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01/11/2020

For the week 1/6-1/10

[Posted 9:30 PM ET, Friday]

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Special thanks to George R.

Edition 1,082

I can’t help but start out this week a little differently, having watched an excellent documentary on the late Sen. Joseph McCarthy (PBS / “American Experience”) and his efforts in the early 1950s to root out Communists, what became known as “McCarthyism.”  The parallels to today are striking.

Mentioned in passing in the documentary, however, is the role of Republican Senator Margaret Chase Smith of Maine.  As McCarthy was gaining traction with his anti-Communist speeches and Senate hearings on same, Smith strode to the Senate floor on June 1, 1950, to issue her “Declaration of Conscience.” 

“Mr. President, I would like to speak briefly and simply about a serious national condition.  It is a national feeling of fear and frustration that could result in national suicide and the end of everything that we Americans hold dear. It is a condition that comes from the lack of effective leadership either in the legislative branch or the executive branch of our government....

“I speak as briefly as possible because too much harm has already been done with irresponsible words of bitterness and selfish political opportunism.  I speak as simply as possible because the issue is too great to be obscured by eloquence.  I speak simply and briefly in the hope that my words will be taken to heart.

“Mr. President, I speak as a Republican.  I speak as a woman.  I speak as a United States senator.  I speak as an American.

“The United States Senate has long enjoyed worldwide respect as the greatest deliberative body in the world.  But recently that deliberative character has too often been debased to the level of a forum of hate and character assassination sheltered by the shield of congressional immunity.

“It is ironical that we senators can in debate in the Senate, directly or indirectly, by any form of words, impute to any American who is not a senator any conduct or motive unworthy or unbecoming an American – and without that non-senator American having any legal redress against us – yet if we say the same thing in the Senate about our colleagues we can be stopped on the grounds of being out of order.

“It is strange that we can verbally attack anyone else without restraint and with full protection, and yet we hold ourselves above the same type of criticism here on the Senate floor.” 

The Senator continues for pages, but notes:

“Those of us who shout the loudest about Americanism in making character assassinations are all too frequently those who, by our own words and acts, ignore some of the basic principles of Americanism ---

The right to criticize.
The right to hold unpopular beliefs.
The right to protest.
The right of independent thought.

“The exercise of these rights should not cost one single American citizen his reputation or his right to a livelihood nor should he be in danger of losing his reputation or livelihood merely because he happens to know someone who holds unpopular beliefs.  Who of us does not?  Otherwise none of us could call our souls our own.  Otherwise thought control would have set in.

“The American people are sick and tired of being afraid to speak their minds lest they be politically smeared as ‘Communists’ or ‘Fascists’ by their opponents....

“The American people are sick and tired of seeing innocent people smeared and guilty people whitewashed.”

Sen. Smith then lays out what she calls a Declaration of Conscience, which ends with:

“It is high time that we stopped thinking politically as Republicans and Democrats about elections and started thinking patriotically as Americans about national security based on individual freedom.  It is high time that we all stopped being tools and victims of totalitarian techniques – techniques that, if continued here unchecked, will surely end what we have come to cherish as the American way of life.”

Six other senators signed the declaration...Charles W. Tobey, New Hampshire; George D. Aiken, Vermont; Wayne L. Morse, Oregon; Irving M. Ives, New York; Edward J. Thye, Minnesota; Robert C. Hendrickson, New Jersey.

All stood up at a critical time in our history.  Today, at another crucial crossroads, will anyone in the Senate do the same?

Whether it’s in the presidency, or in the conduct of our foreign policy, the truth never mattered more.

But one thing we do know for certain, and that which all Americans should be able to agree on, and that is the truth is non-existent in today’s Iran.

Conflict with Iran

After the taking out of Gen. Soleimani a week ago Thursday night (Friday Iran time), President Trump spent much of the weekend blustering as Iran talked of retaliation.

Trump tweeted:

“Iran is talking very boldly about targeting certain USA assets as revenge for our ridding the world of their terrorist leader who had just killed an American, & badly wounded many others, not to mention all of the people he had killed over his lifetime, including recently....

“....hundreds of Iranian protesters.  He was already attacking our Embassy, and preparing for additional hits in other locations.  Iran has been nothing but problems for many years.  Let this serve as a WARNING that if Iran strikes any Americans, or American assets, we have....

“....targeted 52 Iranian sites (representing the 52 American hostages taken by Iran many years ago), some at a very high level & important to Iran & the Iranian culture, and those targets, and Iran itself, WILL BE HIT VERY FAST AND VERY HARD.  The USA wants no more threats!”

Iran then launched more than a dozen ballistic missiles Tuesday night toward U.S. forces in retribution for Soleimani’s assassination and the U.S. did not retaliate.

In the immediate aftermath, Trump tweeted:

“All is well!  Missiles launched from Iran at two military bases located in Iraq.  Assessment of casualties & damages taking place now.  So far, so good!  We have the most powerful and well equipped military anywhere in the world, by far!  I will be making a statement tomorrow morning.”

Trump ally, Sen. Lindsey Graham, tweeted:

“In my view, retaliation for the sake of retaliation is not necessary at this time.  What is necessary is to lay out our strategic objectives regarding Iran in a simple and firm fashion.

“Our objectives:

“--Iran must stop being the largest state sponsor of terrorism in the world.

“--Stop ballistic missile buildup which jeopardizes regional stability.

“--Negotiate a nuclear deal which provides nuclear power to Iran while dismantling a pathway to a bomb.

“The Maximum Pressure campaign with a credible military component is not only working, it’s the best way to achieve our strategic goals.”

The following morning, President Trump gave a 10-minute speech to the American people where he proclaimed “Iran appears to be standing down, which is a good thing for all parties concerned and a very good thing for the world.”

Trump heralded the lack of casualties and “minimal damage” from the Iranian strike, promising “more punishing economic sanctions,” rather than an overwhelming military response.

“By removing Soleimani, we have sent a powerful message to terrorists: If you value your own life, you will not threaten the lives of our people.”

The president attempted to establish why Soleimani deserved the punishment Americans delivered.

“Soleimani’s hands were drenched in both American and Iranian blood,” Trump said, listing his support for militant armies, instigation of regional civil wars and targeting of U.S. troops as evidence.  He warned that Soleimani was planning further attacks on Americans – echoing previous, but so far unsubstantiated, U.S. assertions that the assassination was prompted by an imminent threat to U.S. interests.

Trump concluded: “Finally, to the people and leaders of Iran, we want you to have a future – and a great future, one that you deserve, one of prosperity and home and harmony with the nations of the world.”

But the president also went after Barack Obama, again, saying: “The missiles fired last night at us and our allies were paid for with the funds made available by the last administration,” a claim that is misleading at best.

Ayatollah Khamenei described the missile attacks on U.S. bases as a “slap in the face” for the U.S. and called for an end to the American presence in the Middle East.

Khamenei said that if the U.S. rejoined the nuclear deal it withdrew from in 2018, it could take part in multilateral talks with Iran and the other parties to the deal.

In a letter to the UN, the U.S. justified the killing of Gen. Soleimani as an act of self-defense, saying it is “ready to engage without preconditions in serious negotiations” with Iran following the exchange of hostilities.

Iran’s UN Ambassador Majid Takht Ravanchi said the U.S. offer of talks was “unbelievable” while the U.S. continued to enforce harsh economic sanctions on Iran.

Opinion...after the Iranian retaliatory strike on our bases in Iraq....both sides....

Editorial / Washington Post

“The escalating confrontation between the United States and Iran paused on Wednesday, which, as President Trump put it, ‘is a good thing for all parties concerned.’  Having demonstrated that it can strike Iraqi bases where U.S. troops are deployed with precision, Iran announced that it had ‘concluded’ its response to the killing of Maj. Gen. Qassem Soleimani; Mr. Trump, reporting that no Americans were killed or injured by Tehran’s missiles, set aside the sweeping attacks he had threatened on 52 sites inside Iran.

“Mr. Trump’s acolytes quickly proclaimed him victorious for having eliminated the architect of Iran’s foreign adventurism while avoiding a more damaging response.  That assessment was premature and shortsighted.  Iran’s strikes on U.S. interests and allies will almost certainly continue in the coming months.  Unless the Trump administration quickly steps up its diplomatic game, what Supreme Leader Ayatollah Ali Khamenei called his ultimate aim – the removal of the United States from the Middle East – could soon be realized in Iraq and Syria.

“Then there is Iran’s nuclear program, which the regime announced it would step up in the aftermath of Soleimani’s killing.  In his White House address Wednesday, Mr. Trump asserted that he would ‘never let’ Iran acquire a nuclear weapon.  But, having scrapped the deal that curtailed Iran’s program and plunged into confrontation with the regime, he has articulated no coherent strategy for stopping additional Iranian enrichment of uranium – other than calling on European allies and Russia to give up their attempts to save the pact.

“Mr. Trump ought to embrace the pause in hostilities as an opportunity to begin serious negotiations with the Islamic republic.  That is the course favored not only by a majority of Americans but also by Mideast allies such as Saudi Arabia and Qatar, which have been pressing for restraint.  Though he nodded to the idea, saying the United States was ‘ready to embrace peace,’ Mr. Trump also said he would intensify already-massive sanctions on Iran.  That campaign of ‘maximum pressure’ has failed to bring about the new nuclear negotiations Mr. Trump says he wants, much less the regime collapse or capitulation his more hawkish advisers hope for.  But it virtually ensures that Iranian responses like last year’s attacks on Persian Gulf shipping and Saudi oil fields will continue.

“Tehran will meanwhile press its advantage in Baghdad, where Iraqi legislators furious over two U.S. military operations in its territory in less than a week voted Sunday to expel the 5,000 American troops in the country.  Abetted by U.S. incompetence – the dispatch of a letter announcing a withdrawal that was later termed a mistake – acting prime minister Adel Abdul Mahdi is pressing the case.  Mr. Trump only helped him with a foolish threat to impose sanctions on Iraq; in his address Wednesday, Mr. Trump sounded as if he were arguing the case for an American retreat, saying he wanted NATO to become more involved in the region and that ‘we do not need Middle East oil.’

“There was reason for relief Wednesday that the United States and Iran had avoided a plunge into full-scale war.  But Mr. Trump’s manifest lack of clear goals or strategy in the Middle East, combined with his readiness to launch strikes or order troop movements on impulse, is cause for continued alarm.”

Editorial / Wall Street Journal

“Maybe the Apocalypse isn’t upon us after all.  The lesson after Iran’s missile strike on U.S. bases in Iraq early Wednesday is that deterrence seems to be working.

“More than a dozen ballistic missiles hit two U.S. bases in northern and western Iraq, but no Americans or Iraqis were killed in the attack.  Iraq says Iran gave advance warning, so U.S. and Iraqi troops had time to disperse or seek shelter.  Iran has made advances in missile targeting, as we learned in the attack on Saudi oil facilities.   Yet this time the missiles seemed not to have been precise.

“All of this suggests that Iran tried to make a show of hitting back at the U.S. for the killing of terror chief Qassem Soleimani while trying to avoid killing Americans.  The latter seems to be the red line that President Trump has drawn for an American military response, and Iran knows the U.S. could eliminate much of its military and industrial capacity even from a standoff distance.

“ ‘Iran took & concluded proportionate measures in self-defense,’ Iranian Foreign Minister Javad Zarif tweeted.  ‘We do not seek escalation or war.’  Iranian state TV reported 80 Americans killed, but that was propaganda to impress the loyalists at home and its proxy militias abroad.

“Mr. Trump responded Wednesday morning with strong but also conciliatory remarks from the White House.  ‘Iran appears to be standing down, which is a good thing for all parties concerned,’ the President said.  He announced unspecified ‘additional punishing economic sanctions’ while the U.S. considers other responses to the attack.

“His dual goal seemed to be to reinforce deterrence while also offering a path for Iran to renegotiate the 2015 nuclear deal and become a normal country.  Speaking directly ‘to the people and leaders of Iran,’ he said, the ‘United States is ready to embrace peace with all who seek it.’

“Such a change of mind in Tehran may be a long shot, at least until the U.S. presidential election in November. Then again, this offers more hope of progress than did the appeasement strategy that Barack Obama and John Kerry carried out with their 2015 nuclear deal.  Soleimani used that financial windfall to spread revolution.  Mr. Trump was right when he said Wednesday that ‘the missiles fired last night at us and our allies were paid for with the funds made available by the last Administration.’

“All of this was more productive than Mr. Trump’s threats and Twitter bluster earlier in the week.  He looked deliberate and in control, albeit still forceful, defying the image of a reckless, impulsive Commander in Chief eager for war that his opponents are hoping to campaign against.

“The showdown with Iran is far from over, and the mullahs may strike again in the coming months using proxy forces that give it deniability.  On that score the President missed an opportunity to make clear that an attack on Americans by an Iranian-linked group would be treated as an attack by Iran.  The immediate battleground will continue to be Iraq.  Mr. Trump and Secretary of State Mike Pompeo should focus on maintaining the U.S. presence to help patriotic Iraqis resist becoming another satrapy of Tehran.

“The other challenge is Iran’s pursuit of nuclear weapons, and Mr. Trump asked the U.K., Germany, France, Russia and China to join him in seeking to renegotiate the 2015 pact.  The latter two won’t agree, but it’s past time for the Western Europeans to realize that the deal has fatal flaws including its early end date within a decade.

“Combined with Mr. Trump’s renewed deterrence and ‘maximum pressure,’ a united front might convince Iran’s leaders that they are better off negotiating a new deal and a path out of economic isolation instead of pursuing the dead end of Soleimani’s Mideast revolution.”

David Brooks / New York Times

“Donald Trump is impulse-driven, ignorant, narcissistic, and intellectually dishonest.  So you’d think that those of us in the anti-Trump camp would go out of our way to show we’re not like him – that we are judicious, informed, mature and reasonable.

“But the events of the past week have shown that the anti-Trump echo chamber is becoming a mirror image of Trump himself – overwrought, uncalibrated and incapable of having an intelligent conversation about any complex policy problem.

“For example, there’s a complex policy problem at the heart of this week’s Iran episode.  Iran is not powerful because it has a strong economy or military.  It is powerful because it sponsors militias across the Middle East, destabilizing regimes and spreading genocide and sectarian cleansing.  Over the past few years those militias, orchestrated by Qassem Soleimani, have felt free to operate more in the open with greater destructive effect.

“We’re not going to go in and destroy the militias.  So how can we keep them in check so they don’t destabilize the region?  That’s the hard problem – one that stymied past administrations.

“In the Middle East, and wherever there are protracted conflicts, nations have a way to address this problem.  They use violence as a form of communication.  A nation trying to maintain order will assassinate a terrorism leader or destroy a terrorism facility. The attack says: ‘Hey, we know we’re in a long-term conflict, but let’s not let it get out of hand.  That’s not in either of our interests.’

“The attack is a way to seize control of the escalation process and set a boundary marker.

“These sorts of operations have risks and rewards.  A risk is that it won’t cease the escalation, just accelerate it.  The radicals on the other side will get enraged and take to the streets.  Their leaders will have to appease that rage.

“A reward is that maybe you do halt the escalation.  The other side implicitly says: ‘Message received.  We’ll do some face-saving things to appease the streets, but we don’t want this to get out of hand, either.’  Another reward is that you’ve managed to eliminate an effective terrorist like Soleimani.  Talent doesn’t grow on trees.

“The decision to undertake this sort of operation is a matter of weighing risk and reward. And after the Soleimani killing, you saw American security professionals talk in the language of balancing risk and reward.  Stanley McChrystal, a retired general, and Michael Mullen, a retired admiral, thought it was worth the risk.  Susan Rice, a former national security adviser, thought it wasn’t.

“But in the anti-Trump echo chamber, that’s not how most people were thinking.  Led by Bernie Sanders and Elizabeth Warren, they avoided the hard, complex problem of how to set boundaries around militias.  Instead, they pontificated on the easy question not actually on the table: Should we have a massive invasion of Iran?

“A great cry went up from the echo chamber.  We’re on the brink of war!  Trump is leading us to more endless wars in the Middle East!  We’re on the precipice of total chaos!  This was not the calibrated language of risk and reward.  It was fear-stoking apocalyptic language.  By being so overwrought and exaggerated, the echo chamber drowned out any practical conversation about how to stabilize the Middle East so we could have another righteous chorus of ‘Donald Trump is a monster!’

“This is Trump’s ultimate victory.  Every argument on every topic is now all about him.  Hating Trump together has become the ultimate bonding, attention-grabbing and profit-maximation mechanism for those of us in anti-Trump world.  So you get a series of exaggerated fervors – the Mueller report!  Impeachment!  The Steele dossier! - that lead ultimately nowhere.

“Most of this week’s argument about the Middle East wasn’t really about the Middle East. It was all narcissistically about ourselves!  Democrats defend terrorists!  Republicans are warmongers!  Actual Iranians are just bit players in our imperialistic soap opera, the passive recipients of our greatness or perfidy.

“The world is more complicated than this cartoon.  Love or hate him, Trump has used military force less than any other president since Jimmy Carter.  When it comes to foreign policy, he is not like recent Republicans. He is, as my colleague Ross Douthat put it, a Jacksonian figure, wanting to get America out of foreign entanglements while lobbing a few long-distance attacks to ensure the crazy foreigners stick to killing one another and not us.”

Editorial / The Economist

“The killing of Qassem Soleimani by an American drone on January 3rd threatened to bring the United States and Iran closer to war than at any time since the hostage crisis in 1979.  In a part of the world that has lost the power to shock, the audacious killing of Iran’s most important general, ordered by President Donald Trump, sent Iran reeling.  In public ceremonies millions of Iranians put aside their discontent with the regime to mark General Soleimani’s death.  Blood-curdling threats of destruction issued from the Middle East, echoed by warnings of mayhem from Western experts.  And yet a retaliatory missile strike on two American bases in Iraq five days killed nobody.  It looked like a face-saving attempt by Iran to wind the crisis down.

“If that were the end of it, Mr. Trump would be right to say that his strike had worked, as he suggested on January 8th.  Ridding the world of a baleful individual and forcing Iran to curb its aggressions really would be worthwhile achievements.  In the coming months, that may indeed be how things turn out.  The trouble is that nobody, including Mr. Trump, can count on it.

“Two tests will define whether the killing of the general was a success – its effect on deterrence and on Iran’s regional power.  For the past year Mr. Trump has stood by as Iran and its proxies attacked merchant shipping in the Strait of Hormuz, two American drones, oil facilities in Saudi Arabia and military bases in Iraq. Because it had concluded that there was no price to pay, Iran was becoming more brazen and belligerent.  The beneficial effect of the drone strike on January 3rd is to re-establish the idea that America is willing to hit back.  Iran’s restraint on Tuesday this week signals that it does not want to face an aerial onslaught by America.  Another Iranian missile strike is less likely today that it was just weeks ago.

“And yet Iran’s thirst for revenge is surely not slaked.  Even if they avoid overt forms of aggression, the Revolutionary Guards are likely to pursue other tactics, including cyber-attacks, suicide-bombings by proxies, assassinations of American officials and an array of means they have honed over the years.  These reprisals could take months to unfold.  As the killing of General Soleimani recedes, Iran will once again begin to probe the willingness of America to use force.  In an asymmetric world weak parties often retreat in the face of force, only to return.  They have more patience and a greater tolerance of pain than a distant superpower does.

“The second test is whether America’s strike weakens Iran’s grip on its neighbors.  Iran has a network of militias, proxies and forward bases for its Quds Force, across an area that stretches from the Mediterranean to the Arabian Sea.  This is about projecting Iranian power, regardless of the atrocities committed by its clients, such as Bashar al-Assad, who used nerve gas on his own people without a whisper of complaint from Iran.

“General Soleimani’s death deprives this grim network of its architect and orchestrator.  It is too soon to judge the caliber of those who are taking his place, but if the general was as exceptional as his reputation, then his loss will be felt....

“But there are complications here, too.  After the assassination, Iran is hellbent on pushing America out of the Middle East.  It will start in Iraq, where it has mostly outmaneuvered America.  The government in Baghdad is dominated by Shia politicians in thrall to Iran.  On January 5th Iraq’s parliament passed a resolution calling on the government to start evicting foreign troops, including 5,000 or so American soldiers.  The vote is not binding, many Iraqis resent Iranian influence, and American money and weapons are valuable to Iraq.  Even so, it increasingly seems more a question of when, rather than if, the troops finally go.

“Still more threatening is Iran’s nuclear program. Mr. Trump pulled America out of the agreement with Iran, signed in 2015 with six world powers, which limited its ability to get a bomb....Last summer there was speculation that Iran was ready to talk.  But that now seems out of the question, possibly for a long time.  Indeed, on January 5th Iran said it would no longer abide by any restrictions on the enrichment of uranium.  It has every reason to indulge in nuclear brinkmanship not only as a bargaining counter against America, but also because, were Iran to get the bomb, it would permanently oblige America to change its calculations about using military force against it.

“The lack of an American strategy for negotiation means that the general’s killing has reduced America’s Iran policy to extreme sanctions accompanied by an ill-defined threat of massive retaliation if the regime misbehaves.  Yet, starving Iran into submission is unlikely to work – other regimes have resisted American pressure for longer.  There is no path to the peace Mr. Trump this week said he wanted.  Indeed, because America’s red lines are unclear, the danger of blundering into war remains.”

Lastly, further thoughts.

Iran announced on Sunday it would abandon limitations on enriching uranium, taking a further step back from commitments to the 2015 nuclear deal with the P5+1 (U.S., Germany, France, Britain, Russia and China) that President Trump then pulled out of in 2018.  There was no talk of a “breakout” however to full nuclear weapons-grade material. Iran could yet make such an announcement, though, or already be secretly working on it.

Regardless, with the nuclear deal in tatters, it is easy to conclude Iran is more dangerous today than just a year or two ago, ditto North Korea.

It is also easy to draw the conclusion that with the withdrawal of most of our force from Syria, and Baghdad now asking for a timetable as to when the U.S. will be pulling out of Iraq, the effort to contain any resurgence of ISIS will be severely hampered.

The administration also can’t convince a majority of Americans that the threat from Soleimani was “imminent.”  The public needs to be able to believe administration officials such as Secretary of State Mike Pompeo and Defense Secretary Mark Esper, and tonight many of us can’t.  The constantly changing narrative, led by the president, is hardly a way to create unity.

But what Iran did in shooting down the Ukrainian airliner was beyond egregious, and the official response thus far has been farcical, let alone the removal of large pieces of the fuselage before legitimate inspectors arrive at the crash site.

I also can’t help but add that when I wrote in my opening last week, following the removal of Soleimani from the battlefield: “I do feel Iran will go after some soft targets, perhaps in South America...and a western airline could be shot down,” I sure as heck wasn’t talking about this possibility.

Trump World

--House Speaker Nancy Pelosi said on Thursday that she would be sending the articles of impeachment against President Trump to the Senate “soon,” and then today she said “next week.”  Senate Majority Leader Mitch McConnell put his members on notice not to make plans for the weekend. 

Pelosi has consistently said she wants to know more about how the Senate would conduct its trial before naming the lawmakers to serve as managers, but it appears McConnell made no concessions.  Whether or not witnesses such as John Bolton or Mick Mulvaney will be called remains to be seen.

For his part, Bolton said he would be willing to testify if subpoenaed by the Senate, with most believing the former national security adviser would provide an unflattering account of Trump’s decisions to withhold a White House meeting and almost $400 million in military aid from Ukraine as he sought investigations that would benefit him politically.

But the president will no doubt invoke executive privilege and not allow Bolton to testify even if he wanted to.

Reminder, Senate rules require only a simple majority – 51 – to call witnesses, but that means four Republicans would have to flip on the issue and that still doesn’t seem likely.

--The House voted essentially along party lines on Thursday to curb President Trump’s military powers after members emerged from a classified briefing unconvinced the president had solid legal justification for ordering an airstrike that killed Iran’s top general.

Defense Secretary Mark Esper, Joint Chiefs of Staff Chairman Mark Milley and other Pentagon officials were dispatched to Capitol Hill in an attempt to back up Trump’s claim that he pulled the trigger on a Jan. 3 airstrike to prevent “imminent” attacks on American troops and diplomats.

Unconvinced, the House then voted on a War Powers resolution that would bar Trump from taking any military action against Iran without explicit approval from Congress.  The vote was 224 to 194, with several apparent abstentions, three Republicans voting in favor and eight Democrats voting against it.  But this is a non-binding resolution.  It goes to the Senate, where several Republicans were expected to break with Trump in a vote as early as next week.

--A U.S. appeals court has lifted a legal block on $3.6bn in defense funds, allowing President Trump to spend the money on his border wall.  The order by the 5th Circuit Court of Appeals overturned a lower court’s ruling that stopped the funds from being used while the case continues.

President Trump had directed the funds to be diverted from defense projects in February amid a budget debate.

Trump’s wall was the signature promise of his 2016 campaign.

--Secretary of State Mike Pompeo told Senate Majority Leader McConnell that he would not run for an open Senate seat in Kansas, despite McConnell’s repeated entreaties, according to reports.

Pompeo has been toying with the idea for months, but seems intent to remain in his current position.  He also wants to run for president someday, so this is always part of his calculation.

--Today, Texas Gov. Greg Abbott refused to accept refugees under an executive order requiring local jurisdictions to actively opt in to the federal resettlement program.  The decision is a major blow to the program since Texas is the largest recipient of refugees in the country.  “At this time, the state and non-profit organizations have a responsibility to dedicate available resources to those who are already here, including refugees, migrants and the homeless,” Abbott, a Republican, said in his letter to the State Department.  “As a result, Texas cannot consent” to refugee resettlement this fiscal year.

--Trump tweets:

“These Media Posts will serve as notification to the United States Congress that should Iran strike any U.S. person or target, the United States will quickly & fully strike back, & perhaps in a disproportionate manner.  Such legal notice is not required, but is given nevertheless!”

“IRAN WILL NEVER HAVE A NUCLEAR WEAPON!”

“The United States just spent Two Trillion Dollars on Military Equipment.  We are the biggest and by far the BEST in the World!  If Iran attacks an American Base, or any American, we will be sending some of that brand new beautiful equipment their way...and without hesitation!”

[Well, Iran attacked and none of that beautiful equipment went the other way.]

“They attacked us, & we hit back.  If they attack again, which I would strongly advise them not to do, we will hit them harder than they have ever been hit before!”

“The Impeachment Hoax, just a continuation of the Witch Hunt which started even before I won the Election, must end quickly.  Read the transcripts, see the Ukrainian President’s strong statement, NO PRESSURE – get this done.  It is a con game by the Dems to help with the Election!”

“STOCK MARKET AT ALL-TIME HIGH! HOW ARE YOUR 401K’S DOING? 70%, 80%, 90% up?  Only 50% up!  What are you doing wrong?”

“U.S. Cancer Death Rate Lowest in Recorded History!  A lot of good news coming out of this Administration.”

It is truly outrageous the president is taking credit for this.  I have details on the story below, but the American Cancer Society showed in a report that the cancer death rate fell steadily from 1991 through 2017, and that 2017 saw the largest-ever one-year decline.

Gary Reedy, chief executive officer of the American Cancer Society, pushed back against Trump’s insinuation, stating that “The mortality trends reflected in our current report, including the largest drop in overall cancer mortality ever recorded from 2016 to 2017, reflect prevention, early detection, and treatment advances that occurred in prior years....

“The administration has an opportunity to significantly impact future declines in both cancer incidence and mortality by increasing access to comprehensive health care, supporting robust and sustained increases in federal funding for cancer research and passing and implementing evidence-based tobacco control policies,” Reedy stated.

Wall Street and Trade

Stocks continue to rise, with the Dow Jones crossing 29,000 for the first time today (before pulling back at day’s end), the other major indexes hitting new highs as well, and with a jobs report Friday that was tame, there continues to be zero pressure on the Federal Reserve to abandon its accommodative monetary policy (the Fed basically unanimous in its feeling there will be no change in its benchmark funds rate for months to come, if not all of 2020).

But stocks are pricey, though not absurdly so as of yet...just getting closer to such a level.  It’s now earnings season and as always, the accompanying statements from management will be picked over for signs of optimism, or pessimism, regarding the outlook for the year.

I will be writing the same thing I imagine for months to come.  The consumer is still confident given the strong jobs market, but businesses will not be increasing capital spending in any significant fashion because of the still dicey global trade and geopolitical picture.  The threat of an extensive cyberattack and its potential to destroy confidence, for one, should give most CEOs pause before making any sweeping spending decisions.

On the data front, the aforementioned employment report for December showed a gain of 145,000 jobs, a little shy of expectations, with the unemployment rate unchanged at 3.5%.

The figures for October and November were revised down slightly to 152,000 and 256,000, respectively, meaning the 3-month moving average is at 184,000.

Average hourly wages are now at a slightly disappointing 2.9% annualized rate, the lowest since July 2018.  U6, the underemployment rate, however, hit a record low of 6.7%...very good.

Separately, the ISM December non-manufacturing reading on the service sector came in at 55.0, a little above expectations (50 being the dividing line between growth and contraction).

November factory orders were in line, -0.7%.

Add all the above up and the latest reading from the Atlanta Fed’s GDPNow barometer for the fourth quarter remains at 2.3%, unchanged from the last few readings.

On the trade front, we are finally getting our phase one trade agreement with China this coming Wed., Jan. 15, when a delegation from China, led by Vice Premier Liu He, will sign it at the White House and President Trump will proclaim it’s the greatest trade deal of all time, as he has for a while now.  The Chinese delegation will include the People’s Bank of China governor, the commerce minister, and others.

The exact details have yet to be unveiled but the scope of the 86-page document includes suspension of new tariffs and reduction of existing ones, as laid out before, with China’s commitment to boost intellectual property protection (you can stop laughing), opening up of the country’s financial markets to U.S. companies and increased purchases of U.S. farm goods.

It’s this last point that you will hear about endlessly on the campaign trail, China’s $40-$50 billion purchase a year, the next two, and I can virtually agree, as I’ve noted ad nauseum before, that there is no way China approaches the $40 billion level because that would mean disrupting existing relationships with the EU and the likes of Brazil.  Brazil has taken advantage of the trade dispute to surpass the U.S. in soybean production, with the current harvest expected to exceed the U.S. yield by about 25%.

China is expected to purchase $40 billion of agricultural goods, up from the pre-trade-war amount of $24 billion, even as Brazil’s agricultural exports to China increased to $35.4bn in 2018 from $26.6bn the prior year.

U.S. farm exports to China declined from $24 billion to $13.2bn during that period.  [I emphasize these are ‘total’ figures, not just soybeans.  All kinds of figures get tossed around, especially by President Trump.]

That said, the agriculture purchase increases from China will be enough for President Trump to tout as a huge victory for America’s farmers, while ignoring the thousands forced into bankruptcy during the trade war.

There will also be no phase two trade deal with China this year, though the administration will talk of intense negotiations at times as we approach the election (ostensibly to prop up the stock market).  At least this is how I see it playing out.

Europe and Asia

We had a bunch of economic data on the eurozone (EA19) this week, with more PMI data, courtesy of IHS Markit.

The composite PMI reading for the bloc in December was 50.9 vs. 50.6 in November, with the service-sector reading at 52.8.

Germany had a comp of 50.2, services 52.9; France 52.0 comp, 52.4% services; Spain 52.7 comp, 54.9 services; Italy 49.3 comp, 51.1% services; Ireland 53.0 comp, 55.9 services.

Chris Williamson / IHS Markit

“Another month of subdued business activity in December rounded off the eurozone’s worst quarter since 2013.  The PMI data suggest the euro area will struggle to have grown by more than 0.1% in the closing three months of 2019....

“While the tide may be turning [in terms of business optimism], downside risks to growth in the year ahead remain notable.  While U.S.-China trade wars have eased, any escalation of trade tensions between the U.S. and Europe will likely hit exports further.  Brexit also remains a major uncertainty and is likely to continue to dampen growth in Europe.  Nonetheless, in the absence of any major adverse developments we expect to see growth starting to improve as 2020 proceeds, with low inflation and easing financial conditions supporting consumer spending in particular.”

A flash reading on EA19 inflation for December came in at 1.3% vs. 1.5% a year earlier (though up from 0.7% in October).  Ex-food and energy inflation was 1.4%.  This has to go up.

November retail trade in the euro area rose 1.0% over October; up 2.2% year-over-year.

The EA19 unemployment rate for November was 7.5%, unchanged from October, and down from 7.9% in Nov. 2018.  This remains the lowest rate recorded in the eurozone since July 2008.

Germany 3.1%, France 8.4%, Spain 14.1%, Italy 9.7%, Ireland 4.8%, Netherlands 3.5%.

Brexit:  Prime Minister Boris Johnson had his Brexit deal approved in parliament last month, following his overwhelming election victory, but the Brexit bill was dealt a severe blow after the House of Lords spoke of “serious concerns” over the withdrawal agreement this week.

In a report from the House of Lords European Union Committee, they stated fears that the UK/EU Joint Committee lacks transparency or any potential “democratic oversight.”  The UK/EU Joint Committee has the ability to amend the withdrawal agreement unilaterally while decisions emanating from the group will be legally binding for the UK and the EU without any Parliamentary guidance.

The previous Brexit agreement gave Parliament the ability to approve the UK and EU’s future relationship, but the new UK/EU Joint Committee gives the European Parliament a much stronger position.

Disregarding the House of Lords committee, Boris Johnson has insisted he will take the UK out of the EU by January 31.  As President Trump would say, “We’ll see what happens...”

Spain: Finally, after nearly a year of political deadlock that included two inconclusive elections, Spain chose a prime minister on Tuesday, parliament electing Pedro Sanchez as premier, heading a coalition government between his center-left Socialists and the far-left party Unidas Podemos.  But even together, the two parties lack an outright majority (167 of 350 seats) and will have to rely on the support of minority factions, including Catalan separatists (13 seats).

This is an issue across Europe, as voters lose trust in many established parties, thus making it harder to assemble stable majorities.

Spain’s Socialists and conservatives alternated power for decades, but neither can win elections outright these days.  Europe’s long financial crisis accelerated the rise of insurgent parties.

In November’s election, the Socialists picked up 28%, while the main conservative party won only 21%.

And back to the Catalan separatists, they are still demanding a referendum, which Sanchez has said he would not offer, but for now the Catalan’s see Sanchez as the better of two evils.

Sanchez will rule for four years under the constitution.

France: Trade unions continued to disrupt rail services, shut schools and brought demonstrations on to the streets across France Thursday in what was viewed as a make-or-break push to force President Emmanuel Macron to abandon his planned pension reform.

But participation in the hard-left unions’ 36-day-long public sector strike has been waning (from an estimated 800,000 taking part on Dec. 5, to 452,000 yesterday) and public opinion polls show public backing for the job action falling, though most French people still oppose the overhaul.

For example, the most contentious change remains the introduction of incentives for workers to retire two years after the legal retirement age and penalties for those who don’t.  According to an Elabe poll, 66% of French people are against this proposed measure.

Macron has been trying to streamline France’s unwieldy pension system and incentivize the French to stay in work longer to pay for some of the most generous retirement benefits in the world.  It would be the biggest overhaul since World War II and is central to Macron’s efforts to make his nation more competitive globally, with a more flexible labor force.

Macron has been offering concessions to certain workers.  Under the government’s latest proposal, anyone within 17 years of the legal age of retirement will be exempt and the system won’t apply to people entering the job market until 2022.  Workers born after 1975 will switch to the new system in 2025.

Pilots went back to work after the government said they could continue to retire early.

Turning to Asia...China’s private Caixin manufacturing PMI came in at 51.5, with the services reading at 52.6.  The official government readings from the week before were 50.2 mfg., 53.3 services.

China’s December producer (factory-gate) price index fell 0.5% year-over-year, which is not good, while consumer prices rose 4.5% yoy, unchanged from November, and largely due to the ongoing issue with pork prices.

Japan’s manufacturing PMI for last month was just 48.4%, with the services reading at 49.4 vs. 50.3 in November.

Street Bytes

--As noted above, the major indices continued to hit new highs, taking comfort from the seeming stability (for now) in the Iran situation, while the economic news continues to be solid.  It remains a ‘don’t fight the tape’ environment.  But, again, the market is pricey, and we better start seeing some earnings growth, which you’ll recall was non-existent last year despite the big rally in equities.

The Dow Jones rose 0.7% to 28823, having hit a closing high the day before of 28956.  The S&P 500 was up 0.9% and Nasdaq 1.8%, both of these also hitting new records on Thursday.  A major propellant for the averages is the performance of Apple, which continues to rocket higher, this week on news of stronger than expected iPhone sales in China.

--U.S. Treasury Yields

6-mo. 1.54%  2-yr. 1.57%  10-yr. 1.82%  30-yr. 2.28%

Little change in yields on the week.

--Boeing has had a difficult time of it the past year+, and now it’s involved in another horrific crash, that of a Ukraine International Airlines Boeing 737-800, en route to Kiev from Tehran, that fell to earth in a fireball shortly after take-off, killing all 176 people on board and sparking an international scramble to establish the cause.

The crash occurred just hours after Iran fired missiles at bases housing U.S. forces in Iraq, leading some to speculate that the plane may have been hit.

But the initial assessment, especially from the Iranians, was that the plane had suffered a technical malfunction and had not been brought down by a missile.  Iran cited witnesses on the ground (and the video you’ve all seen) that the aircraft was on fire while still aloft.  Iran said the plane was attempting to head toward a nearby airport before it crashed.  There was no radio communication from the pilot as the aircraft disappeared from radar at about 8,000 feet.

Thursday, however, Ukraine outlined four potential scenarios to explain the crash, including a missile strike and terrorism.  Ukraine’ Security Council Secretary Oleksiy Danylov said the country’s investigators wanted to search for possible Russian missile debris, while President Volodymyr Zelensky said he asked people to refrain from speculation, conspiracy theories and hasty evaluations.

But by Thursday afternoon, both the U.S. and Canada were saying the plane was brought down by Russian missiles. 

As the country where the plane was designed and built, the United States would usually be allowed to be accredited for the investigation, the black boxes having been recovered, but at first there is was no way Iran would allow U.S. investigators to become part of the inquiry.   Now, at least as I go to post, Iran has relented and will allow them.

The 737-800 is one of the world’s most-flown models with a good safety record and does not have the software feature implicated in crashes of the 737 MAX.  The aircraft that crashed was only three-years-old. 

Among the victims were 82 Iranians, 63 Canadians (most with dual citizenship) and 11 Ukrainians, many of the passengers scheduled to go on to Canada.

Meanwhile, regarding the ongoing issue of the 737 MAX, Boeing designed the aircraft to save airlines the expense of training their pilots on flight simulators.  Even after the two crashes that killed 346 people, Boeing has argued in discussions with the FAA that simulator training was not necessary.

But now, after the worldwide grounding of the MAX has cost the company $billions over nearly 10 months and caused it to temporarily halt production, Boeing has reversed course.  Tuesday, the company said it would recommend that pilots train in flight simulators before flying the MAX.

Boeing has been conducting simulator tests as part of the work necessary to return the MAX to service, and pilots have not been using the right procedures to handle emergencies.  Now that’s comforting, isn’t it? 

It’s pretty easy to see that the MAX is not returning to service anytime soon, the FAA reiterating it is “following a thorough process, not a set timeline, to ensure that any design modifications to the 737 MAX are integrated with appropriate training and procedures.”

Simulator training means the return of the MAX could be delayed further even after regulatory approval.

Southwest made its first MAX order in 2011 based on Boeing’s promise that the airline wouldn’t have to educate its pilots on simulators, which can cost tens of $millions to operate over the life of an aircraft.

But wait...there’s more!  Boeing released a new batch of internal messages in which company employees discussed deep unease with the 737 MAX while ridiculing senior managers, customers and regulators. 

The killer email, among many, was sent from one company pilot in messages to a colleague in 2016.  “This airplane is designed by clowns, who in turn are supervised by monkeys.”  The new revelations, which had been provided to lawmakers and the FAA, threaten to further upend Boeing’s efforts to rebuild public trust in the MAX aircraft.

On another, a Boeing employee notes regulators were likely to want simulator training for a particular type of cockpit alert.  “We are going to push back very hard on this and will likely need support at the highest levels when it comes time for the final negotiation,” the employee writes.

The emails “paint a deeply disturbing picture of the lengths Boeing was apparently willing to go to in order to evade scrutiny from regulators, flight crews, and the flying public, even as its own employees were sounding alarms internally,” House Transportation and Infrastructure Committee Chairman Peter DeFazio said.

“We regret the content of these communications, and apologize to the FAA, Congress, our airline customers, and to the flying public for them,” Boeing said in a statement.  “We have made significant changes as a company to enhance our safety processes, organizations, and culture.”

The FAA said in a statement that the messages revealed nothing that wasn’t “already identified as part of the ongoing review of proposed modifications to the aircraft.”

--And this related to Boeing...the biggest MAX supplier, Spirit AeroSystems Holdings Inc., said it is planning an initial 2,800 layoffs, the first announced job cuts since the grounding of a plane that is rippling through the broader aerospace industry.

Spirit makes the fuselage and engine parts for the MAX and had been producing enough for 52 jets a month before Boeing said it would freeze assembling the planes in January for a “temporary” time.

Spirit derives more than half its sales from the MAX, and the cuts cover more than 20% of the staff at the company’s Wichita, Kan., plants.  Spirit’s CEO said more cuts may be necessary.

You will have further announcements in the coming weeks like this and President Trump will be pressuring Boeing, and probably the FAA (through tweets), as he begins to understand the impact on the overall economy and how it could change his campaign narrative.

--Tesla Inc. became the most valuable U.S. auto maker ever.

Monday, the company closed with a market value of $81.39 billion, surpassing Ford Motor Co.’s peak of $80.81 billion set in 1999.  But then the valuation kept soaring, the stock rising $22 on Wednesday and eventually closing the week at $478, for a market cap in excess of $86bn.

Tesla still trails Toyota Motor Corp. and Volkswagen AG, which were valued at $231.76 billion and $98.05 billion, at Tuesday’s close.

Elon Musk’s electric vehicle company said it had met his goal of delivering at least 360,000 electric vehicles in 2019, 367,500 to be exact.

Tesla has been touting its production in China, announcing it would build its Model Y compact sport-utility vehicle at the company’s new Shanghai plant.

GM and Ford also plan to sell several electric models in China, though they will account for a small portion of their business.

--Overall U.S. auto sales again hit the 17 million mark in new cars and light trucks (17.11 million for 2019), according to market-research firm Edmunds, the fifth straight year over that figure, a first. [Sales peaked at 17.55 million in 2016, after bottoming at 10.4m in 2009.]

Most experts are pegging 2020 at 16.8 million, which is still strong.

The sales environment continues to be positively impacted by low interest rates and low fuel prices, with the national retail price of regular gasoline at the pump not rising above $3 in more than five years, according to the Energy Information Administration.

At the same time, the average new vehicle sold for $37,183, according to Edmunds, an increase of 30 percent since 2009, a period in which overall consumer prices rose 20 percent.  This is where the shift to more profitable trucks over cars has been huge for the industry.

Ford Motor was the last to report sales for the fourth quarter, which fell 1.3% in the U.S. from a year earlier to 601,862 vehicles.  Ford’s car sales dropped 41%, and there was a 4.1% slide in sport utility vehicle sales.  However, sales of trucks and vans rose nearly 16%, thanks to the ongoing success of the F-Series of trucks, which remains the best-selling vehicle in the U.S.

Meanwhile, car sales at the company’s Lincoln brand fell more than 19% while its SUV sales rose nearly 31%.

Earlier, GM said deliveries fell 6.3% in the fourth quarter to 735,909, owing in no small part to the 40-day strike by the UAW in September and October.

Fiat Chrysler said sales fell 2% in the fourth quarter, though sales of its Ram brand set a new record of 190,655 trucks sold in the period.

GM’s sales fell 2.3% for the year, Fiat Chrysler’s 1%, and Ford’s were down 3%.  Toyota Motor reported a nearly 2% decline in U.S. sales for 2019, Honda’s were flat, while Nissan Motor Co.’s fell nearly 10%.

GM posted its biggest-ever sales drop in China last year and warned of a tough 2020, underscoring the challenges that U.S. car makers are facing amid the ongoing decline in demand gripping the world’s largest market.

China has been viewed as a reliable profits generator and source of growth, helping to offset cyclical slowdowns in the U.S. and Europe.

But China sales have slipped into reverse the last two years, with the government curtailing subsides that had made vehicles more affordable, and this is creating major issues for manufacturers, both foreign and domestic.

GM, the country’s second-largest car maker by sales, after Volkswagen AG, has retreated from Europe and other car markets to increase profitability, but last year it reported a 15% drop in China sales, the second straight year of declines (down 10% in 2018).

Rival Ford Motor has fared even worse in China.

The China Association of Automobile Manufacturers estimates the market will fall 2% in 2020, after a 7.4% decline from 2018 (greater than 2018’s 5.8% drop).  Total sales of passenger vehicles in China were 20.7 million last year.

But, as you see in the case of Tesla, many car companies are still betting on growth potential in China, particularly in electric vehicles.

--Japan’s Justice Minister Masako Mori said on Thursday that Carlos Ghosn’s accusations against Japan’s legal system are “absolutely intolerable,” firing back at the auto executive-turned-fugitive.

Ghosn, speaking publicly for the first time since his dramatic escape from Japan on Wednesday from Beirut, Lebanon, said he had been treated “brutally” by Tokyo prosecutors, who he said questioned him for up to eight hours a day without a lawyer present and tried to extract a confession out of him.

Ghosn, the former chief of Nissan Motor Co. Ltd. fled as he was awaiting trial on charges of under-reporting earnings, breach of trust and misappropriation of company funds, all of which he denies.

Japan’s justice minister shot back that Ghosn’s escape from his trial in itself “could constitute a crime.”  “Such action would not be condoned under any nation’s system,” Mori said.  “Furthermore, he has been propagating both within Japan and internationally false information on Japan’s legal system and its practice. That is absolutely intolerable.”

Mr. Mori has said it will try to find a way to bring Ghosn back from Lebanon, even though it has no extradition treaty with Japan.  “If defendant Ghosn has anything to say, it is my strong hope that he engage in all possible efforts to make his case within Japan’s fair criminal justice proceedings, and that he seek justice rendered by a Japanese court,” he said.

The more we learn about Japan’s “justice” system, the more we understand it is a sham.  Notice to Olympians going to Tokyo this summer...behave!!!

--Macy’s reported a small decline in holiday same-store sales on Wednesday, surprising investors who were bracing for a sharper drop following an earlier profit warning in November.  Same-store sales during November and December were down just 0.6%.  The retailer also announced it is planning to shutter 28 Macy’s locations and one Bloomingdale’s store in the coming weeks.  Macy’s operates about 860 stores in the United States.

Macy’s said it was helped by online purchases and revamping 150 stores with fresh interiors and better merchandise.

--But both Kohl’s and J.C. Penney reported worse than expected holiday sales.  Kohl’s said same-store sales for November and December were 0.2% lower than in the last two months of 2018, while J.C. Penney said comp sales for the nine-week period, ended Jan. 4, fell 7.5% from a year ago.

By the way, at the end of 2019, department stores accounted for 1.2% of total retail sales, down from 5% in 2005 and 9.5% in 1980, according to research firm Customer Growth Partners.

--Facebook announced on Monday that it would remove some manipulated videos – known as deepfakes – if the changes were not apparent to the average person and could mislead someone into thinking that a person said something they did not say. The Facebook blog post announcing the policy said videos that were not slated for removal could be looked at by fact-checkers, who might take action to slow a video’s distribution if it is rated false.

A spokesman for House Speaker Nancy Pelosi dismissed Facebook’s announcement as inadequate.

“Facebook wants you to think the problem is video-editing technology, but the real problem is Facebook’s refusal to stop the spread of disinformation,” tweeted spokesman Drew Hammill.

Facebook said that as part of its new policy it will not remove a heavily edited video that attempted to make Pelosi seem incoherent by slurring her speech and making it appear like she repeatedly stumbled over her words.

The company also announced this week that it wouldn’t limit how political advertising targets potential voters, but would instead give users tools to see fewer of those ads on its platforms.

--As noted above the cancer death rate in the United States fell 2.2 percent from 2016 to 2017 – the largest single-year decline in cancer mortality ever reported, the American Cancer Society reported on Wednesday.  Since 1991 the rate has dropped 29 percent, which translates to approximately 2.9 million fewer cancer deaths than would have occurred if the mortality rate had remained constant.

Experts attributed the decline to reduced smoking rates and to advances in lung cancer treatment.  New therapies for melanoma of the skin have also helped extend life for many people with metastatic disease, or cancer that has spread to other parts of the body.  So credit the drug companies.

But progress has slowed for colorectal, breast and prostate cancers.  It seems the rising rate of obesity is one explanation why the decline in breast and colorectal cancer death rates has begun to taper off,

Also, as the rate of obesity increases, malignancies of the liver, kidneys, pancreas and uterus, as well as colon and rectal cancers in adults younger than 55 are increasing.

--Bed Bath & Beyond reported a dismal quarter after the market closed Wednesday and the shares opened down over 10% Thursday morning.  The company reported a loss, 31 cents per share, when a small profit was expected on lower-than-forecast sales, a 9% drop in net sales during the three months that ended Nov. 30 vs. a year ago.

The company still plans to close 60 stores after shuttering 14 locations in late 2019.

It’s been just two months since a new CEO, Mark Tritton, took charge.

Personally, this is perhaps my favorite single store and the other day I bought a full bedding set on sale for $42! (after using my 20% off coupon of course). 

--Another retailer, Pier 1 Imports, the specialty furniture chain, announced it was closing up to 450 stores, nearly half of its locations.  In the recent quarter, Pier 1 reported a sales decline of 13% and a loss of $59 million.  The company didn’t give a specified number for the coming layoffs but it will obviously be sizable, including impacting headquarters.

--Shares in Six Flags Entertainment fell more than 18% today after the amusement park operator warned about a drop in Q4 revenue, citing challenges facing its projects being developed in China.  In a regulatory filing, Six Flags said its partner in China had defaulted on its payments to the company due to a declining market.  The company said the issues there “could range from the continuation of one or more projects to the termination of all the Six Flags-branded projects in China.” 

The Texas-based company’s first park in China, Six Flags Zhejiang, outside Shanghai, was set to open this summer.  The projects in China were expected to provide a much-needed new source of revenue for the company, which on Friday also said fewer people visited its North American parks in the fourth quarter.

--UBS Group AG said it will be cutting up to 500 jobs, stripping out layers of bureaucracy in its wealth-management unit as it attempts to keep its edge as bank to the world’s rich and cut costs.

The Swiss banking giant has been culling jobs in its investment bank as part of a broader reorganization over the past decade to focus on wealth management.

--Farmers have been hoping that 2020 will be the year that China finds its appetite for U.S. pork after a disappointing 2019 for exports.  It turns out China did not turn to the U.S. to fill its pork needs despite the African swine fever epidemic that decimated hog herds in Asia.  Most-active hog futures on the Chicago Mercantile Exchange finished the year down nearly 30% from a high set in April.

A tariff of 72% on imports of U.S. pork was in place for most of the year, draining demand for U.S. hog supplies.  575 million pounds of frozen U.S. pork is being stored in refrigerated warehouses throughout the U.S., according to the USDA – a record.

Chinese buyers have been opting to purchase more pork from the EU and Brazil, according to USDA data.

And then this week, China’s commerce ministry said that Beijing will increase pork imports and release more pork from state reserves to ensure stable supply and prices ahead of the Lunar New Year holidays.

At the same time, the Wall Street Journal reported today that “China is finally getting a handle on African swine fever...Beijing still has hard questions to answer about food safety, not least as it grapples with an outbreak of a new virus in Wuhan. But bringing swine fever under control will be great for Chinese consumers, and for the businesses that serve them.”

China’s breeding sow population rose 2.2% on the month in December, while pig stocks at large farms rose 2.7%.

Separately, rising tensions in the Middle East may threaten U.S. wheat growers, who could lose access to Middle Eastern markets.  The U.S. share there, while still small, is growing but could be derailed with prolonged tensions in the region.

Middle Eastern nations are one of the largest importers of wheat outside Southeast Asia and North Africa.

--U.S. consumers, companies and workers will pay the biggest price for proposed 100% tariffs on French Champagne and other sparkling wines, cheese, porcelain, enamel cookware and handbags, witnesses told the U.S. government on Tuesday.  The U.S. Trade Representative’s office last month proposed punitive duties on $2.4 billion in imports from France on these goods after concluding that a new French digital services tax would harm U.S. companies.

Those tariffs come on top of 25% tariffs already imposed on a wide range of European imports, including Airbus jets, European cheeses, wines and other products in a dispute with the EU over aircraft subsidies.

Ben Aneff, managing director of a large retail wine store in New York, said the existing and threatened tariffs posed “the greatest threat to the wine industry since Prohibition.”

“The domino effect of unintended consequences from the proposed tariffs would be catastrophic for tens of thousands of American businesses,” Aneff told government officials at a hearing hosted by the USTR on the French tariff issue.  The Wine & Spirits Wholesalers of America estimates that 100% tariffs on French sparkling wines alone would result in the loss of 17,000 jobs at a cost to the economy of $2 billion.  Overall, the tariffs on European wines were expected to cost some $10 billion in lost revenue and 78,000 jobs, hitting the nation’s 47,000 wine retailers and more than 6,500 importers and distributors disproportionately hard, Aneff said.

Consumers have strong loyalty to specific products and do not readily adopt substitutes.

--According to researchers at the National Institute of Environmental Health Science, talcum powder is not linked to ovarian cancer, the largest ever study having just concluded.  The government pooled data from 252,745 women and found no evidence that talc was dangerous when used as a feminine hygiene product.

In recent years, Johnson & Johnson has had to pay $billion to compensate women who claimed to have developed ovarian cancer after using Johnson’s Baby Powder.

The company said it would now appeal those verdicts, having already won four appeals.  A company spokesman said: “The facts are that Johnson’s Baby Powder is safe, does not contain asbestos, and does not cause cancer.”

--Elon Musk’s SpaceX company launched another 60 satellites in its Starlink network, bringing the number of spacecraft the firm has now put in the sky as part of its plan to provide a global broadband internet service at 182.

SpaceX now operates more commercial satellites in orbit than any other company; Planet Labs, also of California, having about 150.  Its spacecraft are used to image the Earth’s surface.

SpaceX has permission from regulators to launch up to 12,000 platforms but has talked of an eventual 40,000.  [What can go wrong?]

SpaceX could be sending up another 120 (in batches of 60) before the end of January.

--Ray Dalio’s Bridgewater Associates notified investors that its flagship Pure Alpha fund will be flat on the year – ending an 18-year winning streak, according to Institutional Investor.  Flat results are tough to justify in a year where the total return on the S&P 500 was 31.5%.

Critics say Dalio has been overly focused on promoting his 2017 book, “Principles,” which he continues to spend time on years after launch.  He’s also been bearish on global markets, and reportedly shorting the bond market in the second half of 2019, which clearly hasn’t paid off.

--TikTok, the smartphone app beloved by teenagers and used by hundreds of millions of people around the world, had serious vulnerabilities that would have allowed hackers to manipulate user data and reveal personal information, according to research published by Check Point, a cybersecurity company in Israel.

As reported by the New York Times: “The weaknesses would have allowed attackers to send TikTok users messages that carried malicious links.  Once users clicked on the links, attackers would have been able to take control of their accounts, including uploading videos or gaining access to private videos.  A separate flaw allowed Check Point researchers to retrieve personal information from TikTok user accounts through the company’s website.”

TikTok said it learned about the conclusions of Check Point’s research on Nov. 20 and fixed all vulnerabilities by Dec. 15.

The app’s parent company is based in Beijing, and has become a target of lawmakers and regulators suspicious of Chinese technology, for good reason.  Several branches of the U.S. military have barred personnel from having the app on government-issued smartphones.

--Individual taxpayers are half as likely to get audited as they were in 2010, after tax enforcement by the IRS fell to its lowest level in at least four decades.

The IRS audited 0.45% of personal income-tax returns in fiscal 2019, down from 0.59% in 2018 and marking the eighth straight year of decline, according to a report released on Monday.  In 2010, the IRS audited 1.1% of tax returns.

The decline in enforcement is driven by years of cuts to the agency’s budget, and the result is Treasury is letting $billions go uncollected, as the overall budget deficit rises.

Foreign Affairs, cont’d....

Syria: Vladimir Putin met Bashar al-Assad in Damascus on Tuesday, Putin’s second trip to Syria since Moscow intervened decisively on Assad’s behalf in the civil war.  Russian and Iranian support have been critical to Assad’s survival and Putin told the Syrian president that much had been done to restore Syrian statehood.

Kenya: Three Americans – one U.S. military servicemember and two contractors (working for the Defense Department) – were killed by Somalia’s al Shabaab Islamist group during an attack Sunday on a military base used by both U.S. and Kenyan forces.  A number of U.S. helicopters and military vehicles were also destroyed in the attack.  Kenya said five militants were killed while not announcing its own casualties.

Shockingly, President Trump said nothing of this.  More than 150 U.S. personnel are at the base.

China / Hong Kong / Taiwan: Tomorrow, Saturday, is an historic day on Taiwan as it’s expected President Tsai Ing-wen will handily win re-election over opposition candidate Han Kuo-yu.

A year ago, Tsai would have gone down to defeat, but she has taken advantage of months of anti-government protests in Hong Kong

The current Legislative Yuan, the island’s parliament, has the ruling DPP with 68 seats to the Kuomintang’s (KMT) 35; 113 seats in total.  It’s possible the KMT, despite their presidential candidate’s looming defeat, could still pick up seats.

Taiwan’s foreign minister said Beijing should not see the election as representing a win or loss for China, even as Taiwan says it is an independent country called the Republic of China, its formal name, with the government warning of Beijing’s efforts to sway the results in favor of the opposition.

“I just don’t think China should read Taiwan’s election as its own victory or defeat,” Foreign Minister Joseph Wu.

“If China reads too much into our election...there might be a likely scenario that China will engage in military intimidation or diplomatic isolation or using economic measures as punishment against Taiwan.”

Wu added: “This is our election. This is not China’s election.  It is Taiwanese people who go to the voting booth to make a judgment on which candidate or political party is better for them.  If China wants to play with democracies in other countries so much, maybe they can try with their own elections at some point.”

Since Tsai took office in 2016, relations with China have soured, with China cutting off formal dialogue, flying bomber patrols around Taiwan, and whittling away at its diplomatic allies.

Tsai has portrayed the election as a choice between defending democracy and caving to Beijing’s will in return for economic benefits; her campaign slogan being, “Hong Kong today, Taiwan tomorrow.”

China suspects Tsai of pushing for the island’s formal independence, a red line for Beijing.  Tsai says she will maintain the status quo but will defend Taiwan’s democracy and way of life.

There have been a number of reports of China’s efforts to interfere in the election, with allegations in Australian media that a self-professed Chinese spy described a smear campaign against Taiwan’s ruling party.  Needless to say, China has become the main focus in the campaign, especially its threats to “reunify” with Taiwan.

Meanwhile, Hong Kong has a new boss.  Beijing didn’t fire Chief Executive Carrie Lam, yet, but it’s expected to happen at some point.  Instead, Beijing installed a new liaison office director, Luo Huining, a true hardliner.  Two days after sacking former director Wang Zhimin, who wasn’t viewed as being tough enough, Luo briefly faced the media, uttered some catch-phrases used by mainland officials, and refused to take questions.

This is worrisome.  It’s clear Beijing has had enough of the months-long anti-government protests.

Lam is not in charge of political issues, Luo is.

North Korea: Kim Jong Un was quiet this week, perhaps strangely so given his recent bombast and talk of a “new strategic weapon.”  South Korean President Moon, however, wasn’t silent, saying there is a “desperate need” for practical ways to improve ties with the North, adding that he was ready to meet with Kim ‘repeatedly’ if necessary.

Moon has been sidelined from his leading role in the diplomatic effort with Pyongyang since 2018, saying he regretted the lack of progress for over a year now.  He said he would push for restarting the Kaesong Industrial Complex and tours to Mt. Kumgang, and he wants to complete the inter-Korean railroad.  But Kim has been unresponsive to the overtures, and cooperation projects have stalled.

Pyongyang keeps complaining about Washington’s lack of flexibility, while the U.S. says Kim must take more concrete steps to dismantle his nuclear and ballistic missile programs before sanctions are eased.

For his part, President Trump said last Sunday aboard Air Force One that he did not expect Kim to break his promise about denuclearization but conceded he might.

“I don’t think he’d break his word to me, but maybe he will,” Trump told reporters.

Venezuela: It was a chaotic week here, as opposition lawmakers rammed their way into Congress past lines of regime soldiers and swore in their leader Juan Guaido as head of the assembly, a largely symbolic victory for his U.S.-backed movement.

Days earlier, soldiers and supporters of President Nicolas Maduro barred the opposition from entry into parliament.  After keeping Guaido and his opposition deputies out, pro-Maduro lawmakers quickly named Luis Parra, a lawmaker who broke from the opposition, as head of a pro-government assembly.  U.S. officials said they were considering tougher sanctions on the Maduro regime, but, let’s face it, the Trump administration’s Venezuelan strategy has been an unmitigated disaster.

The legislature is the last democratically elected body in the oil-rich country and is recognized by the U.S. and nearly 60 other countries as the nation’s sole legitimate authority.

President Maduro’s regime stripped nearly all the assembly’s power after the opposition won control of the body in 2015 elections.  Maduro instead set up a parallel body that was stacked with government supporters.  He also controls the Supreme Court, military, electoral authority, all television, the central bank and the state-owned oil monopoly PdVSA.

Mexico and Argentina spoke out in forceful terms against the move to impede the operation of the Legislative Assembly, both saying the action condemns Venezuela to international isolation.

But, Russia, Cuba, North Korea and Iran still back Maduro.

Random Musings

--Presidential tracking polls....

Gallup: 45% approval of President Trump’s job performance, 51% disapproval; 89% of Republicans, 42% of independents (Dec. 2-15...Gallup for now back to once a month).
Rasmussen: 48% approval, 51% disapproval (Jan. 10).

--CBS Battleground Tracker YouGov polls of Iowa and New Hampshire Democratic caucus/primary goers.

Iowa (Feb. 3): Bernie Sanders 23%, Joe Biden 23%, Pete Buttigieg 23%, Elizabeth Warren 16%, Amy Klobuchar 7%.

New Hampshire (Feb. 11): Sanders 27%, Biden 25%, Warren 18%, Buttigieg 13%, Klobuchar 7%.

A Monmouth University poll released Thursday of New Hampshire primary voters had Buttigieg at 20%, Biden 19%, Sanders 18%, Warren 15%.  [Klobuchar 6%, Gabbard 4%, Steyer 4%.]

And tonight, a new Des Moines Register/CNN/Mediacom Iowa poll has Sanders on top at 20% of likely Democratic caucusgoers, with Warren at 17%, Buttigieg 16%, and Joe Biden 15%.  Amy Klobuchar is at 6%.

Iowa and New Hampshire are followed by Nevada (Feb. 22) and South Carolina (Feb. 29)...and then it’s on to Super Tuesday (March 3...and delegate rich California, Texas, Virginia and North Carolina, among many others).

Yes, the action is going to be fast and furious, and, reminder, the reason so many are talking about the potential for a brokered convention is because these aren’t winner-take-all affairs.  At 15% you get a share of the delegates.  For example, Joe Biden could easily finish 3rd or 4th in Iowa, maybe second in New Hampshire, but then he’s going to kick butt in South Carolina.

--Well, the next debate is Tuesday from Des Moines, and as of Wednesday, only Biden, Buttigieg, Sanders, Warren and Klobuchar had qualified.

But out of nowhere, with the release of two Fox News polls for South Carolina and Nevada, Tom Steyer will be joining the five on stage.

In South Carolina, Biden received the backing of 36% of primary voters, with Steyer in second at 15%, up 11 points since October.  Sanders received 14% and Warren 10%.

In Nevada, Biden tops Sanders 23-17 among Democratic caucusgoers, with Warren and Steyer tied at 12%.

Steyer needed two polls showing him with 5 percent support, or two polls of early-voting states showing him at 7 percent, and the qualification deadline was only a day away.

This blows me away.

--Elizabeth Warren said Friday that she now supports President Trump’s renegotiated United States-Mexico-Canada Agreement because it “makes improvements.”

“Workers have had the legs taken out from underneath them and this agreement makes improvements,” Warren told a Boston CBS affiliate.  “It’s gonna help open up some markets for farmers, they need that stability.  It’s gonna help with enforceable labor standards and that’s gonna be useful.  We really need trade negotiations going forward that make sure anyone who wants access to our markets is actually helping us in the fight against climate change and helping build an economy that works for everybody in the U.S.”

Warren’s change in stance is important because it sets her apart from Bernie Sanders, who has stated he will not vote for the agreement.

--Michael Bloomberg is buying a 60-second ad spot for the Super Bowl, at a cost of $10 million, to one-up a 30-second ad the Trump campaign has reportedly secured.

But then the Trump campaign said it, too, secured a 60-second spot.

Bloomberg is still targeting Super Tuesday for his big splash.

--Our hearts go out to the people of Puerto Rico, who the last few years just can’t catch a break with Mother Nature and the island happening to be on top of the Caribbean plate.  A swarm of earthquakes has hit these folks this week causing significant damage, power out to 2/3s of the island, and once again they need massive help.

But Gov. Wanda Vazquez did say power should be fully restored across the island by Monday.

--The number of people killed by a measles epidemic in the Democratic Republic of Congo has passed 6,000, the World Health Organization (WHO) announced.

The WHO says the epidemic is the world’s largest and fastest moving.  Around 310,000 suspected measles cases have been reported since the start of 2019, the WHO says.

The Congolese government and the WHO launched an emergency vaccination program last September, but poor infrastructure, attacks on health centers and a lack of access to routine healthcare have all hindered efforts to stop the spread of the disease.

DR Congo is also experiencing the second most deadly outbreak of Ebola the world has ever seen, though the toll thus far is less than half as many people as measles.

--James Morrow / Australia’s Daily Telegraph...on the bushfires....

“The current round of blazes started late last year.  It has charred at least 15 million acres and killed more than two dozen Australians, including brave volunteer firefighters who rush into the inferno to save homes and lives.

“The climate-change narrative grossly oversimplifies bushfires, whose causes are as complex as their recurrence is predictable:

“Australia is in the midst of one of its regular droughts.

“Byzantine environmental restrictions prevent landholders from clearing scrub, brush and trees.  State governments don’t do their part to reduce the fuel load in parks.  Last November a former fire chief in Victoria slammed that state’s ‘minimalist approach’ to hazard-reduction burning in the off-season. That complaint is heard across the country.

“As for the proximate cause, anything from a lightning strike to a spark from a power tool to arson can touch off a conflagration.  More than 180 people have been arrested for allegedly starting blazes since the start of the current bush-fire season.

“Yet the narrative that has been built around the fires and broadcast around the world points the finger only at man-made climate change – and specifically at Prime Minister Scott Morrison.  Activists insist that if his government had an effective ‘climate policy,’ it would somehow help snuff out the flames.  Never mind that Australia emits only around 1/77th of the world’s man-made carbon dioxide.  The country’s complete deindustrialization wouldn’t budge the global thermostat.

“In radical corners of Australian social media, activists play out fantasies of the government’s dissolution and replacement with some sort of revolutionary people’s climate assembly taking power (surely, they’ll get it right this time).  On Monday a parliamentarian from the Australian Greens tweeted about one day holding ‘climate trials’ to deal with conservative politicians....

“Mr. Morrison’s enemies thought they’d found an opening with the fires.  They leapt on a poorly timed family holiday, which saw Mr. Morrison absent when things started to get bad, and an initial response when he returned that many found underwhelming.

“Yet it’s unlikely the country will be forced into some radical climate program.  Australians understand that their climate has always been one of the deadliest in the world, and that the country’s modern history is signposted with huge and deadly bush-fire seasons.  Being a pragmatic, realistic lot, they know that no act of economic self-harm can do anything to change the weather.”

And the other side...Richard Flanagan / New York Times....

“Incredibly, the response of Australia’s leaders to this unprecedented national crisis has been not to defend their country but to defend the coal industry, a big donor to both major parties – as if they were willing the country to its doom.  While the fires were exploding in mid-December, the leader of the opposition Labor Party went on a tour of coal mining communities expressing his unequivocal support for coal exports....

“Since 1996 successive conservative Australian governments have successfully fought to subvert international agreements on climate change in defense of the country’s fossil fuel industries.  Today, Australia is the world’s largest exporter of both coal and gas. It recently was ranked 57th out of 57 countries on climate-change action.

“In no small part Mr. Morrison owes his narrow election victory last year to the coal-mining oligarch Clive Palmer, who formed a puppet party to keep the Labor Party – which had been committed to limited but real climate-change action – out of government....Mr. Palmer subsequently announced plans to build the biggest coal mine in Australia....

“More than one-third of Australians are estimated to be affected by the fires.  By a significant and increasing majority, Australians want action on climate change, and they are now asking questions about the growing gap between the Morrison government’s ideological fantasies and the reality of a dried-out, rapidly heating, burning Australia.

“The situation is eerily reminiscent of the Soviet Union in the 1980s, when the ruling apparatchiks were all-powerful but losing the fundamental, moral legitimacy to govern.  In Australia today, a political establishment, grown sclerotic and demented on its own fantasies, is facing a monstrous reality which it has neither the ability nor the will to confront.

“Mr. Morrison may have a massive propaganda machine in the Murdoch press and no opposition, but his moral authority is bleeding away by the hour....

“As Mikhail Gorbachev, the last Soviet leader, once observed, the collapse of the Soviet Union began with the nuclear disaster at Chernobyl in 1986.  In the wake of that catastrophe, ‘the system as we knew it became untenable,’ he wrote in 2006.  Could it be that the immense, still-unfolding tragedy of the Australian fires may yet prove to be the Chernobyl of climate crisis?”

It is estimated that more than 1 billion mammals, birds and reptiles nationwide – some of them found nowhere else on Earth – may have been affected or killed by the fires sweeping Australia, according to a University of Sydney estimate.  One researcher notes that individual animals might survive, but when their habitat is gone, “it doesn’t matter.  They’ll die anyway.”

--New York City released its official murder rate for 2019, 318, up from 295 in 2018, according to the NYPD.  Overall serious crime in the city fell about 1% compared with the year before.

--Prince Harry and Meghan Markle announced they were quitting the royal family, an extraordinary move – after spending six weeks in a multimillion-dollar hideaway in Canada – the couple saying they wanted to take a “progressive new role” and leave their roles as “senior” royals.

The couple added they wanted to be financially independent, and they will now split their time between the UK and North America.

In the unprecedent statement, the Duke and Duchess of Sussex said: “After many months of reflection and internal discussions, we have chosen to make a transition this year in starting to carve out a progressive new role within this institution.  We intend to step back as ‘senior’ members of the Royal Family and work to become financially independent, while continuing to fully support Her Majesty The Queen.  It is with your encouragement, particularly over the last few years, that we feel prepared to make this adjustment.  We now plan to balance our time between the United Kingdom and North America, continuing to honor our duty to The Queen, the Commonwealth, and our patronages.”

Meghan and Harry said they are launching a new charitable entity.

But the royal family was said to be “deeply disappointed,” Harry and Meghan stepping back without consulting the Queen, Prince Charles or Prince William.

In a statement released two hours after Harry and Meghan’s, Buckingham Palace said the couple’s “desire to take a different approach” created “complicated issues” that would take time to resolve.

As the two now seek privacy, critics lambasted them for their big spending and their acceptance of money from the British taxpayer.  Several national newspapers have launched blistering attacks, saying the couple had been disrespectful to the Queen.

The Daily Mirror, one of three papers facing lawsuits from the couple, often fumed in its coverage about “an extraordinary day in the history of the royal family.”

Rachael Bletchly wrote: “Harry has selfishly turned his back on the institution she (the Queen) has fought to modernize and secure for him and his children.  And he didn’t even have the guts or decency to tell her, or his own father, of the bombshell he was about to drop in their laps.

“Well, good riddance,” Bletchly added.  “I for one have had a bellyful of Harry’s eco-warrior hypocrisy.

“The tragedy is he was once the most loved of the modern royals – from the moment he walked behind his mother’s coffin our hearts ached for him. Then he met Meghan.  But boy, she changed our Harry.”

Harry and Meghan will continue to receive money from Buckingham Palace, which has largely funded their activities.  And they will continue to use Frogmore Cottage, on the Windsor estate, as their official residence in the UK and their security will continue to be funded by the British taxpayer.

Maureen Callahan / New York Post

“How’s this for quitting your job: Abandon every aspect you hate, while continuing to reap all the benefits you love.

“This, in effect, is what Prince Harry and Meghan Markle have done.  In a statement loaded with confusing double-speak, the couple wrote, in part, ‘We intend to step back as ‘senior’ members of the royal family and work to become financially independent, while continuing to fully support Her Majesty The Queen.’

“None other than Queen Elizabeth is confused....

“Will Harry and Meghan keep their royal titles?  ‘Work to’ become financially independent – how long is that going to take/ Will they continue to get an allowance until that happens?  Where will they live while in the UK?  In Frogmore Cottage, the estate gifted to them by the Queen, which they spent another $3 million in taxpayer funds renovating?

“They say yes.  Can’t wait to hear what the Queen has to say about that.

“This is all so smug and gross, considering British taxpayers already spent $3 million on Harry and Meghan’s wedding.

“Since then, the couple has generated more headlines for feuding with William and Kate, for exorbitant spending (half a million for Meghan’s wardrobe in 2018 alone), for seeking the company and approbation of Hollywood stars, for snubbing engagements – both public (last month’s NATO reception at Buckingham Palace) and private (most recently the Queen’s annual Christmas family gathering at Sandringham) - than for any good works as royals....

“The hypocrisy here is Harry and Meghan announcing a ‘step back’ rather than abdication.

“To employ a cliché: They are having their cake and eating it, too....

“It will be interesting to see how this plays out amid the Brexit crisis, the Prince Andrew disaster, and with a public that has long adored Harry for bravely suffering the loss of his mother, for his wartime service in Afghanistan, for his charity work with veterans and children, for his charisma and his common touch.

“The latter, of course, now in question.”

I totally agree with Ms. Callahan’s final comments.  I have been a long-time fan of the royal family and tradition, and really a fan of Harry.  He’s lost me with the way he handled this move.  Meghan?  Oh, I feel sooooo sorry for her.

President Trump said in a Fox News interview tonight that he was disappointed with the decision.

“I think it’s sad, I do.  I think it’s sad.  She’s a great woman,” Trump said, referring to the Queen.  “She’s never made a mistake if you look.  I mean, she’s had like a flawless time.”

Meanwhile, the New York Post revealed that Oprah was heavily involved in Harry and Meghan’s breakout, while Oprah’s BFF Gayle King will be scoring the first interview with the Sussexes post-Megxit.

--Finally, Edward R. Murrow famously said in his show that definitively denounced and revealed Sen. Joseph McCarthy for what he was, we “must not confuse dissent with disloyalty.”

---

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

God bless America.

---

Gold $1561
Oil $59.14...nearly $4 drop with tensions easing (for now) in Iran/Iraq.

Returns for the week 1/6-1/10

Dow Jones  +0.7%  [28823]
S&P 500  +0.9%  [3265]
S&P MidCap  -0.2%
Russell 2000  -0.2%
Nasdaq  +1.8%  [9178]

Returns for the period 1/1/20-1/10/20

Dow Jones  +1.0%
S&P 500  +1.1%
S&P MidCap  -0.6%
Russell 2000  -0.7%
Nasdaq  +2.3%

Bulls 58.9
Bears 17.8...last week’s readings...new data N/A

Have a great week.

Dr. Bortrum posted a new column!

And for Larry David fans, reminder, “Curb Your Enthusiasm” returns on HBO Jan. 19.  This is the best news most of you will receive all week.

Brian Trumbore

 



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Week in Review

01/11/2020

For the week 1/6-1/10

[Posted 9:30 PM ET, Friday]

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

Special thanks to George R.

Edition 1,082

I can’t help but start out this week a little differently, having watched an excellent documentary on the late Sen. Joseph McCarthy (PBS / “American Experience”) and his efforts in the early 1950s to root out Communists, what became known as “McCarthyism.”  The parallels to today are striking.

Mentioned in passing in the documentary, however, is the role of Republican Senator Margaret Chase Smith of Maine.  As McCarthy was gaining traction with his anti-Communist speeches and Senate hearings on same, Smith strode to the Senate floor on June 1, 1950, to issue her “Declaration of Conscience.” 

“Mr. President, I would like to speak briefly and simply about a serious national condition.  It is a national feeling of fear and frustration that could result in national suicide and the end of everything that we Americans hold dear. It is a condition that comes from the lack of effective leadership either in the legislative branch or the executive branch of our government....

“I speak as briefly as possible because too much harm has already been done with irresponsible words of bitterness and selfish political opportunism.  I speak as simply as possible because the issue is too great to be obscured by eloquence.  I speak simply and briefly in the hope that my words will be taken to heart.

“Mr. President, I speak as a Republican.  I speak as a woman.  I speak as a United States senator.  I speak as an American.

“The United States Senate has long enjoyed worldwide respect as the greatest deliberative body in the world.  But recently that deliberative character has too often been debased to the level of a forum of hate and character assassination sheltered by the shield of congressional immunity.

“It is ironical that we senators can in debate in the Senate, directly or indirectly, by any form of words, impute to any American who is not a senator any conduct or motive unworthy or unbecoming an American – and without that non-senator American having any legal redress against us – yet if we say the same thing in the Senate about our colleagues we can be stopped on the grounds of being out of order.

“It is strange that we can verbally attack anyone else without restraint and with full protection, and yet we hold ourselves above the same type of criticism here on the Senate floor.” 

The Senator continues for pages, but notes:

“Those of us who shout the loudest about Americanism in making character assassinations are all too frequently those who, by our own words and acts, ignore some of the basic principles of Americanism ---

The right to criticize.
The right to hold unpopular beliefs.
The right to protest.
The right of independent thought.

“The exercise of these rights should not cost one single American citizen his reputation or his right to a livelihood nor should he be in danger of losing his reputation or livelihood merely because he happens to know someone who holds unpopular beliefs.  Who of us does not?  Otherwise none of us could call our souls our own.  Otherwise thought control would have set in.

“The American people are sick and tired of being afraid to speak their minds lest they be politically smeared as ‘Communists’ or ‘Fascists’ by their opponents....

“The American people are sick and tired of seeing innocent people smeared and guilty people whitewashed.”

Sen. Smith then lays out what she calls a Declaration of Conscience, which ends with:

“It is high time that we stopped thinking politically as Republicans and Democrats about elections and started thinking patriotically as Americans about national security based on individual freedom.  It is high time that we all stopped being tools and victims of totalitarian techniques – techniques that, if continued here unchecked, will surely end what we have come to cherish as the American way of life.”

Six other senators signed the declaration...Charles W. Tobey, New Hampshire; George D. Aiken, Vermont; Wayne L. Morse, Oregon; Irving M. Ives, New York; Edward J. Thye, Minnesota; Robert C. Hendrickson, New Jersey.

All stood up at a critical time in our history.  Today, at another crucial crossroads, will anyone in the Senate do the same?

Whether it’s in the presidency, or in the conduct of our foreign policy, the truth never mattered more.

But one thing we do know for certain, and that which all Americans should be able to agree on, and that is the truth is non-existent in today’s Iran.

Conflict with Iran

After the taking out of Gen. Soleimani a week ago Thursday night (Friday Iran time), President Trump spent much of the weekend blustering as Iran talked of retaliation.

Trump tweeted:

“Iran is talking very boldly about targeting certain USA assets as revenge for our ridding the world of their terrorist leader who had just killed an American, & badly wounded many others, not to mention all of the people he had killed over his lifetime, including recently....

“....hundreds of Iranian protesters.  He was already attacking our Embassy, and preparing for additional hits in other locations.  Iran has been nothing but problems for many years.  Let this serve as a WARNING that if Iran strikes any Americans, or American assets, we have....

“....targeted 52 Iranian sites (representing the 52 American hostages taken by Iran many years ago), some at a very high level & important to Iran & the Iranian culture, and those targets, and Iran itself, WILL BE HIT VERY FAST AND VERY HARD.  The USA wants no more threats!”

Iran then launched more than a dozen ballistic missiles Tuesday night toward U.S. forces in retribution for Soleimani’s assassination and the U.S. did not retaliate.

In the immediate aftermath, Trump tweeted:

“All is well!  Missiles launched from Iran at two military bases located in Iraq.  Assessment of casualties & damages taking place now.  So far, so good!  We have the most powerful and well equipped military anywhere in the world, by far!  I will be making a statement tomorrow morning.”

Trump ally, Sen. Lindsey Graham, tweeted:

“In my view, retaliation for the sake of retaliation is not necessary at this time.  What is necessary is to lay out our strategic objectives regarding Iran in a simple and firm fashion.

“Our objectives:

“--Iran must stop being the largest state sponsor of terrorism in the world.

“--Stop ballistic missile buildup which jeopardizes regional stability.

“--Negotiate a nuclear deal which provides nuclear power to Iran while dismantling a pathway to a bomb.

“The Maximum Pressure campaign with a credible military component is not only working, it’s the best way to achieve our strategic goals.”

The following morning, President Trump gave a 10-minute speech to the American people where he proclaimed “Iran appears to be standing down, which is a good thing for all parties concerned and a very good thing for the world.”

Trump heralded the lack of casualties and “minimal damage” from the Iranian strike, promising “more punishing economic sanctions,” rather than an overwhelming military response.

“By removing Soleimani, we have sent a powerful message to terrorists: If you value your own life, you will not threaten the lives of our people.”

The president attempted to establish why Soleimani deserved the punishment Americans delivered.

“Soleimani’s hands were drenched in both American and Iranian blood,” Trump said, listing his support for militant armies, instigation of regional civil wars and targeting of U.S. troops as evidence.  He warned that Soleimani was planning further attacks on Americans – echoing previous, but so far unsubstantiated, U.S. assertions that the assassination was prompted by an imminent threat to U.S. interests.

Trump concluded: “Finally, to the people and leaders of Iran, we want you to have a future – and a great future, one that you deserve, one of prosperity and home and harmony with the nations of the world.”

But the president also went after Barack Obama, again, saying: “The missiles fired last night at us and our allies were paid for with the funds made available by the last administration,” a claim that is misleading at best.

Ayatollah Khamenei described the missile attacks on U.S. bases as a “slap in the face” for the U.S. and called for an end to the American presence in the Middle East.

Khamenei said that if the U.S. rejoined the nuclear deal it withdrew from in 2018, it could take part in multilateral talks with Iran and the other parties to the deal.

In a letter to the UN, the U.S. justified the killing of Gen. Soleimani as an act of self-defense, saying it is “ready to engage without preconditions in serious negotiations” with Iran following the exchange of hostilities.

Iran’s UN Ambassador Majid Takht Ravanchi said the U.S. offer of talks was “unbelievable” while the U.S. continued to enforce harsh economic sanctions on Iran.

Opinion...after the Iranian retaliatory strike on our bases in Iraq....both sides....

Editorial / Washington Post

“The escalating confrontation between the United States and Iran paused on Wednesday, which, as President Trump put it, ‘is a good thing for all parties concerned.’  Having demonstrated that it can strike Iraqi bases where U.S. troops are deployed with precision, Iran announced that it had ‘concluded’ its response to the killing of Maj. Gen. Qassem Soleimani; Mr. Trump, reporting that no Americans were killed or injured by Tehran’s missiles, set aside the sweeping attacks he had threatened on 52 sites inside Iran.

“Mr. Trump’s acolytes quickly proclaimed him victorious for having eliminated the architect of Iran’s foreign adventurism while avoiding a more damaging response.  That assessment was premature and shortsighted.  Iran’s strikes on U.S. interests and allies will almost certainly continue in the coming months.  Unless the Trump administration quickly steps up its diplomatic game, what Supreme Leader Ayatollah Ali Khamenei called his ultimate aim – the removal of the United States from the Middle East – could soon be realized in Iraq and Syria.

“Then there is Iran’s nuclear program, which the regime announced it would step up in the aftermath of Soleimani’s killing.  In his White House address Wednesday, Mr. Trump asserted that he would ‘never let’ Iran acquire a nuclear weapon.  But, having scrapped the deal that curtailed Iran’s program and plunged into confrontation with the regime, he has articulated no coherent strategy for stopping additional Iranian enrichment of uranium – other than calling on European allies and Russia to give up their attempts to save the pact.

“Mr. Trump ought to embrace the pause in hostilities as an opportunity to begin serious negotiations with the Islamic republic.  That is the course favored not only by a majority of Americans but also by Mideast allies such as Saudi Arabia and Qatar, which have been pressing for restraint.  Though he nodded to the idea, saying the United States was ‘ready to embrace peace,’ Mr. Trump also said he would intensify already-massive sanctions on Iran.  That campaign of ‘maximum pressure’ has failed to bring about the new nuclear negotiations Mr. Trump says he wants, much less the regime collapse or capitulation his more hawkish advisers hope for.  But it virtually ensures that Iranian responses like last year’s attacks on Persian Gulf shipping and Saudi oil fields will continue.

“Tehran will meanwhile press its advantage in Baghdad, where Iraqi legislators furious over two U.S. military operations in its territory in less than a week voted Sunday to expel the 5,000 American troops in the country.  Abetted by U.S. incompetence – the dispatch of a letter announcing a withdrawal that was later termed a mistake – acting prime minister Adel Abdul Mahdi is pressing the case.  Mr. Trump only helped him with a foolish threat to impose sanctions on Iraq; in his address Wednesday, Mr. Trump sounded as if he were arguing the case for an American retreat, saying he wanted NATO to become more involved in the region and that ‘we do not need Middle East oil.’

“There was reason for relief Wednesday that the United States and Iran had avoided a plunge into full-scale war.  But Mr. Trump’s manifest lack of clear goals or strategy in the Middle East, combined with his readiness to launch strikes or order troop movements on impulse, is cause for continued alarm.”

Editorial / Wall Street Journal

“Maybe the Apocalypse isn’t upon us after all.  The lesson after Iran’s missile strike on U.S. bases in Iraq early Wednesday is that deterrence seems to be working.

“More than a dozen ballistic missiles hit two U.S. bases in northern and western Iraq, but no Americans or Iraqis were killed in the attack.  Iraq says Iran gave advance warning, so U.S. and Iraqi troops had time to disperse or seek shelter.  Iran has made advances in missile targeting, as we learned in the attack on Saudi oil facilities.   Yet this time the missiles seemed not to have been precise.

“All of this suggests that Iran tried to make a show of hitting back at the U.S. for the killing of terror chief Qassem Soleimani while trying to avoid killing Americans.  The latter seems to be the red line that President Trump has drawn for an American military response, and Iran knows the U.S. could eliminate much of its military and industrial capacity even from a standoff distance.

“ ‘Iran took & concluded proportionate measures in self-defense,’ Iranian Foreign Minister Javad Zarif tweeted.  ‘We do not seek escalation or war.’  Iranian state TV reported 80 Americans killed, but that was propaganda to impress the loyalists at home and its proxy militias abroad.

“Mr. Trump responded Wednesday morning with strong but also conciliatory remarks from the White House.  ‘Iran appears to be standing down, which is a good thing for all parties concerned,’ the President said.  He announced unspecified ‘additional punishing economic sanctions’ while the U.S. considers other responses to the attack.

“His dual goal seemed to be to reinforce deterrence while also offering a path for Iran to renegotiate the 2015 nuclear deal and become a normal country.  Speaking directly ‘to the people and leaders of Iran,’ he said, the ‘United States is ready to embrace peace with all who seek it.’

“Such a change of mind in Tehran may be a long shot, at least until the U.S. presidential election in November. Then again, this offers more hope of progress than did the appeasement strategy that Barack Obama and John Kerry carried out with their 2015 nuclear deal.  Soleimani used that financial windfall to spread revolution.  Mr. Trump was right when he said Wednesday that ‘the missiles fired last night at us and our allies were paid for with the funds made available by the last Administration.’

“All of this was more productive than Mr. Trump’s threats and Twitter bluster earlier in the week.  He looked deliberate and in control, albeit still forceful, defying the image of a reckless, impulsive Commander in Chief eager for war that his opponents are hoping to campaign against.

“The showdown with Iran is far from over, and the mullahs may strike again in the coming months using proxy forces that give it deniability.  On that score the President missed an opportunity to make clear that an attack on Americans by an Iranian-linked group would be treated as an attack by Iran.  The immediate battleground will continue to be Iraq.  Mr. Trump and Secretary of State Mike Pompeo should focus on maintaining the U.S. presence to help patriotic Iraqis resist becoming another satrapy of Tehran.

“The other challenge is Iran’s pursuit of nuclear weapons, and Mr. Trump asked the U.K., Germany, France, Russia and China to join him in seeking to renegotiate the 2015 pact.  The latter two won’t agree, but it’s past time for the Western Europeans to realize that the deal has fatal flaws including its early end date within a decade.

“Combined with Mr. Trump’s renewed deterrence and ‘maximum pressure,’ a united front might convince Iran’s leaders that they are better off negotiating a new deal and a path out of economic isolation instead of pursuing the dead end of Soleimani’s Mideast revolution.”

David Brooks / New York Times

“Donald Trump is impulse-driven, ignorant, narcissistic, and intellectually dishonest.  So you’d think that those of us in the anti-Trump camp would go out of our way to show we’re not like him – that we are judicious, informed, mature and reasonable.

“But the events of the past week have shown that the anti-Trump echo chamber is becoming a mirror image of Trump himself – overwrought, uncalibrated and incapable of having an intelligent conversation about any complex policy problem.

“For example, there’s a complex policy problem at the heart of this week’s Iran episode.  Iran is not powerful because it has a strong economy or military.  It is powerful because it sponsors militias across the Middle East, destabilizing regimes and spreading genocide and sectarian cleansing.  Over the past few years those militias, orchestrated by Qassem Soleimani, have felt free to operate more in the open with greater destructive effect.

“We’re not going to go in and destroy the militias.  So how can we keep them in check so they don’t destabilize the region?  That’s the hard problem – one that stymied past administrations.

“In the Middle East, and wherever there are protracted conflicts, nations have a way to address this problem.  They use violence as a form of communication.  A nation trying to maintain order will assassinate a terrorism leader or destroy a terrorism facility. The attack says: ‘Hey, we know we’re in a long-term conflict, but let’s not let it get out of hand.  That’s not in either of our interests.’

“The attack is a way to seize control of the escalation process and set a boundary marker.

“These sorts of operations have risks and rewards.  A risk is that it won’t cease the escalation, just accelerate it.  The radicals on the other side will get enraged and take to the streets.  Their leaders will have to appease that rage.

“A reward is that maybe you do halt the escalation.  The other side implicitly says: ‘Message received.  We’ll do some face-saving things to appease the streets, but we don’t want this to get out of hand, either.’  Another reward is that you’ve managed to eliminate an effective terrorist like Soleimani.  Talent doesn’t grow on trees.

“The decision to undertake this sort of operation is a matter of weighing risk and reward. And after the Soleimani killing, you saw American security professionals talk in the language of balancing risk and reward.  Stanley McChrystal, a retired general, and Michael Mullen, a retired admiral, thought it was worth the risk.  Susan Rice, a former national security adviser, thought it wasn’t.

“But in the anti-Trump echo chamber, that’s not how most people were thinking.  Led by Bernie Sanders and Elizabeth Warren, they avoided the hard, complex problem of how to set boundaries around militias.  Instead, they pontificated on the easy question not actually on the table: Should we have a massive invasion of Iran?

“A great cry went up from the echo chamber.  We’re on the brink of war!  Trump is leading us to more endless wars in the Middle East!  We’re on the precipice of total chaos!  This was not the calibrated language of risk and reward.  It was fear-stoking apocalyptic language.  By being so overwrought and exaggerated, the echo chamber drowned out any practical conversation about how to stabilize the Middle East so we could have another righteous chorus of ‘Donald Trump is a monster!’

“This is Trump’s ultimate victory.  Every argument on every topic is now all about him.  Hating Trump together has become the ultimate bonding, attention-grabbing and profit-maximation mechanism for those of us in anti-Trump world.  So you get a series of exaggerated fervors – the Mueller report!  Impeachment!  The Steele dossier! - that lead ultimately nowhere.

“Most of this week’s argument about the Middle East wasn’t really about the Middle East. It was all narcissistically about ourselves!  Democrats defend terrorists!  Republicans are warmongers!  Actual Iranians are just bit players in our imperialistic soap opera, the passive recipients of our greatness or perfidy.

“The world is more complicated than this cartoon.  Love or hate him, Trump has used military force less than any other president since Jimmy Carter.  When it comes to foreign policy, he is not like recent Republicans. He is, as my colleague Ross Douthat put it, a Jacksonian figure, wanting to get America out of foreign entanglements while lobbing a few long-distance attacks to ensure the crazy foreigners stick to killing one another and not us.”

Editorial / The Economist

“The killing of Qassem Soleimani by an American drone on January 3rd threatened to bring the United States and Iran closer to war than at any time since the hostage crisis in 1979.  In a part of the world that has lost the power to shock, the audacious killing of Iran’s most important general, ordered by President Donald Trump, sent Iran reeling.  In public ceremonies millions of Iranians put aside their discontent with the regime to mark General Soleimani’s death.  Blood-curdling threats of destruction issued from the Middle East, echoed by warnings of mayhem from Western experts.  And yet a retaliatory missile strike on two American bases in Iraq five days killed nobody.  It looked like a face-saving attempt by Iran to wind the crisis down.

“If that were the end of it, Mr. Trump would be right to say that his strike had worked, as he suggested on January 8th.  Ridding the world of a baleful individual and forcing Iran to curb its aggressions really would be worthwhile achievements.  In the coming months, that may indeed be how things turn out.  The trouble is that nobody, including Mr. Trump, can count on it.

“Two tests will define whether the killing of the general was a success – its effect on deterrence and on Iran’s regional power.  For the past year Mr. Trump has stood by as Iran and its proxies attacked merchant shipping in the Strait of Hormuz, two American drones, oil facilities in Saudi Arabia and military bases in Iraq. Because it had concluded that there was no price to pay, Iran was becoming more brazen and belligerent.  The beneficial effect of the drone strike on January 3rd is to re-establish the idea that America is willing to hit back.  Iran’s restraint on Tuesday this week signals that it does not want to face an aerial onslaught by America.  Another Iranian missile strike is less likely today that it was just weeks ago.

“And yet Iran’s thirst for revenge is surely not slaked.  Even if they avoid overt forms of aggression, the Revolutionary Guards are likely to pursue other tactics, including cyber-attacks, suicide-bombings by proxies, assassinations of American officials and an array of means they have honed over the years.  These reprisals could take months to unfold.  As the killing of General Soleimani recedes, Iran will once again begin to probe the willingness of America to use force.  In an asymmetric world weak parties often retreat in the face of force, only to return.  They have more patience and a greater tolerance of pain than a distant superpower does.

“The second test is whether America’s strike weakens Iran’s grip on its neighbors.  Iran has a network of militias, proxies and forward bases for its Quds Force, across an area that stretches from the Mediterranean to the Arabian Sea.  This is about projecting Iranian power, regardless of the atrocities committed by its clients, such as Bashar al-Assad, who used nerve gas on his own people without a whisper of complaint from Iran.

“General Soleimani’s death deprives this grim network of its architect and orchestrator.  It is too soon to judge the caliber of those who are taking his place, but if the general was as exceptional as his reputation, then his loss will be felt....

“But there are complications here, too.  After the assassination, Iran is hellbent on pushing America out of the Middle East.  It will start in Iraq, where it has mostly outmaneuvered America.  The government in Baghdad is dominated by Shia politicians in thrall to Iran.  On January 5th Iraq’s parliament passed a resolution calling on the government to start evicting foreign troops, including 5,000 or so American soldiers.  The vote is not binding, many Iraqis resent Iranian influence, and American money and weapons are valuable to Iraq.  Even so, it increasingly seems more a question of when, rather than if, the troops finally go.

“Still more threatening is Iran’s nuclear program. Mr. Trump pulled America out of the agreement with Iran, signed in 2015 with six world powers, which limited its ability to get a bomb....Last summer there was speculation that Iran was ready to talk.  But that now seems out of the question, possibly for a long time.  Indeed, on January 5th Iran said it would no longer abide by any restrictions on the enrichment of uranium.  It has every reason to indulge in nuclear brinkmanship not only as a bargaining counter against America, but also because, were Iran to get the bomb, it would permanently oblige America to change its calculations about using military force against it.

“The lack of an American strategy for negotiation means that the general’s killing has reduced America’s Iran policy to extreme sanctions accompanied by an ill-defined threat of massive retaliation if the regime misbehaves.  Yet, starving Iran into submission is unlikely to work – other regimes have resisted American pressure for longer.  There is no path to the peace Mr. Trump this week said he wanted.  Indeed, because America’s red lines are unclear, the danger of blundering into war remains.”

Lastly, further thoughts.

Iran announced on Sunday it would abandon limitations on enriching uranium, taking a further step back from commitments to the 2015 nuclear deal with the P5+1 (U.S., Germany, France, Britain, Russia and China) that President Trump then pulled out of in 2018.  There was no talk of a “breakout” however to full nuclear weapons-grade material. Iran could yet make such an announcement, though, or already be secretly working on it.

Regardless, with the nuclear deal in tatters, it is easy to conclude Iran is more dangerous today than just a year or two ago, ditto North Korea.

It is also easy to draw the conclusion that with the withdrawal of most of our force from Syria, and Baghdad now asking for a timetable as to when the U.S. will be pulling out of Iraq, the effort to contain any resurgence of ISIS will be severely hampered.

The administration also can’t convince a majority of Americans that the threat from Soleimani was “imminent.”  The public needs to be able to believe administration officials such as Secretary of State Mike Pompeo and Defense Secretary Mark Esper, and tonight many of us can’t.  The constantly changing narrative, led by the president, is hardly a way to create unity.

But what Iran did in shooting down the Ukrainian airliner was beyond egregious, and the official response thus far has been farcical, let alone the removal of large pieces of the fuselage before legitimate inspectors arrive at the crash site.

I also can’t help but add that when I wrote in my opening last week, following the removal of Soleimani from the battlefield: “I do feel Iran will go after some soft targets, perhaps in South America...and a western airline could be shot down,” I sure as heck wasn’t talking about this possibility.

Trump World

--House Speaker Nancy Pelosi said on Thursday that she would be sending the articles of impeachment against President Trump to the Senate “soon,” and then today she said “next week.”  Senate Majority Leader Mitch McConnell put his members on notice not to make plans for the weekend. 

Pelosi has consistently said she wants to know more about how the Senate would conduct its trial before naming the lawmakers to serve as managers, but it appears McConnell made no concessions.  Whether or not witnesses such as John Bolton or Mick Mulvaney will be called remains to be seen.

For his part, Bolton said he would be willing to testify if subpoenaed by the Senate, with most believing the former national security adviser would provide an unflattering account of Trump’s decisions to withhold a White House meeting and almost $400 million in military aid from Ukraine as he sought investigations that would benefit him politically.

But the president will no doubt invoke executive privilege and not allow Bolton to testify even if he wanted to.

Reminder, Senate rules require only a simple majority – 51 – to call witnesses, but that means four Republicans would have to flip on the issue and that still doesn’t seem likely.

--The House voted essentially along party lines on Thursday to curb President Trump’s military powers after members emerged from a classified briefing unconvinced the president had solid legal justification for ordering an airstrike that killed Iran’s top general.

Defense Secretary Mark Esper, Joint Chiefs of Staff Chairman Mark Milley and other Pentagon officials were dispatched to Capitol Hill in an attempt to back up Trump’s claim that he pulled the trigger on a Jan. 3 airstrike to prevent “imminent” attacks on American troops and diplomats.

Unconvinced, the House then voted on a War Powers resolution that would bar Trump from taking any military action against Iran without explicit approval from Congress.  The vote was 224 to 194, with several apparent abstentions, three Republicans voting in favor and eight Democrats voting against it.  But this is a non-binding resolution.  It goes to the Senate, where several Republicans were expected to break with Trump in a vote as early as next week.

--A U.S. appeals court has lifted a legal block on $3.6bn in defense funds, allowing President Trump to spend the money on his border wall.  The order by the 5th Circuit Court of Appeals overturned a lower court’s ruling that stopped the funds from being used while the case continues.

President Trump had directed the funds to be diverted from defense projects in February amid a budget debate.

Trump’s wall was the signature promise of his 2016 campaign.

--Secretary of State Mike Pompeo told Senate Majority Leader McConnell that he would not run for an open Senate seat in Kansas, despite McConnell’s repeated entreaties, according to reports.

Pompeo has been toying with the idea for months, but seems intent to remain in his current position.  He also wants to run for president someday, so this is always part of his calculation.

--Today, Texas Gov. Greg Abbott refused to accept refugees under an executive order requiring local jurisdictions to actively opt in to the federal resettlement program.  The decision is a major blow to the program since Texas is the largest recipient of refugees in the country.  “At this time, the state and non-profit organizations have a responsibility to dedicate available resources to those who are already here, including refugees, migrants and the homeless,” Abbott, a Republican, said in his letter to the State Department.  “As a result, Texas cannot consent” to refugee resettlement this fiscal year.

--Trump tweets:

“These Media Posts will serve as notification to the United States Congress that should Iran strike any U.S. person or target, the United States will quickly & fully strike back, & perhaps in a disproportionate manner.  Such legal notice is not required, but is given nevertheless!”

“IRAN WILL NEVER HAVE A NUCLEAR WEAPON!”

“The United States just spent Two Trillion Dollars on Military Equipment.  We are the biggest and by far the BEST in the World!  If Iran attacks an American Base, or any American, we will be sending some of that brand new beautiful equipment their way...and without hesitation!”

[Well, Iran attacked and none of that beautiful equipment went the other way.]

“They attacked us, & we hit back.  If they attack again, which I would strongly advise them not to do, we will hit them harder than they have ever been hit before!”

“The Impeachment Hoax, just a continuation of the Witch Hunt which started even before I won the Election, must end quickly.  Read the transcripts, see the Ukrainian President’s strong statement, NO PRESSURE – get this done.  It is a con game by the Dems to help with the Election!”

“STOCK MARKET AT ALL-TIME HIGH! HOW ARE YOUR 401K’S DOING? 70%, 80%, 90% up?  Only 50% up!  What are you doing wrong?”

“U.S. Cancer Death Rate Lowest in Recorded History!  A lot of good news coming out of this Administration.”

It is truly outrageous the president is taking credit for this.  I have details on the story below, but the American Cancer Society showed in a report that the cancer death rate fell steadily from 1991 through 2017, and that 2017 saw the largest-ever one-year decline.

Gary Reedy, chief executive officer of the American Cancer Society, pushed back against Trump’s insinuation, stating that “The mortality trends reflected in our current report, including the largest drop in overall cancer mortality ever recorded from 2016 to 2017, reflect prevention, early detection, and treatment advances that occurred in prior years....

“The administration has an opportunity to significantly impact future declines in both cancer incidence and mortality by increasing access to comprehensive health care, supporting robust and sustained increases in federal funding for cancer research and passing and implementing evidence-based tobacco control policies,” Reedy stated.

Wall Street and Trade

Stocks continue to rise, with the Dow Jones crossing 29,000 for the first time today (before pulling back at day’s end), the other major indexes hitting new highs as well, and with a jobs report Friday that was tame, there continues to be zero pressure on the Federal Reserve to abandon its accommodative monetary policy (the Fed basically unanimous in its feeling there will be no change in its benchmark funds rate for months to come, if not all of 2020).

But stocks are pricey, though not absurdly so as of yet...just getting closer to such a level.  It’s now earnings season and as always, the accompanying statements from management will be picked over for signs of optimism, or pessimism, regarding the outlook for the year.

I will be writing the same thing I imagine for months to come.  The consumer is still confident given the strong jobs market, but businesses will not be increasing capital spending in any significant fashion because of the still dicey global trade and geopolitical picture.  The threat of an extensive cyberattack and its potential to destroy confidence, for one, should give most CEOs pause before making any sweeping spending decisions.

On the data front, the aforementioned employment report for December showed a gain of 145,000 jobs, a little shy of expectations, with the unemployment rate unchanged at 3.5%.

The figures for October and November were revised down slightly to 152,000 and 256,000, respectively, meaning the 3-month moving average is at 184,000.

Average hourly wages are now at a slightly disappointing 2.9% annualized rate, the lowest since July 2018.  U6, the underemployment rate, however, hit a record low of 6.7%...very good.

Separately, the ISM December non-manufacturing reading on the service sector came in at 55.0, a little above expectations (50 being the dividing line between growth and contraction).

November factory orders were in line, -0.7%.

Add all the above up and the latest reading from the Atlanta Fed’s GDPNow barometer for the fourth quarter remains at 2.3%, unchanged from the last few readings.

On the trade front, we are finally getting our phase one trade agreement with China this coming Wed., Jan. 15, when a delegation from China, led by Vice Premier Liu He, will sign it at the White House and President Trump will proclaim it’s the greatest trade deal of all time, as he has for a while now.  The Chinese delegation will include the People’s Bank of China governor, the commerce minister, and others.

The exact details have yet to be unveiled but the scope of the 86-page document includes suspension of new tariffs and reduction of existing ones, as laid out before, with China’s commitment to boost intellectual property protection (you can stop laughing), opening up of the country’s financial markets to U.S. companies and increased purchases of U.S. farm goods.

It’s this last point that you will hear about endlessly on the campaign trail, China’s $40-$50 billion purchase a year, the next two, and I can virtually agree, as I’ve noted ad nauseum before, that there is no way China approaches the $40 billion level because that would mean disrupting existing relationships with the EU and the likes of Brazil.  Brazil has taken advantage of the trade dispute to surpass the U.S. in soybean production, with the current harvest expected to exceed the U.S. yield by about 25%.

China is expected to purchase $40 billion of agricultural goods, up from the pre-trade-war amount of $24 billion, even as Brazil’s agricultural exports to China increased to $35.4bn in 2018 from $26.6bn the prior year.

U.S. farm exports to China declined from $24 billion to $13.2bn during that period.  [I emphasize these are ‘total’ figures, not just soybeans.  All kinds of figures get tossed around, especially by President Trump.]

That said, the agriculture purchase increases from China will be enough for President Trump to tout as a huge victory for America’s farmers, while ignoring the thousands forced into bankruptcy during the trade war.

There will also be no phase two trade deal with China this year, though the administration will talk of intense negotiations at times as we approach the election (ostensibly to prop up the stock market).  At least this is how I see it playing out.

Europe and Asia

We had a bunch of economic data on the eurozone (EA19) this week, with more PMI data, courtesy of IHS Markit.

The composite PMI reading for the bloc in December was 50.9 vs. 50.6 in November, with the service-sector reading at 52.8.

Germany had a comp of 50.2, services 52.9; France 52.0 comp, 52.4% services; Spain 52.7 comp, 54.9 services; Italy 49.3 comp, 51.1% services; Ireland 53.0 comp, 55.9 services.

Chris Williamson / IHS Markit

“Another month of subdued business activity in December rounded off the eurozone’s worst quarter since 2013.  The PMI data suggest the euro area will struggle to have grown by more than 0.1% in the closing three months of 2019....

“While the tide may be turning [in terms of business optimism], downside risks to growth in the year ahead remain notable.  While U.S.-China trade wars have eased, any escalation of trade tensions between the U.S. and Europe will likely hit exports further.  Brexit also remains a major uncertainty and is likely to continue to dampen growth in Europe.  Nonetheless, in the absence of any major adverse developments we expect to see growth starting to improve as 2020 proceeds, with low inflation and easing financial conditions supporting consumer spending in particular.”

A flash reading on EA19 inflation for December came in at 1.3% vs. 1.5% a year earlier (though up from 0.7% in October).  Ex-food and energy inflation was 1.4%.  This has to go up.

November retail trade in the euro area rose 1.0% over October; up 2.2% year-over-year.

The EA19 unemployment rate for November was 7.5%, unchanged from October, and down from 7.9% in Nov. 2018.  This remains the lowest rate recorded in the eurozone since July 2008.

Germany 3.1%, France 8.4%, Spain 14.1%, Italy 9.7%, Ireland 4.8%, Netherlands 3.5%.

Brexit:  Prime Minister Boris Johnson had his Brexit deal approved in parliament last month, following his overwhelming election victory, but the Brexit bill was dealt a severe blow after the House of Lords spoke of “serious concerns” over the withdrawal agreement this week.

In a report from the House of Lords European Union Committee, they stated fears that the UK/EU Joint Committee lacks transparency or any potential “democratic oversight.”  The UK/EU Joint Committee has the ability to amend the withdrawal agreement unilaterally while decisions emanating from the group will be legally binding for the UK and the EU without any Parliamentary guidance.

The previous Brexit agreement gave Parliament the ability to approve the UK and EU’s future relationship, but the new UK/EU Joint Committee gives the European Parliament a much stronger position.

Disregarding the House of Lords committee, Boris Johnson has insisted he will take the UK out of the EU by January 31.  As President Trump would say, “We’ll see what happens...”

Spain: Finally, after nearly a year of political deadlock that included two inconclusive elections, Spain chose a prime minister on Tuesday, parliament electing Pedro Sanchez as premier, heading a coalition government between his center-left Socialists and the far-left party Unidas Podemos.  But even together, the two parties lack an outright majority (167 of 350 seats) and will have to rely on the support of minority factions, including Catalan separatists (13 seats).

This is an issue across Europe, as voters lose trust in many established parties, thus making it harder to assemble stable majorities.

Spain’s Socialists and conservatives alternated power for decades, but neither can win elections outright these days.  Europe’s long financial crisis accelerated the rise of insurgent parties.

In November’s election, the Socialists picked up 28%, while the main conservative party won only 21%.

And back to the Catalan separatists, they are still demanding a referendum, which Sanchez has said he would not offer, but for now the Catalan’s see Sanchez as the better of two evils.

Sanchez will rule for four years under the constitution.

France: Trade unions continued to disrupt rail services, shut schools and brought demonstrations on to the streets across France Thursday in what was viewed as a make-or-break push to force President Emmanuel Macron to abandon his planned pension reform.

But participation in the hard-left unions’ 36-day-long public sector strike has been waning (from an estimated 800,000 taking part on Dec. 5, to 452,000 yesterday) and public opinion polls show public backing for the job action falling, though most French people still oppose the overhaul.

For example, the most contentious change remains the introduction of incentives for workers to retire two years after the legal retirement age and penalties for those who don’t.  According to an Elabe poll, 66% of French people are against this proposed measure.

Macron has been trying to streamline France’s unwieldy pension system and incentivize the French to stay in work longer to pay for some of the most generous retirement benefits in the world.  It would be the biggest overhaul since World War II and is central to Macron’s efforts to make his nation more competitive globally, with a more flexible labor force.

Macron has been offering concessions to certain workers.  Under the government’s latest proposal, anyone within 17 years of the legal age of retirement will be exempt and the system won’t apply to people entering the job market until 2022.  Workers born after 1975 will switch to the new system in 2025.

Pilots went back to work after the government said they could continue to retire early.

Turning to Asia...China’s private Caixin manufacturing PMI came in at 51.5, with the services reading at 52.6.  The official government readings from the week before were 50.2 mfg., 53.3 services.

China’s December producer (factory-gate) price index fell 0.5% year-over-year, which is not good, while consumer prices rose 4.5% yoy, unchanged from November, and largely due to the ongoing issue with pork prices.

Japan’s manufacturing PMI for last month was just 48.4%, with the services reading at 49.4 vs. 50.3 in November.

Street Bytes

--As noted above, the major indices continued to hit new highs, taking comfort from the seeming stability (for now) in the Iran situation, while the economic news continues to be solid.  It remains a ‘don’t fight the tape’ environment.  But, again, the market is pricey, and we better start seeing some earnings growth, which you’ll recall was non-existent last year despite the big rally in equities.

The Dow Jones rose 0.7% to 28823, having hit a closing high the day before of 28956.  The S&P 500 was up 0.9% and Nasdaq 1.8%, both of these also hitting new records on Thursday.  A major propellant for the averages is the performance of Apple, which continues to rocket higher, this week on news of stronger than expected iPhone sales in China.

--U.S. Treasury Yields

6-mo. 1.54%  2-yr. 1.57%  10-yr. 1.82%  30-yr. 2.28%

Little change in yields on the week.

--Boeing has had a difficult time of it the past year+, and now it’s involved in another horrific crash, that of a Ukraine International Airlines Boeing 737-800, en route to Kiev from Tehran, that fell to earth in a fireball shortly after take-off, killing all 176 people on board and sparking an international scramble to establish the cause.

The crash occurred just hours after Iran fired missiles at bases housing U.S. forces in Iraq, leading some to speculate that the plane may have been hit.

But the initial assessment, especially from the Iranians, was that the plane had suffered a technical malfunction and had not been brought down by a missile.  Iran cited witnesses on the ground (and the video you’ve all seen) that the aircraft was on fire while still aloft.  Iran said the plane was attempting to head toward a nearby airport before it crashed.  There was no radio communication from the pilot as the aircraft disappeared from radar at about 8,000 feet.

Thursday, however, Ukraine outlined four potential scenarios to explain the crash, including a missile strike and terrorism.  Ukraine’ Security Council Secretary Oleksiy Danylov said the country’s investigators wanted to search for possible Russian missile debris, while President Volodymyr Zelensky said he asked people to refrain from speculation, conspiracy theories and hasty evaluations.

But by Thursday afternoon, both the U.S. and Canada were saying the plane was brought down by Russian missiles. 

As the country where the plane was designed and built, the United States would usually be allowed to be accredited for the investigation, the black boxes having been recovered, but at first there is was no way Iran would allow U.S. investigators to become part of the inquiry.   Now, at least as I go to post, Iran has relented and will allow them.

The 737-800 is one of the world’s most-flown models with a good safety record and does not have the software feature implicated in crashes of the 737 MAX.  The aircraft that crashed was only three-years-old. 

Among the victims were 82 Iranians, 63 Canadians (most with dual citizenship) and 11 Ukrainians, many of the passengers scheduled to go on to Canada.

Meanwhile, regarding the ongoing issue of the 737 MAX, Boeing designed the aircraft to save airlines the expense of training their pilots on flight simulators.  Even after the two crashes that killed 346 people, Boeing has argued in discussions with the FAA that simulator training was not necessary.

But now, after the worldwide grounding of the MAX has cost the company $billions over nearly 10 months and caused it to temporarily halt production, Boeing has reversed course.  Tuesday, the company said it would recommend that pilots train in flight simulators before flying the MAX.

Boeing has been conducting simulator tests as part of the work necessary to return the MAX to service, and pilots have not been using the right procedures to handle emergencies.  Now that’s comforting, isn’t it? 

It’s pretty easy to see that the MAX is not returning to service anytime soon, the FAA reiterating it is “following a thorough process, not a set timeline, to ensure that any design modifications to the 737 MAX are integrated with appropriate training and procedures.”

Simulator training means the return of the MAX could be delayed further even after regulatory approval.

Southwest made its first MAX order in 2011 based on Boeing’s promise that the airline wouldn’t have to educate its pilots on simulators, which can cost tens of $millions to operate over the life of an aircraft.

But wait...there’s more!  Boeing released a new batch of internal messages in which company employees discussed deep unease with the 737 MAX while ridiculing senior managers, customers and regulators. 

The killer email, among many, was sent from one company pilot in messages to a colleague in 2016.  “This airplane is designed by clowns, who in turn are supervised by monkeys.”  The new revelations, which had been provided to lawmakers and the FAA, threaten to further upend Boeing’s efforts to rebuild public trust in the MAX aircraft.

On another, a Boeing employee notes regulators were likely to want simulator training for a particular type of cockpit alert.  “We are going to push back very hard on this and will likely need support at the highest levels when it comes time for the final negotiation,” the employee writes.

The emails “paint a deeply disturbing picture of the lengths Boeing was apparently willing to go to in order to evade scrutiny from regulators, flight crews, and the flying public, even as its own employees were sounding alarms internally,” House Transportation and Infrastructure Committee Chairman Peter DeFazio said.

“We regret the content of these communications, and apologize to the FAA, Congress, our airline customers, and to the flying public for them,” Boeing said in a statement.  “We have made significant changes as a company to enhance our safety processes, organizations, and culture.”

The FAA said in a statement that the messages revealed nothing that wasn’t “already identified as part of the ongoing review of proposed modifications to the aircraft.”

--And this related to Boeing...the biggest MAX supplier, Spirit AeroSystems Holdings Inc., said it is planning an initial 2,800 layoffs, the first announced job cuts since the grounding of a plane that is rippling through the broader aerospace industry.

Spirit makes the fuselage and engine parts for the MAX and had been producing enough for 52 jets a month before Boeing said it would freeze assembling the planes in January for a “temporary” time.

Spirit derives more than half its sales from the MAX, and the cuts cover more than 20% of the staff at the company’s Wichita, Kan., plants.  Spirit’s CEO said more cuts may be necessary.

You will have further announcements in the coming weeks like this and President Trump will be pressuring Boeing, and probably the FAA (through tweets), as he begins to understand the impact on the overall economy and how it could change his campaign narrative.

--Tesla Inc. became the most valuable U.S. auto maker ever.

Monday, the company closed with a market value of $81.39 billion, surpassing Ford Motor Co.’s peak of $80.81 billion set in 1999.  But then the valuation kept soaring, the stock rising $22 on Wednesday and eventually closing the week at $478, for a market cap in excess of $86bn.

Tesla still trails Toyota Motor Corp. and Volkswagen AG, which were valued at $231.76 billion and $98.05 billion, at Tuesday’s close.

Elon Musk’s electric vehicle company said it had met his goal of delivering at least 360,000 electric vehicles in 2019, 367,500 to be exact.

Tesla has been touting its production in China, announcing it would build its Model Y compact sport-utility vehicle at the company’s new Shanghai plant.

GM and Ford also plan to sell several electric models in China, though they will account for a small portion of their business.

--Overall U.S. auto sales again hit the 17 million mark in new cars and light trucks (17.11 million for 2019), according to market-research firm Edmunds, the fifth straight year over that figure, a first. [Sales peaked at 17.55 million in 2016, after bottoming at 10.4m in 2009.]

Most experts are pegging 2020 at 16.8 million, which is still strong.

The sales environment continues to be positively impacted by low interest rates and low fuel prices, with the national retail price of regular gasoline at the pump not rising above $3 in more than five years, according to the Energy Information Administration.

At the same time, the average new vehicle sold for $37,183, according to Edmunds, an increase of 30 percent since 2009, a period in which overall consumer prices rose 20 percent.  This is where the shift to more profitable trucks over cars has been huge for the industry.

Ford Motor was the last to report sales for the fourth quarter, which fell 1.3% in the U.S. from a year earlier to 601,862 vehicles.  Ford’s car sales dropped 41%, and there was a 4.1% slide in sport utility vehicle sales.  However, sales of trucks and vans rose nearly 16%, thanks to the ongoing success of the F-Series of trucks, which remains the best-selling vehicle in the U.S.

Meanwhile, car sales at the company’s Lincoln brand fell more than 19% while its SUV sales rose nearly 31%.

Earlier, GM said deliveries fell 6.3% in the fourth quarter to 735,909, owing in no small part to the 40-day strike by the UAW in September and October.

Fiat Chrysler said sales fell 2% in the fourth quarter, though sales of its Ram brand set a new record of 190,655 trucks sold in the period.

GM’s sales fell 2.3% for the year, Fiat Chrysler’s 1%, and Ford’s were down 3%.  Toyota Motor reported a nearly 2% decline in U.S. sales for 2019, Honda’s were flat, while Nissan Motor Co.’s fell nearly 10%.

GM posted its biggest-ever sales drop in China last year and warned of a tough 2020, underscoring the challenges that U.S. car makers are facing amid the ongoing decline in demand gripping the world’s largest market.

China has been viewed as a reliable profits generator and source of growth, helping to offset cyclical slowdowns in the U.S. and Europe.

But China sales have slipped into reverse the last two years, with the government curtailing subsides that had made vehicles more affordable, and this is creating major issues for manufacturers, both foreign and domestic.

GM, the country’s second-largest car maker by sales, after Volkswagen AG, has retreated from Europe and other car markets to increase profitability, but last year it reported a 15% drop in China sales, the second straight year of declines (down 10% in 2018).

Rival Ford Motor has fared even worse in China.

The China Association of Automobile Manufacturers estimates the market will fall 2% in 2020, after a 7.4% decline from 2018 (greater than 2018’s 5.8% drop).  Total sales of passenger vehicles in China were 20.7 million last year.

But, as you see in the case of Tesla, many car companies are still betting on growth potential in China, particularly in electric vehicles.

--Japan’s Justice Minister Masako Mori said on Thursday that Carlos Ghosn’s accusations against Japan’s legal system are “absolutely intolerable,” firing back at the auto executive-turned-fugitive.

Ghosn, speaking publicly for the first time since his dramatic escape from Japan on Wednesday from Beirut, Lebanon, said he had been treated “brutally” by Tokyo prosecutors, who he said questioned him for up to eight hours a day without a lawyer present and tried to extract a confession out of him.

Ghosn, the former chief of Nissan Motor Co. Ltd. fled as he was awaiting trial on charges of under-reporting earnings, breach of trust and misappropriation of company funds, all of which he denies.

Japan’s justice minister shot back that Ghosn’s escape from his trial in itself “could constitute a crime.”  “Such action would not be condoned under any nation’s system,” Mori said.  “Furthermore, he has been propagating both within Japan and internationally false information on Japan’s legal system and its practice. That is absolutely intolerable.”

Mr. Mori has said it will try to find a way to bring Ghosn back from Lebanon, even though it has no extradition treaty with Japan.  “If defendant Ghosn has anything to say, it is my strong hope that he engage in all possible efforts to make his case within Japan’s fair criminal justice proceedings, and that he seek justice rendered by a Japanese court,” he said.

The more we learn about Japan’s “justice” system, the more we understand it is a sham.  Notice to Olympians going to Tokyo this summer...behave!!!

--Macy’s reported a small decline in holiday same-store sales on Wednesday, surprising investors who were bracing for a sharper drop following an earlier profit warning in November.  Same-store sales during November and December were down just 0.6%.  The retailer also announced it is planning to shutter 28 Macy’s locations and one Bloomingdale’s store in the coming weeks.  Macy’s operates about 860 stores in the United States.

Macy’s said it was helped by online purchases and revamping 150 stores with fresh interiors and better merchandise.

--But both Kohl’s and J.C. Penney reported worse than expected holiday sales.  Kohl’s said same-store sales for November and December were 0.2% lower than in the last two months of 2018, while J.C. Penney said comp sales for the nine-week period, ended Jan. 4, fell 7.5% from a year ago.

By the way, at the end of 2019, department stores accounted for 1.2% of total retail sales, down from 5% in 2005 and 9.5% in 1980, according to research firm Customer Growth Partners.

--Facebook announced on Monday that it would remove some manipulated videos – known as deepfakes – if the changes were not apparent to the average person and could mislead someone into thinking that a person said something they did not say. The Facebook blog post announcing the policy said videos that were not slated for removal could be looked at by fact-checkers, who might take action to slow a video’s distribution if it is rated false.

A spokesman for House Speaker Nancy Pelosi dismissed Facebook’s announcement as inadequate.

“Facebook wants you to think the problem is video-editing technology, but the real problem is Facebook’s refusal to stop the spread of disinformation,” tweeted spokesman Drew Hammill.

Facebook said that as part of its new policy it will not remove a heavily edited video that attempted to make Pelosi seem incoherent by slurring her speech and making it appear like she repeatedly stumbled over her words.

The company also announced this week that it wouldn’t limit how political advertising targets potential voters, but would instead give users tools to see fewer of those ads on its platforms.

--As noted above the cancer death rate in the United States fell 2.2 percent from 2016 to 2017 – the largest single-year decline in cancer mortality ever reported, the American Cancer Society reported on Wednesday.  Since 1991 the rate has dropped 29 percent, which translates to approximately 2.9 million fewer cancer deaths than would have occurred if the mortality rate had remained constant.

Experts attributed the decline to reduced smoking rates and to advances in lung cancer treatment.  New therapies for melanoma of the skin have also helped extend life for many people with metastatic disease, or cancer that has spread to other parts of the body.  So credit the drug companies.

But progress has slowed for colorectal, breast and prostate cancers.  It seems the rising rate of obesity is one explanation why the decline in breast and colorectal cancer death rates has begun to taper off,

Also, as the rate of obesity increases, malignancies of the liver, kidneys, pancreas and uterus, as well as colon and rectal cancers in adults younger than 55 are increasing.

--Bed Bath & Beyond reported a dismal quarter after the market closed Wednesday and the shares opened down over 10% Thursday morning.  The company reported a loss, 31 cents per share, when a small profit was expected on lower-than-forecast sales, a 9% drop in net sales during the three months that ended Nov. 30 vs. a year ago.

The company still plans to close 60 stores after shuttering 14 locations in late 2019.

It’s been just two months since a new CEO, Mark Tritton, took charge.

Personally, this is perhaps my favorite single store and the other day I bought a full bedding set on sale for $42! (after using my 20% off coupon of course). 

--Another retailer, Pier 1 Imports, the specialty furniture chain, announced it was closing up to 450 stores, nearly half of its locations.  In the recent quarter, Pier 1 reported a sales decline of 13% and a loss of $59 million.  The company didn’t give a specified number for the coming layoffs but it will obviously be sizable, including impacting headquarters.

--Shares in Six Flags Entertainment fell more than 18% today after the amusement park operator warned about a drop in Q4 revenue, citing challenges facing its projects being developed in China.  In a regulatory filing, Six Flags said its partner in China had defaulted on its payments to the company due to a declining market.  The company said the issues there “could range from the continuation of one or more projects to the termination of all the Six Flags-branded projects in China.” 

The Texas-based company’s first park in China, Six Flags Zhejiang, outside Shanghai, was set to open this summer.  The projects in China were expected to provide a much-needed new source of revenue for the company, which on Friday also said fewer people visited its North American parks in the fourth quarter.

--UBS Group AG said it will be cutting up to 500 jobs, stripping out layers of bureaucracy in its wealth-management unit as it attempts to keep its edge as bank to the world’s rich and cut costs.

The Swiss banking giant has been culling jobs in its investment bank as part of a broader reorganization over the past decade to focus on wealth management.

--Farmers have been hoping that 2020 will be the year that China finds its appetite for U.S. pork after a disappointing 2019 for exports.  It turns out China did not turn to the U.S. to fill its pork needs despite the African swine fever epidemic that decimated hog herds in Asia.  Most-active hog futures on the Chicago Mercantile Exchange finished the year down nearly 30% from a high set in April.

A tariff of 72% on imports of U.S. pork was in place for most of the year, draining demand for U.S. hog supplies.  575 million pounds of frozen U.S. pork is being stored in refrigerated warehouses throughout the U.S., according to the USDA – a record.

Chinese buyers have been opting to purchase more pork from the EU and Brazil, according to USDA data.

And then this week, China’s commerce ministry said that Beijing will increase pork imports and release more pork from state reserves to ensure stable supply and prices ahead of the Lunar New Year holidays.

At the same time, the Wall Street Journal reported today that “China is finally getting a handle on African swine fever...Beijing still has hard questions to answer about food safety, not least as it grapples with an outbreak of a new virus in Wuhan. But bringing swine fever under control will be great for Chinese consumers, and for the businesses that serve them.”

China’s breeding sow population rose 2.2% on the month in December, while pig stocks at large farms rose 2.7%.

Separately, rising tensions in the Middle East may threaten U.S. wheat growers, who could lose access to Middle Eastern markets.  The U.S. share there, while still small, is growing but could be derailed with prolonged tensions in the region.

Middle Eastern nations are one of the largest importers of wheat outside Southeast Asia and North Africa.

--U.S. consumers, companies and workers will pay the biggest price for proposed 100% tariffs on French Champagne and other sparkling wines, cheese, porcelain, enamel cookware and handbags, witnesses told the U.S. government on Tuesday.  The U.S. Trade Representative’s office last month proposed punitive duties on $2.4 billion in imports from France on these goods after concluding that a new French digital services tax would harm U.S. companies.

Those tariffs come on top of 25% tariffs already imposed on a wide range of European imports, including Airbus jets, European cheeses, wines and other products in a dispute with the EU over aircraft subsidies.

Ben Aneff, managing director of a large retail wine store in New York, said the existing and threatened tariffs posed “the greatest threat to the wine industry since Prohibition.”

“The domino effect of unintended consequences from the proposed tariffs would be catastrophic for tens of thousands of American businesses,” Aneff told government officials at a hearing hosted by the USTR on the French tariff issue.  The Wine & Spirits Wholesalers of America estimates that 100% tariffs on French sparkling wines alone would result in the loss of 17,000 jobs at a cost to the economy of $2 billion.  Overall, the tariffs on European wines were expected to cost some $10 billion in lost revenue and 78,000 jobs, hitting the nation’s 47,000 wine retailers and more than 6,500 importers and distributors disproportionately hard, Aneff said.

Consumers have strong loyalty to specific products and do not readily adopt substitutes.

--According to researchers at the National Institute of Environmental Health Science, talcum powder is not linked to ovarian cancer, the largest ever study having just concluded.  The government pooled data from 252,745 women and found no evidence that talc was dangerous when used as a feminine hygiene product.

In recent years, Johnson & Johnson has had to pay $billion to compensate women who claimed to have developed ovarian cancer after using Johnson’s Baby Powder.

The company said it would now appeal those verdicts, having already won four appeals.  A company spokesman said: “The facts are that Johnson’s Baby Powder is safe, does not contain asbestos, and does not cause cancer.”

--Elon Musk’s SpaceX company launched another 60 satellites in its Starlink network, bringing the number of spacecraft the firm has now put in the sky as part of its plan to provide a global broadband internet service at 182.

SpaceX now operates more commercial satellites in orbit than any other company; Planet Labs, also of California, having about 150.  Its spacecraft are used to image the Earth’s surface.

SpaceX has permission from regulators to launch up to 12,000 platforms but has talked of an eventual 40,000.  [What can go wrong?]

SpaceX could be sending up another 120 (in batches of 60) before the end of January.

--Ray Dalio’s Bridgewater Associates notified investors that its flagship Pure Alpha fund will be flat on the year – ending an 18-year winning streak, according to Institutional Investor.  Flat results are tough to justify in a year where the total return on the S&P 500 was 31.5%.

Critics say Dalio has been overly focused on promoting his 2017 book, “Principles,” which he continues to spend time on years after launch.  He’s also been bearish on global markets, and reportedly shorting the bond market in the second half of 2019, which clearly hasn’t paid off.

--TikTok, the smartphone app beloved by teenagers and used by hundreds of millions of people around the world, had serious vulnerabilities that would have allowed hackers to manipulate user data and reveal personal information, according to research published by Check Point, a cybersecurity company in Israel.

As reported by the New York Times: “The weaknesses would have allowed attackers to send TikTok users messages that carried malicious links.  Once users clicked on the links, attackers would have been able to take control of their accounts, including uploading videos or gaining access to private videos.  A separate flaw allowed Check Point researchers to retrieve personal information from TikTok user accounts through the company’s website.”

TikTok said it learned about the conclusions of Check Point’s research on Nov. 20 and fixed all vulnerabilities by Dec. 15.

The app’s parent company is based in Beijing, and has become a target of lawmakers and regulators suspicious of Chinese technology, for good reason.  Several branches of the U.S. military have barred personnel from having the app on government-issued smartphones.

--Individual taxpayers are half as likely to get audited as they were in 2010, after tax enforcement by the IRS fell to its lowest level in at least four decades.

The IRS audited 0.45% of personal income-tax returns in fiscal 2019, down from 0.59% in 2018 and marking the eighth straight year of decline, according to a report released on Monday.  In 2010, the IRS audited 1.1% of tax returns.

The decline in enforcement is driven by years of cuts to the agency’s budget, and the result is Treasury is letting $billions go uncollected, as the overall budget deficit rises.

Foreign Affairs, cont’d....

Syria: Vladimir Putin met Bashar al-Assad in Damascus on Tuesday, Putin’s second trip to Syria since Moscow intervened decisively on Assad’s behalf in the civil war.  Russian and Iranian support have been critical to Assad’s survival and Putin told the Syrian president that much had been done to restore Syrian statehood.

Kenya: Three Americans – one U.S. military servicemember and two contractors (working for the Defense Department) – were killed by Somalia’s al Shabaab Islamist group during an attack Sunday on a military base used by both U.S. and Kenyan forces.  A number of U.S. helicopters and military vehicles were also destroyed in the attack.  Kenya said five militants were killed while not announcing its own casualties.

Shockingly, President Trump said nothing of this.  More than 150 U.S. personnel are at the base.

China / Hong Kong / Taiwan: Tomorrow, Saturday, is an historic day on Taiwan as it’s expected President Tsai Ing-wen will handily win re-election over opposition candidate Han Kuo-yu.

A year ago, Tsai would have gone down to defeat, but she has taken advantage of months of anti-government protests in Hong Kong

The current Legislative Yuan, the island’s parliament, has the ruling DPP with 68 seats to the Kuomintang’s (KMT) 35; 113 seats in total.  It’s possible the KMT, despite their presidential candidate’s looming defeat, could still pick up seats.

Taiwan’s foreign minister said Beijing should not see the election as representing a win or loss for China, even as Taiwan says it is an independent country called the Republic of China, its formal name, with the government warning of Beijing’s efforts to sway the results in favor of the opposition.

“I just don’t think China should read Taiwan’s election as its own victory or defeat,” Foreign Minister Joseph Wu.

“If China reads too much into our election...there might be a likely scenario that China will engage in military intimidation or diplomatic isolation or using economic measures as punishment against Taiwan.”

Wu added: “This is our election. This is not China’s election.  It is Taiwanese people who go to the voting booth to make a judgment on which candidate or political party is better for them.  If China wants to play with democracies in other countries so much, maybe they can try with their own elections at some point.”

Since Tsai took office in 2016, relations with China have soured, with China cutting off formal dialogue, flying bomber patrols around Taiwan, and whittling away at its diplomatic allies.

Tsai has portrayed the election as a choice between defending democracy and caving to Beijing’s will in return for economic benefits; her campaign slogan being, “Hong Kong today, Taiwan tomorrow.”

China suspects Tsai of pushing for the island’s formal independence, a red line for Beijing.  Tsai says she will maintain the status quo but will defend Taiwan’s democracy and way of life.

There have been a number of reports of China’s efforts to interfere in the election, with allegations in Australian media that a self-professed Chinese spy described a smear campaign against Taiwan’s ruling party.  Needless to say, China has become the main focus in the campaign, especially its threats to “reunify” with Taiwan.

Meanwhile, Hong Kong has a new boss.  Beijing didn’t fire Chief Executive Carrie Lam, yet, but it’s expected to happen at some point.  Instead, Beijing installed a new liaison office director, Luo Huining, a true hardliner.  Two days after sacking former director Wang Zhimin, who wasn’t viewed as being tough enough, Luo briefly faced the media, uttered some catch-phrases used by mainland officials, and refused to take questions.

This is worrisome.  It’s clear Beijing has had enough of the months-long anti-government protests.

Lam is not in charge of political issues, Luo is.

North Korea: Kim Jong Un was quiet this week, perhaps strangely so given his recent bombast and talk of a “new strategic weapon.”  South Korean President Moon, however, wasn’t silent, saying there is a “desperate need” for practical ways to improve ties with the North, adding that he was ready to meet with Kim ‘repeatedly’ if necessary.

Moon has been sidelined from his leading role in the diplomatic effort with Pyongyang since 2018, saying he regretted the lack of progress for over a year now.  He said he would push for restarting the Kaesong Industrial Complex and tours to Mt. Kumgang, and he wants to complete the inter-Korean railroad.  But Kim has been unresponsive to the overtures, and cooperation projects have stalled.

Pyongyang keeps complaining about Washington’s lack of flexibility, while the U.S. says Kim must take more concrete steps to dismantle his nuclear and ballistic missile programs before sanctions are eased.

For his part, President Trump said last Sunday aboard Air Force One that he did not expect Kim to break his promise about denuclearization but conceded he might.

“I don’t think he’d break his word to me, but maybe he will,” Trump told reporters.

Venezuela: It was a chaotic week here, as opposition lawmakers rammed their way into Congress past lines of regime soldiers and swore in their leader Juan Guaido as head of the assembly, a largely symbolic victory for his U.S.-backed movement.

Days earlier, soldiers and supporters of President Nicolas Maduro barred the opposition from entry into parliament.  After keeping Guaido and his opposition deputies out, pro-Maduro lawmakers quickly named Luis Parra, a lawmaker who broke from the opposition, as head of a pro-government assembly.  U.S. officials said they were considering tougher sanctions on the Maduro regime, but, let’s face it, the Trump administration’s Venezuelan strategy has been an unmitigated disaster.

The legislature is the last democratically elected body in the oil-rich country and is recognized by the U.S. and nearly 60 other countries as the nation’s sole legitimate authority.

President Maduro’s regime stripped nearly all the assembly’s power after the opposition won control of the body in 2015 elections.  Maduro instead set up a parallel body that was stacked with government supporters.  He also controls the Supreme Court, military, electoral authority, all television, the central bank and the state-owned oil monopoly PdVSA.

Mexico and Argentina spoke out in forceful terms against the move to impede the operation of the Legislative Assembly, both saying the action condemns Venezuela to international isolation.

But, Russia, Cuba, North Korea and Iran still back Maduro.

Random Musings

--Presidential tracking polls....

Gallup: 45% approval of President Trump’s job performance, 51% disapproval; 89% of Republicans, 42% of independents (Dec. 2-15...Gallup for now back to once a month).
Rasmussen: 48% approval, 51% disapproval (Jan. 10).

--CBS Battleground Tracker YouGov polls of Iowa and New Hampshire Democratic caucus/primary goers.

Iowa (Feb. 3): Bernie Sanders 23%, Joe Biden 23%, Pete Buttigieg 23%, Elizabeth Warren 16%, Amy Klobuchar 7%.

New Hampshire (Feb. 11): Sanders 27%, Biden 25%, Warren 18%, Buttigieg 13%, Klobuchar 7%.

A Monmouth University poll released Thursday of New Hampshire primary voters had Buttigieg at 20%, Biden 19%, Sanders 18%, Warren 15%.  [Klobuchar 6%, Gabbard 4%, Steyer 4%.]

And tonight, a new Des Moines Register/CNN/Mediacom Iowa poll has Sanders on top at 20% of likely Democratic caucusgoers, with Warren at 17%, Buttigieg 16%, and Joe Biden 15%.  Amy Klobuchar is at 6%.

Iowa and New Hampshire are followed by Nevada (Feb. 22) and South Carolina (Feb. 29)...and then it’s on to Super Tuesday (March 3...and delegate rich California, Texas, Virginia and North Carolina, among many others).

Yes, the action is going to be fast and furious, and, reminder, the reason so many are talking about the potential for a brokered convention is because these aren’t winner-take-all affairs.  At 15% you get a share of the delegates.  For example, Joe Biden could easily finish 3rd or 4th in Iowa, maybe second in New Hampshire, but then he’s going to kick butt in South Carolina.

--Well, the next debate is Tuesday from Des Moines, and as of Wednesday, only Biden, Buttigieg, Sanders, Warren and Klobuchar had qualified.

But out of nowhere, with the release of two Fox News polls for South Carolina and Nevada, Tom Steyer will be joining the five on stage.

In South Carolina, Biden received the backing of 36% of primary voters, with Steyer in second at 15%, up 11 points since October.  Sanders received 14% and Warren 10%.

In Nevada, Biden tops Sanders 23-17 among Democratic caucusgoers, with Warren and Steyer tied at 12%.

Steyer needed two polls showing him with 5 percent support, or two polls of early-voting states showing him at 7 percent, and the qualification deadline was only a day away.

This blows me away.

--Elizabeth Warren said Friday that she now supports President Trump’s renegotiated United States-Mexico-Canada Agreement because it “makes improvements.”

“Workers have had the legs taken out from underneath them and this agreement makes improvements,” Warren told a Boston CBS affiliate.  “It’s gonna help open up some markets for farmers, they need that stability.  It’s gonna help with enforceable labor standards and that’s gonna be useful.  We really need trade negotiations going forward that make sure anyone who wants access to our markets is actually helping us in the fight against climate change and helping build an economy that works for everybody in the U.S.”

Warren’s change in stance is important because it sets her apart from Bernie Sanders, who has stated he will not vote for the agreement.

--Michael Bloomberg is buying a 60-second ad spot for the Super Bowl, at a cost of $10 million, to one-up a 30-second ad the Trump campaign has reportedly secured.

But then the Trump campaign said it, too, secured a 60-second spot.

Bloomberg is still targeting Super Tuesday for his big splash.

--Our hearts go out to the people of Puerto Rico, who the last few years just can’t catch a break with Mother Nature and the island happening to be on top of the Caribbean plate.  A swarm of earthquakes has hit these folks this week causing significant damage, power out to 2/3s of the island, and once again they need massive help.

But Gov. Wanda Vazquez did say power should be fully restored across the island by Monday.

--The number of people killed by a measles epidemic in the Democratic Republic of Congo has passed 6,000, the World Health Organization (WHO) announced.

The WHO says the epidemic is the world’s largest and fastest moving.  Around 310,000 suspected measles cases have been reported since the start of 2019, the WHO says.

The Congolese government and the WHO launched an emergency vaccination program last September, but poor infrastructure, attacks on health centers and a lack of access to routine healthcare have all hindered efforts to stop the spread of the disease.

DR Congo is also experiencing the second most deadly outbreak of Ebola the world has ever seen, though the toll thus far is less than half as many people as measles.

--James Morrow / Australia’s Daily Telegraph...on the bushfires....

“The current round of blazes started late last year.  It has charred at least 15 million acres and killed more than two dozen Australians, including brave volunteer firefighters who rush into the inferno to save homes and lives.

“The climate-change narrative grossly oversimplifies bushfires, whose causes are as complex as their recurrence is predictable:

“Australia is in the midst of one of its regular droughts.

“Byzantine environmental restrictions prevent landholders from clearing scrub, brush and trees.  State governments don’t do their part to reduce the fuel load in parks.  Last November a former fire chief in Victoria slammed that state’s ‘minimalist approach’ to hazard-reduction burning in the off-season. That complaint is heard across the country.

“As for the proximate cause, anything from a lightning strike to a spark from a power tool to arson can touch off a conflagration.  More than 180 people have been arrested for allegedly starting blazes since the start of the current bush-fire season.

“Yet the narrative that has been built around the fires and broadcast around the world points the finger only at man-made climate change – and specifically at Prime Minister Scott Morrison.  Activists insist that if his government had an effective ‘climate policy,’ it would somehow help snuff out the flames.  Never mind that Australia emits only around 1/77th of the world’s man-made carbon dioxide.  The country’s complete deindustrialization wouldn’t budge the global thermostat.

“In radical corners of Australian social media, activists play out fantasies of the government’s dissolution and replacement with some sort of revolutionary people’s climate assembly taking power (surely, they’ll get it right this time).  On Monday a parliamentarian from the Australian Greens tweeted about one day holding ‘climate trials’ to deal with conservative politicians....

“Mr. Morrison’s enemies thought they’d found an opening with the fires.  They leapt on a poorly timed family holiday, which saw Mr. Morrison absent when things started to get bad, and an initial response when he returned that many found underwhelming.

“Yet it’s unlikely the country will be forced into some radical climate program.  Australians understand that their climate has always been one of the deadliest in the world, and that the country’s modern history is signposted with huge and deadly bush-fire seasons.  Being a pragmatic, realistic lot, they know that no act of economic self-harm can do anything to change the weather.”

And the other side...Richard Flanagan / New York Times....

“Incredibly, the response of Australia’s leaders to this unprecedented national crisis has been not to defend their country but to defend the coal industry, a big donor to both major parties – as if they were willing the country to its doom.  While the fires were exploding in mid-December, the leader of the opposition Labor Party went on a tour of coal mining communities expressing his unequivocal support for coal exports....

“Since 1996 successive conservative Australian governments have successfully fought to subvert international agreements on climate change in defense of the country’s fossil fuel industries.  Today, Australia is the world’s largest exporter of both coal and gas. It recently was ranked 57th out of 57 countries on climate-change action.

“In no small part Mr. Morrison owes his narrow election victory last year to the coal-mining oligarch Clive Palmer, who formed a puppet party to keep the Labor Party – which had been committed to limited but real climate-change action – out of government....Mr. Palmer subsequently announced plans to build the biggest coal mine in Australia....

“More than one-third of Australians are estimated to be affected by the fires.  By a significant and increasing majority, Australians want action on climate change, and they are now asking questions about the growing gap between the Morrison government’s ideological fantasies and the reality of a dried-out, rapidly heating, burning Australia.

“The situation is eerily reminiscent of the Soviet Union in the 1980s, when the ruling apparatchiks were all-powerful but losing the fundamental, moral legitimacy to govern.  In Australia today, a political establishment, grown sclerotic and demented on its own fantasies, is facing a monstrous reality which it has neither the ability nor the will to confront.

“Mr. Morrison may have a massive propaganda machine in the Murdoch press and no opposition, but his moral authority is bleeding away by the hour....

“As Mikhail Gorbachev, the last Soviet leader, once observed, the collapse of the Soviet Union began with the nuclear disaster at Chernobyl in 1986.  In the wake of that catastrophe, ‘the system as we knew it became untenable,’ he wrote in 2006.  Could it be that the immense, still-unfolding tragedy of the Australian fires may yet prove to be the Chernobyl of climate crisis?”

It is estimated that more than 1 billion mammals, birds and reptiles nationwide – some of them found nowhere else on Earth – may have been affected or killed by the fires sweeping Australia, according to a University of Sydney estimate.  One researcher notes that individual animals might survive, but when their habitat is gone, “it doesn’t matter.  They’ll die anyway.”

--New York City released its official murder rate for 2019, 318, up from 295 in 2018, according to the NYPD.  Overall serious crime in the city fell about 1% compared with the year before.

--Prince Harry and Meghan Markle announced they were quitting the royal family, an extraordinary move – after spending six weeks in a multimillion-dollar hideaway in Canada – the couple saying they wanted to take a “progressive new role” and leave their roles as “senior” royals.

The couple added they wanted to be financially independent, and they will now split their time between the UK and North America.

In the unprecedent statement, the Duke and Duchess of Sussex said: “After many months of reflection and internal discussions, we have chosen to make a transition this year in starting to carve out a progressive new role within this institution.  We intend to step back as ‘senior’ members of the Royal Family and work to become financially independent, while continuing to fully support Her Majesty The Queen.  It is with your encouragement, particularly over the last few years, that we feel prepared to make this adjustment.  We now plan to balance our time between the United Kingdom and North America, continuing to honor our duty to The Queen, the Commonwealth, and our patronages.”

Meghan and Harry said they are launching a new charitable entity.

But the royal family was said to be “deeply disappointed,” Harry and Meghan stepping back without consulting the Queen, Prince Charles or Prince William.

In a statement released two hours after Harry and Meghan’s, Buckingham Palace said the couple’s “desire to take a different approach” created “complicated issues” that would take time to resolve.

As the two now seek privacy, critics lambasted them for their big spending and their acceptance of money from the British taxpayer.  Several national newspapers have launched blistering attacks, saying the couple had been disrespectful to the Queen.

The Daily Mirror, one of three papers facing lawsuits from the couple, often fumed in its coverage about “an extraordinary day in the history of the royal family.”

Rachael Bletchly wrote: “Harry has selfishly turned his back on the institution she (the Queen) has fought to modernize and secure for him and his children.  And he didn’t even have the guts or decency to tell her, or his own father, of the bombshell he was about to drop in their laps.

“Well, good riddance,” Bletchly added.  “I for one have had a bellyful of Harry’s eco-warrior hypocrisy.

“The tragedy is he was once the most loved of the modern royals – from the moment he walked behind his mother’s coffin our hearts ached for him. Then he met Meghan.  But boy, she changed our Harry.”

Harry and Meghan will continue to receive money from Buckingham Palace, which has largely funded their activities.  And they will continue to use Frogmore Cottage, on the Windsor estate, as their official residence in the UK and their security will continue to be funded by the British taxpayer.

Maureen Callahan / New York Post

“How’s this for quitting your job: Abandon every aspect you hate, while continuing to reap all the benefits you love.

“This, in effect, is what Prince Harry and Meghan Markle have done.  In a statement loaded with confusing double-speak, the couple wrote, in part, ‘We intend to step back as ‘senior’ members of the royal family and work to become financially independent, while continuing to fully support Her Majesty The Queen.’

“None other than Queen Elizabeth is confused....

“Will Harry and Meghan keep their royal titles?  ‘Work to’ become financially independent – how long is that going to take/ Will they continue to get an allowance until that happens?  Where will they live while in the UK?  In Frogmore Cottage, the estate gifted to them by the Queen, which they spent another $3 million in taxpayer funds renovating?

“They say yes.  Can’t wait to hear what the Queen has to say about that.

“This is all so smug and gross, considering British taxpayers already spent $3 million on Harry and Meghan’s wedding.

“Since then, the couple has generated more headlines for feuding with William and Kate, for exorbitant spending (half a million for Meghan’s wardrobe in 2018 alone), for seeking the company and approbation of Hollywood stars, for snubbing engagements – both public (last month’s NATO reception at Buckingham Palace) and private (most recently the Queen’s annual Christmas family gathering at Sandringham) - than for any good works as royals....

“The hypocrisy here is Harry and Meghan announcing a ‘step back’ rather than abdication.

“To employ a cliché: They are having their cake and eating it, too....

“It will be interesting to see how this plays out amid the Brexit crisis, the Prince Andrew disaster, and with a public that has long adored Harry for bravely suffering the loss of his mother, for his wartime service in Afghanistan, for his charity work with veterans and children, for his charisma and his common touch.

“The latter, of course, now in question.”

I totally agree with Ms. Callahan’s final comments.  I have been a long-time fan of the royal family and tradition, and really a fan of Harry.  He’s lost me with the way he handled this move.  Meghan?  Oh, I feel sooooo sorry for her.

President Trump said in a Fox News interview tonight that he was disappointed with the decision.

“I think it’s sad, I do.  I think it’s sad.  She’s a great woman,” Trump said, referring to the Queen.  “She’s never made a mistake if you look.  I mean, she’s had like a flawless time.”

Meanwhile, the New York Post revealed that Oprah was heavily involved in Harry and Meghan’s breakout, while Oprah’s BFF Gayle King will be scoring the first interview with the Sussexes post-Megxit.

--Finally, Edward R. Murrow famously said in his show that definitively denounced and revealed Sen. Joseph McCarthy for what he was, we “must not confuse dissent with disloyalty.”

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

God bless America.

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Gold $1561
Oil $59.14...nearly $4 drop with tensions easing (for now) in Iran/Iraq.

Returns for the week 1/6-1/10

Dow Jones  +0.7%  [28823]
S&P 500  +0.9%  [3265]
S&P MidCap  -0.2%
Russell 2000  -0.2%
Nasdaq  +1.8%  [9178]

Returns for the period 1/1/20-1/10/20

Dow Jones  +1.0%
S&P 500  +1.1%
S&P MidCap  -0.6%
Russell 2000  -0.7%
Nasdaq  +2.3%

Bulls 58.9
Bears 17.8...last week’s readings...new data N/A

Have a great week.

Dr. Bortrum posted a new column!

And for Larry David fans, reminder, “Curb Your Enthusiasm” returns on HBO Jan. 19.  This is the best news most of you will receive all week.

Brian Trumbore