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Week in Review

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02/15/2020

For the week 2/10-2/14

[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 this week to Bob C.

Edition 1,087

As I go to post tonight, the new death toll in China from the coronavirus is over 1,500 (1,523), with Hubei reporting 139 more deaths (2,400 new cases).  Nationally, the number of cases is up to 66,492.  Of the 1,523 deaths China is officially acknowledging and, yes, who the hell knows what the truth is, 1,123 are in Wuhan alone.

A top Chinese official acknowledged today that the outbreak is a deep challenge for the country, but defended Beijing’s management of the epidemic while lashing out at the “overreaction” of other countries.

In an interview with Reuters in Berlin, State Councilor Wang Yi, who also serves as China’s foreign minister, urged the United States not to take unnecessary virus-response measures that could hamper trade, travel and tourism.

“The epidemic overall is under control,” he said.  “This epidemic is truly sudden.  It has brought a challenge to China and the world.”

“We’ve taken such complete prevention and control efforts, efforts that are so comprehensive, that I can’t see any other country that can do this,” Wang said, adding that any leader in another country would find the challenge very difficult.  “But China has been able to do this.”

Do what?!

The World Health Organization, as of today, had all of two people in China, both in Beijing, not Wuhan or Hubei, and the United States still isn’t allowed to have any representatives from the world’s best body, the Centers for Disease Control, in China, let alone at the epicenter to work with Chinese scientists and researchers.

And today, China announced that people returning to Beijing from extended holidays were ordered to undergo a 14-day self-quarantine to help prevent the spread of the coronavirus.

The official Beijing Daily newspaper said people failing to obey would be punished but it was not immediately clear how that would be enforced, or whether the restrictions would apply to non-residents of Beijing or foreigners arriving from abroad.

Honghu city in Hubei imposed a “wartime” lock-down beginning today, with strict management of entry into housing compounds and villages, China’s CCTV reported.

Yet Wang Yi, who is indeed a big figure in China, had the temerity to say, “We’re not just defending the life, safety and health of Chinese citizens, but also making our contribution for global public health, and that should be recognized.”

What?  You want a freakin’ participation medal, for having open-air live animal (many rare) markets?  For having the fetid duck ponds I’ve personally seen where thousands of ducks are in a disgusting body of water the size of most living rooms...breeding grounds for bird flu?  For sharing nothing with world health officials?

This is the bottom line.  Beijing is managing the numbers, and hiding the facts, just like it does with its National Bureau of Statistics and the economy, very carefully.

So while Wang Yi was making these comments tonight in Berlin, saying the epidemic is under control, and Chinese officials were failing to come clean, the World Health Organization warned that the epidemic posed a global threat potentially worse than terrorism.

The world must “wake up and consider this enemy virus as public enemy number one,” WHO chief Tedros Adhanom Ghebreyesus said at one point this week, responding to those saying that the virus will simply run its course by April with warmer weather.

“This outbreak could still go in any direction,” the WHO director general warned, though, yes, the slower spread thus far of cases outside Hubei province was slightly reassuring.

As for the United States, of course there is no reason for panic, what with 16 cases diagnosed thus far, none fatal, vs. 14,000 deaths from the flu this season.

But as our own government officials warn, there remains so much we don’t know.  True, at some point it could peter out, but what if it returns in the fall?

I can’t help but add, though, that overall tensions between the United States and China are ratcheting up rapidly, and it’s not just about the lack of transparency with the coronavirus.  It’s about Huawei, and the charges levied against four Chinese military officers in the Equifax hacking incident from a few years ago, both described further below.

China and Xi Jinping’s government is deeply wounded...humiliated.  That’s not a good thing for any of us.

Lastly, since I first brought it up, the WHO told the International Olympic Committee there is no case for canceling or relocating the Tokyo Olympics over the outbreak, the head of the IOC’s Coordination Commission said today.  Japan said it would step up testing and containment after reporting its first coronavirus death and confirming new cases.

We’ll see what everyone says on the topic in another few weeks.

As for President Trump, before we get into Trump World, he received some highly encouraging news regarding his reelection yesterday when a Gallup poll revealed that 61% of Americans say they are better off than they were three years ago when he took office, and about the same number credit him for the improvement.

No other incumbent president in the past three decades has enjoyed such a high percentage of people saying they feel better about their situation.

But now....

….Trump World

--In a rare rebuke of the president, Attorney General William Barr said Trump should stop tweeting about the Roger Stone case because his posts “make it impossible for me to do my job.”

In an interview with ABC News on Thursday, Barr said, “I think it’s time to stop the tweeting about the Department of Justice criminal cases,” adding that he has a problem “with some of the tweets.”

“As I said at my confirmation hearing, I think the essential role of the attorney general is to keep law enforcement, the criminal process sacrosanct to make sure there is no political interference in it. And I have done that and I will continue to do that,” he told the network’s chief justice correspondent, Pierre Thomas.

“And I’m happy to say that, in fact, the president has never asked me to do anything in a criminal case,” he said.

But Barr added he wasn’t going to be pressured by anyone – even the president.

“I’m not going to be bullied or influenced by anybody...whether it’s Congress, a newspaper editorial board, or the president,” he said.

“I cannot do my job here at the department with a constant background commentary that undercuts me.”

Barr’s comments put him in line with many of Trump’s supporters on Capitol Hill who say they support the president but wish he’d cut back on his tweets.

Trump then tweeted today:

“ ‘The President has never asked me to do anything in a criminal case.’ A.G. Barr.  This doesn’t mean that I do not have, as President, the legal right to do so, I do, but I have so far chosen not to!”

The White House said Trump “wasn’t bothered” by Barr’s criticism and that he still had “full faith” in the A.G.

But earlier in the week, Trump thanked and praised Barr for overruling veteran prosecutors who had recommended that Stone – Trump's longtime associate – serve between seven and nine years on his conviction for lying to Congress, witness tampering and obstruction of justice.

In a stunning reversal, the Justice Department overruled a recommendation by its own prosecution team that Stone serve such a lengthy sentence – which was in line with sentencing guidelines – that “would not be appropriate.”

The about-face raised serious questions about whether Barr had intervened on behalf of the president’s friend.  And it also raised questions about whether Trump personally pressured the Justice Department, either directly or indirectly.

Barr, in the ABC News interview, defended his actions and said it had nothing to do with the president.   He said he was supportive of Stone’s conviction but thought the sentencing recommendation was excessive.

Well he undercut his own prosecutors, going against past precedence, and, after all, it doesn’t matter what the prosecutors recommend, it is up to the judge to determine what Roger Stone should receive! 

That is the bottom line of this whole imbroglio.  No wonder the entire four-man DOJ prosecution team withdrew from the case, and one prosecutor resigned from the Justice Department entirely.

Hours after Barr told his staff that the department had to amend its recommendation, President Trump tweeted:

“This is a horrible and very unfair situation.  The real crimes were on the other side, as nothing happens to them.  Cannot allow this miscarriage of justice!”

And...

“Congratulations to Attorney General Bill Barr for taking charge of a case that was totally out of control and perhaps should not have even been brought.  Evidence now clearly shows that the Mueller Scam was improperly brought & tainted.  Even Bob Mueller lied to Congress!”

But Senator Lindsey Graham, chair of the Judiciary Committee that oversees the Justice Department, as well as one of Trump’s closest allies on Capitol Hill, said the president should not have tweeted about an ongoing case.

Editorial / Wall Street Journal

“After his Senate impeachment acquittal, we wrote that President Trump’s history is that he can’t stand prosperity.  Well, that was fast.  The President’s relentless popping off this week about the sentencing of supporter Roger Stone has hurt himself, his Justice Department, and the proper understanding of executive power.  That’s a notable trifecta of self-destructive behavior even by his standards.

“Mr. Trump handed another sword to his opponents when he fulminated on Twitter about the initial recommendation of a seven-to-nine-year prison sentence for Mr. Stone.  He is right that such a sentence would be excessive....

“As it happens, senior Justice officials had concluded on their own that the sentence recommendation was excessive and had decided to rescind it before Mr. Trump’s tweet.  But by ranting publicly as he did, the President gave Democrats an opening to claim that Attorney General Bill Barr was taking orders from the White House.  Four prosecutors...withdrew from the Stone case in protest, and Democrats had another Trump scandal to flog.

“The uproar is obscuring that Mr. Barr had every reason and authority to reduce the sentencing recommendation... All prosecutors ultimately work for Mr. Barr, and he is accountable to the voters through the President....

“But before Mr. Barr could explain any of this, Mr. Trump compounded his political felony by praising the AG for rescinding the sentencing recommendation.  That gave more ammunition to Democrats and undermined Mr. Barr.  The President then shot himself again by attacking Judge Amy Berman Jackson, who is presiding over the Stone case.  ‘Is this the Judge that put Paul Manafort in SOLITARY CONFINEMENT, something that not even mobster Al Capone had to endure?’ he tweeted.

“Mr. Trump makes no friends in the judiciary with such political attacks, and it can't help Mr. Stone’s chances of getting a reduced sentence.  If the President dislikes the sentence, he has his pardon power.  Meantime, knock it off....

“The danger for Mr. Trump is that Mr. Barr will resign because he is tired of having his credibility undermined by a President who can’t control his political id no matter the damage it causes.

“Mr. Trump won’t like to hear any of this, and no doubt his loyalists will blame Democrats, the media and Mr. Barr.  But Mr. Trump is his own worst enemy.  Time and again his need to dominate the news, to justify even his mistakes, and to rebut every critic gets him into needless trouble....

“In the wake of his Senate acquittal, Mr. Trump should be campaigning for re-election and enjoying the disarray of his opponents.  Instead he gives every appearance of wanting to settle scores with anyone who contributed in any way to impeachment.

“He is helping the Democrats who are running against the Senators who voted to acquit.  And he is making millions of voters ask if they really want to take a risk on giving him so much power for another four years.”

Judge Jackson is scheduled to sentence Roger Stone on Feb. 20.

Appearing on Fox News, former Republican Rep. Trey Gowdy, formerly head of the House Oversight Committee, said Stone deserved “two to three years.”  I’m guessing that is what he’ll receive.

So that’s where I was going to end this discussion tonight, only later today we learned that the Justice Department revealed it would not charge former acting FBI director Andrew McCabe with lying to investigators about a media disclosure.  McCabe had authorized the bureau to investigate Donald Trump in 2017 and has been a persistent target of presidential attacks since.  Trump was said to be furious over this move.

You’d think the president would thus be ticked off at Bill Barr, but then we learned Barr has tasked outside prosecutors to review the handling of the criminal case against former national security adviser Michael Flynn and other sensitive national security and public corruption prosecutions in the U.S. attorney’s office in Washington.

Flynn was one of the early people to plead guilty in connection with special counsel Robert Mueller’s probe, admitting he lied to the FBI about his contacts with the Russian ambassador to the United States, though he has since tried to withdraw his plea.

So where are we really, especially with regards to the Trump-Barr relationship?  And just imagine the mood among career officials in the Justice Department.

--President Trump wants to reprogram almost $4 billion in Defense Department funds to pay for his now-infamous wall on the southern border, according to a budget request sent to Congress.

The funds will come from procurement for major weapons programs, including for the fifth-generation F-35 fighter jet.  $1.3 billion will be drawn from the National Guard alone.

The White House is planning to divert $7 billion in military construction and counternarcotics funding overall.

The move is certain to spark outrage in Congress, with Democrats hammering Trump for what they see as an end-run around Congress.

Trump has turned to reprogramming already-appropriated funds to cover the costs, claiming authority under an emergency order he declared last year after Congress repeatedly refused to fund the request.

But weren’t we told Mexico was paying for the wall?!  I mean we aren’t even getting a coupon for some free Dos Equis.

--The Senate voted on Thursday to pass a resolution limiting President Trump’s power to order military strikes against Iran without the approval of Congress.

The bipartisan 55-45 vote – in which eight Republicans joined all the chamber’s Democrats in approving the resolution – was seen as a rebuke to Trump’s opposition to consulting Congress when making foreign policy decisions.

But the move was largely symbolic as the president will veto the measure, and there are not enough Republicans to override it, which requires a two-thirds majority.

Trump tweeted prior:

“It is very important for our Country’s SECURITY that the United States Senate not vote for the Iran War Powers Resolution.  We are doing very well with Iran and this is not the time to show weakness.”

--Former White House Chief of Staff John Kelly, in an appearance in New Jersey the other night, said Lieutenant Colonel Alexander Vindman, the former National Security Council aide and impeachment witness President Trump fired last Friday, was just doing his job.

Kelly, in a Q&A, laid out his misgivings about Trump’s words and actions regarding North Korea, illegal immigration, military discipline, Ukraine, and the news media.

Kelly, a retired Marine Corps general, said that Vindman is blameless and was simply following the training he’d received as a soldier.  Kelly suggested that Vindman was rightly disturbed by Trump’s phone call to Ukrainian President Volodymyr Zelensky in July, and that having seen something “questionable,” Vindman properly notified his superiors, Kelly said.  When subpoenaed by Congress in the House impeachment hearings, Vindman complied and told the truth, Kelly said.

“He did exactly what we teach them to do from cradle to grave,” Kelly told the audience.  “He went and told his boss what he just heard.”

Kelly also made clear that Trump indeed conditioned military aid on Zelensky’s help digging up dirt on Democratic presidential candidate Joe Biden.

When Vindman heard the president tell Zelensky he wanted to see the Biden family investigated, that was tantamount to hearing “an illegal order,” Kelly said.  “We teach them, ‘Don’t follow an illegal order.  And if you’re ever given one, you’ll raise it to whoever gives it to you that this is an illegal order, and then tell your boss.’”

Kelly also said that Trump’s policy with North Korea had failed in that Kim Jong Un “will never give his nuclear weapons up...and I never did think Kim would do anything other than play us for a while, and he did that fairly effectively.”

Kelly said he did not believe the press is “the enemy of the people,” and that when it came to Russian President Vladimir Putin, he is “not necessarily a rational actor.”  Putin sits atop “a society in collapse,” yet is intent on restoring “the glory days of the Soviet Union.”  [See below on Belarus.]

Well, of course Kelly’s comments led to a tweetstorm from the president.

“When I terminated John Kelly, which I couldn’t do fast enough, he knew full well that he was way over his head.  Being Chief of Staff just wasn’t for him.  He came in with a bang, went out with a whimper, but like so many X’s, he misses the action & just can’t keep his mouth shut...

“...which he actually has a military and legal obligation to do.  [Ed. no he doesn’t.] His incredible wife, Karen, who I have a lot of respect for, once pulled me aside & said strongly that ‘John respects you greatly.  When we are no longer here, he will only speak well of you.’  Wrong!”

Earlier, Trump said the military may consider disciplining Vindman, another totally outrageous statement.

“We sent him on his way to a much different location and the military can handle him any way they want,” Trump said on Tuesday.  Asked if he was suggesting that Vindman face disciplinary action, Trump said that would be up to the military.  “If you look at what happened...they’re going to certainly, I would imagine, take a look at that,” Trump said.

--As always when it comes to budgets released by any White House, they are dead on arrival so I don’t bother with them.  But I can’t help but point out that the man who was going to eliminate the federal budget deficit in eight years, now says his plan would do so by 2035.  It also projects 3% growth through the end of the next decade.

--President Trump again downplayed the severity of head injuries suffered by U.S. troops during an Iranian missile attack, as the Pentagon announced the injury total rose to 109.

Trump spoke to Fox Business in an interview Monday, after the update was released.

“They landed in a way that didn’t hit anybody,” Trump said of the missile strike.  “And so when they came in and told me that nobody was killed, I was impressed by that and, you know, I stopped something that would have been very devastating for them.”

The president didn’t specify what he stopped.

Again, if there had been fatalities, we’d be at war with Iran today.

--Trump tweets:

“It is happening again to Crazy Bernie, just like last time, only far more obvious.  They are taking the Democrat Nomination away from him, and there’s very little he can do.  A Rigged System!”

“I was very surprised & disappointed that Senator Joe Manchin of West Virginia voted against me on the Democrat’s totally partisan impeachment Hoax.  No President has done more for the great people of West Virginia than me (Pensions), and that will...

“...always continue.  Every Republican Senator except Romney, many highly religious people, all very smart, voted against the Impeachment Hoax. @SenCapito was all in (a great person).  I was told by many that Manchin was just a puppet for Schumer & Pelosi.  That’s what he is!”

[Earlier, when Trump tweeted a related criticism of Manchin, Manchin tweeted back: “I’ve read the transcripts thoroughly & listened to the witnesses under oath.  Where I come from a person accused defends themselves with witnesses and evidence.”]

“DRAIN THE SWAMP!  We want bad people out of government!”

“Mini Mike is a 5’4” mass of dead energy who does not want to be on the debate stage with these professional politicians.  No boxes please.  He hates Crazy Bernie and will, with enough money, possibly stop him.  Bernie’s people will go nuts!”

“Mini Mike Bloomberg is a LOSER who has money but can’t debate and has zero presence, you will see.  He reminds me of a tiny version of Jeb ‘Low Energy’ Bush, but Jeb has more political skill and has treated the Black community much better than Mini!”

[To which Mike Bloomberg replied via Twitter: “@realDonaldTrump – we know many of the same people in NY.  Behind your back they laugh at you & call you a carnival barking clown.  They know you inherited a fortune & squandered it with stupid deals and incompetence.”]

“Mini Mike is a short ball (very) hitter.  Tiny club head speed.  KEEP AMERICA GREAT!”

Yes, we’re down to attacking someone’s golf game when the president is a titanic cheater on the course.

--Lastly, President Trump really said this in the Oval Office on Tuesday:

“I’m looking to bring the country together.”

Wall Street

The impact of coronavirus is certainly being felt around the world as Asian and European auto plants run short of parts, the supply chain disrupted in other industries, and tourism becomes increasingly impacted, especially in the case of free-spending Chinese staying home.

With factories having been expected to reopen Feb. 10 in China, after the Lunar New Year holiday, a vast majority of workers thus far are either unwilling to return to employers located in the sprawling quarantine zone, or can’t travel back as yet.

Caterpillar said most of its Chinese suppliers were back on line, but Foxconn, a major electronics contractor for Apple, said it will be the end of the month before even half of its facilities reopen.

And you have the airline disruptions, such as United and American saying they wouldn’t resume normal service to China until April 24.

But it’s the auto-industry that is particularly hard hit.  Nissan temporarily closed one of its factories in Japan after running short of Chinese components.

And tonight, the Chinese automakers’ association said sales in China were likely to slide more than 10% in the first half of the year, which isn’t necessarily about a simple lack of parts.

For now, however, when it comes to Wall Street, the above concerns are being largely ignored.  Everything is just a short-term hit and will be made up later, so investors say.

As for the economic indicators, it was a light week.  Inflation was tame once again, with consumer prices in January rising just 0.1%, 0.2% ex-food and energy.  Year-over-year, the CPI was 2.5%, 2.3% on core, both up a tick over consensus.

Retail sales in January came in as forecast, up 0.3%, though unchanged on the key ‘control group’ reading.

January industrial production was –0.3% as expected.

The Atlanta Fed’s GDPNow barometer for the first quarter fell to 2.4% from 2.7%.

Meanwhile, Federal Reserve Chair Jerome Powell went to Congress for his semi-annual testimony on the health of the economy and he said the U.S. is in a good place, even as he cited the potential threat from the coronavirus in China and concerns about the economy’s long-term health.

With risks like trade policy uncertainty receding and global growth stabilizing, “we find the U.S. economy in a very good place, performing well,” Powell told the House Financial Services Committee.

“There is no reason why the expansion can’t continue,” he said, repeating the central bank’s view that its current target range for short-term interest rates, between 1.50% and 1.75%, is “appropriate” to keep the expansion on track.

But he said the coronavirus outbreak will impact China and its close neighbors and trading partners, and there will “very likely be some effects on the United States.”

“The question we will be asking is will these be persistent effects that could lead to a material reassessment of the outlook,” he said.  The answer, he said, is still too early to know.

While Powell was testifying, President Trump tweeted:

“When Jerome Powell started his testimony today, the Dow was up 125, & heading higher.  As he spoke it drifted steadily downward, as usual, and is now at –15.  Germany & other countries get paid to borrow money.  We are more prime, but Fed Rate is too high, Dollar tough on exports.”

[The Dow hit a record high the next day.]

Powell issued sanguine comments on inflation, which was 1.6% in 2019 for the Fed’s preferred barometer, the personal consumption expenditures index, still below the Fed’s 2% target, and he sounded a muted warning on the federal deficit.  Speaking of which....

The federal budget deficit grew 25% in the first four months of the fiscal year (which starts Oct. 1), largely as a result of a calendar quirk that brought forward payments of federal benefits, such as veteran and retiree benefits.

The U.S. budget gap totaled $389 billion from October through January, compared with $310 billion in the same period a year earlier, according to the Treasury Department. 

January’s figure was supposed to show a surplus of $11.5bn, but instead revealed a deficit of $32.6 billion, though this was because certain benefits were shifted from February into January.

But higher federal spending on the military and health care – which rose 9% and 15%, in the first four months of the fiscal year – continued to boost government spending, while revenues did rise smartly. 

Over the 12 months that ended in January, receipts rose 6.7%, the most since February 2016, but outlays were up 8.8%, pushing the deficit to $1.06 trillion, a 16.4% increase from a year earlier.

As a share of GDP, the year-over-year deficit was 4.9%, compared with 4.3% in the previous 12 months, the highest debt/GDP ratio since May 2013.

Needless to say, it’s not good that the deficit is rising despite the strong economy.

Europe and Asia

Eurostat released figures for GDP in the euro area (EA19) for the fourth quarter and they were putrid.  GDP was up just 0.1% over the third quarter, according to a flash estimate, while compared with the same quarter of the previous year, seasonally adjusted GDP rose by 0.9% in the eurozone.

Worrisomely, Germany came in at 0.0% for the fourth quarter, and just 0.5% year-over-year.  France was –0.1%, 0.8% yoy.

Spain had annualized growth of 1.8%*, but Italy was unchanged, 0.0% for the year, and –0.3% for the fourth quarter.

*The government in Madrid cut its growth forecast for 2020 to 1.6%.

The UK had 1.1% growth year-over-year in Q4.

Separately, industrial production in December for the EA19 was down 2.1% over November, and down 4.1% over December 2018.

For the year, average industrial production fell 1.7%, compared with 2018.

Brexit: In an example of the tough negotiations that will be unfolding over the coming months between the UK and the European Union on a trade deal, EU chief Brexit negotiator Michel Barneir said British authorities should be “under no illusion” on financial services in future relations with the EU after the Brexit transition period ends.

In a speech to the European Parliament, Barnier made it clear that equivalence regimes, which govern relations with foreign partners on specific financial sectors like clearing houses or stock exchanges, would remain under tight EU control, with no special treatment for Britain.  This is a big issue.

Turning to Asia...a Reuters poll of 40 economists based in mainland China, Hong Kong, Singapore, as well as Europe and the United States, predicted China’s annual economic growth in the first quarter will slump to 4.5% from 6.0% in the previous quarter.  That drop is expected to drag down the full-year growth rate in 2020 to 5.5% from 6.1% in 2019, its weakest since at least 1990 when comparable records began.

However, economists were optimistic the economy would bounce back as soon as the second quarter, and this is impossible to know at this point.  Yes, some production will be made up once the coronavirus runs its course, it can safely be assumed, but a lot of other activity will be lost.

Separately, consumer prices in China rose 5.4% in January, after a 4.5% rise in December, with prices of pork and fresh vegetables the main culprits.

Food prices spiked 20.6%.  Pork was up 116% in January from a year earlier due to an outbreak of African swine fever.

The National Bureau of Statistics said: “The year-on-year increase has been affected not only by Spring Festival [Lunar New Year holiday]-related factors but...by the new coronavirus as well.”

The rise in January was the highest since October 2011, when CPI inflation was 5.5%.

The producer price index (or factory-gate prices) rose just 0.1% in January, though these are expected to take a demand hit with the coronavirus outbreak.

Japan, the world’s third-largest economy, is bracing for a sharp slowdown and some analysts expect another contraction in the current quarter as the virus outbreak hurts exports, output and consumption.

Street Bytes

--Stocks rose a second straight week, largely ignoring the coronavirus and its potential impact for the reasons stated above.  Earnings have also been better than expected for the fourth quarter, up 2.6% on an annual basis when they were expected to be unchanged, or declining slightly, according to Refinitiv.

The Dow Jones finished up 1% to 29398, having hit an all-time closing high Wednesday of 29551.  The S&P 500 rose 1.6% to a new closing high today, 3380, ditto Nasdaq, up 2.2% to 9731.

But action was muted in the markets today as investors were leery of being too aggressive heading into the three-day weekend.  Who knows what news will emerge out of China during that time?

--U.S. Treasury Yields

6-mo. 1.54%  2-yr. 1.43%  10-yr. 1.59%  30-yr. 2.04%

Little changed on the week.

--Republican senators dealt a significant setback to one of President Trump’s nominees to the Federal Reserve Board when they raised concerns over Judy Shelton’s writings and public statements at a confirmation hearing Thursday.

Lawmakers from both parties on the Senate Banking Committee said they were uncomfortable withi at least some of Shelton’s policy preferences.

Shelton, who was an adviser to Trump’s presidential campaign, has advocated for the Fed to reduce interest rates in response to rate cuts by other central banks and to prevent the U.S. dollar from strengthening against other currencies.

Republican Sen. Pat Toomey said, “That’s a very, very dangerous path to go down.  This beggar-thy-neighbor mutual currency devaluation is not in our interest, and it is not in the mandate of the Fed to pursue it.”

Republicans can lose no more than three votes in the Senate for her to win confirmation, but she may not even get a favorable committee recommendation.

--OPEC cut its forecast for global growth in oil demand this year due to the coronavirus outbreak and said its output fell sharply in January as producers implemented a new supply-limiting pact.  In a monthly report, OPEC said 2020 demand for its crude will average 29.30 million barrels per day, 200,000 bpd less than previously thought.

OPEC said world oil demand was expected to rise by 990,000 bpd this year, a cut of 230,000 bpd from its previous forecast.

OPEC, Russia and other producers, a group now known as OPEC+, have since Jan. 1 implemented a deal to cut output by 1.7 million bpd to support the market.

Separately, the International Energy Agency (IEA) slashed its forecasts for global oil demand, which it says has been hit hard by the “widespread shutdown of China’s economy.”

Demand is now expected to fall by 435,000 barrels per day year-on-year in the first quarter, the first quarterly contraction in more than 10 years.

Global oil demand was around 100.7 million barrels per day at the end of 2019.

The IEA also cut its forecast for oil demand growth during 2020 by 365,000 barrels per day to 825,000, which would be the lowest annual increase since 2011.

When looking at China, when SARS hit in 2002-03, China’s oil demand was 5.7m bpd, but by 2019, with the tremendous growth in the economy there, demand had more than doubled to 13.7m bpd (14% of the global total).  Moreover, last year China accounted for more than three-quarters of global oil demand growth.

--United Airlines said it will extend cancelations of all U.S. flights to China through late April due to the coronavirus epidemic.  All U.S. passenger carriers flying to China have now canceled flights into late April.  Part of the reason is a dramatic drop-off in demand.

For now, United said it will resume flights to China April 24.  Delta previously suspended flights there through April 30.

On Wednesday, the Mobile World Congress, an annual telecom industry gathering that draws more than 10,000 visitors to Barcelona, was canceled after a mass exodus by exhibitors due to coronavirus-related concerns.

--Carnival Cruise Lines said a potential suspension of its operations in Asia through the end of April will hit 2020 earnings.

--Alibaba Group Holdings Ltd warned of a drop in revenues at its key e-commerce businesses this quarter as the coronavirus hits China’s supply chains and deliveries.  The warning from executives came during an earnings call for the quarter ending in December 2019.

Alibaba’s finance chief said most of the company’s businesses that rely on the sale of physical goods would likely see a decline in revenue this quarter.

Despite the downbeat forecast, Alibaba said it had observed more people in large cities going back to work and logistics networks returning to normal operations.

The December quarter benefited from the annual Singles’ Day shopping event, with Alibaba saying sales during the 24-hour extravaganza hit a record $38.4 billion last year.

BABA shares only fell about 2% Thursday following the news on the coronavirus expected impact.

--New York City hasn’t had a single confirmed case of coronavirus – but fear of the disease has left Chinese-American businesses across the five boroughs reeling, with commerce in the city’s Asian communities falling 40% to 80% since the outbreak of the virus.

--Boeing warned that airlines face a fall in profits as the coronavirus crisis hits passenger demand and prolongs weakness in economically sensitive air freight.  A spokesman for Boeing’s commercial sales & marketing division said the air cargo industry was unlikely to grow this year because of challenges in China.

Boeing has seen delays in some deliveries of 777 and 787 aircraft previously sold to China. 

Boeing started the year with zero overall sales in January for the first time in decades, while rival Airbus had its strongest showing in at least 15 years.  But January is a slow month historically.  The aerospace giant delivered 13 planes last month, including six 787 Dreamliners.  Boeing said no customers canceled orders, leaving its backlog for future production at 5,393 jets.

With the prolonged grounding of the 737 MAX and subsequent halt in production, Boeing has lined up a $13 billion bank loan to help fund compensation to MAX customers, as well as the cost of halting production.

At least a month without MAX order cancellations is a plus against a backdrop of weakening demand, but now we have the coronavirus issue.

Airbus booked a record 274 net new orders in January and delivered 31 jets.  It is also ramping up production of its bestselling single-aisle jet to fill the hole in the market created by the grounding of the 737 MAX.

[Regarding the MAX, Southwest Airlines pulled it from its schedules until mid-August (United until Sept.), from a June 6 target previously, meaning the low-cost carrier expects to go another peak summer season without the fuel-efficient planes, and you can be sure Southwest is going after Boeing for further compensation.  Southwest said the MAX grounding cost it $828 million in operating income last year.  The airline had 34 MAX planes in its fleet, and expected to have 75 by the end of last year, plus another 38 delivered this year.]

Separately, from a piece by Christian Davenport of the Washington Post:

“Investigators probing the botched flight of Boeing’s Starliner spacecraft in December have found widespread and ‘fundamental’ problems with the company’s software that could have led to a disastrous outcome more grievous than previously known, NASA said.

“Boeing is now reviewing all 1 million lines of code in the capsule’s computer systems, officials said.  How long that review will take is uncertain, Boeing officials said....

“Speaking in unusually blunt language, NASA officials also acknowledged that the space agency had failed to properly police Boeing’s work and that the checks that were supposed to discover such problems failed repeatedly.”

No astronauts were aboard the Starliner capsule during its test flight in December, but the software issues could have caused what NASA called a “catastrophic spacecraft failure.”

Starliner landed safely two days after it lifted off from Cape Canaveral, after failing to dock with the International Space Station, one of its main objectives.

NASA pointed the finger at Boeing, saying, “there were numerous instances where the Boeing software quality processes either should have or could have uncovered the defects.”

--U.S. officials say Huawei Technologies Co. can covertly access mobile-phone networks around the world through “back doors” designed for use by law enforcement, as Washington tries to persuade allies to exclude the Chinese company from their networks.

Officials said Huawei has had this capability for more than a decade, an allegation Huawei rejects.

The U.S. kept this intelligence highly classified, according to the Wall Street Journal, until late last year, when officials provided it to the UK and Germany.

Telecom-equipment makers are required by law to build in ways for authorities to tap into the networks for lawful purposes, with such access only at the consent of the network operator.  Such access is governed by laws and protocols in each country.

But the U.S. says Huawei has built equipment that secretly preserves its ability to access networks without the carriers’ knowledge.  Other telecom-equipment manufacturers don’t have the same ability, U.S. officials said.

National security adviser Robert O’Brien said: “We have evidence that Huawei has the capability secretly to access sensitive and personal information in systems it maintains and sells around the world.”

U.S. officials haven’t said whether the U.S. has observed Huawei using the backdoor access. 

But one more...Thursday, U.S. prosecutors escalated the battle with the world’s largest telecommunications equipment maker in adding trade secret theft charges to their bank fraud case against Huawei.

The new indictment which supersedes one from last year, was filed in federal court in Brooklyn, New York, and charges Huawei with conspiring to steal trade secrets from six U.S. tech companies (including Cisco Systems, T-Mobile and Motorla).  It also contains new allegations about the company’s involvement in countries subject to sanctions, such as Iran and North Korea.

“The indictment paints a damning portrait of an illegitimate organization that lacks any regard for the law,” U.S. Senate Intelligence Committee chairman Richard Burr and vice chairman Mark Warner said in a joint statement.

--U.S. District Judge Victor Marrero approved of T-Mobile US Inc.’s takeover of Sprint Corp., ushering in a new balance of power in the U.S. wireless market, a test for whether three giants will compete as aggressively for cellphone users as four unequal players once did, the other two being Verizon and AT&T.

Judge Marrero concluded the $26 billion deal wasn’t likely to substantially lessen competition, thus rejecting the main argument against that it would be anticompetitive.

As part of a settlement with the Justice Department, T-Mobile agreed to help create a new, but smaller wireless competitor in satellite-TV company Dish.

Those who are complaining, like 13 state attorneys general who tried to block the merger, fail to understand that without it, Sprint was going under.  Now, the combined entity (to be called T-Mobile), will be able to build out a better next-generation, 5G, network.

--Tesla announced on Thursday that it planned to raise $2 billion by selling shares through a public offering, though this comes just two weeks after CEO Elon Musk said such a move wasn’t needed, that Tesla had more than enough cash. 

Musk said he will buy up to $10 million in shares, while the company said it planned to use the proceeds from the offering to strengthen the balance sheet and for general corporate purposes.

There’s nothing wrong with doing this, and some say Tesla should raise more after its stock has soared, but at the same time you’d expect the shares to fall a little, and at the open yesterday, they did, only to soar anew by the end of the day.  The price action is simply nuts.

Meanwhile, the Wall Street Journal reported that short-sellers in Tesla lost $8.4 billion since January, many of the investors having fought a losing battle for years against the electric-car manufacturer despite mounting losses on Tesla’s part.  But the pain grew exponentially as the stock soared from $178 last June to an intraday high of $968.  The highest close was Feb. 4, at $887.

Short-sellers borrow shares and sell them with the hope of profiting by buying the shares back at a lower price later and pocketing the difference.

But CEO Musk has made baiting short-selling a part of his social media profile.  In 2018, he tweeted the short sellers were “value destroyers” and that short sales should be illegal.

Those who can afford to stay in their positions are unbowed, like noted short seller James Chanos, who has been betting against Tesla for more than six years.  He maintains, “This is a car company, yes a higher-end one, but it’s still a car company, with the same low margins of other auto makers.”

--German luxury carmaker Daimler is intensifying its cost-cutting efforts and plans to slash up to 15,000 jobs, Handelsblatt newspaper reported, citing company sources.  The group in November said it would cut at least 10,000 jobs and reduce staff costs by around $1.5bn by the end of 2022, a number Handelsblatt said would be significantly exceeded.  [Reuters...I’m not a subscriber to Handelsblatt.]

--Total U.S. household debt rose by $601 billion in the fourth quarter compared with a year earlier, up 4.4%, and surpassed $14 trillion for the first time, the New York Fed’s quarterly household credit and debt report showed.  Overall household debt is now 26.8% above the low reached in the second quarter of 2013.

Total credit-card balances increased by $46 billion to $930 billion, well above the previous peak seen before the 2008 financial crisis, also according to the New York Fed.

--Cisco Systems Inc. said global economic uncertainties have slowed technology investment decisions at some companies, denting Cisco’s sales growth.

The telecom-equipment giant / router maker, a proxy for hardware demand from corporations, said it expects revenue to drop between 1.5% and 3.5% in its current quarter, which would come on top of a 3.5% year-over-year drop in revenue for the company’s fiscal second quarter, which ended Jan. 25.

CEO Chuck Robbins told analysts: “We are seeing longer decision-making cycles across our customer segments for a variety of reasons including macro uncertainty as well as unique geographical issues.”

The lousy outlook for the current quarter also doesn’t include the potential supply chain disruptions from the coronavirus.

Cisco’s infrastructure-platforms business, covering its main networking hardware and software products, reported an 8% decline in sales to $6.53 billion in the latest quarter.

Revenue fell 5% in the company’s Americas region and 1% in the region including China and Japan.

--A federal judge in Washington ordered Microsoft to halt all work on a $10 billion cloud-computing contract for the Pentagon, in a victory for Amazon, which had challenged the awarding of the contract.

Patricia E. Campbell-Smith of the Court of Federal Claims, ordered work to stop on the Joint Enterprise Defense Infrastructure project, known as JEDI, until Amazon’s legal challenge was resolved.  The 10-year contract was one of the largest tech contracts from the Pentagon, and Microsoft was set to begin work on it this month.

The decision ratchets up the legal battle around the transformation of the military’s cloud-computing systems.  Amazon had been seen as a front-runner to win the JEDI contract, but then the Defense Department awarded it to Microsoft in October.

Amazon protested the process was unfair, the company claiming President Trump interfered in the bidding because CEO Jeff Bezos is owner of The Washington Post.

In December, Amazon filed its legal challenge saying that Trump used “improper pressure” on the Pentagon at its expense.

--Shares in Bed Bath & Beyond fell sharply on Tuesday after the home furnishing retailer said sales in the first two months of the final quarter were hit by increased promotions, falling store traffic and inventory management issues.  I know I am seeing a lot more promotions in my mail / email.

Same-store sales for December and January fell 5.4%, more than expected.  Fiscal fourth-quarter earnings are released in April.

--Shares in Under Armour Inc. plunged 16% on Tuesday after the sportswear maker forecast a surprise drop in 2020 profit, blaming weakness in its North American business and the coronavirus outbreak.

Under Armour has been losing market share to rivals Nike and Adidas in a saturated North America market, which accounts for about 70% of UA’s revenue.  So it’s been forced to offer big discounts at retail chains and department stores, squeezing profits.

Full-year revenue is expected to be down in the low single-digit percent range, the company said, in contrast to analysts’ expectations for a 4% rise.  That’s an awful miss.  Wall Street was also expecting full-year profit of 47 cents per share, and now UA is saying it will be between 10 and 13 cents.

--Restaurant Brands International Inc. said sales at its Popeyes Louisiana Kitchen far exceeded expectations for the quarter ended in December, as its spicy chicken sandwich was rolled out nationally in November after it sparked a social-media sensation during tests last summer.

Popeyes’ sales at U.S. restaurants open at least 13 months grew 38% for the fourth quarter, with revenue at the chain rising to $145 million from $106 million.  Pretty, pretty good.

But Restaurants Brands’ Canadian coffee chain Tim Hortons saw its comp sales fall 4.3% for the quarter, worse than expected.  Tim Hortons still has the best donuts, but don’t tell that to the folks manning the Dunkin’ Donuts in my building. 

RBI’s Burger King same-store sales also came in weaker than projected, growing just 0.6% in the U.S. for the quarter, despite the national rollout of the plant-based Impossible Whopper, citing a lack of deals.

But to start out this year, the company added the Impossible Whopper as an option to its two items for $6 menu.

Separately, Burger King has closed roughly half of its 1,300 stores in China due to the coronavirus, the nation accounting for just 2% of BK’s sales.

--Months after Disneyland opened the biggest expansion in its history, the Anaheim theme park raised ticket prices Tuesday, pushing the cost of some one-day passes above $200 for the first time.  Prices of annual passes and the digital MaxPass climbed too.

On days when demand is highest, one-day ticket prices rose as much as 5%.

The price of the least expensive annual pass, the Select Pass, which blocks out holidays and peak-demand days, rose 5% to $419 from $399.

Parking stayed flat at $25 a day.

Now if you want unlimited access to Disney parks in both Anaheim and Orlando, without blocking any dates, you can get the Premier Pass, though its price jumped 13% to $2,199.  [Hugo Martin / Los Angeles Times]

--Hugo Martin also had an interesting piece on the airline industry, as in “Environmental crusader Greta Thunberg is starting to make some U.S. airlines nervous.

The Swedish teenager apparently had something to do with a 4% drop in the number of commercial passengers flying in Sweden, where the term “flygskam,” or flight shame, has gained popularity.

“Robin Hayes, chief executive of New York-based JetBlue Airways, told industry analysts during a conference call recently that it’s only a matter of time before Americans follow the lead of their Swedish counterparts to find more environmentally friendly alternatives to commercial air travel.

“ ‘This issue presents a clear and present danger, if we don’t get on top of it,’ he said.  ‘We’ve seen that in other geographies and we should not assume that those sentiments won’t come to the U.S.’”

So carriers are amplifying efforts to reduce emissions to ease concerns of fliers.

According to the International Council on Clean Transportation, emissions of the greenhouse gas carbon dioxide from all commercial flights, including cargo and passenger planes, represented 2.4% of all global CO2 emissions in 2018 – a 32% increase over five years earlier.  Airline travel globally had been growing steadily by about 5% each year over the past decade.

--The U.S. live TV audience for the Oscars fell to an all-time low on Sunday.  Roughly 23.6 million viewers tuned in, according to Nielsen.  That was a sharp decline from last year’s 29.5 million.

South Korea’s “Parasite” made history, becoming the first non-English language film to win Best Picture since the awards began 92 years ago.  But this was hardly a blockbuster hit and thus few were watching just to see if it would win.

Not having a host also didn’t help, though I thought Steve Martin and Christ Rock who opened were terrific.

Foreign Affairs

Syria / Turkey / Russia: The feared new humanitarian catastrophe is upon us, as the UN said Thursday over 140,000 Syrians have been displaced in the last three days alone by violence in Syria’s northwest, bringing the total of those uprooted in a Syrian government offensive against the last opposition stronghold to over 800,000.

The UN said at least 60% of the more than 800,00 displaced since Dec. 1 are children.  The humanitarian crisis in the already overcrowded opposition-held enclave is compounded by freezing weather conditions, and existing severe needs.

CNN had a report from the front lines today, Friday, and it was beyond heartbreaking.  It’s infuriating this can happen all over again.

The government offensive, backed by Russia, has intensified and expanded to include other parts of Idlib province as well as western Aleppo, an area home to an estimated 4 million people.  Most have already been displaced from other parts of Syria because of the ongoing war.

David Swanson, UN regional spokesperson for the crisis in Syria, said, “The crisis is deepening by the minute, but the international community remains indifferent.”

Turkey will use force against those violating a ceasefire in Idlib including “radical” groups, Turkey’s defense minister said on Thursday.

Wednesday, Turkish President Erdogan said the military would strike Syrian government forces by air or ground anywhere in Syria if another Turkish soldier was hurt, after 13 troops were killed by Syrian forces in a week. Turkey is sending additional reinforcements to its positions in Idlib to ensure the ceasefire is maintained and to “control” the region.

Tuesday, Turkey said it killed 51 Syrian soldiers in northwest Syria as Turkish-backed rebels struck back against Russian-supported government forces who had made gains in their campaign to eliminate the last insurgent bastion.

The U.S. military acknowledged its troops fired on and killed a Syrian combatant when government supporters attacked an American convoy in northeastern Syria, a rare direct confrontation between a Syrian pro-government group and U.S. troops.  The U.S. maintains hundreds of troops in the area, but the area is swarming with Russian, Syrian government and Turkish troops following Turkey’s invasion of villages and towns along its borders.

Iran / Israel: The foreign ministry said on Wednesday, “The Islamic Republic of Iran will give a crushing response that will cause regret to any kind of aggression or stupid action from this regime (Israel) against our country’s interests in Syria and the region,” according to the Mehr news agency.

Iranian officials accuse Israel of carrying out attacks against military forces in Syria that are allied with Tehran.  Supreme Leader Ayatollah Ali Khamenei said last week that Iran will support Palestinian armed groups as much as it can and urged Palestinians to confront the U.S. plan for Israeli-Palestinian peace.

Tuesday, Palestinian President Mahmoud Abbas, appearing before the UN Security Council, rejected President Trump’s peace plan as a gift to Israel and unacceptable to Palestinians.  Abbas said the U.S. plan for a two-state solution for Israel and Palestine looked like a fragmented “Swiss cheese,” as he waved a map.

But in a setback for the Palestinians, a draft Security Council resolution circulated by Tunisia and Indonesia that would have implicitly criticized Trump’s plan, including Israel’s retention of Jewish settlements in the West Bank, was not put to a vote.  The text faced a certain U.S. veto and didn’t even get the support of Palestinians because it was too watered down.

A Feb. 5-8 poll conducted in the West Bank and Gaza Strip by the Palestinian Center for Policy and Survey Research found that 94% of Palestinians reject the plan, Trump’s “Deal of the Century.”

Afghanistan: Thursday, Secretary of State Mike Pompeo said the United States has had “a pretty important breakthrough” in peace talks with the Taliban over the past couple of day, but he cautioned Washington wants to see a significant fall in violence in Afghanistan before starting wider discussions.

Defense Secretary Mark Esper earlier said the U.S. and the Taliban have been negotiating a proposal for a seven-day reduction in violence, in what lawmakers said was a test for the insurgents.

And then today, an agreement was reached for a seven-day ceasefire that will start “very soon,” according to the administration, that could pave the way for the withdrawal of some of the 13,000 U.S. troops and thousands of other NATO personnel, perhaps to a level below the 8,600 figure already targeted for yearend.  But the Taliban has long wanted all U.S. troops to leave so it’s hard to imagine how this is resolved to the United States’ satisfaction.

Pompeo said Thursday: “We hope we can get to a place where we can get a significant reduction in violence, not only on a piece of paper but demonstrated...and if we can get there, if we can hold that posture for a while, then we’ll be able to begin the real, serious discussion which is all the Afghans sitting at a table.”

The administration said today the agreement is very specific, and “includes everything – roadside bombs, suicide bombs, rocket attacks – that's all written out.”

It will be up to Gen. Scott Miller – the senior U.S. military commander in Afghanistan – to determine whether the Taliban is living up to its obligations.

But news of the agreement comes as the Taliban continues its attacks, a record-high number in the last three months of 2019, according to the Special Inspector General for Afghanistan Reconstruction, a U.S. government agency.

Separately, two U.S. troops were killed in an insider attack in eastern Afghanistan on Saturday.

China: After being largely invisible in the first month of the coronavirus (now called “COVID-19”) crisis, Chinese President Xi Jinping has been out in the public a bit, and on state television, trying to reassure his people that the government has things under control, while admitting today that the Communist Party must fix various problems, loopholes and weaknesses exposed during the outbreak.

“To ensure people’s life, safety and health is a major task of our party’s governance,” Xi was quoted as saying at a meeting of a committee on deepening reforms.   He also said Beijing would move to improve medical insurance and treatment systems for major diseases.

Xi added on Thursday that China will be able to minimize the impact of the outbreak and will maintain the development of the country’s economy.  It was reported that Xi told Malaysian Prime Minister Mahathir Mohamad in a phone call that China would reach its development targets.

Friday, China reported more than 5,000 new cases, with the National Health Commission saying it had recorded 121 new deaths, bringing the death toll to 1,380, with the number infected at nearly 64,000.  The latest toll takes into account that some deaths were double counted in Hubei, the health commission said.

China said six health workers were among those who had died, and that 1,716 health workers had been infected, which is another depressing statistic.  The fatalities include Li Wenliang, a doctor who tried to alert authorities to the virus early on but was accused by police of “spreading rumors.”

The sharp rise in reported cases on Thursday reflected a decision by authorities to reclassify a backlog of suspected cases by using patients’ chest images, and did not necessarily indicate a wider epidemic, a World Health Organization official said on Thursday.  Hubei reported 240 new deaths and nearly 15,000 new cases, and then 116 and 4,823 on Friday.

The Communist Party chiefs of both Wuhan and Hubei province were replaced with high-ranking officials known for their background in “stability maintenance” and history of working closely with President Xi.

The new figures give no indication the outbreak is nearing a peak, according to the experts.

Chinese scientists are testing two antiviral drugs and preliminary results are weeks away, but most experts believe a true vaccine would take 18 months.

A cruise liner quarantined off the Japanese port of Yokohama has more than 200 people confirmed with the disease.

But the WHO said the coronavirus cases are not rising dramatically outside China despite a spike in Hubei province, the only exception being the cruise liner in Japan, and there has not been a major shift in the coronavirus’ pattern of mortality or severity.

Richard Haass / Washington Post

“Beyond the human tragedy, the immediate impact of the (coronavirus) is mostly economic. The only question is how much it slows China’s economy and for how long....Few supply chains do not have at least some Chinese components.  In this interconnected world, little stays local for long.

“The most lasting impact, though, will likely be the effects this virus has on China’s politics. Political legitimacy in contemporary China is predicated largely on economic performance.  Citizens have been willing to accept constraints on personal and political freedom in exchange for a system that provides an improved standard of living.  Chinese economic growth was already slowing before the coronavirus outbreak, which means a less-than-ideal situation is fast getting worse.

“China’s leaders mostly have themselves to blame. The response to the initial outbreak in early December is revealing.  China suffers from a ‘shoot the messenger’ mentality: Criticism, regardless of its merits, is taken as a rebuke of the political leadership, and the Communist Party seeks to silence dissent.  As a result, Li Wenliang, one of the doctors who first went public with their concerns, was punished.

“Precious weeks were lost as local officials would not assume responsibility lest central authorities subsequently blame them.  This paralysis is a consequence of President Xi Jinping’s consolidation of power, which has left provincial officials unable or unwilling to exercise their authority without the central leadership’s blessing.  Xi’s signature anti-corruption campaign, arguably more of a political purge, has in many instances replaced capable technocrats with party loyalists.  A hallmark of authoritarian systems is the difficulty of admitting error and then self-correcting, and China is a textbook case.

“The coronavirus puts the contradictions at the heart of modern China in plain sight.  There is the need to get word out to the population so that people can take preventive steps and react appropriately if they fall ill, but the government is afraid to allow information to be shared widely, as doing so could feed unrest along with the narrative that the leadership has failed the people.  Policies designed to stem the spread of the virus – quarantine and house arrest – reflect the same dilemma.

“It is always a mistake to underestimate China’s ability to rise to challenges, and after its initial stumble, it has shown its unique ability to mobilize resources.  But the coronavirus has already emerged as Xi’s biggest challenge.  He has concentrated power in his own hands to a degree not seen since Mao Zedong; it is difficult to blame others when you have made yourself first among unequals.  It is also the biggest challenge to the Communist Party since the Tiananmen Square protests of 1989.  Unless authorities get the situation under control and restore economic growth soon, it has the potential to become much more significant than Tiananmen, as what is at issue is not thousands of students calling for reform but millions of citizens demanding basic competence.  Desperate people can do desperate things....

“The potential for political instability exists, as China is a brittle system.  The comparison with India is instructive.  India has not mobilized or organized itself nearly as well as China, and its growth over the past few decades has averaged only half that of China’s, but India’s democracy and civil society give it a cushion that China lacks.

“The U.S. government needs to plan for possible futures in which China’s rise is interrupted.  We could see a Xi-led China that turns to nationalism as a distraction in a ‘wag the dog’ scenario in which China would put pressure on Taiwan or Hong Kong.  Or we could see a China that turns inward amid political convulsion as Xi is challenged.  How long this would take and what would result are unknown. The only thing that is certain is that we cannot assume China’s future will resemble its recent past.”

So speaking of Taiwan and Xi playing the nationalism card, which I have long written will one day be the case, China’s military conducted drills close to the island two days in a row, the People’s Liberation Army said, after Taiwan’s air force scrambled to intercept Chinese jets that briefly crossed the Taiwan Strait’s mid-line. 

Tensions have spiked between the two since Sunday, when Taiwan F-16s shadowed Chinese fighters and bombers which flew around the island.  Beijing claims Taiwan as its territory, to be taken by force if needed.

The same thing happened on Monday, after which the PLA said its forces carried out “air-ground assault and fire support drills to further refine and test their multi-service joint combat capabilities.”

Separately, the United States charged four Chinese military hackers in the 2017 breach of the Equifax credit reporting agency that affected nearly 150 million Americans, Attorney General William Barr said on Monday.

“This was a deliberate and sweeping intrusion into the private information of the American people,” Barr said in announcing the indictments of four members of the People’s Liberation Army in connection with one of the largest data breaches in U.S. history.

A Chinese foreign ministry spokesman denied the allegations and said China’s government, military and their personnel “never engage in cyber theft of trade secrets.”

You can stop laughing.

North Korea: The United States is “deeply concerned” about the possible impact of a coronavirus outbreak here and is prepared to help contain the spread of the virus should COVID-19 hit North Korea, which is as I said last week a truly frightening potentiality.

Russia: As alluded to above, Vladimir Putin still dreams of putting the old Soviet empire back together again and he clearly has his sights set on Belarus.  Today, that nation threatened to siphon off oil from Russia’s transit pipeline to Europe unless Moscow restarted crude supplies, accusing the Kremlin of using energy prices as leverage to try to swallow up its former Soviet neighbor.

The threat, from Belarusian President Alexander Lukashenko, escalates a feud between the two countries over oil and lifts the lid on a bigger geopolitical dispute that has seen Minsk accuse Moscow of trying to bully it into a unified state.

Belarus, because of the dispute, and needing to search for fuel elsewhere, is nurturing ties with the West, an unthinkable development just a few years ago.

Lukashenko knows that a ‘merger’ with Russia would mean a takeover.  Plans for a unified state have long been on the shelf since the 1990s, but it was to be a friendly arrangement, not through extortion.

Philippines: President Trump brushed aside the decision of Philippines President Rodrigo Duterte to end a decades-old military agreement with the United States, saying he didn’t really mind and it would save money.

Duterte announced the termination of the two-decade-old Visiting Forces Agreement on Tuesday, a move U.S. Defense Secretary Mark Esper called “unfortunate.”

Trump said, “My views are different from others,” saying he had “a very good” relationship with Duterte and added: “we’ll see what happens.”

Duterte’s decision was sparked by the revocation of a U.S. visa held by a former police chief who led his bloody war on drugs.  It complicates U.S. military interests in the Asia-Pacific with China’s ambitions rising.

Ireland: Last weekend in a general election, Ireland cast off the relic of their two-party system, Fianna Fail (center-right) and Fine Gael (also center-right), with a breakout vote for Sinn Fein, a party long shunned by the mainstream because of its ties to the Irish Republican Army (IRA).

Sinn Fein, with 24.5% of the vote, doubled its share in the last election, held one fewer parliamentary seat than Fianna Fail (22.2%), which had been expected to romp to victory.  And it captured two more seats than the governing party, Fine Gael (20.9%), led by Prime Minister Leo Varadkar, Ireland’s frontman in negotiations with London over Britain’s withdrawal from the European Union.  He has been presiding over a minority government as Fine Gael and Fianna Fail have never formed a coalition together.

So for the first time in 100 years, Ireland could have a party that calls itself left-wing as leading, or a partner of, government.

Fianna Fail leader Michael Martin has ramped up the pressure on Taoiseach Varadkar by saying he would enter government-formation talks with Fine Gael.  This is a U-turn for Martin after he firmly ruled out Fianna Fail entering government with Sinn Fein.

But now we will have weeks of uncertainty and tortuous negotiations as Varadkar said he will speak to Martin only as a last resort, and after Martin and Sinn Fein fail in their attempts to form a government.

Editorial / The Economist

“For most of the century since Ireland gained independence from Britain, control of the country has alternated between two parties.  On February 8th that duopoly was smashed apart, when Sinn Fein got the largest share of first-preference votes in the republic’s general election. The party, with links to the Irish Republican Army (IRA), which bombed and shot its way through the 1970s, 1980s and 1990s, won with a left-wing platform that included promises to spend more on health and housing.  Yet it did not hide its desire for something a lot more ambitious.  ‘Our core political objective,’ its manifesto read, ‘is to achieve Irish Unity and the referendum on Unity which is the means to secure this.’

“Scottish independence has grabbed headlines since Brexit, but it is time to recognize the chances of a different secession from the United Kingdom.  Sinn Fein’s success at the election is just the latest reason to think that a united Ireland within a decade or so is a real – and growing – possibility.

“That prospect means something far beyond the island of Ireland. The Irish diaspora include more than 20m Americans.   Parties to ethnic conflicts across the world have long found common cause with Northern Ireland’s Roman Catholics, who contend that the separation from the south is an illegitimate vestige of 500 years of incompetent and often callous domination from London.  Ireland, source of pubs, poets, playwrights and too many Eurovision songs for anyone’s good, has soft power to rival a country many times its size.

“Until today, however, unification has never been more than a Republican fantasy.  Even as the IRA waged a bloody campaign in the 20th century, the north’s constitutional status was cemented by a solid Protestant majority and the financial and military backing of the British state.  The Good Friday agreement of 1998 took the heat out of the struggle, bringing an end to the Troubles, which had claimed over 3,500 lives.  Many Catholics were content to have representation in Northern Ireland’s government thanks to that agreement, and to see their culture, flag and sports celebrated and subsidized.  The Protestants have their terrorists, too, and a campaign for unification was thought to risk opening old wounds, with bloody consequences.

“Brexit is one reason all this has changed.  The north voted against, but the biggest unionist party and England voted for.   Nationalists were not the only ones to be angered by the current home secretary, who suggested using the threat of food shortages to soften up the south in the negotiations, heedless of the famine in the 1840s when all of Ireland was under British rule.  Brexit also creates an economic border in the Irish Sea, between Northern Ireland and Britain, even as it keeps a united Ireland for goods.  Although services will become harder to trade with the south, trading goods will be easier than with Britain.  In that the north’s six counties are affected more by what happens in Dublin, the value of having a say who governs there will grow.”

So we’ll see how things play out in the next year, as Brexit negotiations with the EU take place, but as the Economist concludes:

“(Sooner) than most people expect, the momentum for a united Ireland could come to seem unstoppable.  If Scotland chooses independence, many in Northern Ireland would lose their ancestral connection to Britain.  If the government in Westminster persistently refused to recognize that there was a majority in favor of unification in Northern Ireland, that could be just as destabilizing as calling a referendum.

“The island of Ireland needs a plan.  The priority should be to work out how to make unionists feel that they have a place in a new Ireland.  Work is needed on the nuts and bolts of unification – including how to, and indeed whether to, merge two health systems (one of which is free), the armed forces and police services, and what to do about the north’s devolved assembly... Politicians from Britain and Ireland need to start talking, too.  The price of ending violence two decades ago was for Northern Ireland, the republic and Britain to jointly set out a political route to a united Ireland.  If the people of the north and the republic choose that path, the politicians must follow it.”

India: It has been six months since India’s government stripped restive Kashmir of its semi-autonomy and enforced a total communications blackout.  Now, the government is heralding the restoration of limited, slow-speed internet as a step toward normalcy.

But the region’s 7 million people in the Himalayas are only allowed access to government-approved websites.  Popular social media platforms such as Facebook, WhatsApp and Twitter remain blocked.  Plus the internet service is too slow to stream video.

The government said it was necessary to ban the internet to head off anti-India protests by rebels who have fought for decades for independence or unification with Pakistan, which administers the other part of Muslim-majority Kashmir.  Both countries claim the Himalayan region in its entirety.

I agree with those who say the internet clampdown is as bad as any censorship in the world. As Pranesh Prakash, an affiliated fellow at Yale Law School’s Information Society Project, told Reuters, “It is a step toward demolishing democracy in India.”

East Africa: Swarms of locust are now in Uganda, after billions of locusts have been destroying crops in Kenya, which hasn’t seen such an outbreak in 70 years, as well as Somalia and Ethiopia, which haven’t seen this in a quarter-century.  The insects have exploited favorable weather conditions after unusually heavy rains.

UN officials warn that immediate action is needed before more rainfall in the weeks ahead bring fresh vegetation to feed new generations of locusts.  Get this.  If left unchecked, their numbers could grow up to 500 times before drier weather arrives, according to the UN.

Random Musings

--Presidential tracking polls....

Gallup: 49% approve of President Trump’s job performance, 50% disapprove; 94% of Republicans approve, 42% of independents (Jan. 16-29).
Rasmussen: 49% approve, 49% disapprove (Feb. 14).

A new Quinnipiac University national poll has President Trump with a 43% approval rating, 53% disapproving.

--Bernie Sanders is the Democratic frontrunner after a tie in Iowa and a win in New Hampshire.

Sanders took 25.7% of the vote in Tuesday’s primary, with Pete Buttigieg proving his performance in Iowa was far from a fluke, coming in second at 24.4%.

But Amy Klobuchar was a strong third with 19.8%, having done a terrific job in last Friday’s debate.

The real story, however, may be the collapse of both Joe Biden and Elizabeth Warren.  Biden was fifth at 8.4%, Warren a weak fourth at 9.2%.

The former vice president was so pathetic, he fled New Hampshire to head to South Carolina early Tuesday afternoon.

One of the many reasons for Biden’s collapse is, as I said last fall, his amazing mishandling of the Hunter Biden situation.

As for Sanders, yes, we’re all saying the same thing.  He is now the candidate of the liberal wing of the Democratic party, and who will the moderates turn to?

So this is where the latest Quinnipiac University national poll of Democrats and Democrat-leaning independents was kind of a shocker.  Sanders gets 25%, Biden 17%, and, Bloomberg 15%!  [Warren 14%, Buttigieg 10% and Klobuchar 4%.]

But this was released the day before New Hampshire, and no doubt this survey will look much different the next time it is updated.

If the moderate pool of the party is divided between Buttigieg, Klobuchar and Bloomberg, and there is a ceiling to how high Sanders can poll, that’s the formula for a brokered convention.  Oh baby, that would be fun.  Destination television, folks!

But going back, for the record, among the polls released in the days leading up to the New Hampshire primary, Emerson College had Sanders at 30%, Buttigieg 23%, and Klobuchar 14%.  Warren 11% and Biden 10%.  The Boston Globe/Suffolk University had Sanders 27%, Buttigieg 19%, Klobuchar 14%, Warren and Biden 12%.  CNN/UNH had Sanders 28%, Buttigieg 21%, Biden 11%, Warren 9%, Gabbard 6%, Klobuchar 5%.  NBC/Marist had it 25% for Sanders, 21% Buttigieg, 14% Warren, Biden 13%, Klobuchar 8%.

So what now?  It’s on to Nevada and South Carolina, with far more diverse populations than the first two.  This was supposed to benefit Joe Biden, but his support in the African American community is already crumbling.  

Elizabeth Warren’s candidacy is also dead.  Another rapid collapse.

Andrew Yang and Michael Bennett dropped out.  You remember Michael Bennett.  He’s actually a U.S. senator.

But Andrew Yang made a mark.  He’s an asset to Democrats down the road, though I have to admit I didn’t really understand the story that emerged Wednesday morning that Yang could be a candidate for mayor of New York.  But that’s because I didn’t know he was a resident of Gotham.  Leading political operatives think this could be a natural for him.

As for Bernie Sanders, he declared Tuesday night “the beginning of the end” of President Trump.

[Trump won 85.5% of the vote in the Republican primary in New Hampshire, with former Governor Bill Weld taking just 9.1%.  I said before that if Weld wanted to make some noise, he really needed close to 20%.  Bye-bye, Governor.]

--Editorial / Wall Street Journal

“The good news for democracy Tuesday was that in New Hampshire they know how to count votes.  That’s especially good news for Bernie Sanders, who was denied his election night TV time in Iowa last week but not this time as he narrowly won the Granite State. Whether that’s good news for the Democratic Party is another story.

“The socialist from next-door Vermont repeated his triumph from 2016, albeit with a smaller (26%) share in a much larger field.  The result showed the loyalty of Mr. Sanders’ millennial and left-wing supporters despite a heart attack and his 78 years.  In poll after poll, in state after state, Mr. Sanders has retained that plurality base of more than 20%….

“The other winners Tuesday night were Midwesterners Pete Buttigieg (about 24%) and, in a mild surprise, Minnesota Senator Amy Klobuchar at 20%.  We say mild because she was the star of Friday’s debate and had risen in the weekend polls. She won a major chunk of late-deciding voters.

“Ms. Klobuchar may also have benefited from the campaign implosion of Joe Biden, as she picked up his theme of electability and a ‘return to normalcy’ after the Trump Presidency.  Her challenge now will be to raise enough money to organize and compete as the race expands to more populous states. She has always struck us as a candidate with the gravitas and message to give Mr. Trump a strong race in swing states....

“Mr. Biden’s fall to fifth place shows that voters may be concluding that his day has passed.  His message that he can defeat Mr. Trump loses credibility if he can’t finish ahead of four other Democrats.  He can also blame House Speaker Nancy Pelosi, who tried to take out Mr. Trump with impeachment but instead gave Mr. Trump a chance to drag in Mr. Biden and his son Hunter’s actions in Ukraine.  Tuesday night Mr. Biden made an overt pitch to black and Hispanic voters to salvage his campaign in South Carolina and Nevada.

“Overall the results show an unsettled race, with Democrats still looking for the candidate they hope can beat Mr. Trump.  Former New York Mayor Michael Bloomberg joins the fray on Super Tuesday with the biggest checkbook in the history of politics.  But as long as the field contains multiple candidates, Mr. Sanders’ socialist plurality has the advantage.”

--George F. Will / Washington Post

Mike Bloomberg’s 30-second ads do not resemble the Federalist Papers, but neither do they lower the intellectual tone set by the Democrats’ ‘debates’ - and they have propelled him into contention.  There is, however, some point at which such blast marketing has steeply diminishing effectiveness.  Over the last five months of the 2016 campaign, in two hotly contested metropolitan areas in swing states, Las Vegas saw 20,471 presidential campaign ads and Columbus, Ohio, saw 15,658. Such media blitzkriegs become like wallpaper – there but not noticed.

“Whether Bloomberg’s campaign succeeds or fails, the republic will benefit.   If nominated, he might go on to fumigate the Oval Office, and the political scolds who lament ‘too much money in politics’ will be ecstatic about what his spending accomplished.  If, however, his ‘overwhelming’ spending does not overwhelm, this will refute the scolds’ unempirical assertions about the irresistible power of money-bought advertising....

“In politics, too, the product itself matters more than the marketing of it.  Bloomberg’s incurable anti-charisma makes him the equivalent of a no-nonsense sedan, an agreeable contrast with the gaudy chrome-and-tailfins of Trump, a human land-yacht.  Bloomberg’s demeanor is that of someone who knows how to smile but resists the inclination.  There are, however, credible reports of a dry – arid, actually – Bloomberg witticism.  Asked about a possible fall campaign between two billionaires, he replied: Who would be the second one?

“Bloomberg has a knack for getting under Trump’s microscopically thin skin.  His needling of Trump would augment the public stock of harmless pleasure and could leave Trump wallowing waist-deep in his insecurities, a sight that members of his cult need to see and everyone else would enjoy seeing.

“Among Democratic activists, a nascent ABB faction – Anybody But Bloomberg – is decrying New York’s ‘stop and frisk’ anti-handgun police measures during his mayoralty, measures often applied to young minority males. This policy probably was more lamented by white liberals living in buildings with doormen than by minorities living in danger.  Nevertheless, a party whose most fervid members consider ‘billionaire’ an unanswerable epithet might flinch from nominating one of those who was not so long ago elected to office as a Republican.”

Meanwhile, in a surprise, a St. Pete Poll of likely Florida primary voters has Bloomberg ahead of Biden, 27% to 26%, as just released today.  A previous St. Pete Poll had Biden 15 points up.

The Florida primary is March 17.

--Interesting situation in Georgia, as four-term Republican congressman and staunch Trump supporter Doug Collins is gunning for the senate seat temporarily held by Sen. Kelly Loeffler, a business executive with no political experience but lots of money to spend on a campaign.

Republican Gov. Brian Kemp appointed Loeffler to fill out the remainder of Republican Sen. Johnny Isakson’s seat, after the senator left office at the end of 2019 for health reasons.

But now Loeffler must run to fill out the rest of Isakson’s term, which goes through 2022, this fall.  If no candidate gets more than 50% of the vote, the top two vote-getters, regardless of party, compete in a Jan. 5 runoff.

The danger for Republicans is that a Democrat could emerge with 50% as Collins and Loeffler split the vote.  But Collins is under pressure from the National Republican Senatorial Committee, the campaign arm of Senate Republicans, to drop his idea of running.  Collins is, however, defiant.

President Trump wanted Gov. Kemp to appoint Collins to fill Isakson’s seat and Kemp defied him, opting for Loeffler.

--Liz Roscher / Yahoo Sports

“Ohio congressman and former Ohio State assistant wrestling coach Jim Jordan has been accused of participating in the cover-up of widespread sexual abuse in OSU’s wrestling program.

“Jordan was accused by Adam DiSabato, who was the team captain in the late 1980s and early 1990s.  DiSabato was appearing in front of a hearing in the Ohio legislature as a witness for House Bill 249, which would waive the statute of limitations and allow the OSU athletes who had been abused to sue the university.

“DiSabato told the House Civil Justice Committee that several team officials, including Jordan, were aware that the team’s open shower facilities put them at risk of being abused and harassed by a team doctor, but did nothing about it.  Then DiSabato detailed a phone conversation between him and Jordan, in which Jordan asks DiSabato to help him cover up wrongdoing.

“Via Cleveland.com:

“[DiSabato] also said Jordan called him repeatedly in July 2018, after media outlets quoted his brother, Michael DiSabato, saying Strauss’ abuse was common knowledge to those surrounding the wrestling program, including Jordan.

“ ‘Jim Jordan called me crying, groveling...begging me to go against my brother...That’s the kind of cover-up that’s going on here,’ he said.

“ ‘Are you guys going to do what you’re voted in to do?’ he told lawmakers later.  ‘That’s the only reason I’m here.’....

“Jordan continued to deny having any knowledge of student sexual abuse even after independent investigators released a report in May 2019 that concluded that Strauss, who had been employed by OSU’s athletics department and student health center until he was suspended in 1996, abused at least 177 male student athletes and patients.  Strauss died by suicide in 2005.

“A spokesman for Jordan called DiSabato’s accusations ‘a total lie.’”

--Former PIMCO CEO Doug Hodge was sentenced a week ago for his role in the college admissions scandal and the other day he responded in a Wall Street Journal op-ed.

“When I met (Rick) Singer in 2007, he struck me as capable, confident and knowledgeable about the admissions process.  With thousands of students vying for a limited number of places at every top college, having someone like him on my side seemed smart.  His sales pitch had two elements.  First, he would create a ‘brand’ for my child to help separate our application from the legions of others. Second, he touted his many ‘connections’ at top colleges.  Nothing he said suggested he would rely on deception and illicit payments to secure my child’s acceptance.

“I was an easy mark.  Like all parents, I wanted to give my children the best possible college experience.  Having attended great schools myself, I wanted the same for my children, and I thought hiring a ‘coach’ would help.  I was also happy, as Mr. Singer proposed, to make donations funding similar opportunities for students from disadvantaged families.  My wife and I have given to many such causes.  I wanted to believe that’s what I was doing with Mr. Singer.

“As any college administrator would privately acknowledge, donations can bear on admissions.  I realize this is deeply unfair. The reality, however, is that private schools rely heavily on donations to meet their budgets, attract and retain faculty, and provide financial aid to deserving students.  Mr. Singer understood this reality and turned it to his advantage.  He knew that some athletic coaches were willing to help with admissions in return for financial contributions.  He also knew parents were willing to contribute far more than the coaches would need, allowing him to pocket the difference.

“I unfortunately made payments that facilitated Mr. Singer’s scheme, believing that I was supporting the university while also helping my children.  But I also knew that Mr. Singer was providing my children with a false athletic brand.  I believed that Mr. Singer was directing my payments to underfunded athletic programs.  But I have now learned that a large chunk of my payments ended up in Mr. Singer’s personal bank account.

“Mr. Singer presented himself as a do-gooder, but it was all a lie.  There was no ‘good’ at the heart of his mission.  Only greed.  And my participation in his corrupt endeavor is a painful reality that I must accept.  As a person who values honesty and integrity, I failed....

“Looking back, there wasn’t one moment when I decided to abandon my principles. Rather, it was a series of small steps.  I got the first inkling that something wasn’t quite right when Mr. Singer let me know that, due to his coaching experience, the brand he’d help create for my children would be related to ‘athletics,’ and that he just needed my children to have some connection to sports.

“At that first tell, I should have turned the other way. I should have listened to my conscience.  Today I realize that what I did was not only wrong but immoral, and it hurt others.”

I’m sorry, this is pathetic.

--Maureen Callahan / New York Post

“Well, that was fast.

“Just weeks after slamming the door on Buckingham Palace, declaring their suffering as wealthy, pampered, world-famous senior royals so unbearable that they must take their leave and flee to the Canadian woods in search of privacy, humility, a slower way of life, time to think about which noble eco-warrior causes to support (while flying private, of course) and to create normalcy for themselves and their baby, Harry and Meghan are out on the stroll, selling their goods and services – whatever those may be – to the highest bidder.

“You’d think, for appearances’ sake, they would have held out a little longer.  It’s not as if they’re suddenly destitute.  Harry and Meghan are, after all, still on the royal payroll through at least May, after which Prince Charles has vowed to support them.

“And since decamping Britain they’ve been freeloading, staying indefinitely at a $14 million Vancouver mansion (a deal brokered by music producer David Foster) and at Serena Williams’ Palm Beach estate during a recent trip to Florida.

“That trip, by the way, was to attend a summit hosted by JPMorgan Chase.  Harry, a 35-year-old man who knows little of the real world, let alone macro- and micro-economics or likely how to work an ATM, spoke to an audience including Prime Minister Tony Blair, Patriots owner Robert Kraft and architect Sir Norman Foster.

“Neither side will say whether he was paid, though experts say it’s likely he was compensated substantially.  And to speak of what exactly?

“The grief he still suffers from his mother’s death twenty years ago.

“To get this right: Harry, as he said in his last public statement as a working royal, had ‘no other option’ given the ‘many years of challenges’ he has faced, the result of losing his mother, his forced march behind her casket as a 12-year-old boy, and the ongoing mental health challenges from which he suffers.

“ ‘Every single time I hear a click, every single time I see a flash,’ he said last year, ‘it takes me straight back.’

“So, as he said in his farewell speech, he was forced to ‘step my family back from all I have ever known, to take a step forward into what I hope can be a more peaceful life.’

“But for the right price, he’ll dredge up all that deeply personal emotional chaos, held sacred for decades, to a room full of global powerbrokers – despite zero chance any of it will elucidate or ameliorate a single real-world problem....

“Harry’s mother, Princess Diana, did more to change public attitudes towards AIDS patients as a working royal than anyone, and it was precisely because she was doing things no royal had ever done – handhold and hug and kiss those dying from the disease – that her activism had such enormous impact.

“And when Diana did something else a future queen of England had never done – get a divorce – she didn’t commodify her brand or sell her secrets. She recognized her platform as inherently rare and valuable, made more so by her refusal to monetize it.

“SussexRoyal?!  Diana would never.

“Contrast his mother’s approach with the recent video, since taken down, of Harry cornering Disney chief Bob Iger at a private event, begging him to hire Meghan for voiceover work while Beyonce looks on, mortified.

“When, as a royal, you literally put yourself in supplication to a titan of capitalism, you have shown no scruples, no self-awareness, no shame.  Now you’re just another hustler out to make a buck, and there’s nothing special about that.”

--Arthur C. Brooks, Harvard professor and one-time president of the American Enterprise Institute, a conservative think tank, issued some remarks recently at the National Prayer Breakfast that President Trump then responded to by blasting Nancy Pelosi and Mitt Romney.

So here is some of what Mr. Brooks said that morning, Feb. 6.

“I am here today to talk about what I believe is the biggest crisis facing our nation – and many other nations – today.  This is the crisis of contempt – the polarization that is tearing our society apart....

“To start us on a path of new thinking to our cultural crisis, I want to turn to the words of the ultimate original thinker, history’s greatest social entrepreneur, and as a Catholic, my personal Lord and Savior, Jesus.  Here’s what he said, as recorded in the Gospel of Saint Matthew, chapter 5, verse 43-45: ‘You have heard that it was said, ‘Love your neighbor and hate your enemy.’  But I tell you, love your enemies and pray for those who persecute you, that you may be children of your Father in heaven.’

“Love your enemies!  Now that is thinking differently. It changed the world starting 2,000 years ago, and it is as subversive and counterintuitive today as it was then.  But the devil’s in the details.  How do we do it in a country and world roiled by political hatred and differences that we can’t seem to bridge?....”

Brooks said he gives about 150 speeches a year to various groups, and at one, he uttered the following to a group of conservative activists:

“ ‘My friends, you’ve heard a lot today that you’ve agreed with – and well you should.  You’ve also heard a lot about the other side – political liberals – and how they are wrong.  But I want to ask you to remember something: Political liberals are not stupid, and they’re not evil.  They are simply Americans who disagree with you about public policy.  And if you want to persuade them – which should be your goal – remember that no one has ever been insulted into agreement.  You can only persuade with love.’

“It was not an applause line.

“After the speech, a woman in the audience came up to me, and she was clearly none too happy with my comments.  ‘You’re wrong,’ she told me.  ‘Liberals are stupid and evil.’

“At that moment, my thoughts went to...Seattle.  That’s my hometown.  While my own politics are conservative, Seattle is arguably the most politically liberal place in the United States.  My father was a college professor; my mother was an artist.   Professors and artists in Seattle...what do you think their politics were?

“That lady after my speech wasn’t trying to hurt me.  But when she said that liberals are stupid and evil, she was talking about my parents.  I may have disagreed with my parents politically, but I can tell you they were neither stupid nor evil.  They were good, Christian people, who raised me to follow Jesus.  They also taught me to think for myself – which I did, at great inconvenience to them....

“What is leading us to this dark place that we don’t like?

“The problem is what psychologists call contempt.  In the words of the 19th-century philosopher Arthur Schopenhauer, contempt is ‘the unsullied conviction of the worthlessness of another.’  In politics today, we treat each other as worthless, which is why our fights are so bitter and cooperation feels nearly impossible....

“I’m calling each one of you to be missionaries for love in the face of contempt.  If you don’t see enough of it, you’re in an echo chamber and need a wider circle of friends – people who disagree with you.  Hey, if you want a full blast of contempt within 20 seconds, go on social media!  But run toward that darkness, and bring your light.

“My sisters and brothers, when you leave the National Prayer Breakfast today and go back to your lives and jobs, you will be back in a world where there is a lot of contempt.  That is your opportunity.  So I want you to imagine that there is a sign over the exit as you leave this room.  It’s a sign I’ve seen over the doors of churches – not the doors to enter, but rather the doors to leave the church.  Here’s what it says:

“ ‘You are now entering mission territory.’”

Well, you can imagine President Trump, who followed Mr. Brooks, was none too pleased.  So he hated on Nancy and Mitt.  Brooks’ mission had failed in this instance.

--A third of all plant and animal species could be wiped out by man-made climate change in just 50 years, U.S. scientists warn.

The researchers from the University of Arizona used data from 538 species at 581 sites around the globe, and found 44 percent of the 538 species had already gone extinct at one or more of the sites they earlier inhabited.

The study identified maximum annual temperatures as the key variable that best explains whether a population will become extinct.

--An iceberg twice the size of Washington, D.C., has broken off the Pine Island glacier in Antarctica, scientists reported this week.

According to NASA, the Pine Island glacier “is one of the fastest-retreating glaciers in Antarctica.”  The glacier and the nearby Thwaites glacier together contain “enough vulnerable ice to raise global sea level by 1.2 meters (4 feet),” NASA said.

Meanwhile, it was nearly 65 degrees in Antarctica the other day, which may be the warmest ever recorded there.  [It’s tough to prove this.]

--One final note, as we hit the Presidents’ Day weekend, traditionally a time for ski vacations, particularly in the northeast.  We’ve had no snow in the region, at least here in New Jersey, and lower New York State, and no sustained cold weather.

Which means one thing, boys and girls.  A massive mosquito outbreak this summer.  Just had to be the first to tell you.  #WestNileVirus

---

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

God bless America.

Happy Valentine’s Day.

---

Gold $1587
Oil $52.15

Returns for the week 2/10-2/14

Dow Jones  +1.0%  [29398]
S&P 500  +1.6%  [3380]
S&P MidCap  +2.3%
Russell 2000  +1.9%
Nasdaq  +2.2%  [9731]

Returns for the period 1/1/20-2/14/20

Dow Jones  +3.0%
S&P 500  +4.6%
S&P MidCap  +1.6%
Russell 2000  +1.2%
Nasdaq  +8.5%

Bulls 52.9
Bears 19.2

Have a good week.  Enjoy the holiday.

Dr. Bortrum posted a new column!

Brian Trumbore



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Week in Review

02/15/2020

For the week 2/10-2/14

[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 this week to Bob C.

Edition 1,087

As I go to post tonight, the new death toll in China from the coronavirus is over 1,500 (1,523), with Hubei reporting 139 more deaths (2,400 new cases).  Nationally, the number of cases is up to 66,492.  Of the 1,523 deaths China is officially acknowledging and, yes, who the hell knows what the truth is, 1,123 are in Wuhan alone.

A top Chinese official acknowledged today that the outbreak is a deep challenge for the country, but defended Beijing’s management of the epidemic while lashing out at the “overreaction” of other countries.

In an interview with Reuters in Berlin, State Councilor Wang Yi, who also serves as China’s foreign minister, urged the United States not to take unnecessary virus-response measures that could hamper trade, travel and tourism.

“The epidemic overall is under control,” he said.  “This epidemic is truly sudden.  It has brought a challenge to China and the world.”

“We’ve taken such complete prevention and control efforts, efforts that are so comprehensive, that I can’t see any other country that can do this,” Wang said, adding that any leader in another country would find the challenge very difficult.  “But China has been able to do this.”

Do what?!

The World Health Organization, as of today, had all of two people in China, both in Beijing, not Wuhan or Hubei, and the United States still isn’t allowed to have any representatives from the world’s best body, the Centers for Disease Control, in China, let alone at the epicenter to work with Chinese scientists and researchers.

And today, China announced that people returning to Beijing from extended holidays were ordered to undergo a 14-day self-quarantine to help prevent the spread of the coronavirus.

The official Beijing Daily newspaper said people failing to obey would be punished but it was not immediately clear how that would be enforced, or whether the restrictions would apply to non-residents of Beijing or foreigners arriving from abroad.

Honghu city in Hubei imposed a “wartime” lock-down beginning today, with strict management of entry into housing compounds and villages, China’s CCTV reported.

Yet Wang Yi, who is indeed a big figure in China, had the temerity to say, “We’re not just defending the life, safety and health of Chinese citizens, but also making our contribution for global public health, and that should be recognized.”

What?  You want a freakin’ participation medal, for having open-air live animal (many rare) markets?  For having the fetid duck ponds I’ve personally seen where thousands of ducks are in a disgusting body of water the size of most living rooms...breeding grounds for bird flu?  For sharing nothing with world health officials?

This is the bottom line.  Beijing is managing the numbers, and hiding the facts, just like it does with its National Bureau of Statistics and the economy, very carefully.

So while Wang Yi was making these comments tonight in Berlin, saying the epidemic is under control, and Chinese officials were failing to come clean, the World Health Organization warned that the epidemic posed a global threat potentially worse than terrorism.

The world must “wake up and consider this enemy virus as public enemy number one,” WHO chief Tedros Adhanom Ghebreyesus said at one point this week, responding to those saying that the virus will simply run its course by April with warmer weather.

“This outbreak could still go in any direction,” the WHO director general warned, though, yes, the slower spread thus far of cases outside Hubei province was slightly reassuring.

As for the United States, of course there is no reason for panic, what with 16 cases diagnosed thus far, none fatal, vs. 14,000 deaths from the flu this season.

But as our own government officials warn, there remains so much we don’t know.  True, at some point it could peter out, but what if it returns in the fall?

I can’t help but add, though, that overall tensions between the United States and China are ratcheting up rapidly, and it’s not just about the lack of transparency with the coronavirus.  It’s about Huawei, and the charges levied against four Chinese military officers in the Equifax hacking incident from a few years ago, both described further below.

China and Xi Jinping’s government is deeply wounded...humiliated.  That’s not a good thing for any of us.

Lastly, since I first brought it up, the WHO told the International Olympic Committee there is no case for canceling or relocating the Tokyo Olympics over the outbreak, the head of the IOC’s Coordination Commission said today.  Japan said it would step up testing and containment after reporting its first coronavirus death and confirming new cases.

We’ll see what everyone says on the topic in another few weeks.

As for President Trump, before we get into Trump World, he received some highly encouraging news regarding his reelection yesterday when a Gallup poll revealed that 61% of Americans say they are better off than they were three years ago when he took office, and about the same number credit him for the improvement.

No other incumbent president in the past three decades has enjoyed such a high percentage of people saying they feel better about their situation.

But now....

….Trump World

--In a rare rebuke of the president, Attorney General William Barr said Trump should stop tweeting about the Roger Stone case because his posts “make it impossible for me to do my job.”

In an interview with ABC News on Thursday, Barr said, “I think it’s time to stop the tweeting about the Department of Justice criminal cases,” adding that he has a problem “with some of the tweets.”

“As I said at my confirmation hearing, I think the essential role of the attorney general is to keep law enforcement, the criminal process sacrosanct to make sure there is no political interference in it. And I have done that and I will continue to do that,” he told the network’s chief justice correspondent, Pierre Thomas.

“And I’m happy to say that, in fact, the president has never asked me to do anything in a criminal case,” he said.

But Barr added he wasn’t going to be pressured by anyone – even the president.

“I’m not going to be bullied or influenced by anybody...whether it’s Congress, a newspaper editorial board, or the president,” he said.

“I cannot do my job here at the department with a constant background commentary that undercuts me.”

Barr’s comments put him in line with many of Trump’s supporters on Capitol Hill who say they support the president but wish he’d cut back on his tweets.

Trump then tweeted today:

“ ‘The President has never asked me to do anything in a criminal case.’ A.G. Barr.  This doesn’t mean that I do not have, as President, the legal right to do so, I do, but I have so far chosen not to!”

The White House said Trump “wasn’t bothered” by Barr’s criticism and that he still had “full faith” in the A.G.

But earlier in the week, Trump thanked and praised Barr for overruling veteran prosecutors who had recommended that Stone – Trump's longtime associate – serve between seven and nine years on his conviction for lying to Congress, witness tampering and obstruction of justice.

In a stunning reversal, the Justice Department overruled a recommendation by its own prosecution team that Stone serve such a lengthy sentence – which was in line with sentencing guidelines – that “would not be appropriate.”

The about-face raised serious questions about whether Barr had intervened on behalf of the president’s friend.  And it also raised questions about whether Trump personally pressured the Justice Department, either directly or indirectly.

Barr, in the ABC News interview, defended his actions and said it had nothing to do with the president.   He said he was supportive of Stone’s conviction but thought the sentencing recommendation was excessive.

Well he undercut his own prosecutors, going against past precedence, and, after all, it doesn’t matter what the prosecutors recommend, it is up to the judge to determine what Roger Stone should receive! 

That is the bottom line of this whole imbroglio.  No wonder the entire four-man DOJ prosecution team withdrew from the case, and one prosecutor resigned from the Justice Department entirely.

Hours after Barr told his staff that the department had to amend its recommendation, President Trump tweeted:

“This is a horrible and very unfair situation.  The real crimes were on the other side, as nothing happens to them.  Cannot allow this miscarriage of justice!”

And...

“Congratulations to Attorney General Bill Barr for taking charge of a case that was totally out of control and perhaps should not have even been brought.  Evidence now clearly shows that the Mueller Scam was improperly brought & tainted.  Even Bob Mueller lied to Congress!”

But Senator Lindsey Graham, chair of the Judiciary Committee that oversees the Justice Department, as well as one of Trump’s closest allies on Capitol Hill, said the president should not have tweeted about an ongoing case.

Editorial / Wall Street Journal

“After his Senate impeachment acquittal, we wrote that President Trump’s history is that he can’t stand prosperity.  Well, that was fast.  The President’s relentless popping off this week about the sentencing of supporter Roger Stone has hurt himself, his Justice Department, and the proper understanding of executive power.  That’s a notable trifecta of self-destructive behavior even by his standards.

“Mr. Trump handed another sword to his opponents when he fulminated on Twitter about the initial recommendation of a seven-to-nine-year prison sentence for Mr. Stone.  He is right that such a sentence would be excessive....

“As it happens, senior Justice officials had concluded on their own that the sentence recommendation was excessive and had decided to rescind it before Mr. Trump’s tweet.  But by ranting publicly as he did, the President gave Democrats an opening to claim that Attorney General Bill Barr was taking orders from the White House.  Four prosecutors...withdrew from the Stone case in protest, and Democrats had another Trump scandal to flog.

“The uproar is obscuring that Mr. Barr had every reason and authority to reduce the sentencing recommendation... All prosecutors ultimately work for Mr. Barr, and he is accountable to the voters through the President....

“But before Mr. Barr could explain any of this, Mr. Trump compounded his political felony by praising the AG for rescinding the sentencing recommendation.  That gave more ammunition to Democrats and undermined Mr. Barr.  The President then shot himself again by attacking Judge Amy Berman Jackson, who is presiding over the Stone case.  ‘Is this the Judge that put Paul Manafort in SOLITARY CONFINEMENT, something that not even mobster Al Capone had to endure?’ he tweeted.

“Mr. Trump makes no friends in the judiciary with such political attacks, and it can't help Mr. Stone’s chances of getting a reduced sentence.  If the President dislikes the sentence, he has his pardon power.  Meantime, knock it off....

“The danger for Mr. Trump is that Mr. Barr will resign because he is tired of having his credibility undermined by a President who can’t control his political id no matter the damage it causes.

“Mr. Trump won’t like to hear any of this, and no doubt his loyalists will blame Democrats, the media and Mr. Barr.  But Mr. Trump is his own worst enemy.  Time and again his need to dominate the news, to justify even his mistakes, and to rebut every critic gets him into needless trouble....

“In the wake of his Senate acquittal, Mr. Trump should be campaigning for re-election and enjoying the disarray of his opponents.  Instead he gives every appearance of wanting to settle scores with anyone who contributed in any way to impeachment.

“He is helping the Democrats who are running against the Senators who voted to acquit.  And he is making millions of voters ask if they really want to take a risk on giving him so much power for another four years.”

Judge Jackson is scheduled to sentence Roger Stone on Feb. 20.

Appearing on Fox News, former Republican Rep. Trey Gowdy, formerly head of the House Oversight Committee, said Stone deserved “two to three years.”  I’m guessing that is what he’ll receive.

So that’s where I was going to end this discussion tonight, only later today we learned that the Justice Department revealed it would not charge former acting FBI director Andrew McCabe with lying to investigators about a media disclosure.  McCabe had authorized the bureau to investigate Donald Trump in 2017 and has been a persistent target of presidential attacks since.  Trump was said to be furious over this move.

You’d think the president would thus be ticked off at Bill Barr, but then we learned Barr has tasked outside prosecutors to review the handling of the criminal case against former national security adviser Michael Flynn and other sensitive national security and public corruption prosecutions in the U.S. attorney’s office in Washington.

Flynn was one of the early people to plead guilty in connection with special counsel Robert Mueller’s probe, admitting he lied to the FBI about his contacts with the Russian ambassador to the United States, though he has since tried to withdraw his plea.

So where are we really, especially with regards to the Trump-Barr relationship?  And just imagine the mood among career officials in the Justice Department.

--President Trump wants to reprogram almost $4 billion in Defense Department funds to pay for his now-infamous wall on the southern border, according to a budget request sent to Congress.

The funds will come from procurement for major weapons programs, including for the fifth-generation F-35 fighter jet.  $1.3 billion will be drawn from the National Guard alone.

The White House is planning to divert $7 billion in military construction and counternarcotics funding overall.

The move is certain to spark outrage in Congress, with Democrats hammering Trump for what they see as an end-run around Congress.

Trump has turned to reprogramming already-appropriated funds to cover the costs, claiming authority under an emergency order he declared last year after Congress repeatedly refused to fund the request.

But weren’t we told Mexico was paying for the wall?!  I mean we aren’t even getting a coupon for some free Dos Equis.

--The Senate voted on Thursday to pass a resolution limiting President Trump’s power to order military strikes against Iran without the approval of Congress.

The bipartisan 55-45 vote – in which eight Republicans joined all the chamber’s Democrats in approving the resolution – was seen as a rebuke to Trump’s opposition to consulting Congress when making foreign policy decisions.

But the move was largely symbolic as the president will veto the measure, and there are not enough Republicans to override it, which requires a two-thirds majority.

Trump tweeted prior:

“It is very important for our Country’s SECURITY that the United States Senate not vote for the Iran War Powers Resolution.  We are doing very well with Iran and this is not the time to show weakness.”

--Former White House Chief of Staff John Kelly, in an appearance in New Jersey the other night, said Lieutenant Colonel Alexander Vindman, the former National Security Council aide and impeachment witness President Trump fired last Friday, was just doing his job.

Kelly, in a Q&A, laid out his misgivings about Trump’s words and actions regarding North Korea, illegal immigration, military discipline, Ukraine, and the news media.

Kelly, a retired Marine Corps general, said that Vindman is blameless and was simply following the training he’d received as a soldier.  Kelly suggested that Vindman was rightly disturbed by Trump’s phone call to Ukrainian President Volodymyr Zelensky in July, and that having seen something “questionable,” Vindman properly notified his superiors, Kelly said.  When subpoenaed by Congress in the House impeachment hearings, Vindman complied and told the truth, Kelly said.

“He did exactly what we teach them to do from cradle to grave,” Kelly told the audience.  “He went and told his boss what he just heard.”

Kelly also made clear that Trump indeed conditioned military aid on Zelensky’s help digging up dirt on Democratic presidential candidate Joe Biden.

When Vindman heard the president tell Zelensky he wanted to see the Biden family investigated, that was tantamount to hearing “an illegal order,” Kelly said.  “We teach them, ‘Don’t follow an illegal order.  And if you’re ever given one, you’ll raise it to whoever gives it to you that this is an illegal order, and then tell your boss.’”

Kelly also said that Trump’s policy with North Korea had failed in that Kim Jong Un “will never give his nuclear weapons up...and I never did think Kim would do anything other than play us for a while, and he did that fairly effectively.”

Kelly said he did not believe the press is “the enemy of the people,” and that when it came to Russian President Vladimir Putin, he is “not necessarily a rational actor.”  Putin sits atop “a society in collapse,” yet is intent on restoring “the glory days of the Soviet Union.”  [See below on Belarus.]

Well, of course Kelly’s comments led to a tweetstorm from the president.

“When I terminated John Kelly, which I couldn’t do fast enough, he knew full well that he was way over his head.  Being Chief of Staff just wasn’t for him.  He came in with a bang, went out with a whimper, but like so many X’s, he misses the action & just can’t keep his mouth shut...

“...which he actually has a military and legal obligation to do.  [Ed. no he doesn’t.] His incredible wife, Karen, who I have a lot of respect for, once pulled me aside & said strongly that ‘John respects you greatly.  When we are no longer here, he will only speak well of you.’  Wrong!”

Earlier, Trump said the military may consider disciplining Vindman, another totally outrageous statement.

“We sent him on his way to a much different location and the military can handle him any way they want,” Trump said on Tuesday.  Asked if he was suggesting that Vindman face disciplinary action, Trump said that would be up to the military.  “If you look at what happened...they’re going to certainly, I would imagine, take a look at that,” Trump said.

--As always when it comes to budgets released by any White House, they are dead on arrival so I don’t bother with them.  But I can’t help but point out that the man who was going to eliminate the federal budget deficit in eight years, now says his plan would do so by 2035.  It also projects 3% growth through the end of the next decade.

--President Trump again downplayed the severity of head injuries suffered by U.S. troops during an Iranian missile attack, as the Pentagon announced the injury total rose to 109.

Trump spoke to Fox Business in an interview Monday, after the update was released.

“They landed in a way that didn’t hit anybody,” Trump said of the missile strike.  “And so when they came in and told me that nobody was killed, I was impressed by that and, you know, I stopped something that would have been very devastating for them.”

The president didn’t specify what he stopped.

Again, if there had been fatalities, we’d be at war with Iran today.

--Trump tweets:

“It is happening again to Crazy Bernie, just like last time, only far more obvious.  They are taking the Democrat Nomination away from him, and there’s very little he can do.  A Rigged System!”

“I was very surprised & disappointed that Senator Joe Manchin of West Virginia voted against me on the Democrat’s totally partisan impeachment Hoax.  No President has done more for the great people of West Virginia than me (Pensions), and that will...

“...always continue.  Every Republican Senator except Romney, many highly religious people, all very smart, voted against the Impeachment Hoax. @SenCapito was all in (a great person).  I was told by many that Manchin was just a puppet for Schumer & Pelosi.  That’s what he is!”

[Earlier, when Trump tweeted a related criticism of Manchin, Manchin tweeted back: “I’ve read the transcripts thoroughly & listened to the witnesses under oath.  Where I come from a person accused defends themselves with witnesses and evidence.”]

“DRAIN THE SWAMP!  We want bad people out of government!”

“Mini Mike is a 5’4” mass of dead energy who does not want to be on the debate stage with these professional politicians.  No boxes please.  He hates Crazy Bernie and will, with enough money, possibly stop him.  Bernie’s people will go nuts!”

“Mini Mike Bloomberg is a LOSER who has money but can’t debate and has zero presence, you will see.  He reminds me of a tiny version of Jeb ‘Low Energy’ Bush, but Jeb has more political skill and has treated the Black community much better than Mini!”

[To which Mike Bloomberg replied via Twitter: “@realDonaldTrump – we know many of the same people in NY.  Behind your back they laugh at you & call you a carnival barking clown.  They know you inherited a fortune & squandered it with stupid deals and incompetence.”]

“Mini Mike is a short ball (very) hitter.  Tiny club head speed.  KEEP AMERICA GREAT!”

Yes, we’re down to attacking someone’s golf game when the president is a titanic cheater on the course.

--Lastly, President Trump really said this in the Oval Office on Tuesday:

“I’m looking to bring the country together.”

Wall Street

The impact of coronavirus is certainly being felt around the world as Asian and European auto plants run short of parts, the supply chain disrupted in other industries, and tourism becomes increasingly impacted, especially in the case of free-spending Chinese staying home.

With factories having been expected to reopen Feb. 10 in China, after the Lunar New Year holiday, a vast majority of workers thus far are either unwilling to return to employers located in the sprawling quarantine zone, or can’t travel back as yet.

Caterpillar said most of its Chinese suppliers were back on line, but Foxconn, a major electronics contractor for Apple, said it will be the end of the month before even half of its facilities reopen.

And you have the airline disruptions, such as United and American saying they wouldn’t resume normal service to China until April 24.

But it’s the auto-industry that is particularly hard hit.  Nissan temporarily closed one of its factories in Japan after running short of Chinese components.

And tonight, the Chinese automakers’ association said sales in China were likely to slide more than 10% in the first half of the year, which isn’t necessarily about a simple lack of parts.

For now, however, when it comes to Wall Street, the above concerns are being largely ignored.  Everything is just a short-term hit and will be made up later, so investors say.

As for the economic indicators, it was a light week.  Inflation was tame once again, with consumer prices in January rising just 0.1%, 0.2% ex-food and energy.  Year-over-year, the CPI was 2.5%, 2.3% on core, both up a tick over consensus.

Retail sales in January came in as forecast, up 0.3%, though unchanged on the key ‘control group’ reading.

January industrial production was –0.3% as expected.

The Atlanta Fed’s GDPNow barometer for the first quarter fell to 2.4% from 2.7%.

Meanwhile, Federal Reserve Chair Jerome Powell went to Congress for his semi-annual testimony on the health of the economy and he said the U.S. is in a good place, even as he cited the potential threat from the coronavirus in China and concerns about the economy’s long-term health.

With risks like trade policy uncertainty receding and global growth stabilizing, “we find the U.S. economy in a very good place, performing well,” Powell told the House Financial Services Committee.

“There is no reason why the expansion can’t continue,” he said, repeating the central bank’s view that its current target range for short-term interest rates, between 1.50% and 1.75%, is “appropriate” to keep the expansion on track.

But he said the coronavirus outbreak will impact China and its close neighbors and trading partners, and there will “very likely be some effects on the United States.”

“The question we will be asking is will these be persistent effects that could lead to a material reassessment of the outlook,” he said.  The answer, he said, is still too early to know.

While Powell was testifying, President Trump tweeted:

“When Jerome Powell started his testimony today, the Dow was up 125, & heading higher.  As he spoke it drifted steadily downward, as usual, and is now at –15.  Germany & other countries get paid to borrow money.  We are more prime, but Fed Rate is too high, Dollar tough on exports.”

[The Dow hit a record high the next day.]

Powell issued sanguine comments on inflation, which was 1.6% in 2019 for the Fed’s preferred barometer, the personal consumption expenditures index, still below the Fed’s 2% target, and he sounded a muted warning on the federal deficit.  Speaking of which....

The federal budget deficit grew 25% in the first four months of the fiscal year (which starts Oct. 1), largely as a result of a calendar quirk that brought forward payments of federal benefits, such as veteran and retiree benefits.

The U.S. budget gap totaled $389 billion from October through January, compared with $310 billion in the same period a year earlier, according to the Treasury Department. 

January’s figure was supposed to show a surplus of $11.5bn, but instead revealed a deficit of $32.6 billion, though this was because certain benefits were shifted from February into January.

But higher federal spending on the military and health care – which rose 9% and 15%, in the first four months of the fiscal year – continued to boost government spending, while revenues did rise smartly. 

Over the 12 months that ended in January, receipts rose 6.7%, the most since February 2016, but outlays were up 8.8%, pushing the deficit to $1.06 trillion, a 16.4% increase from a year earlier.

As a share of GDP, the year-over-year deficit was 4.9%, compared with 4.3% in the previous 12 months, the highest debt/GDP ratio since May 2013.

Needless to say, it’s not good that the deficit is rising despite the strong economy.

Europe and Asia

Eurostat released figures for GDP in the euro area (EA19) for the fourth quarter and they were putrid.  GDP was up just 0.1% over the third quarter, according to a flash estimate, while compared with the same quarter of the previous year, seasonally adjusted GDP rose by 0.9% in the eurozone.

Worrisomely, Germany came in at 0.0% for the fourth quarter, and just 0.5% year-over-year.  France was –0.1%, 0.8% yoy.

Spain had annualized growth of 1.8%*, but Italy was unchanged, 0.0% for the year, and –0.3% for the fourth quarter.

*The government in Madrid cut its growth forecast for 2020 to 1.6%.

The UK had 1.1% growth year-over-year in Q4.

Separately, industrial production in December for the EA19 was down 2.1% over November, and down 4.1% over December 2018.

For the year, average industrial production fell 1.7%, compared with 2018.

Brexit: In an example of the tough negotiations that will be unfolding over the coming months between the UK and the European Union on a trade deal, EU chief Brexit negotiator Michel Barneir said British authorities should be “under no illusion” on financial services in future relations with the EU after the Brexit transition period ends.

In a speech to the European Parliament, Barnier made it clear that equivalence regimes, which govern relations with foreign partners on specific financial sectors like clearing houses or stock exchanges, would remain under tight EU control, with no special treatment for Britain.  This is a big issue.

Turning to Asia...a Reuters poll of 40 economists based in mainland China, Hong Kong, Singapore, as well as Europe and the United States, predicted China’s annual economic growth in the first quarter will slump to 4.5% from 6.0% in the previous quarter.  That drop is expected to drag down the full-year growth rate in 2020 to 5.5% from 6.1% in 2019, its weakest since at least 1990 when comparable records began.

However, economists were optimistic the economy would bounce back as soon as the second quarter, and this is impossible to know at this point.  Yes, some production will be made up once the coronavirus runs its course, it can safely be assumed, but a lot of other activity will be lost.

Separately, consumer prices in China rose 5.4% in January, after a 4.5% rise in December, with prices of pork and fresh vegetables the main culprits.

Food prices spiked 20.6%.  Pork was up 116% in January from a year earlier due to an outbreak of African swine fever.

The National Bureau of Statistics said: “The year-on-year increase has been affected not only by Spring Festival [Lunar New Year holiday]-related factors but...by the new coronavirus as well.”

The rise in January was the highest since October 2011, when CPI inflation was 5.5%.

The producer price index (or factory-gate prices) rose just 0.1% in January, though these are expected to take a demand hit with the coronavirus outbreak.

Japan, the world’s third-largest economy, is bracing for a sharp slowdown and some analysts expect another contraction in the current quarter as the virus outbreak hurts exports, output and consumption.

Street Bytes

--Stocks rose a second straight week, largely ignoring the coronavirus and its potential impact for the reasons stated above.  Earnings have also been better than expected for the fourth quarter, up 2.6% on an annual basis when they were expected to be unchanged, or declining slightly, according to Refinitiv.

The Dow Jones finished up 1% to 29398, having hit an all-time closing high Wednesday of 29551.  The S&P 500 rose 1.6% to a new closing high today, 3380, ditto Nasdaq, up 2.2% to 9731.

But action was muted in the markets today as investors were leery of being too aggressive heading into the three-day weekend.  Who knows what news will emerge out of China during that time?

--U.S. Treasury Yields

6-mo. 1.54%  2-yr. 1.43%  10-yr. 1.59%  30-yr. 2.04%

Little changed on the week.

--Republican senators dealt a significant setback to one of President Trump’s nominees to the Federal Reserve Board when they raised concerns over Judy Shelton’s writings and public statements at a confirmation hearing Thursday.

Lawmakers from both parties on the Senate Banking Committee said they were uncomfortable withi at least some of Shelton’s policy preferences.

Shelton, who was an adviser to Trump’s presidential campaign, has advocated for the Fed to reduce interest rates in response to rate cuts by other central banks and to prevent the U.S. dollar from strengthening against other currencies.

Republican Sen. Pat Toomey said, “That’s a very, very dangerous path to go down.  This beggar-thy-neighbor mutual currency devaluation is not in our interest, and it is not in the mandate of the Fed to pursue it.”

Republicans can lose no more than three votes in the Senate for her to win confirmation, but she may not even get a favorable committee recommendation.

--OPEC cut its forecast for global growth in oil demand this year due to the coronavirus outbreak and said its output fell sharply in January as producers implemented a new supply-limiting pact.  In a monthly report, OPEC said 2020 demand for its crude will average 29.30 million barrels per day, 200,000 bpd less than previously thought.

OPEC said world oil demand was expected to rise by 990,000 bpd this year, a cut of 230,000 bpd from its previous forecast.

OPEC, Russia and other producers, a group now known as OPEC+, have since Jan. 1 implemented a deal to cut output by 1.7 million bpd to support the market.

Separately, the International Energy Agency (IEA) slashed its forecasts for global oil demand, which it says has been hit hard by the “widespread shutdown of China’s economy.”

Demand is now expected to fall by 435,000 barrels per day year-on-year in the first quarter, the first quarterly contraction in more than 10 years.

Global oil demand was around 100.7 million barrels per day at the end of 2019.

The IEA also cut its forecast for oil demand growth during 2020 by 365,000 barrels per day to 825,000, which would be the lowest annual increase since 2011.

When looking at China, when SARS hit in 2002-03, China’s oil demand was 5.7m bpd, but by 2019, with the tremendous growth in the economy there, demand had more than doubled to 13.7m bpd (14% of the global total).  Moreover, last year China accounted for more than three-quarters of global oil demand growth.

--United Airlines said it will extend cancelations of all U.S. flights to China through late April due to the coronavirus epidemic.  All U.S. passenger carriers flying to China have now canceled flights into late April.  Part of the reason is a dramatic drop-off in demand.

For now, United said it will resume flights to China April 24.  Delta previously suspended flights there through April 30.

On Wednesday, the Mobile World Congress, an annual telecom industry gathering that draws more than 10,000 visitors to Barcelona, was canceled after a mass exodus by exhibitors due to coronavirus-related concerns.

--Carnival Cruise Lines said a potential suspension of its operations in Asia through the end of April will hit 2020 earnings.

--Alibaba Group Holdings Ltd warned of a drop in revenues at its key e-commerce businesses this quarter as the coronavirus hits China’s supply chains and deliveries.  The warning from executives came during an earnings call for the quarter ending in December 2019.

Alibaba’s finance chief said most of the company’s businesses that rely on the sale of physical goods would likely see a decline in revenue this quarter.

Despite the downbeat forecast, Alibaba said it had observed more people in large cities going back to work and logistics networks returning to normal operations.

The December quarter benefited from the annual Singles’ Day shopping event, with Alibaba saying sales during the 24-hour extravaganza hit a record $38.4 billion last year.

BABA shares only fell about 2% Thursday following the news on the coronavirus expected impact.

--New York City hasn’t had a single confirmed case of coronavirus – but fear of the disease has left Chinese-American businesses across the five boroughs reeling, with commerce in the city’s Asian communities falling 40% to 80% since the outbreak of the virus.

--Boeing warned that airlines face a fall in profits as the coronavirus crisis hits passenger demand and prolongs weakness in economically sensitive air freight.  A spokesman for Boeing’s commercial sales & marketing division said the air cargo industry was unlikely to grow this year because of challenges in China.

Boeing has seen delays in some deliveries of 777 and 787 aircraft previously sold to China. 

Boeing started the year with zero overall sales in January for the first time in decades, while rival Airbus had its strongest showing in at least 15 years.  But January is a slow month historically.  The aerospace giant delivered 13 planes last month, including six 787 Dreamliners.  Boeing said no customers canceled orders, leaving its backlog for future production at 5,393 jets.

With the prolonged grounding of the 737 MAX and subsequent halt in production, Boeing has lined up a $13 billion bank loan to help fund compensation to MAX customers, as well as the cost of halting production.

At least a month without MAX order cancellations is a plus against a backdrop of weakening demand, but now we have the coronavirus issue.

Airbus booked a record 274 net new orders in January and delivered 31 jets.  It is also ramping up production of its bestselling single-aisle jet to fill the hole in the market created by the grounding of the 737 MAX.

[Regarding the MAX, Southwest Airlines pulled it from its schedules until mid-August (United until Sept.), from a June 6 target previously, meaning the low-cost carrier expects to go another peak summer season without the fuel-efficient planes, and you can be sure Southwest is going after Boeing for further compensation.  Southwest said the MAX grounding cost it $828 million in operating income last year.  The airline had 34 MAX planes in its fleet, and expected to have 75 by the end of last year, plus another 38 delivered this year.]

Separately, from a piece by Christian Davenport of the Washington Post:

“Investigators probing the botched flight of Boeing’s Starliner spacecraft in December have found widespread and ‘fundamental’ problems with the company’s software that could have led to a disastrous outcome more grievous than previously known, NASA said.

“Boeing is now reviewing all 1 million lines of code in the capsule’s computer systems, officials said.  How long that review will take is uncertain, Boeing officials said....

“Speaking in unusually blunt language, NASA officials also acknowledged that the space agency had failed to properly police Boeing’s work and that the checks that were supposed to discover such problems failed repeatedly.”

No astronauts were aboard the Starliner capsule during its test flight in December, but the software issues could have caused what NASA called a “catastrophic spacecraft failure.”

Starliner landed safely two days after it lifted off from Cape Canaveral, after failing to dock with the International Space Station, one of its main objectives.

NASA pointed the finger at Boeing, saying, “there were numerous instances where the Boeing software quality processes either should have or could have uncovered the defects.”

--U.S. officials say Huawei Technologies Co. can covertly access mobile-phone networks around the world through “back doors” designed for use by law enforcement, as Washington tries to persuade allies to exclude the Chinese company from their networks.

Officials said Huawei has had this capability for more than a decade, an allegation Huawei rejects.

The U.S. kept this intelligence highly classified, according to the Wall Street Journal, until late last year, when officials provided it to the UK and Germany.

Telecom-equipment makers are required by law to build in ways for authorities to tap into the networks for lawful purposes, with such access only at the consent of the network operator.  Such access is governed by laws and protocols in each country.

But the U.S. says Huawei has built equipment that secretly preserves its ability to access networks without the carriers’ knowledge.  Other telecom-equipment manufacturers don’t have the same ability, U.S. officials said.

National security adviser Robert O’Brien said: “We have evidence that Huawei has the capability secretly to access sensitive and personal information in systems it maintains and sells around the world.”

U.S. officials haven’t said whether the U.S. has observed Huawei using the backdoor access. 

But one more...Thursday, U.S. prosecutors escalated the battle with the world’s largest telecommunications equipment maker in adding trade secret theft charges to their bank fraud case against Huawei.

The new indictment which supersedes one from last year, was filed in federal court in Brooklyn, New York, and charges Huawei with conspiring to steal trade secrets from six U.S. tech companies (including Cisco Systems, T-Mobile and Motorla).  It also contains new allegations about the company’s involvement in countries subject to sanctions, such as Iran and North Korea.

“The indictment paints a damning portrait of an illegitimate organization that lacks any regard for the law,” U.S. Senate Intelligence Committee chairman Richard Burr and vice chairman Mark Warner said in a joint statement.

--U.S. District Judge Victor Marrero approved of T-Mobile US Inc.’s takeover of Sprint Corp., ushering in a new balance of power in the U.S. wireless market, a test for whether three giants will compete as aggressively for cellphone users as four unequal players once did, the other two being Verizon and AT&T.

Judge Marrero concluded the $26 billion deal wasn’t likely to substantially lessen competition, thus rejecting the main argument against that it would be anticompetitive.

As part of a settlement with the Justice Department, T-Mobile agreed to help create a new, but smaller wireless competitor in satellite-TV company Dish.

Those who are complaining, like 13 state attorneys general who tried to block the merger, fail to understand that without it, Sprint was going under.  Now, the combined entity (to be called T-Mobile), will be able to build out a better next-generation, 5G, network.

--Tesla announced on Thursday that it planned to raise $2 billion by selling shares through a public offering, though this comes just two weeks after CEO Elon Musk said such a move wasn’t needed, that Tesla had more than enough cash. 

Musk said he will buy up to $10 million in shares, while the company said it planned to use the proceeds from the offering to strengthen the balance sheet and for general corporate purposes.

There’s nothing wrong with doing this, and some say Tesla should raise more after its stock has soared, but at the same time you’d expect the shares to fall a little, and at the open yesterday, they did, only to soar anew by the end of the day.  The price action is simply nuts.

Meanwhile, the Wall Street Journal reported that short-sellers in Tesla lost $8.4 billion since January, many of the investors having fought a losing battle for years against the electric-car manufacturer despite mounting losses on Tesla’s part.  But the pain grew exponentially as the stock soared from $178 last June to an intraday high of $968.  The highest close was Feb. 4, at $887.

Short-sellers borrow shares and sell them with the hope of profiting by buying the shares back at a lower price later and pocketing the difference.

But CEO Musk has made baiting short-selling a part of his social media profile.  In 2018, he tweeted the short sellers were “value destroyers” and that short sales should be illegal.

Those who can afford to stay in their positions are unbowed, like noted short seller James Chanos, who has been betting against Tesla for more than six years.  He maintains, “This is a car company, yes a higher-end one, but it’s still a car company, with the same low margins of other auto makers.”

--German luxury carmaker Daimler is intensifying its cost-cutting efforts and plans to slash up to 15,000 jobs, Handelsblatt newspaper reported, citing company sources.  The group in November said it would cut at least 10,000 jobs and reduce staff costs by around $1.5bn by the end of 2022, a number Handelsblatt said would be significantly exceeded.  [Reuters...I’m not a subscriber to Handelsblatt.]

--Total U.S. household debt rose by $601 billion in the fourth quarter compared with a year earlier, up 4.4%, and surpassed $14 trillion for the first time, the New York Fed’s quarterly household credit and debt report showed.  Overall household debt is now 26.8% above the low reached in the second quarter of 2013.

Total credit-card balances increased by $46 billion to $930 billion, well above the previous peak seen before the 2008 financial crisis, also according to the New York Fed.

--Cisco Systems Inc. said global economic uncertainties have slowed technology investment decisions at some companies, denting Cisco’s sales growth.

The telecom-equipment giant / router maker, a proxy for hardware demand from corporations, said it expects revenue to drop between 1.5% and 3.5% in its current quarter, which would come on top of a 3.5% year-over-year drop in revenue for the company’s fiscal second quarter, which ended Jan. 25.

CEO Chuck Robbins told analysts: “We are seeing longer decision-making cycles across our customer segments for a variety of reasons including macro uncertainty as well as unique geographical issues.”

The lousy outlook for the current quarter also doesn’t include the potential supply chain disruptions from the coronavirus.

Cisco’s infrastructure-platforms business, covering its main networking hardware and software products, reported an 8% decline in sales to $6.53 billion in the latest quarter.

Revenue fell 5% in the company’s Americas region and 1% in the region including China and Japan.

--A federal judge in Washington ordered Microsoft to halt all work on a $10 billion cloud-computing contract for the Pentagon, in a victory for Amazon, which had challenged the awarding of the contract.

Patricia E. Campbell-Smith of the Court of Federal Claims, ordered work to stop on the Joint Enterprise Defense Infrastructure project, known as JEDI, until Amazon’s legal challenge was resolved.  The 10-year contract was one of the largest tech contracts from the Pentagon, and Microsoft was set to begin work on it this month.

The decision ratchets up the legal battle around the transformation of the military’s cloud-computing systems.  Amazon had been seen as a front-runner to win the JEDI contract, but then the Defense Department awarded it to Microsoft in October.

Amazon protested the process was unfair, the company claiming President Trump interfered in the bidding because CEO Jeff Bezos is owner of The Washington Post.

In December, Amazon filed its legal challenge saying that Trump used “improper pressure” on the Pentagon at its expense.

--Shares in Bed Bath & Beyond fell sharply on Tuesday after the home furnishing retailer said sales in the first two months of the final quarter were hit by increased promotions, falling store traffic and inventory management issues.  I know I am seeing a lot more promotions in my mail / email.

Same-store sales for December and January fell 5.4%, more than expected.  Fiscal fourth-quarter earnings are released in April.

--Shares in Under Armour Inc. plunged 16% on Tuesday after the sportswear maker forecast a surprise drop in 2020 profit, blaming weakness in its North American business and the coronavirus outbreak.

Under Armour has been losing market share to rivals Nike and Adidas in a saturated North America market, which accounts for about 70% of UA’s revenue.  So it’s been forced to offer big discounts at retail chains and department stores, squeezing profits.

Full-year revenue is expected to be down in the low single-digit percent range, the company said, in contrast to analysts’ expectations for a 4% rise.  That’s an awful miss.  Wall Street was also expecting full-year profit of 47 cents per share, and now UA is saying it will be between 10 and 13 cents.

--Restaurant Brands International Inc. said sales at its Popeyes Louisiana Kitchen far exceeded expectations for the quarter ended in December, as its spicy chicken sandwich was rolled out nationally in November after it sparked a social-media sensation during tests last summer.

Popeyes’ sales at U.S. restaurants open at least 13 months grew 38% for the fourth quarter, with revenue at the chain rising to $145 million from $106 million.  Pretty, pretty good.

But Restaurants Brands’ Canadian coffee chain Tim Hortons saw its comp sales fall 4.3% for the quarter, worse than expected.  Tim Hortons still has the best donuts, but don’t tell that to the folks manning the Dunkin’ Donuts in my building. 

RBI’s Burger King same-store sales also came in weaker than projected, growing just 0.6% in the U.S. for the quarter, despite the national rollout of the plant-based Impossible Whopper, citing a lack of deals.

But to start out this year, the company added the Impossible Whopper as an option to its two items for $6 menu.

Separately, Burger King has closed roughly half of its 1,300 stores in China due to the coronavirus, the nation accounting for just 2% of BK’s sales.

--Months after Disneyland opened the biggest expansion in its history, the Anaheim theme park raised ticket prices Tuesday, pushing the cost of some one-day passes above $200 for the first time.  Prices of annual passes and the digital MaxPass climbed too.

On days when demand is highest, one-day ticket prices rose as much as 5%.

The price of the least expensive annual pass, the Select Pass, which blocks out holidays and peak-demand days, rose 5% to $419 from $399.

Parking stayed flat at $25 a day.

Now if you want unlimited access to Disney parks in both Anaheim and Orlando, without blocking any dates, you can get the Premier Pass, though its price jumped 13% to $2,199.  [Hugo Martin / Los Angeles Times]

--Hugo Martin also had an interesting piece on the airline industry, as in “Environmental crusader Greta Thunberg is starting to make some U.S. airlines nervous.

The Swedish teenager apparently had something to do with a 4% drop in the number of commercial passengers flying in Sweden, where the term “flygskam,” or flight shame, has gained popularity.

“Robin Hayes, chief executive of New York-based JetBlue Airways, told industry analysts during a conference call recently that it’s only a matter of time before Americans follow the lead of their Swedish counterparts to find more environmentally friendly alternatives to commercial air travel.

“ ‘This issue presents a clear and present danger, if we don’t get on top of it,’ he said.  ‘We’ve seen that in other geographies and we should not assume that those sentiments won’t come to the U.S.’”

So carriers are amplifying efforts to reduce emissions to ease concerns of fliers.

According to the International Council on Clean Transportation, emissions of the greenhouse gas carbon dioxide from all commercial flights, including cargo and passenger planes, represented 2.4% of all global CO2 emissions in 2018 – a 32% increase over five years earlier.  Airline travel globally had been growing steadily by about 5% each year over the past decade.

--The U.S. live TV audience for the Oscars fell to an all-time low on Sunday.  Roughly 23.6 million viewers tuned in, according to Nielsen.  That was a sharp decline from last year’s 29.5 million.

South Korea’s “Parasite” made history, becoming the first non-English language film to win Best Picture since the awards began 92 years ago.  But this was hardly a blockbuster hit and thus few were watching just to see if it would win.

Not having a host also didn’t help, though I thought Steve Martin and Christ Rock who opened were terrific.

Foreign Affairs

Syria / Turkey / Russia: The feared new humanitarian catastrophe is upon us, as the UN said Thursday over 140,000 Syrians have been displaced in the last three days alone by violence in Syria’s northwest, bringing the total of those uprooted in a Syrian government offensive against the last opposition stronghold to over 800,000.

The UN said at least 60% of the more than 800,00 displaced since Dec. 1 are children.  The humanitarian crisis in the already overcrowded opposition-held enclave is compounded by freezing weather conditions, and existing severe needs.

CNN had a report from the front lines today, Friday, and it was beyond heartbreaking.  It’s infuriating this can happen all over again.

The government offensive, backed by Russia, has intensified and expanded to include other parts of Idlib province as well as western Aleppo, an area home to an estimated 4 million people.  Most have already been displaced from other parts of Syria because of the ongoing war.

David Swanson, UN regional spokesperson for the crisis in Syria, said, “The crisis is deepening by the minute, but the international community remains indifferent.”

Turkey will use force against those violating a ceasefire in Idlib including “radical” groups, Turkey’s defense minister said on Thursday.

Wednesday, Turkish President Erdogan said the military would strike Syrian government forces by air or ground anywhere in Syria if another Turkish soldier was hurt, after 13 troops were killed by Syrian forces in a week. Turkey is sending additional reinforcements to its positions in Idlib to ensure the ceasefire is maintained and to “control” the region.

Tuesday, Turkey said it killed 51 Syrian soldiers in northwest Syria as Turkish-backed rebels struck back against Russian-supported government forces who had made gains in their campaign to eliminate the last insurgent bastion.

The U.S. military acknowledged its troops fired on and killed a Syrian combatant when government supporters attacked an American convoy in northeastern Syria, a rare direct confrontation between a Syrian pro-government group and U.S. troops.  The U.S. maintains hundreds of troops in the area, but the area is swarming with Russian, Syrian government and Turkish troops following Turkey’s invasion of villages and towns along its borders.

Iran / Israel: The foreign ministry said on Wednesday, “The Islamic Republic of Iran will give a crushing response that will cause regret to any kind of aggression or stupid action from this regime (Israel) against our country’s interests in Syria and the region,” according to the Mehr news agency.

Iranian officials accuse Israel of carrying out attacks against military forces in Syria that are allied with Tehran.  Supreme Leader Ayatollah Ali Khamenei said last week that Iran will support Palestinian armed groups as much as it can and urged Palestinians to confront the U.S. plan for Israeli-Palestinian peace.

Tuesday, Palestinian President Mahmoud Abbas, appearing before the UN Security Council, rejected President Trump’s peace plan as a gift to Israel and unacceptable to Palestinians.  Abbas said the U.S. plan for a two-state solution for Israel and Palestine looked like a fragmented “Swiss cheese,” as he waved a map.

But in a setback for the Palestinians, a draft Security Council resolution circulated by Tunisia and Indonesia that would have implicitly criticized Trump’s plan, including Israel’s retention of Jewish settlements in the West Bank, was not put to a vote.  The text faced a certain U.S. veto and didn’t even get the support of Palestinians because it was too watered down.

A Feb. 5-8 poll conducted in the West Bank and Gaza Strip by the Palestinian Center for Policy and Survey Research found that 94% of Palestinians reject the plan, Trump’s “Deal of the Century.”

Afghanistan: Thursday, Secretary of State Mike Pompeo said the United States has had “a pretty important breakthrough” in peace talks with the Taliban over the past couple of day, but he cautioned Washington wants to see a significant fall in violence in Afghanistan before starting wider discussions.

Defense Secretary Mark Esper earlier said the U.S. and the Taliban have been negotiating a proposal for a seven-day reduction in violence, in what lawmakers said was a test for the insurgents.

And then today, an agreement was reached for a seven-day ceasefire that will start “very soon,” according to the administration, that could pave the way for the withdrawal of some of the 13,000 U.S. troops and thousands of other NATO personnel, perhaps to a level below the 8,600 figure already targeted for yearend.  But the Taliban has long wanted all U.S. troops to leave so it’s hard to imagine how this is resolved to the United States’ satisfaction.

Pompeo said Thursday: “We hope we can get to a place where we can get a significant reduction in violence, not only on a piece of paper but demonstrated...and if we can get there, if we can hold that posture for a while, then we’ll be able to begin the real, serious discussion which is all the Afghans sitting at a table.”

The administration said today the agreement is very specific, and “includes everything – roadside bombs, suicide bombs, rocket attacks – that's all written out.”

It will be up to Gen. Scott Miller – the senior U.S. military commander in Afghanistan – to determine whether the Taliban is living up to its obligations.

But news of the agreement comes as the Taliban continues its attacks, a record-high number in the last three months of 2019, according to the Special Inspector General for Afghanistan Reconstruction, a U.S. government agency.

Separately, two U.S. troops were killed in an insider attack in eastern Afghanistan on Saturday.

China: After being largely invisible in the first month of the coronavirus (now called “COVID-19”) crisis, Chinese President Xi Jinping has been out in the public a bit, and on state television, trying to reassure his people that the government has things under control, while admitting today that the Communist Party must fix various problems, loopholes and weaknesses exposed during the outbreak.

“To ensure people’s life, safety and health is a major task of our party’s governance,” Xi was quoted as saying at a meeting of a committee on deepening reforms.   He also said Beijing would move to improve medical insurance and treatment systems for major diseases.

Xi added on Thursday that China will be able to minimize the impact of the outbreak and will maintain the development of the country’s economy.  It was reported that Xi told Malaysian Prime Minister Mahathir Mohamad in a phone call that China would reach its development targets.

Friday, China reported more than 5,000 new cases, with the National Health Commission saying it had recorded 121 new deaths, bringing the death toll to 1,380, with the number infected at nearly 64,000.  The latest toll takes into account that some deaths were double counted in Hubei, the health commission said.

China said six health workers were among those who had died, and that 1,716 health workers had been infected, which is another depressing statistic.  The fatalities include Li Wenliang, a doctor who tried to alert authorities to the virus early on but was accused by police of “spreading rumors.”

The sharp rise in reported cases on Thursday reflected a decision by authorities to reclassify a backlog of suspected cases by using patients’ chest images, and did not necessarily indicate a wider epidemic, a World Health Organization official said on Thursday.  Hubei reported 240 new deaths and nearly 15,000 new cases, and then 116 and 4,823 on Friday.

The Communist Party chiefs of both Wuhan and Hubei province were replaced with high-ranking officials known for their background in “stability maintenance” and history of working closely with President Xi.

The new figures give no indication the outbreak is nearing a peak, according to the experts.

Chinese scientists are testing two antiviral drugs and preliminary results are weeks away, but most experts believe a true vaccine would take 18 months.

A cruise liner quarantined off the Japanese port of Yokohama has more than 200 people confirmed with the disease.

But the WHO said the coronavirus cases are not rising dramatically outside China despite a spike in Hubei province, the only exception being the cruise liner in Japan, and there has not been a major shift in the coronavirus’ pattern of mortality or severity.

Richard Haass / Washington Post

“Beyond the human tragedy, the immediate impact of the (coronavirus) is mostly economic. The only question is how much it slows China’s economy and for how long....Few supply chains do not have at least some Chinese components.  In this interconnected world, little stays local for long.

“The most lasting impact, though, will likely be the effects this virus has on China’s politics. Political legitimacy in contemporary China is predicated largely on economic performance.  Citizens have been willing to accept constraints on personal and political freedom in exchange for a system that provides an improved standard of living.  Chinese economic growth was already slowing before the coronavirus outbreak, which means a less-than-ideal situation is fast getting worse.

“China’s leaders mostly have themselves to blame. The response to the initial outbreak in early December is revealing.  China suffers from a ‘shoot the messenger’ mentality: Criticism, regardless of its merits, is taken as a rebuke of the political leadership, and the Communist Party seeks to silence dissent.  As a result, Li Wenliang, one of the doctors who first went public with their concerns, was punished.

“Precious weeks were lost as local officials would not assume responsibility lest central authorities subsequently blame them.  This paralysis is a consequence of President Xi Jinping’s consolidation of power, which has left provincial officials unable or unwilling to exercise their authority without the central leadership’s blessing.  Xi’s signature anti-corruption campaign, arguably more of a political purge, has in many instances replaced capable technocrats with party loyalists.  A hallmark of authoritarian systems is the difficulty of admitting error and then self-correcting, and China is a textbook case.

“The coronavirus puts the contradictions at the heart of modern China in plain sight.  There is the need to get word out to the population so that people can take preventive steps and react appropriately if they fall ill, but the government is afraid to allow information to be shared widely, as doing so could feed unrest along with the narrative that the leadership has failed the people.  Policies designed to stem the spread of the virus – quarantine and house arrest – reflect the same dilemma.

“It is always a mistake to underestimate China’s ability to rise to challenges, and after its initial stumble, it has shown its unique ability to mobilize resources.  But the coronavirus has already emerged as Xi’s biggest challenge.  He has concentrated power in his own hands to a degree not seen since Mao Zedong; it is difficult to blame others when you have made yourself first among unequals.  It is also the biggest challenge to the Communist Party since the Tiananmen Square protests of 1989.  Unless authorities get the situation under control and restore economic growth soon, it has the potential to become much more significant than Tiananmen, as what is at issue is not thousands of students calling for reform but millions of citizens demanding basic competence.  Desperate people can do desperate things....

“The potential for political instability exists, as China is a brittle system.  The comparison with India is instructive.  India has not mobilized or organized itself nearly as well as China, and its growth over the past few decades has averaged only half that of China’s, but India’s democracy and civil society give it a cushion that China lacks.

“The U.S. government needs to plan for possible futures in which China’s rise is interrupted.  We could see a Xi-led China that turns to nationalism as a distraction in a ‘wag the dog’ scenario in which China would put pressure on Taiwan or Hong Kong.  Or we could see a China that turns inward amid political convulsion as Xi is challenged.  How long this would take and what would result are unknown. The only thing that is certain is that we cannot assume China’s future will resemble its recent past.”

So speaking of Taiwan and Xi playing the nationalism card, which I have long written will one day be the case, China’s military conducted drills close to the island two days in a row, the People’s Liberation Army said, after Taiwan’s air force scrambled to intercept Chinese jets that briefly crossed the Taiwan Strait’s mid-line. 

Tensions have spiked between the two since Sunday, when Taiwan F-16s shadowed Chinese fighters and bombers which flew around the island.  Beijing claims Taiwan as its territory, to be taken by force if needed.

The same thing happened on Monday, after which the PLA said its forces carried out “air-ground assault and fire support drills to further refine and test their multi-service joint combat capabilities.”

Separately, the United States charged four Chinese military hackers in the 2017 breach of the Equifax credit reporting agency that affected nearly 150 million Americans, Attorney General William Barr said on Monday.

“This was a deliberate and sweeping intrusion into the private information of the American people,” Barr said in announcing the indictments of four members of the People’s Liberation Army in connection with one of the largest data breaches in U.S. history.

A Chinese foreign ministry spokesman denied the allegations and said China’s government, military and their personnel “never engage in cyber theft of trade secrets.”

You can stop laughing.

North Korea: The United States is “deeply concerned” about the possible impact of a coronavirus outbreak here and is prepared to help contain the spread of the virus should COVID-19 hit North Korea, which is as I said last week a truly frightening potentiality.

Russia: As alluded to above, Vladimir Putin still dreams of putting the old Soviet empire back together again and he clearly has his sights set on Belarus.  Today, that nation threatened to siphon off oil from Russia’s transit pipeline to Europe unless Moscow restarted crude supplies, accusing the Kremlin of using energy prices as leverage to try to swallow up its former Soviet neighbor.

The threat, from Belarusian President Alexander Lukashenko, escalates a feud between the two countries over oil and lifts the lid on a bigger geopolitical dispute that has seen Minsk accuse Moscow of trying to bully it into a unified state.

Belarus, because of the dispute, and needing to search for fuel elsewhere, is nurturing ties with the West, an unthinkable development just a few years ago.

Lukashenko knows that a ‘merger’ with Russia would mean a takeover.  Plans for a unified state have long been on the shelf since the 1990s, but it was to be a friendly arrangement, not through extortion.

Philippines: President Trump brushed aside the decision of Philippines President Rodrigo Duterte to end a decades-old military agreement with the United States, saying he didn’t really mind and it would save money.

Duterte announced the termination of the two-decade-old Visiting Forces Agreement on Tuesday, a move U.S. Defense Secretary Mark Esper called “unfortunate.”

Trump said, “My views are different from others,” saying he had “a very good” relationship with Duterte and added: “we’ll see what happens.”

Duterte’s decision was sparked by the revocation of a U.S. visa held by a former police chief who led his bloody war on drugs.  It complicates U.S. military interests in the Asia-Pacific with China’s ambitions rising.

Ireland: Last weekend in a general election, Ireland cast off the relic of their two-party system, Fianna Fail (center-right) and Fine Gael (also center-right), with a breakout vote for Sinn Fein, a party long shunned by the mainstream because of its ties to the Irish Republican Army (IRA).

Sinn Fein, with 24.5% of the vote, doubled its share in the last election, held one fewer parliamentary seat than Fianna Fail (22.2%), which had been expected to romp to victory.  And it captured two more seats than the governing party, Fine Gael (20.9%), led by Prime Minister Leo Varadkar, Ireland’s frontman in negotiations with London over Britain’s withdrawal from the European Union.  He has been presiding over a minority government as Fine Gael and Fianna Fail have never formed a coalition together.

So for the first time in 100 years, Ireland could have a party that calls itself left-wing as leading, or a partner of, government.

Fianna Fail leader Michael Martin has ramped up the pressure on Taoiseach Varadkar by saying he would enter government-formation talks with Fine Gael.  This is a U-turn for Martin after he firmly ruled out Fianna Fail entering government with Sinn Fein.

But now we will have weeks of uncertainty and tortuous negotiations as Varadkar said he will speak to Martin only as a last resort, and after Martin and Sinn Fein fail in their attempts to form a government.

Editorial / The Economist

“For most of the century since Ireland gained independence from Britain, control of the country has alternated between two parties.  On February 8th that duopoly was smashed apart, when Sinn Fein got the largest share of first-preference votes in the republic’s general election. The party, with links to the Irish Republican Army (IRA), which bombed and shot its way through the 1970s, 1980s and 1990s, won with a left-wing platform that included promises to spend more on health and housing.  Yet it did not hide its desire for something a lot more ambitious.  ‘Our core political objective,’ its manifesto read, ‘is to achieve Irish Unity and the referendum on Unity which is the means to secure this.’

“Scottish independence has grabbed headlines since Brexit, but it is time to recognize the chances of a different secession from the United Kingdom.  Sinn Fein’s success at the election is just the latest reason to think that a united Ireland within a decade or so is a real – and growing – possibility.

“That prospect means something far beyond the island of Ireland. The Irish diaspora include more than 20m Americans.   Parties to ethnic conflicts across the world have long found common cause with Northern Ireland’s Roman Catholics, who contend that the separation from the south is an illegitimate vestige of 500 years of incompetent and often callous domination from London.  Ireland, source of pubs, poets, playwrights and too many Eurovision songs for anyone’s good, has soft power to rival a country many times its size.

“Until today, however, unification has never been more than a Republican fantasy.  Even as the IRA waged a bloody campaign in the 20th century, the north’s constitutional status was cemented by a solid Protestant majority and the financial and military backing of the British state.  The Good Friday agreement of 1998 took the heat out of the struggle, bringing an end to the Troubles, which had claimed over 3,500 lives.  Many Catholics were content to have representation in Northern Ireland’s government thanks to that agreement, and to see their culture, flag and sports celebrated and subsidized.  The Protestants have their terrorists, too, and a campaign for unification was thought to risk opening old wounds, with bloody consequences.

“Brexit is one reason all this has changed.  The north voted against, but the biggest unionist party and England voted for.   Nationalists were not the only ones to be angered by the current home secretary, who suggested using the threat of food shortages to soften up the south in the negotiations, heedless of the famine in the 1840s when all of Ireland was under British rule.  Brexit also creates an economic border in the Irish Sea, between Northern Ireland and Britain, even as it keeps a united Ireland for goods.  Although services will become harder to trade with the south, trading goods will be easier than with Britain.  In that the north’s six counties are affected more by what happens in Dublin, the value of having a say who governs there will grow.”

So we’ll see how things play out in the next year, as Brexit negotiations with the EU take place, but as the Economist concludes:

“(Sooner) than most people expect, the momentum for a united Ireland could come to seem unstoppable.  If Scotland chooses independence, many in Northern Ireland would lose their ancestral connection to Britain.  If the government in Westminster persistently refused to recognize that there was a majority in favor of unification in Northern Ireland, that could be just as destabilizing as calling a referendum.

“The island of Ireland needs a plan.  The priority should be to work out how to make unionists feel that they have a place in a new Ireland.  Work is needed on the nuts and bolts of unification – including how to, and indeed whether to, merge two health systems (one of which is free), the armed forces and police services, and what to do about the north’s devolved assembly... Politicians from Britain and Ireland need to start talking, too.  The price of ending violence two decades ago was for Northern Ireland, the republic and Britain to jointly set out a political route to a united Ireland.  If the people of the north and the republic choose that path, the politicians must follow it.”

India: It has been six months since India’s government stripped restive Kashmir of its semi-autonomy and enforced a total communications blackout.  Now, the government is heralding the restoration of limited, slow-speed internet as a step toward normalcy.

But the region’s 7 million people in the Himalayas are only allowed access to government-approved websites.  Popular social media platforms such as Facebook, WhatsApp and Twitter remain blocked.  Plus the internet service is too slow to stream video.

The government said it was necessary to ban the internet to head off anti-India protests by rebels who have fought for decades for independence or unification with Pakistan, which administers the other part of Muslim-majority Kashmir.  Both countries claim the Himalayan region in its entirety.

I agree with those who say the internet clampdown is as bad as any censorship in the world. As Pranesh Prakash, an affiliated fellow at Yale Law School’s Information Society Project, told Reuters, “It is a step toward demolishing democracy in India.”

East Africa: Swarms of locust are now in Uganda, after billions of locusts have been destroying crops in Kenya, which hasn’t seen such an outbreak in 70 years, as well as Somalia and Ethiopia, which haven’t seen this in a quarter-century.  The insects have exploited favorable weather conditions after unusually heavy rains.

UN officials warn that immediate action is needed before more rainfall in the weeks ahead bring fresh vegetation to feed new generations of locusts.  Get this.  If left unchecked, their numbers could grow up to 500 times before drier weather arrives, according to the UN.

Random Musings

--Presidential tracking polls....

Gallup: 49% approve of President Trump’s job performance, 50% disapprove; 94% of Republicans approve, 42% of independents (Jan. 16-29).
Rasmussen: 49% approve, 49% disapprove (Feb. 14).

A new Quinnipiac University national poll has President Trump with a 43% approval rating, 53% disapproving.

--Bernie Sanders is the Democratic frontrunner after a tie in Iowa and a win in New Hampshire.

Sanders took 25.7% of the vote in Tuesday’s primary, with Pete Buttigieg proving his performance in Iowa was far from a fluke, coming in second at 24.4%.

But Amy Klobuchar was a strong third with 19.8%, having done a terrific job in last Friday’s debate.

The real story, however, may be the collapse of both Joe Biden and Elizabeth Warren.  Biden was fifth at 8.4%, Warren a weak fourth at 9.2%.

The former vice president was so pathetic, he fled New Hampshire to head to South Carolina early Tuesday afternoon.

One of the many reasons for Biden’s collapse is, as I said last fall, his amazing mishandling of the Hunter Biden situation.

As for Sanders, yes, we’re all saying the same thing.  He is now the candidate of the liberal wing of the Democratic party, and who will the moderates turn to?

So this is where the latest Quinnipiac University national poll of Democrats and Democrat-leaning independents was kind of a shocker.  Sanders gets 25%, Biden 17%, and, Bloomberg 15%!  [Warren 14%, Buttigieg 10% and Klobuchar 4%.]

But this was released the day before New Hampshire, and no doubt this survey will look much different the next time it is updated.

If the moderate pool of the party is divided between Buttigieg, Klobuchar and Bloomberg, and there is a ceiling to how high Sanders can poll, that’s the formula for a brokered convention.  Oh baby, that would be fun.  Destination television, folks!

But going back, for the record, among the polls released in the days leading up to the New Hampshire primary, Emerson College had Sanders at 30%, Buttigieg 23%, and Klobuchar 14%.  Warren 11% and Biden 10%.  The Boston Globe/Suffolk University had Sanders 27%, Buttigieg 19%, Klobuchar 14%, Warren and Biden 12%.  CNN/UNH had Sanders 28%, Buttigieg 21%, Biden 11%, Warren 9%, Gabbard 6%, Klobuchar 5%.  NBC/Marist had it 25% for Sanders, 21% Buttigieg, 14% Warren, Biden 13%, Klobuchar 8%.

So what now?  It’s on to Nevada and South Carolina, with far more diverse populations than the first two.  This was supposed to benefit Joe Biden, but his support in the African American community is already crumbling.  

Elizabeth Warren’s candidacy is also dead.  Another rapid collapse.

Andrew Yang and Michael Bennett dropped out.  You remember Michael Bennett.  He’s actually a U.S. senator.

But Andrew Yang made a mark.  He’s an asset to Democrats down the road, though I have to admit I didn’t really understand the story that emerged Wednesday morning that Yang could be a candidate for mayor of New York.  But that’s because I didn’t know he was a resident of Gotham.  Leading political operatives think this could be a natural for him.

As for Bernie Sanders, he declared Tuesday night “the beginning of the end” of President Trump.

[Trump won 85.5% of the vote in the Republican primary in New Hampshire, with former Governor Bill Weld taking just 9.1%.  I said before that if Weld wanted to make some noise, he really needed close to 20%.  Bye-bye, Governor.]

--Editorial / Wall Street Journal

“The good news for democracy Tuesday was that in New Hampshire they know how to count votes.  That’s especially good news for Bernie Sanders, who was denied his election night TV time in Iowa last week but not this time as he narrowly won the Granite State. Whether that’s good news for the Democratic Party is another story.

“The socialist from next-door Vermont repeated his triumph from 2016, albeit with a smaller (26%) share in a much larger field.  The result showed the loyalty of Mr. Sanders’ millennial and left-wing supporters despite a heart attack and his 78 years.  In poll after poll, in state after state, Mr. Sanders has retained that plurality base of more than 20%….

“The other winners Tuesday night were Midwesterners Pete Buttigieg (about 24%) and, in a mild surprise, Minnesota Senator Amy Klobuchar at 20%.  We say mild because she was the star of Friday’s debate and had risen in the weekend polls. She won a major chunk of late-deciding voters.

“Ms. Klobuchar may also have benefited from the campaign implosion of Joe Biden, as she picked up his theme of electability and a ‘return to normalcy’ after the Trump Presidency.  Her challenge now will be to raise enough money to organize and compete as the race expands to more populous states. She has always struck us as a candidate with the gravitas and message to give Mr. Trump a strong race in swing states....

“Mr. Biden’s fall to fifth place shows that voters may be concluding that his day has passed.  His message that he can defeat Mr. Trump loses credibility if he can’t finish ahead of four other Democrats.  He can also blame House Speaker Nancy Pelosi, who tried to take out Mr. Trump with impeachment but instead gave Mr. Trump a chance to drag in Mr. Biden and his son Hunter’s actions in Ukraine.  Tuesday night Mr. Biden made an overt pitch to black and Hispanic voters to salvage his campaign in South Carolina and Nevada.

“Overall the results show an unsettled race, with Democrats still looking for the candidate they hope can beat Mr. Trump.  Former New York Mayor Michael Bloomberg joins the fray on Super Tuesday with the biggest checkbook in the history of politics.  But as long as the field contains multiple candidates, Mr. Sanders’ socialist plurality has the advantage.”

--George F. Will / Washington Post

Mike Bloomberg’s 30-second ads do not resemble the Federalist Papers, but neither do they lower the intellectual tone set by the Democrats’ ‘debates’ - and they have propelled him into contention.  There is, however, some point at which such blast marketing has steeply diminishing effectiveness.  Over the last five months of the 2016 campaign, in two hotly contested metropolitan areas in swing states, Las Vegas saw 20,471 presidential campaign ads and Columbus, Ohio, saw 15,658. Such media blitzkriegs become like wallpaper – there but not noticed.

“Whether Bloomberg’s campaign succeeds or fails, the republic will benefit.   If nominated, he might go on to fumigate the Oval Office, and the political scolds who lament ‘too much money in politics’ will be ecstatic about what his spending accomplished.  If, however, his ‘overwhelming’ spending does not overwhelm, this will refute the scolds’ unempirical assertions about the irresistible power of money-bought advertising....

“In politics, too, the product itself matters more than the marketing of it.  Bloomberg’s incurable anti-charisma makes him the equivalent of a no-nonsense sedan, an agreeable contrast with the gaudy chrome-and-tailfins of Trump, a human land-yacht.  Bloomberg’s demeanor is that of someone who knows how to smile but resists the inclination.  There are, however, credible reports of a dry – arid, actually – Bloomberg witticism.  Asked about a possible fall campaign between two billionaires, he replied: Who would be the second one?

“Bloomberg has a knack for getting under Trump’s microscopically thin skin.  His needling of Trump would augment the public stock of harmless pleasure and could leave Trump wallowing waist-deep in his insecurities, a sight that members of his cult need to see and everyone else would enjoy seeing.

“Among Democratic activists, a nascent ABB faction – Anybody But Bloomberg – is decrying New York’s ‘stop and frisk’ anti-handgun police measures during his mayoralty, measures often applied to young minority males. This policy probably was more lamented by white liberals living in buildings with doormen than by minorities living in danger.  Nevertheless, a party whose most fervid members consider ‘billionaire’ an unanswerable epithet might flinch from nominating one of those who was not so long ago elected to office as a Republican.”

Meanwhile, in a surprise, a St. Pete Poll of likely Florida primary voters has Bloomberg ahead of Biden, 27% to 26%, as just released today.  A previous St. Pete Poll had Biden 15 points up.

The Florida primary is March 17.

--Interesting situation in Georgia, as four-term Republican congressman and staunch Trump supporter Doug Collins is gunning for the senate seat temporarily held by Sen. Kelly Loeffler, a business executive with no political experience but lots of money to spend on a campaign.

Republican Gov. Brian Kemp appointed Loeffler to fill out the remainder of Republican Sen. Johnny Isakson’s seat, after the senator left office at the end of 2019 for health reasons.

But now Loeffler must run to fill out the rest of Isakson’s term, which goes through 2022, this fall.  If no candidate gets more than 50% of the vote, the top two vote-getters, regardless of party, compete in a Jan. 5 runoff.

The danger for Republicans is that a Democrat could emerge with 50% as Collins and Loeffler split the vote.  But Collins is under pressure from the National Republican Senatorial Committee, the campaign arm of Senate Republicans, to drop his idea of running.  Collins is, however, defiant.

President Trump wanted Gov. Kemp to appoint Collins to fill Isakson’s seat and Kemp defied him, opting for Loeffler.

--Liz Roscher / Yahoo Sports

“Ohio congressman and former Ohio State assistant wrestling coach Jim Jordan has been accused of participating in the cover-up of widespread sexual abuse in OSU’s wrestling program.

“Jordan was accused by Adam DiSabato, who was the team captain in the late 1980s and early 1990s.  DiSabato was appearing in front of a hearing in the Ohio legislature as a witness for House Bill 249, which would waive the statute of limitations and allow the OSU athletes who had been abused to sue the university.

“DiSabato told the House Civil Justice Committee that several team officials, including Jordan, were aware that the team’s open shower facilities put them at risk of being abused and harassed by a team doctor, but did nothing about it.  Then DiSabato detailed a phone conversation between him and Jordan, in which Jordan asks DiSabato to help him cover up wrongdoing.

“Via Cleveland.com:

“[DiSabato] also said Jordan called him repeatedly in July 2018, after media outlets quoted his brother, Michael DiSabato, saying Strauss’ abuse was common knowledge to those surrounding the wrestling program, including Jordan.

“ ‘Jim Jordan called me crying, groveling...begging me to go against my brother...That’s the kind of cover-up that’s going on here,’ he said.

“ ‘Are you guys going to do what you’re voted in to do?’ he told lawmakers later.  ‘That’s the only reason I’m here.’....

“Jordan continued to deny having any knowledge of student sexual abuse even after independent investigators released a report in May 2019 that concluded that Strauss, who had been employed by OSU’s athletics department and student health center until he was suspended in 1996, abused at least 177 male student athletes and patients.  Strauss died by suicide in 2005.

“A spokesman for Jordan called DiSabato’s accusations ‘a total lie.’”

--Former PIMCO CEO Doug Hodge was sentenced a week ago for his role in the college admissions scandal and the other day he responded in a Wall Street Journal op-ed.

“When I met (Rick) Singer in 2007, he struck me as capable, confident and knowledgeable about the admissions process.  With thousands of students vying for a limited number of places at every top college, having someone like him on my side seemed smart.  His sales pitch had two elements.  First, he would create a ‘brand’ for my child to help separate our application from the legions of others. Second, he touted his many ‘connections’ at top colleges.  Nothing he said suggested he would rely on deception and illicit payments to secure my child’s acceptance.

“I was an easy mark.  Like all parents, I wanted to give my children the best possible college experience.  Having attended great schools myself, I wanted the same for my children, and I thought hiring a ‘coach’ would help.  I was also happy, as Mr. Singer proposed, to make donations funding similar opportunities for students from disadvantaged families.  My wife and I have given to many such causes.  I wanted to believe that’s what I was doing with Mr. Singer.

“As any college administrator would privately acknowledge, donations can bear on admissions.  I realize this is deeply unfair. The reality, however, is that private schools rely heavily on donations to meet their budgets, attract and retain faculty, and provide financial aid to deserving students.  Mr. Singer understood this reality and turned it to his advantage.  He knew that some athletic coaches were willing to help with admissions in return for financial contributions.  He also knew parents were willing to contribute far more than the coaches would need, allowing him to pocket the difference.

“I unfortunately made payments that facilitated Mr. Singer’s scheme, believing that I was supporting the university while also helping my children.  But I also knew that Mr. Singer was providing my children with a false athletic brand.  I believed that Mr. Singer was directing my payments to underfunded athletic programs.  But I have now learned that a large chunk of my payments ended up in Mr. Singer’s personal bank account.

“Mr. Singer presented himself as a do-gooder, but it was all a lie.  There was no ‘good’ at the heart of his mission.  Only greed.  And my participation in his corrupt endeavor is a painful reality that I must accept.  As a person who values honesty and integrity, I failed....

“Looking back, there wasn’t one moment when I decided to abandon my principles. Rather, it was a series of small steps.  I got the first inkling that something wasn’t quite right when Mr. Singer let me know that, due to his coaching experience, the brand he’d help create for my children would be related to ‘athletics,’ and that he just needed my children to have some connection to sports.

“At that first tell, I should have turned the other way. I should have listened to my conscience.  Today I realize that what I did was not only wrong but immoral, and it hurt others.”

I’m sorry, this is pathetic.

--Maureen Callahan / New York Post

“Well, that was fast.

“Just weeks after slamming the door on Buckingham Palace, declaring their suffering as wealthy, pampered, world-famous senior royals so unbearable that they must take their leave and flee to the Canadian woods in search of privacy, humility, a slower way of life, time to think about which noble eco-warrior causes to support (while flying private, of course) and to create normalcy for themselves and their baby, Harry and Meghan are out on the stroll, selling their goods and services – whatever those may be – to the highest bidder.

“You’d think, for appearances’ sake, they would have held out a little longer.  It’s not as if they’re suddenly destitute.  Harry and Meghan are, after all, still on the royal payroll through at least May, after which Prince Charles has vowed to support them.

“And since decamping Britain they’ve been freeloading, staying indefinitely at a $14 million Vancouver mansion (a deal brokered by music producer David Foster) and at Serena Williams’ Palm Beach estate during a recent trip to Florida.

“That trip, by the way, was to attend a summit hosted by JPMorgan Chase.  Harry, a 35-year-old man who knows little of the real world, let alone macro- and micro-economics or likely how to work an ATM, spoke to an audience including Prime Minister Tony Blair, Patriots owner Robert Kraft and architect Sir Norman Foster.

“Neither side will say whether he was paid, though experts say it’s likely he was compensated substantially.  And to speak of what exactly?

“The grief he still suffers from his mother’s death twenty years ago.

“To get this right: Harry, as he said in his last public statement as a working royal, had ‘no other option’ given the ‘many years of challenges’ he has faced, the result of losing his mother, his forced march behind her casket as a 12-year-old boy, and the ongoing mental health challenges from which he suffers.

“ ‘Every single time I hear a click, every single time I see a flash,’ he said last year, ‘it takes me straight back.’

“So, as he said in his farewell speech, he was forced to ‘step my family back from all I have ever known, to take a step forward into what I hope can be a more peaceful life.’

“But for the right price, he’ll dredge up all that deeply personal emotional chaos, held sacred for decades, to a room full of global powerbrokers – despite zero chance any of it will elucidate or ameliorate a single real-world problem....

“Harry’s mother, Princess Diana, did more to change public attitudes towards AIDS patients as a working royal than anyone, and it was precisely because she was doing things no royal had ever done – handhold and hug and kiss those dying from the disease – that her activism had such enormous impact.

“And when Diana did something else a future queen of England had never done – get a divorce – she didn’t commodify her brand or sell her secrets. She recognized her platform as inherently rare and valuable, made more so by her refusal to monetize it.

“SussexRoyal?!  Diana would never.

“Contrast his mother’s approach with the recent video, since taken down, of Harry cornering Disney chief Bob Iger at a private event, begging him to hire Meghan for voiceover work while Beyonce looks on, mortified.

“When, as a royal, you literally put yourself in supplication to a titan of capitalism, you have shown no scruples, no self-awareness, no shame.  Now you’re just another hustler out to make a buck, and there’s nothing special about that.”

--Arthur C. Brooks, Harvard professor and one-time president of the American Enterprise Institute, a conservative think tank, issued some remarks recently at the National Prayer Breakfast that President Trump then responded to by blasting Nancy Pelosi and Mitt Romney.

So here is some of what Mr. Brooks said that morning, Feb. 6.

“I am here today to talk about what I believe is the biggest crisis facing our nation – and many other nations – today.  This is the crisis of contempt – the polarization that is tearing our society apart....

“To start us on a path of new thinking to our cultural crisis, I want to turn to the words of the ultimate original thinker, history’s greatest social entrepreneur, and as a Catholic, my personal Lord and Savior, Jesus.  Here’s what he said, as recorded in the Gospel of Saint Matthew, chapter 5, verse 43-45: ‘You have heard that it was said, ‘Love your neighbor and hate your enemy.’  But I tell you, love your enemies and pray for those who persecute you, that you may be children of your Father in heaven.’

“Love your enemies!  Now that is thinking differently. It changed the world starting 2,000 years ago, and it is as subversive and counterintuitive today as it was then.  But the devil’s in the details.  How do we do it in a country and world roiled by political hatred and differences that we can’t seem to bridge?....”

Brooks said he gives about 150 speeches a year to various groups, and at one, he uttered the following to a group of conservative activists:

“ ‘My friends, you’ve heard a lot today that you’ve agreed with – and well you should.  You’ve also heard a lot about the other side – political liberals – and how they are wrong.  But I want to ask you to remember something: Political liberals are not stupid, and they’re not evil.  They are simply Americans who disagree with you about public policy.  And if you want to persuade them – which should be your goal – remember that no one has ever been insulted into agreement.  You can only persuade with love.’

“It was not an applause line.

“After the speech, a woman in the audience came up to me, and she was clearly none too happy with my comments.  ‘You’re wrong,’ she told me.  ‘Liberals are stupid and evil.’

“At that moment, my thoughts went to...Seattle.  That’s my hometown.  While my own politics are conservative, Seattle is arguably the most politically liberal place in the United States.  My father was a college professor; my mother was an artist.   Professors and artists in Seattle...what do you think their politics were?

“That lady after my speech wasn’t trying to hurt me.  But when she said that liberals are stupid and evil, she was talking about my parents.  I may have disagreed with my parents politically, but I can tell you they were neither stupid nor evil.  They were good, Christian people, who raised me to follow Jesus.  They also taught me to think for myself – which I did, at great inconvenience to them....

“What is leading us to this dark place that we don’t like?

“The problem is what psychologists call contempt.  In the words of the 19th-century philosopher Arthur Schopenhauer, contempt is ‘the unsullied conviction of the worthlessness of another.’  In politics today, we treat each other as worthless, which is why our fights are so bitter and cooperation feels nearly impossible....

“I’m calling each one of you to be missionaries for love in the face of contempt.  If you don’t see enough of it, you’re in an echo chamber and need a wider circle of friends – people who disagree with you.  Hey, if you want a full blast of contempt within 20 seconds, go on social media!  But run toward that darkness, and bring your light.

“My sisters and brothers, when you leave the National Prayer Breakfast today and go back to your lives and jobs, you will be back in a world where there is a lot of contempt.  That is your opportunity.  So I want you to imagine that there is a sign over the exit as you leave this room.  It’s a sign I’ve seen over the doors of churches – not the doors to enter, but rather the doors to leave the church.  Here’s what it says:

“ ‘You are now entering mission territory.’”

Well, you can imagine President Trump, who followed Mr. Brooks, was none too pleased.  So he hated on Nancy and Mitt.  Brooks’ mission had failed in this instance.

--A third of all plant and animal species could be wiped out by man-made climate change in just 50 years, U.S. scientists warn.

The researchers from the University of Arizona used data from 538 species at 581 sites around the globe, and found 44 percent of the 538 species had already gone extinct at one or more of the sites they earlier inhabited.

The study identified maximum annual temperatures as the key variable that best explains whether a population will become extinct.

--An iceberg twice the size of Washington, D.C., has broken off the Pine Island glacier in Antarctica, scientists reported this week.

According to NASA, the Pine Island glacier “is one of the fastest-retreating glaciers in Antarctica.”  The glacier and the nearby Thwaites glacier together contain “enough vulnerable ice to raise global sea level by 1.2 meters (4 feet),” NASA said.

Meanwhile, it was nearly 65 degrees in Antarctica the other day, which may be the warmest ever recorded there.  [It’s tough to prove this.]

--One final note, as we hit the Presidents’ Day weekend, traditionally a time for ski vacations, particularly in the northeast.  We’ve had no snow in the region, at least here in New Jersey, and lower New York State, and no sustained cold weather.

Which means one thing, boys and girls.  A massive mosquito outbreak this summer.  Just had to be the first to tell you.  #WestNileVirus

---

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

God bless America.

Happy Valentine’s Day.

---

Gold $1587
Oil $52.15

Returns for the week 2/10-2/14

Dow Jones  +1.0%  [29398]
S&P 500  +1.6%  [3380]
S&P MidCap  +2.3%
Russell 2000  +1.9%
Nasdaq  +2.2%  [9731]

Returns for the period 1/1/20-2/14/20

Dow Jones  +3.0%
S&P 500  +4.6%
S&P MidCap  +1.6%
Russell 2000  +1.2%
Nasdaq  +8.5%

Bulls 52.9
Bears 19.2

Have a good week.  Enjoy the holiday.

Dr. Bortrum posted a new column!

Brian Trumbore