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Week in Review

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09/14/2019

For the week 9/9-9/13

[Posted 10:30 PM ET]

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Edition 1,066

It was another tumultuous week with President Trump cancelling a summit at Camp David with the Taliban and Afghanistan that no one knew was about to take place, on the eve of 9/11 no less, the removal of national security adviser John Bolton and the president siding with Kim Jong Un in public comments over Bolton. 

Republican Sen. Lindsey Graham said he was sorry to see Bolton go.  “I see the world as it is, I’m a realist.”

I am too.  I get into Bolton’s resignation below in depth, but I can’t help but say regarding my own views, it’s been easy for me to be a hawk.

It’s easy to be a hawk when in 1973, at age 15 I get to go behind the Iron Curtain and see how my relatives were living in Czechoslovakia and Hungary under Soviet rule, and to see goose-stepping soldiers.

It’s pretty easy to be a hawk when I hire out a driver in Warsaw (1999) to drive me hours away to Treblinka, a Nazi extermination camp, and see these ugly old women outside their homes as I near the site, clearly pissed off I am there.  They were the witnesses who said nothing.

It’s pretty easy to be a hawk when you personally are screwed over by the Chinese in a huge way despite doing all the right things.

It’s pretty easy to be a hawk when you go to Ukraine and visit the museum on Chernobyl right after their Orange Revolution, and then see the same lies repeated over and over again regarding the Putin regime, including the Moscow apartment bombings that he used as a pretext for the obliteration of Grozny.

It’s pretty easy to be a hawk when you go to the DMZ as I did and walk down a tunnel under the mountain that the North Koreans had built as part of their invasion plans of the South, which has multi-barriers at the bottom because the South Koreans were still concerned the Orcs could pump gas into it.

It’s pretty easy to be a hawk when you spend extensive time on Taiwan and in Hong Kong and get to see these terrific people whose freedom is now under threat.

It’s easy to be a hawk when you understand that just yesterday, Putin and his goons raided the homes of hundreds of supporters of Russian activist Navalny.

It’s pretty easy to be a hawk when our own president, Donald J. Trump, has never voiced support for the Hong Kong protesters, let alone the Russian opposition, both of whom just want a true democratic voice...the same that we have here.

It’s also pretty easy to be a hawk when, for all the issues with the invasion of Iraq, if you fail to understand the future threats posed by Saddam’s sons, Uday and Qusay (and we remember the heroism of the 101st Airborne and Special Forces who took the two out), then you just don’t know your history.

It was outrageous that President Trump, in cancelling the summit at Camp David, cited as his excuse the killing of one American soldier in an attack on Kabul, yet didn’t seem to understand that the Taliban has already killed thousands of Americans, directly or indirectly, and tens of thousands of civilians!  As in we could never trust them in any negotiation.

So I was watching Texas Republican Congressman Will Hurd talk about the significance of 9/11.  On that day he was with the CIA.

Hurd said he never would have believed that 18 years later we would still be in Afghanistan.  “No way,” as he put it.

But he also never would have believed that, 18 years later, there has still not been a major attack on the scale of 9/11 on U.S. soil.

That’s the bottom line.  That’s the line “realist” Lindsey Graham is talking about.  It’s the bottom line us maligned hawks refer to.

And so we move on.....

Trump twitterstorm on Afghanistan:

“A lot of Fake News is being reported that I overruled the VP and various advisers on a potential Camp David meeting with the Taliban. This Story is False!  I always think it is good to meet and talk, but in this case I decided not to. The Dishonest Media likes to create....

“....the look of turmoil in the White House, of which there is none. I view much of the media as simply an arm of the Democratic Party. They are corrupt, and they are extremely upset at how well our Country is doing under MY Leadership, including....

“....the Economy, where there is NO Recession, much to the regret of the LameStream Media!  They are working overtime to help the Democrats win in 2020, but that will NEVER HAPPEN, Americans are too smart!

“We have been serving as policemen in Afghanistan, and that was not meant to be the job of our Great Soldiers, the finest on earth.  Over the last four days, we have been hitting our Enemy harder than at any time in the last ten years!”

Trump World

--Trump tweet:

“I informed John Bolton last night that his services are no longer needed at the White House.  I disagreed strongly with many of his suggestions, as did others in the Administration, and therefore....

“....I asked John for his resignation, which was given to me this morning. I thank John very much for his service. I will be naming a new National Security Advisor next week.”

Bolton almost immediately disputed the circumstances of his dismissal on Twitter.

“I offered to resign last night and President Trump said, ‘Let’s talk about it tomorrow,’” he wrote.

Trump clashed with the hawkish adviser, Bolton disagreeing with Trump’s noninterventionalist instincts.

Bolton had been sidelined on a number of key foreign policy and national security initiatives, including peace negotiations with the Taliban that Trump called off.  Before that break, negotiators had reached a deal “in principle” that Bolton, who was opposed to it, was reportedly allowed to view but not take home.  In June, he was dispatched to Mongolia while Trump was meeting with Kim Jong Un at the DMZ.

Trump has reportedly been frustrated that Venezuela’s autocratic leader, Nicolas Maduro, did not step down as quickly as expected under pressure from the United States, and he was concerned Bolton was leading him into war with Iran.

So Trump has now dismissed or accepted the resignations of three national security advisors, the others being Michael Flynn and H.R. McMaster, as well as nine Cabinet secretaries.

As for the new advisor, there were initially all manner of stories that Secretary of State Mike Pompeo could be tabbed to handle both jobs, a la Henry Kissinger, way back, and what a massive mistake this would be, but then Trump denied this was a possibility.

Pompeo, who has mastered the art of kissing the president’s ass, often clashed with Bolton on policy and needless to say he was ecstatic on word Bolton was out.  Appearing before the White House press corps, he was almost giddy.

“There were many times Ambassador Bolton and I disagreed, that’s to be sure,” Pompeo said.  “But that’s true for lots of people with whom I interact.”  Later, when asked whether he was surprised by Bolton’s firing, Pompeo deadpanned: “I’m never surprised.”

Editorial / Wall Street Journal

“John Bolton resigned as White House national security adviser on Tuesday, which must delight North Korea’s Kim Jong Un, Iran’s Hassan Rouhani, Russia’s Vladimir Putin and Venezuela’s Nicolas Maduro. America’s adversaries lost a rare internal restraint on President Trump’s inconstant and transactional security instincts. The world is now a more dangerous place.

“Start with the fact that Mr. Trump didn’t tell the truth about firing Mr. Bolton.  ‘I asked John for his resignation’ due to policy disagreements, Mr. Trump tweeted. The disagreements were real.  But Mr. Bolton says he offered to resign Monday during a conversation with the President on Afghanistan.  Mr. Trump said they’d talk again in the morning.

“Mr. Bolton went home on what was the 17-month anniversary of taking the job and decided to resign.  He submitted his resignation letter Tuesday morning, even as the White House announced he’d be briefing the media on antiterror measures.  Shortly thereafter Mr. Trump tried to spin the resignation as his idea with his tweet.

“None of this speaks well of the President, who fears looking bad for having lost his third NSC adviser in three years.  James Mattis resigned last year as Secretary of Defense, only to have Mr. Trump force him out two months early out of spite.  Mr. Trump ousted Rex Tillerson as Secretary of State via tweet after months of publicly undercutting him.  Mr. Trump is a hard man to work for.

“A President deserves advisers who will implement his policies, but there’s no doubt Mr. Bolton did that even when he disagreed.  The troubling implication of Mr. Bolton’s departure is that Mr. Trump doesn’t really want to hear opposing points of view.  He says he does, but he makes work intolerable for those who give him contrary advice.

“The difference isn’t the simplistic media line – from the left and also on the isolationist right – that Mr. Bolton is a hawk who prevented Mr. Trump from pursuing peace around the world. The real issue is that Mr. Trump thinks every security issue can be boiled down to a negotiation, and that every other head of state wants to do a deal like he does.

“The terms matter less to Mr. Trump than the art of the deal.  Mr. Bolton had the thankless task of telling Mr. Trump that a bad deal is worse than no deal, and that strategic ground must be prepared in advance and over time if you want to get a good deal.

“In this role Mr. Bolton saved Mr. Trump more than once from his worst negotiating instincts.  Mr. Bolton was one of those who argued in February that Mr. Trump should walk away from a bad deal with North Korea’s Kim in Hanoi.

“He also was a lone Administration voice advising against signing a deal with the Afghan Taliban.  Mr. Trump wants to withdraw all U.S. troops from Afghanistan, and it was the President’s idea to invite the Taliban to Camp David on the week of the anniversary of 9/11.  Mr. Trump spared himself substantial embarrassment by cancelling the talks at the last minute, thanks in part to Mr. Bolton’s counsel.

“For all of his tough talk, Mr. Trump doesn’t seem to want a tough foreign policy.  His desire for deals is the reason he flatters dictators and strongmen on the other side of the negotiating table despite their records.

“Mr. Trump has told his advisers to tone down criticism of China’s Xi Jinping on Hong Kong and the re-education camps in Xinjiang.  Mr. Trump is reluctant to impose sanctions on Turkey for buying Russia’s S-400 missile system, despite a clear violation of NATO commitments. He’d like to loosen Mr. Putin’s Russia, and he’d be pleased to sit down with Messrs. Rouhani or Maduro.

“As he heads into a difficult re-election campaign, Mr. Trump should be sending a signal of reassurance and steadiness.  Instead the world sees disarray inside the Administration and a President given to policy-making as impulsive as his Twitter feed.

“The question now is what Mr. Bolton’s departure means for U.S. foreign policy for the next 14 months.  The political pressure will build for some foreign-policy achievement as Election Day approaches.  Yet to get North Korea, Iran or Russia to agree may require concessions that damage U.S. interests.

“Another danger is that Mr. Trump’s behavior is increasingly self-isolating. He thinks individuals are expendable, but the advisers he has lost represent constituencies that ought to be on his side.  Generals Mattis and H.R. McMaster, his second NSC adviser, represent the military.  Mr. Bolton speaks for the Jacksonian wing of U.S. foreign policy that believes in a strong defense of American interests around the world.  Mr. Trump should be cementing these loyalties, not undercutting them.”

--The Trump administration is officially allowed to enforce a new policy denying asylum to migrants at the southern border who have not sought protection from the U.S. or other countries.

A U.S. district judge had blocked the policy from going into effect nationwide shortly after it was unveiled in July, but the Supreme Court decided to reverse the decision in a brief order Wednesday.

Solicitor General Noel Francisco argued Wednesday that the asylum rule – which is meant to bar immigrants from entering the country without seeking protection from the U.S. or nations they travel through – was supposed to keep out people “who declined to request protection at the first opportunity.”

“It alleviates a crushing burden on the U.S. asylum system by prioritizing asylum seekers who most need asylum in the United States,” Francisco wrote.  “The rule also screens out asylum claims that are less likely to be meritorious by denying asylum to aliens who refused to seek protection in third countries en route to the southern border.”

Justice Sonia Sotomayor, in dissent, claimed the move would upend “longstanding practices regarding refugees who seek shelter from persecution.”

The ACLU’s Lee Gelernt wrote: “The first (policy) at least allowed individuals who presented themselves at a port of entry to apply for asylum. The current ban would eliminate virtually all asylum at the southern border, even at ports of entry, for everyone except Mexicans.”

--According to the New York Times: “President Trump, seeking to justify his claim of a hurricane threat to Alabama, pressed aides to intervene with a federal scientific agency, leading to a highly unusual public rebuke of the forecasters who contradicted him, according to people familiar with the events.

“In response to the president’s request, Mick Mulvaney, the acting White House chief of staff, told Wilbur Ross, the commerce secretary, to have the National Oceanic and Atmospheric Administration publicly correct the forecasters, who had insisted that Alabama was not actually at risk from Hurricane Dorian.

“A senior administration official, who asked not to be identified discussing internal matters, said Mr. Trump told his staff to have NOAA ‘clarify’ the forecasters’ position.  NOAA, which is part of the Commerce Department, then issue an unsigned statement saying the Birmingham, Ala., office of the National Weather Service was wrong to refute the president’s warning so categorically....

“The Commerce Department inspector general has opened an investigation, and on Wednesday, a Democrat-controlled House science committee kicked off its own inquiry.”

Earlier it was reported that Ross warned NOAA’s acting administrator that top employees at the agency could be fired if the situation was not addressed.  Ross’s spokesman denied that he threatened to fire anyone.

The Washington Post reported that Mulvaney was acting at the president’s direction, but when Trump was asked by a reporter if he told his chief of staff to instruct NOAA to “disavow those forecasters,” he denied it.

“No, I never did that,” Trump said.  “I never did that.  That’s a whole hoax by the fake news media.  When they talk about the hurricane and when they talk about Florida and they talk about Alabama, that’s just fake news. It was – right from the beginning, it was a fake story.”

Wall Street and the Trade War

Stocks rose as there was de-escalation on the trade front.  But the president continued his shots against the Fed.

Trump tweets:

“China suspends Tariffs on some U.S. products.  Being hit very hard, supply chains breaking up as many companies move, or look to move, to other countries.  Much more expensive to China than originally thought.” @CNBC @JoeSquawk

“The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt.  INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term.  We have the great currency, power, and balance sheet....

“....The USA should always be paying the lowest rate.  No Inflation!  It is only the naivete of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing.  A once in a lifetime opportunity that we are missing because of ‘Boneheads.’”

We had some important inflation data this week, with August producer prices rising 0.1%, 0.3% ex-food and energy; 1.8% and 2.3%, respectively, year-over-year.

August consumer prices were also 0.1%, 0.3% on core; 1.7% and 2.4% ex-food and energy, which represents a one-year high.

While the Fed’s preferred inflation barometer, the personal consumption expenditures index (PCE), has been in the 1.6% to 1.7% range, 2.4% on core for the CPI is not insignificant.  The Fed’s target is 2%.

August retail sales came in at a solid 0.4% today.

So the Federal Reserve’s Open Market Committee, Trump’s “boneheads,”  meets next Tues. and Wed., and the market expects another ¼-point decrease in the funds rate, but the Fed should stop right there. The last two meetings of the year are Oct. 29-30 and Dec. 10-11.

The Atlanta Fed’s GDPNow barometer for third-quarter growth is at 1.8% after this week’s data.

Lastly, the U.S. budget gap widened to more than $1 trillion in the first 11 months of the fiscal year, the Treasury Department said Thursday, the first time year-to-date deficits topped the $trillion dollar level in seven years.

With higher military spending, rising interest expenses on government debt and weak revenues early in the year, the deficit is up 19% from October through August, compared with a year earlier. Government spending climbed 7%, to $4.1 trillion, outpacing receipts, which grew 3% to $3.1 trillion.

The total deficit is $1.07 trillion with one month to go, or 4.4% of GDP.

We are now looking at $trillion dollar annual deficits for decades to come, despite the strong economy.

The administration is pointing to the fact federal revenues have climbed nearly 7% since May, with corporate tax revenue rebounding strongly, but revenue growth is below where forecasters projected it would be prior to the 2017 tax cuts, while at the same time, federal spending has been surging. The Treasury said spending on the military and interest costs each rose 9% in the first eleven months of the fiscal year, which commences October 1.

It is possible September could be a positive month because normally the government collects more than it spends for the month, so the deficit could slip back below $1 trillion.

Meanwhile, the markets just shrug, even as the cumulative net interest expense for the eleven months is $379 billion. That’s the figure I’ve been harping on for years and years.  It can go a lot higher, sports fans.

But heck, President Trump told a rally in North Carolina that regarding the deficit, there is “always time for the other,” as in cutting it.  This is the guy who told you during the 2016 campaign he was such a smart businessman he would eliminate it.

This is the guy who at the same rally said of the farmers, “We gave them $28 billion to make them whole.  No one would ever think of helping farmers targeted by China!”

Well when it isn’t your money, Mr. President, but the American taxpayers’ and no one is standing up against you, of course you can just pass it out.

In the same breath, he said, “We proudly withdrew from the job destroying TPP!”

The TPP created new markets for America’s farmers, Mr. President!

I was watching Fox News’ coverage of the rally and after, commentator Charles Hurt (Washington Times) said, “He’s so entertaining...he loves America!”

I spit up my beer.

Turning to the Trade War....

Lower-level U.S. and Chinese officials are expected to meet next week in Washington before talks between senior trade negotiators in early October.  President Trump said on Thursday he preferred a comprehensive trade deal with China but did not rule out the possibility of an interim pact.

The day before, Trump moved to postpone until Oct. 15 a tariff increase on about $250 billion in imports that had been set to hit on Oct. 1, calling the delay a goodwill gesture as China marks the 70th anniversary of Communist rule on that date.  Of course Xi Jinping’s speech that day is not exactly going to be a peace overture to the West.

Friday, China announced it would exempt some agricultural products from additional tariffs on U.S. goods, according to the official Xinhua News Agency, in another sign of easing Sino-U.S. tensions before a new round of talks.

China had imposed additional tariffs of 25% on U.S. agricultural products including soybeans and pork in July 2018.  It raised tariffs on soybean by a further 5% and on pork by a further 10% on Set. 1.

“China supports relevant enterprises buying certain amounts of soybeans, pork and other agricultural products from today in accordance with market principles and WTO rules,” Xinhua said, adding that the Customs Tariff Commission on China’s State Council would exclude additional tariffs on those items.  China has “broad prospects” for importing high-quality U.S. agricultural goods, Xinhua reported, citing unnamed authorities.  “It is hoped that the U.S. will be true to its words and fulfill its promise to create favorable conditions for cooperation in agricultural areas between the two countries,” the report said.

Before the announcement of additional tariff exemptions, Chinese firms bought at least 10 boatloads of U.S. soybeans on Thursday, the country’s most significant purchase since at least June.

The Wall Street Journal is reporting today that “China is looking to narrow the scope of its negotiations with the U.S. to only trade matters, seeking to put thornier national-security issues on a separate track in a bid to break deadlocked talks.

“Chinese officials hope such an approach would help both sides resolve some immediate issues and offer a path out of the impasse, people familiar with the plan said.”

We have been close before to reaching an accord, only to have negotiations break down, and key issues such as intellectual property, China’s reliance on state-owned enterprises, and investment restrictions on U.S. businesses (forced joint ventures) remain.

But de-escalating is better than escalating, even though there is no imminent broad-based deal in the cards.

Treasury Secretary Steven Mnuchin also made clear that Hong Kong won’t be part of the discussions, while there are questions as to whether Huawei Technologies Co. will be, Huawei regarded as a national security threat amid the global shift to next-generation wireless networks.

And Mnuchin maintained President Trump won’t accept a watered-down deal just to take the issue off the table ahead of the 2020 election.  “He is prepared to raise tariffs if we need to raise tariffs,” the secretary said.

Europe and Asia

As expected the European Central Bank cut its key interest rate and launched a new package of bond purchases Thursday that lays the groundwork for a furtherance of ultraloose monetary policy that has failed to boost inflation.  The latest dose of stimulus is the ECB’s largest in 3 ½ years and departing President Mario Draghi’s swan song, as he hands off to his successor negative interest rates and an open-ended bond-buying regime.

But, again, these policies have largely failed, and with the latest purchases of bonds, at what one point will the ECB be forced to enlarge the pool of assets it can buy?  Plus Draghi highlighted divisions within the ECB’s rate-setting committee over its future course.

The ECB is cutting its key interest rate by 0.1 percentage point, to minus 0.5%, while buying 20bn euro ($22 billion) of eurozone debt starting in November, relaunching its quantitative easing program that it had phased out last December.  The new QE program is expected to “run for as long as necessary,” and only to end shortly before the bank starts raising interest rates, the ECB said.

The ECB also promised not to raise interest rates until it sees inflation at its target of 2%, and it’s been stuck at 1% on core for ages.

Europe risks having the fate of Japan, decades of stagnation, and now as Draghi departs, he has left the central bank with very little ammunition to fight any recession, even as he furthers asset-price bubbles and weakened banks.  [The ECB created another mechanism to shield banks from the full force of negative rates, including a new batch of long-terms loans with sweetened terms.]

So Draghi, recognizing the dangerous side effects, called on eurozone governments to step up spending to support growth.

One German banking executive said: “The ECB recalls a motorist who continues to increase speed in a dead end.”

Former International Monetary Fund Managing Director Christine Lagarde replaces Draghi Nov. 1.

President Trump tweeted on the ECB’s action:

“European Central Bank acting quickly. They are trying, and succeeding, in depreciating the euro against the VERY strong dollar, hurting US exports...And the Fed sits, and sits, and sits.  They get paid to borrow money, while we are paying interest!”

In response, Draghi said: “We have a mandate.  We pursue price stability. And we don’t target exchange rates. Period.”

One separate economic data point for the eurozone...July industrial production was down 0.4% over June, down 2.0% year-over-year.  [Eurostat]

Brexit: British Prime Minister Boris Johnson said he will meet with European Commission President Jean-Claude Juncker in Luxembourg on Monday to discuss a renegotiation of Brexit, which is hardly likely ahead of Britain’s planned departure on Oct. 31, seeing as the EU said it will not renegotiate the terms already agreed to.

I wrote last time that a key figure in the process will be House of Commons Speaker John Bercow and he vowed “creativity” in Parliament if Johnson ignores a law designed to stop a no-deal Brexit.

Bercow said in a lecture in London yesterday that the only possible Brexit was one backed by MPs.

A new law, passed before the suspension of Parliament, forces the prime minister to seek a delay until Jan. 31, 2020, unless a deal or no-deal exit is approved by Parliament by October 19.

Johnson has said he would rather be “dead in a ditch” than ask for another delay.

Bercow said: “Not obeying the law must surely be a non-starter.  Period....

“Surely, in 2019, in modern Britain, in a parliamentary democracy, we – parliamentarians, legislators – cannot in all conscience be conducting a debate as to whether adherence to the law is or isn’t required.”

Bercow called it “astonishing” that “anyone has even entertained the notion.”

The new law could force a Brexit delay beyond the current October 31 deadline by requiring the prime minister to request an extension to the U.K.’s EU membership, with Johnson needing to write EU leaders to prolong talks under Article 50 – the part of the EU’s Lisbon Treaty which sets out what happens when a country decides it wants to leave the EU.

Queen Elizabeth gave her assent to the new law on Monday, the last day Parliament sat in this session, Boris Johnson having previously limited it upon their return from summer recess.  Johnson had also failed, again, to secure the two-thirds of Parliament needed to trigger an election.

“This government is a disgrace, and the way the prime minister operates is a disgrace,” Labour Party head Jeremy Corbyn fumed afterwards.

Parliament is now not scheduled to return until October 14, which was Johnson’s ploy to force an exit by giving MPs limited time before the Oct. 31 deadline, with a critical EU summit Oct. 17-18.

The European Union, in the meantime, is pressing Britain to give Northern Ireland special status within the bloc’s trading orbit to unlock a Brexit deal, with Dublin promising a positive response should London shift its position.

The so-called backstop mechanism to uphold the seamless Irish border after Brexit has proven the key obstacle.

The EU saw an opening after Johnson, earlier in the week, signaled that he was willing to preserve an all-Ireland economy for checks on animals and food products, a single electricity market and travel zone, following talks with Ireland’s leaders.  But Johnson is not for a Northern Ireland-only backstop.

That said, the U.K. has not presented a feasible, legally sound and detailed plan to replace the backstop.

Johnson and many others in Britain oppose the backstop, fearing it would trap the country in a permanent customs union with the EU.  But the Northern Irish unionist DUP party, which props up Johnson’s minority government, fears the backstop proposed by the EU would split their region from the rest of the country.

Lastly, the government published its “reasonable worst-case” planning assumptions for a no-deal Brexit. Titled Operation Yellowhammer, the document outlines the impacts on a range of areas on day one of exiting the EU without a deal.  MPs voted for its disclosure.

It warns of electric price hikes, shortages on medicine and food supplies as well as concern for animal welfare over shortage of veterinary supplies, lengthy delays at ports, protests and disorder.

On Northern Ireland it warns there will be “significant pressure” to find arrangements to manage the border within days or weeks because of the barriers for trade.

Tariffs for goods entering Ireland will “severely disrupt trade” forcing business to stop trading or relocate with costs passed on to customers.

There will be disruption to key sectors, job losses, protests, direct action and road blocks.  And the document talks of potential panic buying of fuel.

“There may also be a rise in public disorder and community tensions.”

MPs said that the release of Yellowhammer made it all the more important that Parliament be recalled immediately.

France: Paris was hit by its biggest transit strike since 2007 today, the first big act against President Emmanuel Macron’s plan for a universal pension, which would replace dozens of different pension schemes for different professions.  Members of other professions including lawyers, airline staff and medical workers have called for more strikes starting on Monday.

Ten of Paris’ 16 train lines were shut and service on the others was disrupted, with 145 miles of traffic jams in the region.

Germany: A Munich-based think-tank, the closely followed Ifo Institute, cut its forecast for German growth this year from 0.6 percent to 0.5 percent and lowered its estimate for next year from 1.7 to 1.2 percent.  This does not include the potential impact of a disruptive Brexit or an escalation of the U.S.-China trade war.

Turning to Asia....

China reported exports in August fell 1% from year ago levels, after rising 3.3% in July.  Exports to the United States were down 16% yoy.

Imports declined 5.6% last month and have been down every month this year except April.  In 2018, the average monthly gain in imports was 16.6%.

Imports from the U.S. fell 22.4%.

There have been growing concerns over a looming pork shortage and soaring prices, with the Lunar New Year holiday not too far away, January this time. 

China produces half the world’s pork, the key staple there, but output could plummet, and imports will not be able to cover the gap, even any added purchases from the U.S., though the government maintains there are no causes for concern.  African swine fever is the culprit.

Japan revised second-quarter GDP down sharply from 1.8% annualized to 1.3%, as cap-ex was downgraded bigly.

Street Bytes

--Stocks rose smartly a third-straight week with all three major averages now just shy of their all-time marks; the Dow Jones up 1.6% to 27210, the S&P 500 advancing 1.0% and Nasdaq 0.9%.

--U.S. Treasury Yields

6-mo. 1.91%  2-yr. 1.80%  10-yr. 1.90%  30-yr. 2.37%

Treasuries continued to tumble in September, with the 10-year at its highest yield since early August.  Solid economic data and questions over the quantitative-easing plans of the ECB helped fuel the move, yields climbing across all developed markets.  Just last month, Treasuries had their biggest monthly gain since the depths of the 2008 financial crisis and yields tumbled on the back of sliding yields in Europe and concern about the U.S.-China trade war.

--Second-quarter figures released Thursday by the Organization for Economic Cooperation and Development showed year-to-year economic growth in the Group of 20 leading economies was at its weakest since the start of 2013.

--Oil prices fell sharply at one point this week on a report that President Trump was discussing reducing sanctions against Iran in order to help facilitate a meeting with Iranian President Rouhani at the UN General Assembly later this month.  This followed the departure of National Security Adviser John Bolton, a hawk on Iran, traders betting the potential for conflict between the two nations had been reduced.  By the end of the week WTI (West Texas Intermediate) was at $54.88, down $1.55 from the prior week’s close, as concerns over global growth trumped any hints of progress on the trade front.

Separately, the International Energy Agency released a report that said the United States briefly became the world’s No. 1 oil exporter as record shale production found its way to global customers.

In June, the U.S. shipped almost 9 million barrels a day of crude and oil products, surpassing Saudi Arabia.

Gains in U.S. supply are undermining efforts by OPEC and its allies, whose production cuts are in their third year in a bid to drain stockpiles. And the swelling American output, as well as deepening concerns over global demand fueled by the prolonged U.S.-China trade war, have prompted a decline in benchmark prices since an April high.

But the Saudis reclaimed the top exporter’s spot in July and August owing to weather (hurricanes) and the trade dispute “making it more difficult for shale shipments to find markets,” the IEA said.

Meanwhile, Wall Street lost one of its true legends this week, T. Boone Pickens, 91.  Pickens was a onetime Texas oil wildcatter turned billionaire energy investor and television pitchman for wind and natural-gas power.  For as long as I’ve followed the markets, Pickens was a giant figure.

Though he achieved much of his fame for takeover bids in the 1970s and 1980s, Pickens earned much of his wealth in the energy futures market after turning 75 in 2003, making billions through his Dallas-based BP Capital LLC by correctly betting on rising prices for oil and natural gas.

Pickens spent $100s of millions on philanthropy (including about $500 million to Oklahoma State University) and his investments in wind energy, part of his plan to end U.S. dependence on Middle East oil.

Editorial / Wall Street Journal

“The colorful capitalists of the 20th century are leaving us, and few were more uproarious than Texas oil man and entrepreneur T. Boone Pickens Jr., who died Wednesday at the age of 91 after a lifetime of bucking the status quo.

“Pickens earned a degree in geology from Oklahoma State, and his chosen field was energy. He began his career working for Phillips Petroleum but soon founded an exploration company that would eventually become Mesa Petroleum, which he built into one of the world’s largest independent natural gas and oil companies.  When he lost control of that firm after a period of declining oil and natural gas prices, at age 68 he founded BP Capital, a hedge fund focusing on oil, gas and other energy-related investment.

“Yet for all his achievements in energy, he was the scourge of some in the oil patch for his takeover bids for larger firms.  His hostile bid in 1983 for Gulf Corp., a giant of the era, was unsuccessful but caused other firms to shape up their management and improve financial returns.

“In this he became one of the leaders of the 1980s in advocating for the primacy of shareholder value as a benchmark for corporate management.  This legacy speaks to today, when the Business Roundtable of Fortune 500 CEOs is suggesting companies must serve ‘stakeholders’ before they represent shareholders.

“Pickens was firmly in the opposite camp.  As he pointed out, companies that don’t serve the interests of their owners – the shareholders – are often serving the interests of managers who don’t have the same stake in long-term success.  In a 1988 speech to the Economic Club of Detroit, he put it this way: ‘What we’re seeing is a transformation of Corporate America. The new focus is on results instead of size, on creating value rather than empires.’

“Corporate America didn’t much like his challenge and denigrated him as a corporate ‘raider.’  But Pickens shook up their culture, and much for the better.  He was also a great philanthropist to many causes, including institutions that promoted free markets. We could use more like him today.”

One note on Mesa Petroleum, its bid for Gulf Oil in 1983 and 1984 spurred the largest corporate merger in history at the time, Standard Oil Co.’s $13.2 billion buyout of Gulf to form Chevron Corp.

As Robert Slater wrote in his 1999 book, “The Titans of Takeover,” the deal made Pickens “a hero to Wall Street” because shareholders earned an estimated $6.5 billion from the run-up of Gulf’s share price, while Merrill Lynch, Morgan Stanley and Salomon Brothers shared $63 million in fees.  Pickens and his partners enjoyed a profit of $760 million.  [Associated Press]

Pickens supported Donald Trump during the 2016 campaign because Pickens felt he “was the only one who was going to change anything” among Republicans who ran for the nomination, Pickens said in an interview.  “Now, you may not like the change you get, but you’re getting ready to have change.  And I’m a change advocate.”

But at the same time, his Pickens Plan, a grassroots campaign that called for building wind farms and an improved electric grid, created an alliance between Pickens and Democrats.  Then-Senate Majority Leader Harry Reid said back in 2008, “Here is a man who was my mortal enemy.  He’s my pal now.”

--Apple unveiled its iPhone 11 range of handsets, which features more cameras than before and a processor that has been updated to be faster while consuming less power.  What is notable is an “ultrawide” rear camera, while a new featured called Deep Fusion takes nine snaps with a variety of exposures and then picks through them “pixel by pixel” to combine the best parts from each to create a superior image.  But this last feature will be added via a software update before year’s end.

Other enhancements include the ability to shoot slow-motion videos with the front camera.

The company said the two Pro models would last between four to five hours longer than their XS predecessors.  All three models were to be available for preorder on Friday, and ship September 20, The iPhone 11 starts at $699, the iPhone 11 Pro at $999, and the Pro Max at $1,099.

But the company did not launch a 5G model, and some rumored features were missing.

Apple did reveal a new version of its smartwatch, which features an “always on” display for the first time. Apple currently accounts for 49% of the global smartwatch market, according to research firm IDC.

From Bloomberg News: “The iPhone maker, which is the only foreign brand to hold a top-five position in China, is struggling to fight off local competitors Huawei Technologies Co., Oppo and Xiaomi, whose slicker designed, more sophisticated cameras and cheaper price tags are wooing customers all over the country. The lack of fifth-generation (5G) cellular support in the newly announced iPhone 11 family won’t immediately be an issue, but it could hurt Apple in mid-2020, when analysts expect China’s smartphone market to rapidly ramp up 5G demand.

“It will be ‘extremely difficult’ for Apple to maintain its China position into the second half of next year, according to Jia Mo, an analyst at research firm Canalys.  ‘It remains to be seen if iPhone 11 can offer technology innovations to offset some disadvantages in hardware, like lack of 5G support.’”

China is rushing to be the leader in 5G, and state-owned mobile operators are pledging billions of dollars to build out the requisite infrastructure.

As for global smartphone shipments the first half of 2019, according to IDC, Samsung’s fell 5.5%, year-on-year, and Apple’s 14.5%, while Huawei’s (incl. Honor) rose 31.8%.

Samsung has 22.9% global market share, Huawei 17.7% and Apple 10.2% (with China’s Xiaomi, Oppo and Vivo at 8.5% to 9.7% each).

But without a 5G model as yet, and with consumers holding onto their handsets longer before upgrading, that could put a further constraint on Apple sales.

One more...Apple introduced its new video streaming service, Apple TV+, which will cost just $4.99 a month – undercutting Disney, which said it will sell its new streaming service for just $6.99 a month.  Apple TV+ will, however, have limited offerings, at least initially.  It will also be offered free for a year to suck you in.

--Thousands of municipal governments nationwide and nearly two dozen states that sued the pharmaceutical industry for the destructive opioid crisis have tentatively reached a settlement with Purdue Pharma and its owners, members of the Sackler family.

The company whose signature opioid, OxyContin, is seen as an early driver of the epidemic, and the Sacklers, were forced to face a day of reckoning for the deaths of hundreds of thousands of people from overdoses, as well as the costs.

Under the deal, with many of the details yet to be revealed, the Sackler family would pay $3 billion in cash over seven years, of a total rumored $12 billion.

The tentative proposal must still be approved by Purdue’s board as well as a bankruptcy court judge.

In a statement, the company said, “Purdue Pharma continues to work with all plaintiffs on reaching a comprehensive resolution to its opioid litigation that will deliver billions of dollars and vital opioid overdose rescue medicines to communities across the country impacted by the opioid crisis.”

But many of the states denounced the proposal, vowing to pursue the Sacklers to try to recover vast sums that their governments have spent on treatment, care and enforcement.

--The Trump administration said on Wednesday it would ban the sale of most flavored e-cigarettes, at a time when hundreds of people have been sickened by mysterious lung illnesses and teenage vaping continues to rise.

Speaking in the Oval Office, President Trump acknowledged there was a vaping problem and said: “We can’t allow people to get sick. And we can’t have our kids be so affected.”

The Food and Drug Administration will outline a plan within the coming weeks for removing flavored e-cigarettes and nicotine pods from the market, excluding tobacco flavors.  The ban would include mint and menthol, popular varieties that manufacturers have argued should not be considered flavors.

There have been nearly 500 cases this summer of vaping-related respiratory illnesses in nearly three dozen states with a possible link to six deaths, which have amplified concerns and renewed calls for a total ban on the largely unregulated products.

Just last week, Michigan became the first state to prohibit the sale of flavored e-cigarettes, while New York, Massachusetts and California are considering similar measures.  San Francisco banned e-cigarettes earlier this year, which Juul Labs, the dominant seller in the United States, is lobbying to reverse through a ballot initiative.

The public is accusing Juul of deliberately targeting youths, which led the company to voluntarily stop shipping most flavored pods to thousands of retail locations around the country.

Five million minors, mostly in their high school years, reported that they had used e-cigarettes recently, the F.D.A. reported in its annual survey, with one-quarter of the nation’s high school students saying they vaped within the last 30 days, up from 20 percent last year.

A company spokesman for Juul said the company would comply with the F.D.A.’s decision to prohibit most flavors.  “We strongly agree with the need for aggressive category-wide action on flavored products.”

On Monday, the F.D.A. rebuked Juul, saying it made unauthorized claims that its vaping products are less harmful than traditional cigarettes.

Editorial / Wall Street Journal

“A campaign against vaping products is moving at land speed records, with the Trump Administration announcing this week it will pull flavored e-cigarettes from the market. This is becoming a political pile on, and regulators risk foreclosing one of the best opportunities in public health, which is to reduce cigarette smoking.

“President Trump on Wednesday popped off about ‘a problem in our country,’ which is the new trend of vaping.  ‘There have been deaths and there have been a lot of other problems.’  The First Lady recently tweeted that she’s ‘deeply concerned’ about e-cigarette use among youth, and Health and Human Services says it is stepping in to clear the market of flavored options....

“(Readers) may have seen the stories about strange illnesses and deaths related to vaping. The details are still emerging, though the Food and Drug Administration has said many of the tested samples contain THC, a psychoactive element of marijuana, and Vitamin E acetate. FDA has warned against buying products on the street, and many of these cases are the result of vaping black-market cannabis even as the regulatory scrutiny is on nicotine.

“This is a nice summary of the bizarre state of public-health debate.  Some in both parties are cheering marijuana legalization and the proliferation of cannabis products, even as the consequences aren’t well understood.  Yet e-cigarettes are treated like public enemy No. 1.  San Francisco recently banned e-cig sales....

“No one wants kids addicted to nicotine, and the question is how to balance these competing equities....

“(But) a Juul executive told Congress this summer that a result of exiting convenience stores has been other actors exploiting the vacuum by selling illegal flavor pods.

“Expect more such unintended consequences.  And if the flavor ban doesn’t reduce the number of teen vapers, then what?  The next step looks like an even broader ban, which won’t be a net positive to public health....

“The question is not whether vaping is healthy – it isn’t – but whether the frenzy against e-cigarettes is moving faster than the evidence. The answer increasingly looks to be yes, and forgotten in the rush are the 480,000 Americans who die each year from smoking.”

As vaping’s popularity has grown over the last five years, smoking rates have plunged to historic lows.  As recently as 1997, 36.4% of U.S. high-school students claimed to have tried cigarettes.  By 2017 the high-school smoking rate had fallen to 7.6%.

--PG&E reached an $11 billion settlement with insurance companies over wildfire claims, a big step as it attempts to emerge from bankruptcy.  Previously, PG&E agreed to pay $1 billion to local governments and state agencies to settle claims from fires in 2017 and 2018.

So now the San Francisco utility needs to reach a settlement with victims, with attorneys for the victims upset that PG&E is paying off insurance companies to buy their cooperation.

--Boeing Co. handed over around a quarter as many planes in August as it did a year ago, pushing total deliveries so far this year down more than 40%, as the worldwide grounding of its best-selling 737 MAX jet enters its seventh month.  Boeing delivered 18 aircraft in August, down from 64 in the same period, a year ago.  In the eight months through August, deliveries totaled 276 aircraft, compared with 481 last year.

Rival Airbus SE has delivered 500 aircraft for the first eight months of 2019, including 207 of its A320neo jets, which compete with the 737 MAX.

--From the Wall Street Journal: “With U.S. corn farmers hammered by the trade war with China, President Trump has said Japan – its own crop hurt by a bug infestation – will buy enough to pick up the slack.  Not everyone in Japan has gotten the memo.

“Agriculture specialists say the bug problem isn’t severe enough to affect import demand. And an official at the Ministry of Agriculture, Forestry and Fisheries said, ‘If the pest damage turns out to be insignificant, the amount of purchases may not change much.’....

“ ‘If Trump thinks he’s going to deplete the stocks of stored-up U.S. corn and rescue the U.S. farmer in the process, that’s not going to happen,’ said James Schoff, a senior fellow in the Asia Program of the Carnegie Endowment for International Peace.”

Japan is the second-largest buyer of U.S. corn after Mexico, most used for feed, but its total annual corn imports would barely make a dent in U.S. corn stocks.

It was at the G-7 on Aug. 25 that President Trump said, after meeting with Japanese Prime Minister Shinzo Abe, that Japanese corn purchases would total “hundreds of millions of dollars,” and, alluding to U.S. excess supplies, Trump added Japan is “going to be buying all of that corn.”

--The number of people without health insurance in the United States increased in 2018, a Census Bureau report released Tuesday indicates.  8.5 percent of Americans, or 27.5 million people, did not have health insurance at any point in 2018, up from 7.9 percent, or 25.6 million people in 2017.

This marked the first year-to-year increase in the percentage of uninsured people since 2008-09.

--The Census Bureau also reported median household income in 2018 was $63,179, an uptick of 0.9% that officials said isn’t statistically significant from the prior year based on figures adjusted for inflation.

But the poverty rate was 11.8% last year, a decrease of a half percentage point from 2017, marking the fourth consecutive annual decline in the national poverty rate.  It was the first time the official rate fell significantly below its level at the start of the recession in 2007.

--Charles Schwab Corp. is cutting about 600 jobs as it deals with the impact of lower interest rates.  The layoffs amount to about 3% of staff, as the brokerage cuts expenses with falling rates pinching profits.

“We initiated a process to review our expense base to ensure we remain well-positioned to serve clients while navigating an increasingly challenging economic environment,” a Schwab spokeswoman said.

--It was reported this week that up to 15% of Goldman Sachs partners are preparing to leave by year’s end, but as Crain’s New York Business adds, firms across Wall Street are having a crappy year so lots of personnel are going to be purged.

Investment-banking revenues had their worst first half since 2006, according to a report by Coalition, a London-based research firm.  The weakest performance is in bond, currency and commodity trading, which accounts for 42% of revenue, down from almost two-thirds before the financial crisis.

But at the same time, Goldman, Morgan Stanley and most of the others remain highly profitable and don’t have the issues that Deutsche Bank or UBS has.

--Billionaire investor Carl Icahn is moving his operation from New York to Miami next year for tax reasons, though in terms of his staff at publicly-traded Icahn Enterprises, those who don’t opt to relocate with him receive no severance, as the New York Post reported.

--Oracle Corp. said co-CEO Mark Hurd will take a medical leave of absence, the company not mentioning any specifics, which means that Safra Catz will be Oracle’s sole CEO.  Since Sept. 2014, Oracle has had a dual leadership structure, while co-founder Larry Ellison is chairman and chief technology officer.

Oracle announced the news on Hurd as it released its first-quarter financial report a day earlier than anticipated, with profit basically in line with estimates.

The company is the third-largest software-as-a-service vendor by market share, behind Salesforce and leader Microsoft, according to research firm Gartner Inc.  Growth is tied closely to the health of enterprise technology spending and world-wide this is projected to rise less than 1% this year to $3.74 trillion, slower than the 5.1% growth of a year earlier, Gartner said.

At least with Oracle, revenue from cloud services and license support, the company’s largest segment, rose 3% to $6.81 billion, though overall revenue rose less than 1% to $9.22 billion.

On the conference call, Ellison bragged that McDonald’s Corp. chose Oracle over Workday for cloud services.

--Moody’s Investors Service cut Ford Motor Co.’s bond rating to junk status, citing weak cash generation and a yearslong restructuring plan that the auto maker is undertaking just as the car market softens globally. Moody’s noted in particular Ford’s sharply weaker performance in China, where its sales have plunged the last two years, leading to big losses.

But Moody’s noted Ford has “a sound balance sheet and liquidity position from which to operate.” As of June 30, the auto maker had $22.1 billion in cash, a far cry from the mid-2000s, when Ford was running out of cash and its survival was in doubt.

Ford is in the process of rebooting its China operations, with new and redesigned models after admitting its vehicle lineup there had become stale.

Both S&P Global Ratings and Fitch, the other two of the three major ratings companies, still have Ford bonds above junk territory, and the company’s shares this week were largely unchanged.

--Passenger car sales in India plunged 41 percent in August from a year earlier, according to the Society of Indian Automobile Manufacturers, marking the fifth month of double-digit losses.

India’s car industry was once among the world’s most promising, buoyed by hopes of a rising middle-class that would begin buying vehicles for the first time.

Key to the unraveling has been a year-long liquidity squeeze caused by defaults in India’s shadow banking sector, which accounted for almost half of new credit for vehicle purchases.

I’ve been talking about the broad slowdown in the Indian economy, and second-quarter GDP came in at a six-year low of 5 percent.

The slump has forced automakers to cut production, shut plants temporarily and lay off contract workers.

--Bucking the trend in the retail sector in a record year of store closing, Old Navy announced plans to open 800 new locations as part of its upcoming split from parent company the Gap.  This would nearly double the number in North America to 2,000. The plan is to add around 75 a year, “focused on off-mall locations.”

--Shares in SmileDirectClub had a miserable debut as a public company on Thursday, having priced shares for its IPO above the range of expectations. 

The dentistry company priced them at $23, implying a market capitalization of $8.9 billion, but they closed the first day at $17, before rallying today to close at $18.60.

SmileDirectClub sells clear teeth aligners directly to consumers for less than traditional orthodontists.  The Nashville-based company reported a loss of $75 million last year and is facing pushback from the American Association of Orthodontists, which has claimed in complaints with state attorneys-general and dental boards that the service is “illegal and creates medical risks.”

--But we did have a successful IPO today, Cloudflare, an internet-security provider, which soared 20% after making its debut.  [Priced at $15, closed at $18.]

--Uber Technologies Inc. is dismissing 435 employees, the second major staff cut this summer, amid mounting losses and a falling stock price.  The jobs being eliminated are largely in the product and engineering divisions, while the previous cuts were in marketing.

Four months after Uber went public, the stock is trading about 25% below its initial offering price.  Last month, the ride-hailing company reported its largest-ever quarterly loss of $5.24 billion.

--The number of passengers flying to Hong Kong with Cathay Pacific Airways plunged 38 percent in August as the anti-government protests scared away visitors during one of the busiest months for travel.  The weakness in the business environment remained in September, as Cathay announced Wednesday.

Demand for business class travel “experienced a more significant drop,” the airline said, with fewer people willing to go to Hong Kong for corporate reasons.

So Cathay has responded by cutting a number of short and long-haul routes, and ordering a hiring and spending freeze.

[Overall, officials said arrivals in Hong Kong fell 40% last month from a year ago, the worst decline since May 2003, when Hong Kong was grappling with the SARS virus.]

--Nearly all British Airways flights were grounded Monday by its first ever pilots’ strike (or at least first in decades), 1,700 flights to and from London’s Heathrow and Gatwick airports during two days of action in its latest high-profile setback. 

BA faces intense competition on short-haul routes from EasyJet, Ryanair and other low-cost airlines, while dealing with a number of operational hiccups in recent years, including a data breach and theft impacting 500,000 customers, for which BA faces a record $230 million fine under tough new data-protection rules.

BA has offered its pilots an 11.5% raise over three years, that would take the pay of its highest earning captains from $205,000 to $245,000, including ‘allowances.’

The strike ended Wednesday, but if the two sides don’t reach an agreement, another one is set for Sept. 27.

--Tourism to Ireland topped three million visitors for the first time in the second quarter, with visits by Americans reaching a spring record.  Overall, there was 2.4 percent growth in numbers versus the April-June 2018 period, despite a slight decline in visits from Britain, owing to Brexit uncertainties and corresponding weakness in sterling.

But there was an 8.3 percent rise in American and Canadian visitors, the former fueled in no small part by the dollar’s strength versus the euro.

--Wendy’s is taking its breakfast menu nationwide in 2020 and will hire 20,000 employees to support the morning meal, the company announced Monday.  Currently, the fast-food chain, a holdout in the breakfast area among national chains, has it in 300-plus restaurants.

I see that one item on Wendy’s breakfast menu is Honey Butter Chicken Biscuit.  Mmmm.

Wendy’s actually tried breakfast before. In the mid-1980s it offered omelets, French toast and toasted sandwiches, but the items took too long to make and it was discontinued.

Foreign Affairs

China / Hong Kong: Anti-government protests spread to the sports field this week, as many local fans defied Chinese law to boo the country’s national anthem ahead of a soccer World Cup qualifier against Iran.  This followed another weekend of violent clashes in which police firing tear gas engaged in skirmishes with protesters who at times smashed windows and started fires in the streets.

Earlier on Tuesday, prior to the soccer match, the city’s Beijing-backed leader, Carrie Lam, warned against foreign interference in Hong Kong’s affairs, adding that an escalation of violence could not solve social issues.

On Monday, former Defense Secretary Jim Mattis said the anti-government protests were not an internal Chinese matter and the United States should offer at least moral support to the demonstrators.  President Trump has offered zero thus far.  Last Sunday, demonstrators marched to the U.S. Embassy, urging Trump to “liberate” their city, posters reading specifically: “President Trump, please liberate Hong Kong.”

Hong Kong billionaire Li Ka-shing, in his first speech mentioning the unrest, urged political leaders to offer young people an olive branch, calling them “masters of our future.”

George Will / Washington Post

“The masked men who recently tossed firebombs at Jimmy Lai’s home targeted one of (Hong Kong’s) foremost democracy advocates.  Lai, a 71-year-old media billionaire, calls this summer’s ongoing protest ‘a martyrdom movement’ and ‘a last-straw movement.’  It has an intensity and dynamic that bewilders the protesters’ opponents in Beijing and in Hong Kong’s Beijing-obedient city administration.  Today’s mostly young protesters will be middle-aged in 2047 at the expiration of the 50-year agreement that ostensibly accords Hong Kong protected status as an island of freedom. Beijing attempted to whittle away that status with a proposed 2003 law against ‘SUBVERSION.’  And by devaluing suffrage via the 2014 requirement that candidates for the chief executive receive approval from a Beijing-loyal committee. And by this year’s extradition bill that would have facilitated sweeping Hong Kongers into the maw of China’s opaque criminal-justice system.

“Monday’s New York Times carried a full-page ad paid for by ‘the Government of the Hong Kong Special Administrative Region of the People’s Republic of China.’ Which means, effectively, by the Chinese Communist Party. The ad said: ‘We are resolutely committed to ‘One Country, Two Systems’ which provides the constitutional guarantee for Hong Kong’s continued development and success as a free and open society.’  The ad pledged ‘dialogue to talk through differences and look for common ground with no preconditions.’

“But the ‘one country, two systems’ formulation – agreed to in 1997, when British authority ended – as a 50-year framework for Hong Kong’s relations with the PRC is an inherently menacing precondition. And Beijing’s consistently sinister behavior reveals a determination, as implacable as it is predictable, to incrementally nullify ‘one nation, two systems’ by reducing Hong Kong to just another jurisdiction wholly subservient to China’s deepening tyranny.

“For Leninists such as Xi Jinping wielding a party-state, nothing is more important than the party’s unchallenged primacy. Another ‘Tiananmen Square’ – a Hong Kong massacre – would be calamitous for China’s Leninists, but less so than weakening the Communist Party’s primacy. The party is, Lai says, ‘detached from reality’ and ‘will always make the wrong decision’ as it tries to become ‘the most absolute dictatorship in human history.’

“In 1940, Winston Churchill warned against ‘a new Dark Age made more sinister, and perhaps more protracted, by the lights of perverted science.’  That is China’s aspiration with ‘digital Leninism,’ an application of science through manipulative technologies that neither Churchill nor his contemporary, George Orwell, anticipated.  With a steadily refined repression apparatus, aptly called ‘cyber-totalitarianism,’ China’s surveillance state is enmeshing everyone in a ‘social credit’ system.  Individuals’ cumulative commercial and social media transactions give them a score that determines their access to education, housing, clinics, travel and more – even pet ownership.  Although China’s published statistics are as untrustworthy as the regime itself, there are reasons to believe that in this decade China has spent more on ‘stability maintenance’ than on its military.  Hong Kong is watching this....

“The Economist recently editorialized: ‘The West’s 25-year bet on China has failed.’  The wager was that ‘market totalitarianism’ is an oxymoron. Embedding China in the global economy supposedly would open it to the softening effects of commerce, which would be solvents of authoritarianism. The West’s tardy but welcome disenchantment is, as the Economist says, ‘the starkest reversal in modern geopolitics.’  If Hong Kong’s heroic refusal to go gentle into Beijing’s dark night is accelerating this disenchantment, the summer of dissent has been this decade’s grandest and most important development.”

North Korea: There are some who see the removal of national security adviser John Bolton, who Pyongyang once branded a “war maniac,” as a chance to resume denuclearization talks without facing an unyielding hawk on the other side.

In the past, Bolton had proposed using military force to overthrow the ruling Kim family and President Trump blamed Bolton directly for the collapse of the second summit in Vietnam in February for calling for use of the “Libya model,” or unilateral denuclearization that Kim has repeatedly rejected.

But North Korea has also targeted Secretary of State Pompeo, urging Trump to replace him with a “more mature” interlocutor.  Last month it called Pompeo a “diehard toxin” who only complicated talks.

Kim has previously given Washington a year-end deadline to take a new approach, but in the meantime he keeps launching missiles, including two more Tuesday morning, hours after a senior diplomat announced Pyongyang would be willing to resume negotiations with the United States in September.

Afghanistan: On Saturday, out of nowhere, President Trump tweeted that he had abruptly cancelled a Camp David meeting with Taliban and Afghan government leaders to finalize a peace agreement, the meeting scheduled for Sunday.

“Unbeknownst to almost everyone, the major Taliban leaders and, separately, the President of Afghanistan, were going to secretly meet with me at Camp David on Sunday. They were coming to the United States tonight.  Unfortunately, in order to build false leverage, they admitted to...

“...an attack in Kabul that killed one of our great soldiers, and 11 other people. I immediately cancelled the meeting and called off peace negotiations.  What kind of people would kill so many in order to seemingly strengthen their bargaining position? They didn’t, they...

“...only made it worse!  If they cannot agree to a ceasefire during these very important peace talks, and would even kill 12 innocent people, then they probably don’t have the power to negotiate a meaningful agreement anyway.  How many more decades are they willing to fight?”

In Sunday talk shows, Secretary of State Mike Pompeo said the negotiations were off “for the time being” but emphasized the progress that had been made.

State Department negotiator Zalmay Khalilzad returned to Washington on Monday for meetings with senior officials to discuss what had happened and where to go from here.

There was dissension in the administration, with Pompeo supporting negotiations, and national security adviser John Bolton in opposition.

Trump declared that talks with the Taliban aimed at ending the 18-year war are “dead.”

“As far as I’m concerned, they are dead,” he told reporters Monday.  Asked about the 14,000 U.S. troops still in Afghanistan, Trump said: “We’d like to get out but we’ll get out at the right time.”

“They thought that they had to kill people to put themselves in a little better negotiating position,” he told reporters, calling the attack “a big mistake.”

“I cancelled Camp David on the basis that they did something that they sure as hell shouldn’t have done,” he said.

Trump was heavily criticized for entertaining the idea of hosting the Taliban just days before the anniversary of 9/11.  Trump defended the idea, saying “having meetings is a good thing, not a bad thing.”

Sixteen U.S. troops have been killed this year.

As part of a peace proposal that was on the table, the U.S. would have withdrawn 5,400 troops within 20 weeks, in return for Taliban guarantees that Afghanistan would never again be used as a base for terrorism.  The remaining 8,600 American forces would have left according to a gradual timeline, perhaps within 16 months, which would have allowed Trump to declare that he had ended a long and increasingly unpopular conflict, when his predecessor, President Obama, couldn’t.

The Taliban is in control of more territory than at any point before the 2001 U.S.-led invasion.  But the militants have refused to hold direct talks with the Afghan government until a timetable for U.S. troop withdrawals is finalized.

For his part, Afghan President Ghani called on the Taliban to negotiate with him but warned that attempts to increase its attacks on the ground would be met with a ferocious military response.  An election that Ghani is expected to win is still planned for Sept. 28. The Taliban has insisted on postponing the election before proceeding with negotiations with the Afghan government.

Ghani’s officials added in a statement: “Real peace will come when the Taliban agree to a ceasefire.”

A Taliban spokesman said: “The Americans will suffer more than anyone else for cancelling the talks.  Its credibility will be affected, its anti-peace stance will be exposed to the world, losses to lives and assets will increase.”

Congresswoman Liz Cheney tweeted: “Camp David is where America’s leaders met to plan our response after al Qaeda, supported by the Taliban, killed 3,000 Americans on 9/11.  No member of the Taliban should set foot there.  Ever.”

Rep. Adam Kinzinger, an Air Force veteran who flew missions throughout the Middle East – including Afghanistan, tweeted: “Never should leaders of a terrorist organization that hasn’t renounced 9/11 and continues in evil be allowed in our great country.  NEVER.  Full stop.”

Editorial / Wall Street Journal

“President Trump on Saturday cancelled talks with the Taliban, and let’s hope for the sake of American security that it’s a long suspension. The talks have looked increasingly like the Paris peace talks of the Vietnam era in which the enemy negotiates a U.S. withdrawal as it prepares for a complete military victory.

“Mr. Trump tweeted that he cancelled talks sponsored by the U.S. and scheduled for Sunday at Camp David because the Taliban killed 12 people, including American Sergeant First Class Elis Angel Barreto Ortiz, in an attack on Thursday.  ‘What kind of people would kill so many in order to seemingly strengthen their bargaining position?’ Mr. Trump asked.

“But that’s what the Taliban have been doing throughout more than a year of negotiations. They practice terror while they talk. They have refused to commit to more than a token cease-fire while slaughtering civilians and the Afghan police and defense forces....

“The Taliban want to restore the Islamic Emirate they had before 9/11, in which religious leaders have the final say on all matters.  Women would once again be denied education, and minority rights would not be protected....

“Critics who complain about ‘forever wars’ overlook that the U.S. has had troops deployed in Europe since World War II and in Korea since the armistice of 1953. These deployments have helped to keep the peace with limited American casualties. This kind of long-term deployment should be possible in Afghanistan, perhaps with reductions as the Afghan forces gain in experience and firepower.

“There is no domestic political clamor for the U.S. to withdraw all troops, especially with casualties low. The political harm for Mr. Trump would be far greater if a pullout triggered the collapse of the Afghan government and a humanitarian tragedy.  A revived terrorist sanctuary in Afghanistan would also erase the political benefit for Mr. Trump from destroying the ISIS caliphate in Syria. The jihadist movement world-wide would declare a great victory.

“Hard as it may be to accept, the fight against Islamic terrorism will be a multi-generational struggle around the world. Better to stay on offense on their turf than to retreat to playing defense on America’s. And far better to have Muslim allies fighting by our side in their countries than to plan pre-emptive or reprisal attacks from the air and far away.  The Clinton years showed us that pinprick missile attacks alone do not stop al Qaeda.

“Mr. Trump might be tempted to resume talks with the Taliban, but he should be in no hurry.  The Taliban have been thinking amid Mr. Khalilzad’s mediations that they have the U.S. on the run.  Mr. Trump’s show of backbone will make them think twice. You can’t have a successful peace negotiation if one side has no interest in peace.”

Editorial / USA TODAY

“The collapse of peace talks aimed at ending American military involvement in Afghanistan has, for the moment at least, thwarted President Donald Trump’s isolationist urge to declare victory while pulling out U.S. troops based on vague Taliban assurances.

“Skeptics, like recently fired national security adviser John Bolton, often point to the 1973 Paris peace agreement as an example of how a rush-to-the-exit ended with the aggressors – North Vietnam, in that case – winning everything in the end.

“But there’s a more troubling, and recent, case in point – Trump’s decision to expedite troop drawdowns in Syria, a move Bolton also opposed.

“Trump made a theatrical display last December of tweeting a video of himself declaring victory in the U.S.-led coalition war against the Islamic State caliphate in Syria, along with his decision to ‘bring our great young people home.’

“Never mind the reality that the American military footprint of 2,000 troops in Syria was relatively small, and that the Pentagon had perfected the art of working with indigenous forces to minimize risk to U.S. ground troops while ensuring battle success.

“And never mind that Trump’s desire to pull the plug in Syria cost him a valuable Cabinet member in Defense Secretary James Mattis, who quit in disagreement with the decision.

“Trump later reversed himself to a degree. The troop commitment to Syria was cut by about half.  He thereafter used the victory as a favorite talking point, boasting of having obliterated, decimated or pulverized the terror group also known as ISIS.

“ ‘The ISIS territorial caliphate has been 100% and just absolutely destroyed,’ Trump said in July.

“Nonetheless, ISIS persists.

“As many as 14,000 to 18,000 ISIS fighters continue to operate in Iraq and Syria, using gangster tactics of assassinations, ambushes, suicide bombings and crop burning to sow discord and extort money.  Its leader, Abu Bakr al-Baghdadi, remains at large.  A recent U.S. inspector general report said ISIS in Syria is ‘resurging.’  And a United Nations report in July said the organization is working to reestablish guerrilla networks in Iraq and Syria.

“Merely by Trump cutting the relatively small force of U.S. troops in Syria to demonstrate his ‘America First’ bona fides, the U.S.-led coalition’s on-the-ground ally, the Syrian Democratic Forces, has been denied appropriate training, equipment and assistance in establishing the kind of human-based intelligence necessary to sustain hard-won victories and check ISIS’ reemergence, the IG report says.

“In addition, the report says the Arab and Kurdish liberation force lacks the wherewithal to continue detaining 10,000 captured ISIS fighters.  More important, they can provide little more than perimeter security for sprawling camps filled with tens of thousands of displaced Syrian families.  These camps are becoming insurgency breeding grounds, where Islamic State infiltrators are working to sow lawlessness and recruit followers.

“Precipitous withdrawal – whether in Afghanistan, Iraq, Syria or Vietnam – too often has been the perfect formula for snatching defeat from the jaws of victory.  Whomever Trump picks as his next national security adviser should understand this reality.”

Syria: Turkey, which for eight years has welcomed millions of Syrian refugees, has reversed course, forcing thousands to leave its major cities in recent weeks and ferrying many of them to its border with Syria in buses and police vans.

President Recep Tayyip Erdogan is pushing a radical solution – resettling refugees in a swath of Syrian territory controlled by the United States and its Kurdish allies.  If that does not happen, as I’ve noted for some time now, Erdogan is threatening to send a flood of Syrian migrants to Europe.

This is all part of Erdogan’s long demanded buffer zone along Turkey’s border with Syria to keep out Kurdish forces, whom he considers a security threat.

But his new plan to send the Syrians who have been fleeing the war back home comes as resentment against the Syrians in Turkey has grown, while at the same time, a Russian/Syrian offensive has sent hundreds of thousands more refugees fleeing toward the Turkish border.

A joint U.S.-Turkey patrol did take place last weekend as they attempt to establish a “safe zone” along a border region controlled by Kurdish forces.  Damascus condemned it.

But President Erdogan said: “It seems that our ally is looking for a safe zone for the terrorist organization, not for us. We reject such understanding,” adding Turkey must secure “the entire region” to resettle refugees.

Iran: Tehran’s nuclear chief said on Sunday the European parties to the 2015 nuclear deal have failed to fulfil their commitments under the pact, a day after Iran announced further breaches of limits on its nuclear activity set by the deal.

Ali Akbar Salehi, director of Iran’s nuclear energy agency, said: “Unfortunately the European parties have failed to fulfil their commitments...The deal is not a one-way street and Iran will act accordingly as we have done so far by gradually downgrading our commitments.”

Since May, Iran has begun to breach caps on its nuclear capacity in retaliation for U.S. pressure on Iran to negotiate restrictions on its ballistic missile program and support for proxy forces around the Middle East.

Iran says its retreat from terms of the deal is reversible if European signatories manage to restore its access to foreign trade promised under the nuclear deal but blocked by the reimposition of U.S. sanctions.

International Atomic Energy Agency inspectors reported in July that Iran had cranked up enrichment to 4.5% purity, above the 3.7% cap suitable for civilian energy generation set by the 2015 accord.

Israel: UN Secretary General Antonio Guterres expressed concern over Prime Minister Benjamin Netanyahu’s stated intention to apply Israeli sovereignty in the Jordan Valley and the northern Dead Sea area of the West Bank if he is reelected prime minister in next Tuesday’s election.

“Such steps, if implemented, would constitute a serious violation of international law,” the secretary general said in a statement.  “They would be devastating to the potential of reviving negotiations and regional peace, while severely undermining the viability of the two-state solution.”

Netanyahu, scrambling for support in the final days, announced the plans on Tuesday to apply Israeli law in those areas effectively annexing them (think Judea and Samaria).  He also said the Trump administration’s peace plan on the conflict, which is to be unveiled after the election, would improve conditions for the peace process, hinting that his plan had been coordinated with the U.S.

The Jordan Valley and northern Dead Sea region constitute about 30 percent of the West Bank, but Netanyahu says he is only referring to a much smaller area that only encompasses the settlements in the area.

The plan means that there would be enclaves of Israeli settlements whose residents would be directly governed by Israeli law rather than by the Israeli army’s Civil Administration, as is currently the case.  The prime minister said Palestinians in the area would maintain complete freedom of movement.

For their part the Palestinians strongly condemned Netanyahu’s move and warned of the consequences.

“Netanyahu is the chief destroyer of the peace process and any foolish move he makes will leave negative consequences on him locally and internationally,” said PA Prime Minister Mohammed Shtayyeh.  “Palestine is not part of Netanyahu’s election campaign, and if he believes that annexing settlement blocs will bring him more votes in the short term, then he and Israel will be the losers in the long term.”

Other Palestinian officials said that Netanyahu’s pledge to extend Israeli sovereignty to the Jordan Valley if re-elected was a “declaration of war” on the Palestinians and the peace process.

Arab League foreign ministers condemned the plan, calling it an act of “aggression” undermining any chances of a peace settlement.

Around 65,000 Palestinians and 11,000 Israeli settlers live in the Jordan Valley and northern Dead Sea area.    The main Palestinian city is Jericho.

Separately, the polls show Netanyahu losing a close election, the prime minister unable to form a coalition. But as Chemi Shalev wrote in Haaretz this week, he is then prepared to cry “fraud.”

“The election fraud chicanery, which has spawned in Donald Trump’s wild fantasies, could turn out to be the trigger for the disintegration of Israel as we’ve known it.

Russia: Law enforcement authorities carried out mass raids on the homes and offices of Kremlin critic Alexei Navalny’s supporters across the country, a move he described as the biggest crackdown of its kind in modern Russian history.  More than 200 searches took place (some reports said as many as 400) as part of an investigation into money-laundering in 41 towns and cities, Navalny said. CCTV footage showed masked men using power tools to remove doors and armed officers securing various premises associated with Navalny’s political movement.

The raids happened four days after the ruling United Russia party, which supports President Vladimir Putin, lost a third of its seats in the Moscow city assembly, while easily retaining its dominant nationwide position.  Navalny’s allies, who had been barred from running in the Moscow city election, urged people to vote tactically to try to reduce the chances of Kremlin-backed candidates, a strategy which appears to have had some success.

“Putin is very angry and is stamping his feet,” Navalny said in a video.  “I congratulate you.  Today the biggest police operation in modern Russian history is taking place.”

Authorities claim the money-laundering investigation is into Navalny’s Anti-Corruption Foundation, an organization that has published embarrassing investigations into the wrongdoing of corrupt officials.

Separately, Russia asked the United States, via Interpol, to confirm the whereabouts of a former Kremlin official who Russian media have said may have been a U.S. spy exfiltrated in 2017, Foreign Ministry spokeswoman Maria Zakharova said on Thursday.

Russian daily newspaper Kommersant has said that the official may have been a man named Oleg Smolenkov.  He was reported to have disappeared with his wife and three children while on holiday in Montenegro in June 2017.

CNN first reported Monday that the U.S. evacuated the agent from Russia in 2017, in part out of concern that President Trump could, inadvertently, somehow lead the Russians to discover the spy’s identity.  According to the New York Times, it was this asset who “was instrumental to the CIA’s most explosive conclusion about Russia’s interference campaign: that President Putin ordered and orchestrated it himself.”

The next day the asset was identified as Smolenkov, and he was believed to be living in Virginia, though after the revelation, he would have been relocated.

Lastly, Russia and Ukraine swapped 35 prisoners each, including 24 Ukrainian sailors, in a somewhat hopeful sign that perhaps an end to the war in eastern Ukraine could be in the offing.

New Ukrainian President Volodymyr Zelenskiy has vowed to fulfill his campaign promise to end the conflict in the Donbass region.  It is also a signal from the Kremlin to the European Union that it is willing to play ball.

Random Musings

--Presidential tracking polls....

Gallup: 39% approval of the president’s job performance, 57% disapproval; 88% of Republicans approve, 34% of independents (Aug. 15-30).
Rasmussen: 47% approve, 52% disapprove (Sept. 13)

A new CNN/SSRS poll has President Trump’s approval rating at just 39%, the lowest since the beginning of the year.  55% disapprove.  [88% of Republicans approve, a la Gallup, ditto independents at 34%.]

Trump receives 54% support from white men, but just 42% from white women.

And in the most worrisome data point, perhaps, 60% say Trump does not deserve reelection. 

In a new Washington Post/ABC News poll, Trump’s approval rating among voting-age Americans stands at 38%, down from 44% in June but similar to 39% in April, with 56% saying they disapprove of his performance.  Among  registered voters, the split is 40-55. 36% of independents approve of Trump’s performance in this one, 58% disapproving.  Two months ago the split was 43-54.

Only 30% of women approve of the president’s performance, 64% disapproving.  Men are split 47-47.

This survey finds that Trump’s economic approval rating has declined from 51% in early July to 46% now, with 47% disapproving.

Only 35% approve of Trump’s handling of trade negotiations with China, 56% disapproving.

While 56% of Americans rate the economy as “excellent” or “good,” that figure is down from 65% in November.

Separately, 6 in 10 say that a recession is either “very likely” or “somewhat likely” in the next year.  By comparison, in fall 2007, 69% said a recession was likely, shortly before one began later that year.

--A CNN/SSRS poll found that Joe Biden led the Democrats and Democratic-leaning independents with 24%, followed by Elizabeth Warren 18%, and Bernie Sanders 17%.  [Kamala Harris 8%, Pete Buttigieg 6%, Beto O’Rourke 5%.]

Biden receives 42% support from black voters, with Sanders next at 12%.

--A separate Washington Post/ABC News poll of registered voters who are Democrats or Democratic-leaning independents has Biden at 29%, Sanders 19%, Warren 18%  [Harris 7%, Mayor Pete 4%, O’Rourke and Andrew Yang 3%.]

In July, Biden was at 30%, Sanders 19% and Warren 12%.

This poll also looked at how Trump would perform against five potential candidates, and voters prefer Biden (55% to 40%), Sanders (52% to 43%), Warren (51% to 44%), and Harris (50% to 43%), while Mayor Pete is within the poll’s margin of error at 47% to 43%.

President Trump, on seeing this poll, tweeted:

“In a hypothetical poll, done by one of the worst pollsters of them all, the Amazon Washington Post/ABC, which predicted I would lose to Crooked Hillary by 15 points (how did that work out?), Sleepy Joe, Pocahontas and virtually all others would beat me in the General Election....

“....This is a phony suppression poll, meant to build up their Democrat partners.  I haven’t even started campaigning yet, and am constantly fighting Fake News like Russia, Russia, Russia.  Look at North Carolina last night, Dan Bishop, down big in the Polls, WINS.  Easier than 2016!”

“If it weren’t for the never ending Fake News about me, and with all that I have done (more than any other President in the first 2 ½ years!), I would be leading the ‘Partners’ of the LameStream Media by 20 points. Sorry, but true!”

--In a CBS News/YouGov Battleground poll of key early states among registered voters....

New Hampshire: Warren 27%, Biden 26%, Sanders 25%, Buttigieg 8%, Harris 7%.

Iowa: Biden 29%, Sanders 26%, Warren 17%, Butigieg 7%, Harris 6%.

South Carolina: Biden 43%, Sanders 18%, Warren 14%, Harris 7%, Buttigieg 4%.

Nevada: Sanders 29%, Biden 27%, Warren 18%, Harris 6%, Buttigieg 4%, O’Rourke 3%.

While I list all the major national polls, yes, it’s the state polling that is most important, and come November 2020, as pollster Frank Luntz said this morning on CNBC, the most important results will once again be in Michigan, Wisconsin and Pennsylvania.

--So they held the latest debate among the Democratic candidates last night in Houston and it wasn’t a bad show, as these things go if your job is to watch them.  But I always get a kick out of perceptions among analysts after.

The debate clearly didn’t move the needle.  The top three – Biden, Warren and Sanders – will continue to distance themselves from the pack, and Biden, overall, didn’t harm himself.  He wasn’t good, mind you, but he didn’t make a mistake that torpedoed his campaign.

Smart-aleck Julian Castro, on the other hand, did hurt himself by going after Biden’s age in an unfair exchange.

I chose to watch from the standpoint of who, among the lower tier, is positioning themselves as a viable running mate and on that score, I thought Sen. Amy Klobuchar did a solid job, and as she keeps hammering home, indeed it is important that she’s from the Midwest.

Sen. Cory Booker also did well, in my opinion.

Beto O’Rourke, while strong in his presentation, is now just a one-trick pony on gun control.

But Michael Goodwin of the New York Post had the following comment on the frontrunner:

“Start with Joe Biden’s incoherence. The nominal frontrunner, the former vice president had a 40-year reputation for never shutting up.  Now he can’t manage to finish a sentence without interrupting himself.

“Nearly all his efforts to make a point were swamped by a sudden change of direction mid-sentence, and then another change a few words later as a random thought popped into his head and out his mouth.  None of his rivals needed to interrupt him – he did it to himself.

“Most of the time I had no idea what he was trying to say, let alone what he actually said.  I veered between feeling sorry for him and expecting the AFLAC duck to come out on stage and shake its head in bewilderment.

“I have said all along that I don’t believe Biden will be the nominee, and last night left me more certain than ever.  He’s not capable of going the distance in the primaries and then taking on Trump.”

--The CNN/SSRS poll found that 45% of registered voters say they’re extremely enthusiastic about voting in next year’s election, despite 2020 being more than a year away, which is significantly higher than in previous cycles.  In September 2015, for example, only 31% of registered voters said they were extremely enthusiastic to vote in the 2016 presidential election.  In October 2011, it was just 28%.

--Former South Carolina governor and congressman Mark Sanford announced he would challenge President Trump in the Republican party primary.

--In a special House election in North Carolina, Dan Bishop, a Republican state senator, scored a narrow 51-49 victory over moderate Democrat Dan McCready, with President Trump making a full-throated plea for support for Bishop at a rally the day before; Trump having carried the district by 12 points in 2016.  [A fellow North Carolina Republican, Greg Murphy, had an easier time of it in another special election.]

The fierce fight for the Ninth Congressional District finally brought an end to a political drama going back to the 2018 midterm race for the seat, in which McCready barely lost against a different Republican, but then evidence of election fraud was revealed on the GOP side and the results were tossed out.

President Trump tweeted today:

“The two big Congressional wins in North Carolina on Tuesday, Dan Bishop and Greg Murphy, have reverberated all over the World.  They showed a lot of people how strong the Republican Party is, and how well it is doing.  2020 is a big, and very important, Election.  We will WIN!”

Trust me; there isn’t a single European, South American or Asian talking about some special elections in North Carolina today.

--According to a Suffolk University/Boston Globe poll, if 38-year-old Rep. Joseph P. Kennedy III launched a primary challenge against incumbent Sen. Edward Markey, Kennedy would hold a 42-28 lead in a head-to-head matchup.

--The National Transportation Safety Board said Thursday that all crew members were asleep when the Conception caught fire early on Labor Day, a major revelation in the investigation of the worst maritime disaster in modern California history.

The boat was required by federal law to have a night watchman who was awake and could alert others to fire and other dangers, said the NTSB.

There are reports that a potential cause was passengers’ charging their electronic devices (and exploding lithium batteries), though a final determination is months in the offing, if ever.

--Actress Felicity Huffman was sentenced to 14 days in prison for her role in the college-admissions cheating scandal, which I feel was totally appropriate given her contrition right from the beginning.  She was also sentenced to one year of supervised release, 250 hours of community service and a $30,000 fine.

Huffman was the first parent to be sentenced, and the result is a middle ground between prosecutors’ desire for one month in prison and her attorneys’ request for one year of probation.

--Lastly, it is disgraceful the United States hasn’t granted temporary protected status to Bahamians displaced by Hurricane Dorian. 

---

Pray for the men and women of our armed forces...and all the fallen.  We remember 9/11.

God bless America.

---

Gold $1513
Oil $56.63

Returns for the week 9/9-9/13

Dow Jones
S&P 500
S&P MidCap
Russell 2000
Nasdaq

Returns for the period 1/1/19-9/13/19

Dow Jones
S&P 500
S&P MidCap
Russell 2000
Nasdaq

Bulls 50.0
Bears 17.9

Have a great week.  The next WIR is likely to be posted a few hours later than usual.

Brian Trumbore

 



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Week in Review

09/14/2019

For the week 9/9-9/13

[Posted 10:30 PM ET]

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

Edition 1,066

It was another tumultuous week with President Trump cancelling a summit at Camp David with the Taliban and Afghanistan that no one knew was about to take place, on the eve of 9/11 no less, the removal of national security adviser John Bolton and the president siding with Kim Jong Un in public comments over Bolton. 

Republican Sen. Lindsey Graham said he was sorry to see Bolton go.  “I see the world as it is, I’m a realist.”

I am too.  I get into Bolton’s resignation below in depth, but I can’t help but say regarding my own views, it’s been easy for me to be a hawk.

It’s easy to be a hawk when in 1973, at age 15 I get to go behind the Iron Curtain and see how my relatives were living in Czechoslovakia and Hungary under Soviet rule, and to see goose-stepping soldiers.

It’s pretty easy to be a hawk when I hire out a driver in Warsaw (1999) to drive me hours away to Treblinka, a Nazi extermination camp, and see these ugly old women outside their homes as I near the site, clearly pissed off I am there.  They were the witnesses who said nothing.

It’s pretty easy to be a hawk when you personally are screwed over by the Chinese in a huge way despite doing all the right things.

It’s pretty easy to be a hawk when you go to Ukraine and visit the museum on Chernobyl right after their Orange Revolution, and then see the same lies repeated over and over again regarding the Putin regime, including the Moscow apartment bombings that he used as a pretext for the obliteration of Grozny.

It’s pretty easy to be a hawk when you go to the DMZ as I did and walk down a tunnel under the mountain that the North Koreans had built as part of their invasion plans of the South, which has multi-barriers at the bottom because the South Koreans were still concerned the Orcs could pump gas into it.

It’s pretty easy to be a hawk when you spend extensive time on Taiwan and in Hong Kong and get to see these terrific people whose freedom is now under threat.

It’s easy to be a hawk when you understand that just yesterday, Putin and his goons raided the homes of hundreds of supporters of Russian activist Navalny.

It’s pretty easy to be a hawk when our own president, Donald J. Trump, has never voiced support for the Hong Kong protesters, let alone the Russian opposition, both of whom just want a true democratic voice...the same that we have here.

It’s also pretty easy to be a hawk when, for all the issues with the invasion of Iraq, if you fail to understand the future threats posed by Saddam’s sons, Uday and Qusay (and we remember the heroism of the 101st Airborne and Special Forces who took the two out), then you just don’t know your history.

It was outrageous that President Trump, in cancelling the summit at Camp David, cited as his excuse the killing of one American soldier in an attack on Kabul, yet didn’t seem to understand that the Taliban has already killed thousands of Americans, directly or indirectly, and tens of thousands of civilians!  As in we could never trust them in any negotiation.

So I was watching Texas Republican Congressman Will Hurd talk about the significance of 9/11.  On that day he was with the CIA.

Hurd said he never would have believed that 18 years later we would still be in Afghanistan.  “No way,” as he put it.

But he also never would have believed that, 18 years later, there has still not been a major attack on the scale of 9/11 on U.S. soil.

That’s the bottom line.  That’s the line “realist” Lindsey Graham is talking about.  It’s the bottom line us maligned hawks refer to.

And so we move on.....

Trump twitterstorm on Afghanistan:

“A lot of Fake News is being reported that I overruled the VP and various advisers on a potential Camp David meeting with the Taliban. This Story is False!  I always think it is good to meet and talk, but in this case I decided not to. The Dishonest Media likes to create....

“....the look of turmoil in the White House, of which there is none. I view much of the media as simply an arm of the Democratic Party. They are corrupt, and they are extremely upset at how well our Country is doing under MY Leadership, including....

“....the Economy, where there is NO Recession, much to the regret of the LameStream Media!  They are working overtime to help the Democrats win in 2020, but that will NEVER HAPPEN, Americans are too smart!

“We have been serving as policemen in Afghanistan, and that was not meant to be the job of our Great Soldiers, the finest on earth.  Over the last four days, we have been hitting our Enemy harder than at any time in the last ten years!”

Trump World

--Trump tweet:

“I informed John Bolton last night that his services are no longer needed at the White House.  I disagreed strongly with many of his suggestions, as did others in the Administration, and therefore....

“....I asked John for his resignation, which was given to me this morning. I thank John very much for his service. I will be naming a new National Security Advisor next week.”

Bolton almost immediately disputed the circumstances of his dismissal on Twitter.

“I offered to resign last night and President Trump said, ‘Let’s talk about it tomorrow,’” he wrote.

Trump clashed with the hawkish adviser, Bolton disagreeing with Trump’s noninterventionalist instincts.

Bolton had been sidelined on a number of key foreign policy and national security initiatives, including peace negotiations with the Taliban that Trump called off.  Before that break, negotiators had reached a deal “in principle” that Bolton, who was opposed to it, was reportedly allowed to view but not take home.  In June, he was dispatched to Mongolia while Trump was meeting with Kim Jong Un at the DMZ.

Trump has reportedly been frustrated that Venezuela’s autocratic leader, Nicolas Maduro, did not step down as quickly as expected under pressure from the United States, and he was concerned Bolton was leading him into war with Iran.

So Trump has now dismissed or accepted the resignations of three national security advisors, the others being Michael Flynn and H.R. McMaster, as well as nine Cabinet secretaries.

As for the new advisor, there were initially all manner of stories that Secretary of State Mike Pompeo could be tabbed to handle both jobs, a la Henry Kissinger, way back, and what a massive mistake this would be, but then Trump denied this was a possibility.

Pompeo, who has mastered the art of kissing the president’s ass, often clashed with Bolton on policy and needless to say he was ecstatic on word Bolton was out.  Appearing before the White House press corps, he was almost giddy.

“There were many times Ambassador Bolton and I disagreed, that’s to be sure,” Pompeo said.  “But that’s true for lots of people with whom I interact.”  Later, when asked whether he was surprised by Bolton’s firing, Pompeo deadpanned: “I’m never surprised.”

Editorial / Wall Street Journal

“John Bolton resigned as White House national security adviser on Tuesday, which must delight North Korea’s Kim Jong Un, Iran’s Hassan Rouhani, Russia’s Vladimir Putin and Venezuela’s Nicolas Maduro. America’s adversaries lost a rare internal restraint on President Trump’s inconstant and transactional security instincts. The world is now a more dangerous place.

“Start with the fact that Mr. Trump didn’t tell the truth about firing Mr. Bolton.  ‘I asked John for his resignation’ due to policy disagreements, Mr. Trump tweeted. The disagreements were real.  But Mr. Bolton says he offered to resign Monday during a conversation with the President on Afghanistan.  Mr. Trump said they’d talk again in the morning.

“Mr. Bolton went home on what was the 17-month anniversary of taking the job and decided to resign.  He submitted his resignation letter Tuesday morning, even as the White House announced he’d be briefing the media on antiterror measures.  Shortly thereafter Mr. Trump tried to spin the resignation as his idea with his tweet.

“None of this speaks well of the President, who fears looking bad for having lost his third NSC adviser in three years.  James Mattis resigned last year as Secretary of Defense, only to have Mr. Trump force him out two months early out of spite.  Mr. Trump ousted Rex Tillerson as Secretary of State via tweet after months of publicly undercutting him.  Mr. Trump is a hard man to work for.

“A President deserves advisers who will implement his policies, but there’s no doubt Mr. Bolton did that even when he disagreed.  The troubling implication of Mr. Bolton’s departure is that Mr. Trump doesn’t really want to hear opposing points of view.  He says he does, but he makes work intolerable for those who give him contrary advice.

“The difference isn’t the simplistic media line – from the left and also on the isolationist right – that Mr. Bolton is a hawk who prevented Mr. Trump from pursuing peace around the world. The real issue is that Mr. Trump thinks every security issue can be boiled down to a negotiation, and that every other head of state wants to do a deal like he does.

“The terms matter less to Mr. Trump than the art of the deal.  Mr. Bolton had the thankless task of telling Mr. Trump that a bad deal is worse than no deal, and that strategic ground must be prepared in advance and over time if you want to get a good deal.

“In this role Mr. Bolton saved Mr. Trump more than once from his worst negotiating instincts.  Mr. Bolton was one of those who argued in February that Mr. Trump should walk away from a bad deal with North Korea’s Kim in Hanoi.

“He also was a lone Administration voice advising against signing a deal with the Afghan Taliban.  Mr. Trump wants to withdraw all U.S. troops from Afghanistan, and it was the President’s idea to invite the Taliban to Camp David on the week of the anniversary of 9/11.  Mr. Trump spared himself substantial embarrassment by cancelling the talks at the last minute, thanks in part to Mr. Bolton’s counsel.

“For all of his tough talk, Mr. Trump doesn’t seem to want a tough foreign policy.  His desire for deals is the reason he flatters dictators and strongmen on the other side of the negotiating table despite their records.

“Mr. Trump has told his advisers to tone down criticism of China’s Xi Jinping on Hong Kong and the re-education camps in Xinjiang.  Mr. Trump is reluctant to impose sanctions on Turkey for buying Russia’s S-400 missile system, despite a clear violation of NATO commitments. He’d like to loosen Mr. Putin’s Russia, and he’d be pleased to sit down with Messrs. Rouhani or Maduro.

“As he heads into a difficult re-election campaign, Mr. Trump should be sending a signal of reassurance and steadiness.  Instead the world sees disarray inside the Administration and a President given to policy-making as impulsive as his Twitter feed.

“The question now is what Mr. Bolton’s departure means for U.S. foreign policy for the next 14 months.  The political pressure will build for some foreign-policy achievement as Election Day approaches.  Yet to get North Korea, Iran or Russia to agree may require concessions that damage U.S. interests.

“Another danger is that Mr. Trump’s behavior is increasingly self-isolating. He thinks individuals are expendable, but the advisers he has lost represent constituencies that ought to be on his side.  Generals Mattis and H.R. McMaster, his second NSC adviser, represent the military.  Mr. Bolton speaks for the Jacksonian wing of U.S. foreign policy that believes in a strong defense of American interests around the world.  Mr. Trump should be cementing these loyalties, not undercutting them.”

--The Trump administration is officially allowed to enforce a new policy denying asylum to migrants at the southern border who have not sought protection from the U.S. or other countries.

A U.S. district judge had blocked the policy from going into effect nationwide shortly after it was unveiled in July, but the Supreme Court decided to reverse the decision in a brief order Wednesday.

Solicitor General Noel Francisco argued Wednesday that the asylum rule – which is meant to bar immigrants from entering the country without seeking protection from the U.S. or nations they travel through – was supposed to keep out people “who declined to request protection at the first opportunity.”

“It alleviates a crushing burden on the U.S. asylum system by prioritizing asylum seekers who most need asylum in the United States,” Francisco wrote.  “The rule also screens out asylum claims that are less likely to be meritorious by denying asylum to aliens who refused to seek protection in third countries en route to the southern border.”

Justice Sonia Sotomayor, in dissent, claimed the move would upend “longstanding practices regarding refugees who seek shelter from persecution.”

The ACLU’s Lee Gelernt wrote: “The first (policy) at least allowed individuals who presented themselves at a port of entry to apply for asylum. The current ban would eliminate virtually all asylum at the southern border, even at ports of entry, for everyone except Mexicans.”

--According to the New York Times: “President Trump, seeking to justify his claim of a hurricane threat to Alabama, pressed aides to intervene with a federal scientific agency, leading to a highly unusual public rebuke of the forecasters who contradicted him, according to people familiar with the events.

“In response to the president’s request, Mick Mulvaney, the acting White House chief of staff, told Wilbur Ross, the commerce secretary, to have the National Oceanic and Atmospheric Administration publicly correct the forecasters, who had insisted that Alabama was not actually at risk from Hurricane Dorian.

“A senior administration official, who asked not to be identified discussing internal matters, said Mr. Trump told his staff to have NOAA ‘clarify’ the forecasters’ position.  NOAA, which is part of the Commerce Department, then issue an unsigned statement saying the Birmingham, Ala., office of the National Weather Service was wrong to refute the president’s warning so categorically....

“The Commerce Department inspector general has opened an investigation, and on Wednesday, a Democrat-controlled House science committee kicked off its own inquiry.”

Earlier it was reported that Ross warned NOAA’s acting administrator that top employees at the agency could be fired if the situation was not addressed.  Ross’s spokesman denied that he threatened to fire anyone.

The Washington Post reported that Mulvaney was acting at the president’s direction, but when Trump was asked by a reporter if he told his chief of staff to instruct NOAA to “disavow those forecasters,” he denied it.

“No, I never did that,” Trump said.  “I never did that.  That’s a whole hoax by the fake news media.  When they talk about the hurricane and when they talk about Florida and they talk about Alabama, that’s just fake news. It was – right from the beginning, it was a fake story.”

Wall Street and the Trade War

Stocks rose as there was de-escalation on the trade front.  But the president continued his shots against the Fed.

Trump tweets:

“China suspends Tariffs on some U.S. products.  Being hit very hard, supply chains breaking up as many companies move, or look to move, to other countries.  Much more expensive to China than originally thought.” @CNBC @JoeSquawk

“The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt.  INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term.  We have the great currency, power, and balance sheet....

“....The USA should always be paying the lowest rate.  No Inflation!  It is only the naivete of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing.  A once in a lifetime opportunity that we are missing because of ‘Boneheads.’”

We had some important inflation data this week, with August producer prices rising 0.1%, 0.3% ex-food and energy; 1.8% and 2.3%, respectively, year-over-year.

August consumer prices were also 0.1%, 0.3% on core; 1.7% and 2.4% ex-food and energy, which represents a one-year high.

While the Fed’s preferred inflation barometer, the personal consumption expenditures index (PCE), has been in the 1.6% to 1.7% range, 2.4% on core for the CPI is not insignificant.  The Fed’s target is 2%.

August retail sales came in at a solid 0.4% today.

So the Federal Reserve’s Open Market Committee, Trump’s “boneheads,”  meets next Tues. and Wed., and the market expects another ¼-point decrease in the funds rate, but the Fed should stop right there. The last two meetings of the year are Oct. 29-30 and Dec. 10-11.

The Atlanta Fed’s GDPNow barometer for third-quarter growth is at 1.8% after this week’s data.

Lastly, the U.S. budget gap widened to more than $1 trillion in the first 11 months of the fiscal year, the Treasury Department said Thursday, the first time year-to-date deficits topped the $trillion dollar level in seven years.

With higher military spending, rising interest expenses on government debt and weak revenues early in the year, the deficit is up 19% from October through August, compared with a year earlier. Government spending climbed 7%, to $4.1 trillion, outpacing receipts, which grew 3% to $3.1 trillion.

The total deficit is $1.07 trillion with one month to go, or 4.4% of GDP.

We are now looking at $trillion dollar annual deficits for decades to come, despite the strong economy.

The administration is pointing to the fact federal revenues have climbed nearly 7% since May, with corporate tax revenue rebounding strongly, but revenue growth is below where forecasters projected it would be prior to the 2017 tax cuts, while at the same time, federal spending has been surging. The Treasury said spending on the military and interest costs each rose 9% in the first eleven months of the fiscal year, which commences October 1.

It is possible September could be a positive month because normally the government collects more than it spends for the month, so the deficit could slip back below $1 trillion.

Meanwhile, the markets just shrug, even as the cumulative net interest expense for the eleven months is $379 billion. That’s the figure I’ve been harping on for years and years.  It can go a lot higher, sports fans.

But heck, President Trump told a rally in North Carolina that regarding the deficit, there is “always time for the other,” as in cutting it.  This is the guy who told you during the 2016 campaign he was such a smart businessman he would eliminate it.

This is the guy who at the same rally said of the farmers, “We gave them $28 billion to make them whole.  No one would ever think of helping farmers targeted by China!”

Well when it isn’t your money, Mr. President, but the American taxpayers’ and no one is standing up against you, of course you can just pass it out.

In the same breath, he said, “We proudly withdrew from the job destroying TPP!”

The TPP created new markets for America’s farmers, Mr. President!

I was watching Fox News’ coverage of the rally and after, commentator Charles Hurt (Washington Times) said, “He’s so entertaining...he loves America!”

I spit up my beer.

Turning to the Trade War....

Lower-level U.S. and Chinese officials are expected to meet next week in Washington before talks between senior trade negotiators in early October.  President Trump said on Thursday he preferred a comprehensive trade deal with China but did not rule out the possibility of an interim pact.

The day before, Trump moved to postpone until Oct. 15 a tariff increase on about $250 billion in imports that had been set to hit on Oct. 1, calling the delay a goodwill gesture as China marks the 70th anniversary of Communist rule on that date.  Of course Xi Jinping’s speech that day is not exactly going to be a peace overture to the West.

Friday, China announced it would exempt some agricultural products from additional tariffs on U.S. goods, according to the official Xinhua News Agency, in another sign of easing Sino-U.S. tensions before a new round of talks.

China had imposed additional tariffs of 25% on U.S. agricultural products including soybeans and pork in July 2018.  It raised tariffs on soybean by a further 5% and on pork by a further 10% on Set. 1.

“China supports relevant enterprises buying certain amounts of soybeans, pork and other agricultural products from today in accordance with market principles and WTO rules,” Xinhua said, adding that the Customs Tariff Commission on China’s State Council would exclude additional tariffs on those items.  China has “broad prospects” for importing high-quality U.S. agricultural goods, Xinhua reported, citing unnamed authorities.  “It is hoped that the U.S. will be true to its words and fulfill its promise to create favorable conditions for cooperation in agricultural areas between the two countries,” the report said.

Before the announcement of additional tariff exemptions, Chinese firms bought at least 10 boatloads of U.S. soybeans on Thursday, the country’s most significant purchase since at least June.

The Wall Street Journal is reporting today that “China is looking to narrow the scope of its negotiations with the U.S. to only trade matters, seeking to put thornier national-security issues on a separate track in a bid to break deadlocked talks.

“Chinese officials hope such an approach would help both sides resolve some immediate issues and offer a path out of the impasse, people familiar with the plan said.”

We have been close before to reaching an accord, only to have negotiations break down, and key issues such as intellectual property, China’s reliance on state-owned enterprises, and investment restrictions on U.S. businesses (forced joint ventures) remain.

But de-escalating is better than escalating, even though there is no imminent broad-based deal in the cards.

Treasury Secretary Steven Mnuchin also made clear that Hong Kong won’t be part of the discussions, while there are questions as to whether Huawei Technologies Co. will be, Huawei regarded as a national security threat amid the global shift to next-generation wireless networks.

And Mnuchin maintained President Trump won’t accept a watered-down deal just to take the issue off the table ahead of the 2020 election.  “He is prepared to raise tariffs if we need to raise tariffs,” the secretary said.

Europe and Asia

As expected the European Central Bank cut its key interest rate and launched a new package of bond purchases Thursday that lays the groundwork for a furtherance of ultraloose monetary policy that has failed to boost inflation.  The latest dose of stimulus is the ECB’s largest in 3 ½ years and departing President Mario Draghi’s swan song, as he hands off to his successor negative interest rates and an open-ended bond-buying regime.

But, again, these policies have largely failed, and with the latest purchases of bonds, at what one point will the ECB be forced to enlarge the pool of assets it can buy?  Plus Draghi highlighted divisions within the ECB’s rate-setting committee over its future course.

The ECB is cutting its key interest rate by 0.1 percentage point, to minus 0.5%, while buying 20bn euro ($22 billion) of eurozone debt starting in November, relaunching its quantitative easing program that it had phased out last December.  The new QE program is expected to “run for as long as necessary,” and only to end shortly before the bank starts raising interest rates, the ECB said.

The ECB also promised not to raise interest rates until it sees inflation at its target of 2%, and it’s been stuck at 1% on core for ages.

Europe risks having the fate of Japan, decades of stagnation, and now as Draghi departs, he has left the central bank with very little ammunition to fight any recession, even as he furthers asset-price bubbles and weakened banks.  [The ECB created another mechanism to shield banks from the full force of negative rates, including a new batch of long-terms loans with sweetened terms.]

So Draghi, recognizing the dangerous side effects, called on eurozone governments to step up spending to support growth.

One German banking executive said: “The ECB recalls a motorist who continues to increase speed in a dead end.”

Former International Monetary Fund Managing Director Christine Lagarde replaces Draghi Nov. 1.

President Trump tweeted on the ECB’s action:

“European Central Bank acting quickly. They are trying, and succeeding, in depreciating the euro against the VERY strong dollar, hurting US exports...And the Fed sits, and sits, and sits.  They get paid to borrow money, while we are paying interest!”

In response, Draghi said: “We have a mandate.  We pursue price stability. And we don’t target exchange rates. Period.”

One separate economic data point for the eurozone...July industrial production was down 0.4% over June, down 2.0% year-over-year.  [Eurostat]

Brexit: British Prime Minister Boris Johnson said he will meet with European Commission President Jean-Claude Juncker in Luxembourg on Monday to discuss a renegotiation of Brexit, which is hardly likely ahead of Britain’s planned departure on Oct. 31, seeing as the EU said it will not renegotiate the terms already agreed to.

I wrote last time that a key figure in the process will be House of Commons Speaker John Bercow and he vowed “creativity” in Parliament if Johnson ignores a law designed to stop a no-deal Brexit.

Bercow said in a lecture in London yesterday that the only possible Brexit was one backed by MPs.

A new law, passed before the suspension of Parliament, forces the prime minister to seek a delay until Jan. 31, 2020, unless a deal or no-deal exit is approved by Parliament by October 19.

Johnson has said he would rather be “dead in a ditch” than ask for another delay.

Bercow said: “Not obeying the law must surely be a non-starter.  Period....

“Surely, in 2019, in modern Britain, in a parliamentary democracy, we – parliamentarians, legislators – cannot in all conscience be conducting a debate as to whether adherence to the law is or isn’t required.”

Bercow called it “astonishing” that “anyone has even entertained the notion.”

The new law could force a Brexit delay beyond the current October 31 deadline by requiring the prime minister to request an extension to the U.K.’s EU membership, with Johnson needing to write EU leaders to prolong talks under Article 50 – the part of the EU’s Lisbon Treaty which sets out what happens when a country decides it wants to leave the EU.

Queen Elizabeth gave her assent to the new law on Monday, the last day Parliament sat in this session, Boris Johnson having previously limited it upon their return from summer recess.  Johnson had also failed, again, to secure the two-thirds of Parliament needed to trigger an election.

“This government is a disgrace, and the way the prime minister operates is a disgrace,” Labour Party head Jeremy Corbyn fumed afterwards.

Parliament is now not scheduled to return until October 14, which was Johnson’s ploy to force an exit by giving MPs limited time before the Oct. 31 deadline, with a critical EU summit Oct. 17-18.

The European Union, in the meantime, is pressing Britain to give Northern Ireland special status within the bloc’s trading orbit to unlock a Brexit deal, with Dublin promising a positive response should London shift its position.

The so-called backstop mechanism to uphold the seamless Irish border after Brexit has proven the key obstacle.

The EU saw an opening after Johnson, earlier in the week, signaled that he was willing to preserve an all-Ireland economy for checks on animals and food products, a single electricity market and travel zone, following talks with Ireland’s leaders.  But Johnson is not for a Northern Ireland-only backstop.

That said, the U.K. has not presented a feasible, legally sound and detailed plan to replace the backstop.

Johnson and many others in Britain oppose the backstop, fearing it would trap the country in a permanent customs union with the EU.  But the Northern Irish unionist DUP party, which props up Johnson’s minority government, fears the backstop proposed by the EU would split their region from the rest of the country.

Lastly, the government published its “reasonable worst-case” planning assumptions for a no-deal Brexit. Titled Operation Yellowhammer, the document outlines the impacts on a range of areas on day one of exiting the EU without a deal.  MPs voted for its disclosure.

It warns of electric price hikes, shortages on medicine and food supplies as well as concern for animal welfare over shortage of veterinary supplies, lengthy delays at ports, protests and disorder.

On Northern Ireland it warns there will be “significant pressure” to find arrangements to manage the border within days or weeks because of the barriers for trade.

Tariffs for goods entering Ireland will “severely disrupt trade” forcing business to stop trading or relocate with costs passed on to customers.

There will be disruption to key sectors, job losses, protests, direct action and road blocks.  And the document talks of potential panic buying of fuel.

“There may also be a rise in public disorder and community tensions.”

MPs said that the release of Yellowhammer made it all the more important that Parliament be recalled immediately.

France: Paris was hit by its biggest transit strike since 2007 today, the first big act against President Emmanuel Macron’s plan for a universal pension, which would replace dozens of different pension schemes for different professions.  Members of other professions including lawyers, airline staff and medical workers have called for more strikes starting on Monday.

Ten of Paris’ 16 train lines were shut and service on the others was disrupted, with 145 miles of traffic jams in the region.

Germany: A Munich-based think-tank, the closely followed Ifo Institute, cut its forecast for German growth this year from 0.6 percent to 0.5 percent and lowered its estimate for next year from 1.7 to 1.2 percent.  This does not include the potential impact of a disruptive Brexit or an escalation of the U.S.-China trade war.

Turning to Asia....

China reported exports in August fell 1% from year ago levels, after rising 3.3% in July.  Exports to the United States were down 16% yoy.

Imports declined 5.6% last month and have been down every month this year except April.  In 2018, the average monthly gain in imports was 16.6%.

Imports from the U.S. fell 22.4%.

There have been growing concerns over a looming pork shortage and soaring prices, with the Lunar New Year holiday not too far away, January this time. 

China produces half the world’s pork, the key staple there, but output could plummet, and imports will not be able to cover the gap, even any added purchases from the U.S., though the government maintains there are no causes for concern.  African swine fever is the culprit.

Japan revised second-quarter GDP down sharply from 1.8% annualized to 1.3%, as cap-ex was downgraded bigly.

Street Bytes

--Stocks rose smartly a third-straight week with all three major averages now just shy of their all-time marks; the Dow Jones up 1.6% to 27210, the S&P 500 advancing 1.0% and Nasdaq 0.9%.

--U.S. Treasury Yields

6-mo. 1.91%  2-yr. 1.80%  10-yr. 1.90%  30-yr. 2.37%

Treasuries continued to tumble in September, with the 10-year at its highest yield since early August.  Solid economic data and questions over the quantitative-easing plans of the ECB helped fuel the move, yields climbing across all developed markets.  Just last month, Treasuries had their biggest monthly gain since the depths of the 2008 financial crisis and yields tumbled on the back of sliding yields in Europe and concern about the U.S.-China trade war.

--Second-quarter figures released Thursday by the Organization for Economic Cooperation and Development showed year-to-year economic growth in the Group of 20 leading economies was at its weakest since the start of 2013.

--Oil prices fell sharply at one point this week on a report that President Trump was discussing reducing sanctions against Iran in order to help facilitate a meeting with Iranian President Rouhani at the UN General Assembly later this month.  This followed the departure of National Security Adviser John Bolton, a hawk on Iran, traders betting the potential for conflict between the two nations had been reduced.  By the end of the week WTI (West Texas Intermediate) was at $54.88, down $1.55 from the prior week’s close, as concerns over global growth trumped any hints of progress on the trade front.

Separately, the International Energy Agency released a report that said the United States briefly became the world’s No. 1 oil exporter as record shale production found its way to global customers.

In June, the U.S. shipped almost 9 million barrels a day of crude and oil products, surpassing Saudi Arabia.

Gains in U.S. supply are undermining efforts by OPEC and its allies, whose production cuts are in their third year in a bid to drain stockpiles. And the swelling American output, as well as deepening concerns over global demand fueled by the prolonged U.S.-China trade war, have prompted a decline in benchmark prices since an April high.

But the Saudis reclaimed the top exporter’s spot in July and August owing to weather (hurricanes) and the trade dispute “making it more difficult for shale shipments to find markets,” the IEA said.

Meanwhile, Wall Street lost one of its true legends this week, T. Boone Pickens, 91.  Pickens was a onetime Texas oil wildcatter turned billionaire energy investor and television pitchman for wind and natural-gas power.  For as long as I’ve followed the markets, Pickens was a giant figure.

Though he achieved much of his fame for takeover bids in the 1970s and 1980s, Pickens earned much of his wealth in the energy futures market after turning 75 in 2003, making billions through his Dallas-based BP Capital LLC by correctly betting on rising prices for oil and natural gas.

Pickens spent $100s of millions on philanthropy (including about $500 million to Oklahoma State University) and his investments in wind energy, part of his plan to end U.S. dependence on Middle East oil.

Editorial / Wall Street Journal

“The colorful capitalists of the 20th century are leaving us, and few were more uproarious than Texas oil man and entrepreneur T. Boone Pickens Jr., who died Wednesday at the age of 91 after a lifetime of bucking the status quo.

“Pickens earned a degree in geology from Oklahoma State, and his chosen field was energy. He began his career working for Phillips Petroleum but soon founded an exploration company that would eventually become Mesa Petroleum, which he built into one of the world’s largest independent natural gas and oil companies.  When he lost control of that firm after a period of declining oil and natural gas prices, at age 68 he founded BP Capital, a hedge fund focusing on oil, gas and other energy-related investment.

“Yet for all his achievements in energy, he was the scourge of some in the oil patch for his takeover bids for larger firms.  His hostile bid in 1983 for Gulf Corp., a giant of the era, was unsuccessful but caused other firms to shape up their management and improve financial returns.

“In this he became one of the leaders of the 1980s in advocating for the primacy of shareholder value as a benchmark for corporate management.  This legacy speaks to today, when the Business Roundtable of Fortune 500 CEOs is suggesting companies must serve ‘stakeholders’ before they represent shareholders.

“Pickens was firmly in the opposite camp.  As he pointed out, companies that don’t serve the interests of their owners – the shareholders – are often serving the interests of managers who don’t have the same stake in long-term success.  In a 1988 speech to the Economic Club of Detroit, he put it this way: ‘What we’re seeing is a transformation of Corporate America. The new focus is on results instead of size, on creating value rather than empires.’

“Corporate America didn’t much like his challenge and denigrated him as a corporate ‘raider.’  But Pickens shook up their culture, and much for the better.  He was also a great philanthropist to many causes, including institutions that promoted free markets. We could use more like him today.”

One note on Mesa Petroleum, its bid for Gulf Oil in 1983 and 1984 spurred the largest corporate merger in history at the time, Standard Oil Co.’s $13.2 billion buyout of Gulf to form Chevron Corp.

As Robert Slater wrote in his 1999 book, “The Titans of Takeover,” the deal made Pickens “a hero to Wall Street” because shareholders earned an estimated $6.5 billion from the run-up of Gulf’s share price, while Merrill Lynch, Morgan Stanley and Salomon Brothers shared $63 million in fees.  Pickens and his partners enjoyed a profit of $760 million.  [Associated Press]

Pickens supported Donald Trump during the 2016 campaign because Pickens felt he “was the only one who was going to change anything” among Republicans who ran for the nomination, Pickens said in an interview.  “Now, you may not like the change you get, but you’re getting ready to have change.  And I’m a change advocate.”

But at the same time, his Pickens Plan, a grassroots campaign that called for building wind farms and an improved electric grid, created an alliance between Pickens and Democrats.  Then-Senate Majority Leader Harry Reid said back in 2008, “Here is a man who was my mortal enemy.  He’s my pal now.”

--Apple unveiled its iPhone 11 range of handsets, which features more cameras than before and a processor that has been updated to be faster while consuming less power.  What is notable is an “ultrawide” rear camera, while a new featured called Deep Fusion takes nine snaps with a variety of exposures and then picks through them “pixel by pixel” to combine the best parts from each to create a superior image.  But this last feature will be added via a software update before year’s end.

Other enhancements include the ability to shoot slow-motion videos with the front camera.

The company said the two Pro models would last between four to five hours longer than their XS predecessors.  All three models were to be available for preorder on Friday, and ship September 20, The iPhone 11 starts at $699, the iPhone 11 Pro at $999, and the Pro Max at $1,099.

But the company did not launch a 5G model, and some rumored features were missing.

Apple did reveal a new version of its smartwatch, which features an “always on” display for the first time. Apple currently accounts for 49% of the global smartwatch market, according to research firm IDC.

From Bloomberg News: “The iPhone maker, which is the only foreign brand to hold a top-five position in China, is struggling to fight off local competitors Huawei Technologies Co., Oppo and Xiaomi, whose slicker designed, more sophisticated cameras and cheaper price tags are wooing customers all over the country. The lack of fifth-generation (5G) cellular support in the newly announced iPhone 11 family won’t immediately be an issue, but it could hurt Apple in mid-2020, when analysts expect China’s smartphone market to rapidly ramp up 5G demand.

“It will be ‘extremely difficult’ for Apple to maintain its China position into the second half of next year, according to Jia Mo, an analyst at research firm Canalys.  ‘It remains to be seen if iPhone 11 can offer technology innovations to offset some disadvantages in hardware, like lack of 5G support.’”

China is rushing to be the leader in 5G, and state-owned mobile operators are pledging billions of dollars to build out the requisite infrastructure.

As for global smartphone shipments the first half of 2019, according to IDC, Samsung’s fell 5.5%, year-on-year, and Apple’s 14.5%, while Huawei’s (incl. Honor) rose 31.8%.

Samsung has 22.9% global market share, Huawei 17.7% and Apple 10.2% (with China’s Xiaomi, Oppo and Vivo at 8.5% to 9.7% each).

But without a 5G model as yet, and with consumers holding onto their handsets longer before upgrading, that could put a further constraint on Apple sales.

One more...Apple introduced its new video streaming service, Apple TV+, which will cost just $4.99 a month – undercutting Disney, which said it will sell its new streaming service for just $6.99 a month.  Apple TV+ will, however, have limited offerings, at least initially.  It will also be offered free for a year to suck you in.

--Thousands of municipal governments nationwide and nearly two dozen states that sued the pharmaceutical industry for the destructive opioid crisis have tentatively reached a settlement with Purdue Pharma and its owners, members of the Sackler family.

The company whose signature opioid, OxyContin, is seen as an early driver of the epidemic, and the Sacklers, were forced to face a day of reckoning for the deaths of hundreds of thousands of people from overdoses, as well as the costs.

Under the deal, with many of the details yet to be revealed, the Sackler family would pay $3 billion in cash over seven years, of a total rumored $12 billion.

The tentative proposal must still be approved by Purdue’s board as well as a bankruptcy court judge.

In a statement, the company said, “Purdue Pharma continues to work with all plaintiffs on reaching a comprehensive resolution to its opioid litigation that will deliver billions of dollars and vital opioid overdose rescue medicines to communities across the country impacted by the opioid crisis.”

But many of the states denounced the proposal, vowing to pursue the Sacklers to try to recover vast sums that their governments have spent on treatment, care and enforcement.

--The Trump administration said on Wednesday it would ban the sale of most flavored e-cigarettes, at a time when hundreds of people have been sickened by mysterious lung illnesses and teenage vaping continues to rise.

Speaking in the Oval Office, President Trump acknowledged there was a vaping problem and said: “We can’t allow people to get sick. And we can’t have our kids be so affected.”

The Food and Drug Administration will outline a plan within the coming weeks for removing flavored e-cigarettes and nicotine pods from the market, excluding tobacco flavors.  The ban would include mint and menthol, popular varieties that manufacturers have argued should not be considered flavors.

There have been nearly 500 cases this summer of vaping-related respiratory illnesses in nearly three dozen states with a possible link to six deaths, which have amplified concerns and renewed calls for a total ban on the largely unregulated products.

Just last week, Michigan became the first state to prohibit the sale of flavored e-cigarettes, while New York, Massachusetts and California are considering similar measures.  San Francisco banned e-cigarettes earlier this year, which Juul Labs, the dominant seller in the United States, is lobbying to reverse through a ballot initiative.

The public is accusing Juul of deliberately targeting youths, which led the company to voluntarily stop shipping most flavored pods to thousands of retail locations around the country.

Five million minors, mostly in their high school years, reported that they had used e-cigarettes recently, the F.D.A. reported in its annual survey, with one-quarter of the nation’s high school students saying they vaped within the last 30 days, up from 20 percent last year.

A company spokesman for Juul said the company would comply with the F.D.A.’s decision to prohibit most flavors.  “We strongly agree with the need for aggressive category-wide action on flavored products.”

On Monday, the F.D.A. rebuked Juul, saying it made unauthorized claims that its vaping products are less harmful than traditional cigarettes.

Editorial / Wall Street Journal

“A campaign against vaping products is moving at land speed records, with the Trump Administration announcing this week it will pull flavored e-cigarettes from the market. This is becoming a political pile on, and regulators risk foreclosing one of the best opportunities in public health, which is to reduce cigarette smoking.

“President Trump on Wednesday popped off about ‘a problem in our country,’ which is the new trend of vaping.  ‘There have been deaths and there have been a lot of other problems.’  The First Lady recently tweeted that she’s ‘deeply concerned’ about e-cigarette use among youth, and Health and Human Services says it is stepping in to clear the market of flavored options....

“(Readers) may have seen the stories about strange illnesses and deaths related to vaping. The details are still emerging, though the Food and Drug Administration has said many of the tested samples contain THC, a psychoactive element of marijuana, and Vitamin E acetate. FDA has warned against buying products on the street, and many of these cases are the result of vaping black-market cannabis even as the regulatory scrutiny is on nicotine.

“This is a nice summary of the bizarre state of public-health debate.  Some in both parties are cheering marijuana legalization and the proliferation of cannabis products, even as the consequences aren’t well understood.  Yet e-cigarettes are treated like public enemy No. 1.  San Francisco recently banned e-cig sales....

“No one wants kids addicted to nicotine, and the question is how to balance these competing equities....

“(But) a Juul executive told Congress this summer that a result of exiting convenience stores has been other actors exploiting the vacuum by selling illegal flavor pods.

“Expect more such unintended consequences.  And if the flavor ban doesn’t reduce the number of teen vapers, then what?  The next step looks like an even broader ban, which won’t be a net positive to public health....

“The question is not whether vaping is healthy – it isn’t – but whether the frenzy against e-cigarettes is moving faster than the evidence. The answer increasingly looks to be yes, and forgotten in the rush are the 480,000 Americans who die each year from smoking.”

As vaping’s popularity has grown over the last five years, smoking rates have plunged to historic lows.  As recently as 1997, 36.4% of U.S. high-school students claimed to have tried cigarettes.  By 2017 the high-school smoking rate had fallen to 7.6%.

--PG&E reached an $11 billion settlement with insurance companies over wildfire claims, a big step as it attempts to emerge from bankruptcy.  Previously, PG&E agreed to pay $1 billion to local governments and state agencies to settle claims from fires in 2017 and 2018.

So now the San Francisco utility needs to reach a settlement with victims, with attorneys for the victims upset that PG&E is paying off insurance companies to buy their cooperation.

--Boeing Co. handed over around a quarter as many planes in August as it did a year ago, pushing total deliveries so far this year down more than 40%, as the worldwide grounding of its best-selling 737 MAX jet enters its seventh month.  Boeing delivered 18 aircraft in August, down from 64 in the same period, a year ago.  In the eight months through August, deliveries totaled 276 aircraft, compared with 481 last year.

Rival Airbus SE has delivered 500 aircraft for the first eight months of 2019, including 207 of its A320neo jets, which compete with the 737 MAX.

--From the Wall Street Journal: “With U.S. corn farmers hammered by the trade war with China, President Trump has said Japan – its own crop hurt by a bug infestation – will buy enough to pick up the slack.  Not everyone in Japan has gotten the memo.

“Agriculture specialists say the bug problem isn’t severe enough to affect import demand. And an official at the Ministry of Agriculture, Forestry and Fisheries said, ‘If the pest damage turns out to be insignificant, the amount of purchases may not change much.’....

“ ‘If Trump thinks he’s going to deplete the stocks of stored-up U.S. corn and rescue the U.S. farmer in the process, that’s not going to happen,’ said James Schoff, a senior fellow in the Asia Program of the Carnegie Endowment for International Peace.”

Japan is the second-largest buyer of U.S. corn after Mexico, most used for feed, but its total annual corn imports would barely make a dent in U.S. corn stocks.

It was at the G-7 on Aug. 25 that President Trump said, after meeting with Japanese Prime Minister Shinzo Abe, that Japanese corn purchases would total “hundreds of millions of dollars,” and, alluding to U.S. excess supplies, Trump added Japan is “going to be buying all of that corn.”

--The number of people without health insurance in the United States increased in 2018, a Census Bureau report released Tuesday indicates.  8.5 percent of Americans, or 27.5 million people, did not have health insurance at any point in 2018, up from 7.9 percent, or 25.6 million people in 2017.

This marked the first year-to-year increase in the percentage of uninsured people since 2008-09.

--The Census Bureau also reported median household income in 2018 was $63,179, an uptick of 0.9% that officials said isn’t statistically significant from the prior year based on figures adjusted for inflation.

But the poverty rate was 11.8% last year, a decrease of a half percentage point from 2017, marking the fourth consecutive annual decline in the national poverty rate.  It was the first time the official rate fell significantly below its level at the start of the recession in 2007.

--Charles Schwab Corp. is cutting about 600 jobs as it deals with the impact of lower interest rates.  The layoffs amount to about 3% of staff, as the brokerage cuts expenses with falling rates pinching profits.

“We initiated a process to review our expense base to ensure we remain well-positioned to serve clients while navigating an increasingly challenging economic environment,” a Schwab spokeswoman said.

--It was reported this week that up to 15% of Goldman Sachs partners are preparing to leave by year’s end, but as Crain’s New York Business adds, firms across Wall Street are having a crappy year so lots of personnel are going to be purged.

Investment-banking revenues had their worst first half since 2006, according to a report by Coalition, a London-based research firm.  The weakest performance is in bond, currency and commodity trading, which accounts for 42% of revenue, down from almost two-thirds before the financial crisis.

But at the same time, Goldman, Morgan Stanley and most of the others remain highly profitable and don’t have the issues that Deutsche Bank or UBS has.

--Billionaire investor Carl Icahn is moving his operation from New York to Miami next year for tax reasons, though in terms of his staff at publicly-traded Icahn Enterprises, those who don’t opt to relocate with him receive no severance, as the New York Post reported.

--Oracle Corp. said co-CEO Mark Hurd will take a medical leave of absence, the company not mentioning any specifics, which means that Safra Catz will be Oracle’s sole CEO.  Since Sept. 2014, Oracle has had a dual leadership structure, while co-founder Larry Ellison is chairman and chief technology officer.

Oracle announced the news on Hurd as it released its first-quarter financial report a day earlier than anticipated, with profit basically in line with estimates.

The company is the third-largest software-as-a-service vendor by market share, behind Salesforce and leader Microsoft, according to research firm Gartner Inc.  Growth is tied closely to the health of enterprise technology spending and world-wide this is projected to rise less than 1% this year to $3.74 trillion, slower than the 5.1% growth of a year earlier, Gartner said.

At least with Oracle, revenue from cloud services and license support, the company’s largest segment, rose 3% to $6.81 billion, though overall revenue rose less than 1% to $9.22 billion.

On the conference call, Ellison bragged that McDonald’s Corp. chose Oracle over Workday for cloud services.

--Moody’s Investors Service cut Ford Motor Co.’s bond rating to junk status, citing weak cash generation and a yearslong restructuring plan that the auto maker is undertaking just as the car market softens globally. Moody’s noted in particular Ford’s sharply weaker performance in China, where its sales have plunged the last two years, leading to big losses.

But Moody’s noted Ford has “a sound balance sheet and liquidity position from which to operate.” As of June 30, the auto maker had $22.1 billion in cash, a far cry from the mid-2000s, when Ford was running out of cash and its survival was in doubt.

Ford is in the process of rebooting its China operations, with new and redesigned models after admitting its vehicle lineup there had become stale.

Both S&P Global Ratings and Fitch, the other two of the three major ratings companies, still have Ford bonds above junk territory, and the company’s shares this week were largely unchanged.

--Passenger car sales in India plunged 41 percent in August from a year earlier, according to the Society of Indian Automobile Manufacturers, marking the fifth month of double-digit losses.

India’s car industry was once among the world’s most promising, buoyed by hopes of a rising middle-class that would begin buying vehicles for the first time.

Key to the unraveling has been a year-long liquidity squeeze caused by defaults in India’s shadow banking sector, which accounted for almost half of new credit for vehicle purchases.

I’ve been talking about the broad slowdown in the Indian economy, and second-quarter GDP came in at a six-year low of 5 percent.

The slump has forced automakers to cut production, shut plants temporarily and lay off contract workers.

--Bucking the trend in the retail sector in a record year of store closing, Old Navy announced plans to open 800 new locations as part of its upcoming split from parent company the Gap.  This would nearly double the number in North America to 2,000. The plan is to add around 75 a year, “focused on off-mall locations.”

--Shares in SmileDirectClub had a miserable debut as a public company on Thursday, having priced shares for its IPO above the range of expectations. 

The dentistry company priced them at $23, implying a market capitalization of $8.9 billion, but they closed the first day at $17, before rallying today to close at $18.60.

SmileDirectClub sells clear teeth aligners directly to consumers for less than traditional orthodontists.  The Nashville-based company reported a loss of $75 million last year and is facing pushback from the American Association of Orthodontists, which has claimed in complaints with state attorneys-general and dental boards that the service is “illegal and creates medical risks.”

--But we did have a successful IPO today, Cloudflare, an internet-security provider, which soared 20% after making its debut.  [Priced at $15, closed at $18.]

--Uber Technologies Inc. is dismissing 435 employees, the second major staff cut this summer, amid mounting losses and a falling stock price.  The jobs being eliminated are largely in the product and engineering divisions, while the previous cuts were in marketing.

Four months after Uber went public, the stock is trading about 25% below its initial offering price.  Last month, the ride-hailing company reported its largest-ever quarterly loss of $5.24 billion.

--The number of passengers flying to Hong Kong with Cathay Pacific Airways plunged 38 percent in August as the anti-government protests scared away visitors during one of the busiest months for travel.  The weakness in the business environment remained in September, as Cathay announced Wednesday.

Demand for business class travel “experienced a more significant drop,” the airline said, with fewer people willing to go to Hong Kong for corporate reasons.

So Cathay has responded by cutting a number of short and long-haul routes, and ordering a hiring and spending freeze.

[Overall, officials said arrivals in Hong Kong fell 40% last month from a year ago, the worst decline since May 2003, when Hong Kong was grappling with the SARS virus.]

--Nearly all British Airways flights were grounded Monday by its first ever pilots’ strike (or at least first in decades), 1,700 flights to and from London’s Heathrow and Gatwick airports during two days of action in its latest high-profile setback. 

BA faces intense competition on short-haul routes from EasyJet, Ryanair and other low-cost airlines, while dealing with a number of operational hiccups in recent years, including a data breach and theft impacting 500,000 customers, for which BA faces a record $230 million fine under tough new data-protection rules.

BA has offered its pilots an 11.5% raise over three years, that would take the pay of its highest earning captains from $205,000 to $245,000, including ‘allowances.’

The strike ended Wednesday, but if the two sides don’t reach an agreement, another one is set for Sept. 27.

--Tourism to Ireland topped three million visitors for the first time in the second quarter, with visits by Americans reaching a spring record.  Overall, there was 2.4 percent growth in numbers versus the April-June 2018 period, despite a slight decline in visits from Britain, owing to Brexit uncertainties and corresponding weakness in sterling.

But there was an 8.3 percent rise in American and Canadian visitors, the former fueled in no small part by the dollar’s strength versus the euro.

--Wendy’s is taking its breakfast menu nationwide in 2020 and will hire 20,000 employees to support the morning meal, the company announced Monday.  Currently, the fast-food chain, a holdout in the breakfast area among national chains, has it in 300-plus restaurants.

I see that one item on Wendy’s breakfast menu is Honey Butter Chicken Biscuit.  Mmmm.

Wendy’s actually tried breakfast before. In the mid-1980s it offered omelets, French toast and toasted sandwiches, but the items took too long to make and it was discontinued.

Foreign Affairs

China / Hong Kong: Anti-government protests spread to the sports field this week, as many local fans defied Chinese law to boo the country’s national anthem ahead of a soccer World Cup qualifier against Iran.  This followed another weekend of violent clashes in which police firing tear gas engaged in skirmishes with protesters who at times smashed windows and started fires in the streets.

Earlier on Tuesday, prior to the soccer match, the city’s Beijing-backed leader, Carrie Lam, warned against foreign interference in Hong Kong’s affairs, adding that an escalation of violence could not solve social issues.

On Monday, former Defense Secretary Jim Mattis said the anti-government protests were not an internal Chinese matter and the United States should offer at least moral support to the demonstrators.  President Trump has offered zero thus far.  Last Sunday, demonstrators marched to the U.S. Embassy, urging Trump to “liberate” their city, posters reading specifically: “President Trump, please liberate Hong Kong.”

Hong Kong billionaire Li Ka-shing, in his first speech mentioning the unrest, urged political leaders to offer young people an olive branch, calling them “masters of our future.”

George Will / Washington Post

“The masked men who recently tossed firebombs at Jimmy Lai’s home targeted one of (Hong Kong’s) foremost democracy advocates.  Lai, a 71-year-old media billionaire, calls this summer’s ongoing protest ‘a martyrdom movement’ and ‘a last-straw movement.’  It has an intensity and dynamic that bewilders the protesters’ opponents in Beijing and in Hong Kong’s Beijing-obedient city administration.  Today’s mostly young protesters will be middle-aged in 2047 at the expiration of the 50-year agreement that ostensibly accords Hong Kong protected status as an island of freedom. Beijing attempted to whittle away that status with a proposed 2003 law against ‘SUBVERSION.’  And by devaluing suffrage via the 2014 requirement that candidates for the chief executive receive approval from a Beijing-loyal committee. And by this year’s extradition bill that would have facilitated sweeping Hong Kongers into the maw of China’s opaque criminal-justice system.

“Monday’s New York Times carried a full-page ad paid for by ‘the Government of the Hong Kong Special Administrative Region of the People’s Republic of China.’ Which means, effectively, by the Chinese Communist Party. The ad said: ‘We are resolutely committed to ‘One Country, Two Systems’ which provides the constitutional guarantee for Hong Kong’s continued development and success as a free and open society.’  The ad pledged ‘dialogue to talk through differences and look for common ground with no preconditions.’

“But the ‘one country, two systems’ formulation – agreed to in 1997, when British authority ended – as a 50-year framework for Hong Kong’s relations with the PRC is an inherently menacing precondition. And Beijing’s consistently sinister behavior reveals a determination, as implacable as it is predictable, to incrementally nullify ‘one nation, two systems’ by reducing Hong Kong to just another jurisdiction wholly subservient to China’s deepening tyranny.

“For Leninists such as Xi Jinping wielding a party-state, nothing is more important than the party’s unchallenged primacy. Another ‘Tiananmen Square’ – a Hong Kong massacre – would be calamitous for China’s Leninists, but less so than weakening the Communist Party’s primacy. The party is, Lai says, ‘detached from reality’ and ‘will always make the wrong decision’ as it tries to become ‘the most absolute dictatorship in human history.’

“In 1940, Winston Churchill warned against ‘a new Dark Age made more sinister, and perhaps more protracted, by the lights of perverted science.’  That is China’s aspiration with ‘digital Leninism,’ an application of science through manipulative technologies that neither Churchill nor his contemporary, George Orwell, anticipated.  With a steadily refined repression apparatus, aptly called ‘cyber-totalitarianism,’ China’s surveillance state is enmeshing everyone in a ‘social credit’ system.  Individuals’ cumulative commercial and social media transactions give them a score that determines their access to education, housing, clinics, travel and more – even pet ownership.  Although China’s published statistics are as untrustworthy as the regime itself, there are reasons to believe that in this decade China has spent more on ‘stability maintenance’ than on its military.  Hong Kong is watching this....

“The Economist recently editorialized: ‘The West’s 25-year bet on China has failed.’  The wager was that ‘market totalitarianism’ is an oxymoron. Embedding China in the global economy supposedly would open it to the softening effects of commerce, which would be solvents of authoritarianism. The West’s tardy but welcome disenchantment is, as the Economist says, ‘the starkest reversal in modern geopolitics.’  If Hong Kong’s heroic refusal to go gentle into Beijing’s dark night is accelerating this disenchantment, the summer of dissent has been this decade’s grandest and most important development.”

North Korea: There are some who see the removal of national security adviser John Bolton, who Pyongyang once branded a “war maniac,” as a chance to resume denuclearization talks without facing an unyielding hawk on the other side.

In the past, Bolton had proposed using military force to overthrow the ruling Kim family and President Trump blamed Bolton directly for the collapse of the second summit in Vietnam in February for calling for use of the “Libya model,” or unilateral denuclearization that Kim has repeatedly rejected.

But North Korea has also targeted Secretary of State Pompeo, urging Trump to replace him with a “more mature” interlocutor.  Last month it called Pompeo a “diehard toxin” who only complicated talks.

Kim has previously given Washington a year-end deadline to take a new approach, but in the meantime he keeps launching missiles, including two more Tuesday morning, hours after a senior diplomat announced Pyongyang would be willing to resume negotiations with the United States in September.

Afghanistan: On Saturday, out of nowhere, President Trump tweeted that he had abruptly cancelled a Camp David meeting with Taliban and Afghan government leaders to finalize a peace agreement, the meeting scheduled for Sunday.

“Unbeknownst to almost everyone, the major Taliban leaders and, separately, the President of Afghanistan, were going to secretly meet with me at Camp David on Sunday. They were coming to the United States tonight.  Unfortunately, in order to build false leverage, they admitted to...

“...an attack in Kabul that killed one of our great soldiers, and 11 other people. I immediately cancelled the meeting and called off peace negotiations.  What kind of people would kill so many in order to seemingly strengthen their bargaining position? They didn’t, they...

“...only made it worse!  If they cannot agree to a ceasefire during these very important peace talks, and would even kill 12 innocent people, then they probably don’t have the power to negotiate a meaningful agreement anyway.  How many more decades are they willing to fight?”

In Sunday talk shows, Secretary of State Mike Pompeo said the negotiations were off “for the time being” but emphasized the progress that had been made.

State Department negotiator Zalmay Khalilzad returned to Washington on Monday for meetings with senior officials to discuss what had happened and where to go from here.

There was dissension in the administration, with Pompeo supporting negotiations, and national security adviser John Bolton in opposition.

Trump declared that talks with the Taliban aimed at ending the 18-year war are “dead.”

“As far as I’m concerned, they are dead,” he told reporters Monday.  Asked about the 14,000 U.S. troops still in Afghanistan, Trump said: “We’d like to get out but we’ll get out at the right time.”

“They thought that they had to kill people to put themselves in a little better negotiating position,” he told reporters, calling the attack “a big mistake.”

“I cancelled Camp David on the basis that they did something that they sure as hell shouldn’t have done,” he said.

Trump was heavily criticized for entertaining the idea of hosting the Taliban just days before the anniversary of 9/11.  Trump defended the idea, saying “having meetings is a good thing, not a bad thing.”

Sixteen U.S. troops have been killed this year.

As part of a peace proposal that was on the table, the U.S. would have withdrawn 5,400 troops within 20 weeks, in return for Taliban guarantees that Afghanistan would never again be used as a base for terrorism.  The remaining 8,600 American forces would have left according to a gradual timeline, perhaps within 16 months, which would have allowed Trump to declare that he had ended a long and increasingly unpopular conflict, when his predecessor, President Obama, couldn’t.

The Taliban is in control of more territory than at any point before the 2001 U.S.-led invasion.  But the militants have refused to hold direct talks with the Afghan government until a timetable for U.S. troop withdrawals is finalized.

For his part, Afghan President Ghani called on the Taliban to negotiate with him but warned that attempts to increase its attacks on the ground would be met with a ferocious military response.  An election that Ghani is expected to win is still planned for Sept. 28. The Taliban has insisted on postponing the election before proceeding with negotiations with the Afghan government.

Ghani’s officials added in a statement: “Real peace will come when the Taliban agree to a ceasefire.”

A Taliban spokesman said: “The Americans will suffer more than anyone else for cancelling the talks.  Its credibility will be affected, its anti-peace stance will be exposed to the world, losses to lives and assets will increase.”

Congresswoman Liz Cheney tweeted: “Camp David is where America’s leaders met to plan our response after al Qaeda, supported by the Taliban, killed 3,000 Americans on 9/11.  No member of the Taliban should set foot there.  Ever.”

Rep. Adam Kinzinger, an Air Force veteran who flew missions throughout the Middle East – including Afghanistan, tweeted: “Never should leaders of a terrorist organization that hasn’t renounced 9/11 and continues in evil be allowed in our great country.  NEVER.  Full stop.”

Editorial / Wall Street Journal

“President Trump on Saturday cancelled talks with the Taliban, and let’s hope for the sake of American security that it’s a long suspension. The talks have looked increasingly like the Paris peace talks of the Vietnam era in which the enemy negotiates a U.S. withdrawal as it prepares for a complete military victory.

“Mr. Trump tweeted that he cancelled talks sponsored by the U.S. and scheduled for Sunday at Camp David because the Taliban killed 12 people, including American Sergeant First Class Elis Angel Barreto Ortiz, in an attack on Thursday.  ‘What kind of people would kill so many in order to seemingly strengthen their bargaining position?’ Mr. Trump asked.

“But that’s what the Taliban have been doing throughout more than a year of negotiations. They practice terror while they talk. They have refused to commit to more than a token cease-fire while slaughtering civilians and the Afghan police and defense forces....

“The Taliban want to restore the Islamic Emirate they had before 9/11, in which religious leaders have the final say on all matters.  Women would once again be denied education, and minority rights would not be protected....

“Critics who complain about ‘forever wars’ overlook that the U.S. has had troops deployed in Europe since World War II and in Korea since the armistice of 1953. These deployments have helped to keep the peace with limited American casualties. This kind of long-term deployment should be possible in Afghanistan, perhaps with reductions as the Afghan forces gain in experience and firepower.

“There is no domestic political clamor for the U.S. to withdraw all troops, especially with casualties low. The political harm for Mr. Trump would be far greater if a pullout triggered the collapse of the Afghan government and a humanitarian tragedy.  A revived terrorist sanctuary in Afghanistan would also erase the political benefit for Mr. Trump from destroying the ISIS caliphate in Syria. The jihadist movement world-wide would declare a great victory.

“Hard as it may be to accept, the fight against Islamic terrorism will be a multi-generational struggle around the world. Better to stay on offense on their turf than to retreat to playing defense on America’s. And far better to have Muslim allies fighting by our side in their countries than to plan pre-emptive or reprisal attacks from the air and far away.  The Clinton years showed us that pinprick missile attacks alone do not stop al Qaeda.

“Mr. Trump might be tempted to resume talks with the Taliban, but he should be in no hurry.  The Taliban have been thinking amid Mr. Khalilzad’s mediations that they have the U.S. on the run.  Mr. Trump’s show of backbone will make them think twice. You can’t have a successful peace negotiation if one side has no interest in peace.”

Editorial / USA TODAY

“The collapse of peace talks aimed at ending American military involvement in Afghanistan has, for the moment at least, thwarted President Donald Trump’s isolationist urge to declare victory while pulling out U.S. troops based on vague Taliban assurances.

“Skeptics, like recently fired national security adviser John Bolton, often point to the 1973 Paris peace agreement as an example of how a rush-to-the-exit ended with the aggressors – North Vietnam, in that case – winning everything in the end.

“But there’s a more troubling, and recent, case in point – Trump’s decision to expedite troop drawdowns in Syria, a move Bolton also opposed.

“Trump made a theatrical display last December of tweeting a video of himself declaring victory in the U.S.-led coalition war against the Islamic State caliphate in Syria, along with his decision to ‘bring our great young people home.’

“Never mind the reality that the American military footprint of 2,000 troops in Syria was relatively small, and that the Pentagon had perfected the art of working with indigenous forces to minimize risk to U.S. ground troops while ensuring battle success.

“And never mind that Trump’s desire to pull the plug in Syria cost him a valuable Cabinet member in Defense Secretary James Mattis, who quit in disagreement with the decision.

“Trump later reversed himself to a degree. The troop commitment to Syria was cut by about half.  He thereafter used the victory as a favorite talking point, boasting of having obliterated, decimated or pulverized the terror group also known as ISIS.

“ ‘The ISIS territorial caliphate has been 100% and just absolutely destroyed,’ Trump said in July.

“Nonetheless, ISIS persists.

“As many as 14,000 to 18,000 ISIS fighters continue to operate in Iraq and Syria, using gangster tactics of assassinations, ambushes, suicide bombings and crop burning to sow discord and extort money.  Its leader, Abu Bakr al-Baghdadi, remains at large.  A recent U.S. inspector general report said ISIS in Syria is ‘resurging.’  And a United Nations report in July said the organization is working to reestablish guerrilla networks in Iraq and Syria.

“Merely by Trump cutting the relatively small force of U.S. troops in Syria to demonstrate his ‘America First’ bona fides, the U.S.-led coalition’s on-the-ground ally, the Syrian Democratic Forces, has been denied appropriate training, equipment and assistance in establishing the kind of human-based intelligence necessary to sustain hard-won victories and check ISIS’ reemergence, the IG report says.

“In addition, the report says the Arab and Kurdish liberation force lacks the wherewithal to continue detaining 10,000 captured ISIS fighters.  More important, they can provide little more than perimeter security for sprawling camps filled with tens of thousands of displaced Syrian families.  These camps are becoming insurgency breeding grounds, where Islamic State infiltrators are working to sow lawlessness and recruit followers.

“Precipitous withdrawal – whether in Afghanistan, Iraq, Syria or Vietnam – too often has been the perfect formula for snatching defeat from the jaws of victory.  Whomever Trump picks as his next national security adviser should understand this reality.”

Syria: Turkey, which for eight years has welcomed millions of Syrian refugees, has reversed course, forcing thousands to leave its major cities in recent weeks and ferrying many of them to its border with Syria in buses and police vans.

President Recep Tayyip Erdogan is pushing a radical solution – resettling refugees in a swath of Syrian territory controlled by the United States and its Kurdish allies.  If that does not happen, as I’ve noted for some time now, Erdogan is threatening to send a flood of Syrian migrants to Europe.

This is all part of Erdogan’s long demanded buffer zone along Turkey’s border with Syria to keep out Kurdish forces, whom he considers a security threat.

But his new plan to send the Syrians who have been fleeing the war back home comes as resentment against the Syrians in Turkey has grown, while at the same time, a Russian/Syrian offensive has sent hundreds of thousands more refugees fleeing toward the Turkish border.

A joint U.S.-Turkey patrol did take place last weekend as they attempt to establish a “safe zone” along a border region controlled by Kurdish forces.  Damascus condemned it.

But President Erdogan said: “It seems that our ally is looking for a safe zone for the terrorist organization, not for us. We reject such understanding,” adding Turkey must secure “the entire region” to resettle refugees.

Iran: Tehran’s nuclear chief said on Sunday the European parties to the 2015 nuclear deal have failed to fulfil their commitments under the pact, a day after Iran announced further breaches of limits on its nuclear activity set by the deal.

Ali Akbar Salehi, director of Iran’s nuclear energy agency, said: “Unfortunately the European parties have failed to fulfil their commitments...The deal is not a one-way street and Iran will act accordingly as we have done so far by gradually downgrading our commitments.”

Since May, Iran has begun to breach caps on its nuclear capacity in retaliation for U.S. pressure on Iran to negotiate restrictions on its ballistic missile program and support for proxy forces around the Middle East.

Iran says its retreat from terms of the deal is reversible if European signatories manage to restore its access to foreign trade promised under the nuclear deal but blocked by the reimposition of U.S. sanctions.

International Atomic Energy Agency inspectors reported in July that Iran had cranked up enrichment to 4.5% purity, above the 3.7% cap suitable for civilian energy generation set by the 2015 accord.

Israel: UN Secretary General Antonio Guterres expressed concern over Prime Minister Benjamin Netanyahu’s stated intention to apply Israeli sovereignty in the Jordan Valley and the northern Dead Sea area of the West Bank if he is reelected prime minister in next Tuesday’s election.

“Such steps, if implemented, would constitute a serious violation of international law,” the secretary general said in a statement.  “They would be devastating to the potential of reviving negotiations and regional peace, while severely undermining the viability of the two-state solution.”

Netanyahu, scrambling for support in the final days, announced the plans on Tuesday to apply Israeli law in those areas effectively annexing them (think Judea and Samaria).  He also said the Trump administration’s peace plan on the conflict, which is to be unveiled after the election, would improve conditions for the peace process, hinting that his plan had been coordinated with the U.S.

The Jordan Valley and northern Dead Sea region constitute about 30 percent of the West Bank, but Netanyahu says he is only referring to a much smaller area that only encompasses the settlements in the area.

The plan means that there would be enclaves of Israeli settlements whose residents would be directly governed by Israeli law rather than by the Israeli army’s Civil Administration, as is currently the case.  The prime minister said Palestinians in the area would maintain complete freedom of movement.

For their part the Palestinians strongly condemned Netanyahu’s move and warned of the consequences.

“Netanyahu is the chief destroyer of the peace process and any foolish move he makes will leave negative consequences on him locally and internationally,” said PA Prime Minister Mohammed Shtayyeh.  “Palestine is not part of Netanyahu’s election campaign, and if he believes that annexing settlement blocs will bring him more votes in the short term, then he and Israel will be the losers in the long term.”

Other Palestinian officials said that Netanyahu’s pledge to extend Israeli sovereignty to the Jordan Valley if re-elected was a “declaration of war” on the Palestinians and the peace process.

Arab League foreign ministers condemned the plan, calling it an act of “aggression” undermining any chances of a peace settlement.

Around 65,000 Palestinians and 11,000 Israeli settlers live in the Jordan Valley and northern Dead Sea area.    The main Palestinian city is Jericho.

Separately, the polls show Netanyahu losing a close election, the prime minister unable to form a coalition. But as Chemi Shalev wrote in Haaretz this week, he is then prepared to cry “fraud.”

“The election fraud chicanery, which has spawned in Donald Trump’s wild fantasies, could turn out to be the trigger for the disintegration of Israel as we’ve known it.

Russia: Law enforcement authorities carried out mass raids on the homes and offices of Kremlin critic Alexei Navalny’s supporters across the country, a move he described as the biggest crackdown of its kind in modern Russian history.  More than 200 searches took place (some reports said as many as 400) as part of an investigation into money-laundering in 41 towns and cities, Navalny said. CCTV footage showed masked men using power tools to remove doors and armed officers securing various premises associated with Navalny’s political movement.

The raids happened four days after the ruling United Russia party, which supports President Vladimir Putin, lost a third of its seats in the Moscow city assembly, while easily retaining its dominant nationwide position.  Navalny’s allies, who had been barred from running in the Moscow city election, urged people to vote tactically to try to reduce the chances of Kremlin-backed candidates, a strategy which appears to have had some success.

“Putin is very angry and is stamping his feet,” Navalny said in a video.  “I congratulate you.  Today the biggest police operation in modern Russian history is taking place.”

Authorities claim the money-laundering investigation is into Navalny’s Anti-Corruption Foundation, an organization that has published embarrassing investigations into the wrongdoing of corrupt officials.

Separately, Russia asked the United States, via Interpol, to confirm the whereabouts of a former Kremlin official who Russian media have said may have been a U.S. spy exfiltrated in 2017, Foreign Ministry spokeswoman Maria Zakharova said on Thursday.

Russian daily newspaper Kommersant has said that the official may have been a man named Oleg Smolenkov.  He was reported to have disappeared with his wife and three children while on holiday in Montenegro in June 2017.

CNN first reported Monday that the U.S. evacuated the agent from Russia in 2017, in part out of concern that President Trump could, inadvertently, somehow lead the Russians to discover the spy’s identity.  According to the New York Times, it was this asset who “was instrumental to the CIA’s most explosive conclusion about Russia’s interference campaign: that President Putin ordered and orchestrated it himself.”

The next day the asset was identified as Smolenkov, and he was believed to be living in Virginia, though after the revelation, he would have been relocated.

Lastly, Russia and Ukraine swapped 35 prisoners each, including 24 Ukrainian sailors, in a somewhat hopeful sign that perhaps an end to the war in eastern Ukraine could be in the offing.

New Ukrainian President Volodymyr Zelenskiy has vowed to fulfill his campaign promise to end the conflict in the Donbass region.  It is also a signal from the Kremlin to the European Union that it is willing to play ball.

Random Musings

--Presidential tracking polls....

Gallup: 39% approval of the president’s job performance, 57% disapproval; 88% of Republicans approve, 34% of independents (Aug. 15-30).
Rasmussen: 47% approve, 52% disapprove (Sept. 13)

A new CNN/SSRS poll has President Trump’s approval rating at just 39%, the lowest since the beginning of the year.  55% disapprove.  [88% of Republicans approve, a la Gallup, ditto independents at 34%.]

Trump receives 54% support from white men, but just 42% from white women.

And in the most worrisome data point, perhaps, 60% say Trump does not deserve reelection. 

In a new Washington Post/ABC News poll, Trump’s approval rating among voting-age Americans stands at 38%, down from 44% in June but similar to 39% in April, with 56% saying they disapprove of his performance.  Among  registered voters, the split is 40-55. 36% of independents approve of Trump’s performance in this one, 58% disapproving.  Two months ago the split was 43-54.

Only 30% of women approve of the president’s performance, 64% disapproving.  Men are split 47-47.

This survey finds that Trump’s economic approval rating has declined from 51% in early July to 46% now, with 47% disapproving.

Only 35% approve of Trump’s handling of trade negotiations with China, 56% disapproving.

While 56% of Americans rate the economy as “excellent” or “good,” that figure is down from 65% in November.

Separately, 6 in 10 say that a recession is either “very likely” or “somewhat likely” in the next year.  By comparison, in fall 2007, 69% said a recession was likely, shortly before one began later that year.

--A CNN/SSRS poll found that Joe Biden led the Democrats and Democratic-leaning independents with 24%, followed by Elizabeth Warren 18%, and Bernie Sanders 17%.  [Kamala Harris 8%, Pete Buttigieg 6%, Beto O’Rourke 5%.]

Biden receives 42% support from black voters, with Sanders next at 12%.

--A separate Washington Post/ABC News poll of registered voters who are Democrats or Democratic-leaning independents has Biden at 29%, Sanders 19%, Warren 18%  [Harris 7%, Mayor Pete 4%, O’Rourke and Andrew Yang 3%.]

In July, Biden was at 30%, Sanders 19% and Warren 12%.

This poll also looked at how Trump would perform against five potential candidates, and voters prefer Biden (55% to 40%), Sanders (52% to 43%), Warren (51% to 44%), and Harris (50% to 43%), while Mayor Pete is within the poll’s margin of error at 47% to 43%.

President Trump, on seeing this poll, tweeted:

“In a hypothetical poll, done by one of the worst pollsters of them all, the Amazon Washington Post/ABC, which predicted I would lose to Crooked Hillary by 15 points (how did that work out?), Sleepy Joe, Pocahontas and virtually all others would beat me in the General Election....

“....This is a phony suppression poll, meant to build up their Democrat partners.  I haven’t even started campaigning yet, and am constantly fighting Fake News like Russia, Russia, Russia.  Look at North Carolina last night, Dan Bishop, down big in the Polls, WINS.  Easier than 2016!”

“If it weren’t for the never ending Fake News about me, and with all that I have done (more than any other President in the first 2 ½ years!), I would be leading the ‘Partners’ of the LameStream Media by 20 points. Sorry, but true!”

--In a CBS News/YouGov Battleground poll of key early states among registered voters....

New Hampshire: Warren 27%, Biden 26%, Sanders 25%, Buttigieg 8%, Harris 7%.

Iowa: Biden 29%, Sanders 26%, Warren 17%, Butigieg 7%, Harris 6%.

South Carolina: Biden 43%, Sanders 18%, Warren 14%, Harris 7%, Buttigieg 4%.

Nevada: Sanders 29%, Biden 27%, Warren 18%, Harris 6%, Buttigieg 4%, O’Rourke 3%.

While I list all the major national polls, yes, it’s the state polling that is most important, and come November 2020, as pollster Frank Luntz said this morning on CNBC, the most important results will once again be in Michigan, Wisconsin and Pennsylvania.

--So they held the latest debate among the Democratic candidates last night in Houston and it wasn’t a bad show, as these things go if your job is to watch them.  But I always get a kick out of perceptions among analysts after.

The debate clearly didn’t move the needle.  The top three – Biden, Warren and Sanders – will continue to distance themselves from the pack, and Biden, overall, didn’t harm himself.  He wasn’t good, mind you, but he didn’t make a mistake that torpedoed his campaign.

Smart-aleck Julian Castro, on the other hand, did hurt himself by going after Biden’s age in an unfair exchange.

I chose to watch from the standpoint of who, among the lower tier, is positioning themselves as a viable running mate and on that score, I thought Sen. Amy Klobuchar did a solid job, and as she keeps hammering home, indeed it is important that she’s from the Midwest.

Sen. Cory Booker also did well, in my opinion.

Beto O’Rourke, while strong in his presentation, is now just a one-trick pony on gun control.

But Michael Goodwin of the New York Post had the following comment on the frontrunner:

“Start with Joe Biden’s incoherence. The nominal frontrunner, the former vice president had a 40-year reputation for never shutting up.  Now he can’t manage to finish a sentence without interrupting himself.

“Nearly all his efforts to make a point were swamped by a sudden change of direction mid-sentence, and then another change a few words later as a random thought popped into his head and out his mouth.  None of his rivals needed to interrupt him – he did it to himself.

“Most of the time I had no idea what he was trying to say, let alone what he actually said.  I veered between feeling sorry for him and expecting the AFLAC duck to come out on stage and shake its head in bewilderment.

“I have said all along that I don’t believe Biden will be the nominee, and last night left me more certain than ever.  He’s not capable of going the distance in the primaries and then taking on Trump.”

--The CNN/SSRS poll found that 45% of registered voters say they’re extremely enthusiastic about voting in next year’s election, despite 2020 being more than a year away, which is significantly higher than in previous cycles.  In September 2015, for example, only 31% of registered voters said they were extremely enthusiastic to vote in the 2016 presidential election.  In October 2011, it was just 28%.

--Former South Carolina governor and congressman Mark Sanford announced he would challenge President Trump in the Republican party primary.

--In a special House election in North Carolina, Dan Bishop, a Republican state senator, scored a narrow 51-49 victory over moderate Democrat Dan McCready, with President Trump making a full-throated plea for support for Bishop at a rally the day before; Trump having carried the district by 12 points in 2016.  [A fellow North Carolina Republican, Greg Murphy, had an easier time of it in another special election.]

The fierce fight for the Ninth Congressional District finally brought an end to a political drama going back to the 2018 midterm race for the seat, in which McCready barely lost against a different Republican, but then evidence of election fraud was revealed on the GOP side and the results were tossed out.

President Trump tweeted today:

“The two big Congressional wins in North Carolina on Tuesday, Dan Bishop and Greg Murphy, have reverberated all over the World.  They showed a lot of people how strong the Republican Party is, and how well it is doing.  2020 is a big, and very important, Election.  We will WIN!”

Trust me; there isn’t a single European, South American or Asian talking about some special elections in North Carolina today.

--According to a Suffolk University/Boston Globe poll, if 38-year-old Rep. Joseph P. Kennedy III launched a primary challenge against incumbent Sen. Edward Markey, Kennedy would hold a 42-28 lead in a head-to-head matchup.

--The National Transportation Safety Board said Thursday that all crew members were asleep when the Conception caught fire early on Labor Day, a major revelation in the investigation of the worst maritime disaster in modern California history.

The boat was required by federal law to have a night watchman who was awake and could alert others to fire and other dangers, said the NTSB.

There are reports that a potential cause was passengers’ charging their electronic devices (and exploding lithium batteries), though a final determination is months in the offing, if ever.

--Actress Felicity Huffman was sentenced to 14 days in prison for her role in the college-admissions cheating scandal, which I feel was totally appropriate given her contrition right from the beginning.  She was also sentenced to one year of supervised release, 250 hours of community service and a $30,000 fine.

Huffman was the first parent to be sentenced, and the result is a middle ground between prosecutors’ desire for one month in prison and her attorneys’ request for one year of probation.

--Lastly, it is disgraceful the United States hasn’t granted temporary protected status to Bahamians displaced by Hurricane Dorian. 

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Pray for the men and women of our armed forces...and all the fallen.  We remember 9/11.

God bless America.

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Gold $1513
Oil $56.63

Returns for the week 9/9-9/13

Dow Jones
S&P 500
S&P MidCap
Russell 2000
Nasdaq

Returns for the period 1/1/19-9/13/19

Dow Jones
S&P 500
S&P MidCap
Russell 2000
Nasdaq

Bulls 50.0
Bears 17.9

Have a great week.  The next WIR is likely to be posted a few hours later than usual.

Brian Trumbore