have been transfixed by a coruscating, erudite essay by a Tsinghua university law professor, Xu Zhangrun. The essay, which draws on centuries-old traditions of scholars petitioning the mighty, condemns the Communist leader for his draconian security policies, for eliminating term limits on the presidency, and for reviving Maoist-style propaganda, political campaigns and purges.  Mr. Xu charges China’s ruler with breaking the bargain underpinning the post-Mao era, that the people will tolerate one-party rule as long as they are left alone to seek prosperity and personal contentment.  But its bravery is tinged with something close to snobbery.  As masterfully translated by Geremie Barme, an Australian sinologist, Mr. Xu calls urban China ‘all very comfy and petit-bourgeois.’  It is a telling line.  Many Chinese reformists of the sort that foreigners meet loathe Mr. Xi’s upending of post-Mao norms. But their grumbles are eerily similar to those that can be heard at Washington dinner parties, when academics or veterans of the Bush and Obama White Houses deplore Mr. Trump and those voters taken in by him. Those Beltway critics don’t wield much clout....

“(But) one Western expert reflecting on this febrile summer wrote an essay asking whether we have reached peak Xi Jinping. Nobody knows. But China may have reached peak boasting.”

It’s true that China has taken steps recently to rein in its swagger, with state media being told to downplay the Made in China 2025 industrial initiative to become the world’s foremost power in 10 important industries, including artificial intelligence and pharmaceuticals, a plan the U.S. has identified as a key threat. They were also instructed to avoid talking about China’s greatness. The push is to focus more on how China has helped other nations.

Russia: The Trump administration announced it was imposing new sanctions on Russia to punish it for violating American and international laws by attempting to assassinate a former Russian spy living in the U.K. using a nerve agent.

In the wake of the March 4 poisoning of former Russian spy Sergei Skripal and his daughter, two dozen Western countries expelled more than 150 Russian diplomats, including 60 from the U.S.

Russia responded with a similar number of diplomatic expulsions and ordered the closure of the American Consulate in St. Petersburg.

But the new measures are part of Congress’ anti-Russian plan despite President Trump’s personal efforts to forge warmer ties.  While the latest round of sanctions allows Trump to say he has been tougher on Vladimir Putin than any past American president, the truth is it’s an example of Congress at its best, with just five members...in both Houses...voting against the sanctions, Trump unable to block them, though he wanted to.

Britain praised the United States’ move: “The strong international response to the use of a chemical weapon on the streets of Salisbury sends an unequivocal message to Russia that its provocative, reckless behavior will not go unchallenged.”

The biggest impact of the latest U.S. sanctions is expected to come from a ban on granting licenses to export sensitive national security goods to Russia, which have included electronic devices and components, along with test and calibration equipment for avionics.

The new prohibitions go into effect on August 22, and a second, more painful round will kick in three months later unless Russia provides “reliable assurances” that it will not use chemical weapons in the future and agrees to “on-site inspections” by the UN – conditions unlikely to be accepted.

The U.S. already has sanctions in place against Russia, in retaliation for its annexation of Crimea and allegations of interference in the 2016 election.

Editorial / Wall Street Journal

“The U.S. determined under the Chemical and Biological Weapons Control and Warfare Elimination Act that Russia ‘used chemical or biological weapons in violation of international law.’  House Foreign Affairs Chairman Ed Royce (R-Calif.) has campaigned for this designation and deserves credit for prodding the Administration into action.

“The White House might have been reluctant to act because the 1991 law packs a punch – and doesn’t give the executive much wiggle room.  The law imposes mandatory sanctions on ‘exports of national security-sensitive goods and technology.’  If Russia doesn’t meet certain conditions...the law mandates further punishment, which could include export and import controls, a ban on Russian flights to the U.S. and a downgrade of diplomatic relations.

“The Salisbury attack has changed the attitude of the British public and Prime Minister Theresa May toward Russia, and the Kremlin’s disregard for the norms of spycraft (you don’t kill agents after they’re released in spy swaps) and civilized nations warrants U.S. support.  After the Helsinki summit when President Trump was so solicitous of Vladimir Putin, the new sanctions are also a useful message to Moscow that reckless behavior has costs.”

Michael Morell / Washington Post

“Putin is afraid of one thing. He is afraid that one day the Russian middle class will finally rebel against his regime and rush into the streets demanding change. It happened in Tunis, Cairo and other Middle Eastern and North African cities between 2010 and 2012, and it happened most alarmingly, from Putin’s perspective, four years ago in Kiev when Ukrainians threw out a government beholden to Moscow. Sanctions that bite at the heart of the Russian economy – sanctions that increase the risk that Russia’s middle class will become restive – will get Putin’s attention.

“The leaders that the United States has chosen, and the security experts they have appointed and confirmed, are aware of the threat. A failure to defend the nation as well as possible, and failure to impose severe costs on those attacking our democracy, would be seen by history as a major abdication of responsibility. The statements from intelligence officials at the White House last week were an excellent first step. 

“More steps, and stronger ones, are urgently needed.”

Venezuela: Six people were arrested for involvement in an apparent assassination attempt on President Nicolas Maduro last weekend.  The interior minister, Nestor Reverol, said they were part of a group that loaded two drones with explosives and set them off during a military parade in the capital Caracas.

Maduro has warned the perpetrators face “maximum punishment.”  He has blamed Colombia for the incident but provided no evidence.  Colombia said the accusation was “baseless.”

The government has also pointed the finger at the opposition, prompting fears of a new crackdown.  There are reported to be more than 200 political prisoners in the country’s jails, which I imagine are not like America’s Club Feds.

U.S. National Security Adviser John Bolton denied any U.S. involvement in the incident.

Curiously, two days later, government sympathizers rallied to show support for Maduro, but he surprised the crowd by skipping the event. [Picture Trump touting a rally in, say, Tampa, and not showing up...it wouldn’t look real good.]

Malaysia: France reopened the investigation into the fate of missing Malaysia Airlines Flight MH370 after Malaysia’s long-awaited ‘final report’ failed to provide an explanation for the aircraft’s disappearance.

French newspaper LeParisien reports that investigators are keen to verify data from Inmarsat – the British operator of a global satellite network – which tracked the aircraft’s pings to the southern Indian Ocean off Western Australia, where it is believed to have crashed.

Malaysia’s 449-page report into MH370’s disappearance, released on July 30, was universally condemned and sparked accusations by victims’ families of a cover-up at worst and incompetence at best.

They were particularly critical of the decision to rule out a sophisticated murder-suicide plot by the chief pilot, Captain Zaharie Shah, despite evidence showing someone intentionally disabled the plane’s communication systems before manually rerouting it.

Boeing has also been uncooperative in the investigation.  France has four victims of the crash, thus its interest, plus the lone large piece of debris was found on the French-owned island of Reunion in the Indian Ocean.

Random Musings

--Presidential tracking polls....

Gallup: 41% approve of President Trump, 54% disapprove (Aug. 5).  89% of Republicans approve, a figure that has consistently been between 85% and 90%.  But just 33% of Independents do, the lowest since April 22 and to me a big key to the midterms.
Rasmussen: 46% approval, 52% disapproval.

--House Democrats can take heart, at least morale wise, from the special election for Ohio’s 12th Congressional District in the northern Columbus suburbs, Tuesday, that wasn’t supposed to be competitive, but as I go to post is still too close to call between Democrat Danny O’Connor and Republican Troy Balderson.  This is a district that has been in Republican hands for 80 years (save for a single term in the 1980s) and voted for Trump by 11 points in 2016, but whether O’Connor wins or loses (after thousands of provisional ballots are counted), Democrats can take heart that at least some voters in Republican-leaning districts could be souring on Trump, and perhaps early talk of a blue wave that had been fading some of late, is back in play.

The winner will hold the seat for only five months, until January 2019, to serve out the term of Rep. Patrick Tiberi, who resigned last October to take a private-sector job.

But a victory will let the temporary congressman run as an incumbent in November’s midterm election, a significant advantage at the ballot box.

--President Trump endorsed conservative firebrand Kris Kobach, secretary of state in Kansas, over the current governor, and Republican incumbent, Jeff Colyer, and the race remains too close to call in this primary. 

--New York Republican Congressman Christopher Collins, who represents the Buffalo area, his son, Cameron, and the father of Cameron’s fiancée, were indicted for insider trading in the shares of an Australian biotech startup, Innate Immunotherapeutics Ltd., federal prosecutors in Manhattan unveiled on Wednesday.

Collins was on the board of Innate, one of its largest shareholders, and had access to nonpublic information about the company.  Prosecutors laid out the wrongdoing in great detail, including evidence that Collins was at the White House for a congressional picnic when he took a call from the company on a failed drug test, that allowed Collins to alert his son (who alerted others) to sell their shares before the dire news became public...the very essence of insider trading. It is so cut and dry from what was presented.  [The shares fell more than 92% when the bad news was released days later.]

Collins was the clear favorite to win this fall, and he announced Wednesday evening he was not stepping down and would fight the charges.  He last won by 34 points in 2016, with Trump winning Collins’ district by 25 points.

The National Republican Congressional Committee called the allegations against Mr. Collins “very serious charges.”

“We will let the facts come to light and trust the judicial system as we continue to assess his re-election campaign,” a spokesman for the NRCC said.  Collins’ Democratic opponent is an unknown, Nate McMurray, who now has a chance to capitalize on a gift just handed him.

Former Health and Human Services Secretary Tom Price was grilled during his confirmation hearing on whether he purchased shares in Innate after receiving a tip from Collins. Price said he never received information that could be considered a stock tip and denied any wrongdoing.  The share price rose as media reported on the men’s holdings in the Australian company.

--Editorial / Wall Street Journal

“Republicans on present trend are poised in November to lose their majority in the House of Representatives and a slew of governorships. That’s the clear message from Tuesday’s election contests and a growing body of evidence. The President’s persona is trumping positive policy results among voters, and without some intervening news or a change in strategy the result is likely to be a national left turn.

“Republicans appear to have won a narrow victory in the special House election in Ohio, with provisional and absentee ballots still to be counted.  But a win of less than 1% in a heavily Republican district is hardly a show of strength.  The Democratic share of the two-party vote surged as it has in every special election this year, while GOP State Senator Troy Balderson was crushed in Franklin County around Columbus by 2 to 1.

“The ominous news for Republicans is that they hold about 68 House seats that are less Republican than this Ohio district.  Most include stretches of suburbia that have been GOP strongholds but where many voters dislike Mr. Trump’s abrasive style and polarizing governance.  Democrats need to pick up 23 seats to regain the majority they lost in 2010, and three or four times as many seats could be in play in November.

“Further evidence came Tuesday in Washington State, where Republicans underperformed in two districts they currently hold. Cathy McMorris Rodgers, a member of the House leadership, barely led the top Democratic vote-getter in a jungle primary in her Spokane seat with 47.5%. She remains a modest favorite in the autumn, but the seven-term incumbent will have to spend heavily to win.

“As for the statehouses, Democrats won 137,000 more votes than Republicans in the primary for Governor. Michigan Attorney General Bill Schuette wrapped himself around Mr. Trump to defeat Lt. Gov. Brian Calley for the GOP nomination, but Mr. Trump’s approval rating in the state was 35% in the latest Marist poll.  Democrats nominated career politician Gretchen Whitmer over a leftist candidate favored by Bernie Sanders.  Lansing is now a prime Democratic pickup opportunity this fall despite the state’s stellar economic revival under Governor Rick Snyder.

“The same goes for Kansas, of all places, if Trump-endorsed Kris Kobach maintains his 191 vote lead [Ed. now 91] over Jeff Colyer in the GOP Governor’s race... Mr. Kobach will have to persuade Republicans in Johnson County in the Kansas City suburbs that he cares about more than deporting illegal immigrants.

“Tuesday’s results cast doubt on the current White House strategy to make the election a referendum on Donald J. Trump.  The President took credit late Tuesday for Mr. Balderson’s apparent Ohio victory, and perhaps his visit to the district Saturday evening motivated some GOP voters.  But his omnipresence also motivates Democrats, while it may de-motivate soft Republicans and independents who dislike Mr. Trump.

“Pollster Ed Goeas of the Tarrance Group says that his surveys show about 31% to 33% of voters are solidly in Mr. Trump’s camp.  Another 11% or so have some doubt about his persona but put a priority on his policies and their success so far. This explains the President’s approval rating of 44% or so.  But another 10% of voters like his results but emphasize his persona and thus disapprove of his job performance.

“This last group are the swing voters GOP candidates need in suburban districts to keep the House. They aren’t impressed by Mr. Trump’s name-calling, his brawls with the media or taunts of LeBron James.  They don’t like the debacle of family separations driven by immigration-enforcement obsessives inside the White House.

“Trade protectionism also doesn’t help among Republicans who work in large companies (and live in those swing districts) and are beginning to see the cost of tariffs.  GOP policy successes on the economy and taxes are drowned out by the Trump cacophony....

“Our sense is that Republican voters haven’t recognized how much jeopardy the party is in.  Many are content to listen only to their safe media spaces that repeat illusions about a ‘red wave’ and invoke 2016 when the media said Mr. Trump couldn’t win. Nearly all of the media does want Democrats to win again, and humility was one of the lessons we learned from the surprises of 2016.

“But that’s not an excuse for ignoring the evidence of GOP trouble.  Mr. Trump barely won in 2016 against the weakest Democratic candidate since Michael Dukakis, and Hillary isn’t on the ballot this year. Mr. Calley, who lost his Michigan primary for Governor, said Wednesday by way of explanation that ‘this is President Trump’s Republican Party.’  The question to be answered in November is whether it remains a majority governing party.”

--President Trump said at his dinner with business leaders in Bedminster on Tuesday that his administration was in contact with officials in California over wildfires burning in the state, this after the following tweet that he then repeated a few times over the week.

“California wildfires are being magnified & made so much worse by the bad environmental laws which aren’t allowing massive amounts of readily available water to be properly utilized.  It is being diverted into the Pacific Ocean.  Must also tree clear to stop fire from spreading!”

The fact is the availability of water is not an issue in the least for battling the fires.  Major reservoirs are near the worst fire zones and all are at or near their historical levels, as reported by the Los Angeles Times.

“There have been no issues getting water from them,” a spokesman for Cal Fire told the Times’ Michael Hiltzik.

But it is true water has been pumped into the valley at the expense of the river ecosystem and the state’s salmon fishery.

As to the “Must also tree clear to stop fire spreading!” there is a “truth nugget of the blind squirrel variety,” as Hiltzik put it.

“If Trump means ‘tree clear’ to mean more logging, then he’s merely putting his oar in for more commercial exploitation of the forests. If he means the construction of fire breaks to contain fires, that’s correct but it’s  a well understood technique and is exactly the technique being applied as a matter of course.

“If Trump means better forest management by consistent clearing of the underbrush that becomes tinder for wildfires, that’s true – but it’s not a novel concept. The suppression of smaller fires over the decades, in part to protect residences that have encroached into woodland, has increased the opportunities for bigger fires to take hold.

“But those policies fall within the jurisdiction of the federal government, as well as the state, since national forests and their environs are where much of the encroachment – the co-called wildland-urban interface – has taken place.  Among other factors, federal spending on fire suppression in the national forests has effectively subsidized the expansion of the interface, by taking the costs of fire control off the shoulders of the residents.

“But if Trump intends to address this factor, there’s no sign of it in any government policy statement. Its absence tells the story behind Trump’s fire tweet: He has no idea what’s causing the wildfires this season, no conception of how to fight them and no plan in place to alter the trend of more fires or more severity. Doing so means devoting attention to a complex problem that involves science, nature and government action. That can’t be accomplished via a Sunday night tweet.”

Editorial / Wall Street Journal

“Liberals exploit natural disasters – drought, hurricane, blizzard, you name it – to promote their anti-fossil fuels agenda.   Yet now they’re outraged that President Trump is daring to fight fire with fire by making a connection between California’s wildfires and destructive green policies.

“The President on Sunday tweeted that ‘bad environmental laws’ are magnifying California’s horrific wildfires by not ‘allowing massive amount of readily available water to be properly utilized.’  He added: ‘Tree clear to stop fire spreading!,’ and on Monday he complained that ‘vast amounts of water’ were being ‘diverted into the Pacific Ocean’ that could be used for ‘fires, farming and everything else.’

“As usual when Mr. Trump fires his scattergun, he hits deserving and undeserving targets. The state firefighting agency Cal Fire says it has plenty of water to battle the 16 or so large blazes that have broken out across the state in recent weeks... But every gallon of water used to extinguish fires won’t be available for Californians amid a severe water shortage, which has been exacerbated by wasteful environmental policies....

“Governor Jerry Brown keeps lecturing Californians that they need to adapt to a new ‘climate normal,’ yet the state government has done little to prepare for warmer and drier times if that is the future.  Lawmakers instead have subordinated fire prevention to pleasing the green lobby.

“Nearly 130 million trees in the state have died from drought, providing fuel for fast-spreading fires, and about half of the state’s 33 million acres of forestland need restoration.  The Little Hoover Commission, an independent state oversight agency, explained in a February report that ‘a century of fire suppression remains firmly entrenched within federal and state firefighting agencies and has left forest floors deep in flammable groundcover.’...

“Another challenge is state politicians who’d rather spend money on green pork. This year the Democratic legislature appropriated a mere $30 million of cap-and-trade revenues for fuel reductions on 60,000 acres of forest land. They allocated $335 million for electric vehicle subsidies.  Democrats have also spent billions on high-speed rail, but only this year did they get around to appropriating $101 million to replace a dozen or so Vietnam War-era helicopters unequipped with modern technology that enables night-flying for fire-fighting.

“Imagine the damage that could have been averted – and lives saved – if the state had replaced the antiques earlier and cleared millions of dead trees in lieu of building the train whose costs are careening toward $100 billion and may never be finished. But instead of examining their own priorities, the state’s’ politicians will blame the damaging fires on climate change and Donald Trump.”

--Michael Gerson / Washington Post

“In November, many Republican leaners and independents will face a difficult decision.  The national Democratic Party under Nancy Pelosi and Charles E. Schumer doesn’t share their views or values. But President Trump is a rolling disaster of mendacity, corruption and prejudice. What should they do?

“They should vote Democratic in their House race, no matter who the Democrats put forward. And they should vote Republican in Senate races with mainstream candidates (unlike, say, Corey Stewart in Virginia).

“Why vote strategically in this case? Because American politics is in the midst of an emergency.

“If Democrats gain control of the House but not the Senate, they will be a check on the president without becoming a threat to his best policies (from a Republican perspective) or able to enact their worst policies. The tax cut will stand. The Senate will still approve conservative judges. But the House will conduct real oversight hearings and expose both Russian influence and administration corruption. Under Republican control, important committees – such as Chairman Devin Nunes’ House Intelligence Committee – have become scraping, sniveling, panting and pathetic tools of the executive branch.  Only Democratic control can drain this particular swamp.

“Alternatively: If Republicans retain control of the House in November, Trump will (correctly) claim victory and vindication. He will have beaten the political performances of Bill Clinton and Barack Obama in their first midterms. He will have proved the electoral value of racial and ethnic stereotyping. He will have demonstrated the effectiveness of circuslike distraction. He will have shown the political power of bold, constant, uncorrected lies. And he will gain many more enablers and imitators.

“Perhaps worst of all, a victorious Trump will complete his takeover of the Republican Party (which is already far along). Ever murmured dissent will be silenced. The GOP will be fully committed to a 2020 presidential campaign conducted in the spirit of George C. Wallace – a campaign of racial division, of rural/urban division, of religious division, of party division that metastasizes into mutual contempt.”

Personally, I am still going to vote for my Republican representative, Congressman Leonard Lance, but I agree with Gerson’s thoughts on 2020.

--Ellis Close / USA TODAY

“A year ago, it seemed unfathomable: an American president defiantly defending ‘very fine people on both sides’ of neo-Nazism; an American president suggesting moral equivalency between fighting for racial equality and championing white supremacy.

“To be fair, President Donald Trump was making a somewhat subtler point.  In his colloquy with the press, he was not calling neo-Nazis great folks but arguing that many of the Confederate-statue-loving protesters in Charlottesville, Virginia, were not neo-Nazis at all. Somehow, these ‘fine people’ got mixed in with white supremacists shouting, ‘Jews will not replace us,’ and never noticed their compatriots were not fine people, too.

“As for Heather Heyer, the 32-year-old idealist plowed down and killed in Charlottesville by a 21-year-old driver said to idolize Adolf Hitler, Trump tweeted on Aug. 16: ‘Memorial service today for beautiful and incredible Heather Heyer, a truly special young woman.  She will be long remembered by all!’

“More than a year-and-a-half into the Trump presidency, many have accepted the reality that Trump is unlike any U.S. president previously seen, that he wallows in divisive rhetoric and tolerates odious behavior because he so often indulges in it.

“His recent assault on LeBron James as stupid and CNN host Don Lemon as stupider (‘low IQ’ is his go-to insult for blacks) is par for the course. It’s impossible, at this point, to be surprised by boorish behavior in someone who consistently acts like a boob.  The trap – and one that Trump could easily lead us into – is to start thinking such behavior is not just normal for Trump but normal.

“In his press availability addressing Charlottesville last year, Trump was asked whether race relations had gotten worse. He replied that they were ‘better or the same,’ but added, ‘They have been frayed for a long time.’  In other words, although he predicted race relations would improve, he emphasized how fraught and ‘frayed’ they were. Who could blame him if they stayed that way – or got worse? Despite promising racial harmony through job creation, he was betting the opposite.

“Indeed, his political career was built on betting the opposite.  It effectively began with birtherism, blossomed with talk of Mexican rapists and Muslim terrorists, and flourished with allusions to gang-bangers spilling over the border.

“At a recent rally in Tampa, Florida, he fired up the crowd by ridiculing Democrats’ desire for ‘open borders, which equals massive crime.’ They ‘want to let MS-13 rule our country,’ he declared, adding, ‘Every day the brave men and women of ICE are liberating communities and towns from savage gangs like MS-13 that are occupying our country like another nation would.’

“Benjamin Wittes, editor in chief of the Lawfare blog, spent more than a year chasing down one of Trump’s statistics.  In a speech before Congress in February 2017, Trump cited a Justice Department study showing ‘the vast majority of individuals convicted of terrorism and terrorism-related offenses since 9/11 came here from outside of our country.’  After repeated requests for information from the Justice Department, Wittes concluded that the president was lying. Justice never generated such a statistic.

“Nor, as fact-checkers have confirmed, is there evidence of Immigration and Customs Enforcement liberating towns across America from savage, immigrant gangs.

“Such falsehoods have a transparent purpose – one aligned with neo-Nazi propaganda. They are designed to make us believe that hatred, suspicion and dread of marginalized populations is not just normal but noble....

“In 2009, I visited Rwanda and talked to men who had participated in the attempted genocide 15 years earlier, many of whom were in prison. Why, I asked, had they tortured and killed their Tutsi neighbors? Some refused to give a direct answer.

“Others claimed they were wrongly accused. But the typical response among those who answered was that they thought they were doing what the state wanted them to do. They thought they were doing good.  They thought they were performing a service by ridding the world of people the government called ‘cockroaches.’

“Thank God we have gotten nowhere near that point in America – yet – although one could argue that putting immigrant children considered part of an infestation in cages is a step in that direction.”

--The Puerto Rican government acknowledged in a document filed to Congress Wednesday that the death toll from Hurricane Maria last year may have exceeded 1,400, though the official count stands at 64.

The administration of Gov. Ricardo Rossello has faced criticism that it severely undercounted the number of fatalities stemming from the storm, with other studies by academic researchers and news organizations coming up with figures in excess of 4,000.

Based on the government’s new findings, “there were 1,427 more deaths in the four months after the hurricanes than normal (based on the previous four years).”

--As reported by Betsy McKay of the Wall Street Journal: “About one in seven children born to women with Zika in U.S. territories had serious health problems linked to the mosquito-borne virus, such as brain damage or impaired vision, federal public-health researchers reported Tuesday.

“Many of the health issues emerged in children who appeared healthy at birth, suggesting just how heavy the virus’s long-term toll is, according to the Centers for Disease Control and Prevention researchers.

“The study...roughly two years after the Zika epidemic swept through the Americas, is the largest to date on the disease’s long-term impact, the agency said.

“The findings also confirm the fears of medical experts about Zika’s toll on children....

“The results ‘could be an underestimate’ of Zika’s impact because many children born to mothers infected with Zika haven’t had follow-up medical care reported...

“A recent CDC study of 7- and 8-year-olds born with birth defects to women infected with Zika in Cambodia found the children required extensive care.... Identifying problems early is critical so that the children can get physical therapy or other care to help them manage or lessen the symptoms....

“The new CDC study included 1,450 babies in the agency’s U.S. Zika Pregnancy and Infant Registry, who were at least one year old by Feb. 1, 2018 and had received some follow-up care after birth.

Of them, 203, or 14%, had either a Zika-associated birth defect, or neurological problems affecting children’s ability to see, hear or move their arms and legs that appeared after birth – or both....

“While Zika isn’t causing the huge epidemic that it did in 2016, and local transmission of the virus hasn’t been identified in the U.S. since 2017, the CDC said, Zika continues to spread at low levels and poses a risk to pregnant women who live in or travel to nearly 100 countries and territories.”

--In Chicago last weekend, at least 72 people were shot, including 12 fatally, with a 13th homicide uncovered later...a woman found dead in a bathtub with her hands and feet bound.

This comes after Chicago had actually seen an improvement in the murder rate through July, down 23% compared with the same point last year (though the total was still over 300 – more than any other U.S. city).

A huge problem not just in Chicago but around the country is very few murder cases are being solved (cleared) in the big cities.  Baltimore, Chicago and New Orleans, for example, only clear about 25% of their homicides.  There was a story in USA Today, for example, that in one case last September in Indianapolis, where the murder rate has surged, Indianapolis Police said that 10 young people were present when 13-year-old Matthew McGee was gunned down in the parking lot of a fast food restaurant.  No one spoke up.  That’s sick.

--Finally, with just four weeks left before the 2018 pageant gets underway in Atlantic City, a group of 11 former Miss America titleholders have issued a letter calling for the immediate resignation of Gretchen Carlson, chairwoman of the pageant’s board of trustees, along with pageant CEO Regina Hopper.

“We insist that our current Chairwoman and CEO resign now, not after September 9 (the date of the pageant),” the letter says.

In June, Carlson (ex-of Fox News and a leader of the #MeToo movement) announced that Miss America would no longer be judging contestants – she now calls them “candidates” – on physical appearance.  Those competing for the crown would not be required to wear bathing suits and heels.

I’ve previously expressed my opinion. Carlson should go.

---

Golf $1219
Oil $67.75

Returns for the week 8/6-8/10

Dow Jones  -0.8%  [25313]
S&P 500  -0.3%  [2873]
S&P MidCap  -0.2%
Russell 2000  +0.8%
Nasdaq  +0.4%  [7839]

Returns for the period 1/1/18-8/10/18

Dow Jones  +2.4%
S&P 500  +6.0%
S&P MidCap  +5.0%
Russell 2000  +9.9%
Nasdaq  +13.6%

Bulls 54.9
Bears 18.6

Have a great week.

Brian Trumbore