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09/29/2018

For the week 9/24-9/28

[Posted 11:45 PM ET, Friday]

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Edition 1,016

Trump World

Stop the world...I want to get off!  Geezuz, it is never ending.  Nonstop action in Trump World.  And there is never enough time to cover it all.  This week I’m leaving on the cutting-room floor President Trump’s totally wacko, incoherent solo press conference, which was filled with one lie after another.  He told a particular whopper about Syria that was beyond outrageous, and further proof of my point he doesn’t even know where it is on a map, so I may revisit this next time in depth.  And his treatment of two Kurdish reporters was appalling as well, though this was because Trump also knows zero about the facts of the topic they wanted addressed, of how we have screwed the Kurds, one time after another, in Iraq and now Syria, over the past few decades.

It’s even the ‘little stuff,’ that really isn’t so little, when President Trump just throws out falsehoods on something like the price of soybeans when he’s talking about trade.

But I have to move on.

The Hearings:

Like all of America, I was riveted by Christine Blasey Ford vs. Brett Kavanaugh on Thursday.  Yes, it was a teaching moment for our country, particularly Male America.  Dr. Ford was highly credible, and by the end of the first half, Republicans were largely left decrying the process, though not questioning the sincerity of her testimony.

But after the intermission, Kavanaugh came out swinging, his emotions etched on his face and in his voice throughout his opening statement, lashing out at the Democrats for what he called a “grotesque and coordinated character assassination,” warning darkly, “what goes around comes around.”  It was not a good display if you were looking for ‘judicial temperament,’ but for a lot of us, it was what was needed if he was to save his nomination, and his professional life.

Your heart went out to the families of both.  Kavanaugh’s poor daughters just don’t deserve this.  It’s cruel.  And it’s so different from even the Clarence Thomas-Anita Hill era because of social media.

People are awful.  This country is peopled with tens of millions of jerks and a-holes.  Globally, call it a billion+. I didn’t dare go on social media myself this week.  Actually, these days I only go on to post my columns, and of course I have Trump’s feed always available.

Anyway, both Dr. Ford and Judge Kavanaugh constantly fought back tears, I did too, America cried with them.  It was extraordinary.

But it never had to come to this.  I blame the Democrats, especially Sen. Dianne Feinstein, and then Dr. Ford’s attorneys for not taking up Judiciary Committee Chair Sen. Chuck Grassley’s request to interview her privately, at her home in California.

Ford, instead, was used as a prop in the Democrats’ game.  I guess you can say America needed to see her, and I just said it was a teaching moment, but where do you draw the line?  I draw it at ‘decency.’  This wasn’t.

As for Kavanaugh, you and I don’t know him, but we know enough now to form an opinion.  I think he’d be an outstanding Supreme Court Justice, but...I also believe he was a different person when drunk in his youth.  An ugly drunk.  But would he then be capable of sexually assaulting a woman in that state of mind?  I don’t know...but we’ve had 30+ years for a story to come out before now and it hasn’t.

Republican Sen. Lindsey Graham angrily blasted the Democrats’ handling of the confirmation process as “the most unethical sham since I’ve been in politics.”

“If you wanted an FBI investigation, you could have come to us,” Graham said, his voice shaking as he addressed Democrats on the committee.  “What you want to do is destroy this guy’s life, hold this seat open and hope you win in 2020 – you’ve said that, not me.”

Graham then said: “This is not a job interview.  This is hell; this is going to destroy the ability of good people to come forward because of this.”

He finished his speech by declaring, “To my Republican colleagues, if you vote no, you are legitimizing the most despicable thing I’ve seen in my time in politics.”

Prior to Thursday’s fireworks, an NPR/PBS NewsHour/Marist poll had 43% of Americans opposing the nomination of Brett Kavanaugh to the Supreme Court, with 38% supporting it (19% still on the fence).

And then, today, as the Senate Judiciary Committee was about to vote on the nomination, Arizona Republican Sen. Jeff Flake, the swing vote on the committee, said he would vote for the judge, but with the understanding there would be a delay for an FBI investigation, “time and scope to be limited,” one week, if the likes of Senate Majority Leader Mitch McConnell and his Democratic counterpart, Chuck Schumer, agreed...as well as President Trump.

Hours later, Trump ordered an FBI investigation into the allegations, as the president soon tweeted after, the seventh such probe of Kavanaugh over the years, and reporting tonight has Trump very comfortable with the move, seeing it as a way to help cool tensions with Democrats in Congress and to give some key Republican lawmakers, as well as potentially one or two Democrats, cover to vote in favor of Kavanaugh’s confirmation next week before the full Senate.

But this is not what we are going to see.  There is zero reason to expect things to go smoothly the next few days.  What you saw this morning in the confronting of Sen. Flake by the two women in the elevator will only be magnified to the nth degree.

And it’s going to be difficult to limit the ‘scope’ of the investigation.   Dr. Ford’s attorney, Debra Katz, immediately said there should be “no artificial limits as to time or scope.”

This coming week we will learn is merely Round Two.  As Sen. Flake correctly said today, “This country is being ripped apart.”  But for you old-time boxing fans out there, this isn’t going to be the “Thrilla in Manila,” it’s going to be more like Ali-Shavers, 1977, though admittedly neither bout was pretty.

It’s possible Kavanaugh will get knocked out.  Maybe not.  But we have entered a new time and place.  Good ‘cut men’ will quickly be in short supply.

In the meantime, this is a running history and just 24 hours earlier we had all been witness to something extraordinary.  Some opinion....

Editorial / Washington Post

“ ‘I believed he was going to rape me,’ Christine Blasey Ford said as she began her Thursday testimony before the Senate Judiciary Committee, detailing allegations of sexual assault against Supreme Court nominee Brett M. Kavanaugh.  She said she is ‘100 percent’ certain the assailant was Mr. Kavanaugh.  Mr. Kavanaugh denied the charges ‘immediately, categorically and unequivocally,’ at times choking back tears.

“Predictably, and as a practical matter, this left the Judiciary Committee, the powerful emotions of the day notwithstanding, in about the same place it started.  Ms. Ford presented a credible accusation of sexual misconduct from their teenage years.

“Mr. Kavanaugh offered a forceful denial. The logical next step would be to take the time to see if an investigation can bolster either contention.  Yet Republicans on the committee seemed more aggrieved by the Democrats’ delay in forwarding Ms. Ford’s allegation than interested in getting to the bottom of it.

“On one secondary but important matter, it was possible to draw a conclusion.  Mr. Kavanaugh contended that ‘this whole two-week effort has been a calculated and orchestrated political hit, fueled with apparent pent-up anger about President Trump and the 2016 election’ and an act of ‘revenge on behalf of the Clintons.’

“But he provided no evidence for his angry charge, and certainly Ms. Ford’s testimony did not support conspiracy theories.  On the contrary, she explained she tried to relay her allegations to political leaders before Mr. Trump tapped Mr. Kavanaugh, so that the president could consider another judge of equal qualifications, refuting suggestions that she is part of a Democratic plot. She was more than supportive of reopening the FBI background check.  ‘I wish that I could be more helpful, and that others could be more helpful and that we could collaborate to get at more information,’ Ms. Ford said.

“The inadequacy of the Judiciary Committee’s process was most glaring in the absence of Mark Judge, whom Republicans refused to subpoena.  Ms. Ford has said Mr. Judge was in the room when the alleged assault occurred; on Thursday, she provided a few fresh details that almost certainly would have sent professional law enforcement agents in new investigative directions if they had the time and mandate. Mr. Judge has denied knowing of or being present for any assault but has also declined to offer any more information.  When Sen. Patrick J. Leahy (D-Vt.) asked Mr. Kavanaugh about Mr. Judge’s writing on drunken high school antics, the nominee told the senator, ‘You’d have to ask him.’  ‘I would like to,’ Mr. Leahy responded

“Americans could only watch with sadness.  If he is the victim of some terrible case of mistaken identity, Mr. Kavanaugh’s anger is understandable, but his partisan conspiracy-theorizing was hardly becoming of a potential Supreme Court justice.  Ms. Ford, whose life and family have been upended, deserved better than the condescension shown by a number of Republican senators and, more to the point, their unwillingness to vet her claims.

“In truth, there is still plenty of time. Any deadline has been artificially imposed by the Republican majority for purely partisan reasons, a majority that was happy to leave a Supreme Court chair vacant for most of 2016.  As we have said repeatedly, the Senate still has not been given access to all relevant documents, let alone fully checked out Ms. Ford’s  allegation.

“It would be irresponsible for Republicans to insist on an immediate vote.  If they do, the responsible vote must be no.”

Kimberley A. Strassel / Wall Street Journal

“The stakes go beyond Judge Kavanaugh.  A ‘no’ vote now equals public approval of every underhanded tactic deployed by the left in recent weeks.  It’s a green light to send coat hangers and rape threats to Sen. Susan Collins and her staff. It is a sanction to the mob that drove Sen. Ted Cruz and his wife out of a restaurant.  It is an endorsement of Sen. Dianne Feinstein, who kept the charge secret for weeks until she could use it to ambush the nominee with last-minute, unverified claims.  It’s approval of the release of confidential committee material (hello, Spartacus), the overthrow of regular Senate order, and Twitterrule.  It’s authorization for a now thoroughly unprofessional press corps to continue crafting stories that rest on anonymous accusers and that twist innuendo into gang rapes.  A vote against Brett Kevanaugh is a vote for Michael Avenatti.  No senator can hide from this reality.  There is no muddy middle.

“The stakes go even further, to the core of this country’s principles. To vote against Judge Kavanaugh now is to overthrow due process.  Contrary to Democrats’ claims, due process is not constrained to courts of law; it is central to employee discipline, professional standards of conduct, even evictions of tenants.  It is owed to any individual in a civilized body politic. Under due process, the accuser has the burden of proof.  Ms. Ford has not met the evidentiary standard even of a civil proceeding, the preponderance of evidence – yet this case is more significant than any that has been dealt with in a court of law for ages.  How the Senate votes now will reverberate to all levels of society.  A ‘no’ vote on Judge Kavanaugh is an authorization to renew calls for a Justice Clarence Thomas to step down.  It is an authorization to derail the life of any white-collar manager or blue-collar crew boss who is ever subject to a single uncorroborated allegation....

“Republican senators didn’t ask for this monumental choice – fair enough.  Those demanding Ms. Ford be heard simply wanted a fair process.  That has happened; she has been given every courtesy and then some. Judiciary Chairman Chuck Grassley has worked with steadfast professionalism to investigate the claims of every other so-called accuser – despite crazy accusations, runarounds, delays, threats and obstruction.  His committee majority has done its job.

“It’s Democrats who have pushed the nation to the brink. This is no longer about one unvetted accusation, or who looks more ‘credible,’ or discrete political calculations. Republicans need to understand that their voters know this goes beyond the question of one man and a Supreme Court seat.  It goes to basic principles.”

Editorial / New York Post

“Thursday’s hearing of the century was filled with high drama and emotion – but failed to produce any new facts.

“Christine Blasey Ford gave a powerful, heartfelt statement, standing firmly behind her memories of a horrific incident 36 years ago, when she was 15, leaving her traumatized and haunting her for decades.

“Brett Kavanaugh followed with also-heartfelt testimony about his feelings of being wrongly accused, being the victim of ‘false, last-minute’ smears and having his life, his family’s life and his good name ‘destroyed.’

“Yes, Ford gave a vivid account of being abused by a drunken teenage Kavanaugh.  Yet he made his own compelling point: Her lifelong friend Leland Keyser, who Ford says was at the party that night, not only doesn’t recall the party, she doesn’t think she ever met Kavanaugh.  That goes well beyond a ‘lack of corroboration.’

“Complicating the hearing was Democrats’ insistence on playing politics. Sens. Cory Booker and Kamala Harris, in particular, spent their time feeding their 2020 hopes.

“Too bad: Another Democrat, Sen. Pat Leahy, prompted one of Ford’s most powerful moments by asking about her most visceral memory of that night: It was her attackers’ laughter, she said.

“But most of the Democrats’ time went for demanding an FBI investigation. This, when their own staffers have been madly investigating – and feeding tips to the media.  (Indeed, it was some Democrat who forced Ford to abandon her anonymity by siccing the press on her.)

“And the senators know full well that an FBI probe would change nothing.  The bureau (as then-Sen. Joe Biden noted during the Anita Hill-Clarence Thomas hearings) doesn’t make judgments about witnesses’ guilt or credibility; it merely takes statements.  And the Senate already has such sworn statements from the three witnesses Ford says were at the party: None has any memory of the event.

“Kavanaugh was absolutely right, and justified in his anger, over the politics Dems have played: waiting until the 11th hour to raise Ford’s allegations and then calling for an FBI probe that would only serve to delay – all while he and his family suffered.

“He accused them, rightly, of ‘lying in wait’ to pounce, after failing to ‘take me out’ on the merits.  It’s a ‘national disgrace,’ he said, that could mar U.S. politics for decades.

“Senators must now weigh the testimony and (scant) evidence and decide for themselves.  It’s time to vote – and end the circus.”

Editorial / Wall Street Journal

“Thursday’s Senate hearing on Brett Kavanaugh’s Supreme Court nomination was an embarrassment that should have never happened.  Judge Kavanaugh was right to call the confirmation process a ‘disgrace’ in his passionate self-defense, and whatever one thinks of Christine Blasey Ford’s assault accusation, she offered no corroboration or new supporting evidence.

“Ms. Ford certainly was a sympathetic witness – by her own admission ‘terrified’ at the start and appearing to be emotionally fragile.  Her description of the assault and its impact on her was wrenching.  She clearly believes what she says happened to her. Her allegation should have been vetted privately, in confidence, as she said she would have preferred.  Instead ranking Democrat Dianne Feinstein held it for six weeks and it was leaked – perhaps to cause precisely such a hearing circus.

“Yet there is still no confirming evidence beyond her own testimony, and some of what she says has been contradicted. The female friend Ms. Ford says was at the home the night of the assault says she wasn’t there.  The number of people she says were there has varied from four to five and perhaps more, but every potential witness she has cited by name says he or she doesn’t recall the party.

“She still can’t recall the home where the assault took place, how she got there or how she got home that evening. She has no witnesses who say she told them about the alleged assault at the time – until she first spoke of it at a couples therapy session 30 years later in 2012. Mr. Kavanaugh’s name doesn’t appear in the notes of her therapist.

“As for Judge Kavanaugh, his self-defense was as powerful and emotional as the moment demanded.  If he was angry at times, imagine how you would feel if you were so accused and were innocent as he says he is. To deny the allegation as he did – invoking his children and parents and so many others who know him – and be lying would mean that he is a sociopath.  If he were found to be lying, he would be impeached and probably prosecuted.  Nothing in his long record in public life betrays the kind of behavior he is accused of against women.

“Had he not been as forceful, his opponents would have said he looked guilty. Because he called the Democrats out for their character assassination, the critics now say he lacks the right temperament.  The truth is that there is no answer, and no demeanor, that Brett Kavanaugh could offer that the left would credit.  Their goal isn’t the truth. They want to destroy Judge Kavanaugh....

“The real Democratic goal is to push a confirmation vote past Election Day. They can then spare their incumbents running for re-election from taking a difficult vote.  If they win the election, they will then try to block any confirmation until they take over the Senate in January.  No nominee to the right of Merrick Garland would then be confirmed in the final two years of the Trump Presidency. The Supreme Court would be divided 4-4 until 2021 at least.

“Senate Republicans should understand that these are the real political stakes.  This nomination isn’t only about the fate of a single man whose reputation can be discarded like some tabloid celebrity. This is about the future of the Supreme Court and who will control the Senate.  If Republicans reject Mr. Kavanaugh based on what we know now, millions of voters will rightly be furious.

“But as important, a rejection will bring dishonor to the Senate.  It will validate the ambush and smear politics that Democrats are using. And it will turn Supreme Court nominations over to the justice of the social-media mob and the politics of accusation.  It’s time for Senators to stand up and confirm Brett Kavanaugh.”

Trumpets....

--Lost in the Kavanaugh hearings and other news of the week was the situation involving deputy attorney general Rod  Rosenstein, who headed to the White House on Monday morning, preparing to resign, convinced President Trump was about to fire him, and hours later he was back at work, still employed as the second-in-command at the Justice Department and, for the time being, still in charge of the Russia investigation.

The president was in New York for the General Assembly, and he announced later he was going to meet with Rosenstein Thursday.  But then something else was scheduled for that day, as you might recall, and here we are, Friday night, and no word whatsoever on the deputy AG.

Rosenstein had called the New York Times story from last Friday that he had considered secretly taping the president and discussed using the 25th Amendment to remove him from office “inaccurate.”  But critics called for him to be fired.  Others, including Trump confidant Sean Hannity, urged the president not to fire Rosenstein.

--Trump’s speech to the UN General Assembly was on the theme of sovereignty and self-interest and solving problems such as Iran, China and North Korea.  I was not a fan of it.  Neither were a lot of other folks.  An example....

Anne Applebaum /Washington Post

“Odd juxtapositions, absurd contrasts – these are the stuff of humor.  People sometimes laugh, nervously, when someone states something that is both true and unacceptable.  People sometimes laugh, uproariously, when someone states something that is both false and exaggerated.  ‘In less than two years,’ said President Trump at the UN General Assembly, ‘my administration has accomplished more than almost any administration in the history of our country.’ And, no, those who chuckled in response were not laughing ‘with’ the president.

“But there was a much darker form of humor to be found in Trump’s speech as well. It was not only his pomposity and his narcissism that were grimly funny.  It was his entire worldview, which is both naïve and incoherent – and which contrasts, sharply, with his stated belief in ‘principled realism.’

“Repeatedly, the president – or, more accurately, his entourage, advisers and speechwriters – issued rousing praise for an ill-defined notion of ‘sovereignty.’  The United States, he said solemnly, ‘will not tell you how to live or work or worship.’  If it means anything at all, that phrase surely implies the United States is not interested in how other countries run their governments, or how they treat their people: Dictatorship, democracy, it’s all the same to us.

“Except, of course, that Trump’s administration is not indifferent at all.  A few paragraphs later, the president denounced the government of Venezuela; ‘All nations of the world should resist socialism,’ he concluded.  He denounced the leaders of Iran, who have ‘embezzled billions of dollars from Iran’s treasury, seized valuable portions of the economy and looted the people’s religious endowments.’  He objected to a German gas deal with Russia. I am not here arguing in favor of Venezuela, Iran or Germany – but surely, if their sovereignty is inviolable, then Venezuela’s socialism, Iran’s corruption and Germany’s energy policy should not be of any interest to the U.S. president....

“He was unequivocal about the negative impact of international trade and the terrible damage it has done to Americans:  ‘The United States will not be taken advantage of any longer.’

“Yet, almost in the same breath, the president made grand proposals for coordinated, international actions.  He wants sanctions against Venezuela and sanctions against Iran.  He wants Middle Eastern states to cooperate to fight terrorism.  He wants cooperation with countries to help ‘better screen foreign investments in our country for national security threats.’  He also wants trade, if it means that people will buy American: ‘The United States stands ready to export our abundant, affordable supply of oil, clean coal and natural gas.’....

“In truth, Trump and the Trumpists are in an unfortunate position: Every problem they claim to care about the most requires, at least in part, an international solution.  Terrorism cannot be stopped without organized efforts in Europe and the Middle East. Blue-collar factory jobs often depend on the export of American goods abroad, or the import of foreign parts.  A sanctions regime imposed by the United States alone, on anyone, is meaningless.  International cooperation of some kind is even required to control immigration, if only because foreign countries issue the passports needed to police the border.

“This isn’t to say that there are not dysfunctional international organizations – the United Nations houses several of them – or that existing trade deals should last forever.  U.S. presidents are constantly renegotiating America’s engagement with the world.  But Trump – or Stephen Miller, or Stephen K. Bannon – goes well beyond that, instead creating black-and-white division between ‘patriotic’ policies and ‘globalist’ policies, using hyped-up, ideological language that has nothing to do with the real choices faced by actual people....

“But this White House does not contain realists.  It is run by a small, elite team of ideological anti-globalists who are very distant from the real world inhabited by millions of ordinary people trying to conduct diplomacy, negotiations and trade. Which is, if you think about it, pretty funny.”

Wall Street and Trade

As expected the Federal Reserve hiked its benchmark funds rate for a third time this year, eighth overall since it began raising rates in late 2015, to a range between 2 and 2.25 percent, the first time above 2% since 2008.

Fed Chairman Jerome Powell said the decision to hike was not intended to get in the way of continued growth.  “My colleagues and I are doing all we can to keep the economy strong, healthy and moving forward,” he said

President Trump, while unhappy, again, over another rate hike, did at least say that the Fed was raising rates “because we’re doing so well.”

Another rate hike is expected in December, as the Fed raised its estimate on growth for the year to 3%.

The Fed is also now expecting three rate increases in 2019 and one in 2020.  The new forecasts included 2021 for the first time and Fed officials expect to end their cycle of rate hikes in 2020. None are planned for the following year...as of today.

Meanwhile, Chairman Powell has so far been circumspect in reflecting on Trump’s trade war.  Powell has suggested that while higher tariffs are generally harmful, they could serve a healthy purpose if they eventually force Beijing to liberalize its trade practices.

We also had a lot of economic data this week. The final reading on second-quarter GDP was unchanged, 4.2%.

August personal income and consumption were both at 0.3%, basically in line with expectations.  Importantly, the Fed’s prime inflation barometer, the personal consumption expenditures index, which is a component of this particular report, came in at 2.2%, year-over-year, which was down a tick, while on core, ex-food and energy, it was 2.0%.  The core PCE hit the Fed’s 2% target back in March for the first time since April 2012.  But this is the number that could change the Fed’s above equation in terms of the future number of rate hikes down the road.  If it starts running ‘hot’ for a spell, that won’t be good for the bond market, for one.

August durable goods were up a strong 4.5%, but this is a highly volatile data point, and ex-transportation it rose only 0.1%.

The Chicago purchasing managers index for September was 60.4, very strong, but less than the prior month’s 63.6.

On the housing front, we had the July S&P CoreLogic Case-Shiller National Home Price Index, which for the 20-city barometer increased 5.9% over the past year, down from 6.4% the prior month. 

Las Vegas had the fastest home-price growth in the country for the second straight month, at 13.7%.  Seattle was up 12.1%.

August new-home sales came in as expected, but June and July were revised sharply downward.

Add it all up and the Atlanta Fed’s GDPNow barometer for third-quarter growth is at 3.8%, down from last week’s 4.4% forecast.

On the aforementioned trade front....

Monday, the Trump administration imposed fresh levies on $200 billion in Chinese imports, prompting Beijing to respond with tariffs on $60 billion in American goods, approaching the point of running out of U.S. products to target.

The $200 billion of goods will have a tariff of 10% that rises to 25% by the beginning of next year unless the countries reach a deal. China’s new tariffs on U.S. goods have been set at 5% to 10%.

Neither side is showing signs of backing down, with the Chinese government releasing a report accusing the Trump administration of a foreign policy based on “trade bullying” and “attempting to impose its own interests on China through extreme pressure,” according to state media.

The ‘white paper’ notes: “(The U.S.) has brazenly preached unilateralism, protectionism and economic hegemony, making false accusations against many countries and regions, particularly China,” the paper said.

Thousands of goods now face border taxes, including grocery store staples, household objects and industrial equipment.  Costs, such as on food, clothing, furniture and cars, will rise, and there will be layoffs down the road.

President Trump warned earlier this month that retaliation from Beijing would spark another set of tariffs on $267 billion in Chinese goods, erecting financial barriers on virtually everything the United States buys from the nation.  [In 2017, that order reached $505 billion.]

China ‘only’ imported $130 billion in U.S. goods last year – but officials have said it can use “qualitative” measures to hurt American businesses.

As for NAFTA and the renegotiation of same, the administration seems determined to advance a deal in the coming days.  There is a self-imposed deadline of Sept. 30, with the U.S. and Mexico looking to start the clock for Congressional approval before the end of November, which would allow Mexico’s President Enrique Pena Nieto to sign it before vacating the office for President elect Andres Manuel Lopez Obrador on Dec. 1.   And tonight there is still hope for getting Canada in the action.  U.S. Trade Representative Robert Lighthizer has also signaled that Canada could rejoin the agreement later.  But President Trump’s animus towards our great friends up north is inexplicable.  Trump said he turned down a meeting with Canadian Prime Minister Justin Trudeau this week.

Trump took aim at the country’s dairy tariffs, for a zillionth time, and reiterated his threat to tax Canada’s auto industry.

“[Mr Trudeau’s] tariffs are too high and he doesn’t seem to want to move and I told him forget about it. And frankly we’re thinking about just taxing cars coming in from Canada,” he said.

“I must be honest with you, we’re not getting along at all with their negotiators,” Trump added at his news conference in New York.

And then he said, “We don’t like their representative very much,” which most took to mean Canadian foreign minister Chrystia Freeland, who has been in charge of Canada’s negotiating team.

For his part, Trudeau on Thursday reiterated his view that a “good, fair deal” on a revised NAFTA is still possible.  He said the Trump administration was frustrated because “Canadians are tough negotiators, as we should be.”

Lighthizer said that with regards to the European Union, Japan and others, negotiations are moving forward.

Regarding Japan, President Trump and Japanese Prime Minister Shinzo Abe agreed on Wednesday to start trade talks in an arrangement that, for now, protects Japanese automakers from further tariffs, seen as a major threat to the export-dependent economy.

Reminder, any trade deal, such as a new NAFTA, would require majority votes in the House and Senate to be enacted.  No way Congress approves a new deal with Mexico that doesn’t include Canada.

A Reuters/Ipsos/UVA Center for Politics Poll found that a plurality of voters in Indiana, Michigan, Ohio, Pennsylvania and Wisconsin – states in America’s industrial heartland that backed President Trump in 2016 – thought tariffs were not good for themselves or their families.

Those in support of tariffs varied from 33 percent in Pennsylvania to 38 percent in Michigan.  In all states, more were negative, varying from 44 percent in Indiana to 50 percent in Wisconsin.

Europe and Asia

No big eurozone data points this week, save for a flash reading on September inflation, 2.1%, up from 2.0% in August, though ex-food and energy the figure was just 1.1%.  [Eurostat]

Eurobits....

Brexit: Brexit campaigner Boris Johnson called on Prime Minster Theresa May to rip up her proposal for Britain’s exit from the European Union, ratcheting up the pressure on May as she prepares to face her divided party at its annual conference next week, which commences Sunday in Birmingham.

Just six months before the UK is due to leave the European Union on March 29, 2019, the whole deal remains totally up in the air:  Prime Minister May has yet to clinch a Brexit divorce deal with the EU and rebels in her party have threatened to vote down any deal she makes.

Johnson, who resigned in July as foreign secretary over May’s Brexit proposals, and seeks to replace her at the top at some point, wrote in Friday’s Daily Telegraph:  “This is the moment to change the course of the negotiations and do justice to the ambitions and potential of Brexit.”

Johnson argues that the prime minister’s plans would leave the United Kingdom half in and half out of the club it joined in 1973 and in effective “enforced vassalage.”

Johnson called for a “SuperCanada-type free trade agreement” and said the EU’s backstop proposals for Northern Ireland amounted to the economic annexation of part of the UK.

The so-called Brexiteers have urged May to take the EU up on its offer of a more limited trade deal based on the one Canada has. Johnson is likely to make a plea directly to the grassroots in Birmingham.

Earlier, Mrs. May said the Brexit vote to leave the European Union was not a rejection of multilateralism, but a demand for accountability.  “It was a clear demand for decisions and accountability to lie closer to home,” May said in her speech to the General Assembly.

May also said, the day before, “It would not be in the national interest to have an election” before the Brexit date, some Brexit hardliners calling for such a vote.  Some of May’s aides have been ‘war-gaming’ a vote for November as a way of breaking the Parliament deadlock.

Rumors have persisted over what would be a major gamble; potentially bringing rebel Tory lawmakers into line, but giving the Labour Party what it wants most – a shot at power.  Jeremy Corbyn has been campaigning as the “government-in-waiting” ever since the last election.

It has been more than two years since the historic June 2016 Brexit referendum and Britain’s politicians and its business leaders remain deeply divided.

The referendum went 51.9 percent for leaving the EU, and 48.1 percent for staying.  A poll of polls published today showed voters would now vote 52-48 in favor of remaining in the EU were there to be another referendum.

But this is far too narrow a margin to argue a second vote would be successful in overturning the first.

Separately, one in five British companies would move at least some of their operations to the European Union in the event of a “no-deal” Brexit, according to a survey by the British Chamber of Commerce.

But the BCC survey also showed 62 percent of firms taking part had not performed a risk assessment of the impact of Brexit.  “Firms still don’t have answers from government to the most basic questions about future trading conditions,” said BCC Director General Adam Marshall.

Gideon Rachman / Financial Times

“The great risk for the British government is that its determination to stand firm against the EU will be similarly undermined by fear in the markets, or among consumers as the reality of ‘no deal’ sinks in.

“The relative strength of Britain’s public finances and banks means that the UK is less vulnerable to a financial panic than Greece. But a ‘no-deal’ Brexit would disrupt commerce across the Channel as new customs procedures and tariffs were imposed.  Modern societies are dependent on just-in-time deliveries, so shops and factories would quickly face disruption of supplies.

“Even the fear of disruption would raise the risk of panic-buying, leading to empty supermarket shelves. The government should certainly be studying the fuel crisis of 2000, where a blockade of petrol refineries by protesters led to panic-buying of fuel and food. Within days petrol stations had run dry and supermarkets were discussing rationing.

“To some in Britain, an open discussion of these possibilities might seem like scaremongering, or even diplomatic sabotage. But one of the problems with the Brexit debate in the UK has been a consistent failure to consider how things might go wrong.  As a result, the May government and the British public have been hit by a series of unpleasant surprises.

“Of course, it is also possible that we are simply witnessing a bout of posturing, as both the EU and the UK flex their muscles, before the final summit at which they actually do the deal.  It may indeed, ultimately, be ‘all right on the night.’

“But it is clear things went badly wrong in Salzburg, and the differences between the UK and the EU look starker than ever.  I happen to agree with some of the British government’s complaints about the inflexibility of the EU’s negotiating position.  As my colleague Martin Sandbu has pointed out, the concept of the ‘integrity’ of the European single market is fuzzier than Brussels theology currently proclaims.

“But British complaints about the EU’s position on Brexit are likely to be no more effective than Greek complaints about austerity.  Ultimately, this is not a debate about which side is ‘right,’ but about where the power lies. And with Brexit day approaching and the threat rising of a no-deal, the weakness of Britain’s position is becoming ever clearer.”

Germany: Chancellor Angela Merkel suffered a big blow on Tuesday when a close ally of hers was ousted as the party’s parliamentary leader and replaced with a candidate she had refused to endorse.

Volker Kauder was voted out as leader of Merkel’s conservative bloc in parliament, a position he held for all 13 years of her successive terms.  Kauder was tasked with keeping her party in line when Merkel was forced to change policies to maintain power over the years.  He was often referred to as her “right-hand man.”

One thing is clear, Merkel’s power base is melting away, and she is still paying for her decision in 2015 to open Germany’s border, which resulted in over 1.5 million asylum seekers entering the country.

An Amnid poll released Sunday put support for her bloc at just 28%, down from the 32.9% it scored at the general election a year ago – the party’s worst result since 1949.

Kauder was ousted by Ralph Brinkaus in an annual party vote.

As for Merkel’s position as the head of her Christian Democrat Union, there is no obvious rival who could rise to the top of a party split between advocates of her centrist approach and a more robust conservatism.

Last weekend, the government also had to deal with another big issue, the fate of Hans-Georg Maassen, the head of the domestic intelligence service, who was shifted to a newly-created post as special adviser to interior minister Horst Seehofer.  Maassen suggested in a newspaper interview a few weeks ago that a video showing a group of locals chasing two foreigners was fake.  Maassen later admitted that the footage was genuine.  Given the unwieldy coalition, this became a huge scandal, tied to the migration issue.

Italy: The new government proposed a 2019 budget that would set a deficit target three times as big as the previous administration’s goal, setting up a clash with the European Commission and sparking a sell-off of state bonds.

Italy has the heaviest debt burden among the largest EU economies, over 130 percent of GDP, and it is under pressure from the EU, which oversees each member’s budget, to rein in spending amid fears it could sow the seeds of another debt crisis in the heart of the eurozone.

The four-month-old government late on Thursday night offered a budget with a deficit of 2.4 percent of GDP over the next three years, to fund a major expansion of welfare spending, tax cuts and a boost to public infrastructure investment.

The Economy Minister, Giovanni Tria, who is an unaffiliated technocrat, had wanted a deficit set as low as 1.6 percent next year, hoping to respect the EU’s demands that Italy progressively cut the fiscal gap to rein in its debt.  But the ruling-party chiefs won out over Tria.

European Economics Commissioner Pierre Moscovici said today he would respond to Italy’s 2019 budget next month when it is formally submitted but that the country must cut its “explosive” debt.

But the coalition government of the 5-Star Movement and the League, in power since June, needed to fund its costly campaign promises, and so, here we are.  The yield on the Italian 10-year rose from 2.82% to 3.14% in response.  [Versus that of the German bund, which sits at 0.47%.]

Sweden: Prime Minister Stefan Lofven will have to stand down after losing the support of parliament.

The anti-immigration Sweden Democrats (SD) backed the vote to remove him, weeks after a general election that delivered a hung parliament, the SD finishing third behind two centrist parties.

Lofven was defeated 204-142.

The Parliament speaker now proposes a new leader – a process that could go on for weeks.  Lofven is expected to stay on in the interim.

France: President Emmanuel Macron’s approval rating is down to 19 percent according to a poll released Monday.  [Other recent polls put this figure at 28-29 percent.]

Turning to Asia...

With the quarter ending this weekend from an economic data standpoint, next week we’ll have a slew of numbers from China, that country just waiting for the clock to turn midnight, and then, presto!  Pre-manufactured data!  But we report it anyway.

Japan has real stuff, on the other hand, and industrial production was up 0.7% in August over July, which was worse than expected, while the unemployment rate for the month ticked down to 2.4%.  There is a huge backlog of jobs here, but don’t bother flying over for one.  They won’t take you...it’s a Japan thing, you know.  No outsiders need apply.  Which is why their demographics are such a mess, but I digress.

Meanwhile, this week the benchmark Nikkei stock index hit its highest level since November 1991.  The global economy is doing well, and Japan is an export nation.  Put the two together and this place normally would do well in that scenario (currency also coming into play).

Street Bytes

--Stocks finished mixed, with the Dow Jones losing 1.1% to 26458, the S&P 500 off 0.5%, but Nasdaq gained 0.7%. 

For the quarter, the Dow was up a whopping 9.0%, the S&P had its best quarter since 2013, up 7.2%, and Nasdaq rose 7.1%, making it nine consecutive ‘up’ quarters for it.

Before long, we’ll be inundated with third-quarter earnings reports.  I can’t wait (the editor lied).

--U.S. Treasury Yields

6-mo.  2.36%  2-yr. 2.82%  10-yr. 3.06%   30-yr. 3.21%

The bond market had long priced in the Fed’s latest rate hike and yields across the curve were virtually unchanged on the week.

--Last weekend, OPEC and its production allies, led by Russia, met in Algiers to reiterate that they want to adhere to current production quotas first implemented at the start of 2017.  That means continuing a gradual ramp-up in production as the producers had agreed to at the start of the summer in an effort to bring down over-compliance with the initial agreement.  But, the producers declined to announce specific plans to raise production further, defying calls by President Trump for the cartel to increase output to put a cap on prices – with oil rising sharply on Monday.  Representatives from Oman and Kuwait, for example, told reporters that producers had agreed they needed to focus on reaching 100 percent compliance with revised production cuts agreed to in June.

Trump tweeted: “We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices!  We will remember. The OPEC monopoly must get prices down now!”

In his speech to the UN General Assembly on Tuesday, Trump reiterated that he feels OPEC is “ripping off the rest of the world” by pushing oil prices higher, while upping his heated rhetoric on Iran ahead of increased U.S. sanctions being levied in November, which impacts the country’s crude exports. 

But OPEC and Russia seem reluctant to raise output to offset the potential hit to global supply.  And Saudi Energy Minister Khalid al-Falih told reporters, “I do not influence prices....My information is that the markets are adequately supplied.  I don’t know of any refiner in the world who is looking for oil and is not able to get it.”

Iran is set to lose sizeable export volumes when the new sanctions go into place Nov. 4.

Markets shrugged off Trump’s remarks and focused on the looming facts, as in oil rose sharply, with West Texas Intermediate finishing the week at $73.56.

French President Macron on Tuesday responded to President Trump’s criticism of high oil prices, saying that if he had not re-imposed sanctions on Tehran, prices would not have risen as much.  “If he goes to the end of his logic, he’ll see that it’s good for the oil price that Iran can sell it,” Macron said.  “It’s good for peace and global oil prices.  Otherwise there is an impasse in the rationale for which I don’t have the answer.  It’s an economic reality...supply and demand.”

The International Energy Agency forecast strong oil demand growth of 1.4 million barrels per day this year and 1.5 million bpd in 2019. As Phil Flynn of Price Futures in Chicago told the Wall Street Journal, “The glut is gone,” referring to U.S. oil inventories that were once as high as 536 million barrels in March 2017.  “Global oil prices are surging because we are now facing a market that is undersupplied.”

Brian Hook, Washington’s special envoy for Iran, said on Tuesday, “We will ensure prior to the re-imposition of our sanctions that we have a well-supplied oil market.”

--The Securities and Exchange Commission sued Elon Musk on Thursday, alleging that the Tesla CEO’s tweets about taking the company private at $420 a share were “false and misleading.”

In its complaint, filed in federal court in Manhattan, the SEC asks the court to, in effect, force Musk out of Tesla’s leadership by prohibiting him “from acting as an officer or director” of a publicly traded company.

The SEC also is asking the court to force Musk to pay back “any ill-gotten gains” received as the result of his slew of Aug. 7 tweets.

“Musk’s statements” – including the assertion that he had “funding secured” to take Tesla private – “were premised on a long series of baseless assumptions and were contrary to facts that Musk knew,” the suit alleges.

So Elon Musk is in big trouble. The SEC is saying he lied, multiple times.

The worst case scenario is Musk would have to pay a huge fine, and be banned from being a director at any public company in the U.S.  His days as Tesla’s CEO would be over.

Musk said in a statement: “This unjustified action by the SEC leaves me deeply saddened and disappointed.  I have always taken action in the best interests of truth, transparency and investors.  Integrity is the most important value in my life and the facts will show I never compromised this in any way.”

In its own statement, the board said it was “fully confident in Elon, his integrity, and his leadership of the company.”

Some experts believe Musk might be able to fashion a solution where he becomes chief product officer and someone else takes over as CEO.  A historically timid board must take charge at this moment.

Whatever the company and the SEC can work out, Musk will no doubt have to stay off Twitter, or get all his tweets cleared first. 

But, the SEC had crafted a settlement with Musk – approved by the agency’s commissioners – that they were prepared to file Thursday morning when Musk’s lawyers called to tell the SEC lawyers in San Francisco that they were no longer interested in the agreement.  So the SEC rushed to pull together the complaint.  Those who saw details of the initial proposal thought Musk was nuts not to take it.

The suit was filed after the market closed Thursday, the shares at $307.50.  They finished the week at $265.

--Southern California home prices kept rising in August, but sales fell 8% from Aug. 2017.  The median sales price in the six-county region rose to $535,000, up 1% from July, according to CoreLogic. The median is up 7% from a year ago, and just shy of the record $537,000 reached in June. 

--Walt Disney Co. lost out on its bid to acquire Sky PLC as part of its acquisition of 21st Century Fox Inc., with rival Comcast Corp. paying $38.8 billion, winning the unusual auction process in the UK for the European pay-TV giant.

But the sum paid benefits Disney as a minority owner of Sky. To wit:

Rupert Murdoch’s Fox then decided to sell its 39% stake in Sky to Comcast for about $15 billion, the decision made with the consent of Fox’s soon-to-be-owner Disney.

So while Disney is disappointed, at the same time, Fox’s sale of its Sky stake will help substantially pay down the amount of debt Disney is taking on in order to complete its purchase of Fox.

Disney won control of Fox in an earlier bidding battle with Comcast by offering $71.4 billion for much of Murdoch’s media empire.

In order to gain regulatory approval, Disney agreed to sell Fox’s 22 regional sports networks.

Disney will now double-down on streaming services and become a majority owner of Hulu once the Fox deal closes.  It does not have the TV operator it sought that would have given it an immediate presence in more than 23 million homes in five European countries.

--Instagram’s co-founders, Kevin Systrom and Mike Krieger, suddenly resigned on Monday, amid reported growing tension with Facebook CEO Mark Zuckerberg over the direction of Instagram.  Zuckerberg wanted the app to prioritize boosting revenue, knowing that Facebook was reaching a saturation point and could not sustain its high growth rate, analysts said.

Which did not sit well with Systrom and Krieger, who founded Instagram in 2010 and sold it to Facebook in 2012 for $1 billion – what was then seen as a shocking number, but a bargain when compared with Facebook’s purchase of WhatsApp two years later for $22 billion.

At the time of the purchase, Instagram had 31 million users, with no ads, and since then, the service has grown to more than 1 billion users and has added plenty of advertisements.

“One of the reasons the founders left is because Facebook has been forcing them to modify the site to maximize revenue for the last several years, and they feel dictated to rather than in complete control,” said Wedbush Securities analyst Michael Pachter  “That’s the selling entrepreneur’s lament: if you take the money, you answer to a new boss.”  [Los Angeles Times]

In a prepared statement, the founders said they were “ready for [their] next chapter” and were grateful for the six years they spent at Facebook.

“We’re planning on taking some time off to explore our curiosity and creativity again,” Systrom said.  “Building new things requires that we step back, understand what inspires us and match that with what the world needs; that’s what we plan to do.”

In his statement, Zuckerberg said:

“Kevin and Mike are extraordinary product leaders and Instagram reflects their combined creative talents. I wish them all the best and I’m looking forward to seeing what they build next.”

On the week, Facebook shares finished nearly unchanged...

But I found the comment of Jason Schloetzer, a professor at Georgetown University’s McDonough School of Business, telling:

“There’s a little overreaction to these two gentlemen leaving Instagram. They’re obviously important as founders of the Instagram concept, but Facebook has been able to digest what Instagram does and how it works since acquiring it. Facebook is more than capable of finding people internally who can competently operate the company after the founders’ departure.”

Meanwhile, Facebook on Friday said an attack on its computer network led to the exposure of information from nearly 50 million of its users.  The company discovered the breach earlier this week, finding that attackers had exploited a feature in Facebook’s code that allowed them to take over user accounts.  Facebook fixed the vulnerability and notified law enforcement officials.

--Nike posted a 10% increase in sales during its fiscal first quarter ending Aug. 31, riding strong consumer spending, both here and abroad, with healthy demand for its sneakers and athletic apparel.

Revenue in Nike’s North American market, which accounts for about 40% of total sales, increased 6%, including a 5% increase in the footwear business and an 8% rise in apparel.

Analysts are expecting stronger results in the fiscal second quarter, thanks to the 30th anniversary “Just Do It” campaign, featuring Colin Kaepernick...the ad having been unveiled after the August quarter ended.

But the shares weakened on simple profit taking, as the stock had gained more than 50% in the past year.

--One of my favorite retailers, Bed Bath & Beyond, saw its shares fall sharply on Wednesday after second-quarter earnings fell short of estimates.  Sales were flat at $2.94 billion, also less than expected.

For the sixth straight quarter, same-store sales declined, dropping 0.6 percent, rather than the slight increase the Street was looking for.  It’s disappointing, given the otherwise robust consumer economy where spending on homewares and home-related products has been strong.

The shares fell 15 percent on the day.

--Barrick Gold Corp. agreed to buy Randgold Resources Ltd. for $6 billion in an all-share merger that will solidify Barrick as the world’s largest gold company by production, with a dominant position in Africa.

Barrick shareholders will own 67% of the combined company, and Randgold investors will own 33%, the companies said Monday.

Both companies are led by dynamic executives with the same vision; a focus for keeping costs in check and reining in debt.

--Pharmaceuticals group Novartis announced it was cutting more than 2,000 jobs, 1,700 of which will be in Switzerland, where the company is based; part of a program announced in 2016 to achieve $1bn in annual cost savings in its production network by 2020.  Novartis has announced it is moving away from high volume drug production towards more specialized and personalized medicines.

Previously, Novartis announced cuts to its operations in the U.S. and Japan.

--Chinese tourism to the U.S. is set to fall sharply in next week’s National Day holidays (“Golden Week”), as there has been a dramatic 42 percent decrease in flight bookings from China compared with last year’s holiday period.

According to travel fare search engine Skyscanner, the first three quarters of 2018  have seen a 16.7 percent drop in flight bookings from China to the U.S.  [South China Morning Post]

--Sirius XM Holdings Inc. said on Monday it would buy music-streaming service provider Pandora Media Inc. in an all-stock deal valued at about $3.5 billion.

--The company behind Arby’s will buy drive-in burger chain Sonic in a deal announced Tuesday.

Inspire Brands, which took over Buffalo Wild Wings last year, will acquire Sonic for $2.3 billion including debt, the company said in a statement.

The purchase adds to Inspire’s collection of restaurants that includes, alongside Arby’s and Buffalo Wild Wings, Mexican food chain Rusty Taco.

The Sonic purchase plays into Inspire’s overall strategy of acquiring distinct, dissimilar brands, the company said.  Known for burgers, hot dogs and specialty drinks, Sonic brings elements not present at Arby’s or Rusty Taco, while operating outside of the fast-casual realm where Buffalo Wild Wings exists.

Sonic’s stock rose more than 18 percent Tuesday, hitting an all-time high.

Sonic’s $4.4 billion in sales last year topped well-known brands including Dairy Queen, Five Guys and Hardee’s, according to Fortune, citing statistics from Nation’s Restaurant News.

--Mars Incorporated announced Tuesday it will roll out M&M’s Chocolate Bars and a new flavor – hazelnut spread – for its popular treats.

The chocolate bars will be made of smooth milk chocolate with whole M&M’s Minis. They will launch in December in five flavors: peanut, milk chocolate, crispy, almond and crispy mint.

Mmmm.

And Mars is adding a new flavor to the traditional M&M’s candy: hazelnut spread.  These candies will include the classic milk chocolate coating with a center containing hazelnut.

--Meanwhile, it’s official: Dunkin’ is dropping Donuts – in name only.

The food chain announced Tuesday it will rebrand as simply Dunkin’, with the change starting in January.

But it’s not dropping the breakfast staple that helped make the chain famous.  The top retailer of donuts in the U.S. sells 2.9 billion a year worldwide.  Your editor is responsible for 312 of these, Sundays the exception.

Dunkin’ has been diversifying its food and beverage lineup for years, but Tony Weisman, U.S. chief marketing officer at Dunkin’, said in a statement.

“By simplifying and modernizing our name, while still paying homage to our heritage, we have an opportunity to create an incredible new energy for Dunkin’, both in and outside our stores.”

--Michael Kors Holdings Ltd. announced on Tuesday it had agreed to pay $2.12 billion for the Italian luxury brand founded by Gianni Versace, furthering the U.S. company’s ambition of becoming a global luxury fashion group.

The deal marks one of the first attempts by an American fashion company to run an elite European brand.  Once it closes, Michael Kors will change its name to Capri Holdings Ltd. and trade under the symbol CPRI.  In addition to its namesake handbags, the company owns high-end shoemaker Jimmy Choo, which it acquired for $1.2 billion in 2017.

--The New York City hotel market is bouncing back amid the growing economy and a surge in visitors, which has helped overcome years of construction that flooded the market with new hotels that pressured room rates.

For the first eight months of the year, according to data provider STR, hotels in Gotham are enjoying their highest occupancy rates since 2000, while revenue per room has grown at the fastest rate since 2013.  Room rates rose 3.2% over last year, ending a three-year streak of declining room rates, according to STR. 

In terms of visitors to New York, in 2017, there were 62.8 million, the eighth consecutive year of record-breaking tourism.  NYC & Co., a tourism and marketing organization for the city, is forecasting another record of 65.1 million visitors for this year, including 13.7 million coming from abroad.  Corporate travelers are also back.

The New York hotel market is still by some measures, though, behind the highs it hit before the financial crisis in 2008, with the average room rate for the second quarter roughly $20 below the level right before the crisis.  [Mengqi Sun / Wall Street Journal]

--Broadcast network news continued to see its viewership slip, the 2017-18 television season ending last week.  Only one daily program, “ABC World News Tonight With David Muir,” showed year-to-year growth, according to data released Tuesday by Nielsen.

Every other daily news franchise on ABC, CBS and NBC posted year-to-year audience declines, as more people turned to cable outlets and online sources for their news.

But NBC News can tout that its “Today,” “NBC Nightly News With Lester Holt” and Sunday’s “Meet the Press” all ranked first among viewers in the 25-to-54 age group coveted by advertisers.  On the three morning shows alone, advertisers spend about $1 billion annually.

Among overall viewers, ABC’s “Good Morning America” averaged 4.15 million viewers for the season, toping NBC’s “Today” (4.07 million) and “CBS This Morning” (3.31 million).

“CBS This Morning” lost 7% of its audience compared with the previous season. The drop was linked to the abrupt departure of former co-anchor Charlie Rose, who was fired in November over sexual harassment allegations.

“Today” lost Matt Lauer, its co-anchor of 20 years, after he was fired for inappropriate workplace behavior during this time, though “Today” lost only 3% of its viewers, buoyed by a boost from the network’s Olympics coverage.  But the audience for “Today” is the smallest in 27 years.

In the evening news race, ABC’s Muir averaged 8.6 million viewers; “NBC Nightly News With Lester Holt” was down 1% to 8.15 million viewers; “CBS Evening News With Jeff Glor” was third with 6.2 million, down 5% from the previous season.

But...the New York Post reported that “Industry insiders are accusing ABC of dirty tricks in the war for network news dominance.

“In 2015 – when their evening news broadcasts were locked in a tight battle for the top spot – NBC got caught double-dipping to boost ratings by re-airing the ‘Nightly News’ at 2 a.m. and then adding the viewers for both broadcasts together.

“Now, with the two networks’ numbers once again locked in close combat, ratings wonks have noticed that ABC has – without fanfare – begun airing ‘World News Tonight’ in LA at 3:30 p.m. (that is, when it airs live at 6:30 p.m. on the East Coast), then also airing the normal taped version at 6:30 p.m. LA time.

“ABC touted a major victory Tuesday, when new Nielsen numbers showed that Muir has grabbed the most overall viewers for a second year in a row.

“But insiders believe that by quietly adding a second broadcast in LA – the second-largest TV market in the country – back in July, the network has goosed those figures.”

--50 years ago, September 30, 1968, Boeing rolled out the 747 Jumbo Jet, the biggest passenger plane the world had seen to date, 231 feet long, wings spanning 196 feet and seats for 490.  Boy, what a game changer it was, with TWA and Pan Am, and then United, the first to use it to expand services to Europe, and elsewhere. The market to Hawaii, for one, boomed.  It was perhaps the most dependable aircraft of all time (Capt. Bobby C. weigh in when you get a chance).  The 747 was only just recently retired for good on the commercial side by the last U.S. airline, Delta, though a final number of 747 air freighters are being manufactured, and British Airways continues to fly 747s commercially, along with numerous other foreign carriers.

Foreign Affairs

Iran: Supreme Leader Ayatollah Ali Khamenei said on Monday that a weekend attack that killed 25 people at a military parade was paid for by Saudi Arabia and the United Arab Emirates, and that Iran would “severely punish” those behind the bloodshed.  The deputy head of Iran’s Revolutionary Guards also accused the United States and Israel of involvement and he said they should expect a devastating response from Tehran.

Twelve members of the elite Islamic Revolutionary Guard Corps were among the 25 dead.  Gunmen fired on a viewing stand in Ahvaz, where Iranian officials had gathered to watch an annual parade marking the start of Iran’s 1980-88 war with Iraq.  Iran’s Fars news agency said on Monday that five attackers were killed in the attack.

“Based on reports, this cowardly act was done by people who the Americans come to help when they are trapped in Syria and Iraq, and are paid by Saudi Arabia and the UAE,” Khamenei said on his official website.

Editorial / The Economist

“It is clear whom President Donald Trump blames for the Middle East’s problems.  Iran’s ‘corrupt dictatorship,’ he told the UN General Assembly on September 25th, ‘sows chaos, death and disruption’ in the region.  It used the economic benefits of its deal with America and other world powers, which curbed Iran’s nuclear program in return for sanctions relief, to raise military spending and support terrorism, he claimed. So his administration pulled America out of the deal in May and launched ‘a campaign of economic pressure to deny the regime the funds it needs to advance its bloody agenda.’

“Iran, has responded, as usual, with defiance.  Hassan Rouhani, its president, insisted he would not meet Mr. Trump, denounced his ‘xenophobic tendencies resembling a Nazi disposition’ and predicted victory over America. ‘The end of this war will be sweeter than the end of the eight-year war,’ said Mr. Rouhani, referring to Iran’s’ war with Iraq in the 1980s, which left 600,000 Iranians dead.  Though considered a pragmatist, he sounds much like Iran’s hardliners, who opposed his nuclear deal and see no room for compromise with America.

“Mr. Trump, though, is not the only one challenging the regime... Two different groups claimed responsibility (for the Sept. 22 attack). The first was a splinter of a local Arab separatist group, the Arab Struggle Movement for the Liberation of Ahvaz.  But the Islamic State group, which a year ago stormed Iran’s parliament in Tehran, then promptly claimed the attack too, perhaps lying to boost its stature.  The regime quickly, and with no hard evidence, blamed America and its regional ‘puppets’ – Saudi Arabia, the United Arab Emirates (UAE) and Israel.

“Iranian officials are fond of lurid conspiracy theories, but it is not hard to see why they suspect outsiders.  Khuzestan is home to some 2m Arabs (most Iranians are Persian).  In recent years Arab broadcasters have stoked up coverage of Iranian minorities, keenly supporting Arabs ‘under occupation by Persian forces.’...One of the groups that claimed responsibility for the attack did so through Iran International, a television station based in Britain and funded by Saudi investors.  Last year Muhammad bin Salman, Saudi Arabia’s crown prince and de facto ruler, promised to take his country’s fight ‘inside Iran.’

“In Iran’s eyes this Arab offensive is part of a broader, ominous front.  Saudi Arabia and the UAE have set aside their differences with Israel in order to take on Iran, a shared enemy. The White House is now full of officials who have spent much of their careers calling for regime change in Iran. Some senior members of Mr. Trump’s team have supported the Mujahideen-e-Khalq, a cult-like dissident group that was until recently considered a terrorist organization in Europe and America, and provokes revulsion even among reform-minded Iranians....

“Iran’s sense of siege is likely to grow.  On November 4th America will impose new sanctions aimed at Iran’s oil industry.  As a result, Japan, South Korea, Sri Lanka and European countries plan to slash oil imports from Iran.  America might offer cheap oil from its own reserves to induce India to follow....Iran is seeking help from Russia and China. But Russia has gleefully filled the gap left by Iran in the oil market, while China is focused on its trade war with America....

“Years of sanctions have made Iran develop a ‘resistance economy,’ which is diverse and in many areas self-sufficient.  Prices of basics have risen, but by far less than they might have if Iran depended on imports. Cynics note that although the falling rial makes people poorer, it makes the government stronger, since Iran earns its oil revenue in foreign currency. Its reserves can survive two more years of Mr. Trump, says Mr. Rouhani.  But suffering Iranians may prove a bigger threat to the regime.”

President Rouhani told the General Assembly that it is ironic that the U.S. government does not even conceal its plans for overthrowing the same government it invites to talks.

Rouhani said that the Trump administration is determined to make all international forums “irrelevant” and is trying to initiate regime change in Iran, despite its denials of doing so.

“The economic war that the United States has initiated under the rubric of new sanctions not only targets the Iranian people but also entails harmful repercussions for the people of other countries, and that war has caused a disruption in the state of global trade,” Rouhani said.  “What Iran says is clear: no war, no sanctions, no threats, no bullying; just acting according to the law and the fulfillment of obligations.”

But Rouhani added: “The security of the Persian Gulf and the Strait of Hormuz has always been important for us...we will confront any and all disruptive efforts in this critical waterway in the future.”

In Trump’s speech to the UN the day before, Tuesday, he sharply criticized Iran, saying that “every solution to the humanitarian crisis in Syria must include a strategy to address the corrupt dictatorship in Iran.  Iran’s leaders sow chaos, death and destruction in Syria,” Trump said, adding that “they do not respect their neighbors and borders. Iran’s leaders plunder the nation’s resources to spread mayhem across the Middle East and far beyond.”

“The dictatorship used the funds released by the deal to finance terrorism and fund havoc and slaughter in Syria and Yemen,” Trump said.

“We will deny the regime the funds it needs to advance its bloody agenda. We re-imposed hard hitting sanctions that were lifted.  More sanctions will follow.  We are working with countries that import Iranian oil to cut their purchase substantially,” he said, adding that “we cannot allow a regime that chants death to America and that threatens Israel, to possess the means to deliver a nuclear warhead to any city in the world.”

Meanwhile, Israeli Prime Minister Benjamin Netanyahu on Thursday revealed that Iran had a ‘secret atomic warehouse’ in Tehran – a facility that he said proves the Islamic Republic is still developing nuclear weapons.

“Today I am disclosing for the first time that Iran has another secret facility in Tehran, a secret atomic warehouse for storing massive amounts of equipment and materiel from Iran’s secret nuclear program,” Netanyahu said in an address to the UN General Assembly.

Netanyahu said the site contains technology for the country’s nuclear program, adding that Iran “took this radioactive material and spread it around Tehran like Nutella” to try to hide it.  Using maps and photos, Netanyahu said the facility was hidden as a rug-cleaning operation.

Iranian officials, he said, had started cleaning out the warehouse, but still have “at least 15 ship containers, they’re gigantic, 15 ship containers full of nuclear-related equipment and materials stored there.”

Netanyahu called on the International Atomic Energy Agency to inspect the facility immediately.

“Do the right thing. Go and inspect; go and investigate,” he said.  “The reason Iran did not destroy its atomic facility and warehouse is because it is not finished with them.”

The Israeli prime minister then took on European leaders for appeasing Tehran by continuing to stick to the parameters of the 2015 Iran nuclear deal.

“Have these European leaders learnt nothing from history?” he said.  “Will they ever wake up?”

The European Union on Monday decided to set up a new mechanism to enable legal trade with Iran without encountering U.S. sanctions.

The EU will create new payment channels to preserve oil and other business deals with Iran, Federica Mogherini, the bloc’s foreign policy chief said, in a bid to evade U.S. punitive measures.

Mogherini’s announcement came after a meeting with foreign ministers from Britain, France, Germany, Russia, China, and Iran on the sidelines of the United Nations General Assembly in New York.

“In practical terms this will mean that EU member states will set up a legal entity to facilitate legitimate financial transactions with Iran and this will allow European companies to continue to trade with Iran in accordance with European Union law and could be open to other partners in the world,” she told reporters after the closed-door meeting.

The EU, along with Russia and China, said in a joint statement that the so-called “Special Purpose Vehicle” will “assist and reassure economic operators pursuing legitimate business with Iran.”

Secretary of State Mike Pompeo condemned the plan as “one of the most counterproductive measures imaginable.”

National Security Adviser John Bolton said the “murderous regime” of “mullahs in Tehran” would face significant consequences if they continued to “lie, cheat and deceive.”

“If you cross us, our allies, or our partners; if you harm our citizens,” he said, “there will indeed be hell to pay.”

Syria: The aforementioned Mr. Bolton said on Monday that Russian plans to supply Syria with a S-300 missile system would be a “significant escalation” by Moscow and hopes it will reconsider. Russia announced on Monday it will supply the surface-to-air missile system to Syria in two weeks against strong Israeli objections, a week after Moscow blamed Israel for indirectly causing the downing of a Russian military plane in Syria.

Russian Defense Minister Sergei Shoigu said the delivery of the system would be within two weeks.  Shoigu said the delivery of the S-300 had been suspended in 2013 following a request from Israel, but added: “Now, the situation has changed. And it’s not our fault.”

Editorial / Wall Street Journal

“The Kremlin justified the decision after Syrian air defenses shot down a Russian reconnaissance plane last week, killing 15 Russians on board.  The Syrian missiles were defending against Israeli planes that were bombing Iranian targets in Syria. The S-300 system is less likely to target Russian aircraft by mistake, but it is also far more lethal and will be a major threat to Israeli aircraft.

“Israel is frequently sending planes into Syrian airspace to slow Iran’s relentless efforts to establish a military presence. Bashar Assad’s regime doesn’t object because Iran’s Revolutionary Guard Corps and Russia helped turn the tide of the Syrian civil war.  Iran wants permanent bases for weapons and militia fighters to extend its imperial reach and directly threaten Israel when the next inevitable war begins. Israel can’t tolerate that buildup, especially with Hezbollah in nearby Lebanon having an arsenal of missiles estimated to be as large as 150,000.

“The U.S. and Israeli Prime Minister Benjamin Netanyahu have been trying to persuade Mr. Putin to distance the country from Iran, to little effect.  Israel will no doubt try to avoid accidents that harm Russian forces, but the Jewish state has no choice but to prevent a Revolutionary Guard beachhead on its border. The S-300 sale is one more indication that Mr. Putin wants to make trouble for the U.S. and its allies.”

Israel: Palestinian President Mahmoud Abbas on Thursday called on the United States to reverse its recognition of Jerusalem as Israel’s capital and cuts in aid to the Palestinians, saying these had undermined the two-state solution to the conflict.  “With all of these decisions, this administration has reneged on all previous U.S. commitments, and has undermined the two-state solution,” Abbas said in his address to the UN General Assembly.  “I renew my call to President Trump to rescind his decisions and decrees regarding Jerusalem, refugees and settlements.”

The last Israeli-Palestinian peace talks collapsed in 2014 and no one really believes President Trump can secure what he has called the “ultimate deal” since he recognized Jerusalem as Israel’s capital in December and moved the U.S. Embassy there in May. The Palestinians want to establish a state in the West Bank and the Gaza Strip, with East Jerusalem as its capital.  Israel annexed those territories in the 1967 Middle East war and annexed East Jerusalem in a move not recognized internationally.

Israeli Dense Minister Avigdor Lieberman criticized Abbas’ speech, saying, “Instead of responding to the outstretched hand of Israel and the United States, the only thing that interests (him) is to settle scores and drive the region toward confrontation.”

On Wednesday, President Trump said he wanted a two-state solution to resolve the conflict, and that he’d unveil a peace plan in the next two to three months.

North Korea: Russian Foreign Minister Sergei Lavrov proposed at the UN Security Council that the United Nations ease its sanctions against Pyongyang, which runs directly counter to the U.S. demand that countries maintain strong economic pressure aimed at forcing the country to give up its nuclear weapons.

While the U.S. could veto any proposal to lift sanctions, Lavrov’s remarks undermined a united international message to North Korea at a time when the U.S. and UN have found lapses and leaks in sanctions enforcement world-wide.

Secretary of State Pompeo announced plans to travel to Pyongyang in October to set up another summit between President Trump and North Korean leader Kim Jong Un.  But the U.S. has said international sanctions must remain in place to ensure North Korea’s continued cooperation.

Meanwhile, on Wednesday, President Trump told the Security Council that many positive things were happening behind the scenes on North Korea, “away from the media.”

“So I think you will have some very good news coming from North Korea in the coming months and years.”

Trump said Kim had reaffirmed his commitment to complete denuclearization to him directly in a “very strong letter form.”

“I think we will make a deal,” said the president.  “But, unfortunately, to ensure this progress continues, we must enforce existing UN Security Council resolutions until denuclearization occurs,” Trump said.

The bottom line is that Kim won’t allow for international inspections of his main nuclear site without “corresponding measures.” South Korean President Moon Jae-in, who has led efforts to encourage U.S.-North Korean talks, said on Tuesday that Kim told him last week the measures he was seeking were security guarantees Trump pledged in Singapore and moves toward normalization of relations with Washington. Moon said declaring a formal end to the 1950-53 Korean War would encourage North Korea to move further with denuclearization and a timetable for such steps would be a task for a second Trump-Kim summit.

China: China’s senior diplomat has demanded the U.S. stop viewing China with a cold war mentality to keep the Sino-U.S. bilateral ties on a healthy track as tensions between the two sides continue to rise.

Foreign Minister Want Yi made the comments to former U.S. Secretary of State Henry Kissinger during a meeting on the sidelines of the UN General Assembly.

The meeting came a day after Wang warned U.S. business representatives that Washington was putting four decades of gains in the Sino-U.S. relationship at risk of “total destruction.”

“China and the U.S. can have competition, but they should not view others with a cold war mentality,” Wang said in a foreign ministry statement.

“There are some forces in the U.S. recently frequently smearing China and creating antagonistic sentiment, which has caused serious damage to China-U.S. relations.”

China demanded the United States “dispel obstacles” to improving military ties and stop slandering it, amid growing tensions over trade, Taiwan, the South China Sea and President Trump’s claims of China meddling in the upcoming U.S. elections.  Trump on Wednesday accused China of seeking to interfere in the midterms, saying that Beijing did not want him or the Republicans to do well because of his stance on trade.

On Saturday, China summoned the U.S. ambassador in Beijing and postponed joint military talks to protest Washington’s decision to sanction a Chinese military agency and its director for buying Russian fighter jets and a surface-to-air missile system.

Beijing also denied a request for a U.S. warship to visit Hong Kong.

Foreign Ministry spokesman Geng Shuang reiterated a denial of Trump’s accusation that Beijing is trying to influence the U.S. congressional elections in November.

“We advise the United States to stop this unceasing criticism and slander of China,” Geng said.  “Stop these wrong words and deeds that damage bilateral relations and the basic interests of both countries’ peoples.”

Josh Rogin / Washington Post

“The Horn of Africa has become a strategic linchpin for the United States, so the fact that China has dramatically escalated its involvement there presents a daunting challenge for U.S. policymakers.  Nowhere is this more evident than in the tiny country of Djibouti, where Beijing is aggressively expanding its influence. When China opened its first overseas military base in Djibouti last year, Washington took a wait-and-see approach.  The United States, Japan, France and Italy all have bases in the area, so the Chinese military presence was a test case of whether Beijing’s military expansion in Africa would be an opportunity for cooperation or a source of potential conflict. A year later, the verdict is increasingly clear.

“The Chinese military base is only one part of a steady encroachment into Djibouti that now threatens the diplomatic and national security interests of the United States and its allies....

“(Beijing’s) military activities in Djibouti are of increasing concern. The U.S. base there is a key launching pad for anti-terrorism and intelligence operations against the Islamic State, al-Qaeda, al-Shabab and Boko Haram. The United States in May publicly accused China of using high-grade lasers to repeatedly attack U.S. pilots operating out of that base.

“That prompted Congress to pass legislation last month that includes language requiring the Pentagon to provide a formal assessment of China’s military presence in Djibouti and the threat it poses to U.S. military personnel....

“Over the past five years, China’s official arms sales to Africa have increased by 55 percent and its share of the African arms market has doubled to 17 percent, surpassing the United States, according to the Stockholm International Peace Research Institute.  There is also growing evidence that Djibouti is emerging as a strategic transit node for illegal weapons smuggled between Yemen and places such as Somalia.

“The Chinese government has a long history of fueling instability in Africa by trading in weapons with rogue regimes....

“What’s new is that, under President Xi Jinping, Beijing now has the power, influence and intention to combine its economic, diplomatic and military interference in Africa to wide-ranging effect.”

Thomas L. Friedman / New York Times

“Historically the U.S. could dominate the global scene and check a rising power like China, and set the global rules, with just our sheer physical mass – more money, more troops, more naval ships, more top-10 companies, more scientists and more universities. That is just not possible any longer, as China has become both big and smart in more and more areas. But all is not lost.

“It happens that we have three huge assets that China doesn’t have, and is unlikely to acquire them anytime soon. We should be doubling down on our strengths: immigration, allies and values. Instead, Trump is squandering them....

“China can’t attract the best and brightest Indian, Israeli, Arab, French, Brazilian and Korean immigrants, but we still can. So why would we put out a sign saying ‘Go Away’ or make it harder for their students to stay here?

“Also, we have real allies in a way China does not. China has clients, customers and frightened neighbors.  It does not have real partners like Canada and Mexico. It doesn’t have the whole Atlantic alliance with the European Union or tight relations with Japan South Korea, Singapore and Australia – which we can leverage if we aren’t doing stupid stuff, like slapping them with steel tariffs or tearing up the Trans-Pacific Partnership.

“Finally, as a society, we stand for things – or at least we used to stand for things – values people admire, about the dignity of human beings, the rights of minorities and women and the virtues of freedom and the rules for fair play.

“Our nation has never been just a beacon for profit-making, which only measured countries by their trade balance with us.  Our values attracted people to our shores and helped us spread our rules onto the wider world.  When Trump tore up the TPP trade deal I’m certain that he actually disappointed China’s economic reformers, who wanted to use the pact to create pressures inside China to reform.

“In short, a strategic president wouldn’t squander our strengths but would reinforce them by creating a stronger global network of people and countries that share our values. We won the Cold War with a strategy of containment and bankrupting the Soviet Union by outspending the Kremlin on defense. But we will ‘win’ this standoff with China, not by brute force alone, or by containment of China’s giant economy, but by ‘entanglement’ – entanglement of Chinese students with our schools, Chinese businesses with our values, and the Chinese government with our allies. That is, with the broad alliances and global institutions, and their rules of fair play, that we’ve been part of since World War II.

“So we have to fight for those rules, and China will fight for its versions. But ultimately, a believe, the U.S. and China together will have to play the role that the U.S. played alone after World War II – to define the rules of the new international order, from A.I. to privacy to trade.  And our weight in that process – we must never forget – will depend on the talent we attract, the allies we rally and the values we embrace and promote.”

Russia: The real identity of one of the men wanted by Britain for the Salisbury nerve agent attack on former Russian spy Sergei Skripal and his daughter is Anatoliy Vladimirovich Chepiga, according to media reports on Wednesday which said he was a decorated Russian colonel.

Earlier this month, British prosecutors charged two Russians – Alexander Petrov and Ruslan Boshirov – with attempted murder for the Novichok poisoning of the Skripals but said they believed the suspects had been using aliases to enter Britain.

Random Musings

--Presidential tracking polls...

Gallup: 40% approval of President Trump’s job performance, 56% disapproval (Sept. 23). 87% of Republicans approve, 34% of Independents.
Rasmussen: 47% approval, 51% disapproval (Sept. 28).

--A new NPR/PBS NewsHour/Marist national poll had President Trump with a 42% approval rating (up 3 points from two weeks earlier), 49% disapproval (down 3 points).  87% of Republicans approve, but Independents are at 44%, 10 points higher than the Gallup survey.

The NPR/PBS/Marist survey has had Trump at a 37% to 42% approval rating all year.

--According to a Gallup poll, 45 percent of Americans now have a favorable view of the Republican Party, a nine-point gain from last September’s 36 percent.  44 percent give the Democratic Party a favorable rating.  Since Barack Obama’s election as president in November 2008, Republicans have been rated less positively than Democrats over this time.

--Quinnipiac University’s poll center had some interesting numbers for the two key races in Florida.

Among likely voters in the state, Democratic incumbent Sen. Bill Nelson held a 53-46 lead over Gov. Rick Scott, the Republican challenger.  Women back Sen. Nelson 58-41 percent.

And in the gubernatorial race, Tallahassee Mayor Andrew Gillum, the Democrat, leads former U.S. Rep. Ron DeSantis 54-45.  Women back the Democrat in this one 59-39.  Independents back Gillum 56-40 percent.

--Bill Cosby was given a three-to-10 year prison sentence on Tuesday for drugging and sexually assaulting a woman, Andrea Constand, at his home 14 years ago, completing a spectacular fall from the heights of stardom, and putting an exclamation point on the first major conviction of the #MeToo era.

Judge Steven T. O’Neill of Montgomery County, Pa., said, “It is time for justice, Mr. Cosby, this has all circled back to you. The day has come. The time has come.”

--Southern Californians will remember the summer of 2018 for its sweltering temperatures and destructive wildfires, but also for a stretch  of 87 consecutive days where the region violated federal smog standards, the longest stretch of bad air in at least 20 years, according to state monitoring data and the Los Angeles Times.

The ozone pollution spell began  June 19 and continued through July and August, on to Sept. 14, when air pollution dipped to “moderate” levels.

--Pope Francis on Tuesday defended a landmark deal between the Vatican and China on the appointment of bishops, saying he, and not the Beijing government, will have the final say on who is named.

On a flight back from Estonia after the final leg of his visit to the Baltic states, Francis made his first public comments on the deal signed in Beijing on Saturday, telling reporters that while he realizes not everyone will understand the logic behind the agreement, he was confident in the “great faith” of Chinese Catholics.

“It’s not (that the government) names them.  It is a dialogue. But the pope will appoint them.  Let that be clear,” the Pope said of the deal, which was more than 10 years in the making.

The deal gives the Vatican a say in the choice of bishops in China, though to me it’s a sellout.

Consider that in the future, new bishops will first have to be proposed by members of local Catholic communities together with Chinese authorities.  The names of candidates will be sent to the Vatican.

Well, of course, the key in the equation is “Chinese authorities.”

I’m ticked at the Pope.  About six million Chinese Catholics have had to operate within an underground church, swearing loyalty to the Vatican, and an equal number in the state-supervised Catholic Patriotic Association.

And as part of the Pope’s deal with the Commies, he is recognizing the legitimacy of the seven remaining state-appointed Chinese bishops who had been named without papal approval.

And now, watch what happens with Taiwan.  The Vatican is one of the 17 remaining states Taiwan has formal relations with and the only one in Europe.

If the Vatican, as seems now imminent, recognizes Beijing and a resumption in diplomatic relations, tossing aside Taiwan, that would be a travesty.

86-year-old Cardinal Joseph Zen, the former archbishop of Hong Kong, told Reuters this week:

“They’re giving the flock into the mouths of the wolves.  It’s an incredible betrayal.”

Separately, Pope Francis acknowledged Tuesday that the sex abuse scandals rocking the Church have outraged the faithful and are driving them away. Francis told a gathering of young people  in Estonia, considered one of the least religious countries in the world, that he knew many young people felt the church had nothing to offer them and simply doesn’t understand their problems today.

Francis said the Catholic Church wants to respond to the complaints transparently and honestly.

“We ourselves need to be converted,” he said.  “We have to realize that in order to stand by your side we need to change many situations that, in the end, put you off.”

--A new FBI report found that roughly 40 percent of the nation’s slayings went unsolved last year.

The bureau looked at 2017 crime and arrest data from 16,000 law enforcement agencies across the country and found that only 61.6 percent of reported murders were “cleared”...38.4 percent of the 15,657 murders reported nationwide unsolved, according to FBI data.

---

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

God bless America.

---

Gold $1196
Oil $73.56

Returns for the week 9/24-9/28

Dow Jones  -1.1%  [26548]
S&P 500  -0.5%  [2913]
S&P MidCap  -1.1%
Russell 2000  -0.9%
Nasdaq  +0.7%  [8046]

Returns for the period 1/1/18-9/28/18

Dow Jones  +7.0%
S&P 500  +9.0%
S&P MidCap  +6.3%
Russell 2000  +10.5%
Nasdaq  +16.6%

Bulls N/A...59.0/18.1 the prior week
Bears

Have a great week.

Brian Trumbore



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Week in Review

09/29/2018

For the week 9/24-9/28

[Posted 11:45 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 1,016

Trump World

Stop the world...I want to get off!  Geezuz, it is never ending.  Nonstop action in Trump World.  And there is never enough time to cover it all.  This week I’m leaving on the cutting-room floor President Trump’s totally wacko, incoherent solo press conference, which was filled with one lie after another.  He told a particular whopper about Syria that was beyond outrageous, and further proof of my point he doesn’t even know where it is on a map, so I may revisit this next time in depth.  And his treatment of two Kurdish reporters was appalling as well, though this was because Trump also knows zero about the facts of the topic they wanted addressed, of how we have screwed the Kurds, one time after another, in Iraq and now Syria, over the past few decades.

It’s even the ‘little stuff,’ that really isn’t so little, when President Trump just throws out falsehoods on something like the price of soybeans when he’s talking about trade.

But I have to move on.

The Hearings:

Like all of America, I was riveted by Christine Blasey Ford vs. Brett Kavanaugh on Thursday.  Yes, it was a teaching moment for our country, particularly Male America.  Dr. Ford was highly credible, and by the end of the first half, Republicans were largely left decrying the process, though not questioning the sincerity of her testimony.

But after the intermission, Kavanaugh came out swinging, his emotions etched on his face and in his voice throughout his opening statement, lashing out at the Democrats for what he called a “grotesque and coordinated character assassination,” warning darkly, “what goes around comes around.”  It was not a good display if you were looking for ‘judicial temperament,’ but for a lot of us, it was what was needed if he was to save his nomination, and his professional life.

Your heart went out to the families of both.  Kavanaugh’s poor daughters just don’t deserve this.  It’s cruel.  And it’s so different from even the Clarence Thomas-Anita Hill era because of social media.

People are awful.  This country is peopled with tens of millions of jerks and a-holes.  Globally, call it a billion+. I didn’t dare go on social media myself this week.  Actually, these days I only go on to post my columns, and of course I have Trump’s feed always available.

Anyway, both Dr. Ford and Judge Kavanaugh constantly fought back tears, I did too, America cried with them.  It was extraordinary.

But it never had to come to this.  I blame the Democrats, especially Sen. Dianne Feinstein, and then Dr. Ford’s attorneys for not taking up Judiciary Committee Chair Sen. Chuck Grassley’s request to interview her privately, at her home in California.

Ford, instead, was used as a prop in the Democrats’ game.  I guess you can say America needed to see her, and I just said it was a teaching moment, but where do you draw the line?  I draw it at ‘decency.’  This wasn’t.

As for Kavanaugh, you and I don’t know him, but we know enough now to form an opinion.  I think he’d be an outstanding Supreme Court Justice, but...I also believe he was a different person when drunk in his youth.  An ugly drunk.  But would he then be capable of sexually assaulting a woman in that state of mind?  I don’t know...but we’ve had 30+ years for a story to come out before now and it hasn’t.

Republican Sen. Lindsey Graham angrily blasted the Democrats’ handling of the confirmation process as “the most unethical sham since I’ve been in politics.”

“If you wanted an FBI investigation, you could have come to us,” Graham said, his voice shaking as he addressed Democrats on the committee.  “What you want to do is destroy this guy’s life, hold this seat open and hope you win in 2020 – you’ve said that, not me.”

Graham then said: “This is not a job interview.  This is hell; this is going to destroy the ability of good people to come forward because of this.”

He finished his speech by declaring, “To my Republican colleagues, if you vote no, you are legitimizing the most despicable thing I’ve seen in my time in politics.”

Prior to Thursday’s fireworks, an NPR/PBS NewsHour/Marist poll had 43% of Americans opposing the nomination of Brett Kavanaugh to the Supreme Court, with 38% supporting it (19% still on the fence).

And then, today, as the Senate Judiciary Committee was about to vote on the nomination, Arizona Republican Sen. Jeff Flake, the swing vote on the committee, said he would vote for the judge, but with the understanding there would be a delay for an FBI investigation, “time and scope to be limited,” one week, if the likes of Senate Majority Leader Mitch McConnell and his Democratic counterpart, Chuck Schumer, agreed...as well as President Trump.

Hours later, Trump ordered an FBI investigation into the allegations, as the president soon tweeted after, the seventh such probe of Kavanaugh over the years, and reporting tonight has Trump very comfortable with the move, seeing it as a way to help cool tensions with Democrats in Congress and to give some key Republican lawmakers, as well as potentially one or two Democrats, cover to vote in favor of Kavanaugh’s confirmation next week before the full Senate.

But this is not what we are going to see.  There is zero reason to expect things to go smoothly the next few days.  What you saw this morning in the confronting of Sen. Flake by the two women in the elevator will only be magnified to the nth degree.

And it’s going to be difficult to limit the ‘scope’ of the investigation.   Dr. Ford’s attorney, Debra Katz, immediately said there should be “no artificial limits as to time or scope.”

This coming week we will learn is merely Round Two.  As Sen. Flake correctly said today, “This country is being ripped apart.”  But for you old-time boxing fans out there, this isn’t going to be the “Thrilla in Manila,” it’s going to be more like Ali-Shavers, 1977, though admittedly neither bout was pretty.

It’s possible Kavanaugh will get knocked out.  Maybe not.  But we have entered a new time and place.  Good ‘cut men’ will quickly be in short supply.

In the meantime, this is a running history and just 24 hours earlier we had all been witness to something extraordinary.  Some opinion....

Editorial / Washington Post

“ ‘I believed he was going to rape me,’ Christine Blasey Ford said as she began her Thursday testimony before the Senate Judiciary Committee, detailing allegations of sexual assault against Supreme Court nominee Brett M. Kavanaugh.  She said she is ‘100 percent’ certain the assailant was Mr. Kavanaugh.  Mr. Kavanaugh denied the charges ‘immediately, categorically and unequivocally,’ at times choking back tears.

“Predictably, and as a practical matter, this left the Judiciary Committee, the powerful emotions of the day notwithstanding, in about the same place it started.  Ms. Ford presented a credible accusation of sexual misconduct from their teenage years.

“Mr. Kavanaugh offered a forceful denial. The logical next step would be to take the time to see if an investigation can bolster either contention.  Yet Republicans on the committee seemed more aggrieved by the Democrats’ delay in forwarding Ms. Ford’s allegation than interested in getting to the bottom of it.

“On one secondary but important matter, it was possible to draw a conclusion.  Mr. Kavanaugh contended that ‘this whole two-week effort has been a calculated and orchestrated political hit, fueled with apparent pent-up anger about President Trump and the 2016 election’ and an act of ‘revenge on behalf of the Clintons.’

“But he provided no evidence for his angry charge, and certainly Ms. Ford’s testimony did not support conspiracy theories.  On the contrary, she explained she tried to relay her allegations to political leaders before Mr. Trump tapped Mr. Kavanaugh, so that the president could consider another judge of equal qualifications, refuting suggestions that she is part of a Democratic plot. She was more than supportive of reopening the FBI background check.  ‘I wish that I could be more helpful, and that others could be more helpful and that we could collaborate to get at more information,’ Ms. Ford said.

“The inadequacy of the Judiciary Committee’s process was most glaring in the absence of Mark Judge, whom Republicans refused to subpoena.  Ms. Ford has said Mr. Judge was in the room when the alleged assault occurred; on Thursday, she provided a few fresh details that almost certainly would have sent professional law enforcement agents in new investigative directions if they had the time and mandate. Mr. Judge has denied knowing of or being present for any assault but has also declined to offer any more information.  When Sen. Patrick J. Leahy (D-Vt.) asked Mr. Kavanaugh about Mr. Judge’s writing on drunken high school antics, the nominee told the senator, ‘You’d have to ask him.’  ‘I would like to,’ Mr. Leahy responded

“Americans could only watch with sadness.  If he is the victim of some terrible case of mistaken identity, Mr. Kavanaugh’s anger is understandable, but his partisan conspiracy-theorizing was hardly becoming of a potential Supreme Court justice.  Ms. Ford, whose life and family have been upended, deserved better than the condescension shown by a number of Republican senators and, more to the point, their unwillingness to vet her claims.

“In truth, there is still plenty of time. Any deadline has been artificially imposed by the Republican majority for purely partisan reasons, a majority that was happy to leave a Supreme Court chair vacant for most of 2016.  As we have said repeatedly, the Senate still has not been given access to all relevant documents, let alone fully checked out Ms. Ford’s  allegation.

“It would be irresponsible for Republicans to insist on an immediate vote.  If they do, the responsible vote must be no.”

Kimberley A. Strassel / Wall Street Journal

“The stakes go beyond Judge Kavanaugh.  A ‘no’ vote now equals public approval of every underhanded tactic deployed by the left in recent weeks.  It’s a green light to send coat hangers and rape threats to Sen. Susan Collins and her staff. It is a sanction to the mob that drove Sen. Ted Cruz and his wife out of a restaurant.  It is an endorsement of Sen. Dianne Feinstein, who kept the charge secret for weeks until she could use it to ambush the nominee with last-minute, unverified claims.  It’s approval of the release of confidential committee material (hello, Spartacus), the overthrow of regular Senate order, and Twitterrule.  It’s authorization for a now thoroughly unprofessional press corps to continue crafting stories that rest on anonymous accusers and that twist innuendo into gang rapes.  A vote against Brett Kevanaugh is a vote for Michael Avenatti.  No senator can hide from this reality.  There is no muddy middle.

“The stakes go even further, to the core of this country’s principles. To vote against Judge Kavanaugh now is to overthrow due process.  Contrary to Democrats’ claims, due process is not constrained to courts of law; it is central to employee discipline, professional standards of conduct, even evictions of tenants.  It is owed to any individual in a civilized body politic. Under due process, the accuser has the burden of proof.  Ms. Ford has not met the evidentiary standard even of a civil proceeding, the preponderance of evidence – yet this case is more significant than any that has been dealt with in a court of law for ages.  How the Senate votes now will reverberate to all levels of society.  A ‘no’ vote on Judge Kavanaugh is an authorization to renew calls for a Justice Clarence Thomas to step down.  It is an authorization to derail the life of any white-collar manager or blue-collar crew boss who is ever subject to a single uncorroborated allegation....

“Republican senators didn’t ask for this monumental choice – fair enough.  Those demanding Ms. Ford be heard simply wanted a fair process.  That has happened; she has been given every courtesy and then some. Judiciary Chairman Chuck Grassley has worked with steadfast professionalism to investigate the claims of every other so-called accuser – despite crazy accusations, runarounds, delays, threats and obstruction.  His committee majority has done its job.

“It’s Democrats who have pushed the nation to the brink. This is no longer about one unvetted accusation, or who looks more ‘credible,’ or discrete political calculations. Republicans need to understand that their voters know this goes beyond the question of one man and a Supreme Court seat.  It goes to basic principles.”

Editorial / New York Post

“Thursday’s hearing of the century was filled with high drama and emotion – but failed to produce any new facts.

“Christine Blasey Ford gave a powerful, heartfelt statement, standing firmly behind her memories of a horrific incident 36 years ago, when she was 15, leaving her traumatized and haunting her for decades.

“Brett Kavanaugh followed with also-heartfelt testimony about his feelings of being wrongly accused, being the victim of ‘false, last-minute’ smears and having his life, his family’s life and his good name ‘destroyed.’

“Yes, Ford gave a vivid account of being abused by a drunken teenage Kavanaugh.  Yet he made his own compelling point: Her lifelong friend Leland Keyser, who Ford says was at the party that night, not only doesn’t recall the party, she doesn’t think she ever met Kavanaugh.  That goes well beyond a ‘lack of corroboration.’

“Complicating the hearing was Democrats’ insistence on playing politics. Sens. Cory Booker and Kamala Harris, in particular, spent their time feeding their 2020 hopes.

“Too bad: Another Democrat, Sen. Pat Leahy, prompted one of Ford’s most powerful moments by asking about her most visceral memory of that night: It was her attackers’ laughter, she said.

“But most of the Democrats’ time went for demanding an FBI investigation. This, when their own staffers have been madly investigating – and feeding tips to the media.  (Indeed, it was some Democrat who forced Ford to abandon her anonymity by siccing the press on her.)

“And the senators know full well that an FBI probe would change nothing.  The bureau (as then-Sen. Joe Biden noted during the Anita Hill-Clarence Thomas hearings) doesn’t make judgments about witnesses’ guilt or credibility; it merely takes statements.  And the Senate already has such sworn statements from the three witnesses Ford says were at the party: None has any memory of the event.

“Kavanaugh was absolutely right, and justified in his anger, over the politics Dems have played: waiting until the 11th hour to raise Ford’s allegations and then calling for an FBI probe that would only serve to delay – all while he and his family suffered.

“He accused them, rightly, of ‘lying in wait’ to pounce, after failing to ‘take me out’ on the merits.  It’s a ‘national disgrace,’ he said, that could mar U.S. politics for decades.

“Senators must now weigh the testimony and (scant) evidence and decide for themselves.  It’s time to vote – and end the circus.”

Editorial / Wall Street Journal

“Thursday’s Senate hearing on Brett Kavanaugh’s Supreme Court nomination was an embarrassment that should have never happened.  Judge Kavanaugh was right to call the confirmation process a ‘disgrace’ in his passionate self-defense, and whatever one thinks of Christine Blasey Ford’s assault accusation, she offered no corroboration or new supporting evidence.

“Ms. Ford certainly was a sympathetic witness – by her own admission ‘terrified’ at the start and appearing to be emotionally fragile.  Her description of the assault and its impact on her was wrenching.  She clearly believes what she says happened to her. Her allegation should have been vetted privately, in confidence, as she said she would have preferred.  Instead ranking Democrat Dianne Feinstein held it for six weeks and it was leaked – perhaps to cause precisely such a hearing circus.

“Yet there is still no confirming evidence beyond her own testimony, and some of what she says has been contradicted. The female friend Ms. Ford says was at the home the night of the assault says she wasn’t there.  The number of people she says were there has varied from four to five and perhaps more, but every potential witness she has cited by name says he or she doesn’t recall the party.

“She still can’t recall the home where the assault took place, how she got there or how she got home that evening. She has no witnesses who say she told them about the alleged assault at the time – until she first spoke of it at a couples therapy session 30 years later in 2012. Mr. Kavanaugh’s name doesn’t appear in the notes of her therapist.

“As for Judge Kavanaugh, his self-defense was as powerful and emotional as the moment demanded.  If he was angry at times, imagine how you would feel if you were so accused and were innocent as he says he is. To deny the allegation as he did – invoking his children and parents and so many others who know him – and be lying would mean that he is a sociopath.  If he were found to be lying, he would be impeached and probably prosecuted.  Nothing in his long record in public life betrays the kind of behavior he is accused of against women.

“Had he not been as forceful, his opponents would have said he looked guilty. Because he called the Democrats out for their character assassination, the critics now say he lacks the right temperament.  The truth is that there is no answer, and no demeanor, that Brett Kavanaugh could offer that the left would credit.  Their goal isn’t the truth. They want to destroy Judge Kavanaugh....

“The real Democratic goal is to push a confirmation vote past Election Day. They can then spare their incumbents running for re-election from taking a difficult vote.  If they win the election, they will then try to block any confirmation until they take over the Senate in January.  No nominee to the right of Merrick Garland would then be confirmed in the final two years of the Trump Presidency. The Supreme Court would be divided 4-4 until 2021 at least.

“Senate Republicans should understand that these are the real political stakes.  This nomination isn’t only about the fate of a single man whose reputation can be discarded like some tabloid celebrity. This is about the future of the Supreme Court and who will control the Senate.  If Republicans reject Mr. Kavanaugh based on what we know now, millions of voters will rightly be furious.

“But as important, a rejection will bring dishonor to the Senate.  It will validate the ambush and smear politics that Democrats are using. And it will turn Supreme Court nominations over to the justice of the social-media mob and the politics of accusation.  It’s time for Senators to stand up and confirm Brett Kavanaugh.”

Trumpets....

--Lost in the Kavanaugh hearings and other news of the week was the situation involving deputy attorney general Rod  Rosenstein, who headed to the White House on Monday morning, preparing to resign, convinced President Trump was about to fire him, and hours later he was back at work, still employed as the second-in-command at the Justice Department and, for the time being, still in charge of the Russia investigation.

The president was in New York for the General Assembly, and he announced later he was going to meet with Rosenstein Thursday.  But then something else was scheduled for that day, as you might recall, and here we are, Friday night, and no word whatsoever on the deputy AG.

Rosenstein had called the New York Times story from last Friday that he had considered secretly taping the president and discussed using the 25th Amendment to remove him from office “inaccurate.”  But critics called for him to be fired.  Others, including Trump confidant Sean Hannity, urged the president not to fire Rosenstein.

--Trump’s speech to the UN General Assembly was on the theme of sovereignty and self-interest and solving problems such as Iran, China and North Korea.  I was not a fan of it.  Neither were a lot of other folks.  An example....

Anne Applebaum /Washington Post

“Odd juxtapositions, absurd contrasts – these are the stuff of humor.  People sometimes laugh, nervously, when someone states something that is both true and unacceptable.  People sometimes laugh, uproariously, when someone states something that is both false and exaggerated.  ‘In less than two years,’ said President Trump at the UN General Assembly, ‘my administration has accomplished more than almost any administration in the history of our country.’ And, no, those who chuckled in response were not laughing ‘with’ the president.

“But there was a much darker form of humor to be found in Trump’s speech as well. It was not only his pomposity and his narcissism that were grimly funny.  It was his entire worldview, which is both naïve and incoherent – and which contrasts, sharply, with his stated belief in ‘principled realism.’

“Repeatedly, the president – or, more accurately, his entourage, advisers and speechwriters – issued rousing praise for an ill-defined notion of ‘sovereignty.’  The United States, he said solemnly, ‘will not tell you how to live or work or worship.’  If it means anything at all, that phrase surely implies the United States is not interested in how other countries run their governments, or how they treat their people: Dictatorship, democracy, it’s all the same to us.

“Except, of course, that Trump’s administration is not indifferent at all.  A few paragraphs later, the president denounced the government of Venezuela; ‘All nations of the world should resist socialism,’ he concluded.  He denounced the leaders of Iran, who have ‘embezzled billions of dollars from Iran’s treasury, seized valuable portions of the economy and looted the people’s religious endowments.’  He objected to a German gas deal with Russia. I am not here arguing in favor of Venezuela, Iran or Germany – but surely, if their sovereignty is inviolable, then Venezuela’s socialism, Iran’s corruption and Germany’s energy policy should not be of any interest to the U.S. president....

“He was unequivocal about the negative impact of international trade and the terrible damage it has done to Americans:  ‘The United States will not be taken advantage of any longer.’

“Yet, almost in the same breath, the president made grand proposals for coordinated, international actions.  He wants sanctions against Venezuela and sanctions against Iran.  He wants Middle Eastern states to cooperate to fight terrorism.  He wants cooperation with countries to help ‘better screen foreign investments in our country for national security threats.’  He also wants trade, if it means that people will buy American: ‘The United States stands ready to export our abundant, affordable supply of oil, clean coal and natural gas.’....

“In truth, Trump and the Trumpists are in an unfortunate position: Every problem they claim to care about the most requires, at least in part, an international solution.  Terrorism cannot be stopped without organized efforts in Europe and the Middle East. Blue-collar factory jobs often depend on the export of American goods abroad, or the import of foreign parts.  A sanctions regime imposed by the United States alone, on anyone, is meaningless.  International cooperation of some kind is even required to control immigration, if only because foreign countries issue the passports needed to police the border.

“This isn’t to say that there are not dysfunctional international organizations – the United Nations houses several of them – or that existing trade deals should last forever.  U.S. presidents are constantly renegotiating America’s engagement with the world.  But Trump – or Stephen Miller, or Stephen K. Bannon – goes well beyond that, instead creating black-and-white division between ‘patriotic’ policies and ‘globalist’ policies, using hyped-up, ideological language that has nothing to do with the real choices faced by actual people....

“But this White House does not contain realists.  It is run by a small, elite team of ideological anti-globalists who are very distant from the real world inhabited by millions of ordinary people trying to conduct diplomacy, negotiations and trade. Which is, if you think about it, pretty funny.”

Wall Street and Trade

As expected the Federal Reserve hiked its benchmark funds rate for a third time this year, eighth overall since it began raising rates in late 2015, to a range between 2 and 2.25 percent, the first time above 2% since 2008.

Fed Chairman Jerome Powell said the decision to hike was not intended to get in the way of continued growth.  “My colleagues and I are doing all we can to keep the economy strong, healthy and moving forward,” he said

President Trump, while unhappy, again, over another rate hike, did at least say that the Fed was raising rates “because we’re doing so well.”

Another rate hike is expected in December, as the Fed raised its estimate on growth for the year to 3%.

The Fed is also now expecting three rate increases in 2019 and one in 2020.  The new forecasts included 2021 for the first time and Fed officials expect to end their cycle of rate hikes in 2020. None are planned for the following year...as of today.

Meanwhile, Chairman Powell has so far been circumspect in reflecting on Trump’s trade war.  Powell has suggested that while higher tariffs are generally harmful, they could serve a healthy purpose if they eventually force Beijing to liberalize its trade practices.

We also had a lot of economic data this week. The final reading on second-quarter GDP was unchanged, 4.2%.

August personal income and consumption were both at 0.3%, basically in line with expectations.  Importantly, the Fed’s prime inflation barometer, the personal consumption expenditures index, which is a component of this particular report, came in at 2.2%, year-over-year, which was down a tick, while on core, ex-food and energy, it was 2.0%.  The core PCE hit the Fed’s 2% target back in March for the first time since April 2012.  But this is the number that could change the Fed’s above equation in terms of the future number of rate hikes down the road.  If it starts running ‘hot’ for a spell, that won’t be good for the bond market, for one.

August durable goods were up a strong 4.5%, but this is a highly volatile data point, and ex-transportation it rose only 0.1%.

The Chicago purchasing managers index for September was 60.4, very strong, but less than the prior month’s 63.6.

On the housing front, we had the July S&P CoreLogic Case-Shiller National Home Price Index, which for the 20-city barometer increased 5.9% over the past year, down from 6.4% the prior month. 

Las Vegas had the fastest home-price growth in the country for the second straight month, at 13.7%.  Seattle was up 12.1%.

August new-home sales came in as expected, but June and July were revised sharply downward.

Add it all up and the Atlanta Fed’s GDPNow barometer for third-quarter growth is at 3.8%, down from last week’s 4.4% forecast.

On the aforementioned trade front....

Monday, the Trump administration imposed fresh levies on $200 billion in Chinese imports, prompting Beijing to respond with tariffs on $60 billion in American goods, approaching the point of running out of U.S. products to target.

The $200 billion of goods will have a tariff of 10% that rises to 25% by the beginning of next year unless the countries reach a deal. China’s new tariffs on U.S. goods have been set at 5% to 10%.

Neither side is showing signs of backing down, with the Chinese government releasing a report accusing the Trump administration of a foreign policy based on “trade bullying” and “attempting to impose its own interests on China through extreme pressure,” according to state media.

The ‘white paper’ notes: “(The U.S.) has brazenly preached unilateralism, protectionism and economic hegemony, making false accusations against many countries and regions, particularly China,” the paper said.

Thousands of goods now face border taxes, including grocery store staples, household objects and industrial equipment.  Costs, such as on food, clothing, furniture and cars, will rise, and there will be layoffs down the road.

President Trump warned earlier this month that retaliation from Beijing would spark another set of tariffs on $267 billion in Chinese goods, erecting financial barriers on virtually everything the United States buys from the nation.  [In 2017, that order reached $505 billion.]

China ‘only’ imported $130 billion in U.S. goods last year – but officials have said it can use “qualitative” measures to hurt American businesses.

As for NAFTA and the renegotiation of same, the administration seems determined to advance a deal in the coming days.  There is a self-imposed deadline of Sept. 30, with the U.S. and Mexico looking to start the clock for Congressional approval before the end of November, which would allow Mexico’s President Enrique Pena Nieto to sign it before vacating the office for President elect Andres Manuel Lopez Obrador on Dec. 1.   And tonight there is still hope for getting Canada in the action.  U.S. Trade Representative Robert Lighthizer has also signaled that Canada could rejoin the agreement later.  But President Trump’s animus towards our great friends up north is inexplicable.  Trump said he turned down a meeting with Canadian Prime Minister Justin Trudeau this week.

Trump took aim at the country’s dairy tariffs, for a zillionth time, and reiterated his threat to tax Canada’s auto industry.

“[Mr Trudeau’s] tariffs are too high and he doesn’t seem to want to move and I told him forget about it. And frankly we’re thinking about just taxing cars coming in from Canada,” he said.

“I must be honest with you, we’re not getting along at all with their negotiators,” Trump added at his news conference in New York.

And then he said, “We don’t like their representative very much,” which most took to mean Canadian foreign minister Chrystia Freeland, who has been in charge of Canada’s negotiating team.

For his part, Trudeau on Thursday reiterated his view that a “good, fair deal” on a revised NAFTA is still possible.  He said the Trump administration was frustrated because “Canadians are tough negotiators, as we should be.”

Lighthizer said that with regards to the European Union, Japan and others, negotiations are moving forward.

Regarding Japan, President Trump and Japanese Prime Minister Shinzo Abe agreed on Wednesday to start trade talks in an arrangement that, for now, protects Japanese automakers from further tariffs, seen as a major threat to the export-dependent economy.

Reminder, any trade deal, such as a new NAFTA, would require majority votes in the House and Senate to be enacted.  No way Congress approves a new deal with Mexico that doesn’t include Canada.

A Reuters/Ipsos/UVA Center for Politics Poll found that a plurality of voters in Indiana, Michigan, Ohio, Pennsylvania and Wisconsin – states in America’s industrial heartland that backed President Trump in 2016 – thought tariffs were not good for themselves or their families.

Those in support of tariffs varied from 33 percent in Pennsylvania to 38 percent in Michigan.  In all states, more were negative, varying from 44 percent in Indiana to 50 percent in Wisconsin.

Europe and Asia

No big eurozone data points this week, save for a flash reading on September inflation, 2.1%, up from 2.0% in August, though ex-food and energy the figure was just 1.1%.  [Eurostat]

Eurobits....

Brexit: Brexit campaigner Boris Johnson called on Prime Minster Theresa May to rip up her proposal for Britain’s exit from the European Union, ratcheting up the pressure on May as she prepares to face her divided party at its annual conference next week, which commences Sunday in Birmingham.

Just six months before the UK is due to leave the European Union on March 29, 2019, the whole deal remains totally up in the air:  Prime Minister May has yet to clinch a Brexit divorce deal with the EU and rebels in her party have threatened to vote down any deal she makes.

Johnson, who resigned in July as foreign secretary over May’s Brexit proposals, and seeks to replace her at the top at some point, wrote in Friday’s Daily Telegraph:  “This is the moment to change the course of the negotiations and do justice to the ambitions and potential of Brexit.”

Johnson argues that the prime minister’s plans would leave the United Kingdom half in and half out of the club it joined in 1973 and in effective “enforced vassalage.”

Johnson called for a “SuperCanada-type free trade agreement” and said the EU’s backstop proposals for Northern Ireland amounted to the economic annexation of part of the UK.

The so-called Brexiteers have urged May to take the EU up on its offer of a more limited trade deal based on the one Canada has. Johnson is likely to make a plea directly to the grassroots in Birmingham.

Earlier, Mrs. May said the Brexit vote to leave the European Union was not a rejection of multilateralism, but a demand for accountability.  “It was a clear demand for decisions and accountability to lie closer to home,” May said in her speech to the General Assembly.

May also said, the day before, “It would not be in the national interest to have an election” before the Brexit date, some Brexit hardliners calling for such a vote.  Some of May’s aides have been ‘war-gaming’ a vote for November as a way of breaking the Parliament deadlock.

Rumors have persisted over what would be a major gamble; potentially bringing rebel Tory lawmakers into line, but giving the Labour Party what it wants most – a shot at power.  Jeremy Corbyn has been campaigning as the “government-in-waiting” ever since the last election.

It has been more than two years since the historic June 2016 Brexit referendum and Britain’s politicians and its business leaders remain deeply divided.

The referendum went 51.9 percent for leaving the EU, and 48.1 percent for staying.  A poll of polls published today showed voters would now vote 52-48 in favor of remaining in the EU were there to be another referendum.

But this is far too narrow a margin to argue a second vote would be successful in overturning the first.

Separately, one in five British companies would move at least some of their operations to the European Union in the event of a “no-deal” Brexit, according to a survey by the British Chamber of Commerce.

But the BCC survey also showed 62 percent of firms taking part had not performed a risk assessment of the impact of Brexit.  “Firms still don’t have answers from government to the most basic questions about future trading conditions,” said BCC Director General Adam Marshall.

Gideon Rachman / Financial Times

“The great risk for the British government is that its determination to stand firm against the EU will be similarly undermined by fear in the markets, or among consumers as the reality of ‘no deal’ sinks in.

“The relative strength of Britain’s public finances and banks means that the UK is less vulnerable to a financial panic than Greece. But a ‘no-deal’ Brexit would disrupt commerce across the Channel as new customs procedures and tariffs were imposed.  Modern societies are dependent on just-in-time deliveries, so shops and factories would quickly face disruption of supplies.

“Even the fear of disruption would raise the risk of panic-buying, leading to empty supermarket shelves. The government should certainly be studying the fuel crisis of 2000, where a blockade of petrol refineries by protesters led to panic-buying of fuel and food. Within days petrol stations had run dry and supermarkets were discussing rationing.

“To some in Britain, an open discussion of these possibilities might seem like scaremongering, or even diplomatic sabotage. But one of the problems with the Brexit debate in the UK has been a consistent failure to consider how things might go wrong.  As a result, the May government and the British public have been hit by a series of unpleasant surprises.

“Of course, it is also possible that we are simply witnessing a bout of posturing, as both the EU and the UK flex their muscles, before the final summit at which they actually do the deal.  It may indeed, ultimately, be ‘all right on the night.’

“But it is clear things went badly wrong in Salzburg, and the differences between the UK and the EU look starker than ever.  I happen to agree with some of the British government’s complaints about the inflexibility of the EU’s negotiating position.  As my colleague Martin Sandbu has pointed out, the concept of the ‘integrity’ of the European single market is fuzzier than Brussels theology currently proclaims.

“But British complaints about the EU’s position on Brexit are likely to be no more effective than Greek complaints about austerity.  Ultimately, this is not a debate about which side is ‘right,’ but about where the power lies. And with Brexit day approaching and the threat rising of a no-deal, the weakness of Britain’s position is becoming ever clearer.”

Germany: Chancellor Angela Merkel suffered a big blow on Tuesday when a close ally of hers was ousted as the party’s parliamentary leader and replaced with a candidate she had refused to endorse.

Volker Kauder was voted out as leader of Merkel’s conservative bloc in parliament, a position he held for all 13 years of her successive terms.  Kauder was tasked with keeping her party in line when Merkel was forced to change policies to maintain power over the years.  He was often referred to as her “right-hand man.”

One thing is clear, Merkel’s power base is melting away, and she is still paying for her decision in 2015 to open Germany’s border, which resulted in over 1.5 million asylum seekers entering the country.

An Amnid poll released Sunday put support for her bloc at just 28%, down from the 32.9% it scored at the general election a year ago – the party’s worst result since 1949.

Kauder was ousted by Ralph Brinkaus in an annual party vote.

As for Merkel’s position as the head of her Christian Democrat Union, there is no obvious rival who could rise to the top of a party split between advocates of her centrist approach and a more robust conservatism.

Last weekend, the government also had to deal with another big issue, the fate of Hans-Georg Maassen, the head of the domestic intelligence service, who was shifted to a newly-created post as special adviser to interior minister Horst Seehofer.  Maassen suggested in a newspaper interview a few weeks ago that a video showing a group of locals chasing two foreigners was fake.  Maassen later admitted that the footage was genuine.  Given the unwieldy coalition, this became a huge scandal, tied to the migration issue.

Italy: The new government proposed a 2019 budget that would set a deficit target three times as big as the previous administration’s goal, setting up a clash with the European Commission and sparking a sell-off of state bonds.

Italy has the heaviest debt burden among the largest EU economies, over 130 percent of GDP, and it is under pressure from the EU, which oversees each member’s budget, to rein in spending amid fears it could sow the seeds of another debt crisis in the heart of the eurozone.

The four-month-old government late on Thursday night offered a budget with a deficit of 2.4 percent of GDP over the next three years, to fund a major expansion of welfare spending, tax cuts and a boost to public infrastructure investment.

The Economy Minister, Giovanni Tria, who is an unaffiliated technocrat, had wanted a deficit set as low as 1.6 percent next year, hoping to respect the EU’s demands that Italy progressively cut the fiscal gap to rein in its debt.  But the ruling-party chiefs won out over Tria.

European Economics Commissioner Pierre Moscovici said today he would respond to Italy’s 2019 budget next month when it is formally submitted but that the country must cut its “explosive” debt.

But the coalition government of the 5-Star Movement and the League, in power since June, needed to fund its costly campaign promises, and so, here we are.  The yield on the Italian 10-year rose from 2.82% to 3.14% in response.  [Versus that of the German bund, which sits at 0.47%.]

Sweden: Prime Minister Stefan Lofven will have to stand down after losing the support of parliament.

The anti-immigration Sweden Democrats (SD) backed the vote to remove him, weeks after a general election that delivered a hung parliament, the SD finishing third behind two centrist parties.

Lofven was defeated 204-142.

The Parliament speaker now proposes a new leader – a process that could go on for weeks.  Lofven is expected to stay on in the interim.

France: President Emmanuel Macron’s approval rating is down to 19 percent according to a poll released Monday.  [Other recent polls put this figure at 28-29 percent.]

Turning to Asia...

With the quarter ending this weekend from an economic data standpoint, next week we’ll have a slew of numbers from China, that country just waiting for the clock to turn midnight, and then, presto!  Pre-manufactured data!  But we report it anyway.

Japan has real stuff, on the other hand, and industrial production was up 0.7% in August over July, which was worse than expected, while the unemployment rate for the month ticked down to 2.4%.  There is a huge backlog of jobs here, but don’t bother flying over for one.  They won’t take you...it’s a Japan thing, you know.  No outsiders need apply.  Which is why their demographics are such a mess, but I digress.

Meanwhile, this week the benchmark Nikkei stock index hit its highest level since November 1991.  The global economy is doing well, and Japan is an export nation.  Put the two together and this place normally would do well in that scenario (currency also coming into play).

Street Bytes

--Stocks finished mixed, with the Dow Jones losing 1.1% to 26458, the S&P 500 off 0.5%, but Nasdaq gained 0.7%. 

For the quarter, the Dow was up a whopping 9.0%, the S&P had its best quarter since 2013, up 7.2%, and Nasdaq rose 7.1%, making it nine consecutive ‘up’ quarters for it.

Before long, we’ll be inundated with third-quarter earnings reports.  I can’t wait (the editor lied).

--U.S. Treasury Yields

6-mo.  2.36%  2-yr. 2.82%  10-yr. 3.06%   30-yr. 3.21%

The bond market had long priced in the Fed’s latest rate hike and yields across the curve were virtually unchanged on the week.

--Last weekend, OPEC and its production allies, led by Russia, met in Algiers to reiterate that they want to adhere to current production quotas first implemented at the start of 2017.  That means continuing a gradual ramp-up in production as the producers had agreed to at the start of the summer in an effort to bring down over-compliance with the initial agreement.  But, the producers declined to announce specific plans to raise production further, defying calls by President Trump for the cartel to increase output to put a cap on prices – with oil rising sharply on Monday.  Representatives from Oman and Kuwait, for example, told reporters that producers had agreed they needed to focus on reaching 100 percent compliance with revised production cuts agreed to in June.

Trump tweeted: “We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices!  We will remember. The OPEC monopoly must get prices down now!”

In his speech to the UN General Assembly on Tuesday, Trump reiterated that he feels OPEC is “ripping off the rest of the world” by pushing oil prices higher, while upping his heated rhetoric on Iran ahead of increased U.S. sanctions being levied in November, which impacts the country’s crude exports. 

But OPEC and Russia seem reluctant to raise output to offset the potential hit to global supply.  And Saudi Energy Minister Khalid al-Falih told reporters, “I do not influence prices....My information is that the markets are adequately supplied.  I don’t know of any refiner in the world who is looking for oil and is not able to get it.”

Iran is set to lose sizeable export volumes when the new sanctions go into place Nov. 4.

Markets shrugged off Trump’s remarks and focused on the looming facts, as in oil rose sharply, with West Texas Intermediate finishing the week at $73.56.

French President Macron on Tuesday responded to President Trump’s criticism of high oil prices, saying that if he had not re-imposed sanctions on Tehran, prices would not have risen as much.  “If he goes to the end of his logic, he’ll see that it’s good for the oil price that Iran can sell it,” Macron said.  “It’s good for peace and global oil prices.  Otherwise there is an impasse in the rationale for which I don’t have the answer.  It’s an economic reality...supply and demand.”

The International Energy Agency forecast strong oil demand growth of 1.4 million barrels per day this year and 1.5 million bpd in 2019. As Phil Flynn of Price Futures in Chicago told the Wall Street Journal, “The glut is gone,” referring to U.S. oil inventories that were once as high as 536 million barrels in March 2017.  “Global oil prices are surging because we are now facing a market that is undersupplied.”

Brian Hook, Washington’s special envoy for Iran, said on Tuesday, “We will ensure prior to the re-imposition of our sanctions that we have a well-supplied oil market.”

--The Securities and Exchange Commission sued Elon Musk on Thursday, alleging that the Tesla CEO’s tweets about taking the company private at $420 a share were “false and misleading.”

In its complaint, filed in federal court in Manhattan, the SEC asks the court to, in effect, force Musk out of Tesla’s leadership by prohibiting him “from acting as an officer or director” of a publicly traded company.

The SEC also is asking the court to force Musk to pay back “any ill-gotten gains” received as the result of his slew of Aug. 7 tweets.

“Musk’s statements” – including the assertion that he had “funding secured” to take Tesla private – “were premised on a long series of baseless assumptions and were contrary to facts that Musk knew,” the suit alleges.

So Elon Musk is in big trouble. The SEC is saying he lied, multiple times.

The worst case scenario is Musk would have to pay a huge fine, and be banned from being a director at any public company in the U.S.  His days as Tesla’s CEO would be over.

Musk said in a statement: “This unjustified action by the SEC leaves me deeply saddened and disappointed.  I have always taken action in the best interests of truth, transparency and investors.  Integrity is the most important value in my life and the facts will show I never compromised this in any way.”

In its own statement, the board said it was “fully confident in Elon, his integrity, and his leadership of the company.”

Some experts believe Musk might be able to fashion a solution where he becomes chief product officer and someone else takes over as CEO.  A historically timid board must take charge at this moment.

Whatever the company and the SEC can work out, Musk will no doubt have to stay off Twitter, or get all his tweets cleared first. 

But, the SEC had crafted a settlement with Musk – approved by the agency’s commissioners – that they were prepared to file Thursday morning when Musk’s lawyers called to tell the SEC lawyers in San Francisco that they were no longer interested in the agreement.  So the SEC rushed to pull together the complaint.  Those who saw details of the initial proposal thought Musk was nuts not to take it.

The suit was filed after the market closed Thursday, the shares at $307.50.  They finished the week at $265.

--Southern California home prices kept rising in August, but sales fell 8% from Aug. 2017.  The median sales price in the six-county region rose to $535,000, up 1% from July, according to CoreLogic. The median is up 7% from a year ago, and just shy of the record $537,000 reached in June. 

--Walt Disney Co. lost out on its bid to acquire Sky PLC as part of its acquisition of 21st Century Fox Inc., with rival Comcast Corp. paying $38.8 billion, winning the unusual auction process in the UK for the European pay-TV giant.

But the sum paid benefits Disney as a minority owner of Sky. To wit:

Rupert Murdoch’s Fox then decided to sell its 39% stake in Sky to Comcast for about $15 billion, the decision made with the consent of Fox’s soon-to-be-owner Disney.

So while Disney is disappointed, at the same time, Fox’s sale of its Sky stake will help substantially pay down the amount of debt Disney is taking on in order to complete its purchase of Fox.

Disney won control of Fox in an earlier bidding battle with Comcast by offering $71.4 billion for much of Murdoch’s media empire.

In order to gain regulatory approval, Disney agreed to sell Fox’s 22 regional sports networks.

Disney will now double-down on streaming services and become a majority owner of Hulu once the Fox deal closes.  It does not have the TV operator it sought that would have given it an immediate presence in more than 23 million homes in five European countries.

--Instagram’s co-founders, Kevin Systrom and Mike Krieger, suddenly resigned on Monday, amid reported growing tension with Facebook CEO Mark Zuckerberg over the direction of Instagram.  Zuckerberg wanted the app to prioritize boosting revenue, knowing that Facebook was reaching a saturation point and could not sustain its high growth rate, analysts said.

Which did not sit well with Systrom and Krieger, who founded Instagram in 2010 and sold it to Facebook in 2012 for $1 billion – what was then seen as a shocking number, but a bargain when compared with Facebook’s purchase of WhatsApp two years later for $22 billion.

At the time of the purchase, Instagram had 31 million users, with no ads, and since then, the service has grown to more than 1 billion users and has added plenty of advertisements.

“One of the reasons the founders left is because Facebook has been forcing them to modify the site to maximize revenue for the last several years, and they feel dictated to rather than in complete control,” said Wedbush Securities analyst Michael Pachter  “That’s the selling entrepreneur’s lament: if you take the money, you answer to a new boss.”  [Los Angeles Times]

In a prepared statement, the founders said they were “ready for [their] next chapter” and were grateful for the six years they spent at Facebook.

“We’re planning on taking some time off to explore our curiosity and creativity again,” Systrom said.  “Building new things requires that we step back, understand what inspires us and match that with what the world needs; that’s what we plan to do.”

In his statement, Zuckerberg said:

“Kevin and Mike are extraordinary product leaders and Instagram reflects their combined creative talents. I wish them all the best and I’m looking forward to seeing what they build next.”

On the week, Facebook shares finished nearly unchanged...

But I found the comment of Jason Schloetzer, a professor at Georgetown University’s McDonough School of Business, telling:

“There’s a little overreaction to these two gentlemen leaving Instagram. They’re obviously important as founders of the Instagram concept, but Facebook has been able to digest what Instagram does and how it works since acquiring it. Facebook is more than capable of finding people internally who can competently operate the company after the founders’ departure.”

Meanwhile, Facebook on Friday said an attack on its computer network led to the exposure of information from nearly 50 million of its users.  The company discovered the breach earlier this week, finding that attackers had exploited a feature in Facebook’s code that allowed them to take over user accounts.  Facebook fixed the vulnerability and notified law enforcement officials.

--Nike posted a 10% increase in sales during its fiscal first quarter ending Aug. 31, riding strong consumer spending, both here and abroad, with healthy demand for its sneakers and athletic apparel.

Revenue in Nike’s North American market, which accounts for about 40% of total sales, increased 6%, including a 5% increase in the footwear business and an 8% rise in apparel.

Analysts are expecting stronger results in the fiscal second quarter, thanks to the 30th anniversary “Just Do It” campaign, featuring Colin Kaepernick...the ad having been unveiled after the August quarter ended.

But the shares weakened on simple profit taking, as the stock had gained more than 50% in the past year.

--One of my favorite retailers, Bed Bath & Beyond, saw its shares fall sharply on Wednesday after second-quarter earnings fell short of estimates.  Sales were flat at $2.94 billion, also less than expected.

For the sixth straight quarter, same-store sales declined, dropping 0.6 percent, rather than the slight increase the Street was looking for.  It’s disappointing, given the otherwise robust consumer economy where spending on homewares and home-related products has been strong.

The shares fell 15 percent on the day.

--Barrick Gold Corp. agreed to buy Randgold Resources Ltd. for $6 billion in an all-share merger that will solidify Barrick as the world’s largest gold company by production, with a dominant position in Africa.

Barrick shareholders will own 67% of the combined company, and Randgold investors will own 33%, the companies said Monday.

Both companies are led by dynamic executives with the same vision; a focus for keeping costs in check and reining in debt.

--Pharmaceuticals group Novartis announced it was cutting more than 2,000 jobs, 1,700 of which will be in Switzerland, where the company is based; part of a program announced in 2016 to achieve $1bn in annual cost savings in its production network by 2020.  Novartis has announced it is moving away from high volume drug production towards more specialized and personalized medicines.

Previously, Novartis announced cuts to its operations in the U.S. and Japan.

--Chinese tourism to the U.S. is set to fall sharply in next week’s National Day holidays (“Golden Week”), as there has been a dramatic 42 percent decrease in flight bookings from China compared with last year’s holiday period.

According to travel fare search engine Skyscanner, the first three quarters of 2018  have seen a 16.7 percent drop in flight bookings from China to the U.S.  [South China Morning Post]

--Sirius XM Holdings Inc. said on Monday it would buy music-streaming service provider Pandora Media Inc. in an all-stock deal valued at about $3.5 billion.

--The company behind Arby’s will buy drive-in burger chain Sonic in a deal announced Tuesday.

Inspire Brands, which took over Buffalo Wild Wings last year, will acquire Sonic for $2.3 billion including debt, the company said in a statement.

The purchase adds to Inspire’s collection of restaurants that includes, alongside Arby’s and Buffalo Wild Wings, Mexican food chain Rusty Taco.

The Sonic purchase plays into Inspire’s overall strategy of acquiring distinct, dissimilar brands, the company said.  Known for burgers, hot dogs and specialty drinks, Sonic brings elements not present at Arby’s or Rusty Taco, while operating outside of the fast-casual realm where Buffalo Wild Wings exists.

Sonic’s stock rose more than 18 percent Tuesday, hitting an all-time high.

Sonic’s $4.4 billion in sales last year topped well-known brands including Dairy Queen, Five Guys and Hardee’s, according to Fortune, citing statistics from Nation’s Restaurant News.

--Mars Incorporated announced Tuesday it will roll out M&M’s Chocolate Bars and a new flavor – hazelnut spread – for its popular treats.

The chocolate bars will be made of smooth milk chocolate with whole M&M’s Minis. They will launch in December in five flavors: peanut, milk chocolate, crispy, almond and crispy mint.

Mmmm.

And Mars is adding a new flavor to the traditional M&M’s candy: hazelnut spread.  These candies will include the classic milk chocolate coating with a center containing hazelnut.

--Meanwhile, it’s official: Dunkin’ is dropping Donuts – in name only.

The food chain announced Tuesday it will rebrand as simply Dunkin’, with the change starting in January.

But it’s not dropping the breakfast staple that helped make the chain famous.  The top retailer of donuts in the U.S. sells 2.9 billion a year worldwide.  Your editor is responsible for 312 of these, Sundays the exception.

Dunkin’ has been diversifying its food and beverage lineup for years, but Tony Weisman, U.S. chief marketing officer at Dunkin’, said in a statement.

“By simplifying and modernizing our name, while still paying homage to our heritage, we have an opportunity to create an incredible new energy for Dunkin’, both in and outside our stores.”

--Michael Kors Holdings Ltd. announced on Tuesday it had agreed to pay $2.12 billion for the Italian luxury brand founded by Gianni Versace, furthering the U.S. company’s ambition of becoming a global luxury fashion group.

The deal marks one of the first attempts by an American fashion company to run an elite European brand.  Once it closes, Michael Kors will change its name to Capri Holdings Ltd. and trade under the symbol CPRI.  In addition to its namesake handbags, the company owns high-end shoemaker Jimmy Choo, which it acquired for $1.2 billion in 2017.

--The New York City hotel market is bouncing back amid the growing economy and a surge in visitors, which has helped overcome years of construction that flooded the market with new hotels that pressured room rates.

For the first eight months of the year, according to data provider STR, hotels in Gotham are enjoying their highest occupancy rates since 2000, while revenue per room has grown at the fastest rate since 2013.  Room rates rose 3.2% over last year, ending a three-year streak of declining room rates, according to STR. 

In terms of visitors to New York, in 2017, there were 62.8 million, the eighth consecutive year of record-breaking tourism.  NYC & Co., a tourism and marketing organization for the city, is forecasting another record of 65.1 million visitors for this year, including 13.7 million coming from abroad.  Corporate travelers are also back.

The New York hotel market is still by some measures, though, behind the highs it hit before the financial crisis in 2008, with the average room rate for the second quarter roughly $20 below the level right before the crisis.  [Mengqi Sun / Wall Street Journal]

--Broadcast network news continued to see its viewership slip, the 2017-18 television season ending last week.  Only one daily program, “ABC World News Tonight With David Muir,” showed year-to-year growth, according to data released Tuesday by Nielsen.

Every other daily news franchise on ABC, CBS and NBC posted year-to-year audience declines, as more people turned to cable outlets and online sources for their news.

But NBC News can tout that its “Today,” “NBC Nightly News With Lester Holt” and Sunday’s “Meet the Press” all ranked first among viewers in the 25-to-54 age group coveted by advertisers.  On the three morning shows alone, advertisers spend about $1 billion annually.

Among overall viewers, ABC’s “Good Morning America” averaged 4.15 million viewers for the season, toping NBC’s “Today” (4.07 million) and “CBS This Morning” (3.31 million).

“CBS This Morning” lost 7% of its audience compared with the previous season. The drop was linked to the abrupt departure of former co-anchor Charlie Rose, who was fired in November over sexual harassment allegations.

“Today” lost Matt Lauer, its co-anchor of 20 years, after he was fired for inappropriate workplace behavior during this time, though “Today” lost only 3% of its viewers, buoyed by a boost from the network’s Olympics coverage.  But the audience for “Today” is the smallest in 27 years.

In the evening news race, ABC’s Muir averaged 8.6 million viewers; “NBC Nightly News With Lester Holt” was down 1% to 8.15 million viewers; “CBS Evening News With Jeff Glor” was third with 6.2 million, down 5% from the previous season.

But...the New York Post reported that “Industry insiders are accusing ABC of dirty tricks in the war for network news dominance.

“In 2015 – when their evening news broadcasts were locked in a tight battle for the top spot – NBC got caught double-dipping to boost ratings by re-airing the ‘Nightly News’ at 2 a.m. and then adding the viewers for both broadcasts together.

“Now, with the two networks’ numbers once again locked in close combat, ratings wonks have noticed that ABC has – without fanfare – begun airing ‘World News Tonight’ in LA at 3:30 p.m. (that is, when it airs live at 6:30 p.m. on the East Coast), then also airing the normal taped version at 6:30 p.m. LA time.

“ABC touted a major victory Tuesday, when new Nielsen numbers showed that Muir has grabbed the most overall viewers for a second year in a row.

“But insiders believe that by quietly adding a second broadcast in LA – the second-largest TV market in the country – back in July, the network has goosed those figures.”

--50 years ago, September 30, 1968, Boeing rolled out the 747 Jumbo Jet, the biggest passenger plane the world had seen to date, 231 feet long, wings spanning 196 feet and seats for 490.  Boy, what a game changer it was, with TWA and Pan Am, and then United, the first to use it to expand services to Europe, and elsewhere. The market to Hawaii, for one, boomed.  It was perhaps the most dependable aircraft of all time (Capt. Bobby C. weigh in when you get a chance).  The 747 was only just recently retired for good on the commercial side by the last U.S. airline, Delta, though a final number of 747 air freighters are being manufactured, and British Airways continues to fly 747s commercially, along with numerous other foreign carriers.

Foreign Affairs

Iran: Supreme Leader Ayatollah Ali Khamenei said on Monday that a weekend attack that killed 25 people at a military parade was paid for by Saudi Arabia and the United Arab Emirates, and that Iran would “severely punish” those behind the bloodshed.  The deputy head of Iran’s Revolutionary Guards also accused the United States and Israel of involvement and he said they should expect a devastating response from Tehran.

Twelve members of the elite Islamic Revolutionary Guard Corps were among the 25 dead.  Gunmen fired on a viewing stand in Ahvaz, where Iranian officials had gathered to watch an annual parade marking the start of Iran’s 1980-88 war with Iraq.  Iran’s Fars news agency said on Monday that five attackers were killed in the attack.

“Based on reports, this cowardly act was done by people who the Americans come to help when they are trapped in Syria and Iraq, and are paid by Saudi Arabia and the UAE,” Khamenei said on his official website.

Editorial / The Economist

“It is clear whom President Donald Trump blames for the Middle East’s problems.  Iran’s ‘corrupt dictatorship,’ he told the UN General Assembly on September 25th, ‘sows chaos, death and disruption’ in the region.  It used the economic benefits of its deal with America and other world powers, which curbed Iran’s nuclear program in return for sanctions relief, to raise military spending and support terrorism, he claimed. So his administration pulled America out of the deal in May and launched ‘a campaign of economic pressure to deny the regime the funds it needs to advance its bloody agenda.’

“Iran, has responded, as usual, with defiance.  Hassan Rouhani, its president, insisted he would not meet Mr. Trump, denounced his ‘xenophobic tendencies resembling a Nazi disposition’ and predicted victory over America. ‘The end of this war will be sweeter than the end of the eight-year war,’ said Mr. Rouhani, referring to Iran’s’ war with Iraq in the 1980s, which left 600,000 Iranians dead.  Though considered a pragmatist, he sounds much like Iran’s hardliners, who opposed his nuclear deal and see no room for compromise with America.

“Mr. Trump, though, is not the only one challenging the regime... Two different groups claimed responsibility (for the Sept. 22 attack). The first was a splinter of a local Arab separatist group, the Arab Struggle Movement for the Liberation of Ahvaz.  But the Islamic State group, which a year ago stormed Iran’s parliament in Tehran, then promptly claimed the attack too, perhaps lying to boost its stature.  The regime quickly, and with no hard evidence, blamed America and its regional ‘puppets’ – Saudi Arabia, the United Arab Emirates (UAE) and Israel.

“Iranian officials are fond of lurid conspiracy theories, but it is not hard to see why they suspect outsiders.  Khuzestan is home to some 2m Arabs (most Iranians are Persian).  In recent years Arab broadcasters have stoked up coverage of Iranian minorities, keenly supporting Arabs ‘under occupation by Persian forces.’...One of the groups that claimed responsibility for the attack did so through Iran International, a television station based in Britain and funded by Saudi investors.  Last year Muhammad bin Salman, Saudi Arabia’s crown prince and de facto ruler, promised to take his country’s fight ‘inside Iran.’

“In Iran’s eyes this Arab offensive is part of a broader, ominous front.  Saudi Arabia and the UAE have set aside their differences with Israel in order to take on Iran, a shared enemy. The White House is now full of officials who have spent much of their careers calling for regime change in Iran. Some senior members of Mr. Trump’s team have supported the Mujahideen-e-Khalq, a cult-like dissident group that was until recently considered a terrorist organization in Europe and America, and provokes revulsion even among reform-minded Iranians....

“Iran’s sense of siege is likely to grow.  On November 4th America will impose new sanctions aimed at Iran’s oil industry.  As a result, Japan, South Korea, Sri Lanka and European countries plan to slash oil imports from Iran.  America might offer cheap oil from its own reserves to induce India to follow....Iran is seeking help from Russia and China. But Russia has gleefully filled the gap left by Iran in the oil market, while China is focused on its trade war with America....

“Years of sanctions have made Iran develop a ‘resistance economy,’ which is diverse and in many areas self-sufficient.  Prices of basics have risen, but by far less than they might have if Iran depended on imports. Cynics note that although the falling rial makes people poorer, it makes the government stronger, since Iran earns its oil revenue in foreign currency. Its reserves can survive two more years of Mr. Trump, says Mr. Rouhani.  But suffering Iranians may prove a bigger threat to the regime.”

President Rouhani told the General Assembly that it is ironic that the U.S. government does not even conceal its plans for overthrowing the same government it invites to talks.

Rouhani said that the Trump administration is determined to make all international forums “irrelevant” and is trying to initiate regime change in Iran, despite its denials of doing so.

“The economic war that the United States has initiated under the rubric of new sanctions not only targets the Iranian people but also entails harmful repercussions for the people of other countries, and that war has caused a disruption in the state of global trade,” Rouhani said.  “What Iran says is clear: no war, no sanctions, no threats, no bullying; just acting according to the law and the fulfillment of obligations.”

But Rouhani added: “The security of the Persian Gulf and the Strait of Hormuz has always been important for us...we will confront any and all disruptive efforts in this critical waterway in the future.”

In Trump’s speech to the UN the day before, Tuesday, he sharply criticized Iran, saying that “every solution to the humanitarian crisis in Syria must include a strategy to address the corrupt dictatorship in Iran.  Iran’s leaders sow chaos, death and destruction in Syria,” Trump said, adding that “they do not respect their neighbors and borders. Iran’s leaders plunder the nation’s resources to spread mayhem across the Middle East and far beyond.”

“The dictatorship used the funds released by the deal to finance terrorism and fund havoc and slaughter in Syria and Yemen,” Trump said.

“We will deny the regime the funds it needs to advance its bloody agenda. We re-imposed hard hitting sanctions that were lifted.  More sanctions will follow.  We are working with countries that import Iranian oil to cut their purchase substantially,” he said, adding that “we cannot allow a regime that chants death to America and that threatens Israel, to possess the means to deliver a nuclear warhead to any city in the world.”

Meanwhile, Israeli Prime Minister Benjamin Netanyahu on Thursday revealed that Iran had a ‘secret atomic warehouse’ in Tehran – a facility that he said proves the Islamic Republic is still developing nuclear weapons.

“Today I am disclosing for the first time that Iran has another secret facility in Tehran, a secret atomic warehouse for storing massive amounts of equipment and materiel from Iran’s secret nuclear program,” Netanyahu said in an address to the UN General Assembly.

Netanyahu said the site contains technology for the country’s nuclear program, adding that Iran “took this radioactive material and spread it around Tehran like Nutella” to try to hide it.  Using maps and photos, Netanyahu said the facility was hidden as a rug-cleaning operation.

Iranian officials, he said, had started cleaning out the warehouse, but still have “at least 15 ship containers, they’re gigantic, 15 ship containers full of nuclear-related equipment and materials stored there.”

Netanyahu called on the International Atomic Energy Agency to inspect the facility immediately.

“Do the right thing. Go and inspect; go and investigate,” he said.  “The reason Iran did not destroy its atomic facility and warehouse is because it is not finished with them.”

The Israeli prime minister then took on European leaders for appeasing Tehran by continuing to stick to the parameters of the 2015 Iran nuclear deal.

“Have these European leaders learnt nothing from history?” he said.  “Will they ever wake up?”

The European Union on Monday decided to set up a new mechanism to enable legal trade with Iran without encountering U.S. sanctions.

The EU will create new payment channels to preserve oil and other business deals with Iran, Federica Mogherini, the bloc’s foreign policy chief said, in a bid to evade U.S. punitive measures.

Mogherini’s announcement came after a meeting with foreign ministers from Britain, France, Germany, Russia, China, and Iran on the sidelines of the United Nations General Assembly in New York.

“In practical terms this will mean that EU member states will set up a legal entity to facilitate legitimate financial transactions with Iran and this will allow European companies to continue to trade with Iran in accordance with European Union law and could be open to other partners in the world,” she told reporters after the closed-door meeting.

The EU, along with Russia and China, said in a joint statement that the so-called “Special Purpose Vehicle” will “assist and reassure economic operators pursuing legitimate business with Iran.”

Secretary of State Mike Pompeo condemned the plan as “one of the most counterproductive measures imaginable.”

National Security Adviser John Bolton said the “murderous regime” of “mullahs in Tehran” would face significant consequences if they continued to “lie, cheat and deceive.”

“If you cross us, our allies, or our partners; if you harm our citizens,” he said, “there will indeed be hell to pay.”

Syria: The aforementioned Mr. Bolton said on Monday that Russian plans to supply Syria with a S-300 missile system would be a “significant escalation” by Moscow and hopes it will reconsider. Russia announced on Monday it will supply the surface-to-air missile system to Syria in two weeks against strong Israeli objections, a week after Moscow blamed Israel for indirectly causing the downing of a Russian military plane in Syria.

Russian Defense Minister Sergei Shoigu said the delivery of the system would be within two weeks.  Shoigu said the delivery of the S-300 had been suspended in 2013 following a request from Israel, but added: “Now, the situation has changed. And it’s not our fault.”

Editorial / Wall Street Journal

“The Kremlin justified the decision after Syrian air defenses shot down a Russian reconnaissance plane last week, killing 15 Russians on board.  The Syrian missiles were defending against Israeli planes that were bombing Iranian targets in Syria. The S-300 system is less likely to target Russian aircraft by mistake, but it is also far more lethal and will be a major threat to Israeli aircraft.

“Israel is frequently sending planes into Syrian airspace to slow Iran’s relentless efforts to establish a military presence. Bashar Assad’s regime doesn’t object because Iran’s Revolutionary Guard Corps and Russia helped turn the tide of the Syrian civil war.  Iran wants permanent bases for weapons and militia fighters to extend its imperial reach and directly threaten Israel when the next inevitable war begins. Israel can’t tolerate that buildup, especially with Hezbollah in nearby Lebanon having an arsenal of missiles estimated to be as large as 150,000.

“The U.S. and Israeli Prime Minister Benjamin Netanyahu have been trying to persuade Mr. Putin to distance the country from Iran, to little effect.  Israel will no doubt try to avoid accidents that harm Russian forces, but the Jewish state has no choice but to prevent a Revolutionary Guard beachhead on its border. The S-300 sale is one more indication that Mr. Putin wants to make trouble for the U.S. and its allies.”

Israel: Palestinian President Mahmoud Abbas on Thursday called on the United States to reverse its recognition of Jerusalem as Israel’s capital and cuts in aid to the Palestinians, saying these had undermined the two-state solution to the conflict.  “With all of these decisions, this administration has reneged on all previous U.S. commitments, and has undermined the two-state solution,” Abbas said in his address to the UN General Assembly.  “I renew my call to President Trump to rescind his decisions and decrees regarding Jerusalem, refugees and settlements.”

The last Israeli-Palestinian peace talks collapsed in 2014 and no one really believes President Trump can secure what he has called the “ultimate deal” since he recognized Jerusalem as Israel’s capital in December and moved the U.S. Embassy there in May. The Palestinians want to establish a state in the West Bank and the Gaza Strip, with East Jerusalem as its capital.  Israel annexed those territories in the 1967 Middle East war and annexed East Jerusalem in a move not recognized internationally.

Israeli Dense Minister Avigdor Lieberman criticized Abbas’ speech, saying, “Instead of responding to the outstretched hand of Israel and the United States, the only thing that interests (him) is to settle scores and drive the region toward confrontation.”

On Wednesday, President Trump said he wanted a two-state solution to resolve the conflict, and that he’d unveil a peace plan in the next two to three months.

North Korea: Russian Foreign Minister Sergei Lavrov proposed at the UN Security Council that the United Nations ease its sanctions against Pyongyang, which runs directly counter to the U.S. demand that countries maintain strong economic pressure aimed at forcing the country to give up its nuclear weapons.

While the U.S. could veto any proposal to lift sanctions, Lavrov’s remarks undermined a united international message to North Korea at a time when the U.S. and UN have found lapses and leaks in sanctions enforcement world-wide.

Secretary of State Pompeo announced plans to travel to Pyongyang in October to set up another summit between President Trump and North Korean leader Kim Jong Un.  But the U.S. has said international sanctions must remain in place to ensure North Korea’s continued cooperation.

Meanwhile, on Wednesday, President Trump told the Security Council that many positive things were happening behind the scenes on North Korea, “away from the media.”

“So I think you will have some very good news coming from North Korea in the coming months and years.”

Trump said Kim had reaffirmed his commitment to complete denuclearization to him directly in a “very strong letter form.”

“I think we will make a deal,” said the president.  “But, unfortunately, to ensure this progress continues, we must enforce existing UN Security Council resolutions until denuclearization occurs,” Trump said.

The bottom line is that Kim won’t allow for international inspections of his main nuclear site without “corresponding measures.” South Korean President Moon Jae-in, who has led efforts to encourage U.S.-North Korean talks, said on Tuesday that Kim told him last week the measures he was seeking were security guarantees Trump pledged in Singapore and moves toward normalization of relations with Washington. Moon said declaring a formal end to the 1950-53 Korean War would encourage North Korea to move further with denuclearization and a timetable for such steps would be a task for a second Trump-Kim summit.

China: China’s senior diplomat has demanded the U.S. stop viewing China with a cold war mentality to keep the Sino-U.S. bilateral ties on a healthy track as tensions between the two sides continue to rise.

Foreign Minister Want Yi made the comments to former U.S. Secretary of State Henry Kissinger during a meeting on the sidelines of the UN General Assembly.

The meeting came a day after Wang warned U.S. business representatives that Washington was putting four decades of gains in the Sino-U.S. relationship at risk of “total destruction.”

“China and the U.S. can have competition, but they should not view others with a cold war mentality,” Wang said in a foreign ministry statement.

“There are some forces in the U.S. recently frequently smearing China and creating antagonistic sentiment, which has caused serious damage to China-U.S. relations.”

China demanded the United States “dispel obstacles” to improving military ties and stop slandering it, amid growing tensions over trade, Taiwan, the South China Sea and President Trump’s claims of China meddling in the upcoming U.S. elections.  Trump on Wednesday accused China of seeking to interfere in the midterms, saying that Beijing did not want him or the Republicans to do well because of his stance on trade.

On Saturday, China summoned the U.S. ambassador in Beijing and postponed joint military talks to protest Washington’s decision to sanction a Chinese military agency and its director for buying Russian fighter jets and a surface-to-air missile system.

Beijing also denied a request for a U.S. warship to visit Hong Kong.

Foreign Ministry spokesman Geng Shuang reiterated a denial of Trump’s accusation that Beijing is trying to influence the U.S. congressional elections in November.

“We advise the United States to stop this unceasing criticism and slander of China,” Geng said.  “Stop these wrong words and deeds that damage bilateral relations and the basic interests of both countries’ peoples.”

Josh Rogin / Washington Post

“The Horn of Africa has become a strategic linchpin for the United States, so the fact that China has dramatically escalated its involvement there presents a daunting challenge for U.S. policymakers.  Nowhere is this more evident than in the tiny country of Djibouti, where Beijing is aggressively expanding its influence. When China opened its first overseas military base in Djibouti last year, Washington took a wait-and-see approach.  The United States, Japan, France and Italy all have bases in the area, so the Chinese military presence was a test case of whether Beijing’s military expansion in Africa would be an opportunity for cooperation or a source of potential conflict. A year later, the verdict is increasingly clear.

“The Chinese military base is only one part of a steady encroachment into Djibouti that now threatens the diplomatic and national security interests of the United States and its allies....

“(Beijing’s) military activities in Djibouti are of increasing concern. The U.S. base there is a key launching pad for anti-terrorism and intelligence operations against the Islamic State, al-Qaeda, al-Shabab and Boko Haram. The United States in May publicly accused China of using high-grade lasers to repeatedly attack U.S. pilots operating out of that base.

“That prompted Congress to pass legislation last month that includes language requiring the Pentagon to provide a formal assessment of China’s military presence in Djibouti and the threat it poses to U.S. military personnel....

“Over the past five years, China’s official arms sales to Africa have increased by 55 percent and its share of the African arms market has doubled to 17 percent, surpassing the United States, according to the Stockholm International Peace Research Institute.  There is also growing evidence that Djibouti is emerging as a strategic transit node for illegal weapons smuggled between Yemen and places such as Somalia.

“The Chinese government has a long history of fueling instability in Africa by trading in weapons with rogue regimes....

“What’s new is that, under President Xi Jinping, Beijing now has the power, influence and intention to combine its economic, diplomatic and military interference in Africa to wide-ranging effect.”

Thomas L. Friedman / New York Times

“Historically the U.S. could dominate the global scene and check a rising power like China, and set the global rules, with just our sheer physical mass – more money, more troops, more naval ships, more top-10 companies, more scientists and more universities. That is just not possible any longer, as China has become both big and smart in more and more areas. But all is not lost.

“It happens that we have three huge assets that China doesn’t have, and is unlikely to acquire them anytime soon. We should be doubling down on our strengths: immigration, allies and values. Instead, Trump is squandering them....

“China can’t attract the best and brightest Indian, Israeli, Arab, French, Brazilian and Korean immigrants, but we still can. So why would we put out a sign saying ‘Go Away’ or make it harder for their students to stay here?

“Also, we have real allies in a way China does not. China has clients, customers and frightened neighbors.  It does not have real partners like Canada and Mexico. It doesn’t have the whole Atlantic alliance with the European Union or tight relations with Japan South Korea, Singapore and Australia – which we can leverage if we aren’t doing stupid stuff, like slapping them with steel tariffs or tearing up the Trans-Pacific Partnership.

“Finally, as a society, we stand for things – or at least we used to stand for things – values people admire, about the dignity of human beings, the rights of minorities and women and the virtues of freedom and the rules for fair play.

“Our nation has never been just a beacon for profit-making, which only measured countries by their trade balance with us.  Our values attracted people to our shores and helped us spread our rules onto the wider world.  When Trump tore up the TPP trade deal I’m certain that he actually disappointed China’s economic reformers, who wanted to use the pact to create pressures inside China to reform.

“In short, a strategic president wouldn’t squander our strengths but would reinforce them by creating a stronger global network of people and countries that share our values. We won the Cold War with a strategy of containment and bankrupting the Soviet Union by outspending the Kremlin on defense. But we will ‘win’ this standoff with China, not by brute force alone, or by containment of China’s giant economy, but by ‘entanglement’ – entanglement of Chinese students with our schools, Chinese businesses with our values, and the Chinese government with our allies. That is, with the broad alliances and global institutions, and their rules of fair play, that we’ve been part of since World War II.

“So we have to fight for those rules, and China will fight for its versions. But ultimately, a believe, the U.S. and China together will have to play the role that the U.S. played alone after World War II – to define the rules of the new international order, from A.I. to privacy to trade.  And our weight in that process – we must never forget – will depend on the talent we attract, the allies we rally and the values we embrace and promote.”

Russia: The real identity of one of the men wanted by Britain for the Salisbury nerve agent attack on former Russian spy Sergei Skripal and his daughter is Anatoliy Vladimirovich Chepiga, according to media reports on Wednesday which said he was a decorated Russian colonel.

Earlier this month, British prosecutors charged two Russians – Alexander Petrov and Ruslan Boshirov – with attempted murder for the Novichok poisoning of the Skripals but said they believed the suspects had been using aliases to enter Britain.

Random Musings

--Presidential tracking polls...

Gallup: 40% approval of President Trump’s job performance, 56% disapproval (Sept. 23). 87% of Republicans approve, 34% of Independents.
Rasmussen: 47% approval, 51% disapproval (Sept. 28).

--A new NPR/PBS NewsHour/Marist national poll had President Trump with a 42% approval rating (up 3 points from two weeks earlier), 49% disapproval (down 3 points).  87% of Republicans approve, but Independents are at 44%, 10 points higher than the Gallup survey.

The NPR/PBS/Marist survey has had Trump at a 37% to 42% approval rating all year.

--According to a Gallup poll, 45 percent of Americans now have a favorable view of the Republican Party, a nine-point gain from last September’s 36 percent.  44 percent give the Democratic Party a favorable rating.  Since Barack Obama’s election as president in November 2008, Republicans have been rated less positively than Democrats over this time.

--Quinnipiac University’s poll center had some interesting numbers for the two key races in Florida.

Among likely voters in the state, Democratic incumbent Sen. Bill Nelson held a 53-46 lead over Gov. Rick Scott, the Republican challenger.  Women back Sen. Nelson 58-41 percent.

And in the gubernatorial race, Tallahassee Mayor Andrew Gillum, the Democrat, leads former U.S. Rep. Ron DeSantis 54-45.  Women back the Democrat in this one 59-39.  Independents back Gillum 56-40 percent.

--Bill Cosby was given a three-to-10 year prison sentence on Tuesday for drugging and sexually assaulting a woman, Andrea Constand, at his home 14 years ago, completing a spectacular fall from the heights of stardom, and putting an exclamation point on the first major conviction of the #MeToo era.

Judge Steven T. O’Neill of Montgomery County, Pa., said, “It is time for justice, Mr. Cosby, this has all circled back to you. The day has come. The time has come.”

--Southern Californians will remember the summer of 2018 for its sweltering temperatures and destructive wildfires, but also for a stretch  of 87 consecutive days where the region violated federal smog standards, the longest stretch of bad air in at least 20 years, according to state monitoring data and the Los Angeles Times.

The ozone pollution spell began  June 19 and continued through July and August, on to Sept. 14, when air pollution dipped to “moderate” levels.

--Pope Francis on Tuesday defended a landmark deal between the Vatican and China on the appointment of bishops, saying he, and not the Beijing government, will have the final say on who is named.

On a flight back from Estonia after the final leg of his visit to the Baltic states, Francis made his first public comments on the deal signed in Beijing on Saturday, telling reporters that while he realizes not everyone will understand the logic behind the agreement, he was confident in the “great faith” of Chinese Catholics.

“It’s not (that the government) names them.  It is a dialogue. But the pope will appoint them.  Let that be clear,” the Pope said of the deal, which was more than 10 years in the making.

The deal gives the Vatican a say in the choice of bishops in China, though to me it’s a sellout.

Consider that in the future, new bishops will first have to be proposed by members of local Catholic communities together with Chinese authorities.  The names of candidates will be sent to the Vatican.

Well, of course, the key in the equation is “Chinese authorities.”

I’m ticked at the Pope.  About six million Chinese Catholics have had to operate within an underground church, swearing loyalty to the Vatican, and an equal number in the state-supervised Catholic Patriotic Association.

And as part of the Pope’s deal with the Commies, he is recognizing the legitimacy of the seven remaining state-appointed Chinese bishops who had been named without papal approval.

And now, watch what happens with Taiwan.  The Vatican is one of the 17 remaining states Taiwan has formal relations with and the only one in Europe.

If the Vatican, as seems now imminent, recognizes Beijing and a resumption in diplomatic relations, tossing aside Taiwan, that would be a travesty.

86-year-old Cardinal Joseph Zen, the former archbishop of Hong Kong, told Reuters this week:

“They’re giving the flock into the mouths of the wolves.  It’s an incredible betrayal.”

Separately, Pope Francis acknowledged Tuesday that the sex abuse scandals rocking the Church have outraged the faithful and are driving them away. Francis told a gathering of young people  in Estonia, considered one of the least religious countries in the world, that he knew many young people felt the church had nothing to offer them and simply doesn’t understand their problems today.

Francis said the Catholic Church wants to respond to the complaints transparently and honestly.

“We ourselves need to be converted,” he said.  “We have to realize that in order to stand by your side we need to change many situations that, in the end, put you off.”

--A new FBI report found that roughly 40 percent of the nation’s slayings went unsolved last year.

The bureau looked at 2017 crime and arrest data from 16,000 law enforcement agencies across the country and found that only 61.6 percent of reported murders were “cleared”...38.4 percent of the 15,657 murders reported nationwide unsolved, according to FBI data.

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

God bless America.

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Gold $1196
Oil $73.56

Returns for the week 9/24-9/28

Dow Jones  -1.1%  [26548]
S&P 500  -0.5%  [2913]
S&P MidCap  -1.1%
Russell 2000  -0.9%
Nasdaq  +0.7%  [8046]

Returns for the period 1/1/18-9/28/18

Dow Jones  +7.0%
S&P 500  +9.0%
S&P MidCap  +6.3%
Russell 2000  +10.5%
Nasdaq  +16.6%

Bulls N/A...59.0/18.1 the prior week
Bears

Have a great week.

Brian Trumbore