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11/03/2018

For the week 10/29-11/2

[Posted 11:45 PM ET]

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Edition 1,021

Following today’s strong jobs report for October, President Trump tweeted: “Wow! The U.S. added 250,000 Jobs in October – and this was despite the hurricanes.  Unemployment at 3.7%. Wages UP!  These are incredible numbers.  Keep it going, Vote Republican!”

Yes, the numbers were solid, as I’ll detail further below, and the market recovered some from its October swoon, save for today.

As we approach Tuesday’s vote, though, there are many Republicans, such as yours truly, who wonder why the president didn’t just hammer home the positive economic news the past few weeks and instead changed the subject to immigration.

But did the president’s strategy work?

If you had to pick one state that is key in setting the tone, it’s probably Florida.

There was some fascinating CNN/SSRS data Thursday that showed that both the Florida gubernatorial and Senate races were now toss-ups when the Democrat had a decent lead in both just ten days ago. 

Specifically, Democrat Andrew Gillum was ahead of Republican challenger Ron DeSantis for governor, 49-48 (a statistical dead heat), while in the Senate race, Democrat Bill Nelson led Republican Rick Scott 49-47 (ditto).

At the same time, President Trump’s approval rating in Florida rose from 43% to 47% since mid-October, so was this the immigration strategy, the economic numbers, or both?  [This is where Tuesday’s exit polling can be very useful.]

Separately, in Tennessee, where there is a heated Senate race between Republican Marsha Blackburn and Democrat Phil Bredesen, Blackburn now has a 49-45 lead, according to CNN/SSRS, when for much of the time Bredesen has led.  Here, President Trump’s approval rating has risen to 53% vs. 49% in September.

One man I look to when it comes to gauging the national picture is Larry Sabato, the head of the University of Virginia’s Center for Politics, and he told the Washington Post on Monday:

“Our current hard count in the House is 212 D, 202 R, 21 toss-ups.  Neither party is over 218, a majority.  Democrats have the better chance to go over the top, since 20 of 21 tossups are currently held by the GOP. That doesn’t guarantee that the Democrats actually will.”

“In the Senate,” Sabato notes, “we currently have Rs at 50 – all they need to control with Pence – Dems at 45, with 5 toss-ups.”

“For Dems to win 51, they’d have to sweep the toss-ups, and switch a GOP seat such as Tennessee or Texas.  Not impossible but the equivalent of an inside straight.”

A new poll by Quinnipiac University, incidentally, had Texas Republican Sen. Ted Cruz leading his Democratic challenger Beto O’Rourke, 51-46.

Virtually most are in agreement.  Republicans will retain the Senate, Democrats will take the House.  But a lot of folks were wrong in 2016.  I just want the election to be over so, err, we can move on to 2020!!!

One other point....

Turnout Tuesday, by all indications, is going to rival a presidential election.  I thought it was interesting that in a local NBC News report on my state of New Jersey, there were at least five times more mail-in ballots already received as of Thursday in two large counties as in 2016 (me being one of them).  That’s surely an indicator of interest.  Early voting returns across the country are way up, it seems.

But an NBC News / Univ. of Chicago poll of millennials, nationwide, found 59% of them are unfamiliar with their congressional candidates.   At the same time, 59% disapprove of President Trump’s performance, 24% approve.  Democrats need them to vote...but they never do!  So is this year finally different?

[A separate Harvard University Kennedy School of Government survey, on the other hand, says Millennials are likelier to vote this year than they were in 2014 and 2010, with 40 percent of voters under 30 saying they will definitely vote this year – 54 percent of  Democrats, 43 percent of Republicans and 24 percent of independents.  In this one, President Trump has a 26 percent approval rating.]

---

But I want to spend a little time on a two-part documentary PBS’ “Frontline” ran on Facebook, Tuesday and Wednesday. [You can find it on their site, if not now, then shortly.]

There is no better program on the air than “Frontline.”  I always try to catch its shows on foreign policy topics and it has done some phenomenal work on items such as the Rwandan genocide and the Moscow apartment bombings that Vladimir Putin was responsible for.  Every American, especially every high school student, should watch both of those.

Add this Facebook two-parter to the list.  Yes, “60 Minutes” had a good segment on the social media network, but that was for about 28 minutes.  “Frontline” did two hours and no one gets more people of influence to speak than the producers of this program do.  Plug Frontline into my search engine and you’ll come up with a ton of stuff.

But the Facebook expose is devastating.  Yes, the market didn’t react to it, and “Frontline” has nowhere near the audience “60 Minutes” has.  But influential people watch it.  And I’d be shocked if Facebook executives aren’t hauled back before a Congress armed with far more knowledge than they had before.

Personally, after watching the program and hearing the words of insiders, there is no doubt in my mind that Mark Zuckerberg and Cheryl Sandberg would be indicted given the right investigation.  They deserve to be.

Facebook made five insiders available to “Frontline” and they were all dopes.  And the documentary unearthed some scathing video that spelled out how executives in the company, including Zuckerberg and Sandberg, despite countless warnings on how the data could be misused, refused to take action.

A big part of the reason for this was Facebook was trying to build up its valuation before going public.

But what you see on the program is that in light of the Russia investigation and the misuse of Facebook’s user profiles, they now proudly talk of hiring thousands to attack ‘misinformation’ and someone like me, experienced beyond belief in the world, can only shake their heads and think, “this massive group of 20-something know-nothings?  Are you kidding me?!”  Their boss, one of the five allowed to talk to “Frontline,” Tessa Lyons, is a flat-out idiot, and she’s apparently overseeing the entire operation.

All five ‘team members’ also told producers the same thing when it comes to how they are going to attack the massive problems inherent in the platform.  “We’re having an ongoing conversation...”  What the blank does that mean?!

Here’s what you learn.  “Frontline” interviewed a UN investigator on the misuse of Facebook in Myanmar and he called the company “highly destructive.”  “Facebook turned into a beast,” as the government literally spread deadly lies through the network, heavily used by the people there.  The representative said, Facebook “played a significant role in the genocide.”

The same thing has happened in the likes of India, Sri Lanka and the Philippines.

And what is the company’s standard response to allowing all the deadly garbage on its network?

‘We’re hiring more people versed in the language in [plug in the country].’  Trust me, they aren’t hiring former CIA station chiefs, which is what would be required.

“Frontline” interviewed a former company rep in the Middle East who said the leaders she talked to were telling her “the danger of how rumors could spread.”  The program also interviewed the man behind the Arab Spring in Egypt, who used the Facebook platform to overthrow President Mubarak, and then watched Egyptian intelligence turn the platform against him and his supporters, killing scores.

Facebook turns democracy upside down.  It’s where “lies are truth.” A professor at the University of North Carolina at Chapel Hill, who has studied the company extensively, told “Frontline” the “company is in way over its head.”

As for Russian involvement in our 2016 elections, a Facebook exec admitted they knew of the disinformation campaigns but did nothing of substance to stop them.

So following last weekend’s synagogue massacre, the New York Times reported: “On Monday, a search on Instagram, the photo-sharing site owned by Facebook, produced a torrent of anti-Semitic images and videos uploaded in the wake of Saturday’s shooting at a Pittsburgh synagogue.

“A search for the word ‘Jews’ displayed 11,696 posts with a hashtag ‘#jewsdid911,’ claiming that Jews had orchestrated the Sept. 11 terror attacks.  Other hashtags on Instagram referenced Nazi ideology, including the number 88, an abbreviation used for the Nazi salute ‘Heil Hitler.’”

And as I told you the other week, and as the Times noted Monday, “Close watchers of Brazil’s election on Sunday ascribed much of the appeal of the victor, the far-right populist Jair Bolsonaro, to what unfolded on social media there.  Interests tied to Mr. Bolsonaro’s campaign appeared to have flooded WhatsApp, the messaging application owned by Facebook, with a deluge of political content that gave wrong information on voting locations and times, provided false instructions on how to vote for particular candidates and outright disparaged one of Mr. Bolsonaro’s main opponents, Fernando Haddad.”  [The Times should have noted, ‘his only opponent,’ as it was a run-off.]

I’m still on Facebook myself, but for weeks I’ve decided to use it sparingly, just to post my columns.  One of their 20-something security ‘experts’ will now probably read my missive and shut me down, before they do anything about the Russians, the Iranians, Facebook-related killings in Myanmar and India.  So be it.

Wall Street

October ended Wednesday and it was a brutal month for stocks.  The Dow Jones fell 5.1%, but the S&P 500 lost 6.9%, its worst month in 7 years, and Nasdaq cratered 9.2%, worst since Nov. 2008.  That is ugly, sports fans.

But, depending on whose figures you’re looking at, third-quarter earnings are going to be up anywhere from 26% to 29%.  [Over 50% of the gain the result of the corporate tax cuts, it just needs to be added.]

So why the doom and gloom?  The Federal Reserve, chiefly, and all the good news that follows means the Fed is raising interest rates for sure in December, though the October swoon had some casting doubt they would, and there are more rate hikes to follow in 2019 and we know the market doesn’t like this.

It also doesn’t help the rest of the world, particularly Europe and China, rather major players in their own right, are in slowdown mode.  So there are good reasons for concern later in 2019 here, and definitely 2020, which would have our president going ballistic.

But for now, as alluded to above, we had a strong jobs report for October, 250,000, well above the projected 190,000 (September was revised down 16,000 to 118,000, while August was revised up 16,000 to 286,000).

The three-month average is a very healthy 218,000, the jobless rate unchanged at a low of 3.7% (since 1969).

Importantly, average hourly earnings came in up 0.2%, but 3.1% over a year ago, which is encouraging.

We had much more economic data on the week.   Personal income for September was up 0.2%, less than forecast, while spending came in as projected, 0.4%.  The Fed’s key personal consumption expenditure index was 0.1%, with a core PCE of 2.0% year-over-year, right in line with what the Fed wants to see, though it seems willing to accept a little more.

The Chicago manufacturing PMI figure for October was less than expected but a still strong 58.4 (50 being the dividing line between growth and contraction) while the ISM national figure on manufacturing was also a little shy of forecast, 57.7.

September’s construction spending number was unchanged and factory orders for the month were up a strong 0.7%.

But you still have the ongoing weakness in the key housing sector, and the S&P CoreLogic Case-Shiller home price data for August was 5.8% year-over-year, which is a continuation of a trend of slowing price hikes, i.e., not just the impact of rising mortgage rates but also of homebuyers being priced out of the market, so sellers are lowering prices.  [The rate on a 30-year mortgage has come down to about 4.86% vs. 5.00% recently, but that’s largely because the yield on the 10-year Treasury had fallen some from its cycle high, though by week’s end it was headed back up.]

That said, for the 12-month period ending August, Las Vegas still had the biggest appreciation at 13.9%, with San Francisco at 10.6%. 

On the trade front, for now it’s all about the ongoing U.S.-China conflict, with President Trump tweeting Thursday: “Just had a long and very good conversation with President Xi Jinping of China.  We talked about many subjects, with a heavy emphasis on Trade. Those discussions are moving along nicely with meetings being scheduled at the G-20 in Argentina. Also had good discussion on North Korea!”

Clearly, the president felt compelled to boost the stock market ahead of Tuesday’s vote, and overnight in the futures market it worked...until it didn’t.

President Xi said he told Trump that economic and trade disputes risked harming both of their countries, according to Chinese state broadcaster China Central Television.

CCTV also reported that Trump initiated the phone call and said Xi was willing to meet the president at the G-20 to “exchange in-depth views on China-U.S. relations and other major issues.”

Xi said both he and Trump have good visions for a healthy, stable development of China-U.S. relations as well as expanding economic and trade cooperation, and they should make efforts to realize the wishes.

President Trump’s top economic adviser, Larry Kudlow, echoed his boss’s optimism, saying in an interview the call between the two leaders represented “a thaw” in relations.

But then Kudlow later conceded there were no official trade talks taking place and there won’t be until Beijing presents a concrete proposal to address Washington’s big complaints.

There is no way, despite the false reports to the contrary this morning, that there is going to be a full-blown trade agreement between the two sides until maybe next year, as the two are miles apart, particularly on the intellectual property issue, which I get into in great detail later.

The Trump administration is still looking to impose increased tariffs on $250bn in Chinese imports come January (from the current 10% to 25%), and to expand the tariffs to all Chinese imports, which would include iPhones and other gadgets.

Editorial / Wall Street Journal

“The Trump Administration’s China trade strategy has employed blunderbuss tariffs that hurt the U.S. and China. But the policy took a better turn this week with strong but targeted actions to punish alleged theft of U.S. technology...

[Ed. I cover the specifics in the ‘Foreign Affairs’ section down below.]

“IP theft usually goes unreported because victims fear retaliation and reputational damage...

“The export restrictions and indictments also have the advantage of focusing on the culprits, while tariffs spread economic damage to innocent consumers. The actions send a message that the U.S. wants to punish theft and predatory behavior, not free trade and honest commerce. Beijing has to make a choice about the kind of trading partner it wants to be.”

Walter Russell Mead / Wall Street Journal

“That crashing sound you heard in the world markets last week wasn’t just a correction.  It was the sound of the end of an age.

“During the long era of relatively stable international relations that succeeded the Cold War, markets enjoyed an environment uniquely conducive to economic growth. The U.S. faced no peer competitors, and the most important great powers generally (if sometimes selectively) supported Washington’s emphasis on opening markets and reducing barriers to investment and trade.  The positive-sum logic of economics trumped zero-sum international politics in the halls of power world-wide.

“The results were extraordinary. Between 1990 and 2017, world-wide gross domestic product rose from $23.4 trillion to $80.1 trillion, the value of world trade grew even faster, more than a billion people escaped poverty, and infant-mortality rates decreased by more than 50%. The number of people with telephone service grew roughly 10-fold.

“This hiatus from history was, by most measures of human flourishing, a glorious era. Now it has come to an end, or at least a pause, and the world is beginning to see what that means.

“During the Obama administration, foreign-policy observers began to speak of ‘the return of geopolitics’ – the idea that the international arena was increasingly defined by competition among strategic rivals. Russia, China and Iran were ‘revisionist’ powers that aimed to upend the post-Cold War era of American dominance. These powers enjoyed growing success, particularly during President Obama’s second term. By the time Mr. Trump took office, there was little doubt a much more challenging geopolitical environment had taken shape....

“The new era of geopolitics is unlikely to be an era of small government. The Trump administration is reversing some of the regulatory excesses of the Obama era, and the president’s judicial appointees are prepared to rein in the administrative state. But it’s in the realm of national security that Washington’s most formidable powers are found, and Mr. Trump appears determined to make liberal use of them. Whether he will wield them wisely is another question: The evidence to date is mixed.

“President Trump cannot be blamed for the return of geopolitics. Russia, China and Iran decided to challenge the American power on which the economic order depended, and Mr. Obama’s response to that challenge was, regrettably, insufficient. A recalibration of the U.S.-China relationship was likely inevitable as the world’s oldest civilization became an economic superpower.  Hillary Clinton, who as secretary of state clashed with Mr. Obama over the need for a tougher approach to China, would not be a popular figure in Beijing if she had won the 2016 election.

“The world has entered a new, complicated and dangerous era of nationalist competition.  That is the realization now reverberating through the world’s financial markets.  More such realizations are still to come.”

Trump World

--On the caravan, President Trump said he believes there are more people traveling in the group than has been reported in the media – because he’s “pretty good at estimating crowd size.”

“You have caravans coming up that look a lot larger than it’s reported actually,” Trump told ABC News in an interview published Wednesday.

The United Nations refugee agency said last week that about 7,000 people were traveling with the caravan bound for the U.S. border.  The Mexican government has said there are 3,600 participants.

UNICEF estimates at least 2,300 children are among the group.

The interview with ABC came as Trump announced that the U.S. was going to send 10,000 to 15,000 troops to the border in anticipation of the caravan’s arrival.

Trump tweets on the topic:

“The caravans are made up of some very tough fighters and people. Fought back hard and viciously against Mexico at Northern Border before breaking through.  Mexican soldiers hurt, were unable, or unwilling to stop Caravan.  Should stop them before they reach our Border, but won’t!”

“Our military is being mobilized at the Southern Border.  Many more troops coming. We will NOT let these Caravans, which are also made up of some very bad thugs and gang members, into the U.S.  Our Border is sacred, must come in legally. TURN AROUND!”

“So-called Birthright Citizenship, which costs our Country billions of dollars and is very unfair to our citizens, will be ended one way or the other.  It is not covered by the 14th Amendment because of the words ‘subject to the jurisdiction thereof.’  Many legal scholars agree...

“...Harry Reid was right in 1993, before he and the Democrats went insane and started with the Open Borders (which brings massive Crime) ‘stuff.’  Don’t forget the nasty term Anchor Babies.  I will keep our Country safe. This case will be settled by the United States Supreme Court!”

“Paul Ryan should be focusing on holding the Majority rather than giving his opinions on Birthright Citizenship, something he knows nothing about! Our new Republican Majority will work on this.  Closing the Immigration Loopholes and Securing our Border!”

Editorial / Wall Street Journal

“President Trump really, really wants to make the midterm election about immigration, and for a while it looked like he had an edge due to Democratic excess. But with this week’s pre-election vow to end birthright citizenship in America by executive order, Mr. Trump has driven into his own constitutional ditch.

“Mr. Trump has the political high ground as long as he is trying to stop lawlessness or deter migrant caravans mobilized by left-wing groups in Central America. Even deploying soldiers to the border in nonmilitary roles can be justified to assist immigration agents overwhelmed by asylum seekers.  The U.S. has to send a signal that no one can bum-rush the border – not least to deter migrants from making a trip that will end in disappointment, or worse.

“By contrast, the birth citizenship gambit puts Mr. Trump on the wrong side of immigration law and politics.  Did Michael Cohen give him this legal advice?

“The right to citizenship for anyone born on U.S. soil is derived from the Fourteenth Amendment adopted in 1868: ‘All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.’  This is the common law doctrine of jus soli, or right of the soil.  Opponents of birth citizenship try to obscure this plain meaning by interpreting ‘subject to the jurisdiction’ as applying only to those who owe allegiance to America. Because alien parents owe allegiance to a different sovereign, the argument goes, their children have no right to citizenship.

“But ‘jurisdiction’ is well understood as referring to the territory where the force of law applies, and that means it applies to nearly everyone on U.S. soil.  The exceptions in 1868 were diplomats (who have sovereign immunity) and Native Americans on tribal lands. Congress later granted Native Americans birth citizenship while diminishing tribal sovereignty....

“The very purpose of the Fourteenth Amendment was to prevent politicians from denying citizenship to those they thought weren’t American enough. This meant former slaves, but in the debate over the amendment the question of citizenship for immigrant children was raised directly.  As David Rivkin and John Yoo have recounted, Pennsylvania Sen. Edgar Cowan asked: ‘Is the child of the Chinese immigrant in California a citizen?’  Sen. John Conness of California said yes.

“The Supreme Court reinforced that meaning in U.S. v. Wong Kim Ark (1898) by upholding the citizenship of a child born in San Francisco of Chinese parents barred from citizenship by the Chinese Exclusion Act.  The Court wrote that ‘the 14th Amendment affirms the ancient and fundamental rule of citizenship by birth within the territory, in the allegiance and protection of the country, including all children here born of resident aliens.’

“Mr. Trump may imagine the current Supreme Court would rule differently.  We doubt it....

“The President still stands on firm legal and political ground when he fights sanctuary cities or the abolition of U.S. Immigration and Customs Enforcement.  But he undermines his legal standing, and his political credibility, when he pulls a stunt like single-handedly trying to rewrite the Fourteenth Amendment.”

--President Trump expressed disappointment that two recent terror incidents – including the mass shooting at a Pittsburgh synagogue – hurt the “GOP momentum” going into next week’s midterm elections.

Trump lamented the consequences of the pipe bombs sent to prominent Democrats and the killing of 11 by a white supremacist during a campaign rally Thursday in Missouri.

“We did have two maniacs stop a momentum that was incredible, because for seven days nobody talked about the elections,” he said.  “It stopped a tremendous momentum.”

--According to the Washington Post’s fact checkers, in the first nine months of the Trump presidency, the president made 1,318 false or misleading claims, an average of five a day.  But in the seven weeks leading up to the midterm elections, the president made 1,419 – an average of 30 a day.

There have been 6,420 falsehoods through Oct. 30, the 649th day of his presidency, according to The Fact Checker’s database that analyzes, categorizes and tracks every suspect statement uttered by the president.

October, not counting Oct. 31, was the worst month yet for the president: 1,014 claims that were false or misleading.

To state one example, he has said at least 74 times his border wall is already being built, when Congress has only approved $1.6 billion for improved fencing, while Trump also frequently mentions additional funding that has not yet been appropriated.

It’s little stuff, yes, but it’s not so little, like constantly claiming Supreme Court nominee Brett Kavanaugh was No. 1 in his class at Yale University or at Yale Law School. The law school does not rank and Kavanaugh graduated cum laude from the college – the third level below summa cum laude and magna cum laude.

Lastly, as someone who was writing about the aftermath of 9/11 on Wall Street in great detail, I couldn’t believe what Trump said on Saturday at an event in Indianapolis.

“I remember when we had the attack on Manhattan, we opened the stock exchange the next day.  People were shocked.”

I heard this and I was shocked.  Trump continued.

“With what happened early today, that horrible, horrible attack in Pittsburgh, I was saying maybe I should cancel both this and that. And then I said to myself, I remembered Dick Russell, a friend of mine, great guy, he headed up the New York Stock Exchange on September 11th, and the New York Stock Exchange was open the following day.  He said – and what they had to do to open it you wouldn’t believe, we won’t even talk to you about it. But he got that exchange open.  We can’t make these sick, demented, evil people important.”

The facts are that 9/11 was a Tuesday, and the market didn’t open until the following Monday, Sept. 17 – the longest shutdown since 1933.  It was also only through the heroics of Verizon that the Exchange was able to open when it did...the phone lines having been destroyed.

Oh, and that Dick Russell, Trump’s friend?  Try Dick Grasso.

--David Ignatius / Washington Post

“When President Trump issues an election-time order to send up to 15,000 troops to confront what many experts say is a nonexistent threat on the U.S.-Mexico border, what should Defense Secretary Jim Mattis do about it?

“Mattis’ answer, so far, has been to support the president and mostly keep his mouth shut.  He gruffly batted back a reporter’s question Wednesday about whether Trump’s troop deployment order was a political stunt by saying, ‘We don’t do stunts in this department.’  Unfortunately, some of Mattis’ colleagues fear he’s doing just that in implicitly backing Trump’s incendiary talk of an immigrant ‘invasion’ that requires sending active-duty troops.

“Watching Mattis walk the Trump tightrope is agonizing.  For many Americans, the retired Marine four-star general is the model of a stand-up guy – the sort of independent, experienced leader who can steady the nation in a time of division. But in dealing with Trump, Mattis often takes a seat and quietly accommodates the president’s erratic and divisive rhetoric – evidently believing that it’s better to hold fire and work from inside to sustain sensible policies.

“The danger for Mattis now is that he may be losing credibility on both sides.  Trump no longer seems to trust him fully, and some Pentagon colleagues wonder why he doesn’t speak out more forcefully about unwise policies.  Mattis’ role in the administration is precious, but so is his credibility as a truth teller – which is his ultimate legacy beyond any position or medal....

“Mattis is a national asset, and the country is lucky to have his solid judgment at the Pentagon.  No sensible person would want him to leave the job, but that’s partly because people believe he will speak out if the military is being misused for political purposes. With the spurious border deployment, that red line is close.”

I could not agree more with Mr. Ignatius.

--President Trump, speaking at a rally in Florida, said a third of Americans believed that the media was “the enemy of the people.”  He provided no evidence for this.

“We have forcefully condemned hatred, bigotry, racism and prejudice in all of its ugly forms,” he said.  “But the media doesn’t want you to hear your story, it’s not my story, it’s your story. And that’s why thirty-three percent of the people in this country believe the fake news is in fact, and I hate to say this, in fact the enemy of the people.”

Trump tweet: “There is great anger in our Country caused in part by inaccurate, and even fraudulent, reporting of the news. The Fake News Media, the true Enemy of the People, must stop the open & obvious hostility & report the news accurately & fairly. That will do much to put out the flame...

“...of Anger and Outrage and we will then be able to bring all sides together in Peace and Harmony.  Fake News Must End!”

Well, as the New York Times’ Jim Rutenberg points out, Trump’s anti-media strategy is working.  “Increasingly, the president’s almost daily attacks seem to be delivering the desired effect, despite the many examples of powerful reporting on his presidency. By one measure, a CBS News poll over the summer, 91 percent of ‘strong Trump supporters’ trust him to provide accurate information; 11 percent said the same about the news media.”

Trump told Lesley Stahl of CBS News in 2016 about his tactic, which she shared earlier this year: “I do it to discredit you all and demean you all, so when you write negative stories about me, no one will believe you,” she quoted him as saying.

But today, a new Washington Post/ABC News poll of registered voters asked the question ‘who is more responsible for politically motivated violence?’ and the answer was Trump, 49% / Media, 47%.

In a remark to the press today outside the White House, Trump reiterated “The Fake News is creating violence.”

--The president told ABC’s Jonathan Karl in an interview, “I always want to tell the truth...but sometimes something happens.”

Wish I had thought of this excuse as a kid when I was caught in a lie... “I told you the truth, Mom...but something happened.”

--Kanye West complained on Tuesday that he has been “used” and has decided to leave the political world to focus more on his music and design work.

“My eyes are now wide open and now realize I’ve been used to spread messages I don’t believe in,” West wrote.  “I am distancing myself from politics and completely focusing on being creative!!!”

Whatever.  I always liked your wife better, Yeezy.

Europe and Asia

Lots of data on the eurozone (EA19).

A flash estimate of third-quarter GDP was 0.2% quarter-over-quarter, 1.7% year-over-year, vs. 2.7% in the fourth quarter of 2017. This isn’t good. [Eurostat]

The September unemployment rate in the EA19 was 8.1% vs. 8.9% in Sept. 2017, the lowest since Nov. 2008, so this is good.  [Eurostat]

Some representative country rates: Germany 3.4%, France 9.3%, Italy 10.1%, Spain 14.9%, Ireland 5.4%, Netherlands 3.7%.

A flash look at October inflation has it up 2.2%, the highest since Dec. 2012, as released by Eurostat.  But the core is 1.1%, well below the European Central Bank’s 2% target.

And we had the IHS/Markit PMIs for manufacturing in October, 52.0 vs. 53.2 in September for the EA19, a 26-month low.

Germany was at 52.2, 29-mo. low; France 51.2, 25-mo. low; Italy 49.2, 46-mo. low*; Spain 51.8 (slight uptick from prior month); Ireland 54.9; Netherlands 57.1, 21-mo. low; Greece 53.1.

This data is not good, even if there’s still growth in all but Italy.

*Political tensions in Italy are definitely having an impact on growth, with a rising unemployment rate and a punk manufacturing sector.

Chris Williamson, chief economist, IHS/Markit

“Concerns about the Eurozone manufacturing sector intensified at the start of the fourth quarter.  The headline PMI fell to its lowest since August 2016, signaling a further slowing in the rate of  expansion.  New orders fell into decline for the first time in almost four years as trade woes escalated. Export sales fell for the first time in over five years.

“Moreover, the survey suggests that the manufacturing sector could contract in the fourth quarter unless the data revive in coming months.  However, with backlogs of work falling for a second successive month, and business expectations sliding to the lowest for nearly six years, risks seem firmly tilted towards the downside heading towards the end of the year.”

--Just a note on the key German economy.  Retail sales in September were up a disappointing 0.1%, month-on-month, and are down 2.6% year-over-year, which isn’t good.

Eurobits....

Brexit: It was a light week, news-wise, on the Brexit front. The UK did reportedly strike a deal with the European Union on post-Brexit financial services, with The Times newspaper saying London had agreed in talks with Brussels to give UK financial services firms continued access to the bloc.

But then a government source told the BBC, this was “a rather rose-tinted interpretation of where we  have got to,” and that “People shouldn’t get ahead of themselves.”

Prime Minister Theresa May insists that definitive trade terms between firms in the UK and the EU will be finalized by next March, but businesses across the board are already preparing for the worst.

Standard & Poor’s, for example, said on Tuesday that a no-deal Brexit would be likely to tip Britain into a recession as long as the downturn that followed the global financial crisis, and investors should no longer ignore this danger.

Talks are still essentially stalled over arrangements for the border between the British province of Northern Ireland and the Irish Republic if a trading relationship is not agreed to in time.

S&P’s worst-case scenario has unemployment rising to above 7 percent from around 4 percent now, house prices falling 10 percent, while London office prices would shrink more than 20 percent over 2 to 3 years.

Germany: Following another humiliating election performance in a key state, Chancellor Angela Merkel announced she would step down as party leader of the Christian Democratic Union (CDU) in December, a post she has held for 18 years, after a dismal performance by the party in elections in Hesse on Sunday.  But Merkel said she intended to stay on as Chancellor until 2021, a neat trick few really believe she’ll be able to pull off.

The CDU saw its share fall of the vote fall 11 points to just 28 percent, while the Social Democrats (SPD), the junior partner in her governing grand coalition, also slumped to just 20 percent, a third less than in the last election five years ago.  [The Greens came in third at 19.5 percent.  The far-right Alternative for Germany (AfD), enters the Hesse regional assembly for the first time with 12 percent of the vote.]

A former political rival of Merkel who retired from politics nine years ago has emerged as an unlikely early front-runner to succeed her as leader of Germany’s Christian Democrats.

62-year-old Friedrich Merz is the most popular candidate for party leader in various polls, ahead of Merkel’s preferred successor, Annegret Kramp-Karrenbauer.

Merz, in his retirement from politics, has served on the boards of high-profile companies including BlackRock, the world’s largest asset manager.  In announcing his return to the scene, Merz said of the chancellor: “She deserves respect and recognition for her achievements in 18 years at the head of the party but the CDU now has the opportunity to re-set.”

The CDU has its party conference in December in Hamburg to select a new leader.  Many members resent how Merkel dragged it to the center and want to return to its conservative roots.  Merkel had long held that the jobs of chancellor and party leader shouldn’t be split.

But Merz’ presence could make it easier for Merkel’s coalition partner, the Social Democrats, to walk away.

A Gallup poll taken this week did show Merkel still has a 66% approval rating among all Germans, down from a high of 74% in 2013.

Turning to Asia, China released its official government readings on manufacturing and services for October; 50.2 vs. 50.8 in September for the former, 53.9 vs. 54.9 for the latter.  [National Bureau of Statistics]

The Caixin private manufacturing figure was 50.1 for October, so at least some consistency between the two, both also reflecting a manufacturing economy that is potentially on the verge of contraction.

Japan’s manufacturing PMI for October was 52.9, 51.0 in South Korea, and a disappointing 48.7 in Taiwan.

Japan’s retail sales did rise an 11th consecutive month in September from a year earlier, +2.1%.

But the Bank of Japan cut its inflation forecast to just 1.5% for 2021 (a projected 0.9% this year).  Well off its 2 percent target.

Street Bytes

--On the week the market rallied after a rough start Monday, and despite a little weakness today, with the Dow Jones up 2.4%, ditto the S&P 500, and Nasdaq advancing 2.7%.  So the Dow and S&P are back in the black, up 2.2% and 1.9%, respectively, year to date.  [Nasdaq is up 6.6%.]

--U.S. Treasury Yields

6-mo. 2.49%  2-yr. 2.90%  10-yr. 3.21%  30-yr. 3.45%

The yield on the 10-year rose 13 basis points and is back near the 3.25% peak of a few weeks ago.  No the 30-year mortgage will climb back to 5.00% by the end of this coming week, most likely.  And that doesn’t help housing.

--Domestic crude inventories in the U.S. continued to rise, according to the Energy Information Administration’s latest weekly petroleum status report, with stocks at their highest level since mid-June.  The steady growth in crude inventories has helped to check excessive increases in crude prices.

And it’s also about U.S. production, which surged to a record 11.3 million barrels a day.  Plus the Saudis have said they would “meet any demand that materializes” following the imposition of U.S.-imposed sanctions on Iran’s crude exports that go into play this Monday.  [More on this below.]  For now, the actual impact may not be realized until early next year as ships loaded in October will still be delivering their cargoes over the coming weeks.

On the week, crude oil fell to its lowest level since early April, with West Texas Intermediate closing today at $62.86, down over $11 in four weeks.

But crude didn’t start falling until after Sept. 30 and in reporting their third-quarter earnings, both Exxon Mobil and Chevron had their highest profits for the quarter in four years.

Exxon’s net income rose 47% to $6.24 billion with improved operations and better refining margins.  Chevron’s profits doubled to $4 billion as production in the red-hot Permian basin in West Texas and New Mexico surged 80%.

Shares in both rallied on the news Friday, their earnings coming out this morning.  But before today, shares in Exxon and Chevron had fallen about 4% in the last 12 months even as oil prices were rising 30%.

Exxon’s production in the second quarter had indeed fallen to its lowest level in a decade, but the company said production had rebounded in Q3, a slight decline from a year ago.

For Chevron production set a company record, including new output from giant natural gas projects in Australia and North America.

Both companies are exploiting the Permian basin, owing in no small part to improved technology.

--Apple delivered unexpectedly strong sales and profits for its latest quarter, but the shares tanked 6.6% at the open Friday as the company gave a weak holiday forecast amid fears shoppers aren’t willing to shell out cash for the new crop of extra-pricey iPhones.

Apple posted its strongest fiscal fourth-quarter results yet – with $62.9 billion in revenue, beating the $61.4bn estimate of analysts. Apple beat profit expectations, with earnings per share of $2.91 against the forecasted $2.78.

But the company also revealed iPhone sales were 46.9 million, badly missing the Street’s forecast of 48.4 million and growing only 0.4 percent year-over-year.

The new iPhones have price tags starting at $999 and can stretch to $1,400 for a tricked-out XS Max.

But then Apple said that beginning this quarter, it would no longer break down unit sales for iPhones, iPads and Macs; revenue for same, including Watches and other items, accounting for more than 85% of the company’s total revenue.

CFO Luca Maestri said: “The number of units sold in any 90-day period is not necessarily representative of the underlying strength of our business.  If you look at our top competitors, they do not provide quarterly numbers.”

“When we believe that providing qualitative quantity of unit sales provides additional relevancy for investors, we will do so,” he added.

To which I’d say, ‘The hell with you.’  I mean that’s a bit arrogant, don’t you think?  Investors will now be sharply limited in how to understand the main drivers of the company’s performance.  Zero transparency!

As for Apple’s holiday guidance, it forecast sales between $89 billion and $93 billion, vs. analysts’ expectations of $92.7bn.  Apple’s forecast suggests a gain of only 3% year-over-year at the midpoint, as noted by the Wall Street Journal’s Dan Gallagher.  “That follows five consecutive periods of double-digit percentage gains, and even includes the launch of a new iPhone, iPad and MacBook Air in the period.  Those devices still may end up selling well. But Apple has made sure investors will have a harder time figuring that out. At this point, the stock deserves to lose some of its shine.”

CEO Tim Cook, however, said that when it came to China (where sales did rise 16% from a year earlier) and the company’s huge bet there, he was not concerned about the trade issue.  “I’m optimistic that the U.S. and China can work these things out for the benefit of everyone.”

Yeah, perhaps, but China’s home-grown product is at this point essentially the same as yours, Mr. Cook, at a fraction of the cost.  [Thanks to IP theft.]

--Samsung, the South Korean technology giant, slashed 2018 capex by more than a quarter this week and warned of lower profit until early next year, calling an end to a two-year boom in memory chips that fueled record third-quarter profit. 

Investors were already jittery over waning global demand for mobile and other electronics devices (see Apple), but Samsung does say the business environment for its products will improve by the second half of 2019, the company citing solid demand from servers as cloud-based data services grow fast.

Memory chip prices have fallen to over two-year lows as rivals gear up to start new production lines next year.

Separately, but related to the above, according to data from HYLA Mobile Inc., a mobile-device trade-in company that works with carriers and big-box stores, Americans are holding on to their smartphones an average of 2.83 years before upgrading, with Apple iPhones traded in during the period having an average of 2.92 years old.

Pricier devices, fewer subsidies from carriers and the demise of the two-year cellphone contract are the causes.

--FB, part II...Tuesday, Facebook said the next few years would be tough as its business slows, but that it was looking to a future where it moves beyond News Feed, the stream of content that is the core of the platform, and instead focuses more on different mediums like messaging, private chat and video – even though none of those make as much money as the News Feed does.

CEO Mark Zuckerberg said in a conference call with investors: “We have great products people love, but it will take us some time to catch up. It will take some time, and our revenue growth will be slower.”

The social network has pledged to hire tens of thousands more people to monitor content on its platform with the increased scrutiny on the spreading of disinformation, hate speech and leaks of user data.

For the third quarter, FB said its revenue rose 33 percent to $13.7 billion and profit increased 9 percent to $5.1 billion from a year earlier, roughly in line with the Street’s expectations. Revenue growth was down from the 42 percent jump the company had reported in the previous quarter.

Facebook also said its number of daily active users increased 9 percent to 1.49 billion from a year earlier, down from 11 percent growth in the prior quarter.  Monthly active users reached 2.27 billion.

Zuckerberg said Facebook was also looking more toward some of the properties it already owned, such as messaging apps WhatsApp and Messenger, which together have more than two billion users.

Farhad Manjoo / New York Times

“A few weeks ago, after Facebook revealed that tens of millions of its users’ accounts had been exposed in a security breach, I began asking people in and around the tech industry a simple question: Should Mark Zuckerberg still be running Facebook?

“I’ll spare you the suspense.  Just about everyone thought Mr. Zuckerberg was still the right man for the job, if not the only man for the job....

“That few can imagine a Facebook without Mr. Zuckerberg, 34, underscores how unaccountable our largest tech companies have become. Mr. Zuckerberg, thanks to his own drive and brilliance, has become one of the most powerful unelected people in the world.  Like an errant oil company or sugar-pumping food company, Facebook makes decisions that create huge consequences for society – and he has profited handsomely from the chaos.

“Yet because of Facebook’s ownership structure – in which Mr. Zuckerberg’s shares have 10 times the voting power of ordinary shares – he is omnipotent there, answering basically to no one....

“There’s another way to put this: For better or worse, Mr. Zuckerberg has become too big to fail.”

Separately, officials in Britain and Canada are joining forces to compel Zuckerberg to appear before them to answer questions on data privacy and disinformation.

Earlier this year, Facebook was fined over $600,000 after the UK’s data protection watchdog found it had given app developers access to up to 87 million users’ data “without clear consent,” some of the data shared with Cambridge Analytica, which used it to target political advertising in the U.S.

Last April, when parliament requested Zuckerberg appear before Commons Digital Culture committee, Zuckerberg sent his chief technology officer to appear, MPs then threatening to issue a formal summons for Zuckerberg to appear himself.

--General Motors shares surged nearly 10 percent Wednesday after reporting better than expected third-quarter earnings and revenues on strong sales of higher price models in the U.S. and China.

The carmaker announced adjusted earnings per share of $1.87, up 42 percent on the year earlier period and well above market expectations of $1.25.  Net revenue rose 6.4 percent to $35.8 billion.

Sales in North America and China were aided by the sale of more expensive pick-up truck models, for one.  In China, GM reported $500m in income in the quarter, which contrasts with Ford’s sizable loss there, as reported the week before.

GM also raised its guidance a bit, emphasizing results were influenced in part by a favorable tax rate.

--Shares in Boeing dived nearly 7% on Monday on word one of its brand-new 737 Max 8 planes had crashed into the Java Sea, killing all 189 people on board.  But then they recovered the rest of the week and ended up basically unchanged over last Friday.

Thursday, one of the black boxes (the flight data recorder) from the Lion Air jet was recovered by divers, while the search continues for the cockpit voice recorder.

The plane took off from Jakarta and plunged into the sea just minutes later. Data from flight-tracking sites showed erratic speed, altitude and direction in the time after the plane’s previous flight on Sunday.

Passengers on the Sunday flight from Bali to Jakarta recounted problems that included a long delay before takeoff for an engine check and the plane dropping suddenly several times in the first minutes of its flight.

But the president of Lion Air told reporters Monday that the aircraft’s technical issue from the previous flight had been resolved according to the manufacturer’s procedures.

--General Electric cut its dividend to one cent per share Tuesday and the shares cratered, as the company moved to separate its power division into two units following a net loss of $22.8 billion in the third quarter.  The company also revealed federal prosecutors had opened a criminal accounting probe over a $22 billion charge GE booked tied to acquisitions in its power unit, as well as a $6 billion charge in the first quarter for a shortfall in insurance reserves.

Revenue in the power division tumbled 33% from a year earlier.  Overall, GE said revenue dropped 4% to $29.57 billion in the quarter, as growth in its aviation and energy units offset some of power’s decline.

Larry Culp, who took over as CEO in October, told investors the conglomerate would miss its cash flow and earnings projections for the year, with the cut in the dividend from 12 cents saving about $3.9 billion a year.

GE’s turbine business has taken a nose dive as utilities started constructing their own solar and wind farms.  There are also ongoing issues with GE Capital, which despite being pared back significantly in recent years, remains a source of problems, including the need to boost reserves on its insurance portfolio by $15 billion, a not insignificant sum. Moody’s lowered the company’s credit rating two notches, from A2 to Baa1, analysts saying problems in the power-generation business could cause “considerable” damage to its cash flow.

GE’s stock is down nearly 50 percent over the past 12 months and finished the week at $9.30!

--IBM Corp. announced it was acquiring cyber security company Red Hat for $34 billion, by far IBM’s biggest acquisition.    The move underscores CEO Ginni Rometty’s efforts to expand the company’s subscription-based technology offerings and diversify its business beyond software sales and mainframe servers, which have seen sluggish growth.

Red Hat specializes in Linux operating systems, the most popular type of open-source software, which was developed as an alternative to proprietary software made by Microsoft.  Red Hat charges fees to its corporate customers for custom features, maintenance and technical support.

Rometty told USA TODAY in an interview: “This is about completely resetting the cloud landscape out there. Together we will be the No. 1 hybrid cloud provider.”

But many questioned IBM’s acquisition price, the company paying $190 per share for Red Hat, a premium of over 60 percent on Friday’s closing price of $116.68.

--Staff at Google offices around the world have been staging walkouts to protest the company’s treatment of women.  Specifically, the employees are demanding changes in how sexual misconduct allegations are handled, including an end to forced arbitration, which makes it difficult for victims to sue.  Google CEO Sundar Pichai has told staff he supports their right to take the action.

As I wrote last week, anger has been boiling over with the revelation, initially via a New York Times report, that one high profile executive received a $90 million payout after he left the firm, despite what the company considered a “credible” allegation of sexual misconduct made against him.

This week another executive resigned after he was alleged to have made unwanted advances towards a woman he was interviewing for a job that would have had her report to him.

Nearly 50 other employees have been sacked for sexual harassment without receiving a payout, Pichai told staff.

Thursday, speaking at a New York Times DealBook conference, Pichai said: “It’s been a difficult time. There is anger and frustration within the company. We all feel it.  I feel it, too.”

Pichai said Google had not lived up to the high bar it set for itself.  It has since “evolved as a company,” he added.  He promised Google would take steps to address the issues the employees raised.

--Starbucks delivered its strongest quarterly sales gain in more than a year, but it is still struggling to attract more customers to U.S. stores.  The company said it saw a 4 percent increase globally in the average check during its fourth quarter, which in turn drove sales at Starbucks locations on a comp-store basis, up 3 percent, and up a solid 4% in the U.S.  But the number of transactions in the home market fell 1% from a year earlier.

Revenue for the fiscal fourth quarter, which ended Sept. 30, surged 11% to $6.3 billion, beating estimates.

This was the first full quarter that CEO Kevin Johnson led the company without the presence of longtime leader Howard Schultz, who stepped down as chairman in June.

The shares surged on the generally positive news to $64.50 at week’s end.  [Months ago I said Starbucks was dead money at $57.70, and it fell to $48, but has rallied back rather strongly.]

--A cancer-linked herbicide has been found in more than two dozen popular breakfast cereals and snack bars, according to a report from the Environmental Working Group.

Glyphosate, the main ingredient in Roundup, was found in 26 of the 28 products tested, in levels “higher than what EWG scientists consider protective of children’s health.”

Of course it’s glyphosate that is causing all sorts of serious legal troubles for Monsanto and new parent Bayer AG.  Every year, according to the EWG, more than 250 million pounds of glyphosate is sprayed on American crops.

In a statement, Quaker said: “EWG report artificially creates a ‘safe level’ for glyphosate that is detached from those that have been established by responsible regulatory bodies in an effort to grab headlines.”

“I don’t think that people should become hysterical,” Sarah Evans, an assistant professor at the Icahn School of Medicine at Mount Sinai, told CNN.  “But people need to be really aware of where their food is coming from and what’s getting into their foods.”

Monsanto strongly disputes the finding that glyphosate is  a probable carcinogen and notes that over four decades, the EPA has consistently supported the safe and effective use of glyphosate.

--DowDupont, which was formed through the $130bn merger of Dow Chemical and DuPont last year, announced earnings for the third quarter that beat the Street, up 35 percent, with sales up 10 percent on a pro forma basis at $20.1bn.  The company said it had seen sales volume growth “in all divisions and all regions, led by double-digit growth in Asia Pacific and Latin America.”

CEO Ed Breen said plans to break the company up into three more focused companies remains on track for next year...the three being Materials Science, Agriculture and Specialty Products.

--Editorial / Wall Street Journal

“President Trump unloaded last week that the U.S. pays more for drugs – ‘same company, same box, same pill’ – than, say, the United Kingdom or France.  ‘And I’d say: ‘Why is this?’’ His latest proposal reveals he still doesn’t know, so allow us to explain why the U.S. shouldn’t put the world’s most innovative drug market at the mercy of what Greece is willing to pay for a cancer treatment.

“Health and Human Services has invited comment on a potential rule that would tether what Medicare Part B pays for certain drugs to a price index of what other developed countries pay. The goal is to bring prices down to 126% of what other countries pay, versus 180% today.  The move will ‘ensure that American patients get a more fair deal on the discounts drug companies voluntarily give to other countries,’ HHS Secretary Alex Azar said.

“The reason European countries pay less for drugs is because they run single-payer health systems and dictate the prices they’re willing to pay. Don’t like it? They’ll then vitiate your patents and make a copycat. This is hardly a ‘voluntary’ discount. Other countries have the luxury of extortion because the U.S. produces more drugs than the rest of the world combined.  Mr. Trump mentioned these realities in his speech but blew past them to suggest importing the same bad behavior.

“By the way, Europe does pay more – in the form of reduced access.  Of 74 cancer drugs launched between 2011 and 2018, 70 (95%) are available in the United States.  Compare that with 74% in the UK, 49% in Japan, and 8% in Greece. This should cure anyone of the delusion that these countries will simply start to pay more for drugs. They’re willing to deny treatments if it saves money.”

--A privately developed Chinese carrier rocket failed to reach orbit after lifting off from Jiuquan Satellite Launch Center, a big blow to the country’s early attempts by private companies to rival Elon Musk’s SpaceX.

The three-stage rocket was developed by Beijing-based Landspace.  The company said it was an issue with the third stage, without giving any details.

Since coming to office in 2012, President Xi Jinping has made becoming a “space flight superpower” a priority for the government, which has a goal of sending a permanent manned space station into orbit by around 2022.  [Which will probably be used later on to shoot down our satellites, mused the editor.]

--Finally, I was really torqued off in seeing a FiveThirtyEight survey of favorite Halloween candies, and then I looked at other lists, because my favorite, Baby Ruth, was like in the middle of the pack in all of them, whereas one I can’t stand, Butterfingers, seemed to make all the top ten lists.

This is outrageous.

And then I saw that FiveThirtyEight ranked Good & Plenty last at 86!  I loved Good& Plenty.  So I proceeded to go into a deep depression...or was it the midterms....

[Reese’s deservedly takes most top spots.  I’d also offer that the best snack is frozen Funny Bones, playing off the Peanut Butter theme.]

Foreign Affairs

Iran / Syria: The Wall Street Journal reported Friday that Iran’s ally Hezbollah “is paying former U.S.-backed rebels to switch sides and join a growing force in southern Syria, deepening its presence near Israel’s border after appearing to withdraw to avoid Israeli airstrikes, according to activists and a former rebel commander.

“The Iran-backed militia has recruited up to 2,000 fighters, these people said, most of them from rebel groups that lost U.S. funding last year, according to the former commander, who tracks recruitment in villages in southern Syria.”

Israel has warned Iran it won’t allow it to become entrenched in the area near its border.  The U.S. has said the removal of Iran-allied forces from Syria is a central goal for its 2,000 troops there and a precondition for the funding of any rebuilding in the country.  The sanctions that commence Nov. 5 were designed in part to force Tehran to remove its support for the militants.

So it’s yet another quandary, for both the United States and Israel.

As for Hezbollah, their leader, Sheik Nasrallah, who resides in Lebanon (most of the time it is believed), has said his forces would stay in Syria as long as Bashar al-Assad wants them there.

Meanwhile, Russia’s defense ministry warned this week against “hot heads” provoking Syria and intimated that the S-300 missile system had been deployed in the country to defend against such action.  The warning was clearly aimed at Israel, which has been conducting an aggressive military campaign across Syria against the Iran-backed militia groups; striking about 200 targets over the past 18 months.

Russia also said that when it comes to the situation in northern and eastern Syria, Syrian rebels in Idlib are preparing a “false flag” chemical weapons attack.

And as to President Trump’s claims that ISIS has been destroyed, just know that Islamic State recently launched an attack against Syrian Kurdish forces in the eastern part of the country  and took some ground, which the U.S.-backed Syrian Democratic Forces (SDF) have been fighting back against in an offensive that has claimed many lives on both sides.

[And today, ISIS gunmen, it is assumed based on past history, killed seven people and wounded 12 in an attack on buses carrying Coptic Christians in rural Egypt, the latest in a wave of violence against the Middle East’s largest Christian minority.  Graphic images of the attack showed one man’s skull was crushed.]

Meanwhile, Iranian President Rouhani has warned his countrymen that they face hard times when new U.S. sanctions take effect this week but said the government would do its best to alleviate them.

The cost of living has soared in recent months, leading to demonstrations against profiteering and corruption in which protesters have been chanting anti-government slogans.

Rouhani said: “Our main enemy, America, faces us with a drawn sword and we have to fight it and we have to unite. Regardless of factions...we are all part of the Iranian nation.”

Rouhani reshuffled his economic team this week.

Saudi Arabia / Turkey: At week’s end, little has changed in the murder of journalist Jamal Khashoggi.  Turkish authorities are still demanding that Saudi Arabia tell them the whereabouts of the body, with Justice Minister Abdulhamit Gul adding Saudi Arabia must cooperate in the investigation and that there must be no further cover-up.

“We are looking for answers to the question of where the body is,” he said.

Yes, this is absurd.  How can the Saudis get away with this?!

The Saudi government first denied Khashoggi had been killed, then said he died in an unplanned “rogue operation.”  And last week, the kingdom’s public prosecutor admitted that the attack was premeditated.

This week, Istanbul’s chief prosecutor said after talks with the Saudi prosecutor that Khashoggi was strangled as soon as he entered the consulate.  The body was then dismembered as part of a premeditated plan.

A statement from the prosecutor’s office said: “The victim’s body was dismembered and destroyed following his death by suffocation...in accordance with plans made in advance.”

Saudi Foreign Minister Adel al-Jubeir, addressing a security conference in Bahrain, said hysterical media are rushing to judgment in the Khashoggi case.

“Unfortunately there has been this hysteria in the media about Saudi Arabia’s guilt before the investigation is completed. What we say to people is wait until everything is done” then decide if the investigation was serious or not.

I respectfully say this investigation should have taken two hours, not four weeks and counting.

Defense Secretary Jim Mattis, addressing the same conference in Bahrain, characterized the killing of Khashoggi as not only a human rights issue but also a national security concern for nations in the Middle East.

“When opposing voices can be heard within a political process adapted to each nation’s culture, one that permits peaceful opposition by giving voice and human rights to all, a nation becomes more secure,” Mattis said.  ‘When people can speak and be heard calling for peace and respect for all, the terrorist message of hatred and violence is not embraced.  With our collective interests in peace and unwavering respect for human rights in mind, the murder of Jamal Khashoggi in a diplomatic facility must concern us all greatly....

“Failure of any one nation to adhere to international norms and the rule of law undermines regional stability at a time when it is needed most,” Mattis said.

Meanwhile, the New York Times and Washington Post have reported that Saudi Crown Prince Mohammed bin Salman (MBS) had told U.S. officials that he considered Khashoggi to be a dangerous Islamist. MBS called the White House before the kingdom admitted Khashoggi had been killed inside the Saudi consulate.

Saudi Arabia is denying the reports of the content of the call, and the royal family continues to deny it was involved in the killing and that it is “determined to find out all the facts.”

The Washington Post reported that MBS called Jared Kushner and National Security Adviser John Bolton, with MBS saying Khashoggi had been a member of the Muslim Brotherhood, the transnational Islamist organization, the call reported to have taken place Oct. 9, a week after Khashoggi disappeared.

In a statement to the Post, Khashoggi’s family denied he was a member of the Brotherhood and that he had denied this repeatedly in recent years.

“Jamal Khashoggi was not a dangerous person in any way possible. To claim otherwise would be ridiculous,” the statement said.

Separately, a senior Saudi prince who courted controversy after appearing critical of the king and crown prince has returned to the kingdom amid the crisis, family members told AFP.

The return of Prince Ahmed bin Abdulaziz al-Saud, a bother of King Salman and uncle of MBS, has fueled speculation of royal family efforts to shore up support for the monarchy after all the global criticism; MBS’s image as a reformer severely tarnished.

Prince Ahmed had been in London for months. There are no indications, however, that  Prince Mohammed’s position as de facto ruler is in danger.

Editorial / Washington Post

“Saudi Arabia’s dispatch of a 15-member team to Turkey to attack journalist Jamal Khashoggi added to a global trend of autocratic states reaching out to kill or kidnap exiled dissidents.  Russia and China have been pioneers of the practice and for the most part have gotten away with it; that has encouraged others.  One such regime is Saudi Arabia’s regional rival Iran, which appears to have returned to an old practice of trying to murder exiles in European capitals – notwithstanding its dependence on European support for resisting new U.S. sanctions.

“This week, Denmark’s government revealed what it described as an Iranian plot to assassinate a man who leads the Danish branch of a group advocating independence for an Arab-populated region of Iran. Danish Foreign Minister Anders Samuelsen, saying it was ‘completely clear that the arrow is pointing at the Iranian intelligence service,’ recalled Denmark’s ambassador from Tehran and said he would raise the possibility of new sanctions by the European Union.

“That was the second Iranian plot broken up in Europe in four months. In late June, European security services arrested two Iranian emigres living in Belgium and charged them with plotting to bomb a Paris rally of the opposition Mujahideen-e Khalq that was attended by former New York mayor Rudolph Giuliani.  An alleged Iranian intelligence officer who authorities said directed the operation was arrested shortly afterward in Germany.

“Some have marveled at Iranian audacity in planning attacks on the territory of countries that have been trying to devise ways to circumvent the new U.S. sanctions due to take effect Sunday.  Both Denmark and France strongly opposed President Trump’s decision this year to cancel the Iranian nuclear deal and to reimpose an economic blockade on the government of Hassan Rouhani.

“U.S. and Israeli officials have done their best to exploit the uncovering of the plots. The Paris case, national security adviser John Bolton declared, ‘tells you, I think, everything you need to know about how the government of Iran views its responsibilities in connection with diplomatic relations.’

“That’s true enough – and EU leaders ought to punish Tehran.  Yet Mr. Bolton’s words raise the question of how Saudi Arabia ought to be judged in light of what it now acknowledges was the premeditated murder of Mr. Khashoggi inside its own consulate in Istanbul. Should not the regime of King Salman and Crown Prince Mohammed bin Salman be held to the same standard as Iran?  And if the United States does  not impose significant punishment on Saudi Arabia, how can it expect other nations to enforce its sanctions against Iran?”

Yemen: According to a UN children’s agency, UNICEF, over seven million children face a serious threat of famine in Yemen and just ending the civil war will not save them all.

“Today, 1.8 million children under the age of five are facing acute malnutrition, and 400,000 are affected by severe acute malnutrition,” said Geert Cappelaere, regional director for UNICEF.  He said efforts to come up with a solution in the next 30 days were “critical” to improving aid distribution and saving lives.

Over 6,000 children have either been killed or sustained serious injuries since the war started in 2015.  Overall, more than 10,000 people have been killed and 22 million are in need of food aid, according to the UN.

Separately, the Saudi-led coalition has been massing thousands of troops near Yemen’s main port city of Hodeidah in a move to pressure Iranian-aligned Houthi insurgents to return to UN-sponsored peace talks. We aren’t talking a small force, but according to Reuters, around “30,000-strong.”

North Korea: According to South Korea’s spy agency, North Korea appears to be preparing for international inspections at several of its nuclear and missile test sites, as reported by Yonhap news agency. U.S. officials declined to confirm the observations.  Secretary of State Mike Pompeo said in Washington he planned to meet his North Korean negotiating counterpart next week and would speak to him about inspections.

Pompeo said in a radio interview that Kim Jong Un had committed to allowing U.S. inspectors at two “significant” sites when he met him in Pyongyang this month.  “We hope to get them there before too long,” Pompeo said on Laura Ingraham’s show.

But skeptics note that Pyongyang has had months and months to ‘prepare’ the sites for show, and were North Korea to actually verifiably close a facility, it would be asking for reciprocal moves by the United States. There is also growing talk in the intelligence community of a previously undisclosed nuclear enrichment site, with the latest estimates on the number of nuclear weapons that Kim may have ranging from 15 to 60.

China: As I alluded to above, the Justice Department unsealed charges Thursday against several Taiwanese individuals and Chinese and Taiwanese companies for trade-secret theft; part of a series of moves to pressure Beijing. The administration has prioritized countering threats to U.S. national and economic security, with China’s long-range plan to supplant the United States as the world’s dominant power, not just economically but militarily.

Since September federal prosecutors have brought charges in three separate intellectual property theft cases involving Chinese spies and hackers.

Attorney General Jeff Sessions said: “Chinese economic espionage against the United States has been increasing – and it has been increasing rapidly. Enough is enough. We’re not going to take it anymore.”

Assistant Attorney General John Demers said: “China wants the fruits of America’s brainpower to harvest the seeds of its planned economic dominance.”  With this new initiative, he said, “we will confront China’s malign behaviors and encourage them to conduct themselves as they aspire to be one of the world’s leading nations.”

The indictment alleges the defendants conspired to steal trade secrets from Micron, an Idaho-based semiconductor company with a subsidiary in Taiwan.  Those individuals charged stole “some of the most advanced semiconductor technology in the world,” as described by U.S. Attorney Alex Tse.  [Ellen Nakashima / Washington Post]

A lot of the recent U.S. actions are designed to counter China’s efforts to be the global leader in 5G technology.

Tuesday, other charges were unveiled against two alleged Chinese spies, accused of orchestrating a conspiracy to steal prized jet-engine technology from private companies. For decades, China has sought to develop its own commercial jet to break the duopoly held by Airbus and Boeing.  In 2016, it set up state-owned engine maker Aero Engine Corp. of China to develop engines to be fitted on homegrown commercial aircraft.

Aerospace is a key sector targeted in President Xi’s “Made in China 2025” blueprint, as it seeks to match or exceed the high-end manufacturing output of the U.S., Germany and Japan.

Also on the general topic of espionage, Echo Huang, a reporter for Quartz in Hong Kong, had a piece in Defense News that read in part:

“Universities in the U.S., UK, Australia and other countries may have been unknowingly collaborating with China’s military.

“That’s according to a new study by Canberra-based think tank Australian Strategic Policy Institute (ASPI), which found that dozens of scientists and engineers linked to China’s People’s Liberation Army (PLA) had obscured their military connections when applying to study overseas.

“Most strikingly, said ASPI, the collaboration is the highest among the ‘Five Eyes’ countries – an intelligence alliance consisting of Australia, Canada, New Zealand, the UK and the U.S. – which counts China as one of their ‘main intelligence adversaries.’ The fear is that such scientists could be engaging in espionage or committing intellectual-property theft during their stints overseas.

“About 2,500 PLA-sponsored military scientists have gone abroad since 2007, according to ASPI.  Such collaborations are encouraged by cash-strapped foreign universities, some of which have increasingly turned to China for scientific funding....

“ASPI estimates that about 500 PLA-linked scientists were sent each to the UK and the U.S. since 2007, about 300 each to Australia and Canada, and more than 100 each to Germany and Singapore.”

Meanwhile, the new director of the U.S. de facto embassy in Taipei (under the name of American Institute in Taiwan), Brent Christensen, made his debut this week on the island in a press conference and signaled stronger U.S. support for the island in the face of growing pressure from Beijing.

“I am here to tell you that U.S. policy towards Taiwan has not changed,” he said.  “Any effort to determine the future of Taiwan by other than peaceful means represents a threat to the peace and security of the Western Pacific area and is of grave concern to the United States.  We are opposed to unilateral attempts to change the status quo.”

I’m glad to see this.  The comments no doubt infuriated Beijing, which has loudly protested against the U.S. supplying arms to Taiwan and allowing senior officials to visit the island – acts the mainland says violates the one-China policy that Washington committed to observe after switching official recognition to Beijing.

Japan: The cabinet approved draft legislation to loosen the country’s immigration rules, a big move.  The relaxed laws would create two new visa categories to allow foreigners in sectors with labor shortages to enter the country.

This is long overdue.  Japan has some of the most restrictive immigration laws and accepts few workers from other countries, but now the government is looking to add blue-collar workers in construction, farming and healthcare.

Workers in the first visa category would be allowed to work in the country for five years, and bring their families, though they need some level of proficiency in the language.

Workers with a higher level of skills would eventually be allowed to apply for residency.

Parliament still must approve the draft legislation and there is stiff opposition from groups that worry about the potential impact on wages and the crime rate.  Sound familiar?

But Japan has long had a severe demographic problem, such as in a birthrate below replacement level (2.1) all the way back to the mid-1970s. It now stands at 1.4.  Plus Japan has the world’s longest life expectancy at 85.5 years and you see the problem.  How to pay for all those retirees, and benefits, and let alone how to maintain growth in the economy with a shrinking population?

Brazil: Far-right candidate Jair Bolsonaro won the run-off for president on Sunday with 55% of the vote against left-wing hopeful Fernando Haddad of the Worker’s Party (PT) who took the other 45%.

Editorial / Wall Street Journal

“ ‘Bolsonaro threatens the world, not just Brazil’s fledgling democracy,’ declared a headline last week in the Guardian... And that was one of the milder warnings in the international press. Yet Brazilians elected him anyway... Maybe the world should show a decent respect for Brazilian democracy and try to understand what happened.

“Start with the fact that this was a transparent, competitive and fair contest.  Mr. Bolsonaro didn’t steal the election. He won it by persuading voters. [Ed: and use of the above-noted fake news campaign employing WhatsApp.]  A 27-year member of the legislature, Mr. Bolsonaro was also fortunate to be running against Fernando Haddad, the hand-picked candidate of the Worker’s Party that has ruled Brazil for most of the last 15 years.  Mr. Bolsonaro was able to run as the reformer against a legacy of economic and political failure.

“Brazil has yet to recover from the leftwing populism of PT President Luiz Inacio Lula da Silva (2003-2010) and successor Dilma Rousseff (2011-2016). Deficits, public debt and inflation soared, as the PT expanded the number of state-owned enterprises.  It also squandered the opportunity to boost capital flows, most notably by failing to create attractive auction rules in the huge deepwater oil reserves discovered in 2007.  By the time the Workers’ Party was done, Brazil was in a recession that lasted nearly three years.

“The PT also built a legacy of graft....

“Many other politicians from other parties joined in the bribery schemes. Mr. Bolsonaro did not. That gave him credibility when he ran as the antidote to PT greed and promised to drain the swamp.

“Now he has to deliver.  One good sign is that his chief economic adviser is Paulo Guedes, who trained at the University of Chicago.  Mr. Bolsonaro has a history of economic nationalism, which could be his downfall.  But as a candidate he promised to privatize some industries, clean up the fiscal accounts and propose full independence for the central bank....

“To achieve any of this Mr. Bolsonaro will have to confront an array of special interests in Brazil’s powerful business class.  He must also deal with 30 separate parties in Congress’ lower house and 20 in the senate. Yet he has a mandate, which means he should act fast on his reform agenda.

“Mr. Bolsonaro has often made offensive comments about race, homosexuality and women, and in the PT days he sometimes waxed nostalgic for an earlier era of military rule. But Brazilians went to the polls knowing all this, and knowing too that their democratic institutions proved their mettle resisting the corruption of Lula and the PT.

“Brazilians didn’t vote for fascism or a military coup. They voted for hope and change, and they will throw Mr. Bolsonaro out if he fails to honor his promises.”

The above editorial aside, following the vote, among his early moves, Bolsonaro said he will merge the ministries of agriculture and the environment, which many fear will endanger the Amazon rainforest, seeing as Bolsonaro is heavily supported by the agribusiness lobby.  A former environment minister tweeted that the move was “tragic.”

“This disastrous decision will bring serious damage to Brazil and will pass on to consumers abroad the idea that all Brazilian agribusiness survives thanks to the destruction of forests,” Marina Silva said.

The Amazon region is the largest rainforest in the world and is critical to the global environment.  Bolsonaro has previously suggested Brazil could pull out of the 2015 Paris Agreement on climate change, which he says compromises Brazil’s sovereignty over the Amazon region.

Random Musings

--Presidential tracking polls:

Gallup: 40% approval of Trump’s job performance, 54% disapproval; 89% Republicans, 37% Independents (Oct. 28).
Rasmussen: 51% approve / 47% disapprove (Nov. 2)

--In New Jersey, I told you I mailed in my ballot over a week ago and voted for my Republican congressman Leonard Lance.

But for the Senate, this was the evolution of my thinking.  A year ago, despite all his ethical issues, I said I was prepared to support Democrat Robert Menendez because he represented one of the four or five best foreign policy minds in the Senate at a time I felt this trumped other factors.

But then the Senate became even more partisan than ever and that blunted any hope that even on foreign policy, Menendez would act as an independent voice.

Enter Republican Bob Hugin, who I’m so-so on simply because of his past at my neighbor across the street, Celgene, where  he did some things with his drug pipe-line that were unethical in a big way.  I was nonetheless preparing to vote for him.

Then a few weeks ago Hugin ran a blatantly false ad about Menendez and the criminal accusations against the senator as part of his federal corruption trial, which ended last November in a hung jury.  The ads implied Menendez was guilty, when, in fact, he was never convicted and the charges were dropped.

That’s bad enough...but the worst was the ad that has been running over and over again that Menendez was consorting with underage prostitutes.  Yes, that was part of an affidavit in the court proceedings that was later found to be fake and the girls paid off to make the charge, and, again, the charges in the entire case were dropped.

Menendez is no angel, but I wasn’t voting for him for my above reason on how he was no longer an independent voice in the Senate in today’s climate.

But I was not voting for Hugin because of his blatantly false, vicious ad.

Remember, I supported Brett Kavanaugh, despite all the questions surrounding his past that came up in his hearings, because I felt the charges leveled against him were either unfair, or totally without factual basis.  [Bad behavior didn’t necessarily mean he was guilty of sexual assault, a giant leap.]

I thus would be an extreme hypocrite to accept the same behavior in the case of the Hugin campaign.

So I protested...and voted for the Libertarian, a long-time candidate in the state.

Yes, I can’t say this is my best moment, but I’m just telling you the truth.  You know I’m tired of our endless national dialogue that is filled with the worst lies imaginable...and of course it’s all getting much worse.

--I watched Oprah Winfrey’s speech in support of Georgia gubernatorial candidate Stacey Abrams Thursday and Oprah was outstanding, a masterful performance that was inclusive, not divisive, with the emphasis on the importance of voting.

Alas, she insists she’s not interested in running in 2020, but there isn’t a single Democrat who could come close to energizing the base, and many independents, like she could.

--Editorial / Wall Street Journal

“An old line is that the 11th Commandment of the Grand Old Party is never criticize a fellow Republican, but even Moses might have allowed some exceptions. The party’s House campaign chairman Steve Stivers was right this week to distance the GOP from Steve King of Iowa.

“ ‘Congressman Steve King’s recent comments, actions, and retweets are completely inappropriate,’ Mr. Stivers tweeted on Tuesday.  ‘We must stand up against White supremacy and hate in all forms, and I strongly condemn this behavior.’ Mr. King is known for a library of inflammatory remarks and associations, and in August he met with members of an Austrian political party associated with neo-Nazi movements.

“The Stivers rebuke is notable because the Ohio Congressman is chairman of the National Republican Congressional Committee, which is responsible for holding the GOP’s House majority, and every seat counts.  Mr. King won more than 61% of the vote in 2016, but this year he’s in a tight race because of his own words  and actions.  His Democratic challenger J.D. Scholten is a former professional baseball player who has raised far more money that has Mr. King. Voters in western Iowa’s fourth district might decide they prefer Mr. Scholten over someone who keeps company with the ugly right.”

--A gunmen stormed into the Tree of Life Synagogue in Pittsburgh Saturday morning during a service, killing 11 worshippers and wounding six others, including four policemen.

The suspect, Robert Bowers, was not a fan of President Trump and had accused the president of doing nothing to stop an “infestation” of the United States by Jews.  Trump condemned the shooting and said there was no tolerance for anti-Semitism.  But Trump’s critics have blasted the president for his frequent anti-immigrant and anti-Muslim comments, and for blaming “both sides” when a counter-protester was killed at a white supremacist rally in Charlottesville, Virginia last year.

Editorial / Wall Street Journal

“The massacre at the Tree of Life synagogue in Pittsburgh is an awful reminder that there are human hatreds far more virulent and ancient than those that animate our current political divisions. The killer of 11 human beings on the Sabbath Saturday morning was an anti-Semite who was out to kill Jews.

“ ‘All Jews must die,’ alleged killer Robert Bowers yelled as he burst into a religious service and opened fire. As our friends at the New York Sun note, anti-Semitism is not aimed at Jewish behavior, or support for Jewish immigration, or support from Israel.  Robert Bowers simply hated Jews.

“This irrational hatred is one of humanity’s oldest and manifests itself in murder almost daily in the Middle East.  Jews are killed simply because they are Jews, as they have throughout history. This is why millions have sought refuge in a Jewish state, Israel, and also in the religious protections embedded in the Constitution of the United States.

“The outpouring of support and grief for the victims of the Pittsburgh massacre is a reminder of America’s unique role as a refuge for the world’s religious.  Muslim states often persecute non-Muslims as well as Muslims who do not share their brand of Islam. China persecutes people of all faiths. America protects them....

“In America the most stalwart supporters of Israel and the Jewish people are evangelical Christians and orthodox Catholics.  Perhaps this is because as people of faith themselves they know what it is like to be mocked and shunned in a popular culture that is increasingly secular, often aggressively so....

“This being 2018 in America, the political left nonetheless jumped immediately to shift blame for the murders from the killer to Mr. Trump....

“Americans would do well to ignore this toxic habit of political blame for murderous acts by the racist, anti-Semitic or mentally disturbed. We are all responsible for our rhetoric, and that includes Mr. Trump, as well as Hillary Clinton and Eric Holder.

“But the blame artists are distracting attention from the real sickness, which in this case is anti-Semitism, a hatred that goes back millennia. That is the toxin to banish as much as possible from American life, even if it can’t be purged entirely from human souls.”

Michael Gerson / Washington Post

“Americans like to think of the military defeat of Nazi Germany and the liberation of death camps as their answer to the most murderous outbreak of anti-Semitism in history. It has become part of our national lore: American soldiers escorting German locals to visit the Buchenwald concentration camp, forcing them to see the faces of those killed with their complicity.

“Americans predictably forget that their initial response to attacks on Jews in Germany during the 1930s was utterly shameful.  Horrific persecution was broadly reported in American media. Yet our country passed up opportunity after opportunity to accept Jewish refugees, including children.  President Franklin D. Roosevelt said it was ‘not a governmental affair.’ Cultural leaders such as Henry Ford and Charles Lindbergh normalized anti-Semitic ideas and language.

“Yet after the war, no one ever forced Americans to walk past the faces of those who needlessly died with their complicity....

“(Today), the big business of partisanship – cable networks and hosts, radio personalities, talking heads, and conspiratorial websites – manage to profit from the escalation of contempt. They are the culture-war profiteers.

“We see this dynamic at work when Hispanics are routinely reduced to caricatures of gang bangers and rapists, intent on invading the country (with Democratic support); when refugees are identified as a dangerous fifth column, motivated by an inherently violent faith; when young African American men are regularly accused of disloyalty for acts of protest; and, yes, when politicians and commentators talk about ‘globalists’ and the ‘[George] Soros-occupied State Department’ and are clearly going after the Jews.

“Much of this can be traced to white supremacy, or its close cousin, white grievance. But why anti-Semitism?  Why did the Charlottesville alt-right protesters defend Confederate monuments by chanting, ‘Jews will not replace us’?  I am not sure.  Anti-Semitism seems to have deep theological roots, in the distortion of Christianity as a blessing for hatred.  It bubbles up on the right and left, among European right-wingers and academic ‘anti-Zionists,’ from Republican legislators, from followers of Louis Farrakhan and from the leader of the British Labour Party.  The Anti-Defamation League reported a 57 percent increase in anti-Semitic hate crimes in America in 2017 over 2016.  Can there be any other reason for this spike than the general legitimation of dehumanization in American politics?

“This is what makes Republicans who are complicit – those who are bystanders and enablers – so difficult to understand or forgive.  Many regard themselves as opponents of prejudice and especially as philo-Semites. But how can they accept political leadership that expands the acceptable range of hatred? How can they condemn the fire in our public life when they follow a political pyromaniac?  Or perhaps they assume that history will again look the other way.”

Patti Davis / Washington Post

“When I was writing my book ‘The Long Goodbye,’ a memoir about losing my father to Alzheimer’s, I spoke with veteran reporter Harry Smith about my father’s legacy. Harry was my neighbor when I lived in New York, and I had become friends with him and his family.

“ ‘Your father had a shoulder big enough for us to cry on,’ he said.  ‘Think about how he comforted this country in the Challenger disaster.’

“ ‘We know of your anguish,’ my father said in that speech.  ‘We share it.’

“Ronald Reagan has not been the only president to offer comfort and solace to a grieving nation. Bill Clinton did after Columbine. George W. Bush did after 9/11. Barack Obama did after Sandy Hook. Each spoke eloquently, with somber compassion and with reverence for the pain of the victims and the shock of a saddened country. Our grief was reflected in their eyes. We didn’t doubt that their hearts were breaking along with ours.

“That was then. Now, after a week of fear, with pipe bombs being sent to a list of people whom President Trump has said horrible things about, and to CNN, which he consistently targets, 11 Jewish citizens were slaughtered in their place of worship on the Sabbath. Trump’s response?  He joked that he almost canceled an event because, after having to speak to reporters about the shooting in the rain, he was having ‘a bad hair day.’  Yes, I know, he first read what was scripted for him and called the act ‘evil.’ But he has also called Democrats, others who oppose him and the news media evil. The word doesn’t hold much meaning coming from him.

“Where does a grieving nation turn for comfort when the man who occupies the White House offers none?  Our hearts are hurting.  Places of worship are meant to be sanctuaries, not slaughterhouses. America is not supposed to be awash in fear. A friend told me that he doesn’t want to listen to the news anymore.  He wants to be ignorant of what’s going on because the stress and the fear are too much to bear.  I answered him that we’re all responsible now for tending to one another’s wounds, and if you stay blind to what those wounds are, you can’t help.  Ignorance is not an option these days. This is a time for all of us to lead with the courage and compassion that is missing at the highest levels of our government.

“In 1999, after Columbine, Clinton spoke about teaching our children ‘to resolve their conflicts with words, not weapons.’

“After 9/11, Bush said, ‘America was targeted for attack because we’re the brightest beacon for freedom and opportunity in the world. And no one will keep that light from shining.’

“In 2012, after Sandy Hook, Obama said, ‘all across this land of ours, we have wept with you.  We’ve pulled our children tight.’

“After the Challenger disaster, my father said, ‘We will never forget them, nor the last time we saw them, this morning, as they prepared for their journey and waved goodbye and ‘slipped the surly bonds of earth’ to ‘touch the face of God.’’

“After 11 worshippers were gunned down, massacred because they were Jewish, Trump said there should have been an armed guard inside.  He said the death penalty should be toughened. And then, later, he made his joke about having a bad hair day and tweeted about a baseball game.

“This president will never offer comfort, compassion or empathy to a grieving nation.  It’s not in him.  When questioned after a tragedy, he will always be glib and inappropriate. So I have a wild suggestion: Let’s stop asking him.  His words are only salt in our wounds....

“Comfort comes in many forms, some of them small moments of kindness.  Mother Teresa said, ‘We know only too well that what we are doing is nothing more than a drop in the ocean. But if the drop were not there, the ocean would be missing something.’”

--A German former nurse accused of murdering 100...100... patients, admitted as his trial began Tuesday that he did it.  Detectives say Niels Hoegel, 41, administered fatal doses of medication to the people in his care in two hospitals in northern Germany; the biggest serial killing case in Germany’s post-war history.

His motive, authorities say, was to impress colleagues by trying to resuscitate the very patients he had attacked.

Hoegel is already serving a life sentence for killing people in his care.  The 100 patients died between 1999 and 2005.

It’s a sensitive trial for German health authorities who are accused of turning a blind eye to Hoegel’s murderous activity.  I mean 64 were killed in one facility, 36 in the other. You’d think....

Actually, he may have killed more than 100 but many potential victims have been cremated.

Good lord.

--Infamous Boston gangster James “Whitey” Bulger was killed Tuesday, shortly after being transferred to a federal prison in West Virginia.  A fellow inmate with Mafia ties is under investigation in the slaying at the Hazelton federal penitentiary, one of the roughest prisons in the federal system.

As yet, no one can explain why Bulger was transferred, and why he was put in the general prison population.  He was reportedly smashed repeatedly in the face with a padlock, inside a sock, to the point where he was unrecognizable....and it was far worse than this gruesome description.

Bulger was convicted on racketeering charges that included 11 murders and sentenced to life in prison in 2013, with the judge telling him that the “scope, callousness and depravity of your crimes are almost unfathomable.”

But he had also been an FBI informant, and no one likes a snitch.         

--“The Simpsons” is solving the problem of Apu, the Indian immigrant who runs a Kwik-E-Mart, by just dropping the character and not making a big deal out of it, amid allegations of racial stereotyping about Indian-Americans.

The problems with Apu have been brewing for years.

Now discuss amongst yourselves.  I’m in enough trouble as it is.

--Finally, back to Pittsburgh and the tragedy at Squirrel Hill.  Long-time readers know that the Pittsburgh area is “home.”  My mother was part of a very large family in the area, towns like Greensburg, Latrobe, Pleasant Unity, Monroeville, Murrysville....

My parents both went to Pitt, where they met, my nephew recently graduated from the school, I was actually accepted at Carnegie-Mellon but thought I would flunk out (I would have) and, thanks to my parents allowing me the decision, I ended up at Wake Forest (Arnold Palmer’s alma mater, speaking of Latrobe) and almost flunked out there.

There are no better people on the planet than western Pennsylvanians.  From all my travels I’d say it’s not even close.   Growing up I spent weeks there each year, between summer vacations and driving out for holidays (including a memorable trip, the day JFK was assassinated), and they are the most giving people on Earth.  My relatives, to this day, would do anything to help me.  I know one thing for sure...no one feeds you like they do!

The Pittsburgh area, to me, is the ultimate melting pot.  Tons of Eastern Europeans – my Mom’s side is Slovak, primary roots, today, in what is now Slovakia – and you have every other ethnicity there.  Just look through an old Pitt Panther roster and you’ll get a kick out of some of the names...oh yeah, lots of Slovaks, Poles, Italians (Dan Marino ring a bell?  I just double-checked; he had some Pole in him as well.)

So my heart goes out to the Squirrel Hill community.  Mr. Rogers’ Neighborhood.  [I forgot he was born in Latrobe.]  Steelers coach Mike Tomlin lives right near the Tree of Life Synagogue.

We love you...we pray for you. 

And in memory, each individual needs to do what they can to combat hate.

---

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

God bless America.

---

Gold $1234
Oil $62.86

Returns for the week 10/29-11/2

Dow Jones  +2.4%  [25270]
S&P 500  +2.4%  [2723]
S&P MidCap  +3.8%
Russell 2000  +4.3%
Nasdaq  +2.7%  [7356]

Returns for the period 1/1/18-11/2/18

Dow Jones  +2.2%
S&P 500  +1.9%
S&P MidCap  -2.0%
Russell 2000  +0.8%
Nasdaq  +6.6%

Bulls 44.3
Bears 
19.8...the report from Investors Intelligence is released on Wednesdays, and Oct. 3, the S&P 500 was at 2925, five points from its all-time high, with a bull reading of 61.8.  I wrote in my WIR of 10/6 that a reading above 60 was a strong warning sign...and it proved to be shortly thereafter.  But 44.3 is to me a sign ‘the worst is over,’ for now.

Have a great week.

Dr. Bortrum posted a new column!

Brian Trumbore



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Week in Review

11/03/2018

For the week 10/29-11/2

[Posted 11:45 PM ET]

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

Edition 1,021

Following today’s strong jobs report for October, President Trump tweeted: “Wow! The U.S. added 250,000 Jobs in October – and this was despite the hurricanes.  Unemployment at 3.7%. Wages UP!  These are incredible numbers.  Keep it going, Vote Republican!”

Yes, the numbers were solid, as I’ll detail further below, and the market recovered some from its October swoon, save for today.

As we approach Tuesday’s vote, though, there are many Republicans, such as yours truly, who wonder why the president didn’t just hammer home the positive economic news the past few weeks and instead changed the subject to immigration.

But did the president’s strategy work?

If you had to pick one state that is key in setting the tone, it’s probably Florida.

There was some fascinating CNN/SSRS data Thursday that showed that both the Florida gubernatorial and Senate races were now toss-ups when the Democrat had a decent lead in both just ten days ago. 

Specifically, Democrat Andrew Gillum was ahead of Republican challenger Ron DeSantis for governor, 49-48 (a statistical dead heat), while in the Senate race, Democrat Bill Nelson led Republican Rick Scott 49-47 (ditto).

At the same time, President Trump’s approval rating in Florida rose from 43% to 47% since mid-October, so was this the immigration strategy, the economic numbers, or both?  [This is where Tuesday’s exit polling can be very useful.]

Separately, in Tennessee, where there is a heated Senate race between Republican Marsha Blackburn and Democrat Phil Bredesen, Blackburn now has a 49-45 lead, according to CNN/SSRS, when for much of the time Bredesen has led.  Here, President Trump’s approval rating has risen to 53% vs. 49% in September.

One man I look to when it comes to gauging the national picture is Larry Sabato, the head of the University of Virginia’s Center for Politics, and he told the Washington Post on Monday:

“Our current hard count in the House is 212 D, 202 R, 21 toss-ups.  Neither party is over 218, a majority.  Democrats have the better chance to go over the top, since 20 of 21 tossups are currently held by the GOP. That doesn’t guarantee that the Democrats actually will.”

“In the Senate,” Sabato notes, “we currently have Rs at 50 – all they need to control with Pence – Dems at 45, with 5 toss-ups.”

“For Dems to win 51, they’d have to sweep the toss-ups, and switch a GOP seat such as Tennessee or Texas.  Not impossible but the equivalent of an inside straight.”

A new poll by Quinnipiac University, incidentally, had Texas Republican Sen. Ted Cruz leading his Democratic challenger Beto O’Rourke, 51-46.

Virtually most are in agreement.  Republicans will retain the Senate, Democrats will take the House.  But a lot of folks were wrong in 2016.  I just want the election to be over so, err, we can move on to 2020!!!

One other point....

Turnout Tuesday, by all indications, is going to rival a presidential election.  I thought it was interesting that in a local NBC News report on my state of New Jersey, there were at least five times more mail-in ballots already received as of Thursday in two large counties as in 2016 (me being one of them).  That’s surely an indicator of interest.  Early voting returns across the country are way up, it seems.

But an NBC News / Univ. of Chicago poll of millennials, nationwide, found 59% of them are unfamiliar with their congressional candidates.   At the same time, 59% disapprove of President Trump’s performance, 24% approve.  Democrats need them to vote...but they never do!  So is this year finally different?

[A separate Harvard University Kennedy School of Government survey, on the other hand, says Millennials are likelier to vote this year than they were in 2014 and 2010, with 40 percent of voters under 30 saying they will definitely vote this year – 54 percent of  Democrats, 43 percent of Republicans and 24 percent of independents.  In this one, President Trump has a 26 percent approval rating.]

---

But I want to spend a little time on a two-part documentary PBS’ “Frontline” ran on Facebook, Tuesday and Wednesday. [You can find it on their site, if not now, then shortly.]

There is no better program on the air than “Frontline.”  I always try to catch its shows on foreign policy topics and it has done some phenomenal work on items such as the Rwandan genocide and the Moscow apartment bombings that Vladimir Putin was responsible for.  Every American, especially every high school student, should watch both of those.

Add this Facebook two-parter to the list.  Yes, “60 Minutes” had a good segment on the social media network, but that was for about 28 minutes.  “Frontline” did two hours and no one gets more people of influence to speak than the producers of this program do.  Plug Frontline into my search engine and you’ll come up with a ton of stuff.

But the Facebook expose is devastating.  Yes, the market didn’t react to it, and “Frontline” has nowhere near the audience “60 Minutes” has.  But influential people watch it.  And I’d be shocked if Facebook executives aren’t hauled back before a Congress armed with far more knowledge than they had before.

Personally, after watching the program and hearing the words of insiders, there is no doubt in my mind that Mark Zuckerberg and Cheryl Sandberg would be indicted given the right investigation.  They deserve to be.

Facebook made five insiders available to “Frontline” and they were all dopes.  And the documentary unearthed some scathing video that spelled out how executives in the company, including Zuckerberg and Sandberg, despite countless warnings on how the data could be misused, refused to take action.

A big part of the reason for this was Facebook was trying to build up its valuation before going public.

But what you see on the program is that in light of the Russia investigation and the misuse of Facebook’s user profiles, they now proudly talk of hiring thousands to attack ‘misinformation’ and someone like me, experienced beyond belief in the world, can only shake their heads and think, “this massive group of 20-something know-nothings?  Are you kidding me?!”  Their boss, one of the five allowed to talk to “Frontline,” Tessa Lyons, is a flat-out idiot, and she’s apparently overseeing the entire operation.

All five ‘team members’ also told producers the same thing when it comes to how they are going to attack the massive problems inherent in the platform.  “We’re having an ongoing conversation...”  What the blank does that mean?!

Here’s what you learn.  “Frontline” interviewed a UN investigator on the misuse of Facebook in Myanmar and he called the company “highly destructive.”  “Facebook turned into a beast,” as the government literally spread deadly lies through the network, heavily used by the people there.  The representative said, Facebook “played a significant role in the genocide.”

The same thing has happened in the likes of India, Sri Lanka and the Philippines.

And what is the company’s standard response to allowing all the deadly garbage on its network?

‘We’re hiring more people versed in the language in [plug in the country].’  Trust me, they aren’t hiring former CIA station chiefs, which is what would be required.

“Frontline” interviewed a former company rep in the Middle East who said the leaders she talked to were telling her “the danger of how rumors could spread.”  The program also interviewed the man behind the Arab Spring in Egypt, who used the Facebook platform to overthrow President Mubarak, and then watched Egyptian intelligence turn the platform against him and his supporters, killing scores.

Facebook turns democracy upside down.  It’s where “lies are truth.” A professor at the University of North Carolina at Chapel Hill, who has studied the company extensively, told “Frontline” the “company is in way over its head.”

As for Russian involvement in our 2016 elections, a Facebook exec admitted they knew of the disinformation campaigns but did nothing of substance to stop them.

So following last weekend’s synagogue massacre, the New York Times reported: “On Monday, a search on Instagram, the photo-sharing site owned by Facebook, produced a torrent of anti-Semitic images and videos uploaded in the wake of Saturday’s shooting at a Pittsburgh synagogue.

“A search for the word ‘Jews’ displayed 11,696 posts with a hashtag ‘#jewsdid911,’ claiming that Jews had orchestrated the Sept. 11 terror attacks.  Other hashtags on Instagram referenced Nazi ideology, including the number 88, an abbreviation used for the Nazi salute ‘Heil Hitler.’”

And as I told you the other week, and as the Times noted Monday, “Close watchers of Brazil’s election on Sunday ascribed much of the appeal of the victor, the far-right populist Jair Bolsonaro, to what unfolded on social media there.  Interests tied to Mr. Bolsonaro’s campaign appeared to have flooded WhatsApp, the messaging application owned by Facebook, with a deluge of political content that gave wrong information on voting locations and times, provided false instructions on how to vote for particular candidates and outright disparaged one of Mr. Bolsonaro’s main opponents, Fernando Haddad.”  [The Times should have noted, ‘his only opponent,’ as it was a run-off.]

I’m still on Facebook myself, but for weeks I’ve decided to use it sparingly, just to post my columns.  One of their 20-something security ‘experts’ will now probably read my missive and shut me down, before they do anything about the Russians, the Iranians, Facebook-related killings in Myanmar and India.  So be it.

Wall Street

October ended Wednesday and it was a brutal month for stocks.  The Dow Jones fell 5.1%, but the S&P 500 lost 6.9%, its worst month in 7 years, and Nasdaq cratered 9.2%, worst since Nov. 2008.  That is ugly, sports fans.

But, depending on whose figures you’re looking at, third-quarter earnings are going to be up anywhere from 26% to 29%.  [Over 50% of the gain the result of the corporate tax cuts, it just needs to be added.]

So why the doom and gloom?  The Federal Reserve, chiefly, and all the good news that follows means the Fed is raising interest rates for sure in December, though the October swoon had some casting doubt they would, and there are more rate hikes to follow in 2019 and we know the market doesn’t like this.

It also doesn’t help the rest of the world, particularly Europe and China, rather major players in their own right, are in slowdown mode.  So there are good reasons for concern later in 2019 here, and definitely 2020, which would have our president going ballistic.

But for now, as alluded to above, we had a strong jobs report for October, 250,000, well above the projected 190,000 (September was revised down 16,000 to 118,000, while August was revised up 16,000 to 286,000).

The three-month average is a very healthy 218,000, the jobless rate unchanged at a low of 3.7% (since 1969).

Importantly, average hourly earnings came in up 0.2%, but 3.1% over a year ago, which is encouraging.

We had much more economic data on the week.   Personal income for September was up 0.2%, less than forecast, while spending came in as projected, 0.4%.  The Fed’s key personal consumption expenditure index was 0.1%, with a core PCE of 2.0% year-over-year, right in line with what the Fed wants to see, though it seems willing to accept a little more.

The Chicago manufacturing PMI figure for October was less than expected but a still strong 58.4 (50 being the dividing line between growth and contraction) while the ISM national figure on manufacturing was also a little shy of forecast, 57.7.

September’s construction spending number was unchanged and factory orders for the month were up a strong 0.7%.

But you still have the ongoing weakness in the key housing sector, and the S&P CoreLogic Case-Shiller home price data for August was 5.8% year-over-year, which is a continuation of a trend of slowing price hikes, i.e., not just the impact of rising mortgage rates but also of homebuyers being priced out of the market, so sellers are lowering prices.  [The rate on a 30-year mortgage has come down to about 4.86% vs. 5.00% recently, but that’s largely because the yield on the 10-year Treasury had fallen some from its cycle high, though by week’s end it was headed back up.]

That said, for the 12-month period ending August, Las Vegas still had the biggest appreciation at 13.9%, with San Francisco at 10.6%. 

On the trade front, for now it’s all about the ongoing U.S.-China conflict, with President Trump tweeting Thursday: “Just had a long and very good conversation with President Xi Jinping of China.  We talked about many subjects, with a heavy emphasis on Trade. Those discussions are moving along nicely with meetings being scheduled at the G-20 in Argentina. Also had good discussion on North Korea!”

Clearly, the president felt compelled to boost the stock market ahead of Tuesday’s vote, and overnight in the futures market it worked...until it didn’t.

President Xi said he told Trump that economic and trade disputes risked harming both of their countries, according to Chinese state broadcaster China Central Television.

CCTV also reported that Trump initiated the phone call and said Xi was willing to meet the president at the G-20 to “exchange in-depth views on China-U.S. relations and other major issues.”

Xi said both he and Trump have good visions for a healthy, stable development of China-U.S. relations as well as expanding economic and trade cooperation, and they should make efforts to realize the wishes.

President Trump’s top economic adviser, Larry Kudlow, echoed his boss’s optimism, saying in an interview the call between the two leaders represented “a thaw” in relations.

But then Kudlow later conceded there were no official trade talks taking place and there won’t be until Beijing presents a concrete proposal to address Washington’s big complaints.

There is no way, despite the false reports to the contrary this morning, that there is going to be a full-blown trade agreement between the two sides until maybe next year, as the two are miles apart, particularly on the intellectual property issue, which I get into in great detail later.

The Trump administration is still looking to impose increased tariffs on $250bn in Chinese imports come January (from the current 10% to 25%), and to expand the tariffs to all Chinese imports, which would include iPhones and other gadgets.

Editorial / Wall Street Journal

“The Trump Administration’s China trade strategy has employed blunderbuss tariffs that hurt the U.S. and China. But the policy took a better turn this week with strong but targeted actions to punish alleged theft of U.S. technology...

[Ed. I cover the specifics in the ‘Foreign Affairs’ section down below.]

“IP theft usually goes unreported because victims fear retaliation and reputational damage...

“The export restrictions and indictments also have the advantage of focusing on the culprits, while tariffs spread economic damage to innocent consumers. The actions send a message that the U.S. wants to punish theft and predatory behavior, not free trade and honest commerce. Beijing has to make a choice about the kind of trading partner it wants to be.”

Walter Russell Mead / Wall Street Journal

“That crashing sound you heard in the world markets last week wasn’t just a correction.  It was the sound of the end of an age.

“During the long era of relatively stable international relations that succeeded the Cold War, markets enjoyed an environment uniquely conducive to economic growth. The U.S. faced no peer competitors, and the most important great powers generally (if sometimes selectively) supported Washington’s emphasis on opening markets and reducing barriers to investment and trade.  The positive-sum logic of economics trumped zero-sum international politics in the halls of power world-wide.

“The results were extraordinary. Between 1990 and 2017, world-wide gross domestic product rose from $23.4 trillion to $80.1 trillion, the value of world trade grew even faster, more than a billion people escaped poverty, and infant-mortality rates decreased by more than 50%. The number of people with telephone service grew roughly 10-fold.

“This hiatus from history was, by most measures of human flourishing, a glorious era. Now it has come to an end, or at least a pause, and the world is beginning to see what that means.

“During the Obama administration, foreign-policy observers began to speak of ‘the return of geopolitics’ – the idea that the international arena was increasingly defined by competition among strategic rivals. Russia, China and Iran were ‘revisionist’ powers that aimed to upend the post-Cold War era of American dominance. These powers enjoyed growing success, particularly during President Obama’s second term. By the time Mr. Trump took office, there was little doubt a much more challenging geopolitical environment had taken shape....

“The new era of geopolitics is unlikely to be an era of small government. The Trump administration is reversing some of the regulatory excesses of the Obama era, and the president’s judicial appointees are prepared to rein in the administrative state. But it’s in the realm of national security that Washington’s most formidable powers are found, and Mr. Trump appears determined to make liberal use of them. Whether he will wield them wisely is another question: The evidence to date is mixed.

“President Trump cannot be blamed for the return of geopolitics. Russia, China and Iran decided to challenge the American power on which the economic order depended, and Mr. Obama’s response to that challenge was, regrettably, insufficient. A recalibration of the U.S.-China relationship was likely inevitable as the world’s oldest civilization became an economic superpower.  Hillary Clinton, who as secretary of state clashed with Mr. Obama over the need for a tougher approach to China, would not be a popular figure in Beijing if she had won the 2016 election.

“The world has entered a new, complicated and dangerous era of nationalist competition.  That is the realization now reverberating through the world’s financial markets.  More such realizations are still to come.”

Trump World

--On the caravan, President Trump said he believes there are more people traveling in the group than has been reported in the media – because he’s “pretty good at estimating crowd size.”

“You have caravans coming up that look a lot larger than it’s reported actually,” Trump told ABC News in an interview published Wednesday.

The United Nations refugee agency said last week that about 7,000 people were traveling with the caravan bound for the U.S. border.  The Mexican government has said there are 3,600 participants.

UNICEF estimates at least 2,300 children are among the group.

The interview with ABC came as Trump announced that the U.S. was going to send 10,000 to 15,000 troops to the border in anticipation of the caravan’s arrival.

Trump tweets on the topic:

“The caravans are made up of some very tough fighters and people. Fought back hard and viciously against Mexico at Northern Border before breaking through.  Mexican soldiers hurt, were unable, or unwilling to stop Caravan.  Should stop them before they reach our Border, but won’t!”

“Our military is being mobilized at the Southern Border.  Many more troops coming. We will NOT let these Caravans, which are also made up of some very bad thugs and gang members, into the U.S.  Our Border is sacred, must come in legally. TURN AROUND!”

“So-called Birthright Citizenship, which costs our Country billions of dollars and is very unfair to our citizens, will be ended one way or the other.  It is not covered by the 14th Amendment because of the words ‘subject to the jurisdiction thereof.’  Many legal scholars agree...

“...Harry Reid was right in 1993, before he and the Democrats went insane and started with the Open Borders (which brings massive Crime) ‘stuff.’  Don’t forget the nasty term Anchor Babies.  I will keep our Country safe. This case will be settled by the United States Supreme Court!”

“Paul Ryan should be focusing on holding the Majority rather than giving his opinions on Birthright Citizenship, something he knows nothing about! Our new Republican Majority will work on this.  Closing the Immigration Loopholes and Securing our Border!”

Editorial / Wall Street Journal

“President Trump really, really wants to make the midterm election about immigration, and for a while it looked like he had an edge due to Democratic excess. But with this week’s pre-election vow to end birthright citizenship in America by executive order, Mr. Trump has driven into his own constitutional ditch.

“Mr. Trump has the political high ground as long as he is trying to stop lawlessness or deter migrant caravans mobilized by left-wing groups in Central America. Even deploying soldiers to the border in nonmilitary roles can be justified to assist immigration agents overwhelmed by asylum seekers.  The U.S. has to send a signal that no one can bum-rush the border – not least to deter migrants from making a trip that will end in disappointment, or worse.

“By contrast, the birth citizenship gambit puts Mr. Trump on the wrong side of immigration law and politics.  Did Michael Cohen give him this legal advice?

“The right to citizenship for anyone born on U.S. soil is derived from the Fourteenth Amendment adopted in 1868: ‘All persons born or naturalized in the United States and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.’  This is the common law doctrine of jus soli, or right of the soil.  Opponents of birth citizenship try to obscure this plain meaning by interpreting ‘subject to the jurisdiction’ as applying only to those who owe allegiance to America. Because alien parents owe allegiance to a different sovereign, the argument goes, their children have no right to citizenship.

“But ‘jurisdiction’ is well understood as referring to the territory where the force of law applies, and that means it applies to nearly everyone on U.S. soil.  The exceptions in 1868 were diplomats (who have sovereign immunity) and Native Americans on tribal lands. Congress later granted Native Americans birth citizenship while diminishing tribal sovereignty....

“The very purpose of the Fourteenth Amendment was to prevent politicians from denying citizenship to those they thought weren’t American enough. This meant former slaves, but in the debate over the amendment the question of citizenship for immigrant children was raised directly.  As David Rivkin and John Yoo have recounted, Pennsylvania Sen. Edgar Cowan asked: ‘Is the child of the Chinese immigrant in California a citizen?’  Sen. John Conness of California said yes.

“The Supreme Court reinforced that meaning in U.S. v. Wong Kim Ark (1898) by upholding the citizenship of a child born in San Francisco of Chinese parents barred from citizenship by the Chinese Exclusion Act.  The Court wrote that ‘the 14th Amendment affirms the ancient and fundamental rule of citizenship by birth within the territory, in the allegiance and protection of the country, including all children here born of resident aliens.’

“Mr. Trump may imagine the current Supreme Court would rule differently.  We doubt it....

“The President still stands on firm legal and political ground when he fights sanctuary cities or the abolition of U.S. Immigration and Customs Enforcement.  But he undermines his legal standing, and his political credibility, when he pulls a stunt like single-handedly trying to rewrite the Fourteenth Amendment.”

--President Trump expressed disappointment that two recent terror incidents – including the mass shooting at a Pittsburgh synagogue – hurt the “GOP momentum” going into next week’s midterm elections.

Trump lamented the consequences of the pipe bombs sent to prominent Democrats and the killing of 11 by a white supremacist during a campaign rally Thursday in Missouri.

“We did have two maniacs stop a momentum that was incredible, because for seven days nobody talked about the elections,” he said.  “It stopped a tremendous momentum.”

--According to the Washington Post’s fact checkers, in the first nine months of the Trump presidency, the president made 1,318 false or misleading claims, an average of five a day.  But in the seven weeks leading up to the midterm elections, the president made 1,419 – an average of 30 a day.

There have been 6,420 falsehoods through Oct. 30, the 649th day of his presidency, according to The Fact Checker’s database that analyzes, categorizes and tracks every suspect statement uttered by the president.

October, not counting Oct. 31, was the worst month yet for the president: 1,014 claims that were false or misleading.

To state one example, he has said at least 74 times his border wall is already being built, when Congress has only approved $1.6 billion for improved fencing, while Trump also frequently mentions additional funding that has not yet been appropriated.

It’s little stuff, yes, but it’s not so little, like constantly claiming Supreme Court nominee Brett Kavanaugh was No. 1 in his class at Yale University or at Yale Law School. The law school does not rank and Kavanaugh graduated cum laude from the college – the third level below summa cum laude and magna cum laude.

Lastly, as someone who was writing about the aftermath of 9/11 on Wall Street in great detail, I couldn’t believe what Trump said on Saturday at an event in Indianapolis.

“I remember when we had the attack on Manhattan, we opened the stock exchange the next day.  People were shocked.”

I heard this and I was shocked.  Trump continued.

“With what happened early today, that horrible, horrible attack in Pittsburgh, I was saying maybe I should cancel both this and that. And then I said to myself, I remembered Dick Russell, a friend of mine, great guy, he headed up the New York Stock Exchange on September 11th, and the New York Stock Exchange was open the following day.  He said – and what they had to do to open it you wouldn’t believe, we won’t even talk to you about it. But he got that exchange open.  We can’t make these sick, demented, evil people important.”

The facts are that 9/11 was a Tuesday, and the market didn’t open until the following Monday, Sept. 17 – the longest shutdown since 1933.  It was also only through the heroics of Verizon that the Exchange was able to open when it did...the phone lines having been destroyed.

Oh, and that Dick Russell, Trump’s friend?  Try Dick Grasso.

--David Ignatius / Washington Post

“When President Trump issues an election-time order to send up to 15,000 troops to confront what many experts say is a nonexistent threat on the U.S.-Mexico border, what should Defense Secretary Jim Mattis do about it?

“Mattis’ answer, so far, has been to support the president and mostly keep his mouth shut.  He gruffly batted back a reporter’s question Wednesday about whether Trump’s troop deployment order was a political stunt by saying, ‘We don’t do stunts in this department.’  Unfortunately, some of Mattis’ colleagues fear he’s doing just that in implicitly backing Trump’s incendiary talk of an immigrant ‘invasion’ that requires sending active-duty troops.

“Watching Mattis walk the Trump tightrope is agonizing.  For many Americans, the retired Marine four-star general is the model of a stand-up guy – the sort of independent, experienced leader who can steady the nation in a time of division. But in dealing with Trump, Mattis often takes a seat and quietly accommodates the president’s erratic and divisive rhetoric – evidently believing that it’s better to hold fire and work from inside to sustain sensible policies.

“The danger for Mattis now is that he may be losing credibility on both sides.  Trump no longer seems to trust him fully, and some Pentagon colleagues wonder why he doesn’t speak out more forcefully about unwise policies.  Mattis’ role in the administration is precious, but so is his credibility as a truth teller – which is his ultimate legacy beyond any position or medal....

“Mattis is a national asset, and the country is lucky to have his solid judgment at the Pentagon.  No sensible person would want him to leave the job, but that’s partly because people believe he will speak out if the military is being misused for political purposes. With the spurious border deployment, that red line is close.”

I could not agree more with Mr. Ignatius.

--President Trump, speaking at a rally in Florida, said a third of Americans believed that the media was “the enemy of the people.”  He provided no evidence for this.

“We have forcefully condemned hatred, bigotry, racism and prejudice in all of its ugly forms,” he said.  “But the media doesn’t want you to hear your story, it’s not my story, it’s your story. And that’s why thirty-three percent of the people in this country believe the fake news is in fact, and I hate to say this, in fact the enemy of the people.”

Trump tweet: “There is great anger in our Country caused in part by inaccurate, and even fraudulent, reporting of the news. The Fake News Media, the true Enemy of the People, must stop the open & obvious hostility & report the news accurately & fairly. That will do much to put out the flame...

“...of Anger and Outrage and we will then be able to bring all sides together in Peace and Harmony.  Fake News Must End!”

Well, as the New York Times’ Jim Rutenberg points out, Trump’s anti-media strategy is working.  “Increasingly, the president’s almost daily attacks seem to be delivering the desired effect, despite the many examples of powerful reporting on his presidency. By one measure, a CBS News poll over the summer, 91 percent of ‘strong Trump supporters’ trust him to provide accurate information; 11 percent said the same about the news media.”

Trump told Lesley Stahl of CBS News in 2016 about his tactic, which she shared earlier this year: “I do it to discredit you all and demean you all, so when you write negative stories about me, no one will believe you,” she quoted him as saying.

But today, a new Washington Post/ABC News poll of registered voters asked the question ‘who is more responsible for politically motivated violence?’ and the answer was Trump, 49% / Media, 47%.

In a remark to the press today outside the White House, Trump reiterated “The Fake News is creating violence.”

--The president told ABC’s Jonathan Karl in an interview, “I always want to tell the truth...but sometimes something happens.”

Wish I had thought of this excuse as a kid when I was caught in a lie... “I told you the truth, Mom...but something happened.”

--Kanye West complained on Tuesday that he has been “used” and has decided to leave the political world to focus more on his music and design work.

“My eyes are now wide open and now realize I’ve been used to spread messages I don’t believe in,” West wrote.  “I am distancing myself from politics and completely focusing on being creative!!!”

Whatever.  I always liked your wife better, Yeezy.

Europe and Asia

Lots of data on the eurozone (EA19).

A flash estimate of third-quarter GDP was 0.2% quarter-over-quarter, 1.7% year-over-year, vs. 2.7% in the fourth quarter of 2017. This isn’t good. [Eurostat]

The September unemployment rate in the EA19 was 8.1% vs. 8.9% in Sept. 2017, the lowest since Nov. 2008, so this is good.  [Eurostat]

Some representative country rates: Germany 3.4%, France 9.3%, Italy 10.1%, Spain 14.9%, Ireland 5.4%, Netherlands 3.7%.

A flash look at October inflation has it up 2.2%, the highest since Dec. 2012, as released by Eurostat.  But the core is 1.1%, well below the European Central Bank’s 2% target.

And we had the IHS/Markit PMIs for manufacturing in October, 52.0 vs. 53.2 in September for the EA19, a 26-month low.

Germany was at 52.2, 29-mo. low; France 51.2, 25-mo. low; Italy 49.2, 46-mo. low*; Spain 51.8 (slight uptick from prior month); Ireland 54.9; Netherlands 57.1, 21-mo. low; Greece 53.1.

This data is not good, even if there’s still growth in all but Italy.

*Political tensions in Italy are definitely having an impact on growth, with a rising unemployment rate and a punk manufacturing sector.

Chris Williamson, chief economist, IHS/Markit

“Concerns about the Eurozone manufacturing sector intensified at the start of the fourth quarter.  The headline PMI fell to its lowest since August 2016, signaling a further slowing in the rate of  expansion.  New orders fell into decline for the first time in almost four years as trade woes escalated. Export sales fell for the first time in over five years.

“Moreover, the survey suggests that the manufacturing sector could contract in the fourth quarter unless the data revive in coming months.  However, with backlogs of work falling for a second successive month, and business expectations sliding to the lowest for nearly six years, risks seem firmly tilted towards the downside heading towards the end of the year.”

--Just a note on the key German economy.  Retail sales in September were up a disappointing 0.1%, month-on-month, and are down 2.6% year-over-year, which isn’t good.

Eurobits....

Brexit: It was a light week, news-wise, on the Brexit front. The UK did reportedly strike a deal with the European Union on post-Brexit financial services, with The Times newspaper saying London had agreed in talks with Brussels to give UK financial services firms continued access to the bloc.

But then a government source told the BBC, this was “a rather rose-tinted interpretation of where we  have got to,” and that “People shouldn’t get ahead of themselves.”

Prime Minister Theresa May insists that definitive trade terms between firms in the UK and the EU will be finalized by next March, but businesses across the board are already preparing for the worst.

Standard & Poor’s, for example, said on Tuesday that a no-deal Brexit would be likely to tip Britain into a recession as long as the downturn that followed the global financial crisis, and investors should no longer ignore this danger.

Talks are still essentially stalled over arrangements for the border between the British province of Northern Ireland and the Irish Republic if a trading relationship is not agreed to in time.

S&P’s worst-case scenario has unemployment rising to above 7 percent from around 4 percent now, house prices falling 10 percent, while London office prices would shrink more than 20 percent over 2 to 3 years.

Germany: Following another humiliating election performance in a key state, Chancellor Angela Merkel announced she would step down as party leader of the Christian Democratic Union (CDU) in December, a post she has held for 18 years, after a dismal performance by the party in elections in Hesse on Sunday.  But Merkel said she intended to stay on as Chancellor until 2021, a neat trick few really believe she’ll be able to pull off.

The CDU saw its share fall of the vote fall 11 points to just 28 percent, while the Social Democrats (SPD), the junior partner in her governing grand coalition, also slumped to just 20 percent, a third less than in the last election five years ago.  [The Greens came in third at 19.5 percent.  The far-right Alternative for Germany (AfD), enters the Hesse regional assembly for the first time with 12 percent of the vote.]

A former political rival of Merkel who retired from politics nine years ago has emerged as an unlikely early front-runner to succeed her as leader of Germany’s Christian Democrats.

62-year-old Friedrich Merz is the most popular candidate for party leader in various polls, ahead of Merkel’s preferred successor, Annegret Kramp-Karrenbauer.

Merz, in his retirement from politics, has served on the boards of high-profile companies including BlackRock, the world’s largest asset manager.  In announcing his return to the scene, Merz said of the chancellor: “She deserves respect and recognition for her achievements in 18 years at the head of the party but the CDU now has the opportunity to re-set.”

The CDU has its party conference in December in Hamburg to select a new leader.  Many members resent how Merkel dragged it to the center and want to return to its conservative roots.  Merkel had long held that the jobs of chancellor and party leader shouldn’t be split.

But Merz’ presence could make it easier for Merkel’s coalition partner, the Social Democrats, to walk away.

A Gallup poll taken this week did show Merkel still has a 66% approval rating among all Germans, down from a high of 74% in 2013.

Turning to Asia, China released its official government readings on manufacturing and services for October; 50.2 vs. 50.8 in September for the former, 53.9 vs. 54.9 for the latter.  [National Bureau of Statistics]

The Caixin private manufacturing figure was 50.1 for October, so at least some consistency between the two, both also reflecting a manufacturing economy that is potentially on the verge of contraction.

Japan’s manufacturing PMI for October was 52.9, 51.0 in South Korea, and a disappointing 48.7 in Taiwan.

Japan’s retail sales did rise an 11th consecutive month in September from a year earlier, +2.1%.

But the Bank of Japan cut its inflation forecast to just 1.5% for 2021 (a projected 0.9% this year).  Well off its 2 percent target.

Street Bytes

--On the week the market rallied after a rough start Monday, and despite a little weakness today, with the Dow Jones up 2.4%, ditto the S&P 500, and Nasdaq advancing 2.7%.  So the Dow and S&P are back in the black, up 2.2% and 1.9%, respectively, year to date.  [Nasdaq is up 6.6%.]

--U.S. Treasury Yields

6-mo. 2.49%  2-yr. 2.90%  10-yr. 3.21%  30-yr. 3.45%

The yield on the 10-year rose 13 basis points and is back near the 3.25% peak of a few weeks ago.  No the 30-year mortgage will climb back to 5.00% by the end of this coming week, most likely.  And that doesn’t help housing.

--Domestic crude inventories in the U.S. continued to rise, according to the Energy Information Administration’s latest weekly petroleum status report, with stocks at their highest level since mid-June.  The steady growth in crude inventories has helped to check excessive increases in crude prices.

And it’s also about U.S. production, which surged to a record 11.3 million barrels a day.  Plus the Saudis have said they would “meet any demand that materializes” following the imposition of U.S.-imposed sanctions on Iran’s crude exports that go into play this Monday.  [More on this below.]  For now, the actual impact may not be realized until early next year as ships loaded in October will still be delivering their cargoes over the coming weeks.

On the week, crude oil fell to its lowest level since early April, with West Texas Intermediate closing today at $62.86, down over $11 in four weeks.

But crude didn’t start falling until after Sept. 30 and in reporting their third-quarter earnings, both Exxon Mobil and Chevron had their highest profits for the quarter in four years.

Exxon’s net income rose 47% to $6.24 billion with improved operations and better refining margins.  Chevron’s profits doubled to $4 billion as production in the red-hot Permian basin in West Texas and New Mexico surged 80%.

Shares in both rallied on the news Friday, their earnings coming out this morning.  But before today, shares in Exxon and Chevron had fallen about 4% in the last 12 months even as oil prices were rising 30%.

Exxon’s production in the second quarter had indeed fallen to its lowest level in a decade, but the company said production had rebounded in Q3, a slight decline from a year ago.

For Chevron production set a company record, including new output from giant natural gas projects in Australia and North America.

Both companies are exploiting the Permian basin, owing in no small part to improved technology.

--Apple delivered unexpectedly strong sales and profits for its latest quarter, but the shares tanked 6.6% at the open Friday as the company gave a weak holiday forecast amid fears shoppers aren’t willing to shell out cash for the new crop of extra-pricey iPhones.

Apple posted its strongest fiscal fourth-quarter results yet – with $62.9 billion in revenue, beating the $61.4bn estimate of analysts. Apple beat profit expectations, with earnings per share of $2.91 against the forecasted $2.78.

But the company also revealed iPhone sales were 46.9 million, badly missing the Street’s forecast of 48.4 million and growing only 0.4 percent year-over-year.

The new iPhones have price tags starting at $999 and can stretch to $1,400 for a tricked-out XS Max.

But then Apple said that beginning this quarter, it would no longer break down unit sales for iPhones, iPads and Macs; revenue for same, including Watches and other items, accounting for more than 85% of the company’s total revenue.

CFO Luca Maestri said: “The number of units sold in any 90-day period is not necessarily representative of the underlying strength of our business.  If you look at our top competitors, they do not provide quarterly numbers.”

“When we believe that providing qualitative quantity of unit sales provides additional relevancy for investors, we will do so,” he added.

To which I’d say, ‘The hell with you.’  I mean that’s a bit arrogant, don’t you think?  Investors will now be sharply limited in how to understand the main drivers of the company’s performance.  Zero transparency!

As for Apple’s holiday guidance, it forecast sales between $89 billion and $93 billion, vs. analysts’ expectations of $92.7bn.  Apple’s forecast suggests a gain of only 3% year-over-year at the midpoint, as noted by the Wall Street Journal’s Dan Gallagher.  “That follows five consecutive periods of double-digit percentage gains, and even includes the launch of a new iPhone, iPad and MacBook Air in the period.  Those devices still may end up selling well. But Apple has made sure investors will have a harder time figuring that out. At this point, the stock deserves to lose some of its shine.”

CEO Tim Cook, however, said that when it came to China (where sales did rise 16% from a year earlier) and the company’s huge bet there, he was not concerned about the trade issue.  “I’m optimistic that the U.S. and China can work these things out for the benefit of everyone.”

Yeah, perhaps, but China’s home-grown product is at this point essentially the same as yours, Mr. Cook, at a fraction of the cost.  [Thanks to IP theft.]

--Samsung, the South Korean technology giant, slashed 2018 capex by more than a quarter this week and warned of lower profit until early next year, calling an end to a two-year boom in memory chips that fueled record third-quarter profit. 

Investors were already jittery over waning global demand for mobile and other electronics devices (see Apple), but Samsung does say the business environment for its products will improve by the second half of 2019, the company citing solid demand from servers as cloud-based data services grow fast.

Memory chip prices have fallen to over two-year lows as rivals gear up to start new production lines next year.

Separately, but related to the above, according to data from HYLA Mobile Inc., a mobile-device trade-in company that works with carriers and big-box stores, Americans are holding on to their smartphones an average of 2.83 years before upgrading, with Apple iPhones traded in during the period having an average of 2.92 years old.

Pricier devices, fewer subsidies from carriers and the demise of the two-year cellphone contract are the causes.

--FB, part II...Tuesday, Facebook said the next few years would be tough as its business slows, but that it was looking to a future where it moves beyond News Feed, the stream of content that is the core of the platform, and instead focuses more on different mediums like messaging, private chat and video – even though none of those make as much money as the News Feed does.

CEO Mark Zuckerberg said in a conference call with investors: “We have great products people love, but it will take us some time to catch up. It will take some time, and our revenue growth will be slower.”

The social network has pledged to hire tens of thousands more people to monitor content on its platform with the increased scrutiny on the spreading of disinformation, hate speech and leaks of user data.

For the third quarter, FB said its revenue rose 33 percent to $13.7 billion and profit increased 9 percent to $5.1 billion from a year earlier, roughly in line with the Street’s expectations. Revenue growth was down from the 42 percent jump the company had reported in the previous quarter.

Facebook also said its number of daily active users increased 9 percent to 1.49 billion from a year earlier, down from 11 percent growth in the prior quarter.  Monthly active users reached 2.27 billion.

Zuckerberg said Facebook was also looking more toward some of the properties it already owned, such as messaging apps WhatsApp and Messenger, which together have more than two billion users.

Farhad Manjoo / New York Times

“A few weeks ago, after Facebook revealed that tens of millions of its users’ accounts had been exposed in a security breach, I began asking people in and around the tech industry a simple question: Should Mark Zuckerberg still be running Facebook?

“I’ll spare you the suspense.  Just about everyone thought Mr. Zuckerberg was still the right man for the job, if not the only man for the job....

“That few can imagine a Facebook without Mr. Zuckerberg, 34, underscores how unaccountable our largest tech companies have become. Mr. Zuckerberg, thanks to his own drive and brilliance, has become one of the most powerful unelected people in the world.  Like an errant oil company or sugar-pumping food company, Facebook makes decisions that create huge consequences for society – and he has profited handsomely from the chaos.

“Yet because of Facebook’s ownership structure – in which Mr. Zuckerberg’s shares have 10 times the voting power of ordinary shares – he is omnipotent there, answering basically to no one....

“There’s another way to put this: For better or worse, Mr. Zuckerberg has become too big to fail.”

Separately, officials in Britain and Canada are joining forces to compel Zuckerberg to appear before them to answer questions on data privacy and disinformation.

Earlier this year, Facebook was fined over $600,000 after the UK’s data protection watchdog found it had given app developers access to up to 87 million users’ data “without clear consent,” some of the data shared with Cambridge Analytica, which used it to target political advertising in the U.S.

Last April, when parliament requested Zuckerberg appear before Commons Digital Culture committee, Zuckerberg sent his chief technology officer to appear, MPs then threatening to issue a formal summons for Zuckerberg to appear himself.

--General Motors shares surged nearly 10 percent Wednesday after reporting better than expected third-quarter earnings and revenues on strong sales of higher price models in the U.S. and China.

The carmaker announced adjusted earnings per share of $1.87, up 42 percent on the year earlier period and well above market expectations of $1.25.  Net revenue rose 6.4 percent to $35.8 billion.

Sales in North America and China were aided by the sale of more expensive pick-up truck models, for one.  In China, GM reported $500m in income in the quarter, which contrasts with Ford’s sizable loss there, as reported the week before.

GM also raised its guidance a bit, emphasizing results were influenced in part by a favorable tax rate.

--Shares in Boeing dived nearly 7% on Monday on word one of its brand-new 737 Max 8 planes had crashed into the Java Sea, killing all 189 people on board.  But then they recovered the rest of the week and ended up basically unchanged over last Friday.

Thursday, one of the black boxes (the flight data recorder) from the Lion Air jet was recovered by divers, while the search continues for the cockpit voice recorder.

The plane took off from Jakarta and plunged into the sea just minutes later. Data from flight-tracking sites showed erratic speed, altitude and direction in the time after the plane’s previous flight on Sunday.

Passengers on the Sunday flight from Bali to Jakarta recounted problems that included a long delay before takeoff for an engine check and the plane dropping suddenly several times in the first minutes of its flight.

But the president of Lion Air told reporters Monday that the aircraft’s technical issue from the previous flight had been resolved according to the manufacturer’s procedures.

--General Electric cut its dividend to one cent per share Tuesday and the shares cratered, as the company moved to separate its power division into two units following a net loss of $22.8 billion in the third quarter.  The company also revealed federal prosecutors had opened a criminal accounting probe over a $22 billion charge GE booked tied to acquisitions in its power unit, as well as a $6 billion charge in the first quarter for a shortfall in insurance reserves.

Revenue in the power division tumbled 33% from a year earlier.  Overall, GE said revenue dropped 4% to $29.57 billion in the quarter, as growth in its aviation and energy units offset some of power’s decline.

Larry Culp, who took over as CEO in October, told investors the conglomerate would miss its cash flow and earnings projections for the year, with the cut in the dividend from 12 cents saving about $3.9 billion a year.

GE’s turbine business has taken a nose dive as utilities started constructing their own solar and wind farms.  There are also ongoing issues with GE Capital, which despite being pared back significantly in recent years, remains a source of problems, including the need to boost reserves on its insurance portfolio by $15 billion, a not insignificant sum. Moody’s lowered the company’s credit rating two notches, from A2 to Baa1, analysts saying problems in the power-generation business could cause “considerable” damage to its cash flow.

GE’s stock is down nearly 50 percent over the past 12 months and finished the week at $9.30!

--IBM Corp. announced it was acquiring cyber security company Red Hat for $34 billion, by far IBM’s biggest acquisition.    The move underscores CEO Ginni Rometty’s efforts to expand the company’s subscription-based technology offerings and diversify its business beyond software sales and mainframe servers, which have seen sluggish growth.

Red Hat specializes in Linux operating systems, the most popular type of open-source software, which was developed as an alternative to proprietary software made by Microsoft.  Red Hat charges fees to its corporate customers for custom features, maintenance and technical support.

Rometty told USA TODAY in an interview: “This is about completely resetting the cloud landscape out there. Together we will be the No. 1 hybrid cloud provider.”

But many questioned IBM’s acquisition price, the company paying $190 per share for Red Hat, a premium of over 60 percent on Friday’s closing price of $116.68.

--Staff at Google offices around the world have been staging walkouts to protest the company’s treatment of women.  Specifically, the employees are demanding changes in how sexual misconduct allegations are handled, including an end to forced arbitration, which makes it difficult for victims to sue.  Google CEO Sundar Pichai has told staff he supports their right to take the action.

As I wrote last week, anger has been boiling over with the revelation, initially via a New York Times report, that one high profile executive received a $90 million payout after he left the firm, despite what the company considered a “credible” allegation of sexual misconduct made against him.

This week another executive resigned after he was alleged to have made unwanted advances towards a woman he was interviewing for a job that would have had her report to him.

Nearly 50 other employees have been sacked for sexual harassment without receiving a payout, Pichai told staff.

Thursday, speaking at a New York Times DealBook conference, Pichai said: “It’s been a difficult time. There is anger and frustration within the company. We all feel it.  I feel it, too.”

Pichai said Google had not lived up to the high bar it set for itself.  It has since “evolved as a company,” he added.  He promised Google would take steps to address the issues the employees raised.

--Starbucks delivered its strongest quarterly sales gain in more than a year, but it is still struggling to attract more customers to U.S. stores.  The company said it saw a 4 percent increase globally in the average check during its fourth quarter, which in turn drove sales at Starbucks locations on a comp-store basis, up 3 percent, and up a solid 4% in the U.S.  But the number of transactions in the home market fell 1% from a year earlier.

Revenue for the fiscal fourth quarter, which ended Sept. 30, surged 11% to $6.3 billion, beating estimates.

This was the first full quarter that CEO Kevin Johnson led the company without the presence of longtime leader Howard Schultz, who stepped down as chairman in June.

The shares surged on the generally positive news to $64.50 at week’s end.  [Months ago I said Starbucks was dead money at $57.70, and it fell to $48, but has rallied back rather strongly.]

--A cancer-linked herbicide has been found in more than two dozen popular breakfast cereals and snack bars, according to a report from the Environmental Working Group.

Glyphosate, the main ingredient in Roundup, was found in 26 of the 28 products tested, in levels “higher than what EWG scientists consider protective of children’s health.”

Of course it’s glyphosate that is causing all sorts of serious legal troubles for Monsanto and new parent Bayer AG.  Every year, according to the EWG, more than 250 million pounds of glyphosate is sprayed on American crops.

In a statement, Quaker said: “EWG report artificially creates a ‘safe level’ for glyphosate that is detached from those that have been established by responsible regulatory bodies in an effort to grab headlines.”

“I don’t think that people should become hysterical,” Sarah Evans, an assistant professor at the Icahn School of Medicine at Mount Sinai, told CNN.  “But people need to be really aware of where their food is coming from and what’s getting into their foods.”

Monsanto strongly disputes the finding that glyphosate is  a probable carcinogen and notes that over four decades, the EPA has consistently supported the safe and effective use of glyphosate.

--DowDupont, which was formed through the $130bn merger of Dow Chemical and DuPont last year, announced earnings for the third quarter that beat the Street, up 35 percent, with sales up 10 percent on a pro forma basis at $20.1bn.  The company said it had seen sales volume growth “in all divisions and all regions, led by double-digit growth in Asia Pacific and Latin America.”

CEO Ed Breen said plans to break the company up into three more focused companies remains on track for next year...the three being Materials Science, Agriculture and Specialty Products.

--Editorial / Wall Street Journal

“President Trump unloaded last week that the U.S. pays more for drugs – ‘same company, same box, same pill’ – than, say, the United Kingdom or France.  ‘And I’d say: ‘Why is this?’’ His latest proposal reveals he still doesn’t know, so allow us to explain why the U.S. shouldn’t put the world’s most innovative drug market at the mercy of what Greece is willing to pay for a cancer treatment.

“Health and Human Services has invited comment on a potential rule that would tether what Medicare Part B pays for certain drugs to a price index of what other developed countries pay. The goal is to bring prices down to 126% of what other countries pay, versus 180% today.  The move will ‘ensure that American patients get a more fair deal on the discounts drug companies voluntarily give to other countries,’ HHS Secretary Alex Azar said.

“The reason European countries pay less for drugs is because they run single-payer health systems and dictate the prices they’re willing to pay. Don’t like it? They’ll then vitiate your patents and make a copycat. This is hardly a ‘voluntary’ discount. Other countries have the luxury of extortion because the U.S. produces more drugs than the rest of the world combined.  Mr. Trump mentioned these realities in his speech but blew past them to suggest importing the same bad behavior.

“By the way, Europe does pay more – in the form of reduced access.  Of 74 cancer drugs launched between 2011 and 2018, 70 (95%) are available in the United States.  Compare that with 74% in the UK, 49% in Japan, and 8% in Greece. This should cure anyone of the delusion that these countries will simply start to pay more for drugs. They’re willing to deny treatments if it saves money.”

--A privately developed Chinese carrier rocket failed to reach orbit after lifting off from Jiuquan Satellite Launch Center, a big blow to the country’s early attempts by private companies to rival Elon Musk’s SpaceX.

The three-stage rocket was developed by Beijing-based Landspace.  The company said it was an issue with the third stage, without giving any details.

Since coming to office in 2012, President Xi Jinping has made becoming a “space flight superpower” a priority for the government, which has a goal of sending a permanent manned space station into orbit by around 2022.  [Which will probably be used later on to shoot down our satellites, mused the editor.]

--Finally, I was really torqued off in seeing a FiveThirtyEight survey of favorite Halloween candies, and then I looked at other lists, because my favorite, Baby Ruth, was like in the middle of the pack in all of them, whereas one I can’t stand, Butterfingers, seemed to make all the top ten lists.

This is outrageous.

And then I saw that FiveThirtyEight ranked Good & Plenty last at 86!  I loved Good& Plenty.  So I proceeded to go into a deep depression...or was it the midterms....

[Reese’s deservedly takes most top spots.  I’d also offer that the best snack is frozen Funny Bones, playing off the Peanut Butter theme.]

Foreign Affairs

Iran / Syria: The Wall Street Journal reported Friday that Iran’s ally Hezbollah “is paying former U.S.-backed rebels to switch sides and join a growing force in southern Syria, deepening its presence near Israel’s border after appearing to withdraw to avoid Israeli airstrikes, according to activists and a former rebel commander.

“The Iran-backed militia has recruited up to 2,000 fighters, these people said, most of them from rebel groups that lost U.S. funding last year, according to the former commander, who tracks recruitment in villages in southern Syria.”

Israel has warned Iran it won’t allow it to become entrenched in the area near its border.  The U.S. has said the removal of Iran-allied forces from Syria is a central goal for its 2,000 troops there and a precondition for the funding of any rebuilding in the country.  The sanctions that commence Nov. 5 were designed in part to force Tehran to remove its support for the militants.

So it’s yet another quandary, for both the United States and Israel.

As for Hezbollah, their leader, Sheik Nasrallah, who resides in Lebanon (most of the time it is believed), has said his forces would stay in Syria as long as Bashar al-Assad wants them there.

Meanwhile, Russia’s defense ministry warned this week against “hot heads” provoking Syria and intimated that the S-300 missile system had been deployed in the country to defend against such action.  The warning was clearly aimed at Israel, which has been conducting an aggressive military campaign across Syria against the Iran-backed militia groups; striking about 200 targets over the past 18 months.

Russia also said that when it comes to the situation in northern and eastern Syria, Syrian rebels in Idlib are preparing a “false flag” chemical weapons attack.

And as to President Trump’s claims that ISIS has been destroyed, just know that Islamic State recently launched an attack against Syrian Kurdish forces in the eastern part of the country  and took some ground, which the U.S.-backed Syrian Democratic Forces (SDF) have been fighting back against in an offensive that has claimed many lives on both sides.

[And today, ISIS gunmen, it is assumed based on past history, killed seven people and wounded 12 in an attack on buses carrying Coptic Christians in rural Egypt, the latest in a wave of violence against the Middle East’s largest Christian minority.  Graphic images of the attack showed one man’s skull was crushed.]

Meanwhile, Iranian President Rouhani has warned his countrymen that they face hard times when new U.S. sanctions take effect this week but said the government would do its best to alleviate them.

The cost of living has soared in recent months, leading to demonstrations against profiteering and corruption in which protesters have been chanting anti-government slogans.

Rouhani said: “Our main enemy, America, faces us with a drawn sword and we have to fight it and we have to unite. Regardless of factions...we are all part of the Iranian nation.”

Rouhani reshuffled his economic team this week.

Saudi Arabia / Turkey: At week’s end, little has changed in the murder of journalist Jamal Khashoggi.  Turkish authorities are still demanding that Saudi Arabia tell them the whereabouts of the body, with Justice Minister Abdulhamit Gul adding Saudi Arabia must cooperate in the investigation and that there must be no further cover-up.

“We are looking for answers to the question of where the body is,” he said.

Yes, this is absurd.  How can the Saudis get away with this?!

The Saudi government first denied Khashoggi had been killed, then said he died in an unplanned “rogue operation.”  And last week, the kingdom’s public prosecutor admitted that the attack was premeditated.

This week, Istanbul’s chief prosecutor said after talks with the Saudi prosecutor that Khashoggi was strangled as soon as he entered the consulate.  The body was then dismembered as part of a premeditated plan.

A statement from the prosecutor’s office said: “The victim’s body was dismembered and destroyed following his death by suffocation...in accordance with plans made in advance.”

Saudi Foreign Minister Adel al-Jubeir, addressing a security conference in Bahrain, said hysterical media are rushing to judgment in the Khashoggi case.

“Unfortunately there has been this hysteria in the media about Saudi Arabia’s guilt before the investigation is completed. What we say to people is wait until everything is done” then decide if the investigation was serious or not.

I respectfully say this investigation should have taken two hours, not four weeks and counting.

Defense Secretary Jim Mattis, addressing the same conference in Bahrain, characterized the killing of Khashoggi as not only a human rights issue but also a national security concern for nations in the Middle East.

“When opposing voices can be heard within a political process adapted to each nation’s culture, one that permits peaceful opposition by giving voice and human rights to all, a nation becomes more secure,” Mattis said.  ‘When people can speak and be heard calling for peace and respect for all, the terrorist message of hatred and violence is not embraced.  With our collective interests in peace and unwavering respect for human rights in mind, the murder of Jamal Khashoggi in a diplomatic facility must concern us all greatly....

“Failure of any one nation to adhere to international norms and the rule of law undermines regional stability at a time when it is needed most,” Mattis said.

Meanwhile, the New York Times and Washington Post have reported that Saudi Crown Prince Mohammed bin Salman (MBS) had told U.S. officials that he considered Khashoggi to be a dangerous Islamist. MBS called the White House before the kingdom admitted Khashoggi had been killed inside the Saudi consulate.

Saudi Arabia is denying the reports of the content of the call, and the royal family continues to deny it was involved in the killing and that it is “determined to find out all the facts.”

The Washington Post reported that MBS called Jared Kushner and National Security Adviser John Bolton, with MBS saying Khashoggi had been a member of the Muslim Brotherhood, the transnational Islamist organization, the call reported to have taken place Oct. 9, a week after Khashoggi disappeared.

In a statement to the Post, Khashoggi’s family denied he was a member of the Brotherhood and that he had denied this repeatedly in recent years.

“Jamal Khashoggi was not a dangerous person in any way possible. To claim otherwise would be ridiculous,” the statement said.

Separately, a senior Saudi prince who courted controversy after appearing critical of the king and crown prince has returned to the kingdom amid the crisis, family members told AFP.

The return of Prince Ahmed bin Abdulaziz al-Saud, a bother of King Salman and uncle of MBS, has fueled speculation of royal family efforts to shore up support for the monarchy after all the global criticism; MBS’s image as a reformer severely tarnished.

Prince Ahmed had been in London for months. There are no indications, however, that  Prince Mohammed’s position as de facto ruler is in danger.

Editorial / Washington Post

“Saudi Arabia’s dispatch of a 15-member team to Turkey to attack journalist Jamal Khashoggi added to a global trend of autocratic states reaching out to kill or kidnap exiled dissidents.  Russia and China have been pioneers of the practice and for the most part have gotten away with it; that has encouraged others.  One such regime is Saudi Arabia’s regional rival Iran, which appears to have returned to an old practice of trying to murder exiles in European capitals – notwithstanding its dependence on European support for resisting new U.S. sanctions.

“This week, Denmark’s government revealed what it described as an Iranian plot to assassinate a man who leads the Danish branch of a group advocating independence for an Arab-populated region of Iran. Danish Foreign Minister Anders Samuelsen, saying it was ‘completely clear that the arrow is pointing at the Iranian intelligence service,’ recalled Denmark’s ambassador from Tehran and said he would raise the possibility of new sanctions by the European Union.

“That was the second Iranian plot broken up in Europe in four months. In late June, European security services arrested two Iranian emigres living in Belgium and charged them with plotting to bomb a Paris rally of the opposition Mujahideen-e Khalq that was attended by former New York mayor Rudolph Giuliani.  An alleged Iranian intelligence officer who authorities said directed the operation was arrested shortly afterward in Germany.

“Some have marveled at Iranian audacity in planning attacks on the territory of countries that have been trying to devise ways to circumvent the new U.S. sanctions due to take effect Sunday.  Both Denmark and France strongly opposed President Trump’s decision this year to cancel the Iranian nuclear deal and to reimpose an economic blockade on the government of Hassan Rouhani.

“U.S. and Israeli officials have done their best to exploit the uncovering of the plots. The Paris case, national security adviser John Bolton declared, ‘tells you, I think, everything you need to know about how the government of Iran views its responsibilities in connection with diplomatic relations.’

“That’s true enough – and EU leaders ought to punish Tehran.  Yet Mr. Bolton’s words raise the question of how Saudi Arabia ought to be judged in light of what it now acknowledges was the premeditated murder of Mr. Khashoggi inside its own consulate in Istanbul. Should not the regime of King Salman and Crown Prince Mohammed bin Salman be held to the same standard as Iran?  And if the United States does  not impose significant punishment on Saudi Arabia, how can it expect other nations to enforce its sanctions against Iran?”

Yemen: According to a UN children’s agency, UNICEF, over seven million children face a serious threat of famine in Yemen and just ending the civil war will not save them all.

“Today, 1.8 million children under the age of five are facing acute malnutrition, and 400,000 are affected by severe acute malnutrition,” said Geert Cappelaere, regional director for UNICEF.  He said efforts to come up with a solution in the next 30 days were “critical” to improving aid distribution and saving lives.

Over 6,000 children have either been killed or sustained serious injuries since the war started in 2015.  Overall, more than 10,000 people have been killed and 22 million are in need of food aid, according to the UN.

Separately, the Saudi-led coalition has been massing thousands of troops near Yemen’s main port city of Hodeidah in a move to pressure Iranian-aligned Houthi insurgents to return to UN-sponsored peace talks. We aren’t talking a small force, but according to Reuters, around “30,000-strong.”

North Korea: According to South Korea’s spy agency, North Korea appears to be preparing for international inspections at several of its nuclear and missile test sites, as reported by Yonhap news agency. U.S. officials declined to confirm the observations.  Secretary of State Mike Pompeo said in Washington he planned to meet his North Korean negotiating counterpart next week and would speak to him about inspections.

Pompeo said in a radio interview that Kim Jong Un had committed to allowing U.S. inspectors at two “significant” sites when he met him in Pyongyang this month.  “We hope to get them there before too long,” Pompeo said on Laura Ingraham’s show.

But skeptics note that Pyongyang has had months and months to ‘prepare’ the sites for show, and were North Korea to actually verifiably close a facility, it would be asking for reciprocal moves by the United States. There is also growing talk in the intelligence community of a previously undisclosed nuclear enrichment site, with the latest estimates on the number of nuclear weapons that Kim may have ranging from 15 to 60.

China: As I alluded to above, the Justice Department unsealed charges Thursday against several Taiwanese individuals and Chinese and Taiwanese companies for trade-secret theft; part of a series of moves to pressure Beijing. The administration has prioritized countering threats to U.S. national and economic security, with China’s long-range plan to supplant the United States as the world’s dominant power, not just economically but militarily.

Since September federal prosecutors have brought charges in three separate intellectual property theft cases involving Chinese spies and hackers.

Attorney General Jeff Sessions said: “Chinese economic espionage against the United States has been increasing – and it has been increasing rapidly. Enough is enough. We’re not going to take it anymore.”

Assistant Attorney General John Demers said: “China wants the fruits of America’s brainpower to harvest the seeds of its planned economic dominance.”  With this new initiative, he said, “we will confront China’s malign behaviors and encourage them to conduct themselves as they aspire to be one of the world’s leading nations.”

The indictment alleges the defendants conspired to steal trade secrets from Micron, an Idaho-based semiconductor company with a subsidiary in Taiwan.  Those individuals charged stole “some of the most advanced semiconductor technology in the world,” as described by U.S. Attorney Alex Tse.  [Ellen Nakashima / Washington Post]

A lot of the recent U.S. actions are designed to counter China’s efforts to be the global leader in 5G technology.

Tuesday, other charges were unveiled against two alleged Chinese spies, accused of orchestrating a conspiracy to steal prized jet-engine technology from private companies. For decades, China has sought to develop its own commercial jet to break the duopoly held by Airbus and Boeing.  In 2016, it set up state-owned engine maker Aero Engine Corp. of China to develop engines to be fitted on homegrown commercial aircraft.

Aerospace is a key sector targeted in President Xi’s “Made in China 2025” blueprint, as it seeks to match or exceed the high-end manufacturing output of the U.S., Germany and Japan.

Also on the general topic of espionage, Echo Huang, a reporter for Quartz in Hong Kong, had a piece in Defense News that read in part:

“Universities in the U.S., UK, Australia and other countries may have been unknowingly collaborating with China’s military.

“That’s according to a new study by Canberra-based think tank Australian Strategic Policy Institute (ASPI), which found that dozens of scientists and engineers linked to China’s People’s Liberation Army (PLA) had obscured their military connections when applying to study overseas.

“Most strikingly, said ASPI, the collaboration is the highest among the ‘Five Eyes’ countries – an intelligence alliance consisting of Australia, Canada, New Zealand, the UK and the U.S. – which counts China as one of their ‘main intelligence adversaries.’ The fear is that such scientists could be engaging in espionage or committing intellectual-property theft during their stints overseas.

“About 2,500 PLA-sponsored military scientists have gone abroad since 2007, according to ASPI.  Such collaborations are encouraged by cash-strapped foreign universities, some of which have increasingly turned to China for scientific funding....

“ASPI estimates that about 500 PLA-linked scientists were sent each to the UK and the U.S. since 2007, about 300 each to Australia and Canada, and more than 100 each to Germany and Singapore.”

Meanwhile, the new director of the U.S. de facto embassy in Taipei (under the name of American Institute in Taiwan), Brent Christensen, made his debut this week on the island in a press conference and signaled stronger U.S. support for the island in the face of growing pressure from Beijing.

“I am here to tell you that U.S. policy towards Taiwan has not changed,” he said.  “Any effort to determine the future of Taiwan by other than peaceful means represents a threat to the peace and security of the Western Pacific area and is of grave concern to the United States.  We are opposed to unilateral attempts to change the status quo.”

I’m glad to see this.  The comments no doubt infuriated Beijing, which has loudly protested against the U.S. supplying arms to Taiwan and allowing senior officials to visit the island – acts the mainland says violates the one-China policy that Washington committed to observe after switching official recognition to Beijing.

Japan: The cabinet approved draft legislation to loosen the country’s immigration rules, a big move.  The relaxed laws would create two new visa categories to allow foreigners in sectors with labor shortages to enter the country.

This is long overdue.  Japan has some of the most restrictive immigration laws and accepts few workers from other countries, but now the government is looking to add blue-collar workers in construction, farming and healthcare.

Workers in the first visa category would be allowed to work in the country for five years, and bring their families, though they need some level of proficiency in the language.

Workers with a higher level of skills would eventually be allowed to apply for residency.

Parliament still must approve the draft legislation and there is stiff opposition from groups that worry about the potential impact on wages and the crime rate.  Sound familiar?

But Japan has long had a severe demographic problem, such as in a birthrate below replacement level (2.1) all the way back to the mid-1970s. It now stands at 1.4.  Plus Japan has the world’s longest life expectancy at 85.5 years and you see the problem.  How to pay for all those retirees, and benefits, and let alone how to maintain growth in the economy with a shrinking population?

Brazil: Far-right candidate Jair Bolsonaro won the run-off for president on Sunday with 55% of the vote against left-wing hopeful Fernando Haddad of the Worker’s Party (PT) who took the other 45%.

Editorial / Wall Street Journal

“ ‘Bolsonaro threatens the world, not just Brazil’s fledgling democracy,’ declared a headline last week in the Guardian... And that was one of the milder warnings in the international press. Yet Brazilians elected him anyway... Maybe the world should show a decent respect for Brazilian democracy and try to understand what happened.

“Start with the fact that this was a transparent, competitive and fair contest.  Mr. Bolsonaro didn’t steal the election. He won it by persuading voters. [Ed: and use of the above-noted fake news campaign employing WhatsApp.]  A 27-year member of the legislature, Mr. Bolsonaro was also fortunate to be running against Fernando Haddad, the hand-picked candidate of the Worker’s Party that has ruled Brazil for most of the last 15 years.  Mr. Bolsonaro was able to run as the reformer against a legacy of economic and political failure.

“Brazil has yet to recover from the leftwing populism of PT President Luiz Inacio Lula da Silva (2003-2010) and successor Dilma Rousseff (2011-2016). Deficits, public debt and inflation soared, as the PT expanded the number of state-owned enterprises.  It also squandered the opportunity to boost capital flows, most notably by failing to create attractive auction rules in the huge deepwater oil reserves discovered in 2007.  By the time the Workers’ Party was done, Brazil was in a recession that lasted nearly three years.

“The PT also built a legacy of graft....

“Many other politicians from other parties joined in the bribery schemes. Mr. Bolsonaro did not. That gave him credibility when he ran as the antidote to PT greed and promised to drain the swamp.

“Now he has to deliver.  One good sign is that his chief economic adviser is Paulo Guedes, who trained at the University of Chicago.  Mr. Bolsonaro has a history of economic nationalism, which could be his downfall.  But as a candidate he promised to privatize some industries, clean up the fiscal accounts and propose full independence for the central bank....

“To achieve any of this Mr. Bolsonaro will have to confront an array of special interests in Brazil’s powerful business class.  He must also deal with 30 separate parties in Congress’ lower house and 20 in the senate. Yet he has a mandate, which means he should act fast on his reform agenda.

“Mr. Bolsonaro has often made offensive comments about race, homosexuality and women, and in the PT days he sometimes waxed nostalgic for an earlier era of military rule. But Brazilians went to the polls knowing all this, and knowing too that their democratic institutions proved their mettle resisting the corruption of Lula and the PT.

“Brazilians didn’t vote for fascism or a military coup. They voted for hope and change, and they will throw Mr. Bolsonaro out if he fails to honor his promises.”

The above editorial aside, following the vote, among his early moves, Bolsonaro said he will merge the ministries of agriculture and the environment, which many fear will endanger the Amazon rainforest, seeing as Bolsonaro is heavily supported by the agribusiness lobby.  A former environment minister tweeted that the move was “tragic.”

“This disastrous decision will bring serious damage to Brazil and will pass on to consumers abroad the idea that all Brazilian agribusiness survives thanks to the destruction of forests,” Marina Silva said.

The Amazon region is the largest rainforest in the world and is critical to the global environment.  Bolsonaro has previously suggested Brazil could pull out of the 2015 Paris Agreement on climate change, which he says compromises Brazil’s sovereignty over the Amazon region.

Random Musings

--Presidential tracking polls:

Gallup: 40% approval of Trump’s job performance, 54% disapproval; 89% Republicans, 37% Independents (Oct. 28).
Rasmussen: 51% approve / 47% disapprove (Nov. 2)

--In New Jersey, I told you I mailed in my ballot over a week ago and voted for my Republican congressman Leonard Lance.

But for the Senate, this was the evolution of my thinking.  A year ago, despite all his ethical issues, I said I was prepared to support Democrat Robert Menendez because he represented one of the four or five best foreign policy minds in the Senate at a time I felt this trumped other factors.

But then the Senate became even more partisan than ever and that blunted any hope that even on foreign policy, Menendez would act as an independent voice.

Enter Republican Bob Hugin, who I’m so-so on simply because of his past at my neighbor across the street, Celgene, where  he did some things with his drug pipe-line that were unethical in a big way.  I was nonetheless preparing to vote for him.

Then a few weeks ago Hugin ran a blatantly false ad about Menendez and the criminal accusations against the senator as part of his federal corruption trial, which ended last November in a hung jury.  The ads implied Menendez was guilty, when, in fact, he was never convicted and the charges were dropped.

That’s bad enough...but the worst was the ad that has been running over and over again that Menendez was consorting with underage prostitutes.  Yes, that was part of an affidavit in the court proceedings that was later found to be fake and the girls paid off to make the charge, and, again, the charges in the entire case were dropped.

Menendez is no angel, but I wasn’t voting for him for my above reason on how he was no longer an independent voice in the Senate in today’s climate.

But I was not voting for Hugin because of his blatantly false, vicious ad.

Remember, I supported Brett Kavanaugh, despite all the questions surrounding his past that came up in his hearings, because I felt the charges leveled against him were either unfair, or totally without factual basis.  [Bad behavior didn’t necessarily mean he was guilty of sexual assault, a giant leap.]

I thus would be an extreme hypocrite to accept the same behavior in the case of the Hugin campaign.

So I protested...and voted for the Libertarian, a long-time candidate in the state.

Yes, I can’t say this is my best moment, but I’m just telling you the truth.  You know I’m tired of our endless national dialogue that is filled with the worst lies imaginable...and of course it’s all getting much worse.

--I watched Oprah Winfrey’s speech in support of Georgia gubernatorial candidate Stacey Abrams Thursday and Oprah was outstanding, a masterful performance that was inclusive, not divisive, with the emphasis on the importance of voting.

Alas, she insists she’s not interested in running in 2020, but there isn’t a single Democrat who could come close to energizing the base, and many independents, like she could.

--Editorial / Wall Street Journal

“An old line is that the 11th Commandment of the Grand Old Party is never criticize a fellow Republican, but even Moses might have allowed some exceptions. The party’s House campaign chairman Steve Stivers was right this week to distance the GOP from Steve King of Iowa.

“ ‘Congressman Steve King’s recent comments, actions, and retweets are completely inappropriate,’ Mr. Stivers tweeted on Tuesday.  ‘We must stand up against White supremacy and hate in all forms, and I strongly condemn this behavior.’ Mr. King is known for a library of inflammatory remarks and associations, and in August he met with members of an Austrian political party associated with neo-Nazi movements.

“The Stivers rebuke is notable because the Ohio Congressman is chairman of the National Republican Congressional Committee, which is responsible for holding the GOP’s House majority, and every seat counts.  Mr. King won more than 61% of the vote in 2016, but this year he’s in a tight race because of his own words  and actions.  His Democratic challenger J.D. Scholten is a former professional baseball player who has raised far more money that has Mr. King. Voters in western Iowa’s fourth district might decide they prefer Mr. Scholten over someone who keeps company with the ugly right.”

--A gunmen stormed into the Tree of Life Synagogue in Pittsburgh Saturday morning during a service, killing 11 worshippers and wounding six others, including four policemen.

The suspect, Robert Bowers, was not a fan of President Trump and had accused the president of doing nothing to stop an “infestation” of the United States by Jews.  Trump condemned the shooting and said there was no tolerance for anti-Semitism.  But Trump’s critics have blasted the president for his frequent anti-immigrant and anti-Muslim comments, and for blaming “both sides” when a counter-protester was killed at a white supremacist rally in Charlottesville, Virginia last year.

Editorial / Wall Street Journal

“The massacre at the Tree of Life synagogue in Pittsburgh is an awful reminder that there are human hatreds far more virulent and ancient than those that animate our current political divisions. The killer of 11 human beings on the Sabbath Saturday morning was an anti-Semite who was out to kill Jews.

“ ‘All Jews must die,’ alleged killer Robert Bowers yelled as he burst into a religious service and opened fire. As our friends at the New York Sun note, anti-Semitism is not aimed at Jewish behavior, or support for Jewish immigration, or support from Israel.  Robert Bowers simply hated Jews.

“This irrational hatred is one of humanity’s oldest and manifests itself in murder almost daily in the Middle East.  Jews are killed simply because they are Jews, as they have throughout history. This is why millions have sought refuge in a Jewish state, Israel, and also in the religious protections embedded in the Constitution of the United States.

“The outpouring of support and grief for the victims of the Pittsburgh massacre is a reminder of America’s unique role as a refuge for the world’s religious.  Muslim states often persecute non-Muslims as well as Muslims who do not share their brand of Islam. China persecutes people of all faiths. America protects them....

“In America the most stalwart supporters of Israel and the Jewish people are evangelical Christians and orthodox Catholics.  Perhaps this is because as people of faith themselves they know what it is like to be mocked and shunned in a popular culture that is increasingly secular, often aggressively so....

“This being 2018 in America, the political left nonetheless jumped immediately to shift blame for the murders from the killer to Mr. Trump....

“Americans would do well to ignore this toxic habit of political blame for murderous acts by the racist, anti-Semitic or mentally disturbed. We are all responsible for our rhetoric, and that includes Mr. Trump, as well as Hillary Clinton and Eric Holder.

“But the blame artists are distracting attention from the real sickness, which in this case is anti-Semitism, a hatred that goes back millennia. That is the toxin to banish as much as possible from American life, even if it can’t be purged entirely from human souls.”

Michael Gerson / Washington Post

“Americans like to think of the military defeat of Nazi Germany and the liberation of death camps as their answer to the most murderous outbreak of anti-Semitism in history. It has become part of our national lore: American soldiers escorting German locals to visit the Buchenwald concentration camp, forcing them to see the faces of those killed with their complicity.

“Americans predictably forget that their initial response to attacks on Jews in Germany during the 1930s was utterly shameful.  Horrific persecution was broadly reported in American media. Yet our country passed up opportunity after opportunity to accept Jewish refugees, including children.  President Franklin D. Roosevelt said it was ‘not a governmental affair.’ Cultural leaders such as Henry Ford and Charles Lindbergh normalized anti-Semitic ideas and language.

“Yet after the war, no one ever forced Americans to walk past the faces of those who needlessly died with their complicity....

“(Today), the big business of partisanship – cable networks and hosts, radio personalities, talking heads, and conspiratorial websites – manage to profit from the escalation of contempt. They are the culture-war profiteers.

“We see this dynamic at work when Hispanics are routinely reduced to caricatures of gang bangers and rapists, intent on invading the country (with Democratic support); when refugees are identified as a dangerous fifth column, motivated by an inherently violent faith; when young African American men are regularly accused of disloyalty for acts of protest; and, yes, when politicians and commentators talk about ‘globalists’ and the ‘[George] Soros-occupied State Department’ and are clearly going after the Jews.

“Much of this can be traced to white supremacy, or its close cousin, white grievance. But why anti-Semitism?  Why did the Charlottesville alt-right protesters defend Confederate monuments by chanting, ‘Jews will not replace us’?  I am not sure.  Anti-Semitism seems to have deep theological roots, in the distortion of Christianity as a blessing for hatred.  It bubbles up on the right and left, among European right-wingers and academic ‘anti-Zionists,’ from Republican legislators, from followers of Louis Farrakhan and from the leader of the British Labour Party.  The Anti-Defamation League reported a 57 percent increase in anti-Semitic hate crimes in America in 2017 over 2016.  Can there be any other reason for this spike than the general legitimation of dehumanization in American politics?

“This is what makes Republicans who are complicit – those who are bystanders and enablers – so difficult to understand or forgive.  Many regard themselves as opponents of prejudice and especially as philo-Semites. But how can they accept political leadership that expands the acceptable range of hatred? How can they condemn the fire in our public life when they follow a political pyromaniac?  Or perhaps they assume that history will again look the other way.”

Patti Davis / Washington Post

“When I was writing my book ‘The Long Goodbye,’ a memoir about losing my father to Alzheimer’s, I spoke with veteran reporter Harry Smith about my father’s legacy. Harry was my neighbor when I lived in New York, and I had become friends with him and his family.

“ ‘Your father had a shoulder big enough for us to cry on,’ he said.  ‘Think about how he comforted this country in the Challenger disaster.’

“ ‘We know of your anguish,’ my father said in that speech.  ‘We share it.’

“Ronald Reagan has not been the only president to offer comfort and solace to a grieving nation. Bill Clinton did after Columbine. George W. Bush did after 9/11. Barack Obama did after Sandy Hook. Each spoke eloquently, with somber compassion and with reverence for the pain of the victims and the shock of a saddened country. Our grief was reflected in their eyes. We didn’t doubt that their hearts were breaking along with ours.

“That was then. Now, after a week of fear, with pipe bombs being sent to a list of people whom President Trump has said horrible things about, and to CNN, which he consistently targets, 11 Jewish citizens were slaughtered in their place of worship on the Sabbath. Trump’s response?  He joked that he almost canceled an event because, after having to speak to reporters about the shooting in the rain, he was having ‘a bad hair day.’  Yes, I know, he first read what was scripted for him and called the act ‘evil.’ But he has also called Democrats, others who oppose him and the news media evil. The word doesn’t hold much meaning coming from him.

“Where does a grieving nation turn for comfort when the man who occupies the White House offers none?  Our hearts are hurting.  Places of worship are meant to be sanctuaries, not slaughterhouses. America is not supposed to be awash in fear. A friend told me that he doesn’t want to listen to the news anymore.  He wants to be ignorant of what’s going on because the stress and the fear are too much to bear.  I answered him that we’re all responsible now for tending to one another’s wounds, and if you stay blind to what those wounds are, you can’t help.  Ignorance is not an option these days. This is a time for all of us to lead with the courage and compassion that is missing at the highest levels of our government.

“In 1999, after Columbine, Clinton spoke about teaching our children ‘to resolve their conflicts with words, not weapons.’

“After 9/11, Bush said, ‘America was targeted for attack because we’re the brightest beacon for freedom and opportunity in the world. And no one will keep that light from shining.’

“In 2012, after Sandy Hook, Obama said, ‘all across this land of ours, we have wept with you.  We’ve pulled our children tight.’

“After the Challenger disaster, my father said, ‘We will never forget them, nor the last time we saw them, this morning, as they prepared for their journey and waved goodbye and ‘slipped the surly bonds of earth’ to ‘touch the face of God.’’

“After 11 worshippers were gunned down, massacred because they were Jewish, Trump said there should have been an armed guard inside.  He said the death penalty should be toughened. And then, later, he made his joke about having a bad hair day and tweeted about a baseball game.

“This president will never offer comfort, compassion or empathy to a grieving nation.  It’s not in him.  When questioned after a tragedy, he will always be glib and inappropriate. So I have a wild suggestion: Let’s stop asking him.  His words are only salt in our wounds....

“Comfort comes in many forms, some of them small moments of kindness.  Mother Teresa said, ‘We know only too well that what we are doing is nothing more than a drop in the ocean. But if the drop were not there, the ocean would be missing something.’”

--A German former nurse accused of murdering 100...100... patients, admitted as his trial began Tuesday that he did it.  Detectives say Niels Hoegel, 41, administered fatal doses of medication to the people in his care in two hospitals in northern Germany; the biggest serial killing case in Germany’s post-war history.

His motive, authorities say, was to impress colleagues by trying to resuscitate the very patients he had attacked.

Hoegel is already serving a life sentence for killing people in his care.  The 100 patients died between 1999 and 2005.

It’s a sensitive trial for German health authorities who are accused of turning a blind eye to Hoegel’s murderous activity.  I mean 64 were killed in one facility, 36 in the other. You’d think....

Actually, he may have killed more than 100 but many potential victims have been cremated.

Good lord.

--Infamous Boston gangster James “Whitey” Bulger was killed Tuesday, shortly after being transferred to a federal prison in West Virginia.  A fellow inmate with Mafia ties is under investigation in the slaying at the Hazelton federal penitentiary, one of the roughest prisons in the federal system.

As yet, no one can explain why Bulger was transferred, and why he was put in the general prison population.  He was reportedly smashed repeatedly in the face with a padlock, inside a sock, to the point where he was unrecognizable....and it was far worse than this gruesome description.

Bulger was convicted on racketeering charges that included 11 murders and sentenced to life in prison in 2013, with the judge telling him that the “scope, callousness and depravity of your crimes are almost unfathomable.”

But he had also been an FBI informant, and no one likes a snitch.         

--“The Simpsons” is solving the problem of Apu, the Indian immigrant who runs a Kwik-E-Mart, by just dropping the character and not making a big deal out of it, amid allegations of racial stereotyping about Indian-Americans.

The problems with Apu have been brewing for years.

Now discuss amongst yourselves.  I’m in enough trouble as it is.

--Finally, back to Pittsburgh and the tragedy at Squirrel Hill.  Long-time readers know that the Pittsburgh area is “home.”  My mother was part of a very large family in the area, towns like Greensburg, Latrobe, Pleasant Unity, Monroeville, Murrysville....

My parents both went to Pitt, where they met, my nephew recently graduated from the school, I was actually accepted at Carnegie-Mellon but thought I would flunk out (I would have) and, thanks to my parents allowing me the decision, I ended up at Wake Forest (Arnold Palmer’s alma mater, speaking of Latrobe) and almost flunked out there.

There are no better people on the planet than western Pennsylvanians.  From all my travels I’d say it’s not even close.   Growing up I spent weeks there each year, between summer vacations and driving out for holidays (including a memorable trip, the day JFK was assassinated), and they are the most giving people on Earth.  My relatives, to this day, would do anything to help me.  I know one thing for sure...no one feeds you like they do!

The Pittsburgh area, to me, is the ultimate melting pot.  Tons of Eastern Europeans – my Mom’s side is Slovak, primary roots, today, in what is now Slovakia – and you have every other ethnicity there.  Just look through an old Pitt Panther roster and you’ll get a kick out of some of the names...oh yeah, lots of Slovaks, Poles, Italians (Dan Marino ring a bell?  I just double-checked; he had some Pole in him as well.)

So my heart goes out to the Squirrel Hill community.  Mr. Rogers’ Neighborhood.  [I forgot he was born in Latrobe.]  Steelers coach Mike Tomlin lives right near the Tree of Life Synagogue.

We love you...we pray for you. 

And in memory, each individual needs to do what they can to combat hate.

---

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

God bless America.

---

Gold $1234
Oil $62.86

Returns for the week 10/29-11/2

Dow Jones  +2.4%  [25270]
S&P 500  +2.4%  [2723]
S&P MidCap  +3.8%
Russell 2000  +4.3%
Nasdaq  +2.7%  [7356]

Returns for the period 1/1/18-11/2/18

Dow Jones  +2.2%
S&P 500  +1.9%
S&P MidCap  -2.0%
Russell 2000  +0.8%
Nasdaq  +6.6%

Bulls 44.3
Bears 
19.8...the report from Investors Intelligence is released on Wednesdays, and Oct. 3, the S&P 500 was at 2925, five points from its all-time high, with a bull reading of 61.8.  I wrote in my WIR of 10/6 that a reading above 60 was a strong warning sign...and it proved to be shortly thereafter.  But 44.3 is to me a sign ‘the worst is over,’ for now.

Have a great week.

Dr. Bortrum posted a new column!

Brian Trumbore