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03/31/2018

For the week 3/26-3/30

[Posted 11:30 PM ET, Friday]

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Edition 990

Trump World

I cover Kim Jong-un’s surprise visit to China, the latest on Russia, and President Trump’s crazy statement on pulling out of Syria in great detail below.

But as the first quarter was wrapping up, it struck me that the second quarter could potentially be monumental on the foreign policy front, and thus roil global markets further. 

In the next three months, we are supposed to have a Trump-Kim summit, after Kim’s historic summit with South Korea’s President Moon Jae-in.  China will be looming over both of them.

President Trump seems certain to scuttle the Iran nuclear deal, which next has a May deadline for either extending the sanctions relief and keeping the deal in place, or putting the sanctions back on and starting over, with unknown consequences.

And also over the next three months, no one should be surprised to see Russian President Putin create a new crisis, especially in the Baltics, as he defends Russia’s honor...at least that is how he’ll frame it.  Also, remember the name Kaliningrad. 

These are three massively important theaters, and throw in Israel, which is rapidly being surrounded. 

Again, this could all come to a head in just the next 90 days.  How will President Trump respond?  Who will be the last one in his ear?

Fasten your seat belts.  There isn’t a soul alive who truly knows what could happen.

Trumpets....

[Due to time constraints, i.e., far more important things to discuss...I am limiting the scope of this section this week, many items not making the cut.]

--Attorney General Jeff Sessions said Thursday that Utah U.S. Attorney John Huber is investigating GOP lawmakers’ allegations against the FBI and that a special counsel is not needed to probe the case, as President Trump, Republicans on the Hill, and the likes of Sean Hannity have been calling for.

“I am confident that Mr. Huber’s review will include a full, complete and objective evaluation of these matters in a manner that is consistent with the law and facts,” Sessions wrote.

The AG said he would rely on Huber’s conclusion before reaching a final decision on whether a second special counsel was warranted.

I’m a little surprised Trump hasn’t tweeted his disapproval of the decision as yet.

Huber is also looking at whether the FBI should have done a better job probing Hillary Clinton’s role in the controversy surrounding Uranium One and Russia.

--Trump replaced the head of Veterans Affairs, David Shulkin, in a tweet: “I am pleased to announce that I intend to nominate highly respected Admiral Ronny L. Jackson, MD, as the new Secretary of Veterans Affairs... In the interim, Hon. Robert Wilkie of DOD will serve as Acting Secretary. I am thankful for Dr. David Shulkin’s service to our country and to our GREAT VETERANS!”

The selection of Dr. Jackson is beyond outrageous.  No way is he prepared to run the second-largest department in the government.  His nomination should not be approved.  But Shulkin deserved the boot over his European adventure last year that included Wimbledon and lots of sightseeing on our dime.

--Trump tweets: “Washington spent trillions building up foreign countries while allowing OUR OWN infrastructure to fall into a state of total disrepair. NO more!  It’s time to REBUILD, and we will do it with American WORKERS, American GRIT, and American PRIDE!”

“JOBS, JOBS, JOBS!  Unemployment claims have fallen to a 45-year low. Together, we are making the economy great again!”

“Because of the $700 & $716 Billion Dollars gotten to rebuild our Military, many jobs are created and our Military is again rich. Building a great Border Wall, with drugs (poison) and enemy combatants pouring into our Country, is all about National Defense. Build Wall through M!”

[The president has clearly decided he is going to attempt to use money allocated for the Pentagon to build the wall, in the name of national defense, even though there are serious questions as to whether this is really legal, let alone what the Pentagon will think about it.  Americans should also know by now that with such massive sums that are headed the Pentagon’s way comes massive corruption.  And that sucks.  I’m all for increasing defense spending, but history tells us “60 Minutes” will soon have ample fodder for future segments.]

“So much Fake News.  Never been more voluminous or more inaccurate. But through it all, our country is doing great!

--To cut to the chase...Jared Kushner should not be in the White House.  He shouldn’t have anything to do with government...period.  It bears repeating...the apple doesn’t fall far from the tree.  The loans the kid received from Apollo and Citigroup clearly ran afoul of the rules and laws governing the conduct of federal employees.  This case remains under investigation.

--Finally, of course I watched “60 Minutes” and Anderson Cooper’s interview with Stormy Daniels and, no, Sean Hannity, we don’t need to see your montage of Cooper’s work every night for the next three years, Hannity having a habit of repeating the same stories over and over and over and over....

Here’s my bottom line with Ms. Daniels, aka Stephanie Clifford.  The detestable Michael Cohen paid Daniels $130,000 in late October of 2016 to keep quiet about the 2006 hookup with Donald Trump.  No one now disputes this.  On “60 Minutes” Stormy agreed it was “hush money.”  Cohen insists he paid the sum out of his pocket without any discussion or repayment from Trump.

I totally agree with the following from an editorial, post- “60 Minutes,” in the Wall Street Journal:

“It’s impossible to predict how all of this will play out politically. Many Trump partisans will refuse to believe it or claim it’s irrelevant. But our guess is that at the margin this contributes to a growing public belief that Mr. Trump’s personal flaws are undermining his chances for a successful presidency.

“Two months ago he had emerged from a tumultuous first year with the triumph of tax reform and rising poll numbers. The strong economy had Republicans closing the gap with Democrats on who should run Congress next year. But Mr. Trump can’t resist promoting White House strife and making himself the center of political tumult.

“His recent selections of John Bolton and Mike Pompeo for his security team are first rate. But Mr. Trump’s reality-TV dismissal of their predecessors was nasty and chaotic. On Friday he threatened to veto a budget bill his own staff had been negotiating for weeks – further souring voters on the GOP Congress. Doesn’t he realize that if Democrats win the House, they will vote to impeach him?

“Mr. Trump can’t retain the best legal counsel because no one wants a client who ignores all advice.  He wants to answer questions from Mr. Mueller but probably won’t prepare enough to avoid even accidental self-incrimination.  The Stormy Daniels case is typical of Mr. Trump’s pre-presidential behavior in thinking he can, with enough threats and dissembling, get away with anything.  He’s never understood that a President can’t behave that way, and this may be the cause of his downfall.”

Wall Street...Trade...the Deficit....

Wall Street finished the quarter on Thursday, Friday being a holiday, and after nine straight quarterly increases, the Dow Jones and S&P 500 both fell for the three months. The Dow finished down 2.5%, the S&P falling 1.2%.  Nasdaq, though, had another up quarter, 2.3%.

The quarter was best symbolized by a stronger-than-expected jobs figure in February that stoked fears of a more aggressive Federal Reserve, and then more recently talk of a trade war with China after President Trump suddenly said he was levying tariffs on steel and aluminum.

But aside from the still looming trade issue, and geopolitical concerns as noted above, the immediate focus will be on next Friday’s jobs data for March, and then corporate earnings, which will begin coming out in earnest the week of April 9.

On the economic front this week, the final revision for fourth-quarter GDP was better than expected, 2.9% annualized, so the last few quarters now look like this.

Q4 2016... 1.8% (annualized)
Q1 2017... 1.2%
Q2 2017... 3.1%
Q3 2017... 3.2%
Q4 2017... 2.9%

Separately, personal income for February rose a solid 0.4%, but consumption (spending) rose just 0.2% a second consecutive month after gains of 0.5% in December and 0.7% in November.  Both income and consumption were in line with expectations but the latter points to a slowdown in consumer spending, which represents 2/3s of the U.S. economy, i.e., most folks are saving their tax cut, the personal savings rate rising in February.

The personal consumption expenditures indicator, the Fed’s preferred inflation barometer, was 0.2%, both on headline and core (ex-food and energy) and for the 12 months was up 1.8% and 1.6%, respectively, so still below the Fed’s 2% target.

The Chicago Purchasing Managers Index for March was 57.4, well below consensus and the lowest since March 2017, but still solidly in growth mode (50 being the dividing line between growth and contraction).

Add all of this week’s data up and the Atlanta Fed’s GDPNow indicator is 2.4% for first-quarter growth, up from its prior reading of 1.8%.

Moving on to trade....      

We learned that  the president’s tariffs on Chinese goods may not be imposed until early June, administration officials said, with further public consultations and potential tariff revisions buying time for negotiations.  U.S. Trade Representative Robert Lighthizer said he anticipates about 60 days’ worth of public comment on a soon-to-be published tariff list, but added that it would take years to bring the U.S.-China trading relationship “to a good place.”

Lighthizer added, “The 60 days refers to the time frame anticipated for public response. A determination on a final list and an effective date would be made thereafter,” the comments via an interview with CNBC.

So it’s time for everyone, including the Street, to chill out for a while.

Until the president’s next statement, that is, like the one he made on a new trade agreement with South Korea, heralded earlier in the week, which he then commented on at his Ohio appearance on Thursday. “I may hold it up after a deal is made with North Korea.  Does everybody understand that? You know why, right?  You know why? Because it’s a very strong card.”

Trump added, “We’ll probably hold that deal up for a little while, see how it all plays out.”

So you can imagine South Korea’s response.  Undoubtedly it was “WTF!”

[This was in the same speech he was to tout infrastructure, and then instead mentioned it only in passing at the end, saying legislation for same was unlikely to pass soon anyway.  Trump had more important things to discuss...like himself...and Roseanne.]

The renegotiated trade deal with South Korea (should it be finalized), doubles the quota on the number of cars each U.S. automaker can sell in South Korea without meeting local safety standards to 50,000, but currently, no American company sells more than 11,000 cars a year there and 25,000 was hardly an obstacle.  A 25% U.S. tariff on pickup trucks from South Korea will remain until 2041, rather than the existing 2021, thus protecting U.S. companies from South Korean competition for this category, but it also limits Americans’ consumer choices another 20 years.

South Korea agreed to limit its steel exports to the U.S. to about 2.7 million tons a year (70 percent of its recent shipments), in exchange for relief from the 25 percent tariff Trump announced earlier in March.

But as was the case in this instance, the Trump administration wants to reshape global trade within months, rather than the years complex treaties such as NAFTA normally take.

For now, there are still temporary exemptions on imports of aluminum and steel from Australia, Brazil, Canada, the EU, and Mexico (South Korea having just been settled...maybe) on May 1.  Or later....

Editorial / Wall Street Journal

“The Trump Administration is celebrating its revised trade agreement with South Korea, and the news is how little the deal will change. The U.S. wisely backed away from threats to blow up the pact with its sixth largest trading partner, but the price is more politically managed trade.

“Donald Trump once called the 2012 bilateral pact ‘horrible’ and threatened to withdraw if Seoul refused to renegotiate. But after the melodrama, the new pact’s main revisions are a change in the terms of trade for vehicles and a quota on Korean steel exports to the U.S.  Neither is likely to make much difference to the U.S. trade deficit with South Korea, which is supposedly the goal of this exercise....

“(And) trade negotiator Robert Lighthizer failed to win a new opening for U.S. farm goods or other exporters. By focusing so much on autos and steel, Mr. Lighthizer missed an opportunity to expand trade in services, where the U.S. runs a $12.3 billion annual surplus with South Korea.

“Mr. Lighthizer is also trumpeting Seoul’s acceptance of a 30% cut in its steel exports to the U.S.  This is a defeat for American steel users who are already paying higher prices despite the country-specific exemptions from Mr. Trump’s world-wide 25% tariff on imported steel.  Reducing supply can have the same effect as a tariff in raising domestic prices.

“This is another step toward politicians managing trade flows, as if Mr. Lighthizer in his wisdom can judge the right supply for tens of thousands of buyers and sellers. This seems to be the U.S. trade rep’s household remedy. The U.S. bludgeoned Mexico into accepting sugar quotas, and he’s now doing the same with steel suppliers around the world.

“The creation of the World Trade Organization was supposed to put an end to these so-called voluntary export restraints. But Mr. Lighthizer negotiated them with Japan in the 1980s, and he wants to try again. His problem is that global business supply chains are more complex than 30 years ago, trade is dominated by intermediate goods, and the U.S. is no longer as dominant a market for finished goods.  Negotiated quotas will damage U.S. competitiveness and do little to alter the trade balance.

“In that sense the Korean renegotiation is less a triumph than lost opportunity. By focusing on trade in industrial-age goods, the U.S. missed a chance to open South Korea further to the services and products of the future. But at least the Administration didn’t blow up a mutually beneficial pact with an important ally, and for that we can be grateful.”

Of course, after this editorial was published, Trump then said he was prepared to walk away from it over North Korea.

Editorial / The Economist

“Mr. Trump’s misunderstanding of economics explains why his politics are so irresponsible. Rather than join with other aggrieved countries to put legal pressure on China, Mr. Trump has threatened putative allies. Rather than work within the rules-based system of trade, which America helped create and which, despite the system’s imperfections, has served the country well, he bypasses it at will. He is particularly reckless to claim that the steel and aluminum tariffs are justified by national-security concerns (a get-out-of-jail-free card under World Trade Organization rules that should be used sparingly). If America thumbs its nose at the WTO, why shouldn’t others?

“Managed trade is a mistake, not a victory. It substitutes the power of political lobbies for market forces, favoring loud, well-organized producers over silent, disparate consumers and robbing economies of the nimbleness needed to adapt to changing technological conditions. Other countries will feel freer to follow America’s example, making a trade war a repeated risk rather than a one-off danger.  Mr. Trump’s approach threatens to leave everyone much worse off. Some deal.”

Finally, we have the U.S. federal deficit.  For years, admittedly, I have cried wolf on this topic.  But with interest rates held artificially low for ages, it hasn’t been the issue it once threatened to become.  That is no longer the case, and between the tax-cut package (whose long-term impact could still be positive, we hope) and the new spending legislation (whose long-term impact most decidedly will not be good), the deficit is back on center stage, at least among some opinion shapers.

Greg Ip / Wall Street Journal

“The U.S.’s underlying economic prowess is without peer: it is rich and diversified, produces most of its own food and energy, has a growing population, and it is entrepreneurial and competitive.

“But those assets are all legacies of the U.S.’s past, and some are eroding: business dynamism by some measures and economic growth have both declined, and the population is aging. If the U.S. pivots toward less trade and immigration, the ratings company (ed. Moody’s) warns, that may ‘swing the balance of risks for long-term growth to the downside.’

“Slow growth can be managed with the right fiscal policies. This is where it gets worrisome. In the U.S., interest swallowed 8% of federal revenue last year, the highest of all AAA-rated countries. As interest rates return to normal and debt keeps rising, Moody’s thinks it will hit 21.4% in 2027. This severely limits the government’s flexibility to respond to emergencies, whether a financial crisis, a recession, or a war, not to mention longer-term priorities such as education and research.  It is ‘a good proxy of the stress you may see on the prioritization of funds,’ says William Foster, an analyst at Moody’s.  ‘As interest is rising, that crowds out other spending.’....

“(But today) even Republicans have little appetite for cutting spending.  President Trump threatened (last) Friday to veto a bill funding the government for the rest of the fiscal year because it didn’t spend enough on a border wall. ‘We’re in a full-blown era of free-lunch economics where no one says no to anyone anymore,’ says Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a watchdog.

“Does it matter?  Japan’s debts are higher and the country long also lost its AAA rating, yet it has no problem whatsoever borrowing.  After Moody’s competitor, Standard & Poor’s Corp., stripped the U.S. of its AAA in 2011, interest rates went down, not up.  As Moody’s says, the global pool of savings from which the U.S. borrows tends to grow in times of stress.

“There are at least two reasons it matters. First, when the next recession hits, the U.S. may want to open the fiscal taps but instead have to do the opposite as tax collections sink and deficits mount. Second, while markets and the Federal Reserve both doubt interest rates will go much above 3% for the foreseeable future, the U.S. is acutely vulnerable if they are wrong because the debt is so large and so much of it comes due each year, and would have to be refinanced at higher rates.

“ ‘We are the greatest country with the strongest economy yet we seem intent on finding out when we can’t borrow any more in a painless way,’ Ms. MacGuineas says.”

Michael J. Boskin, John H. Cochrane, John F. Cogan, George P. Shultz and John B. Taylor (all senior fellows and economists at the Hoover Institution) / Washington Post

“We live in a time of extraordinary promise. Breakthroughs in artificial intelligence, 3D manufacturing, medical science and other areas have the potential to dramatically raise living standards in coming decades. But a major obstacle stands squarely in the way of this promise: high and sharply rising government debt.

“President Trump’s recently released budget is a wake-up call. It projects that this year, a year of relatively strong economic growth, low unemployment and continued historically low interest rates, the deficit will reach $870 billion, 30 percent greater than last year.

“For years, economists have warned of major increases in future public debt burdens. That future is on our doorstep. From this point forward, even if economic growth continues uninterrupted, current tax and spending patterns imply that annual deficits will steadily increase, approaching the $1 trillion mark in two years and steadily rising thereafter as far as the eye can see.

“Unless Congress acts to reduce federal budget deficits, the outstanding public debt will reach $20 trillion a scant five years from now, up from its current level of $15 trillion.  That amounts to almost a quarter of a million dollars for a family of four, more than twice the median household wealth.

“This string of perpetually rising trillion-dollar-plus deficits is unprecedented in U.S. history....

“If, for example, interest rates were to rise to 5 percent, instead of the Trump administration’s prediction of just under 3.5 percent, the interest cost alone on the projected $20 trillion of public debt would total $1 trillion per year. More than half of all personal income taxes would be needed to pay bondholders. Such high interest payments would crowd out financing of needed expenditures to restore our depleted national defense budget, our domestic infrastructure and other critical government activities.

“Unchecked, such a debt spiral raises the specter of a crisis. Some may think that such concerns are overblown, as there is no current evidence in financial futures markets that a crisis is on the horizon. But  a debt crisis does not come slowly and visibly like a rising tide. It comes without warning, like an earthquake, as short-term bondholders attempt to escape fiscal carnage.  Only in hindsight are we able to see the stresses building and bemoan that we did no act. While some insulation flows from the dollar’s role as the global reserve currency, that is neither sufficient nor immutable, and relies on faith in the United States’ eventual fiscal probity....

“As is well-known, our deficit and debt problems stem from sharply rising entitlement spending.  Without congressional action, the combination of the automatic spending increase per beneficiary provisions of these programs and the growth in entitlement program recipients as the population ages will cause entitlement spending to continue to rise far faster than U.S. national income and tax revenue.

“To address the debt problem, Congress must reform and restrain the growth of entitlement programs and adopt further pro-growth tax and regulatory policies. The recently enacted corporate-tax-reform plan is a good first step, as it sharply increases the incentive to invest and grow businesses, which will increase incomes. The revenue loss, which amounts to about 0.4 percent of gross-domestic product in 2025, is not by itself a budget buster, considering both the offsetting revenue reflow from higher incomes and the far larger long-run entitlement explosion. Moreover, over the next decade, the tax plan maintains or increases the federal tax claim on GDP compared with recent levels.... Taxes alone cannot solve our budget problem. Funding programs as they are currently structured will require high taxes for all income levels, taxes that would sharply reduce economic opportunity and growth, which in turn will make funding entitlements that much harder.

“If Congress acts now, it can avoid a fiscal collapse while continuing to provide help to people who need it. If Congress waits for a crisis – which may come when the United States needs suddenly to borrow significantly to address a financial meltdown, recession or war – the result will be fiscal and economic chaos, as well as painfully sharp cuts to programs that people rely on.”

Reminder, boys and girls.  “Payments for individuals,” which encompass such income transfers as Medicare, Medicaid, Social Security and food stamps, were 47.9% of outlays in 1989 and are projected to reach 69.2% in 2019.

Europe and Asia

There was zero broad economic news for the eurozone, China or Japan this week. But with quarter end, there will be a flood of it shortly.

[Oops, as I go to post this popped up. The official China manufacturing PMI for March was released Saturday, China time, and it rose to 51.5 from 50.3 in February.  Business conditions in China’s manufacturing sector have now improved 20 straight months.]

Eurobits....

--Crowds of protesters in Spain’s Catalonia region clashed with police after the Supreme Court stepped up legal action against separatists, the high court ruling at the end of last week that 25 Catalan leaders should be tried for rebellion, embezzlement or disobeying the state, the protests spreading over the weekend.  More than 20 people were injured in Barcelona.

So then on Sunday, Carles Puigdemont, the fugitive ex-leader of Catalonia and an ardent separatist, was detained by German police on an international warrant as he tried to enter the country from Denmark.  [He had flown to Finland to give a speech,  Finland being in the EU.  I’m not sure why he wasn’t arrested there, but it seems he fled and was transiting through Denmark, to Germany, because he thought Finnish authorities were about to haul him in.]

What an idiot!  He was in self-imposed exile in Brussels, the Belgium government barely tolerating his presence for another month or two, but he knew he couldn’t go anywhere else but home to stand trial.

So what the heck was he doing sneaking around?  Remember, it’s the European Union. The other member states don’t support what Catalonia has been trying to do because virtually all of them have some kind of simmering separatist minority in their midst as well (especially Belgium). So all the governments will do what they can to support Spain’s central government in Madrid. This isn’t rocket science, sports fans.

But needless to say, Puigdemont’s arrest sparked new protests and the country’s worst political crisis in three decades continues.

I have yet to see if a formal extradition process to Spain for him is underway as he now sits in a prison in northern Germany, but I do believe the situation has to be rectified within 60 days.

--Former British prime minister Tony Blair refuses to give up the fight against Brexit, using a new tactic: He is trying to make people understand that the U.K. will leave the European Union next March without anyone really knowing  what sort of future relationship it will have with its biggest trading partner.

“As time goes on, it will become crystal clear that the Government’s original negotiating position was built on sand,” he said on Monday.

What concerns Blair is the way the negotiations are structured. First the divorce gets formalized in the withdrawal treaty, with a transition deal included in it (the agreed upon final exit date December 2020, or 21 months after Brexit).

But then on the future relationship beyond December 2020, all Britain can hope for by that time is a political statement setting out the scope of a deal, the EU says.  It won’t be legally binding and will likely be very vague.

So Blair accuses the government of Prime Minister Theresa May of using this vagueness as just a way to keep her Conservative Party together until it can deliver Brexit.  For example, U.K. proposals on trade have been rejected thus far by the EU as unrealistic; the U.K. wanting to opt out of certain pieces of the single market while retaining freedom to go its own way where it chooses, such as in financial services, i.e., the “cherry-picking” EU leaders have consistently said is not going to be tolerated.

So, Blair says, “The government will turn to fudge. They will understand – and the Brexiteers will assist them – that they have somehow to get past March 2019 without a defeat and they can only do that if the terms of the new relationship are sufficiently vague to let the fiction of ‘cakeism’ continue.”  [Having one’s cake and eating it.]

“It is this strategy that Parliament has a duty to foil,” Blair says. Blair wants the government to put a detailed trade proposal on the table with the EU before the U.K. leaves. The people should then have a vote.

I’ve been following Brexit closely, as you know, and I can’t disagree one bit with Blair.  I thought Brexit from the beginning would be a disaster...and it still can be.

--Italy’s right-wing League (formerly Northern League) leader Mattel Salvini and ex-premier Silvio Berlusconi pledged to work together after a virulent clash over relations with the anti-establishment Five Star Movement; the prospect of a populist Five Star-League government alarming investors.

The rift was over who would be the speaker of the lower house, which went to Roberto Fico of Five Star, while the Senate post went to a member of Berlusconi’s Forza Italia party, but a person who was not Berlusconi’s first choice, Berlusconi all torqued off because Five Star’s leader Luigi Di Maio refused to meet with him.

President Sergio Mattarella, who has the duty of naming a new premier, is expected to start formal consultations with party leaders in early April, but there is no way these three players will put together a true coalition government...unless it is the League and Five Star, and that would spell disaster for the EU and financial markets...a true separatist government in the EU’s third-largest economy.

Separately, Salvini called for an immediate halt to migrant arrivals in Italian ports, claiming a “very high risk of terrorism,” the League’s popularity largely built on its virulently anti-immigrant stance, having already called for the deportation of more than 600,000 illegal immigrants on Italian soil.

Wolfgang Munchau / Financial Times

“What we see in Italy now is the predictable response to two decades of economic policy that failed to produce jobs for young people.  Many of the victims of this policy are now the backbone of support for the two triumphant populist parties.  No country, not even a paternalistic one such as Italy, can maintain a pro-European consensus in the presence of permanent economic calamity.

“Unless Five Star or the League agree to self-destruct, they cannot afford to let go of their election promises. Five Star promised a universal basic income; the League wants a flat income tax. Both intend to reverse pension reforms. These promises are simply inconsistent with adherence to the EU’s fiscal rules....

“It has been the tragedy of the eurozone that Italy is too big to save and too big to fail. The eurozone has no instruments to deal with the crisis of a large country effectively. The Franco-German talks about economic reform belong in the nice-to-have-category – new rules of engagement for the European Stability Mechanism, the rescue umbrella, and the next steps towards banking union.

“But if Paris and Berlin were serious about crisi prevention, they would need to talk about a single safe asset as a backup for financial markets and a funding instrument to create fiscal capacity to revive the eurozone’s economic wastelands. The political chances of such reforms are zero.

“For as long as this remains so, we are safe to define a time of economic stability as the period between two crises.”

--Germany’s unemployment rate hit a new post-reunification low, falling to 5.3 percent in March, according to the Federal Labour Office.  [The European Union uses a different format and estimates it is far lower than this.]

--Consumer spending in the U.K. dropped to the slowest pace since 2011 last year as the fall in the pound squeezed living standards.  Household spending rose 1.7 percent in 2017, down from 3.1 percent the previous year, according to the Office for National Statistics.

--Former French President Nicolas Sarkozy is going to face trial over charges he misused his influence to secure leaked details of an inquiry into alleged irregularities in his 2007 election campaign, as reported by Le Monde.  The case came about after investigators used phone-taps to examine separate allegations that late Libyan leader Muammar Gaddafi funded Sarkozy’s campaign and began to suspect he kept tabs on a separate case through a network of informants.

--Austria is drawing criticism from parts of the European Union for saying it couldn’t expel Russian diplomats on account of its neutrality.

Recall, Chancellor Sebastian Kurz’s new government includes nationalists that cooperate with Vladimir Putin, and he has declined to join the tough international response to the nerve-agent attack in the U.K.

Kurz’s position is hardly compatible with EU membership, as many are saying.  I wrote the other week of scary developments here.  This inaction only confirms some of the worst fears.

I’m reminded of a trip I took to Vienna around 2003. I took the train line out to the end to go hike in a state forest I knew was out there somewhere.  The line ended in a small village and I did find the entrance to the park, but then I realized I didn’t have enough time to get the train back to Vienna that I was targeting.

So I’m walking around in my London Fog raincoat, sticking out like a sore thumb as unfriendly folks passed me on these very suburban streets, and I go back to the station and thought I’d have a beer at the bar there. When I walked in, it felt like I had walked back into Nazi Germany.  I turned right around and was glad to get back to ‘civilized’ Vienna. 

--Finally, last week I opened with the heroism of French police officer Lt.-Col. Arnaud Beltrame, who had traded places with one of the captives taken by an Islamist terrorist last Friday following a shooting spree in southern France.  I just couldn’t believe his story...a hero for the ages.

Beltrame, as you heard, died of his injuries about four hours after I posted.

Col. Arnaud’s brother Cedric told a French radio station on Saturday, “He gave his life for strangers. He must have known that he didn’t really have a chance.  If that doesn’t make him a hero, I don’t know what would.”

President Emmanuel Macron said that Col. Arnaud “fell as a hero” after showing “exceptional courage and selflessness,” adding that he deserved “the respect and admiration of the whole nation.”

British Prime Minister May said the “sacrifice and courage” of Beltrame would not be forgotten.

I will never forget him. 

Street Bytes

--Stocks broke a two-week losing streak, with the Dow finishing up 2.4%, the S&P 2.0% and Nasdaq 1.0%.  The big positive was a seeming lessening of trade tensions, at least for now, though extreme volatility in the tech sector continued.

--U.S. Treasury Yields

6-mo. 1.91%  2-yr. 2.27%  10-yr. 2.74%  30-yr. 2.97%

Yields on the long end of the curve fell to two-month lows.  Frankly, it made little sense but here we are.  Let’s see what the beginning of a new quarter brings.

--In an extensive interview with MSNBC on Wednesday, the taping of a show to be aired April 6, Apple CEO Tim Cook called for privacy regulation, saying consumers should have more visibility into not only what personal information they share online but how companies than use that information to better understand their users.

Cook said: “We’ve never believed that these detailed profiles of people that have incredibly deep personal information that is patched together from several sources should exist.”

Cook added that while he is generally averse to regulation, “I think we’re (now) beyond that.  It’s time for a set of people to think about what can be done.”

Cook called for more transparency about what data is collected and how that data is used, saying too many privacy policies are written by lawyers and difficult for users to understand.

Apple protects its user’s privacy on its devices, with sensitive information such as facial profiles stored on devices rather than remotely.  The business model relies on sales of its phones, iPads and other devices and not on advertising, as the models of Alphabet (Google) and Facebook do by contrast.

Cook said: “Everyone should know what they’re giving up, not only the specific data point but the whole line people can draw: When I know this-plus-this-plus-this-plus-this, I can infer a whole bunch of different things. That can be abused.”

Cook added, “To me, it’s creepy when I look at something and all of a sudden it’s chasing me all across the web.”

I have to admit I get a kick out of how Facebook, in my case, chases me with advertisements for buttery desserts that leave me drooling like Homer Simpson over beer and donuts.  I’m a sucker for food porn.

Speaking of food porn, and digressing wildly, hey Mark R., did you know Yuengling now makes ice cream?  [Haven’t tried it yet.]

Now where we were.....

Oh yeah, partially in response to the likes of Tim Cook above, Facebook said it would roll out a centralized system for its users to control their privacy and security settings in response to the outcry over how it handled personal data.

The system, which they say has been in the works, will allow people to change their privacy and security settings from one place rather than having to go to roughly 20 separate sections across the social media platform.

Back to Cook, when asked what he would do if he were Facebook’s Mark Zuckerberg, he replied: “I wouldn’t be in this situation.”  [Tripp Mickle / Wall Street Journal]

--Meanwhile, Zuckerberg and Facebook are in talks with lawmakers on having him testify before Congress about the social network’s handling of user data.  All three congressional committees that have some jurisdiction in such matters – Senate Judiciary, Senate Commerce, Science and Transportation and the House Energy and Commerce committees – are interested in speaking to him.  Hehe. 

At the same time the Federal Trade Commission confirmed Monday it was investigating Facebook for potentially violating a consent order to disclose uses of customers’ data going back to 2011.  And, 37 attorneys general sent a letter to Facebook asking about the company’s data policies and its role in the Cambridge Analytica controversy.

And...Facebook is facing its most serious consumer backlash, highlighted by the #deletefacebook hashtag.

Zuckerberg said he would not appear before a British parliamentary committee on misinformation and social media, choosing instead to send one of his deputies, who no doubt will be shredded, body sent back to the States by parcel post.

Instead, Zuckerberg apologized to Britons on Sunday over a “breach of trust,” taking out full page ads in British newspapers.

“We have a responsibility to protect your information. If we can’t, we don’t deserve it,” said the advert, signed by him.

Separately, fewer than half of Americans trust Facebook to obey U.S. privacy laws, according to a new Reuters/Ipsos poll.  Some 41 percent of Americans trust Facebook to obey laws that protect their personal information, compared with 66 percent who said they trust Amazon, 62 percent who trust Google, 60 percent for Microsoft and 47 percent for Yahoo.

Zuckerberg and chief operating officer Sheryl Sandberg said shoring up trust was their priority.

And to that end, Thursday, Facebook said it had begun “fact-checking” photos and videos to reduce the hoaxes and false news stories.  Zuckerberg said Facebook would prioritize “trustworthy” news by using member surveys to identify high-quality outlets.

--Back to Apple, the Street was less than excited about its announcement this week of a new education-targeted 9.7-inch iPad, selling for $299, with support.  Apple hopes this new, lowest-cost iPad ever will appeal to students and educators.

iPad sales have been soft in recent years.

--Shares in Tesla closed Monday, March 12, at $345 and they’ve been crashing ever since, to their lowest levels in a more than a year ($260 after a little snapback from Thursday’s low of $248), as the electric-car maker struggles with ongoing production delays and failure to hit targets, a debt downgrade from Moody’s, and the most recent killer, concerns about last week’s fatal car crash in California.

Tesla has always been subject to rumors of cash flow issues and Moody’s said Wednesday the downgrade reflected “the significant shortfall in the production rate of the company’s Model 3 electric vehicle.”

It also “faces liquidity pressures due to its large negative free cash flow and the pending maturities of convertible bonds.”

Tesla has $230 million in unsecured paper maturing in November 2018 and $920 million in March 2019.

The company is now saying it will produce 2,500 Model 3 (base price $35,000) vehicles per  week by the end of March, and 5,000 per week by the end of June, Moody’s said, down from the earlier company expectations of 5,000 per week by the end of last year and 10,000 by December 2018.

But the biggest issue concerns last week’s accident in which there is doubt whether Tesla’s automated control system was driving the Model X SUV; an accident involving two other cars, according to the National Transportation Safety Board and local police.  The 38-year-old driver of the Tesla died amid the questions over the Autopilot system.

Late Tuesday, Tesla said it does “not yet know what happened in the moments leading up to the crash,” but added in the blog post that data shows Tesla owners have driven the same stretch of highway with Autopilot engaged “roughly 85,000 times...and there has never been an accident that we know of.”

“We have never seen this level of damage to a Model X in any other crash,” Tesla added.  The car caught fire which was even more concerning to the NTSB.

Tesla’s battery packs are designed so that when a fire occurs, it spreads slowly, allowing people more time to exit or be removed from the car.  The victim was removed and died on the way to the hospital before the car became engulfed.

A research report by Cowen & Co. said it’s time to “question Autopilot leadership” at Tesla and Sanford C. Bernstein said it was focusing on the “fallacy of automation” to boost production.

There are certainly growing concerns that the self-driving equipment touted by Tesla, let alone the recent Uber fatal crash involving the pedestrian in Arizona, will fail to meet government standards.

Typical Elon Musk.  He once vowed to demonstrate a fully autonomous Los Angeles-to-New York cross-country trip by the end of 2017.  Like everything else in his company, that date has slipped.

But wait...there’s more! Tesla is recalling 123,000 Model S cars due to a problem with the power steering component bolts in vehicles built before April 2016.

“If the bolts fail, the driver is still able to steer the car, but increased force is required due to loss or reduction of power assist,” an email to affected customer states.

Tesla said there have been no injuries or accidents related to issues with the component, and that the problem only arises in cold winter climates where roads are frequently salted which can cause “excessive corrosion” of the bolts, which is laughable.  [Didn’t Tesla have a prior issue involving excessive humidity?  Or was that someone else.]

We also learned of a pair of recent internal memos from the heads of engineering and production that challenged workers to reach production goals for assembling 2,500 Model 3s a week by the end of the quarter, partly to silence the doubters.

Doug Field, engineering chief, wrote in the March 23 email, “Let’s make them regret ever betting against us. You will prove a bunch of haters wrong.”

Yoh, Mr. Field.  There are few actual “haters” of Tesla, the company, or Elon Musk.  We admire Elon.  It’s just that your stock is and has been grossly overvalued and he’s been setting unrealistic expectations to keep the share price up.

But watch what happens in the race to increase production. There are already reports of quality control issues, and they will only grow.

--Back to Uber, it has now been forbidden from resuming self-driving tests in Arizona.  The car-hailing company had already halted its trial after the fatal accident involving one of its vehicles and a pedestrian. But Arizona’s governor wrote to the company saying there had been an “unquestionable failure” to make safety the top priority.

Gov. Doug Ducey referenced a video released of the incident where the car’s operator was looking down, rather than directly at the road, for about five seconds before the night-time accident.

“I found the video to be disturbing and alarming, and it raises many questions about the ability of Uber to continue testing in Arizona,” wrote Ducey.

Back in 2016, Ducey welcomed Uber’s self-driving fleet “with open arms and wide open roads.”

I am the last person to defend Uber in the accident, but every story about it should be required to note that the victim was not in a crosswalk and just started walking out in the middle of the street (at least that is my recollection).

--Then there is Amazon.  Trump tweet: “I have stated my concerns with Amazon long before the Election.  Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!”

Lindsay Walters, a White House spokeswoman , told reporters on Thursday that “the president has expressed his concerns with Amazon. We have no actions at this time.”

But Trump’s willingness to again single out the company was enough to spook investors.  Kevin Hassett, the chair of the president’s council on economic advisers, said Thursday on Fox Business: “The general principle that I know deeply concerns the president is that we need to live in a world where the government sets a level playing field between internet vendors and mom and pop stores.”

But of course Trump regularly conflates Amazon with the Washington Post, Jeff Bezos owning the paper privately, separate from his role at Amazon.

Brad Parscale, the president’s 2020 campaign manager, tweeted on Thursday: “Do not forget to mention that @amazon has probably 10X the data on every American that @facebook does. All that data and own a political newspaper, The @washingtonpost.  Hmm...”

Far-right conspiracy sites- some of which the president is known to read – have for months stoked the idea The Post is working with the CIA because the agency contracts with Amazon for cloud-based storage.

Regarding the issue of the Postal Service, Amazon has said that the Postal Regulatory Commission, which oversees the service, has consistently found that its contracts with Amazon are profitable.

And on taxes, Amazon collects sales taxes on its own products in all 45 states that have one, but third-party vendors who sell products on the site often do not collect sales tax, which is indeed unfair.

In April, the Supreme Court is to rule on whether to allow states to impose sales taxes on all internet sales.

Trump does have some congressional support on the issue from key Democrats.  Minnesota Rep. Keith Ellison said in a statement on Thursday: “The Trump administration should rein in giants like Amazon because they have an unfair stranglehold on the competition, not because the president has a personal feud with a company’s CEO.”  [New York Times]

Editorial / Wall Street Journal

“Donald Trump slammed Amazon on Twitter Thursday, and its stock price went up.  Maybe investors are figuring out that deploying federal power against the online retailing behemoth isn’t as easy as pressing ‘Tweet’ – for which Americans should be grateful no matter what they think of Amazon.

“On Wednesday the Axios website reported what was hardly a secret – that Mr. Trump doesn’t like Amazon and its CEO Jeff Bezos, who also owns the relentlessly anti-Trump Washington Post. Amazon shares fell about 4.4% on the day, amid the general investor angst over political anger aimed at Facebook and the big tech companies.

“Then on Thursday Mr. Trump, perhaps boiling over after a calm week, tweeted: ‘I have stated my concerns with Amazon long before the election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!’

“Amazon wisely declined to respond, and the President is wrong to target a private company. That’s what Democrats do – as Barack Obama did against Staples for executive compensation (2015), Anthem for raising insurance premiums (2010), and the Koch brothers for opposing renewable fuels (2015), among others.  But Amazon shares popped 1.1% Thursday in a rising market.

“The reality is that Mr. Trump and the executive branch can’t do much to hurt Amazon – at least not legally, or without an  effort to build a far better case than his tweets offer.

“Mr. Trump complains about Amazon’s state and local tax payments, but Amazon has collected billions of dollars in sales tax in the states that require it. It’s true that cities and states competing for Amazon’s second headquarters have offered an embarrassment of taxpayer subsidies. But however regrettable, such corporate dowries aren’t the concern of federal government.

“Mr. Trump could try to unleash the Internal Revenue Service, though that would be a scandal that could be an impeachable offense. The press and prosecutors would not give the Trump IRS the pass they gave Lois Lerner during the Obama years for targeting conservative nonprofits with extra scrutiny.

“Alternatively, Mr. Trump could try to gin up antitrust regulators at the Federal Trade Commission and Justice Department. But the federal government would struggle to prove consumer hardship, the most basic criterion for an antitrust case.”

The Journal editorial then notes Trump could go after Amazon’s dominance in e-books, before concluding...

“Mr. Trump’s other big gripe is that taxpayers are on the losing end of Amazon’s deal with the U.S. Postal Service. But that story is also more complicated. The Post Office has often operated at a net loss, but package volumes grew in fiscal 2017 by more than 11%, making it a rare growth market.  Many of the additional 589 million boxes delivered last year came from Amazon.

“Though imperfect, the deal is mutually beneficial.  The Post Office arguably needs Amazon more than Amazon needs the Post Office. The Post Office could drop Amazon as a delivery partner, but it would likely have to raise prices elsewhere or endure higher losses. Would Mr. Trump take credit for that?

“Mr. Trump can rail against anyone he wants, but America is still a nation of laws... This is a lesson Mr. Trump’s critics forgot as they cried wolf over a fascist takeover. The political reality is that the more Mr. Trump publicly assails Amazon, the harder it will be to take regulatory action, deserved or not.”

Last year, Amazon contributed about 4% of total U.S. retail sales, while its portion of e-commerce totaled about 43%, according to eMarketer. The company’s revenue grew 31% to $177.87 billion in 2017.

At some point, yes, Amazon could face legitimate antitrust action.  But that day is not here yet.

--The personal details of around 150 million users of a popular nutrition app from Under Armour were accessed in a breach; the company’s MyFitnessPal software, specifically, which contains usernames, email addresses and passwords.

Under Armour said the passwords were protected by strong encryption. The breach, which occurred in February, was only discovered on March 25. Users are urged to change their passwords immediately. It seems UA acted quickly and appropriately.

--Boeing was hit by a computer virus, raising some fears that manufacturing equipment used to build its 787 Dreamliner and 777 wide-body jets could be crippled, as first reported by the Seattle Times.

Boeing acknowledged a cyberattack while saying “a number of reported statements on this are overstated and inaccurate.”

Of course they would say this, but this is kind of scary.

“Our cybersecurity operations center detected a limited intrusion of malware that affected a small number of systems,” a spokeswoman for the company said in a statement.  “Remediation were applied and this is not a production and delivery issue.”

But a Boeing engineer wrote a memo, cited by the Seattle Times, that read in part, “It is metastasizing rapidly out of North Charleston and I just heard 777 [automated spar (sic) assembly tools] may have gone down.” The engineer (I’m leaving out his name...the paper put it in), said he was concerned that the virus would hit equipment used to test jetliners before they roll out of the factory for flight testing and could potentially “spread to airplane software.”

A similar cyberattack compromised companies such as FedEx last year, as well as crippling Britain’s state-run National Health Service.

--Investors put $11.9 billion into the now-$3.3 trillion hedge fund industry in February, according to a report by eVestment.  Combined with $10 billion added in January, the inflows over the first two months of 2018 marked the steepest increase since 2014.

It was just in 2016 that the industry experienced its first annual net outflow since 2009.

--Related to the above, the annual bonus for the average Wall Street worker is back to heights not seen since pre-financial crisis, an estimated $184,220, the most since 2006, according to data released by the New York state comptroller Monday. The Wall Street bonus pool was $31.4 billion, which as you can imagine is critical to the finances of both New York City and New York State.

The comptroller’s report added that Wall Street accounted for less than 5 percent of local jobs but 20 percent of private sector wages in the city.  The Street had 176,500 workers last year, down from 188,400 in 2008.

--I didn’t see until after I posted last time that California’s jobless rate fell to 4.3% in February, which is not too shabby, but then you have the exploding homeless issue that is roiling communities across the state, much of this due to the unaffordability of housing.

--U.S. farmers have retrenched in the face of low agricultural prices by setting plans to plant less corn and soybeans this year, according to a Department of Agriculture survey, which in turn sent prices higher. The decreases are, however, minimal...2% for corn, 1% for soybeans. 

But at 89m acres for soybeans and 88m acres for corn, this marks the second year in history that U.S. farmers would plant more soybeans than corn, reflecting a strong demand for products made from versatile oilseed, such as livestock feed.

--I totally forgot about the premiere of the revival of “Roseanne” on ABC, Tuesday, which drew 18.2 million viewers, so impressive that President Trump phoned her to offer his congratulations on her “huge” ratings. It helps that Roseanne plays her alter-ego Roseanne Conner, a Trump supporter, like Roseanne is in real life.

I was a fan of the original “Roseanne” show and I’ll try and remember to catch it.  [Depends on that night’s Mets game, I hope you understand...thank god we have baseball back.  No more Tucker Carlson and Hannity.]

John Podhoretz / New York Post

“At the beginning of March, the Academy Awards featured performers talking about ‘intersectionality’ and Dreamers and jokes about how an Oscar-nominated movie about a gay awakening was made to annoy Mike Pence – and the show got the lowest ratings in history.

“Tuesday night, the premiere episode of the revival of ‘Roseanne’ featured a working-class grandmother saying grace before dinner and concluding with thanks for ‘making America great again’ – and the show got the highest ratings of any network program in six years.

“Hollywood is now faced with indisputable evidence that there’s a huge potential audience out there for programs that don’t actively insult 63 million Trump voters....

“One might also point out that the first ‘Roseanne’ episode on Tuesday (ABC aired two) was absolutely sensational. Bruce Rasmussen’s script centered on a political feud between the Trumpy Roseanne and her Hillary-centric sister Jackie – and it was funny and barbed and fair, unquestionably one of the best renderings of the cross-ideological tension in America since Trump came down the escalator nearly three years ago.

“But of course the people who watched in droves couldn’t have known the episode was going to be good. They might, however, have seen the news reports about Roseanne Barr’s appearance on Jimmy Kimmel’s show last week, when he complained to her that she had once been so liberal.

“Barr, who remains among the most confrontational people on earth, was having none of it.

“ ‘I’m still the same,’ she shouted.  ‘You all moved!’  And she yelled at him about how his hunger to get rid of Trump would just leave an opening for the very same Mike Pence whom Kimmel had made fun of in his Oscar monologue.

“ ‘A lot of us, no matter who we voted for, we don’t want to see our president fail,’ Barr said. ‘Because we don’t want Pence!’

“So what America might have known about the new ‘Roseanne’ before tuning in was that it was going to be the very rarest of birds at this cultural moment – a Hollywood product that wasn’t going to use Trump as a punchline or use a Trump supporter as a comic punching bag.

“Perhaps more important, her appearance signaled that the new ‘Roseanne’ was going to be true to the spirit of the old.  The original show was properly hailed as a detailed depiction of the lives of the American working class – and if any fictional characters of the past 30 years were going to vote for Trump, it was going to be the Conners....

“The world between the coasts has just sent a message to the major domos of our popular culture. The message is: We’re conscious enough of our differences to shut you down when you set yourselves against us (the Oscars) but we are ready to provide enthusiastic support for your efforts if you treat us with respect.

“How will Hollywood respond?”

Thursday, in his infrastructure speech in Richfield, Ohio, that turned into another rambling diatribe, with the same stories and targets, his greatest hits, Trump boasted about the ratings for “Roseanne.”

“Look at Roseanne!  I called her yesterday!  Look at her ratings!” said the president.

“They were unbelievable! Over 18 million people! And it was about us! They haven’t figured it out! The fake news hasn’t quite figured it out yet...But they will.”

--I didn’t have time last review to say anything about the passing of entrepreneur and sports team owner Wayne Huizenga, 80.  I have a bit on him on his sports past in one of my Bar Chat columns, but Huizenga was an amazing success in virtually everything he touched on the business end, including his first major venture, buying up some trash companies in his native Midwest, and then launching his own garbage hauling business in Pompano Beach, Florida, in 1962. He would drive a garbage truck from 2 a.m. to noon each day, then shower and go out and solicit new customers in the afternoon.

The offshoot was he eventually expanded throughout South Florida, and then merged with a Chicago sanitation company his uncles owned, creating Waste Management Inc.  By 1984, he resigned from the company, taking $100 million in stock.

Then he rode the video wave and built Blockbuster Entertainment into the leading video rental chain by snapping up competitors, cracking Forbes’ list of the 100 richest Americans. Blockbuster was the McDonald’s of video.  He and two partners bought 43 percent of the business for $19 million, and by 1991, the chain had grown to over 1,800 stores.

So once again, Huizenga knew when to get out, selling Blockbuster in 1994 to Viacom for about $8 billion.

Then he got back into the trash hauling business, buying Republic Waste Industries Inc. for $27 million.  Mergers and acquisitions soon followed.  He renamed the company Republic Industries as it branched out, buying Alamo Rent-A-Car and National Car Rental.

And then Republic, under his leadership, started AutoNation, a national chain of car dealerships.

Republic Services was spun off in 1998, to focus on waste management, while AutoNation expanded to about 375 dealerships in 17 states.

Alas, he didn’t always meet with the same success in the sports arena, though he won a World Series with the Marlins, before becoming a villain for dismantling the team.

But Wayne Huizenga should always be remembered for his business acumen, particularly with Blockbuster.  He played that beautifully.  I’m even smiling typing this. 

It should also be noted that as reader Mark R. reminded me, so many leaders, including in the sports world, said Wayne Huizenga changed their lives for the better.  He was a good man with a big heart.  [Ask former coach Jimmy Johnson, for one.]

--And we note the passing of Lance Clark, 81.  Clark, a member of the sixth generation Quaker family that founded the British company Clarks shoes, in the mid-1960s came up with a hit product, the Wallabee, a lace-up moccasin that became popular with musicians and the lead character in the TV series “Breaking Bad.” And in my case, the highly popular Clarks desert boots, that I wore as a kid.  [I seem to recall a fight with Mom over the purchase of these because she was concerned with arch support.  Oh, the things we look back on today that shouldn’t have been worth anyone’s concern.  I wasn’t allowed to buy Converse for the same reason.  We were a Keds family.]

--Back to food porn, because at the end of the day...Red Lobster is introducing a lobster and waffles dish, available this past week, as part of their Lobsterfest menu. Huh.

The dish features a buttermilk-battered and fried split Maine lobster tail served on top of a waffle made with the same mix used in the chain’s famous Cheddar Bay biscuits, according to the chain.  All of this is then topped with maple syrup.

I’m not sure I want syrup on my lobster.  Reaction thus far, from what I’ve read, has been mixed.

Just slather melted butter on both, I say!

Foreign Affairs

North Korea / China / South Korea:  After days of speculation, it was confirmed that North Korean leader Kim Jong-un paid a visit to Beijing after his famous train was spotted pulling into a station there. The visit was confirmed by both China and North Korea.

It was the reclusive leader’s first known trip out of the country since coming to power in 2011.  There were reports that Kim’s lack of experience in summit diplomacy may have been an important motive for his visit. A former South Korean foreign minister, Yun Byung-se, told the South China Morning Post that Kim may have wanted advice on how to deal with President Trump, “who is not predictable.” Xi has already had bilateral meetings with Trump in Mar-a-Lago and Beijing.  Then again, Xi had every reason to show Kim who was boss, thus the real reason for demanding Kim train it to Beijing.

After the meeting, China said Kim pledged his commitment to denuclearization and to meet U.S. officials.

China’s Xinhua news agency reported Kim held “successful talks” with President Xi, and later we saw extensive videotape of the two leaders in various settings, along with their wives; Kim arriving with his wife, Ri Sol-ju, by train on Sunday and leaving Beijing on Tuesday afternoon, according to reports.

By custom, and for major security reasons, these rare trips are not announced by either side until Kim (and before that his father and grandfather), are safely back in Pyongyang...a coup long feared while the North Korean leader is away.

North Korea’s KCNA news agency called the visit “a milestone” in improving bilateral ties.

President Trump tweeted he had received a message from Xi on Tuesday night that his meeting with Kim “went very well” and that Kim looked forward to meeting the U.S. president.

“Look forward to our meeting!” Trump wrote, while adding: “In the meantime, and unfortunately, maximum sanctions and pressure must be maintained at all cost!”

The next day, Trump tweeted: “For years and through many administrations, everyone said that peace and the denuclearization of the Korean Peninsula was not even a small possibility.  Now there is a good chance that Kim Jong Un will do what is right for his people and for humanity.”

Following Kim’s return to Pyongyang, it was announced that he would meet South Korean President Moon Jae-in on April 27 for the first summit between the two countries’ leaders in more than a decade.  But North and South Korea failed to agree on whether Pyongyang’s nuclear program would be on the agenda at the border village of Panmunjom, raising fresh doubts about Kim’s willingness to give up the weapons. The Koreas plan to hold a preparatory meeting on April 4 to discuss protocol, security and media coverage issues, according to a joint statement released by the countries.

This meeting is expected to precede the meeting between Kim and President Trump, that we’ve been told would take place by end of May.  Kim has previously said he was open to denuclearization of the Korean peninsula.

But according to South Korea’s senior presidential press secretary Yoon Young-chan, Seoul was very cautious, not having been involved beforehand in Kim’s trip to Beijing (nor was Trump, obviously).  “What is happening now is beyond what the (government) has been predicting and (Seoul) will need to keep an eye on the situation with all possibilities in mind.”

All now know, China will be a major presence in the room when Kim meets with Moon, and then with Donald Trump.  President Xi noted after his meeting with Kim that “China will continue to play a constructive role on the issue (of talks) and work with all parties, including the DPRK (Democratic Republic of Korea), toward the thaw of the situation on the Peninsula,” Xinhua reported.

The “situation on the Peninsula” refers to not only North Korea’s nuclear program, but the presence of 30,000 U.S. troops to the south and the outlying waters, where the U.S. and South Korea continue to conduct regular military exercises.

Denuclearization to Pyongyang means U.S. troop withdrawal from the South.  Only then will North Korea begin dismantling its nuclear program. This much seems clear.

The message from the week is that Pyongyang has a partner in Beijing, and President Xi, in essence, through Kim, is not going to be dictated to.

Remember Xi’s words just a week ago on Taiwan.  ‘It’s ours.’

According to an analysis of Chinese customs data, China’s exports of refined petroleum to North Korea have plummeted in the last five months, in an attempt to pile on economic pressure as leaders from Seoul and Pyongyang prepare for their summit.  North Korean imports of steel and cars from China have also fallen dramatically.

There is good reason to believe such data may explain recent dramatic shifts in policy by Kim Jong-un.  President Trump has repeatedly called on China to do more to put pressure on North Korea.

A Fox News poll show voters favoring a meeting between Trump and Kim by a 63-30 margin.  But 76 percent don’t think North Korea will ever be convinced to give up its nuclear weapons, and they continue to give Trump negative ratings for his handling of North Korea overall (41 percent approve, 49 percent disapprove).

Gideon Rachman / Financial Times

“Could Donald Trump’s strategy for North Korea actually work? That is the question that is inevitably raised after the dramatic visit by Kim Jong-un to Beijing.

“The U.S. president’s North Korea strategy has been fairly evident ever since he took office. Mr. Trump intends to put intense pressure on North Korea to get rid of its nuclear weapons, particularly those that could directly threaten the U.S. To do this, Mr. Trump has resorted to frequent threats of military action, talking of unleashing ‘fire and fury’ on the North Koreans.  But he has also always intended to use China, North Korea’s closest ally, to exert maximum diplomatic and economic pressure on the Kim regime. The goal is that the combination of U.S. threats and Chinese pressure will force North Korea to back down.

“On the face of it, this goal looks closer to fruition after Mr. Kim’s visit to China. In a parting statement, Mr. Kim pledged that the ‘issue of denuclearization on the peninsula can be resolved.’ But while that sounds promising, a theoretical commitment to scrapping nuclear weapons still leaves huge issues to be resolved. The North Korean leader’s statement also referred to ‘simultaneous steps for peace,’ which is probably code for the longstanding North Korean demand for the withdrawal of U.S. troops from the Korean peninsula. No U.S. administration, to date, would have contemplated pulling out of South Korea. Mr. Trump will probably maintain this U.S. red line – although his approach to foreign policy is so unorthodox that nothing can be taken for granted.

“More broadly, the prospect of a U.S.-North Korean summit (and of a summit between North and South Korea shortly beforehand), clearly raises the possibility that all sorts of frozen issues may start to thaw. Real diplomatic progress would also involve discussion of finally securing a peace treaty on the Korean peninsula that formally ends the war fought there in the early 1950s.  At the moment, there is simply an armistice. The South Korean government, led by the dovish President Moon Jae-in, is also keen to revive economic relations and people-to-people contacts.

“The Chinese government, led by President Xi Jinping, will be pleased that Mr. Kim’s visit to Beijing has reaffirmed China’s central role in resolving the Korean issue.  Since China shares a border with North Korea, and is also a formal treaty ally, the prospect of a war on the Korean peninsula is a big security threat to Beijing. It is also a little humiliating for the Chinese government to be bypassed in the diplomacy over North Korea....

“But the fact that Mr. Kim felt it necessary to visit China before his summits with the U.S. and South Korea underscores that China is actually a vital player. How could it not be, given that 90 percent of North Korean trade flows through China?

“The impending Korean negotiations are further complicated by two additional factors. First, the emerging trade war between the U.S. and China. And second the appointment of the ultra-hawkish John Bolton as Mr. Trump’s new national security adviser.

“Beijing will be hoping that the chance that China could help ‘deliver’ North Korea may persuade the Trump administration to ease off on trade sanctions.  But Mr. Trump’s trade team will be reluctant to back off now.

“As for Mr. Bolton, he is a noted hawk on North Korea and has openly advocated a military option if denuclearization cannot be achieved by peaceful means....

“On the other hand, Mr. Trump is known to yearn for a ‘deal of the century’ that he can brandish as proof of his presidential prowess. He will not want Mr. Bolton to get in the way.”

Finally, I have a summarization of “Xi Jinping Thought” on my “Hot Spots” link for those who are interested.

Russia: President Donald Trump joined his European allies in taking action against the government of Vladimir Putin after the U.K. blamed the Kremlin for a March 4 nerve-agent attack on a former Russian spy living in England.  Trump expelled 60 Russian diplomats, among more than 100 Russian envoys who will be sent home from capitals across Europe and North America.

For a president who has been accused of cozying up to Moscow (as I have), it was a move that drew bipartisan praise, though it certainly raised the stakes in what is rapidly becoming a new, full-fledged Cold War.

U.K. Prime Minister Theresa May, whose government expelled 23 Russians, was elated with the unified response from the West, particularly the U.S.

“If the Kremlin’s goal is to divide and intimidate the Western alliance,” she told lawmakers in the House of Commons on Monday, “then their efforts have spectacularly backfired.”

Former ambassador to Moscow under President Obama, Michael McFaul, said on Bloomberg Radio, “The Trump administration took the right move here. And I think this response is a strong one that sends a powerful signal that our alliance system matters to us in Europe and that’s a united front we need against Putin right now.”

In retaliation, Russia ordered 60 U.S. diplomats to leave by April 5, the Foreign Ministry said on Thursday, declaring 58 diplomats in Moscow  “persona non grata” and two general consulate officials in Yekaterinburg the same.  The agreement allowing the United States general consulate to operate in St. Petersburg was also rescinded.

Including other nations that have joined Britain and the United States in expelling Russians, Russian Foreign Minister Sergei Lavrov said the ultimate number of expelled diplomats could exceed 150.  [Russia expelled 23 of Britain’s representatives in a tit for tat.]

A statement from the State Department on Thursday read: “With its regrettable, unwarranted decision today, it is clear that Russia is not interested in dialogue about issues that matter to our two countries.  Russia is further isolating itself following the brazen chemical attack in the United Kingdom.”

[In a poll by state-run VTsIOM, only 5 percent of the 82 percent of surveyed Russians who had heard of the Skripals’ poisoning said that London’s accusations were plausible.]

Today, the Kremlin released video of a rocket test of what is reportedly its new, supersonic ballistic missile, labeled “Satan 2” by NATO, which Putin has said is unhittable and caries 15 (or 16...depending on the source) nuclear warheads. 

Meanwhile, Sergei Skripal’s daughter, Yulia, is showing improvement in her condition, while he remains in critical condition.  British officials said this week the nerve agent was likely spread on the door handle of their home in the small city of Salisbury.

As tensions between Russia and the West reach levels not seen in many years, Julian E. Barnes had a piece in the Wall Street Journal addressing the dangers of conflict.

“If Europe came into conflict with Russia, only several thousand of the more than one million troops in its armies would be ready for rapid deployment, military planners fear.

“The U.S. now wants to step up readiness and ensure that at least 30,000 troops, plus additional aircraft and naval ships, can reach a trouble spot within 30 days of NATO commanders putting forces on alert, current and former allied officials say....

“Boosting allied readiness in the face of resurgent threats from Russia has become a priority of U.S. Defense Secretary Jim Mattis. He has told the North Atlantic Treaty Organization it must speed decision-making, improve its ability to move forces and ensure it has units ready to deploy with little notice, alliance officials said.

“NATO officials are debating the issue. Officials say there is general acceptance of the U.S. position and allies hope to reach an agreement before a summit of leaders in July.  A U.S. proposal would have the alliance commit to having 30 battalions, 30 fighter squadrons and 30 naval ships ready to deploy. That would translate to roughly 30,000 troops and more than 360 fighter planes.

“During the Cold War, American plans foresaw moving 10 U.S. divisions – about 200,000 troops – to Europe in 10 days. The new proposal instead focuses on European allies’ ability to mobilize, with a less ambitious target of 30 days.”

This is beyond pathetic. For starters, the U.S. could only meet major obligations in one theater.  If the United States is occupied in, say, Asia (Korea), Russian forces could roll.

And in the current environment, Putin can gin up a crisis in the Baltics in the blink of an eye, much as he did with Crimea and eastern Ukraine, under the guise of protecting Russian minorities.

Meanwhile, Poland signed a $4.75 billion contract with the U.S. for the first phase of a Patriot air missile-defense system in the face of Russia’s renewed assertiveness.  Moscow sees Poland’s moves, including hosting U.S. troops, as destabilizing.

But Russia has its enclave, Kaliningrad, bordering Poland and there is no doubt you are going to hear increasing talk of Russia placing nuclear weapons there.  It’s long been felt they already had some positioned in a spot destined to become a staple in the headlines.

Benny Avni / New York Post

“Monday’s coordinated Euro-American action against Russia may signal the end of an era: Goodbye, empty UN blather, hello again, coalitions of the willing....

“America wasn’t alone – 21 countries, including France and Germany, as well as former Soviet satellites Poland, Latvia and Lithuania, expelled a handful of Russia diplomats each on Monday. All told, more than 100 Russian diplomats were told to leave world capitals in one day.

“True, Vladimir Putin is riding a nationalist wave after ‘wining’ a sham election that extended the term of his seemingly endless presidency, and his name is invoked in the elections of his Western democratic counterparts, so it may not force a change of his ways.

“But it’ll get Putin’s attention....

“While ‘coalition of the willing’ was first used by Bill Clinton, it was made popular by George W. Bush, and was much maligned after the Iraq war, when the United Nations was put at the center of international action. It didn’t work. Russia, China, North Korea, Iran and various Islamist regimes became more aggressive than ever.

“Time to reassemble allied powers to counter them. Monday’s action could be the start. With Bolton at the White House, let’s hope more will follow.”

Lastly, on a different issue, President Putin had to face thousands of irate citizens of the Siberian city of Kemerovo, demanding answers following a tragic shopping mall fire that killed at least 64 people, many of them children celebrating the beginning of spring break, with scores still missing. 

Putin, in an appearance with local officials, blamed the fire on “criminal negligence, sloppiness,” and at least five have been arrested.

The fire swept the entertainment complex and many were trapped inside a locked movie theater on the fourth floor of the mall, adjacent to the area the fire is believed to have started, and then many of the exits were blocked.  There is a video out there of the beginning of the fire and it’s truly horrifying, especially knowing that as they are fleeing, thinking they know where exits are, the people will find them locked.

It was also reported a simple fire extinguisher could have doused the blaze at the start but it did not work.

It is very reminiscent of a tragedy in Paraguay’s capital of Asuncion at a mall over a decade ago, that killed well over 100, and in a roundabout way was the cause of my trip to Paraguay to meet up with golfer Carlos Franco...only to have Franco stand me up when I arrived where he was staying...with a check for the burn victims...which his people deposited and for which I never received a thank you.  [Mistake #732 of 997 in my life...or was it #842 of 1,143...I can’t remember.]

Robert D. Kaplan / Wall Street Journal

“Russia and China are in different situations. Russia is a rickety house that at some point may crumble. China is sturdier; nevertheless, it could slowly become a compressed pack of social dynamite with less of an outlet for its internal frustrations. It is theoretically possible for Mr. Xi, as president for life, to institute a program of dramatic economic reforms. But doing so would unleash the need and yearning for more personal freedoms, the kind that the regime is moving with its technological thought control to try to eliminate.

“As Russia and China strengthen militarily, even as they maintain and intensify internal repression, they will continue to clash with the West in the near term. But as in the early days of the Cold War, policy makers have to look beyond the present to the difficulty our adversaries will have sustaining their systems over time. And if their systems come undone in the next decade or the one after, Eurasia – of which Russia and China are the geographic organizing principles – will face extreme instability. The U.S. must gird itself for this struggle, though with a certain degree of optimism. Democracy is the better long-distance runner.”

Syria: Thursday, President Trump indicated the United States would be withdrawing its forces from Syria “very soon.”

Friday, the U.S.-backed Syrian Democratic Forces (SDF) said it had not been informed of any plan to withdraw U.S. forces operating in Syria as part of the coalition against Islamic State. The SDF, spearheaded by the Kurdish YPG militia, has been the main partner for the U.S.-led coalition in Syria, where some 2,000 U.S. forces are operating in the fight against ISIS.

SDF spokesman Kino Gabriel told Reuters, “Our work and coordination (with the coalition) is continuing.”  Referring to Trump’s statement, he said it “was not clear,” and noted “statements that came from other American officials in the American administration did not confirm that or deny it.”

Kevin Barron / Defense News

“When the president said on Thursday that the U.S. would pull out of Syria ‘very soon,’ in another apparently off-handed (and definitely off-script) quip, it struck to the very heart of why some American troops had said they voted for him – and why they had said they would never vote for Hillary Clinton

“Back during the campaign, more than one special operator said to me privately that they were worried Clinton ‘would get us killed.’ That’s not hyperbole. That’s a quote.

“What they meant was that they expected a trigger-happy President Clinton would increase their missions, while the more-isolationist President Trump would not.

“On Thursday, Trump said: ‘We’re knocking the heck out of ISIS. We’ll be coming out of Syria, like, very soon.  Let the other people take care of it now. Very soon...we’re going to be coming out of there very soon.’

“That has to send chills down the spines of a lot of Green Berets and other elite forces who have fought, bled and died to win back that territory – and who are saying the U.S. needs to stay until a peace is settled, just like Gen. Joseph Votel, commander of U.S. Central Command, said as recently as January.

“The argument went like this: Hillary was a known war hawk who would start new wars, continue current wars, and send more special operations troops into additional counterterrorism missions. Clinton had a record of defending U.S. military interventions and active engagements abroad and promising to continue a strong U.S. military abroad if she were elected.

“No argument there. But these troops and fighters also felt that Clinton would want to start wars and send troops as a political distraction to prop herself up and distract the public from her undoubtedly unpopular domestic standing and agenda that would come. That hypothesis is pure wag-the-dog conspiracy theory speculation, frankly, but it’s what they told me they believed and it is just one reason they did not want to vote for her.

“Part of this fear was based on their own experiences. The most frequent criticism of President Obama’s stewardship of Iraq is that he pulled U.S. troops out of the country, and those that fought and died there did so in vain – only to be sent back to cover for his mistake. And they were weary of the Afghanistan war, too. They told me they believed that Clinton, too, would send them off fighting and dying for yet more pointless gains that Washington politicians eventually would give away – like miniature Iraq wars, all over the place....

“But the president, with one quip, potentially has turned the entire U.S. participation in the ISIS war in Syria into just that: short-term adventurism. Right or wrong, Trump views the military as the hammer for terrorism’s eternal whac-a-mole game. He loves to go after the bad guys as much as he wants to get out quickly and let the locals sort out their own mess. Trump ignores the basic idea behind counterterrorism warfare that U.S. commanders so often preach: that the absence of security and good governance is what breeds terrorism – especially the kind that is focused on attacking targets in the U.S. and Europe.

“Trump draws big cheers when he talks about sending U.S. troops to kill ISIS. He draws equally big cheers when he talks about pulling them home. Those doing the killing, and dying, will have to reconcile with that – and whether the mission yet another president has sent them to do is worth getting killed over.”

Separately, a U.N. official in Syria says aid groups need $150 million to provide urgent relief to a quarter-million people recently displaced by separate offensives by the Syrian government outside Damascus and by Turkish-led forces in the north.

At least 80,000 were forced to flee the government’s offensive in the eastern Ghouta suburbs. Another 180,000 have been displaced from the capture by Turkish forces of the Kurdish-controlled town of Afrin, with the bulk now in the northern town of Tal Rifaat.

At the same time, the Syrian army announced it was preparing to launch a “huge” operation against the last rebel-held town in eastern Ghouta unless the Jaish al-Islam insurgent group agreed to hand over the area.

More than 1,600 have now been killed since Feb. 18 in the region in some of the fiercest bombing of the war, with thousands more injured, according to the Syrian Observatory. Before the conflict, the eastern Ghouta area had nearly two million people, and was a major industrial and commercial hub.  Some 70,000 remain.

Israel: According to a Kuwaiti newspaper, Al-Jarida, two Israeli F-35 stealth fighter jets entered Iranian airspace over the past month, an act signaling heightened regional tensions, especially in light of recent Israeli military attacks in Syria, including against Iranian bases in the country.

The report stated the two fighter jets circled at high altitude over suspected sites associated with Iran’s nuclear program. The report, which cited various sources, also stated the two jets went undetected by radar, including a Russian radar system located in Syria.

Israel has seven F-35 fighters in active service.

Separately, Israeli Prime Minister Benjamin Netanyahu suddenly took ill and was hospitalized on Tuesday. The prime minister, 68, was suffering from a high fever and bad cough, but he was released the same night, though ordered by doctors to rest.  It seems he had some kind of viral infection, but the episode raises succession questions. Defense Minister Avigdor Lieberman ran Wednesday’s security cabinet meeting in Netanyahu’s absence.

The law states that if Netanyahu becomes incapacitated without appointing an interim prime minister, the cabinet secretary would convene ministers to vote one in.

As for today’s violence on the Israeli-Gaza border, it is a very fluid situation.  Israel had warned the Palestinians not to mass in protest on the border in numbers not seen in years and they did anyway.  The result was inevitable.

At last report, 16 Palestinians have been killed and there are fears this is the start of something far bigger. 

Egypt: President Abdel-Fattah al-Sisi was reelected for a second term with 92 percent of the vote, state media reported on Thursday.  23 million of the 60 million registered voters turned out during the three days of polling.

Venezuela: More tragedy here as at least 68 people died when a fire swept through the cell area inside a police station, a blaze reportedly started by detainees during a disturbance at the state police headquarters in Valencia, about 100 miles west of Caracas.  Nearly all the dead were prisoners.

A fire at a prison back in 1994 in the state of Zulia killed more than 100 inmates.

Random Musings

--Presidential tracking polls....

Gallup: 39% approval for President Trump, 55% disapproval [March 25]
Rasmussen:  47% approval, 52% disapproval

A Fox news poll gives Trump a 45% approval rating, 52% disapprove.  In February, it was 43-53.

When asked their candidate preference in this fall’s congressional election, voters chose Democrats over Republicans by 46-41, the generic vote, which is a big improvement when it was 15 points for the Democrats back in October in this survey.

A CNN poll has President Trump’s approval rating at 42%, 54% disapproval, with the first number up 7 points since February, including 6 points among Independents (from 35% to 41%). In this survey, Trump trails Ronald Reagan and Barack Obama by just 4 points at this point in their first terms.

But the CNN poll has been see-sawing...from 35% approval in December, to 40% in January, down to 35% in February and back up to 42% today.

--I’m on record as not being a big fan of the Marjory Stoneman Douglas High School kids who have become activists for gun control.  I noted that when they first appeared, my initial reaction was ‘this won’t end well for them.’

I also think that the way some of them, like David Hogg, have treated Sen. Marco Rubio (R-Fla.) is outrageous, especially since they consider themselves to be so informed.

Ross Douthat / New York Times

“Since the Parkland shootings in Florida, Senator Marco Rubio has done many of the things liberals say they are desperate, desperate for decent Republicans to do.  He has changed his position on gun control, expressing support for new restrictions: age limits on gun purchases, new background check rules, possibly magazine restrictions. He has co-sponsored legislation encouraging states to issue restraining orders that temporarily would strip people deemed dangerous of their guns.  Some of these measures have conservative support, but in other cases the Florida Republican has effectively bucked the N.R.A.

“But over the same period Rubio, more than any other prominent Republican, has been vigorously and sometimes virulently attacked by the student-led movement that filled D.C. with protesters last weekend.  When he showed up for the CNN town hall he met boos and heckles; one of the shooting survivors told him that just looking at him was like staring down the barrel of an assault rifle. Notwithstanding his subsequent policy concessions, at the March for Our Lives [Ed. which I refused to write about for various reasons] the students wore price tags around their neck, $1.05 each – the amount of money Rubio’s campaigns have received from the N.R.A. divided by the number of students in Florida schools. David Hogg, one of their leaders, began his speech with the price tag line, and told a CNN interviewer that if anything he feels that their attacks on the Florida senator haven’t been provocative enough.

“There was a time, not so many years ago, when Rubio was attacked and his efforts at bipartisanship regarded skeptically because liberals perceived him as a threat – a plausible and eloquent leader for a less bunkered G.O.P., a bridge between the party’s old white base and a more multicultural America.  That time has passed, at least for now: After Rubio was defeated and partially undone by Donald Trump, and especially after he turned in his #NeverTrump card and filmed a hostage-video endorsement, the official media consensus on the Florida senator flipped from ‘Great Republican Hope’ to ‘Liddle Marco,’ and anti-Rubio sentiment became dominated less by anxiety than by contempt.

“That contempt seems to inform some of the reaction to his every public utterance since Parkland.  But I think that in their anti-Rubio zeal the student activists are also picking up on a general approach to politics that the Trump era has encouraged among liberals – a view that since the current Republican majorities were forged by anger and a kind of smash-mouth politics, it’s incumbent upon liberals to give no quarter in return, and to treat any sudden conciliation from a prominent figure like the Florida senator not as an opportunity for deal making but as a welcome sign of weakness that should inspire further fierce attack....

“It’s too soon to say whether this dynamic will repeat itself with the post-Parkland gun control debate.  Again, the activists’ anti-Rubio zeal might actually help the progress of legislation, by holding him to his newfound promises.  Or there might be no point in making a deal unless he’s willing to accept something closer to the full list of activist demands. Or no bargain of any sort might be possible so long as Republicans hold the Senate, or even so long as they hold seats in states like Florida – in which case the hate for the senator is just a necessary path to his eventual retirement.

“I am personally agnostic on all of these points.... (Having) watched the Trump G.O.P. hold power with a largely negative agenda and an ugly rhetorical style, I can certainly believe that  a no-quarter liberalism will gain power eventually in its turn.

“But I can also believe that the obvious pleasure to be found in demonizing the Republicans most likely to do outreach could deliver liberalism more of what it has already been earning for itself these last few years: the satisfaction of self-righteousness as a compensation for the absence of political or policy success.”

Sen. Rubio commented on the March for Our Lives protests.

“I commend those who today are peacefully exercising their First Amendment rights to march in favor of a gun ban,” he said in a statement.

“While I do not agree with all of the solutions they propose, I respect their views and recognize that many Americans support certain gun bans. However, many other Americans do not support a gun ban. They too want to prevent mass shootings, but view banning guns as an infringement on the Second Amendment rights of law abiding citizens that ultimately will not prevent these tragedies,” he said.

Rubio went on to caution people marching for gun control that while “protests are a legitimate way of making a point, in our system of government, making a change requires finding common ground with those who hold opposing views.”

--Related to the above, Fox News host Laura Ingraham offered an apology Thursday after advertisers began fleeing her show because she mocked Marjory Stoneman Douglas senior David Hogg for getting turned down by four colleges.  In response, Hogg summoned his more than 600,000 followers to express their disdain for the conservative commentator to 12 of her advertises.

Ingraham, who I personally can’t stomach, hid behind Jesus as she watched at least four advertisers leave the show.

“On reflection, in the spirit of Holy Week, I apologize for any upset or hurt my tweet caused him or any of the brave victims of Parkland,” she tweeted.

--97-year-old retired Supreme Court justice John Paul Stevens called for the repeal of the Second Amendment and is encouraging anti-gun protesters to do the same.

Stevens, once one of the court’s liberals, argued in a New York Times op-ed that the amendment – which states that “a well-regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms, shall not be infringed” – is a “relic of the 18th century.”

Well such talk is incredibly stupid.  Not whether you agree or disagree with, say, sweeping gun control, but because you just will never be able to repeal the Second Amendment.  First, both houses of Congress have to propose the amendment with a two-thirds vote, or two thirds of state legislatures have to call on Congress to hold a constitutional convention.  It would then have to be ratified by three-fourths of the states or state legislatures.  I know I for one will be long dead and gone before the entire process even played out, if it began in earnest tomorrow, which isn’t happening.

So it’s just a stupid issue.

But, President Trump will make hay with it.  “They’re going to take away your guns!  We won’t let it happen!”

Trump tweet: “THE SECOND AMENDMENT WILL NEVER BE REPEALED! As much as Democrats would like to see this happen, and despite the words yesterday of former Supreme Court Justice Stevens, NO WAY. We need more Republicans in 2018 and must ALWAYS hold the Supreme Court!”

--The battle between fellow New York Democrats, Gov. Andrew Cuomo and New York Mayor Bill de Blasio, is fascinating for local area followers of politics. They truly despise each other, both highly ambitious and seeking higher office. The latest tiff is over Penn Station, over which Gov. Cuomo has sweeping powers to take control of the rehabilitation of the area, including the construction of huge towers and a renovation of the critically important transit hub.

Cuomo controls the state’s Urban Development Corp., which wants to create a vast development district spanning large amounts of the surrounding area, which means the state can supersede city environmental and land-use reviews that normally control development. That’s big.  And it also means Cuomo, not de Blasio, has the power to condemn and seize property.

According to sources, the state would capture potentially billions of dollars of additional tax revenue from having larger properties built in the area than the mayor is likely to want.

Not just de Blasio but the entire City Council is livid and I can’t blame them.

Cuomo has also found a way to take credit for any improvements in New York City’s transit system, including the subways, but he seems to make himself scarce when problems arise...that then becomes de Blasio’s responsibility.

--Meanwhile, actress Cynthia Nixon is picking up an unbelievable amount of early publicity after announcing she was running against Andrew Cuomo for the Democratic nomination for governor.  But as Greg David writes in Crain’s New York Business, “Her biggest hurdle is proving she knows enough and isn’t, in former Council Speaker Christine Quinn’s unfortunate characterization (for which Quinn apologized), ‘an unqualified lesbian.’”

What outside observers have noticed, however, is that Nixon has rattled Cuomo.  Which is fun to watch. As Greg David concludes, “For now, go Nixon!”

--A CNN poll from this week shows that 63 percent of those surveyed believed the women who claimed they had extramarital affairs with Trump.  21 percent said they believed the president, while 16 percent had no opinion about the affairs.  [But 4 in 10 white evangelicals believe the women, while 36 percent believe Trump.  24 percent are unsure.]

Separately, in a Pew Research Center survey, nearly 8 in 10 white evangelical Protestants approve of Trump’s job performance.

--Atlanta’s municipal government was brought to its knees Thursday morning by a ransomware attack – one of the most sustained and consequential cyberattacks on a major American city ever mounted.

Security experts linked the digital extortion to a shadowy hacking crew known for its careful selection of targets.  Dell SecureWorks, the security firm helping with Atlanta’s response, identified the assailants as the SamSam hacking crew, which is known for choosing targets that are the most likely to accede to its high ransom demands – typically the Bitcoin equivalent of about $50,000 – and for finding and locking up the victims’ most valuable data.

The SamSam group has supposedly extorted more than $1 million from more than 30 target organizations already this year.  [New York Times]

--The Tax Policy Center, a research group, says in a new report that 10.2 percent of New Jersey households will see  their federal income taxes go up this year under the Republican tax measure. That’s in large part due to the law’s $10,000 cap on the deduction for state and local income, property and sales taxes.

New Jersey was the only state where the percentage of those facing a tax hike reached double digits.  Next came Maryland with 9.4 percent and California with 8.6 percent, according to the report.

--Ecuador’s government said Wednesday it had cut off WikiLeaks founder Julian Assange’s internet connection at the nation’s London embassy where he was been living in exile.  Ecuador is pissed at Assange’s recent activity on social media decrying the arrest of a Catalan separatist politician.  Officials said in a statement that Assange’s recent posts were putting at risk the good relations Ecuador maintains throughout Europe.

There have also been stories that Assange is a pig, and that he doesn’t like to take showers.  I can’t imagine how embassy personnel feel about the guy just hanging out there all these years.

--We learned this week of the cause of death of the Iowa family of four vacationing at a Mexico resort town, Tulum.  Officials said it was likely a gas leak from a faulty water heater.  The prosecutor told local media that the heater in the seaside condo “was letting gas escape, perhaps because of lack of maintenance, perhaps because it was in use, perhaps because of the age of the equipment.”

Whatever was the reason, “a high concentration of toxic gas was found in the room.”

--Harvard hit a new low in terms of its acceptance rate this year, admitting 4.6% of applicants. Last year, it admitted 5.2%.  Seven of the eight Ivy League schools posted record-high application numbers, as released this week. Seven reported their lowest-ever acceptance rates.

At Princeton, more than 14,200 of the 35,370  applicants had 4.0 grade point averages.
Brown said 96% of its admitted students are in the top 10% of their high school classes.  It was 97% at Dartmouth.

--While it’s now Saturday in Ireland as I go to post, Good Friday was the first time the pubs were allowed to sell alcohol in almost a century.  Pubs in the Republic were open from 10:30 until closing time at 12:30 a.m.

Good Friday has traditionally been a popular time for house parties in the Republic, for obvious reasons. But this new legislation, passed in January by the Irish parliament, is good news for tourists, too.

Slainte!

---

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

God bless America.

---

Gold $1329
Oil $64.91

Returns for the week 3/26-3/30

Dow Jones  +2.4%  [24103]
S&P 500  +2.0%  [2640]
S&P MidCap +2.1%
Russell 2000 +1.3%
Nasdaq  +1.0%  [7063]

Returns for the period 1/1/18-3/30/18

Dow Jones  -2.5%
S&P 500  -1.2%
S&P MidCap  -1.2%
Russell 2000  -0.4%
Nasdaq  +2.3%

Bulls 45.5
Bears  17.5  [Source: Investors Intelligence]

Have a great week.

Happy Easter and Passover! Go Sister Jean!

Brian Trumbore



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Week in Review

03/31/2018

For the week 3/26-3/30

[Posted 11:30 PM ET, Friday]

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

Edition 990

Trump World

I cover Kim Jong-un’s surprise visit to China, the latest on Russia, and President Trump’s crazy statement on pulling out of Syria in great detail below.

But as the first quarter was wrapping up, it struck me that the second quarter could potentially be monumental on the foreign policy front, and thus roil global markets further. 

In the next three months, we are supposed to have a Trump-Kim summit, after Kim’s historic summit with South Korea’s President Moon Jae-in.  China will be looming over both of them.

President Trump seems certain to scuttle the Iran nuclear deal, which next has a May deadline for either extending the sanctions relief and keeping the deal in place, or putting the sanctions back on and starting over, with unknown consequences.

And also over the next three months, no one should be surprised to see Russian President Putin create a new crisis, especially in the Baltics, as he defends Russia’s honor...at least that is how he’ll frame it.  Also, remember the name Kaliningrad. 

These are three massively important theaters, and throw in Israel, which is rapidly being surrounded. 

Again, this could all come to a head in just the next 90 days.  How will President Trump respond?  Who will be the last one in his ear?

Fasten your seat belts.  There isn’t a soul alive who truly knows what could happen.

Trumpets....

[Due to time constraints, i.e., far more important things to discuss...I am limiting the scope of this section this week, many items not making the cut.]

--Attorney General Jeff Sessions said Thursday that Utah U.S. Attorney John Huber is investigating GOP lawmakers’ allegations against the FBI and that a special counsel is not needed to probe the case, as President Trump, Republicans on the Hill, and the likes of Sean Hannity have been calling for.

“I am confident that Mr. Huber’s review will include a full, complete and objective evaluation of these matters in a manner that is consistent with the law and facts,” Sessions wrote.

The AG said he would rely on Huber’s conclusion before reaching a final decision on whether a second special counsel was warranted.

I’m a little surprised Trump hasn’t tweeted his disapproval of the decision as yet.

Huber is also looking at whether the FBI should have done a better job probing Hillary Clinton’s role in the controversy surrounding Uranium One and Russia.

--Trump replaced the head of Veterans Affairs, David Shulkin, in a tweet: “I am pleased to announce that I intend to nominate highly respected Admiral Ronny L. Jackson, MD, as the new Secretary of Veterans Affairs... In the interim, Hon. Robert Wilkie of DOD will serve as Acting Secretary. I am thankful for Dr. David Shulkin’s service to our country and to our GREAT VETERANS!”

The selection of Dr. Jackson is beyond outrageous.  No way is he prepared to run the second-largest department in the government.  His nomination should not be approved.  But Shulkin deserved the boot over his European adventure last year that included Wimbledon and lots of sightseeing on our dime.

--Trump tweets: “Washington spent trillions building up foreign countries while allowing OUR OWN infrastructure to fall into a state of total disrepair. NO more!  It’s time to REBUILD, and we will do it with American WORKERS, American GRIT, and American PRIDE!”

“JOBS, JOBS, JOBS!  Unemployment claims have fallen to a 45-year low. Together, we are making the economy great again!”

“Because of the $700 & $716 Billion Dollars gotten to rebuild our Military, many jobs are created and our Military is again rich. Building a great Border Wall, with drugs (poison) and enemy combatants pouring into our Country, is all about National Defense. Build Wall through M!”

[The president has clearly decided he is going to attempt to use money allocated for the Pentagon to build the wall, in the name of national defense, even though there are serious questions as to whether this is really legal, let alone what the Pentagon will think about it.  Americans should also know by now that with such massive sums that are headed the Pentagon’s way comes massive corruption.  And that sucks.  I’m all for increasing defense spending, but history tells us “60 Minutes” will soon have ample fodder for future segments.]

“So much Fake News.  Never been more voluminous or more inaccurate. But through it all, our country is doing great!

--To cut to the chase...Jared Kushner should not be in the White House.  He shouldn’t have anything to do with government...period.  It bears repeating...the apple doesn’t fall far from the tree.  The loans the kid received from Apollo and Citigroup clearly ran afoul of the rules and laws governing the conduct of federal employees.  This case remains under investigation.

--Finally, of course I watched “60 Minutes” and Anderson Cooper’s interview with Stormy Daniels and, no, Sean Hannity, we don’t need to see your montage of Cooper’s work every night for the next three years, Hannity having a habit of repeating the same stories over and over and over and over....

Here’s my bottom line with Ms. Daniels, aka Stephanie Clifford.  The detestable Michael Cohen paid Daniels $130,000 in late October of 2016 to keep quiet about the 2006 hookup with Donald Trump.  No one now disputes this.  On “60 Minutes” Stormy agreed it was “hush money.”  Cohen insists he paid the sum out of his pocket without any discussion or repayment from Trump.

I totally agree with the following from an editorial, post- “60 Minutes,” in the Wall Street Journal:

“It’s impossible to predict how all of this will play out politically. Many Trump partisans will refuse to believe it or claim it’s irrelevant. But our guess is that at the margin this contributes to a growing public belief that Mr. Trump’s personal flaws are undermining his chances for a successful presidency.

“Two months ago he had emerged from a tumultuous first year with the triumph of tax reform and rising poll numbers. The strong economy had Republicans closing the gap with Democrats on who should run Congress next year. But Mr. Trump can’t resist promoting White House strife and making himself the center of political tumult.

“His recent selections of John Bolton and Mike Pompeo for his security team are first rate. But Mr. Trump’s reality-TV dismissal of their predecessors was nasty and chaotic. On Friday he threatened to veto a budget bill his own staff had been negotiating for weeks – further souring voters on the GOP Congress. Doesn’t he realize that if Democrats win the House, they will vote to impeach him?

“Mr. Trump can’t retain the best legal counsel because no one wants a client who ignores all advice.  He wants to answer questions from Mr. Mueller but probably won’t prepare enough to avoid even accidental self-incrimination.  The Stormy Daniels case is typical of Mr. Trump’s pre-presidential behavior in thinking he can, with enough threats and dissembling, get away with anything.  He’s never understood that a President can’t behave that way, and this may be the cause of his downfall.”

Wall Street...Trade...the Deficit....

Wall Street finished the quarter on Thursday, Friday being a holiday, and after nine straight quarterly increases, the Dow Jones and S&P 500 both fell for the three months. The Dow finished down 2.5%, the S&P falling 1.2%.  Nasdaq, though, had another up quarter, 2.3%.

The quarter was best symbolized by a stronger-than-expected jobs figure in February that stoked fears of a more aggressive Federal Reserve, and then more recently talk of a trade war with China after President Trump suddenly said he was levying tariffs on steel and aluminum.

But aside from the still looming trade issue, and geopolitical concerns as noted above, the immediate focus will be on next Friday’s jobs data for March, and then corporate earnings, which will begin coming out in earnest the week of April 9.

On the economic front this week, the final revision for fourth-quarter GDP was better than expected, 2.9% annualized, so the last few quarters now look like this.

Q4 2016... 1.8% (annualized)
Q1 2017... 1.2%
Q2 2017... 3.1%
Q3 2017... 3.2%
Q4 2017... 2.9%

Separately, personal income for February rose a solid 0.4%, but consumption (spending) rose just 0.2% a second consecutive month after gains of 0.5% in December and 0.7% in November.  Both income and consumption were in line with expectations but the latter points to a slowdown in consumer spending, which represents 2/3s of the U.S. economy, i.e., most folks are saving their tax cut, the personal savings rate rising in February.

The personal consumption expenditures indicator, the Fed’s preferred inflation barometer, was 0.2%, both on headline and core (ex-food and energy) and for the 12 months was up 1.8% and 1.6%, respectively, so still below the Fed’s 2% target.

The Chicago Purchasing Managers Index for March was 57.4, well below consensus and the lowest since March 2017, but still solidly in growth mode (50 being the dividing line between growth and contraction).

Add all of this week’s data up and the Atlanta Fed’s GDPNow indicator is 2.4% for first-quarter growth, up from its prior reading of 1.8%.

Moving on to trade....      

We learned that  the president’s tariffs on Chinese goods may not be imposed until early June, administration officials said, with further public consultations and potential tariff revisions buying time for negotiations.  U.S. Trade Representative Robert Lighthizer said he anticipates about 60 days’ worth of public comment on a soon-to-be published tariff list, but added that it would take years to bring the U.S.-China trading relationship “to a good place.”

Lighthizer added, “The 60 days refers to the time frame anticipated for public response. A determination on a final list and an effective date would be made thereafter,” the comments via an interview with CNBC.

So it’s time for everyone, including the Street, to chill out for a while.

Until the president’s next statement, that is, like the one he made on a new trade agreement with South Korea, heralded earlier in the week, which he then commented on at his Ohio appearance on Thursday. “I may hold it up after a deal is made with North Korea.  Does everybody understand that? You know why, right?  You know why? Because it’s a very strong card.”

Trump added, “We’ll probably hold that deal up for a little while, see how it all plays out.”

So you can imagine South Korea’s response.  Undoubtedly it was “WTF!”

[This was in the same speech he was to tout infrastructure, and then instead mentioned it only in passing at the end, saying legislation for same was unlikely to pass soon anyway.  Trump had more important things to discuss...like himself...and Roseanne.]

The renegotiated trade deal with South Korea (should it be finalized), doubles the quota on the number of cars each U.S. automaker can sell in South Korea without meeting local safety standards to 50,000, but currently, no American company sells more than 11,000 cars a year there and 25,000 was hardly an obstacle.  A 25% U.S. tariff on pickup trucks from South Korea will remain until 2041, rather than the existing 2021, thus protecting U.S. companies from South Korean competition for this category, but it also limits Americans’ consumer choices another 20 years.

South Korea agreed to limit its steel exports to the U.S. to about 2.7 million tons a year (70 percent of its recent shipments), in exchange for relief from the 25 percent tariff Trump announced earlier in March.

But as was the case in this instance, the Trump administration wants to reshape global trade within months, rather than the years complex treaties such as NAFTA normally take.

For now, there are still temporary exemptions on imports of aluminum and steel from Australia, Brazil, Canada, the EU, and Mexico (South Korea having just been settled...maybe) on May 1.  Or later....

Editorial / Wall Street Journal

“The Trump Administration is celebrating its revised trade agreement with South Korea, and the news is how little the deal will change. The U.S. wisely backed away from threats to blow up the pact with its sixth largest trading partner, but the price is more politically managed trade.

“Donald Trump once called the 2012 bilateral pact ‘horrible’ and threatened to withdraw if Seoul refused to renegotiate. But after the melodrama, the new pact’s main revisions are a change in the terms of trade for vehicles and a quota on Korean steel exports to the U.S.  Neither is likely to make much difference to the U.S. trade deficit with South Korea, which is supposedly the goal of this exercise....

“(And) trade negotiator Robert Lighthizer failed to win a new opening for U.S. farm goods or other exporters. By focusing so much on autos and steel, Mr. Lighthizer missed an opportunity to expand trade in services, where the U.S. runs a $12.3 billion annual surplus with South Korea.

“Mr. Lighthizer is also trumpeting Seoul’s acceptance of a 30% cut in its steel exports to the U.S.  This is a defeat for American steel users who are already paying higher prices despite the country-specific exemptions from Mr. Trump’s world-wide 25% tariff on imported steel.  Reducing supply can have the same effect as a tariff in raising domestic prices.

“This is another step toward politicians managing trade flows, as if Mr. Lighthizer in his wisdom can judge the right supply for tens of thousands of buyers and sellers. This seems to be the U.S. trade rep’s household remedy. The U.S. bludgeoned Mexico into accepting sugar quotas, and he’s now doing the same with steel suppliers around the world.

“The creation of the World Trade Organization was supposed to put an end to these so-called voluntary export restraints. But Mr. Lighthizer negotiated them with Japan in the 1980s, and he wants to try again. His problem is that global business supply chains are more complex than 30 years ago, trade is dominated by intermediate goods, and the U.S. is no longer as dominant a market for finished goods.  Negotiated quotas will damage U.S. competitiveness and do little to alter the trade balance.

“In that sense the Korean renegotiation is less a triumph than lost opportunity. By focusing on trade in industrial-age goods, the U.S. missed a chance to open South Korea further to the services and products of the future. But at least the Administration didn’t blow up a mutually beneficial pact with an important ally, and for that we can be grateful.”

Of course, after this editorial was published, Trump then said he was prepared to walk away from it over North Korea.

Editorial / The Economist

“Mr. Trump’s misunderstanding of economics explains why his politics are so irresponsible. Rather than join with other aggrieved countries to put legal pressure on China, Mr. Trump has threatened putative allies. Rather than work within the rules-based system of trade, which America helped create and which, despite the system’s imperfections, has served the country well, he bypasses it at will. He is particularly reckless to claim that the steel and aluminum tariffs are justified by national-security concerns (a get-out-of-jail-free card under World Trade Organization rules that should be used sparingly). If America thumbs its nose at the WTO, why shouldn’t others?

“Managed trade is a mistake, not a victory. It substitutes the power of political lobbies for market forces, favoring loud, well-organized producers over silent, disparate consumers and robbing economies of the nimbleness needed to adapt to changing technological conditions. Other countries will feel freer to follow America’s example, making a trade war a repeated risk rather than a one-off danger.  Mr. Trump’s approach threatens to leave everyone much worse off. Some deal.”

Finally, we have the U.S. federal deficit.  For years, admittedly, I have cried wolf on this topic.  But with interest rates held artificially low for ages, it hasn’t been the issue it once threatened to become.  That is no longer the case, and between the tax-cut package (whose long-term impact could still be positive, we hope) and the new spending legislation (whose long-term impact most decidedly will not be good), the deficit is back on center stage, at least among some opinion shapers.

Greg Ip / Wall Street Journal

“The U.S.’s underlying economic prowess is without peer: it is rich and diversified, produces most of its own food and energy, has a growing population, and it is entrepreneurial and competitive.

“But those assets are all legacies of the U.S.’s past, and some are eroding: business dynamism by some measures and economic growth have both declined, and the population is aging. If the U.S. pivots toward less trade and immigration, the ratings company (ed. Moody’s) warns, that may ‘swing the balance of risks for long-term growth to the downside.’

“Slow growth can be managed with the right fiscal policies. This is where it gets worrisome. In the U.S., interest swallowed 8% of federal revenue last year, the highest of all AAA-rated countries. As interest rates return to normal and debt keeps rising, Moody’s thinks it will hit 21.4% in 2027. This severely limits the government’s flexibility to respond to emergencies, whether a financial crisis, a recession, or a war, not to mention longer-term priorities such as education and research.  It is ‘a good proxy of the stress you may see on the prioritization of funds,’ says William Foster, an analyst at Moody’s.  ‘As interest is rising, that crowds out other spending.’....

“(But today) even Republicans have little appetite for cutting spending.  President Trump threatened (last) Friday to veto a bill funding the government for the rest of the fiscal year because it didn’t spend enough on a border wall. ‘We’re in a full-blown era of free-lunch economics where no one says no to anyone anymore,’ says Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a watchdog.

“Does it matter?  Japan’s debts are higher and the country long also lost its AAA rating, yet it has no problem whatsoever borrowing.  After Moody’s competitor, Standard & Poor’s Corp., stripped the U.S. of its AAA in 2011, interest rates went down, not up.  As Moody’s says, the global pool of savings from which the U.S. borrows tends to grow in times of stress.

“There are at least two reasons it matters. First, when the next recession hits, the U.S. may want to open the fiscal taps but instead have to do the opposite as tax collections sink and deficits mount. Second, while markets and the Federal Reserve both doubt interest rates will go much above 3% for the foreseeable future, the U.S. is acutely vulnerable if they are wrong because the debt is so large and so much of it comes due each year, and would have to be refinanced at higher rates.

“ ‘We are the greatest country with the strongest economy yet we seem intent on finding out when we can’t borrow any more in a painless way,’ Ms. MacGuineas says.”

Michael J. Boskin, John H. Cochrane, John F. Cogan, George P. Shultz and John B. Taylor (all senior fellows and economists at the Hoover Institution) / Washington Post

“We live in a time of extraordinary promise. Breakthroughs in artificial intelligence, 3D manufacturing, medical science and other areas have the potential to dramatically raise living standards in coming decades. But a major obstacle stands squarely in the way of this promise: high and sharply rising government debt.

“President Trump’s recently released budget is a wake-up call. It projects that this year, a year of relatively strong economic growth, low unemployment and continued historically low interest rates, the deficit will reach $870 billion, 30 percent greater than last year.

“For years, economists have warned of major increases in future public debt burdens. That future is on our doorstep. From this point forward, even if economic growth continues uninterrupted, current tax and spending patterns imply that annual deficits will steadily increase, approaching the $1 trillion mark in two years and steadily rising thereafter as far as the eye can see.

“Unless Congress acts to reduce federal budget deficits, the outstanding public debt will reach $20 trillion a scant five years from now, up from its current level of $15 trillion.  That amounts to almost a quarter of a million dollars for a family of four, more than twice the median household wealth.

“This string of perpetually rising trillion-dollar-plus deficits is unprecedented in U.S. history....

“If, for example, interest rates were to rise to 5 percent, instead of the Trump administration’s prediction of just under 3.5 percent, the interest cost alone on the projected $20 trillion of public debt would total $1 trillion per year. More than half of all personal income taxes would be needed to pay bondholders. Such high interest payments would crowd out financing of needed expenditures to restore our depleted national defense budget, our domestic infrastructure and other critical government activities.

“Unchecked, such a debt spiral raises the specter of a crisis. Some may think that such concerns are overblown, as there is no current evidence in financial futures markets that a crisis is on the horizon. But  a debt crisis does not come slowly and visibly like a rising tide. It comes without warning, like an earthquake, as short-term bondholders attempt to escape fiscal carnage.  Only in hindsight are we able to see the stresses building and bemoan that we did no act. While some insulation flows from the dollar’s role as the global reserve currency, that is neither sufficient nor immutable, and relies on faith in the United States’ eventual fiscal probity....

“As is well-known, our deficit and debt problems stem from sharply rising entitlement spending.  Without congressional action, the combination of the automatic spending increase per beneficiary provisions of these programs and the growth in entitlement program recipients as the population ages will cause entitlement spending to continue to rise far faster than U.S. national income and tax revenue.

“To address the debt problem, Congress must reform and restrain the growth of entitlement programs and adopt further pro-growth tax and regulatory policies. The recently enacted corporate-tax-reform plan is a good first step, as it sharply increases the incentive to invest and grow businesses, which will increase incomes. The revenue loss, which amounts to about 0.4 percent of gross-domestic product in 2025, is not by itself a budget buster, considering both the offsetting revenue reflow from higher incomes and the far larger long-run entitlement explosion. Moreover, over the next decade, the tax plan maintains or increases the federal tax claim on GDP compared with recent levels.... Taxes alone cannot solve our budget problem. Funding programs as they are currently structured will require high taxes for all income levels, taxes that would sharply reduce economic opportunity and growth, which in turn will make funding entitlements that much harder.

“If Congress acts now, it can avoid a fiscal collapse while continuing to provide help to people who need it. If Congress waits for a crisis – which may come when the United States needs suddenly to borrow significantly to address a financial meltdown, recession or war – the result will be fiscal and economic chaos, as well as painfully sharp cuts to programs that people rely on.”

Reminder, boys and girls.  “Payments for individuals,” which encompass such income transfers as Medicare, Medicaid, Social Security and food stamps, were 47.9% of outlays in 1989 and are projected to reach 69.2% in 2019.

Europe and Asia

There was zero broad economic news for the eurozone, China or Japan this week. But with quarter end, there will be a flood of it shortly.

[Oops, as I go to post this popped up. The official China manufacturing PMI for March was released Saturday, China time, and it rose to 51.5 from 50.3 in February.  Business conditions in China’s manufacturing sector have now improved 20 straight months.]

Eurobits....

--Crowds of protesters in Spain’s Catalonia region clashed with police after the Supreme Court stepped up legal action against separatists, the high court ruling at the end of last week that 25 Catalan leaders should be tried for rebellion, embezzlement or disobeying the state, the protests spreading over the weekend.  More than 20 people were injured in Barcelona.

So then on Sunday, Carles Puigdemont, the fugitive ex-leader of Catalonia and an ardent separatist, was detained by German police on an international warrant as he tried to enter the country from Denmark.  [He had flown to Finland to give a speech,  Finland being in the EU.  I’m not sure why he wasn’t arrested there, but it seems he fled and was transiting through Denmark, to Germany, because he thought Finnish authorities were about to haul him in.]

What an idiot!  He was in self-imposed exile in Brussels, the Belgium government barely tolerating his presence for another month or two, but he knew he couldn’t go anywhere else but home to stand trial.

So what the heck was he doing sneaking around?  Remember, it’s the European Union. The other member states don’t support what Catalonia has been trying to do because virtually all of them have some kind of simmering separatist minority in their midst as well (especially Belgium). So all the governments will do what they can to support Spain’s central government in Madrid. This isn’t rocket science, sports fans.

But needless to say, Puigdemont’s arrest sparked new protests and the country’s worst political crisis in three decades continues.

I have yet to see if a formal extradition process to Spain for him is underway as he now sits in a prison in northern Germany, but I do believe the situation has to be rectified within 60 days.

--Former British prime minister Tony Blair refuses to give up the fight against Brexit, using a new tactic: He is trying to make people understand that the U.K. will leave the European Union next March without anyone really knowing  what sort of future relationship it will have with its biggest trading partner.

“As time goes on, it will become crystal clear that the Government’s original negotiating position was built on sand,” he said on Monday.

What concerns Blair is the way the negotiations are structured. First the divorce gets formalized in the withdrawal treaty, with a transition deal included in it (the agreed upon final exit date December 2020, or 21 months after Brexit).

But then on the future relationship beyond December 2020, all Britain can hope for by that time is a political statement setting out the scope of a deal, the EU says.  It won’t be legally binding and will likely be very vague.

So Blair accuses the government of Prime Minister Theresa May of using this vagueness as just a way to keep her Conservative Party together until it can deliver Brexit.  For example, U.K. proposals on trade have been rejected thus far by the EU as unrealistic; the U.K. wanting to opt out of certain pieces of the single market while retaining freedom to go its own way where it chooses, such as in financial services, i.e., the “cherry-picking” EU leaders have consistently said is not going to be tolerated.

So, Blair says, “The government will turn to fudge. They will understand – and the Brexiteers will assist them – that they have somehow to get past March 2019 without a defeat and they can only do that if the terms of the new relationship are sufficiently vague to let the fiction of ‘cakeism’ continue.”  [Having one’s cake and eating it.]

“It is this strategy that Parliament has a duty to foil,” Blair says. Blair wants the government to put a detailed trade proposal on the table with the EU before the U.K. leaves. The people should then have a vote.

I’ve been following Brexit closely, as you know, and I can’t disagree one bit with Blair.  I thought Brexit from the beginning would be a disaster...and it still can be.

--Italy’s right-wing League (formerly Northern League) leader Mattel Salvini and ex-premier Silvio Berlusconi pledged to work together after a virulent clash over relations with the anti-establishment Five Star Movement; the prospect of a populist Five Star-League government alarming investors.

The rift was over who would be the speaker of the lower house, which went to Roberto Fico of Five Star, while the Senate post went to a member of Berlusconi’s Forza Italia party, but a person who was not Berlusconi’s first choice, Berlusconi all torqued off because Five Star’s leader Luigi Di Maio refused to meet with him.

President Sergio Mattarella, who has the duty of naming a new premier, is expected to start formal consultations with party leaders in early April, but there is no way these three players will put together a true coalition government...unless it is the League and Five Star, and that would spell disaster for the EU and financial markets...a true separatist government in the EU’s third-largest economy.

Separately, Salvini called for an immediate halt to migrant arrivals in Italian ports, claiming a “very high risk of terrorism,” the League’s popularity largely built on its virulently anti-immigrant stance, having already called for the deportation of more than 600,000 illegal immigrants on Italian soil.

Wolfgang Munchau / Financial Times

“What we see in Italy now is the predictable response to two decades of economic policy that failed to produce jobs for young people.  Many of the victims of this policy are now the backbone of support for the two triumphant populist parties.  No country, not even a paternalistic one such as Italy, can maintain a pro-European consensus in the presence of permanent economic calamity.

“Unless Five Star or the League agree to self-destruct, they cannot afford to let go of their election promises. Five Star promised a universal basic income; the League wants a flat income tax. Both intend to reverse pension reforms. These promises are simply inconsistent with adherence to the EU’s fiscal rules....

“It has been the tragedy of the eurozone that Italy is too big to save and too big to fail. The eurozone has no instruments to deal with the crisis of a large country effectively. The Franco-German talks about economic reform belong in the nice-to-have-category – new rules of engagement for the European Stability Mechanism, the rescue umbrella, and the next steps towards banking union.

“But if Paris and Berlin were serious about crisi prevention, they would need to talk about a single safe asset as a backup for financial markets and a funding instrument to create fiscal capacity to revive the eurozone’s economic wastelands. The political chances of such reforms are zero.

“For as long as this remains so, we are safe to define a time of economic stability as the period between two crises.”

--Germany’s unemployment rate hit a new post-reunification low, falling to 5.3 percent in March, according to the Federal Labour Office.  [The European Union uses a different format and estimates it is far lower than this.]

--Consumer spending in the U.K. dropped to the slowest pace since 2011 last year as the fall in the pound squeezed living standards.  Household spending rose 1.7 percent in 2017, down from 3.1 percent the previous year, according to the Office for National Statistics.

--Former French President Nicolas Sarkozy is going to face trial over charges he misused his influence to secure leaked details of an inquiry into alleged irregularities in his 2007 election campaign, as reported by Le Monde.  The case came about after investigators used phone-taps to examine separate allegations that late Libyan leader Muammar Gaddafi funded Sarkozy’s campaign and began to suspect he kept tabs on a separate case through a network of informants.

--Austria is drawing criticism from parts of the European Union for saying it couldn’t expel Russian diplomats on account of its neutrality.

Recall, Chancellor Sebastian Kurz’s new government includes nationalists that cooperate with Vladimir Putin, and he has declined to join the tough international response to the nerve-agent attack in the U.K.

Kurz’s position is hardly compatible with EU membership, as many are saying.  I wrote the other week of scary developments here.  This inaction only confirms some of the worst fears.

I’m reminded of a trip I took to Vienna around 2003. I took the train line out to the end to go hike in a state forest I knew was out there somewhere.  The line ended in a small village and I did find the entrance to the park, but then I realized I didn’t have enough time to get the train back to Vienna that I was targeting.

So I’m walking around in my London Fog raincoat, sticking out like a sore thumb as unfriendly folks passed me on these very suburban streets, and I go back to the station and thought I’d have a beer at the bar there. When I walked in, it felt like I had walked back into Nazi Germany.  I turned right around and was glad to get back to ‘civilized’ Vienna. 

--Finally, last week I opened with the heroism of French police officer Lt.-Col. Arnaud Beltrame, who had traded places with one of the captives taken by an Islamist terrorist last Friday following a shooting spree in southern France.  I just couldn’t believe his story...a hero for the ages.

Beltrame, as you heard, died of his injuries about four hours after I posted.

Col. Arnaud’s brother Cedric told a French radio station on Saturday, “He gave his life for strangers. He must have known that he didn’t really have a chance.  If that doesn’t make him a hero, I don’t know what would.”

President Emmanuel Macron said that Col. Arnaud “fell as a hero” after showing “exceptional courage and selflessness,” adding that he deserved “the respect and admiration of the whole nation.”

British Prime Minister May said the “sacrifice and courage” of Beltrame would not be forgotten.

I will never forget him. 

Street Bytes

--Stocks broke a two-week losing streak, with the Dow finishing up 2.4%, the S&P 2.0% and Nasdaq 1.0%.  The big positive was a seeming lessening of trade tensions, at least for now, though extreme volatility in the tech sector continued.

--U.S. Treasury Yields

6-mo. 1.91%  2-yr. 2.27%  10-yr. 2.74%  30-yr. 2.97%

Yields on the long end of the curve fell to two-month lows.  Frankly, it made little sense but here we are.  Let’s see what the beginning of a new quarter brings.

--In an extensive interview with MSNBC on Wednesday, the taping of a show to be aired April 6, Apple CEO Tim Cook called for privacy regulation, saying consumers should have more visibility into not only what personal information they share online but how companies than use that information to better understand their users.

Cook said: “We’ve never believed that these detailed profiles of people that have incredibly deep personal information that is patched together from several sources should exist.”

Cook added that while he is generally averse to regulation, “I think we’re (now) beyond that.  It’s time for a set of people to think about what can be done.”

Cook called for more transparency about what data is collected and how that data is used, saying too many privacy policies are written by lawyers and difficult for users to understand.

Apple protects its user’s privacy on its devices, with sensitive information such as facial profiles stored on devices rather than remotely.  The business model relies on sales of its phones, iPads and other devices and not on advertising, as the models of Alphabet (Google) and Facebook do by contrast.

Cook said: “Everyone should know what they’re giving up, not only the specific data point but the whole line people can draw: When I know this-plus-this-plus-this-plus-this, I can infer a whole bunch of different things. That can be abused.”

Cook added, “To me, it’s creepy when I look at something and all of a sudden it’s chasing me all across the web.”

I have to admit I get a kick out of how Facebook, in my case, chases me with advertisements for buttery desserts that leave me drooling like Homer Simpson over beer and donuts.  I’m a sucker for food porn.

Speaking of food porn, and digressing wildly, hey Mark R., did you know Yuengling now makes ice cream?  [Haven’t tried it yet.]

Now where we were.....

Oh yeah, partially in response to the likes of Tim Cook above, Facebook said it would roll out a centralized system for its users to control their privacy and security settings in response to the outcry over how it handled personal data.

The system, which they say has been in the works, will allow people to change their privacy and security settings from one place rather than having to go to roughly 20 separate sections across the social media platform.

Back to Cook, when asked what he would do if he were Facebook’s Mark Zuckerberg, he replied: “I wouldn’t be in this situation.”  [Tripp Mickle / Wall Street Journal]

--Meanwhile, Zuckerberg and Facebook are in talks with lawmakers on having him testify before Congress about the social network’s handling of user data.  All three congressional committees that have some jurisdiction in such matters – Senate Judiciary, Senate Commerce, Science and Transportation and the House Energy and Commerce committees – are interested in speaking to him.  Hehe. 

At the same time the Federal Trade Commission confirmed Monday it was investigating Facebook for potentially violating a consent order to disclose uses of customers’ data going back to 2011.  And, 37 attorneys general sent a letter to Facebook asking about the company’s data policies and its role in the Cambridge Analytica controversy.

And...Facebook is facing its most serious consumer backlash, highlighted by the #deletefacebook hashtag.

Zuckerberg said he would not appear before a British parliamentary committee on misinformation and social media, choosing instead to send one of his deputies, who no doubt will be shredded, body sent back to the States by parcel post.

Instead, Zuckerberg apologized to Britons on Sunday over a “breach of trust,” taking out full page ads in British newspapers.

“We have a responsibility to protect your information. If we can’t, we don’t deserve it,” said the advert, signed by him.

Separately, fewer than half of Americans trust Facebook to obey U.S. privacy laws, according to a new Reuters/Ipsos poll.  Some 41 percent of Americans trust Facebook to obey laws that protect their personal information, compared with 66 percent who said they trust Amazon, 62 percent who trust Google, 60 percent for Microsoft and 47 percent for Yahoo.

Zuckerberg and chief operating officer Sheryl Sandberg said shoring up trust was their priority.

And to that end, Thursday, Facebook said it had begun “fact-checking” photos and videos to reduce the hoaxes and false news stories.  Zuckerberg said Facebook would prioritize “trustworthy” news by using member surveys to identify high-quality outlets.

--Back to Apple, the Street was less than excited about its announcement this week of a new education-targeted 9.7-inch iPad, selling for $299, with support.  Apple hopes this new, lowest-cost iPad ever will appeal to students and educators.

iPad sales have been soft in recent years.

--Shares in Tesla closed Monday, March 12, at $345 and they’ve been crashing ever since, to their lowest levels in a more than a year ($260 after a little snapback from Thursday’s low of $248), as the electric-car maker struggles with ongoing production delays and failure to hit targets, a debt downgrade from Moody’s, and the most recent killer, concerns about last week’s fatal car crash in California.

Tesla has always been subject to rumors of cash flow issues and Moody’s said Wednesday the downgrade reflected “the significant shortfall in the production rate of the company’s Model 3 electric vehicle.”

It also “faces liquidity pressures due to its large negative free cash flow and the pending maturities of convertible bonds.”

Tesla has $230 million in unsecured paper maturing in November 2018 and $920 million in March 2019.

The company is now saying it will produce 2,500 Model 3 (base price $35,000) vehicles per  week by the end of March, and 5,000 per week by the end of June, Moody’s said, down from the earlier company expectations of 5,000 per week by the end of last year and 10,000 by December 2018.

But the biggest issue concerns last week’s accident in which there is doubt whether Tesla’s automated control system was driving the Model X SUV; an accident involving two other cars, according to the National Transportation Safety Board and local police.  The 38-year-old driver of the Tesla died amid the questions over the Autopilot system.

Late Tuesday, Tesla said it does “not yet know what happened in the moments leading up to the crash,” but added in the blog post that data shows Tesla owners have driven the same stretch of highway with Autopilot engaged “roughly 85,000 times...and there has never been an accident that we know of.”

“We have never seen this level of damage to a Model X in any other crash,” Tesla added.  The car caught fire which was even more concerning to the NTSB.

Tesla’s battery packs are designed so that when a fire occurs, it spreads slowly, allowing people more time to exit or be removed from the car.  The victim was removed and died on the way to the hospital before the car became engulfed.

A research report by Cowen & Co. said it’s time to “question Autopilot leadership” at Tesla and Sanford C. Bernstein said it was focusing on the “fallacy of automation” to boost production.

There are certainly growing concerns that the self-driving equipment touted by Tesla, let alone the recent Uber fatal crash involving the pedestrian in Arizona, will fail to meet government standards.

Typical Elon Musk.  He once vowed to demonstrate a fully autonomous Los Angeles-to-New York cross-country trip by the end of 2017.  Like everything else in his company, that date has slipped.

But wait...there’s more! Tesla is recalling 123,000 Model S cars due to a problem with the power steering component bolts in vehicles built before April 2016.

“If the bolts fail, the driver is still able to steer the car, but increased force is required due to loss or reduction of power assist,” an email to affected customer states.

Tesla said there have been no injuries or accidents related to issues with the component, and that the problem only arises in cold winter climates where roads are frequently salted which can cause “excessive corrosion” of the bolts, which is laughable.  [Didn’t Tesla have a prior issue involving excessive humidity?  Or was that someone else.]

We also learned of a pair of recent internal memos from the heads of engineering and production that challenged workers to reach production goals for assembling 2,500 Model 3s a week by the end of the quarter, partly to silence the doubters.

Doug Field, engineering chief, wrote in the March 23 email, “Let’s make them regret ever betting against us. You will prove a bunch of haters wrong.”

Yoh, Mr. Field.  There are few actual “haters” of Tesla, the company, or Elon Musk.  We admire Elon.  It’s just that your stock is and has been grossly overvalued and he’s been setting unrealistic expectations to keep the share price up.

But watch what happens in the race to increase production. There are already reports of quality control issues, and they will only grow.

--Back to Uber, it has now been forbidden from resuming self-driving tests in Arizona.  The car-hailing company had already halted its trial after the fatal accident involving one of its vehicles and a pedestrian. But Arizona’s governor wrote to the company saying there had been an “unquestionable failure” to make safety the top priority.

Gov. Doug Ducey referenced a video released of the incident where the car’s operator was looking down, rather than directly at the road, for about five seconds before the night-time accident.

“I found the video to be disturbing and alarming, and it raises many questions about the ability of Uber to continue testing in Arizona,” wrote Ducey.

Back in 2016, Ducey welcomed Uber’s self-driving fleet “with open arms and wide open roads.”

I am the last person to defend Uber in the accident, but every story about it should be required to note that the victim was not in a crosswalk and just started walking out in the middle of the street (at least that is my recollection).

--Then there is Amazon.  Trump tweet: “I have stated my concerns with Amazon long before the Election.  Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!”

Lindsay Walters, a White House spokeswoman , told reporters on Thursday that “the president has expressed his concerns with Amazon. We have no actions at this time.”

But Trump’s willingness to again single out the company was enough to spook investors.  Kevin Hassett, the chair of the president’s council on economic advisers, said Thursday on Fox Business: “The general principle that I know deeply concerns the president is that we need to live in a world where the government sets a level playing field between internet vendors and mom and pop stores.”

But of course Trump regularly conflates Amazon with the Washington Post, Jeff Bezos owning the paper privately, separate from his role at Amazon.

Brad Parscale, the president’s 2020 campaign manager, tweeted on Thursday: “Do not forget to mention that @amazon has probably 10X the data on every American that @facebook does. All that data and own a political newspaper, The @washingtonpost.  Hmm...”

Far-right conspiracy sites- some of which the president is known to read – have for months stoked the idea The Post is working with the CIA because the agency contracts with Amazon for cloud-based storage.

Regarding the issue of the Postal Service, Amazon has said that the Postal Regulatory Commission, which oversees the service, has consistently found that its contracts with Amazon are profitable.

And on taxes, Amazon collects sales taxes on its own products in all 45 states that have one, but third-party vendors who sell products on the site often do not collect sales tax, which is indeed unfair.

In April, the Supreme Court is to rule on whether to allow states to impose sales taxes on all internet sales.

Trump does have some congressional support on the issue from key Democrats.  Minnesota Rep. Keith Ellison said in a statement on Thursday: “The Trump administration should rein in giants like Amazon because they have an unfair stranglehold on the competition, not because the president has a personal feud with a company’s CEO.”  [New York Times]

Editorial / Wall Street Journal

“Donald Trump slammed Amazon on Twitter Thursday, and its stock price went up.  Maybe investors are figuring out that deploying federal power against the online retailing behemoth isn’t as easy as pressing ‘Tweet’ – for which Americans should be grateful no matter what they think of Amazon.

“On Wednesday the Axios website reported what was hardly a secret – that Mr. Trump doesn’t like Amazon and its CEO Jeff Bezos, who also owns the relentlessly anti-Trump Washington Post. Amazon shares fell about 4.4% on the day, amid the general investor angst over political anger aimed at Facebook and the big tech companies.

“Then on Thursday Mr. Trump, perhaps boiling over after a calm week, tweeted: ‘I have stated my concerns with Amazon long before the election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!’

“Amazon wisely declined to respond, and the President is wrong to target a private company. That’s what Democrats do – as Barack Obama did against Staples for executive compensation (2015), Anthem for raising insurance premiums (2010), and the Koch brothers for opposing renewable fuels (2015), among others.  But Amazon shares popped 1.1% Thursday in a rising market.

“The reality is that Mr. Trump and the executive branch can’t do much to hurt Amazon – at least not legally, or without an  effort to build a far better case than his tweets offer.

“Mr. Trump complains about Amazon’s state and local tax payments, but Amazon has collected billions of dollars in sales tax in the states that require it. It’s true that cities and states competing for Amazon’s second headquarters have offered an embarrassment of taxpayer subsidies. But however regrettable, such corporate dowries aren’t the concern of federal government.

“Mr. Trump could try to unleash the Internal Revenue Service, though that would be a scandal that could be an impeachable offense. The press and prosecutors would not give the Trump IRS the pass they gave Lois Lerner during the Obama years for targeting conservative nonprofits with extra scrutiny.

“Alternatively, Mr. Trump could try to gin up antitrust regulators at the Federal Trade Commission and Justice Department. But the federal government would struggle to prove consumer hardship, the most basic criterion for an antitrust case.”

The Journal editorial then notes Trump could go after Amazon’s dominance in e-books, before concluding...

“Mr. Trump’s other big gripe is that taxpayers are on the losing end of Amazon’s deal with the U.S. Postal Service. But that story is also more complicated. The Post Office has often operated at a net loss, but package volumes grew in fiscal 2017 by more than 11%, making it a rare growth market.  Many of the additional 589 million boxes delivered last year came from Amazon.

“Though imperfect, the deal is mutually beneficial.  The Post Office arguably needs Amazon more than Amazon needs the Post Office. The Post Office could drop Amazon as a delivery partner, but it would likely have to raise prices elsewhere or endure higher losses. Would Mr. Trump take credit for that?

“Mr. Trump can rail against anyone he wants, but America is still a nation of laws... This is a lesson Mr. Trump’s critics forgot as they cried wolf over a fascist takeover. The political reality is that the more Mr. Trump publicly assails Amazon, the harder it will be to take regulatory action, deserved or not.”

Last year, Amazon contributed about 4% of total U.S. retail sales, while its portion of e-commerce totaled about 43%, according to eMarketer. The company’s revenue grew 31% to $177.87 billion in 2017.

At some point, yes, Amazon could face legitimate antitrust action.  But that day is not here yet.

--The personal details of around 150 million users of a popular nutrition app from Under Armour were accessed in a breach; the company’s MyFitnessPal software, specifically, which contains usernames, email addresses and passwords.

Under Armour said the passwords were protected by strong encryption. The breach, which occurred in February, was only discovered on March 25. Users are urged to change their passwords immediately. It seems UA acted quickly and appropriately.

--Boeing was hit by a computer virus, raising some fears that manufacturing equipment used to build its 787 Dreamliner and 777 wide-body jets could be crippled, as first reported by the Seattle Times.

Boeing acknowledged a cyberattack while saying “a number of reported statements on this are overstated and inaccurate.”

Of course they would say this, but this is kind of scary.

“Our cybersecurity operations center detected a limited intrusion of malware that affected a small number of systems,” a spokeswoman for the company said in a statement.  “Remediation were applied and this is not a production and delivery issue.”

But a Boeing engineer wrote a memo, cited by the Seattle Times, that read in part, “It is metastasizing rapidly out of North Charleston and I just heard 777 [automated spar (sic) assembly tools] may have gone down.” The engineer (I’m leaving out his name...the paper put it in), said he was concerned that the virus would hit equipment used to test jetliners before they roll out of the factory for flight testing and could potentially “spread to airplane software.”

A similar cyberattack compromised companies such as FedEx last year, as well as crippling Britain’s state-run National Health Service.

--Investors put $11.9 billion into the now-$3.3 trillion hedge fund industry in February, according to a report by eVestment.  Combined with $10 billion added in January, the inflows over the first two months of 2018 marked the steepest increase since 2014.

It was just in 2016 that the industry experienced its first annual net outflow since 2009.

--Related to the above, the annual bonus for the average Wall Street worker is back to heights not seen since pre-financial crisis, an estimated $184,220, the most since 2006, according to data released by the New York state comptroller Monday. The Wall Street bonus pool was $31.4 billion, which as you can imagine is critical to the finances of both New York City and New York State.

The comptroller’s report added that Wall Street accounted for less than 5 percent of local jobs but 20 percent of private sector wages in the city.  The Street had 176,500 workers last year, down from 188,400 in 2008.

--I didn’t see until after I posted last time that California’s jobless rate fell to 4.3% in February, which is not too shabby, but then you have the exploding homeless issue that is roiling communities across the state, much of this due to the unaffordability of housing.

--U.S. farmers have retrenched in the face of low agricultural prices by setting plans to plant less corn and soybeans this year, according to a Department of Agriculture survey, which in turn sent prices higher. The decreases are, however, minimal...2% for corn, 1% for soybeans. 

But at 89m acres for soybeans and 88m acres for corn, this marks the second year in history that U.S. farmers would plant more soybeans than corn, reflecting a strong demand for products made from versatile oilseed, such as livestock feed.

--I totally forgot about the premiere of the revival of “Roseanne” on ABC, Tuesday, which drew 18.2 million viewers, so impressive that President Trump phoned her to offer his congratulations on her “huge” ratings. It helps that Roseanne plays her alter-ego Roseanne Conner, a Trump supporter, like Roseanne is in real life.

I was a fan of the original “Roseanne” show and I’ll try and remember to catch it.  [Depends on that night’s Mets game, I hope you understand...thank god we have baseball back.  No more Tucker Carlson and Hannity.]

John Podhoretz / New York Post

“At the beginning of March, the Academy Awards featured performers talking about ‘intersectionality’ and Dreamers and jokes about how an Oscar-nominated movie about a gay awakening was made to annoy Mike Pence – and the show got the lowest ratings in history.

“Tuesday night, the premiere episode of the revival of ‘Roseanne’ featured a working-class grandmother saying grace before dinner and concluding with thanks for ‘making America great again’ – and the show got the highest ratings of any network program in six years.

“Hollywood is now faced with indisputable evidence that there’s a huge potential audience out there for programs that don’t actively insult 63 million Trump voters....

“One might also point out that the first ‘Roseanne’ episode on Tuesday (ABC aired two) was absolutely sensational. Bruce Rasmussen’s script centered on a political feud between the Trumpy Roseanne and her Hillary-centric sister Jackie – and it was funny and barbed and fair, unquestionably one of the best renderings of the cross-ideological tension in America since Trump came down the escalator nearly three years ago.

“But of course the people who watched in droves couldn’t have known the episode was going to be good. They might, however, have seen the news reports about Roseanne Barr’s appearance on Jimmy Kimmel’s show last week, when he complained to her that she had once been so liberal.

“Barr, who remains among the most confrontational people on earth, was having none of it.

“ ‘I’m still the same,’ she shouted.  ‘You all moved!’  And she yelled at him about how his hunger to get rid of Trump would just leave an opening for the very same Mike Pence whom Kimmel had made fun of in his Oscar monologue.

“ ‘A lot of us, no matter who we voted for, we don’t want to see our president fail,’ Barr said. ‘Because we don’t want Pence!’

“So what America might have known about the new ‘Roseanne’ before tuning in was that it was going to be the very rarest of birds at this cultural moment – a Hollywood product that wasn’t going to use Trump as a punchline or use a Trump supporter as a comic punching bag.

“Perhaps more important, her appearance signaled that the new ‘Roseanne’ was going to be true to the spirit of the old.  The original show was properly hailed as a detailed depiction of the lives of the American working class – and if any fictional characters of the past 30 years were going to vote for Trump, it was going to be the Conners....

“The world between the coasts has just sent a message to the major domos of our popular culture. The message is: We’re conscious enough of our differences to shut you down when you set yourselves against us (the Oscars) but we are ready to provide enthusiastic support for your efforts if you treat us with respect.

“How will Hollywood respond?”

Thursday, in his infrastructure speech in Richfield, Ohio, that turned into another rambling diatribe, with the same stories and targets, his greatest hits, Trump boasted about the ratings for “Roseanne.”

“Look at Roseanne!  I called her yesterday!  Look at her ratings!” said the president.

“They were unbelievable! Over 18 million people! And it was about us! They haven’t figured it out! The fake news hasn’t quite figured it out yet...But they will.”

--I didn’t have time last review to say anything about the passing of entrepreneur and sports team owner Wayne Huizenga, 80.  I have a bit on him on his sports past in one of my Bar Chat columns, but Huizenga was an amazing success in virtually everything he touched on the business end, including his first major venture, buying up some trash companies in his native Midwest, and then launching his own garbage hauling business in Pompano Beach, Florida, in 1962. He would drive a garbage truck from 2 a.m. to noon each day, then shower and go out and solicit new customers in the afternoon.

The offshoot was he eventually expanded throughout South Florida, and then merged with a Chicago sanitation company his uncles owned, creating Waste Management Inc.  By 1984, he resigned from the company, taking $100 million in stock.

Then he rode the video wave and built Blockbuster Entertainment into the leading video rental chain by snapping up competitors, cracking Forbes’ list of the 100 richest Americans. Blockbuster was the McDonald’s of video.  He and two partners bought 43 percent of the business for $19 million, and by 1991, the chain had grown to over 1,800 stores.

So once again, Huizenga knew when to get out, selling Blockbuster in 1994 to Viacom for about $8 billion.

Then he got back into the trash hauling business, buying Republic Waste Industries Inc. for $27 million.  Mergers and acquisitions soon followed.  He renamed the company Republic Industries as it branched out, buying Alamo Rent-A-Car and National Car Rental.

And then Republic, under his leadership, started AutoNation, a national chain of car dealerships.

Republic Services was spun off in 1998, to focus on waste management, while AutoNation expanded to about 375 dealerships in 17 states.

Alas, he didn’t always meet with the same success in the sports arena, though he won a World Series with the Marlins, before becoming a villain for dismantling the team.

But Wayne Huizenga should always be remembered for his business acumen, particularly with Blockbuster.  He played that beautifully.  I’m even smiling typing this. 

It should also be noted that as reader Mark R. reminded me, so many leaders, including in the sports world, said Wayne Huizenga changed their lives for the better.  He was a good man with a big heart.  [Ask former coach Jimmy Johnson, for one.]

--And we note the passing of Lance Clark, 81.  Clark, a member of the sixth generation Quaker family that founded the British company Clarks shoes, in the mid-1960s came up with a hit product, the Wallabee, a lace-up moccasin that became popular with musicians and the lead character in the TV series “Breaking Bad.” And in my case, the highly popular Clarks desert boots, that I wore as a kid.  [I seem to recall a fight with Mom over the purchase of these because she was concerned with arch support.  Oh, the things we look back on today that shouldn’t have been worth anyone’s concern.  I wasn’t allowed to buy Converse for the same reason.  We were a Keds family.]

--Back to food porn, because at the end of the day...Red Lobster is introducing a lobster and waffles dish, available this past week, as part of their Lobsterfest menu. Huh.

The dish features a buttermilk-battered and fried split Maine lobster tail served on top of a waffle made with the same mix used in the chain’s famous Cheddar Bay biscuits, according to the chain.  All of this is then topped with maple syrup.

I’m not sure I want syrup on my lobster.  Reaction thus far, from what I’ve read, has been mixed.

Just slather melted butter on both, I say!

Foreign Affairs

North Korea / China / South Korea:  After days of speculation, it was confirmed that North Korean leader Kim Jong-un paid a visit to Beijing after his famous train was spotted pulling into a station there. The visit was confirmed by both China and North Korea.

It was the reclusive leader’s first known trip out of the country since coming to power in 2011.  There were reports that Kim’s lack of experience in summit diplomacy may have been an important motive for his visit. A former South Korean foreign minister, Yun Byung-se, told the South China Morning Post that Kim may have wanted advice on how to deal with President Trump, “who is not predictable.” Xi has already had bilateral meetings with Trump in Mar-a-Lago and Beijing.  Then again, Xi had every reason to show Kim who was boss, thus the real reason for demanding Kim train it to Beijing.

After the meeting, China said Kim pledged his commitment to denuclearization and to meet U.S. officials.

China’s Xinhua news agency reported Kim held “successful talks” with President Xi, and later we saw extensive videotape of the two leaders in various settings, along with their wives; Kim arriving with his wife, Ri Sol-ju, by train on Sunday and leaving Beijing on Tuesday afternoon, according to reports.

By custom, and for major security reasons, these rare trips are not announced by either side until Kim (and before that his father and grandfather), are safely back in Pyongyang...a coup long feared while the North Korean leader is away.

North Korea’s KCNA news agency called the visit “a milestone” in improving bilateral ties.

President Trump tweeted he had received a message from Xi on Tuesday night that his meeting with Kim “went very well” and that Kim looked forward to meeting the U.S. president.

“Look forward to our meeting!” Trump wrote, while adding: “In the meantime, and unfortunately, maximum sanctions and pressure must be maintained at all cost!”

The next day, Trump tweeted: “For years and through many administrations, everyone said that peace and the denuclearization of the Korean Peninsula was not even a small possibility.  Now there is a good chance that Kim Jong Un will do what is right for his people and for humanity.”

Following Kim’s return to Pyongyang, it was announced that he would meet South Korean President Moon Jae-in on April 27 for the first summit between the two countries’ leaders in more than a decade.  But North and South Korea failed to agree on whether Pyongyang’s nuclear program would be on the agenda at the border village of Panmunjom, raising fresh doubts about Kim’s willingness to give up the weapons. The Koreas plan to hold a preparatory meeting on April 4 to discuss protocol, security and media coverage issues, according to a joint statement released by the countries.

This meeting is expected to precede the meeting between Kim and President Trump, that we’ve been told would take place by end of May.  Kim has previously said he was open to denuclearization of the Korean peninsula.

But according to South Korea’s senior presidential press secretary Yoon Young-chan, Seoul was very cautious, not having been involved beforehand in Kim’s trip to Beijing (nor was Trump, obviously).  “What is happening now is beyond what the (government) has been predicting and (Seoul) will need to keep an eye on the situation with all possibilities in mind.”

All now know, China will be a major presence in the room when Kim meets with Moon, and then with Donald Trump.  President Xi noted after his meeting with Kim that “China will continue to play a constructive role on the issue (of talks) and work with all parties, including the DPRK (Democratic Republic of Korea), toward the thaw of the situation on the Peninsula,” Xinhua reported.

The “situation on the Peninsula” refers to not only North Korea’s nuclear program, but the presence of 30,000 U.S. troops to the south and the outlying waters, where the U.S. and South Korea continue to conduct regular military exercises.

Denuclearization to Pyongyang means U.S. troop withdrawal from the South.  Only then will North Korea begin dismantling its nuclear program. This much seems clear.

The message from the week is that Pyongyang has a partner in Beijing, and President Xi, in essence, through Kim, is not going to be dictated to.

Remember Xi’s words just a week ago on Taiwan.  ‘It’s ours.’

According to an analysis of Chinese customs data, China’s exports of refined petroleum to North Korea have plummeted in the last five months, in an attempt to pile on economic pressure as leaders from Seoul and Pyongyang prepare for their summit.  North Korean imports of steel and cars from China have also fallen dramatically.

There is good reason to believe such data may explain recent dramatic shifts in policy by Kim Jong-un.  President Trump has repeatedly called on China to do more to put pressure on North Korea.

A Fox News poll show voters favoring a meeting between Trump and Kim by a 63-30 margin.  But 76 percent don’t think North Korea will ever be convinced to give up its nuclear weapons, and they continue to give Trump negative ratings for his handling of North Korea overall (41 percent approve, 49 percent disapprove).

Gideon Rachman / Financial Times

“Could Donald Trump’s strategy for North Korea actually work? That is the question that is inevitably raised after the dramatic visit by Kim Jong-un to Beijing.

“The U.S. president’s North Korea strategy has been fairly evident ever since he took office. Mr. Trump intends to put intense pressure on North Korea to get rid of its nuclear weapons, particularly those that could directly threaten the U.S. To do this, Mr. Trump has resorted to frequent threats of military action, talking of unleashing ‘fire and fury’ on the North Koreans.  But he has also always intended to use China, North Korea’s closest ally, to exert maximum diplomatic and economic pressure on the Kim regime. The goal is that the combination of U.S. threats and Chinese pressure will force North Korea to back down.

“On the face of it, this goal looks closer to fruition after Mr. Kim’s visit to China. In a parting statement, Mr. Kim pledged that the ‘issue of denuclearization on the peninsula can be resolved.’ But while that sounds promising, a theoretical commitment to scrapping nuclear weapons still leaves huge issues to be resolved. The North Korean leader’s statement also referred to ‘simultaneous steps for peace,’ which is probably code for the longstanding North Korean demand for the withdrawal of U.S. troops from the Korean peninsula. No U.S. administration, to date, would have contemplated pulling out of South Korea. Mr. Trump will probably maintain this U.S. red line – although his approach to foreign policy is so unorthodox that nothing can be taken for granted.

“More broadly, the prospect of a U.S.-North Korean summit (and of a summit between North and South Korea shortly beforehand), clearly raises the possibility that all sorts of frozen issues may start to thaw. Real diplomatic progress would also involve discussion of finally securing a peace treaty on the Korean peninsula that formally ends the war fought there in the early 1950s.  At the moment, there is simply an armistice. The South Korean government, led by the dovish President Moon Jae-in, is also keen to revive economic relations and people-to-people contacts.

“The Chinese government, led by President Xi Jinping, will be pleased that Mr. Kim’s visit to Beijing has reaffirmed China’s central role in resolving the Korean issue.  Since China shares a border with North Korea, and is also a formal treaty ally, the prospect of a war on the Korean peninsula is a big security threat to Beijing. It is also a little humiliating for the Chinese government to be bypassed in the diplomacy over North Korea....

“But the fact that Mr. Kim felt it necessary to visit China before his summits with the U.S. and South Korea underscores that China is actually a vital player. How could it not be, given that 90 percent of North Korean trade flows through China?

“The impending Korean negotiations are further complicated by two additional factors. First, the emerging trade war between the U.S. and China. And second the appointment of the ultra-hawkish John Bolton as Mr. Trump’s new national security adviser.

“Beijing will be hoping that the chance that China could help ‘deliver’ North Korea may persuade the Trump administration to ease off on trade sanctions.  But Mr. Trump’s trade team will be reluctant to back off now.

“As for Mr. Bolton, he is a noted hawk on North Korea and has openly advocated a military option if denuclearization cannot be achieved by peaceful means....

“On the other hand, Mr. Trump is known to yearn for a ‘deal of the century’ that he can brandish as proof of his presidential prowess. He will not want Mr. Bolton to get in the way.”

Finally, I have a summarization of “Xi Jinping Thought” on my “Hot Spots” link for those who are interested.

Russia: President Donald Trump joined his European allies in taking action against the government of Vladimir Putin after the U.K. blamed the Kremlin for a March 4 nerve-agent attack on a former Russian spy living in England.  Trump expelled 60 Russian diplomats, among more than 100 Russian envoys who will be sent home from capitals across Europe and North America.

For a president who has been accused of cozying up to Moscow (as I have), it was a move that drew bipartisan praise, though it certainly raised the stakes in what is rapidly becoming a new, full-fledged Cold War.

U.K. Prime Minister Theresa May, whose government expelled 23 Russians, was elated with the unified response from the West, particularly the U.S.

“If the Kremlin’s goal is to divide and intimidate the Western alliance,” she told lawmakers in the House of Commons on Monday, “then their efforts have spectacularly backfired.”

Former ambassador to Moscow under President Obama, Michael McFaul, said on Bloomberg Radio, “The Trump administration took the right move here. And I think this response is a strong one that sends a powerful signal that our alliance system matters to us in Europe and that’s a united front we need against Putin right now.”

In retaliation, Russia ordered 60 U.S. diplomats to leave by April 5, the Foreign Ministry said on Thursday, declaring 58 diplomats in Moscow  “persona non grata” and two general consulate officials in Yekaterinburg the same.  The agreement allowing the United States general consulate to operate in St. Petersburg was also rescinded.

Including other nations that have joined Britain and the United States in expelling Russians, Russian Foreign Minister Sergei Lavrov said the ultimate number of expelled diplomats could exceed 150.  [Russia expelled 23 of Britain’s representatives in a tit for tat.]

A statement from the State Department on Thursday read: “With its regrettable, unwarranted decision today, it is clear that Russia is not interested in dialogue about issues that matter to our two countries.  Russia is further isolating itself following the brazen chemical attack in the United Kingdom.”

[In a poll by state-run VTsIOM, only 5 percent of the 82 percent of surveyed Russians who had heard of the Skripals’ poisoning said that London’s accusations were plausible.]

Today, the Kremlin released video of a rocket test of what is reportedly its new, supersonic ballistic missile, labeled “Satan 2” by NATO, which Putin has said is unhittable and caries 15 (or 16...depending on the source) nuclear warheads. 

Meanwhile, Sergei Skripal’s daughter, Yulia, is showing improvement in her condition, while he remains in critical condition.  British officials said this week the nerve agent was likely spread on the door handle of their home in the small city of Salisbury.

As tensions between Russia and the West reach levels not seen in many years, Julian E. Barnes had a piece in the Wall Street Journal addressing the dangers of conflict.

“If Europe came into conflict with Russia, only several thousand of the more than one million troops in its armies would be ready for rapid deployment, military planners fear.

“The U.S. now wants to step up readiness and ensure that at least 30,000 troops, plus additional aircraft and naval ships, can reach a trouble spot within 30 days of NATO commanders putting forces on alert, current and former allied officials say....

“Boosting allied readiness in the face of resurgent threats from Russia has become a priority of U.S. Defense Secretary Jim Mattis. He has told the North Atlantic Treaty Organization it must speed decision-making, improve its ability to move forces and ensure it has units ready to deploy with little notice, alliance officials said.

“NATO officials are debating the issue. Officials say there is general acceptance of the U.S. position and allies hope to reach an agreement before a summit of leaders in July.  A U.S. proposal would have the alliance commit to having 30 battalions, 30 fighter squadrons and 30 naval ships ready to deploy. That would translate to roughly 30,000 troops and more than 360 fighter planes.

“During the Cold War, American plans foresaw moving 10 U.S. divisions – about 200,000 troops – to Europe in 10 days. The new proposal instead focuses on European allies’ ability to mobilize, with a less ambitious target of 30 days.”

This is beyond pathetic. For starters, the U.S. could only meet major obligations in one theater.  If the United States is occupied in, say, Asia (Korea), Russian forces could roll.

And in the current environment, Putin can gin up a crisis in the Baltics in the blink of an eye, much as he did with Crimea and eastern Ukraine, under the guise of protecting Russian minorities.

Meanwhile, Poland signed a $4.75 billion contract with the U.S. for the first phase of a Patriot air missile-defense system in the face of Russia’s renewed assertiveness.  Moscow sees Poland’s moves, including hosting U.S. troops, as destabilizing.

But Russia has its enclave, Kaliningrad, bordering Poland and there is no doubt you are going to hear increasing talk of Russia placing nuclear weapons there.  It’s long been felt they already had some positioned in a spot destined to become a staple in the headlines.

Benny Avni / New York Post

“Monday’s coordinated Euro-American action against Russia may signal the end of an era: Goodbye, empty UN blather, hello again, coalitions of the willing....

“America wasn’t alone – 21 countries, including France and Germany, as well as former Soviet satellites Poland, Latvia and Lithuania, expelled a handful of Russia diplomats each on Monday. All told, more than 100 Russian diplomats were told to leave world capitals in one day.

“True, Vladimir Putin is riding a nationalist wave after ‘wining’ a sham election that extended the term of his seemingly endless presidency, and his name is invoked in the elections of his Western democratic counterparts, so it may not force a change of his ways.

“But it’ll get Putin’s attention....

“While ‘coalition of the willing’ was first used by Bill Clinton, it was made popular by George W. Bush, and was much maligned after the Iraq war, when the United Nations was put at the center of international action. It didn’t work. Russia, China, North Korea, Iran and various Islamist regimes became more aggressive than ever.

“Time to reassemble allied powers to counter them. Monday’s action could be the start. With Bolton at the White House, let’s hope more will follow.”

Lastly, on a different issue, President Putin had to face thousands of irate citizens of the Siberian city of Kemerovo, demanding answers following a tragic shopping mall fire that killed at least 64 people, many of them children celebrating the beginning of spring break, with scores still missing. 

Putin, in an appearance with local officials, blamed the fire on “criminal negligence, sloppiness,” and at least five have been arrested.

The fire swept the entertainment complex and many were trapped inside a locked movie theater on the fourth floor of the mall, adjacent to the area the fire is believed to have started, and then many of the exits were blocked.  There is a video out there of the beginning of the fire and it’s truly horrifying, especially knowing that as they are fleeing, thinking they know where exits are, the people will find them locked.

It was also reported a simple fire extinguisher could have doused the blaze at the start but it did not work.

It is very reminiscent of a tragedy in Paraguay’s capital of Asuncion at a mall over a decade ago, that killed well over 100, and in a roundabout way was the cause of my trip to Paraguay to meet up with golfer Carlos Franco...only to have Franco stand me up when I arrived where he was staying...with a check for the burn victims...which his people deposited and for which I never received a thank you.  [Mistake #732 of 997 in my life...or was it #842 of 1,143...I can’t remember.]

Robert D. Kaplan / Wall Street Journal

“Russia and China are in different situations. Russia is a rickety house that at some point may crumble. China is sturdier; nevertheless, it could slowly become a compressed pack of social dynamite with less of an outlet for its internal frustrations. It is theoretically possible for Mr. Xi, as president for life, to institute a program of dramatic economic reforms. But doing so would unleash the need and yearning for more personal freedoms, the kind that the regime is moving with its technological thought control to try to eliminate.

“As Russia and China strengthen militarily, even as they maintain and intensify internal repression, they will continue to clash with the West in the near term. But as in the early days of the Cold War, policy makers have to look beyond the present to the difficulty our adversaries will have sustaining their systems over time. And if their systems come undone in the next decade or the one after, Eurasia – of which Russia and China are the geographic organizing principles – will face extreme instability. The U.S. must gird itself for this struggle, though with a certain degree of optimism. Democracy is the better long-distance runner.”

Syria: Thursday, President Trump indicated the United States would be withdrawing its forces from Syria “very soon.”

Friday, the U.S.-backed Syrian Democratic Forces (SDF) said it had not been informed of any plan to withdraw U.S. forces operating in Syria as part of the coalition against Islamic State. The SDF, spearheaded by the Kurdish YPG militia, has been the main partner for the U.S.-led coalition in Syria, where some 2,000 U.S. forces are operating in the fight against ISIS.

SDF spokesman Kino Gabriel told Reuters, “Our work and coordination (with the coalition) is continuing.”  Referring to Trump’s statement, he said it “was not clear,” and noted “statements that came from other American officials in the American administration did not confirm that or deny it.”

Kevin Barron / Defense News

“When the president said on Thursday that the U.S. would pull out of Syria ‘very soon,’ in another apparently off-handed (and definitely off-script) quip, it struck to the very heart of why some American troops had said they voted for him – and why they had said they would never vote for Hillary Clinton

“Back during the campaign, more than one special operator said to me privately that they were worried Clinton ‘would get us killed.’ That’s not hyperbole. That’s a quote.

“What they meant was that they expected a trigger-happy President Clinton would increase their missions, while the more-isolationist President Trump would not.

“On Thursday, Trump said: ‘We’re knocking the heck out of ISIS. We’ll be coming out of Syria, like, very soon.  Let the other people take care of it now. Very soon...we’re going to be coming out of there very soon.’

“That has to send chills down the spines of a lot of Green Berets and other elite forces who have fought, bled and died to win back that territory – and who are saying the U.S. needs to stay until a peace is settled, just like Gen. Joseph Votel, commander of U.S. Central Command, said as recently as January.

“The argument went like this: Hillary was a known war hawk who would start new wars, continue current wars, and send more special operations troops into additional counterterrorism missions. Clinton had a record of defending U.S. military interventions and active engagements abroad and promising to continue a strong U.S. military abroad if she were elected.

“No argument there. But these troops and fighters also felt that Clinton would want to start wars and send troops as a political distraction to prop herself up and distract the public from her undoubtedly unpopular domestic standing and agenda that would come. That hypothesis is pure wag-the-dog conspiracy theory speculation, frankly, but it’s what they told me they believed and it is just one reason they did not want to vote for her.

“Part of this fear was based on their own experiences. The most frequent criticism of President Obama’s stewardship of Iraq is that he pulled U.S. troops out of the country, and those that fought and died there did so in vain – only to be sent back to cover for his mistake. And they were weary of the Afghanistan war, too. They told me they believed that Clinton, too, would send them off fighting and dying for yet more pointless gains that Washington politicians eventually would give away – like miniature Iraq wars, all over the place....

“But the president, with one quip, potentially has turned the entire U.S. participation in the ISIS war in Syria into just that: short-term adventurism. Right or wrong, Trump views the military as the hammer for terrorism’s eternal whac-a-mole game. He loves to go after the bad guys as much as he wants to get out quickly and let the locals sort out their own mess. Trump ignores the basic idea behind counterterrorism warfare that U.S. commanders so often preach: that the absence of security and good governance is what breeds terrorism – especially the kind that is focused on attacking targets in the U.S. and Europe.

“Trump draws big cheers when he talks about sending U.S. troops to kill ISIS. He draws equally big cheers when he talks about pulling them home. Those doing the killing, and dying, will have to reconcile with that – and whether the mission yet another president has sent them to do is worth getting killed over.”

Separately, a U.N. official in Syria says aid groups need $150 million to provide urgent relief to a quarter-million people recently displaced by separate offensives by the Syrian government outside Damascus and by Turkish-led forces in the north.

At least 80,000 were forced to flee the government’s offensive in the eastern Ghouta suburbs. Another 180,000 have been displaced from the capture by Turkish forces of the Kurdish-controlled town of Afrin, with the bulk now in the northern town of Tal Rifaat.

At the same time, the Syrian army announced it was preparing to launch a “huge” operation against the last rebel-held town in eastern Ghouta unless the Jaish al-Islam insurgent group agreed to hand over the area.

More than 1,600 have now been killed since Feb. 18 in the region in some of the fiercest bombing of the war, with thousands more injured, according to the Syrian Observatory. Before the conflict, the eastern Ghouta area had nearly two million people, and was a major industrial and commercial hub.  Some 70,000 remain.

Israel: According to a Kuwaiti newspaper, Al-Jarida, two Israeli F-35 stealth fighter jets entered Iranian airspace over the past month, an act signaling heightened regional tensions, especially in light of recent Israeli military attacks in Syria, including against Iranian bases in the country.

The report stated the two fighter jets circled at high altitude over suspected sites associated with Iran’s nuclear program. The report, which cited various sources, also stated the two jets went undetected by radar, including a Russian radar system located in Syria.

Israel has seven F-35 fighters in active service.

Separately, Israeli Prime Minister Benjamin Netanyahu suddenly took ill and was hospitalized on Tuesday. The prime minister, 68, was suffering from a high fever and bad cough, but he was released the same night, though ordered by doctors to rest.  It seems he had some kind of viral infection, but the episode raises succession questions. Defense Minister Avigdor Lieberman ran Wednesday’s security cabinet meeting in Netanyahu’s absence.

The law states that if Netanyahu becomes incapacitated without appointing an interim prime minister, the cabinet secretary would convene ministers to vote one in.

As for today’s violence on the Israeli-Gaza border, it is a very fluid situation.  Israel had warned the Palestinians not to mass in protest on the border in numbers not seen in years and they did anyway.  The result was inevitable.

At last report, 16 Palestinians have been killed and there are fears this is the start of something far bigger. 

Egypt: President Abdel-Fattah al-Sisi was reelected for a second term with 92 percent of the vote, state media reported on Thursday.  23 million of the 60 million registered voters turned out during the three days of polling.

Venezuela: More tragedy here as at least 68 people died when a fire swept through the cell area inside a police station, a blaze reportedly started by detainees during a disturbance at the state police headquarters in Valencia, about 100 miles west of Caracas.  Nearly all the dead were prisoners.

A fire at a prison back in 1994 in the state of Zulia killed more than 100 inmates.

Random Musings

--Presidential tracking polls....

Gallup: 39% approval for President Trump, 55% disapproval [March 25]
Rasmussen:  47% approval, 52% disapproval

A Fox news poll gives Trump a 45% approval rating, 52% disapprove.  In February, it was 43-53.

When asked their candidate preference in this fall’s congressional election, voters chose Democrats over Republicans by 46-41, the generic vote, which is a big improvement when it was 15 points for the Democrats back in October in this survey.

A CNN poll has President Trump’s approval rating at 42%, 54% disapproval, with the first number up 7 points since February, including 6 points among Independents (from 35% to 41%). In this survey, Trump trails Ronald Reagan and Barack Obama by just 4 points at this point in their first terms.

But the CNN poll has been see-sawing...from 35% approval in December, to 40% in January, down to 35% in February and back up to 42% today.

--I’m on record as not being a big fan of the Marjory Stoneman Douglas High School kids who have become activists for gun control.  I noted that when they first appeared, my initial reaction was ‘this won’t end well for them.’

I also think that the way some of them, like David Hogg, have treated Sen. Marco Rubio (R-Fla.) is outrageous, especially since they consider themselves to be so informed.

Ross Douthat / New York Times

“Since the Parkland shootings in Florida, Senator Marco Rubio has done many of the things liberals say they are desperate, desperate for decent Republicans to do.  He has changed his position on gun control, expressing support for new restrictions: age limits on gun purchases, new background check rules, possibly magazine restrictions. He has co-sponsored legislation encouraging states to issue restraining orders that temporarily would strip people deemed dangerous of their guns.  Some of these measures have conservative support, but in other cases the Florida Republican has effectively bucked the N.R.A.

“But over the same period Rubio, more than any other prominent Republican, has been vigorously and sometimes virulently attacked by the student-led movement that filled D.C. with protesters last weekend.  When he showed up for the CNN town hall he met boos and heckles; one of the shooting survivors told him that just looking at him was like staring down the barrel of an assault rifle. Notwithstanding his subsequent policy concessions, at the March for Our Lives [Ed. which I refused to write about for various reasons] the students wore price tags around their neck, $1.05 each – the amount of money Rubio’s campaigns have received from the N.R.A. divided by the number of students in Florida schools. David Hogg, one of their leaders, began his speech with the price tag line, and told a CNN interviewer that if anything he feels that their attacks on the Florida senator haven’t been provocative enough.

“There was a time, not so many years ago, when Rubio was attacked and his efforts at bipartisanship regarded skeptically because liberals perceived him as a threat – a plausible and eloquent leader for a less bunkered G.O.P., a bridge between the party’s old white base and a more multicultural America.  That time has passed, at least for now: After Rubio was defeated and partially undone by Donald Trump, and especially after he turned in his #NeverTrump card and filmed a hostage-video endorsement, the official media consensus on the Florida senator flipped from ‘Great Republican Hope’ to ‘Liddle Marco,’ and anti-Rubio sentiment became dominated less by anxiety than by contempt.

“That contempt seems to inform some of the reaction to his every public utterance since Parkland.  But I think that in their anti-Rubio zeal the student activists are also picking up on a general approach to politics that the Trump era has encouraged among liberals – a view that since the current Republican majorities were forged by anger and a kind of smash-mouth politics, it’s incumbent upon liberals to give no quarter in return, and to treat any sudden conciliation from a prominent figure like the Florida senator not as an opportunity for deal making but as a welcome sign of weakness that should inspire further fierce attack....

“It’s too soon to say whether this dynamic will repeat itself with the post-Parkland gun control debate.  Again, the activists’ anti-Rubio zeal might actually help the progress of legislation, by holding him to his newfound promises.  Or there might be no point in making a deal unless he’s willing to accept something closer to the full list of activist demands. Or no bargain of any sort might be possible so long as Republicans hold the Senate, or even so long as they hold seats in states like Florida – in which case the hate for the senator is just a necessary path to his eventual retirement.

“I am personally agnostic on all of these points.... (Having) watched the Trump G.O.P. hold power with a largely negative agenda and an ugly rhetorical style, I can certainly believe that  a no-quarter liberalism will gain power eventually in its turn.

“But I can also believe that the obvious pleasure to be found in demonizing the Republicans most likely to do outreach could deliver liberalism more of what it has already been earning for itself these last few years: the satisfaction of self-righteousness as a compensation for the absence of political or policy success.”

Sen. Rubio commented on the March for Our Lives protests.

“I commend those who today are peacefully exercising their First Amendment rights to march in favor of a gun ban,” he said in a statement.

“While I do not agree with all of the solutions they propose, I respect their views and recognize that many Americans support certain gun bans. However, many other Americans do not support a gun ban. They too want to prevent mass shootings, but view banning guns as an infringement on the Second Amendment rights of law abiding citizens that ultimately will not prevent these tragedies,” he said.

Rubio went on to caution people marching for gun control that while “protests are a legitimate way of making a point, in our system of government, making a change requires finding common ground with those who hold opposing views.”

--Related to the above, Fox News host Laura Ingraham offered an apology Thursday after advertisers began fleeing her show because she mocked Marjory Stoneman Douglas senior David Hogg for getting turned down by four colleges.  In response, Hogg summoned his more than 600,000 followers to express their disdain for the conservative commentator to 12 of her advertises.

Ingraham, who I personally can’t stomach, hid behind Jesus as she watched at least four advertisers leave the show.

“On reflection, in the spirit of Holy Week, I apologize for any upset or hurt my tweet caused him or any of the brave victims of Parkland,” she tweeted.

--97-year-old retired Supreme Court justice John Paul Stevens called for the repeal of the Second Amendment and is encouraging anti-gun protesters to do the same.

Stevens, once one of the court’s liberals, argued in a New York Times op-ed that the amendment – which states that “a well-regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms, shall not be infringed” – is a “relic of the 18th century.”

Well such talk is incredibly stupid.  Not whether you agree or disagree with, say, sweeping gun control, but because you just will never be able to repeal the Second Amendment.  First, both houses of Congress have to propose the amendment with a two-thirds vote, or two thirds of state legislatures have to call on Congress to hold a constitutional convention.  It would then have to be ratified by three-fourths of the states or state legislatures.  I know I for one will be long dead and gone before the entire process even played out, if it began in earnest tomorrow, which isn’t happening.

So it’s just a stupid issue.

But, President Trump will make hay with it.  “They’re going to take away your guns!  We won’t let it happen!”

Trump tweet: “THE SECOND AMENDMENT WILL NEVER BE REPEALED! As much as Democrats would like to see this happen, and despite the words yesterday of former Supreme Court Justice Stevens, NO WAY. We need more Republicans in 2018 and must ALWAYS hold the Supreme Court!”

--The battle between fellow New York Democrats, Gov. Andrew Cuomo and New York Mayor Bill de Blasio, is fascinating for local area followers of politics. They truly despise each other, both highly ambitious and seeking higher office. The latest tiff is over Penn Station, over which Gov. Cuomo has sweeping powers to take control of the rehabilitation of the area, including the construction of huge towers and a renovation of the critically important transit hub.

Cuomo controls the state’s Urban Development Corp., which wants to create a vast development district spanning large amounts of the surrounding area, which means the state can supersede city environmental and land-use reviews that normally control development. That’s big.  And it also means Cuomo, not de Blasio, has the power to condemn and seize property.

According to sources, the state would capture potentially billions of dollars of additional tax revenue from having larger properties built in the area than the mayor is likely to want.

Not just de Blasio but the entire City Council is livid and I can’t blame them.

Cuomo has also found a way to take credit for any improvements in New York City’s transit system, including the subways, but he seems to make himself scarce when problems arise...that then becomes de Blasio’s responsibility.

--Meanwhile, actress Cynthia Nixon is picking up an unbelievable amount of early publicity after announcing she was running against Andrew Cuomo for the Democratic nomination for governor.  But as Greg David writes in Crain’s New York Business, “Her biggest hurdle is proving she knows enough and isn’t, in former Council Speaker Christine Quinn’s unfortunate characterization (for which Quinn apologized), ‘an unqualified lesbian.’”

What outside observers have noticed, however, is that Nixon has rattled Cuomo.  Which is fun to watch. As Greg David concludes, “For now, go Nixon!”

--A CNN poll from this week shows that 63 percent of those surveyed believed the women who claimed they had extramarital affairs with Trump.  21 percent said they believed the president, while 16 percent had no opinion about the affairs.  [But 4 in 10 white evangelicals believe the women, while 36 percent believe Trump.  24 percent are unsure.]

Separately, in a Pew Research Center survey, nearly 8 in 10 white evangelical Protestants approve of Trump’s job performance.

--Atlanta’s municipal government was brought to its knees Thursday morning by a ransomware attack – one of the most sustained and consequential cyberattacks on a major American city ever mounted.

Security experts linked the digital extortion to a shadowy hacking crew known for its careful selection of targets.  Dell SecureWorks, the security firm helping with Atlanta’s response, identified the assailants as the SamSam hacking crew, which is known for choosing targets that are the most likely to accede to its high ransom demands – typically the Bitcoin equivalent of about $50,000 – and for finding and locking up the victims’ most valuable data.

The SamSam group has supposedly extorted more than $1 million from more than 30 target organizations already this year.  [New York Times]

--The Tax Policy Center, a research group, says in a new report that 10.2 percent of New Jersey households will see  their federal income taxes go up this year under the Republican tax measure. That’s in large part due to the law’s $10,000 cap on the deduction for state and local income, property and sales taxes.

New Jersey was the only state where the percentage of those facing a tax hike reached double digits.  Next came Maryland with 9.4 percent and California with 8.6 percent, according to the report.

--Ecuador’s government said Wednesday it had cut off WikiLeaks founder Julian Assange’s internet connection at the nation’s London embassy where he was been living in exile.  Ecuador is pissed at Assange’s recent activity on social media decrying the arrest of a Catalan separatist politician.  Officials said in a statement that Assange’s recent posts were putting at risk the good relations Ecuador maintains throughout Europe.

There have also been stories that Assange is a pig, and that he doesn’t like to take showers.  I can’t imagine how embassy personnel feel about the guy just hanging out there all these years.

--We learned this week of the cause of death of the Iowa family of four vacationing at a Mexico resort town, Tulum.  Officials said it was likely a gas leak from a faulty water heater.  The prosecutor told local media that the heater in the seaside condo “was letting gas escape, perhaps because of lack of maintenance, perhaps because it was in use, perhaps because of the age of the equipment.”

Whatever was the reason, “a high concentration of toxic gas was found in the room.”

--Harvard hit a new low in terms of its acceptance rate this year, admitting 4.6% of applicants. Last year, it admitted 5.2%.  Seven of the eight Ivy League schools posted record-high application numbers, as released this week. Seven reported their lowest-ever acceptance rates.

At Princeton, more than 14,200 of the 35,370  applicants had 4.0 grade point averages.
Brown said 96% of its admitted students are in the top 10% of their high school classes.  It was 97% at Dartmouth.

--While it’s now Saturday in Ireland as I go to post, Good Friday was the first time the pubs were allowed to sell alcohol in almost a century.  Pubs in the Republic were open from 10:30 until closing time at 12:30 a.m.

Good Friday has traditionally been a popular time for house parties in the Republic, for obvious reasons. But this new legislation, passed in January by the Irish parliament, is good news for tourists, too.

Slainte!

---

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

God bless America.

---

Gold $1329
Oil $64.91

Returns for the week 3/26-3/30

Dow Jones  +2.4%  [24103]
S&P 500  +2.0%  [2640]
S&P MidCap +2.1%
Russell 2000 +1.3%
Nasdaq  +1.0%  [7063]

Returns for the period 1/1/18-3/30/18

Dow Jones  -2.5%
S&P 500  -1.2%
S&P MidCap  -1.2%
Russell 2000  -0.4%
Nasdaq  +2.3%

Bulls 45.5
Bears  17.5  [Source: Investors Intelligence]

Have a great week.

Happy Easter and Passover! Go Sister Jean!

Brian Trumbore