Week in Review

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Week in Review

02/05/2022

For the week 1/31-2/4

[Posted 9:30 PM ET, Friday]

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Edition 1,190

We had some late-breaking news today from our former vice president, which never should have been news, at least in normal times, but we don’t live in normal times, and so it was.

In the meantime, Presidents Xi and Putin met at the start of the Beijing Winter Olympics, an absolutely absurd event, given the location, that I couldn’t give a hoot about save for the figure skating finals and skiing.

I detail all that the two dictators discussed and reached agreement on below, but now it’s about any timelines they may have established.  We know that Putin gave his blessing to any actions Xi may take against Taiwan, and Xi did the same on Russia’s intentions with Ukraine, et al.

It’s the Good Guys vs. the Bad Guys, Good vs. Evil, and Evil is the betting line favorite.

NATO and the U.S. are not going to meet Moscow’s demands, and Putin has to act in some fashion to save face after placing 130,000+ troops on the border, including in Belarus.

And I don’t care what some experts say regarding Xi and Taiwan.  One theory has it that Xi wants a quiet year to secure his third term and focus on the economy, but Xi knows the time is now to act and as I’ve written, and will stand by, once the Games are over in Beijing, China will be harassing Taiwan 24/7.  And I also stand by my belief that China doesn’t necessarily have to launch a major invasion to achieve its ends. 

To be continued….

Meanwhile….

Former Vice President Mike Pence directly rebutted Donald Trump’s false claims that Pence could have overturned the results of the 2020 election.

Pence, in a speech to the conservative Federalist Society in Florida this afternoon, addressed Trump’s intensifying efforts to advance the false narrative that the vice president could have done something to prevent Joe Biden from taking office.

“President Trump is wrong,” Pence said.  “I had no right to overturn the election.”

It marked Pence’s most forceful rebuttal of Trump to date.  A total break, which has many of us wondering if Pence is still going to run for president, or he’s just clearing his conscience and will settle in at a think tank or university.

I get into what Trump said last weekend and on Tuesday about Pence down below, but Pence, in his remarks today, described Jan. 6, 2021, as “a dark day in the history of the United States Capitol.”

Pence framed his actions that day as part of his duty as a constitutional conservative.

“The American people must know that we will always keep our oath to the Constitution, even when it would be politically expedient to do otherwise,” he told the group.  He noted that, under Article II Section One of the Constitution, “elections are conducted at the state level, not by Congress” and that “the only role of Congress with respect to the Electoral College is to open and count votes submitted and certified by the states.  No more, no less.”

“Frankly there is no idea more un-American than the notion that any one person could choose the American president,” he added.  “Under the Constitution, I had no right to change the outcome of our election. And Kamala Harris will have no right to overturn the election when we beat them in 2024.”

Pence also acknowledged the lingering anger among many in Trump’s base.  But, he said, “The truth is, there’s more at stake than our party or political fortunes.  Men and women, if we lose faith in the Constitution, we won’t just lose elections – we’ll lose our country.”

[As I go to post, Trump hasn’t responded as yet.]

Separately, Trump has injected himself into a volatile trucker protest in Ottawa, Canada, that we’ve learned is partly being funded by sympathizers in the United States. 

Trump said the truckers were “peacefully protesting the harsh policies of far left (sic) lunatic (Prime Minister) Justin Trudeau who has destroyed Canada with insane Covid mandates.”

I have more on this below, in the pandemic section because it has to do with calls for an end to the vaccine mandate for cross-border truckers.

Lastly, I wrote on 12/25/2021 that the Omicron variant wave in the U.S. represented a “final spasm,” and I’m being proven right.  Deaths are still disturbingly high, but cases are plummeting.

Yes, Omicron waves are now impacting India and Brazil, among others, all over again, and we have this new BA.2 Omicron offshoot, but in terms of the United States, I think 2022 will be much, much better.  Already you are seeing states and municipalities removing restrictions and mandates and, depending on the individual situation, it is totally appropriate to do so.

Personally, I’ll continue to wear a mask in certain places, for a little longer, but I’ll have zero problem eating dinner inside, which I’ve done a fair amount of the last few months anyway.

I’m also boosted.  To those who still haven’t even received one shot, and if it’s for political reasons, I couldn’t give a damn.

Biden Agenda

--President Biden announced that the leader of ISIS, Abu Ibrahim al-Hashimi al-Qurayshi, killed himself and members of his family during a U.S. raid that targeted him in northwestern Syria.

“This operation is testament to America’s reach and capabilities to take out terrorist threats no matter where they try to hide anywhere in the world,” the president said Thursday. “Last night’s operation took a major terrorist leader off the battlefield, and it sent a strong message to terrorists around the world that we will come after you and find you.”

The president ordered the Pentagon on Tuesday to proceed with the strike, which officials first briefed him on over a month ago, a senior administration official said.

Biden ordered troops to conduct a ground operation instead of an air strike to protect civilians living in the same residential building as al-Qurayshi who did not have any affiliation with ISIS.

U.S. forces entered the building after midnight on Feb. 3 local time, evacuating one man, one woman, and multiple children from the first floor early in the operation.  American officials did not know who lived on the building’s third floor.   Troops also alerted local residents that an operation was underway as the raid began to ensure they did not unintentionally interfere.

When military forces confronted al-Qurayshi on the second floor of the building, he detonated an explosion that killed his wife and children, Biden said.  The blast destroyed much of the third floor and threw bodies from the building.

“All casualties at the site were due to acts of ISIS terrorists,” the official said.

But as is always the case, more details will eventually emerge.

Editorial / Wall Street Journal

“One lesson (from the raid) is the importance of maintaining the forward deployment of U.S. counterterror forces.  Donald Trump came close to withdrawing from Syria – and it’s fortunate he changed his mind. As of last month some 900 U.S. troops were stationed in Syria with another 2,500 in Iraq. Their mission is to help local forces prevent an ISIS resurgence, and their presence means that antiterror operations needn’t rely on ‘over the horizon’ capability as we now must in Afghanistan.

“Another lesson is the benefit of local allies on the ground. U.S. officials praised the Syrian Democratic Forces as ‘critical, vital enablers for operations like this.’  That probably included intelligence from months of searching for and then monitoring Hajji Abdullah (as al-Qurayshi was known) at his safe house. We wish we now had such allies against ISIS and al-Qaeda in Afghanistan….

“(Hajji Abdullah’s) demise will disrupt their operations, though no doubt new leaders will emerge in this long war. The temptation is to say the war against radical Islam is unwinnable so why keep fighting it?

“But by keeping jihadists on defense abroad, we reduce their ability to plot attacks against the U.S. homeland.  We know what can happen when the plotters feel unthreatened.  Mr. Biden’s chaotic and needless Afghanistan withdrawal thrilled radicals around the world and may still lead to renewed terror attacks.  All the more reason to welcome this week’s operation against one of the world’s most dangerous terrorists.”

--It’s the economy, stupid…or so the saying goes, and a new Gallup poll found that just one-third of Americans are satisfied with the current state of the economy, despite the improvements in employment, economic growth and the stock market last year.  It marks a significant drop from one year ago, before Biden was sworn in as president, when 43% of survey respondents said they were satisfied.  Before the pandemic began, about 68% of Americans said they were satisfied with the economy. 

Editorial / New York Times

“Most Americans don’t share the administration’s sunny view of its economic record, and it is little mystery why: The average worker’s paycheck doesn’t buy as many hamburgers as it did last year. (Using hamburgers to measure inflation is a twist on The Economist magazine’s Big Mac Index, which tracks the price of the class hamburger in different currencies.)  The government’s Consumer Price Index rose by 7 percent in 2021, the biggest jump since 1982.  Mr. Biden’s approval rating remains low, and poll after poll finds that Americans are not pleased with his handling of the economy….

“The challenge now is to bring inflation back under control without undermining the economic recovery.  The work will mostly be done by the Federal Reserve, not by Mr. Biden or his administration. The role of presidents in shaping the nation’s economic fortunes is generally overstated.   But if the government can complete the work it has begun, this administration may yet deserve the victory laps it is taking for successful stewardship of the nation’s economy.

“The discomforting truth is that the United States last year faced a choice between a protracted period of economic pain and an economic recovery whose benefits are temporarily attenuated by high inflation.  Mr. Biden made the right choice [Ed. the massive fiscal response to the pandemic].  But it came at a real price – economically, for the nation, and politically, for him.”

--News of Sen. Ben Ray Lujan’s (D-N.M.) stroke sent shockwaves through the Senate on Tuesday, underscoring the fragility of the Democrats’ 50-50 majority.  Lujan’s absence leaves them at 49 seats until he returns, with his office saying he’s expected to make a full recovery.  The senator is just 49 years old.

Obviously, this could impact the nomination of a Supreme Court justice to fill the retiring Justice Stephen Breyer’s seat.

Related to the above, in a new ABC News/Ipsos poll, Americans overwhelmingly believe President Biden should “consider all possible nominees” (76%) rather than “consider only nominees who are Black women, as he has pledged to do” (23%).

I’m sorry, I can’t blame Biden on this one and I’m kind of surprised by the percentages.

But then partisanship drives the major differences in attitudes, with virtually all Republicans saying “consider all” (95%) compared to only half of Democrats (54%).

I’d be among the 5% of Republicans feeling otherwise.  It was a campaign pledge.  It helped Biden win the election.  Deal with it.  Plus there are some outstanding candidates.

--New statements from former president Donald Trump, covered below, insisting that Mike Pence could have “overturned” the election at least helped jolt a congressional debate over potentially changing the 135-year-old federal law under which Trump and his allies sought to reverse Joe Biden’s victory.

A bipartisan group of senators has been meeting to discuss revisions to the 1887 Electoral Count Act, which governs the congressional certification for the election of the president and vice president.

By exploring revisions of the 1887 law, Trump said in a Sunday statement, “what [members of Congress] are saying is that Mike Pence did have the right to change the outcome, and they now want to take that right away.  Unfortunately, he didn’t exercise that power, he could have overturned the Election!”

Top Republicans said they remained open to the discussions. Senate Minority Leader Mitch McConnell told reporters the law is “clearly flawed and needs to be updated,” while Minority Whip John Thune suggested Trump’s comments could actually help forge a deal.

“Clarifying it makes sense,” Thune said, adding that Trump’s comments “perhaps add additional arguments in favor of trying to fix this and slam the door shut on this once and for all.”

But it remains to be seen whether Republicans and Democrats can come to an accord on precisely how the law should be modified.  Some Republicans are warning that a more expansive bill, including federal funding for election agencies and protections for state and local administrators who have faced harassment and intimidation, could become difficult to pass, with any Senate legislation needing at least 60 votes to vault a potential filibuster.

Wall Street and the Economy

The odds for a 50-basis point (1/2-point) hike in the federal funds rate, not a mere ¼-point, in March rose today with the much-better-than-expected January jobs report.

The survey of establishments in the Labor Department’s report showed nonfarm payrolls increased by 467,000 jobs last month, far more than the 150,000 expected, while December’s number, previously a sub-par 199,000, was revised upward to show 510,000 jobs were created.

As the same time, average hourly earnings rose a strong 0.7%, and 5.7% year-over-year, compared with December’s 4.7% pace.

The unemployment rate ticked up to 4.0% from 3.9%, with more people joining the workforce.  U6, the underemployment rate, fell to 7.1% from 7.3%.

Leisure and hospitality, one of the most exposed industries to Covid-19 spikes, added the highest number of jobs in January, at 151,000 versus 163,000 at the end of 2021, led by the restaurant and bar sector.

The numbers, including a big revision upwards for November as well show how difficult it has been for the Bureau of Labor Statistics to measure movements during the pandemic.

In response, bond yields surged, breaking out of a recent narrow range on the long end, with the yield on the key 10-year Treasury up to 1.91%.

Separately, the Chicago PMI number for January came in at a strong 65.2 (50 the dividing the line between growth and contraction), while the national ISM manufacturing figure for the month was 57.6, and 59.9 for the service sector, essentially in line with expectations and very solid.

Weekly jobless claims fell 23,000 to 238,000.

The early Atlanta Fed GDPNow barometer for the first quarter is just 0.1%, but little data has come in as yet.  That said, growth in the quarter will be down substantially from the fourth quarter’s 6.9% pace.  Goldman Sachs lowered its own Q1 forecast to just 0.5%, while cutting its forecast for 2022 to 3.2% from a consensus 3.8%.  The abrupt slowdown early in the year is the result of fiscal support fading while Omicron continues to weigh on facets of the economy.

So now it’s a waiting game for the March 15-16 Federal Open Market Committee meeting.  In the meantime, markets will be hanging on every word from Fed governors, as well as looking at the coming data, especially the inflation numbers, in an attempt to gauge just how far the Fed will hike rates.

Lawrence H. Summers / Washington Post…Summers having correctly made the call early in 2021 that an inflation crisis loomed, when most nearly everyone else was saying otherwise, including the Fed.

“The good news is that, judging by Federal Reserve Board Chair Jerome H. Powell’s latest news conference, the Fed has explicitly recognized the gravity of the inflation problem and – with his vow to be humble and nimble – implicitly recognized the inappropriateness of the Fed’s current policy framework. This is all good.  It should be reassuring that inflation is a primary priority. And, in a world where we have just seen the difficulty of forecasting, there is no reason for the Fed to lay out a detailed policy path going out months.

“History teaches that stronger deterrent military forces credibly deployed are less likely to be called on.  In the same way, strength in word and deed from the administration and Fed about the importance of keeping the economy from overheating raises the prospect of containing inflation without causing recession.

“To this end, policymakers should avoid presenting the idea that supply improvements will magically bring down inflation as anything more than a highly optimistic scenario. The administration should also cease making diversionary claims that policies meant to promote competition, make public investments or combat corporate greed can meaningfully impact inflation over the next several years and instead emphasize its support for Fed inflation-control efforts and a strong dollar. The Fed should emphasize the key asymmetry in its dual mandate – there is no prospect of maximizing employment without achieving price stability.

“The past 60 years of economic history record few if any instances of inflation declining substantially without significant slowdown.  Policymakers can either learn from that history or repeat it.”

Lastly, according to the Treasury Department, as of Jan. 31, the U.S. national debt exceeded $30 trillion for the first time, reflecting increasing federal borrowing during the pandemic.  The debt has increased $7 trillion since late January 2020, just before the pandemic hit.

Needless to say, $30 trillion is a rather large number, sports fans.

Treasury Secretary Janet Yellen said recently concerning the debt:

“It’s important to evaluate debt sustainability in the context of the interest-rate environment,” adding that the interest burden of U.S. debt is “very manageable” because of low interest rates.

But now those interest rates are rising and could go up substantially. 

Michael Peterson, chief executive of the Peter G. Peterson Foundation, a nonpartisan group that advocates for deficit reduction, said in a statement:

“The milestone of $30 trillion in debt should be a giant red flag for all of us about America’s future economic health, generational equity, and role in the world.”

The Biden administration can kiss Build Back Better, at least in its current form, goodbye…for good.

Europe and Asia

We had the final PMIs for January in the eurozone, courtesy of IHS Markit, and the composite index was 52.3 vs. December’s 53.3.  The final eurozone manufacturing PMI was 58.7 in the month, up from December’s 58.0, while the service sector came in at 51.1, down from December’s 53.1.

Germany: 59.8 mfg., 52.2 services
France: 55.5 mfg., 53.1 services
Italy: 58.3 mfg., 48.5 services
Spain: 56.2 mfg., 46.6 services (down from 55.8 in Dec.)
Ireland: 59.4 mfg., 56.2 services
Netherlands: 60.1 mfg.
Greece: 57.9 mfg.

UK: 57.3 mfg., 54.1 services

Chris Williamson / IHS Markit

“The eurozone economy has slowed further in January after seeing growth weaken in the final quarter of 2021.  Businesses are reporting subdued demand and ongoing constraints in terms of both labor shortages and raw material supply issues resulting from the pandemic.

“The slowdown coincides with virus-fighting containment measures having been tightened to the highest since last May across the eurozone amid the surge in Covid-19 cases linked to Omicron.

“Spain has been the hardest hit, falling back into contraction, while Italy has seen business activity stall, in both cases linked to declining service sector output.  France is meanwhile recording the weakest expansion since last April.

“Germany is bucking the slowdown trend, however, providing a welcome ray of light to suggest that the impact of Omicron will be both shorter and less severe than prior virus waves.  Having been hit to a greater extent by Omicron late last year, service sector activity is already picking up again in Germany and manufacturing output is surging higher.

“A key concern is that inflationary pressures continue to build, with soaring energy prices likely to add further to upward price pressures in coming months.  Households are already being squeezed and firms face further cost rises.  Tensions in Ukraine also pose a further downside risk to the outlook, with any escalation of the situation likely to further dampen business confidence.”

A flash estimate for fourth quarter GDP in the euro area was up by 0.3% compared with the previous quarter.  An early estimate for full-year growth in the eurozone had GDP increasing 5.2%.  [4.6% 2021 Q4 vs. 2020 Q4.]

On the euro area inflation front, a flash estimate for January pegged it at 5.1%, up from 5.0% in December, according to Eurostat.  In January 2021, inflation was running at a 0.9% annualized pace.

Ex-food and energy, the flash estimate is 2.5% vs. 1.4% a year ago.

The flash estimate for January in Germany is also 5.1%.

European Central Bank President Christine Lagarde acknowledged on Thursday that eurozone inflation was running hotter than expected and with risks tilted to the upside, but continued to forecast it would ease through this year.

Speaking after the ECB kept its policy unchanged as expected, Largarde told a news conference that policymakers would not rush into new moves, but also chose not to repeat her past comment that a rate hike this year was very unlikely.

“Inflation is likely to remain elevated for longer than previously expected but to decline in the course of this year… Compared with our expectations in December, risks to the inflation outlook are tilted to the upside, particularly in the near term,” she said.  “The situation has indeed changed.”

But while the ECB insists that any move to raise interest rates in 2022 is very unlikely, markets have already projected the first rate hike will come in July.

Meanwhile, the Bank of England tightened policy the same day, raising its benchmark interest rate to 0.50%, as nearly half its policymakers wanted a bigger increase to contain rampant price pressures which the British central bank warned would push inflation above 7%.  In a surprise split decision, four of the nine Monetary Policy Committee members wanted to raise rates to 0.75% in what would have been the biggest increase in borrowing costs since the BoE became operationally independent 25 years ago.  The majority, including Governor Andrew Bailey, voted for a 0.25 percentage point increase.

The BoE first hiked rates in December.

Bailey said investors should not assume the BoE was embarking on a long series of rate hikes and that there would be a tradeoff between strong inflation and weakening growth as many households see their incomes squeezed.

One other euro area inflation note.  December producer prices rose 2.9% compared with November and a whopping 26.2%, compared with December 2020.

In light of all the above, and the seeming certainty the ECB will be raising interest rates this year, the euro bond market took it on the chin, with the yield on the German 10-year, the bund, climbing from -0.05% to 0.20%, the highest yield in years.  The Italian 10-year saw its yield go from 1.28% to 1.74% this week.

Finally, the euro area unemployment rate for December was 7.0%, down from 8.2% in December 2020, per Eurostat.

Germany 3.2%, France 7.4%, Italy 9.0%, Spain 13.0%, Greece 12.7%, Netherlands 3.8% Ireland 5.1%, Austria 4.9%.

Brexit / Boris Johnson: The prime minister’s leadership plunged deeper into crisis last night when four of Johnson’s most senior Downing Street aides resigned within four hours.  Head of policy Munira Mirza, who had worked with Johnson for 14 years since he was mayor of London, left in protest against his failure to apologize for a smear against Labour leader Keir Starmer.

Head of communications Jack Doyle resigned a couple of hours later, telling colleagues that recent weeks had taken “a terrible toll” on his family life.  Doyle was reported to have attended at least one of the parties at Downing Street being investigated by the Metropolitan Police for possible, serious breaches of lockdown rules.

Two others followed suit.

Johnson’s suggestion that Keir Starmer, a former director of public prosecutions, was responsible for failing to prosecute Jimmy Savile (a former television and radio personality who raised $millions for charity but upon his death was the subject of widespread allegations of sexual abuse) drew outrage from many Conservative MPs.

Thirteen Conservative MPs have called publicly for Johnson’s resignation and others are believed to have submitted letters calling for a no confidence vote in his leadership. Fifty-four MPs must request a vote for it to go ahead and if Johnson wins, there can be no further challenge to his leadership for 12 months.

Earlier in the week, a long-awaited report from senior civil servant Sue Gray into “partygate” allegations of rule-breaking, lockdown-busting gatherings in Number 10 Downing Street and Whitehall, heavily redacted for now, showed:

“At least some of the gatherings in question represent a serious failure to observe not just the high standards expected of those working at the heart of government but also of the standards expected of the entire British population at the time.”

In her report, Ms. Gray criticized a culture of alcohol consumption in Downing Street and said there were failures of leadership by different parts of Number 10 and the cabinet office at different times.

In a statement to the House of Commons after the report’s publication, Boris Johnson said he was sorry “for the things we simply did not get right” and for the way the matter in general has been handled. He said he would change how Downing Street is organized by creating a new government department, with a permanent secretary in charge. He added “I get it and I will fix it.”

But Johnson refused to answer questions about the parties, including whether he was at the event in his own flat being investigated by police, insisting that MPs must wait for the outcome of the police investigation.

Labour leader Starmer described the prime minister as a man without shame who damaged everyone and everything around him.  Sir Keir challenged Conservative MPs to ask themselves what they were going to do about a leader whose dishonesty and lack of decency were at odds with the country’s democratic values.

I told you since day one, and especially during the Brexit campaign, that Johnson was a buffoon, an inveterate liar…Brexit itself being one big lie.

So, attempting to refocus attention away from the scandal, while shrugging off calls for his resignation, Johnson brought forward a “Brexit freedoms bill.”  The new legislation is intended to make it easier to amend or remove European Union statutes that remain on U.K. books, a measure that Johnson’s office said will help the government strip away regulations costing businesses 1 billion pounds ($1.3 billion).

Brexit was a boon for Northern Ireland’s main port in 2021.  Belfast Harbor handled 9% more cargo in 2021 than in 2020, with container traffic up 15% to the highest level since 2008.

But the big issue regarding Brexit was the announcement from Northern Ireland’s Minister for Agriculture, Edwin Poots, that he ordered a halt to post-Brexit checks at the North’s ports.

Poots said he took the decision after he received legal advice on Wednesday which stated that “at present there is presently no Executive approval for SPS [sanitary and phytosanitary] checks.

Ireland’s Minster for Foreign Affairs Simon Coveney said that such a move by Poots would be “a breach of international law.”

“The protocol is part of an international agreement,” Coveney told the Irish Senate Wednesday.  “It was agreed and ratified by the EU and the UK and its implementation is not only part of an international treaty, it’s part of international law.”

Since the UK left the EU physical checks have been required for some agri-food shipments from Britain to Northern Ireland.

Italy: Well, when all was said and done, we do not have a female Italian head of state, which would have been a first.  Sophia Loren would have been my choice.

But instead, parliament decided to re-elect President Sergio Mattarella for a second term, with party chiefs asking him to carry on after a week of fruitless voting to choose a successor.

Poor Mattarella.  He’s 80.  And this isn’t good for Italian stability.  Seven rounds of balloting have apparently left deep scars, and analysts in Italy says it’s dangerous.

So Mario Draghi, who wanted to be president, will continue as prime minister, and that’s good for Europe.  He thanked Mattarella for “his big decision to go along with the extremely strong will of parliament.” 

I’ll repeat that while Draghi has most of the power in Italy’s system of governing, the president gets to appoint prime ministers and is often called on to resolve political crises. 

And now Draghi’s coalition has been weakened, and there are all kinds of things going on with Italy’s volatile far-right parties.  This could be a wildcard for 2022.

Turning to Asia…China’s official PMIs for January came in at 50.1 mfg., 51.1 services…very weak, as per the National Bureau of Statistics.

The Caixin private survey put manufacturing at 49.1, contraction, vs. 50.9 in December.  [Caixin’s service sector reading coming this weekend.]

The IMF has pegged China’s 2022 growth at 4.8%, as “momentum has slowed considerably with consumption lagging.”

Japan’s January PMIs were 55.4 for manufacturing, but only 47.6 for the service sector.

Separately, the December unemployment rate was 2.7%.

South Korea’s manufacturing PMI for January was 52.8, while Taiwan’s was 55.1.

Street Bytes

--Monday, despite a huge rally, especially in tech shares, the market closed out its worst month since March 2020, with the S&P 500 falling 5.3%, the Dow Jones 3.3% and Nasdaq 9%.

But on the week, thanks to a slew of positive earnings reports, and gains in energy and consumer discretionary stocks, the Dow rose 1.0% on the week, the S&P 1.5% and Nasdaq 2.4%.

The volatility was best exemplified by the action in two stocks.  Thursday, Facebook owner Meta Platforms suffered the deepest loss of stock market value in history for a U.S. company, and then today, Amazon logged the greatest ever one-day increase in value.

Amazon expanded its market capitalization by around $190 billion with the shares surging 13.5% following its blowout quarterly report.  Further details on both FB and AMZN below.

--U.S. Treasury Yields

6-mo. 0.54%  2-yr. 1.31%  10-yr 1.91%  30-yr. 2.22%

The 10-year yield is the highest weekly close since Dec. 31, 2019.

--OPEC and its allies agreed to a small, planned increase in crude production amid soaring oil prices, with concerns over supply heightened due to a possible Russian invasion of Ukraine.

OPEC and a coalition of Russia-led oil producers said they agreed to raise their collective production by another 400,000 barrels a day in March, in line with what the cartel, OPEC+, agreed to last year as part of a plan to raise output to pre-pandemic levels.

If Russia invades Ukraine, it faces the prospect of Western sanctions that could affect its oil exports, fueling fears of more supply constraints.

Meanwhile, the Biden administration has pleaded for months with Saudi Arabia and other OPEC countries to open the taps wider to tame fast-rising U.S. gasoline prices that have become a political liability.  But those members with spare capacity, namely Saudi Arabia, are reluctant to increase output faster.

And this week, oil surged to another 7-year high, $91.93 on West Texas Intermediate, the rally extended to seven weeks.  Fears of supply disruptions, producers failing to meet demand and geopolitics holding sway.

--Exxon Mobil returned to a profit in its fourth quarter as demand for oil continues to improve.  The oil and natural gas company earned $8.87 billion for the final three months of 2021.  A year earlier it lost $20.07 billion.  [Exxon does not adjust its reported results based on one-time events such as asset sales.]

“Our effective pandemic response, focused investments during the down-cycle, and structural cost savings positioned us to realize the full benefits of the market recovery in 2021,” Chairman and CEO Darren Woods said in a statement.

Fourth-quarter oil-equivalent production was 3.8 million barrels per day, up 2% compared with the year-ago period.

Quarterly revenue surged to $84.97 billion from $46.54 billion, better than the Street forecast, with the rising prices for crude.

A day earlier, Exxon said that it is restructuring its business into three divisions and moving its headquarters 250 miles south from Irving, Texas, to its campus north of Houston.

--Google parent Alphabet Inc. saw its shares surge 7.5% Wednesday after the company reported a blowout quarterly report, the valuation nearing $2 trillion, which would match peers Apple and Microsoft.

Alphabet reported fourth-quarter revenue of $75.33 billion, an increase of 32% from a year earlier when ad spending began to swell in anticipation that the economy would snap back in 2021 after the pandemic receded.  Profit rose by a third, with the company’s annual profit increasing by almost $36 billion from 2020.

The quarterly sales gain was the lowest the company has recorded for a three-month period since 2020 and marks a deceleration from the 41% increase reported in the July-to-September quarter.

Much of Google’s growth over the past year came from more e-commerce advertisers eager to reach customers whose product searches begin online. Total advertising sales rose by a third to $61.24 billion in the December quarter.  YouTube was a major contributor with sales of $8.63 billion, bringing its total for the year to $28.85 billion, about $850 million less than Netflix Inc.

As the internet’s largest video destination, YouTube now records 15 billion views daily, the company said.

Google has invested heavily in building out a cloud-computing division that can compete with established players Amazon.com and Microsoft, which account for 41% and 20% of the market, respectively.

Google’s cloud sales rose 45% to $5.54 billion in the period, however, the costs contributed to the cloud business reporting a $1.45 billion loss for the period.

Alphabet also announced a 20-1 stock split, the shares finishing the week at $2,925.

--Facebook shares, unlike Alphabet’s, cratered Thursday after the company reported after Wednesday’s close that user growth had faltered in the last quarter, the first stagnation in the social network’s history, part of a dire earnings report that caused Meta Platforms Inc.’s stock to collapse 26%.

The company also gave a disappointing sales forecast for the current period, and CEO Mark Zuckerberg acknowledged that Meta is facing serous competition for user time and attention, particularly from viral video-sharing app TikTok.

Meta said revenue in the current quarter would be $27 billion to $29 billion, compared to $30.25 billion analysts estimated on average.

The dour outlook and stalled user momentum is a dramatic turnaround for a company that has posted share gains in every year but one since its 2012 IPO, stoking concern that Meta Platforms’ flagship product and core advertising moneymaker has plateaued after years of consistent gains.

Zuckerberg asked investors for patience when it came to monetization of the Meta project.

“Over time we think that there is potential for a tremendous amount of overall engagement growth” with Reels (Meta’s rival to TikTok), he said on a conference all.  “We think it’s definitely the right thing to lean into this and push as hard to grow Reels as quickly as possible and not hold on the brakes at all, even though it may create some near-term slower growth than we would have wanted.”

Not exactly what a lot of investors wanted to hear.

Meta also said it is contending with a crackdown on targeted advertising by Apple Inc., which it said may trim $10 billion in revenue this year, and cutbacks by advertisers that are paring budgets because of rising costs and supply chain disruptions.

Meta’s Reality Labs division, which includes the company’s investments in the metaverse and virtual reality, reported an operating loss of $3.3 billion for the fourth quarter, as the company disclosed its contribution for the first time. 

Facebook reported 2.91 billion monthly users in the fourth quarter, flat compared with the prior period. The main app’s daily active users in North America – the company’s most lucrative market – declined slightly from 196 million to 195 million users.

Revenue was $33.67 billion for the quarter, up from $28.07 billion a year earlier, basically in line with expectations.  Net income was $10.3 billion, less than analysts projected.

--But then after the market closed on Thursday, Amazon.com reported Q4 net income of $14.32 billion vs. $7.22 billion a year earlier.

The company said the latest results include a pretax valuation gain of $11.8 billion included in non-operating income from its investment in Rivian Automotive, which went public in November.

Net sales for the quarter ended Dec. 31 rose 9% to $137.4 billion from $125.6 billion a year earlier.

For Q1, the e-commerce giant said it expects net sales of $112 billion to $117 billion, while operating income is expected to come in at $3 billion to $6 billion.

But Amazon also announced it is raising its annual prime membership fee in the U.S. to $139 per year from $119.  It’s the first price hike for the Prime membership since 2018.  Shares of Amazon then jumped nearly 15% in after-market trading.

“As expected over the holidays, we saw higher costs driven by labor supply shortages and inflationary pressures, and these issues persisted into the first quarter due to Omicron,” said CEO Andrew Jassy, who succeeded founder Jeff Bezos in that role last July. “Despite these short-term challenges, we continue to feel optimistic and excited about the business as we emerge from the pandemic.”

Meanwhile, sales at Amazon’s cloud-computing business grew 40% in the quarter.  And sales in its advertising business, where brands pay to get their products to show up first when shoppers search on Amazon’s site, rose 32%.  Amazon Web Services operating income rose nearly 49% to $5.3 billion.

--Ryanair lost nearly $110 million in the last three months of 2021 as Omicron hit bookings in the run up to Christmas. 

The Irish airline, Europe’s largest, said on Monday that revenues rose 331 percent during the quarter, with passenger numbers almost quadrupling to 31.1 million from 8.1 million in the same three months of 2020, when severe lockdowns shut travel across most of Europe.

But Omicron hit “close in bookings,” costing Ryanair a potential 1.5 million to two million passengers.

“These were people who would typically book two weeks before Christmas and the New year,” the CFO said.

Michael O’Leary, CEO, said the media hysteria that Omicron generated in December forced many European governments to re-impose travel restrictions.

--The Wall Street Journal released its 14th annual ranking of nine U.S. airlines by operational performance and Delta Air Lines reclaimed the top spot, with JetBlue Airways finishing last.

Delta took the top spot in five of seven categories, notably its cancellation rate.  The airline’s overall on-time rate was 87.9%, using masFlight’s criterion of flights arrived within 14 minutes of schedule.

JetBlue ranked last in part due to its delays and below-average performance in on-time arrivals.  Of the airline’s approximately 262,800 completed flights, 14.3% were delayed 45 minutes or longer, according to masFlight data.  Its on-time arrival percentage was 69.9%, second-worst in that category, behind Allegiant Travel Co.

A JetBlue spokesman said in an email to the Journal that the airline increased staffing, facilities and equipment to near pre-pandemic levels faster than other airlines.

Alaska Air Group finished second overall, while Southwest Airlines finished third, dropping from first place in the 2020 rankings. The airline saw an on-time arrival percentage of 74.3%, ranking seventh.  [The departure/retirement of former Southwest pilot, and S&N supporter, Bob C., hurt the on-time performance.]

--According to FlightAware, 4,830 flights were canceled across the U.S. on Saturday, and then nearly 2,000 flights were grounded for travelers on Sunday due to the northeaster.

And then Wednesday through Friday, another 7,000+ were canceled due to the latest storm.

--TSA checkpoint travel numbers vs. 2019….

2/3…67 percent of 2019 levels
2/2…66
2/1…75
1/31…74
1/30…88
1/29…67
1/28…106
1/27…84

--United Parcel Service Inc. forecast 2022 revenue above market expectations and boosted its dividend after posting record quarterly earnings on Tuesday, supported by higher shipping rates and demand from more profitable e-commerce customers.  Shares in the Atlanta-based company rose more than 7%.

Under CEO Carol Tome, the world’s largest parcel delivery firm has adopted a “better, not bigger” strategy, prioritizing lucrative deliveries over volume.  UPS has been vying for more contracts with healthcare firms and small and medium-sized businesses rather than large clients, which generate lower profits.  That led to UPS’ 2021 adjusted operating margins rising to 13.5% from 11.5% in the comparable pandemic-hit period in 2020 when Tome took over as CEO.

During the crucial holiday season, UPS posted an on-time performance of 96.4% in the three weeks to Dec. 4, better than rival FedEx’s 85.7%, according to ShipMatrix data.

Aside from hiking its revenue forecast for 2022, UPS raised its quarterly dividend by 49% year-on-year to $1.52 per share.  Revenue jumped 11.5% to $27.77 billion in the three months to Dec. 31, with the average revenue per piece increasing by 11.3%.  Net income was $3.09 billion.

--Ford Motor Co. is planning a major reorganization to prepare for the electric future, using Tesla Inc.’s success as a road map and accelerating EV spending by as much as $20 billion.

The effort, led by a former Apple Inc. and Tesla executive, calls for Ford to spend an additional $10 billion to $20 billion over the next five to 10 years converting factories worldwide to electric vehicle production from making gasoline-powered cars.  That would be on top of the $30 billion Ford already has committed to EVs through 2025.

Ford’s EV plans have accelerated since Jim Farley became CEO 16 months ago. The company has tripled output of the electric Mustang Mach-E model and doubled production of the F-150 Lightning plug-in pickup coming this spring.  The company also is spending $11.4 billion with South Korea’s SK Innovation to build three battery factories and an EV truck plant in Tennessee and Kentucky.

Ford then reported earnings for the fourth quarter and rode some big accounting changes to post a $17.94 billion net profit for 2021.

U.S. sales, however, fell 7% for the year over depressed 2020 numbers, but customers paid record prices of nearly $51,000 per vehicle in Ford’s most lucrative market, according to Edmunds.com.

Revenue rose 7.2% to $136.34 billion.

For this year, Ford said it expects global vehicle deliveries to increase by a range of 10% to 15%.  Additionally, it forecasts pretax profit to rise 15% to 25% to a range of $11.5 billion to $12.5 billion in 2022.  The company cited its expectation for continued strong pricing, which it said should offset higher commodity prices, and a gradual easing of supply-chain problems.

For last year’s fourth quarter, Ford’s adjusted pretax profit rose 19% to $2 billion, or 26 cents a share, far worse than the average analyst forecast of 45 cents, and the shares fell nearly 10% in response.

--General Motors reported earnings on Tuesday and said it expects the company’s factory activity to rebound sharply in 2022, forecasting growth of 25% to 30% in global vehicle deliveries compared with 2021.

CEO Mary Barra told analysts GM has targeted sales of 400,000 electric vehicles in North America this year and next, which would be a sharp acceleration from 2021, when it sold fewer than 25,000 electrics in the U.S. – all Chevrolet Bolts, whose production has been paused for months to fix battery problems that had led to fires.

The company said it has hit nearly 60,000 reservations for its GMC Hummer electric pickup truck and SUV, and this spring plans to introduce a Cadillac electric SUV, the Lyriq, starting around $60,000.  Ms. Barra said the company has 110,000 reservations for the electric Silverado.

GM reported a net profit of $10 billion for 2021. Revenue rose 3.7% last year to $127 billion, despite deep production cuts from the ongoing computer-chip shortage and a lack of new inventory on dealership lots.

GM projects it could earn between $9.4 billion and $10.8 billion in net income this year.

--Shares in Spotify plunged 9% Thursday after the company forecast current quarter subscribers lower than Wall Street expectations, but executives sought to reassure investors that growth had not cratered even as it deals with the fallout from the controversy around The Joe Rogan Experience podcast.

In an interview after the report. Spotify Chief Financial Officer Paul Vogel said this year’s growth rate would not be that much different than last year in terms of users and subscribers.

The outlook overshadowed a solid fourth quarter, with revenue coming in higher than analysts’ estimates, as the music streaming company sold more advertisements and newer services such as podcasts, while recording a 16% increase in paid subscribers for its premium service.

Total monthly active users rose 18% to a record 406 million.

But following protests kicked off by Neil Young over the spread of Covid-19 vaccine misinformation, Spotify said it will add content advisories before podcasts discussing the virus.

Joe Rogan responded to the fallout on Sunday, saying in a video on Instagram that he was only seeking to have conversations on his podcast with people who have “differing opinions.”

“I’m not trying to promote misinformation, I’m not trying to be controversial,” Rogan said.  “I’ve never tried to do anything with this podcast other than to just talk to people.”

--Snap Inc. shares soared a staggering 58% today, yes, 5-8, after the company posted its first quarterly profit and signaled it is adjusting to disruptions in the digital-advertising market caused by Apple Inc.’s privacy policy changes that are affecting Meta Platforms.

Snap posted a net profit of $22.6 million in the most recent quarter after sales advanced 42% to $1.3 billion from the year-ago period, beating the Street’s forecasts.

--Starbucks Corp. said rising costs of supplies and wages will continue to weight on the coffee giant’s profit in the months ahead after pandemic-related restrictions reappeared in the U.S. and overseas.

Starbucks and other restaurant chains at some locations are selling food for takeout only, closing dining-room seating or shortening hours during the Omicron variant’s surge.

Starbucks on Tuesday reported a same-store sales increase of 18% at U.S. stores compared with the year-earlier quarter.  Sales weakened in the latter part of the period, during the Omicron surge. In China, a significant market for the chain, same-store sales fell 14%, due to China’s strict policies aimed at controlling Covid which resulted in store closures and reduced sales.  The company said it continues to open new stores in its second-largest market, and was operating more than 5,500 stores in China at the end of the quarter.

For the three months ended Jan. 2, Starbucks reported net income of $816 million, up 31% from a year earlier, but below forecasts.  Sales of $8.1 billion, topped expectations.

Price increases in Starbucks’ North American stores helped its margins during the quarter, the chain said, while supply-chain costs and increasing wages dragged on profit.  The company said it will continue to raise prices to offset rising costs.

“We anticipate supply-chain disruptions will continue for the foreseeable future,” CEO Kevin Johnson said.

--Russia and Ukraine combine to account for 29% of global wheat exports, according to the U.S. Agriculture Department, and the threat of war between the two is rattling international grain markets.  Wheat futures rose to a nearly decade high before backing off some this week.

A deep Russian push into Ukraine and Western sanctions that curtail Russian exports would be a worst-case scenario and could deprive global markets of the lion’s share of both nations’ wheat supplies.

Ukraine, renowned as the breadbasket of Europe, ships a lot of its product to North African nations who often depend on imports to keep their populations fed and bread prices down.

--PayPal Holdings Inc. suffered their worst selloff on record, 24%, after the company lowered its 2022 profit outlook and scrapped an ambitious growth strategy it put in place last year.

For much of 2020 and 2021, PayPal was an investor favorite. The migration to online shopping over the course of the pandemic boosted its transaction volumes and profits.

But investor sentiment started to sour after Covid lockdowns eased and in-store sales recovered.  In October, news of a potential deal to buy the social-media company Pinterest Inc. Sent PayPal shares even lower.  The stock is now trading at its lowest level since May 2020.

Executives said a number of forces will pressure its business in 2022, some of which are unique to PayPal, such as losing business from onetime corporate parent eBay Inc. faster than expected.  But the company also said macroeconomic factors – the runoff in government stimulus, labor shortages, the Omicron variant, inflation and supply-chain problems – are putting pressure on its growth.

But other payments companies, such as Visa Inc., raised earnings guidance in recent weeks and cited only a modest impact on domestic payments due to Omicron.

And in a surprise to analysts and investors, PayPal abandoned a target it established last year of roughly doubling its active user base to 750 million accounts

As a result of PayPal’s earnings report, other e-commerce and digital-payments companies that got a boost during the pandemic, such as Shopify Inc. and Block Inc., formerly known as Square, each closed down around 10%.

--The Canadian economy lost a net 200,100 jobs in January, more than expected, and the jobless rate jumped to 6.5% from 6.0% in December, Statistics Canada data showed on Friday.

--Bitcoin had a good day today, rallying from $37,000 in the morning to about $40,600 as I go to post.

--New York Times Co. said it surpassed its goal of 10 million subscriptions years ahead of schedule, partly thanks to its recent acquisition of sports-media company the Athletic, while profit rose sharply on the back of strong advertising-revenue growth.

The news organization set a new target of at least 15 million total subscribers by year-end 2027, as the company focuses more on selling bundles that include multiple Times products, such as news, cooking and games.

For the first time, the company’s lower-cost digital products – such as its games, cooking app and product-recommendation website Wirecutter – attracted more new digital subscriptions – 204,000 – in the latest quarter than its core product, which added 171,000.  The total 375,000 new digital subscriptions gained in the fourth quarter were lower than the 455,000 it added in the third. Growth in digital-news subscriptions has slowed down after rapid growth during the Trump administration and the early stages of the pandemic, and the company had warned that the end of a one-year promotional-pricing offer ahead of the 2020 presidential election would pressure fourth-quarter subscriber growth.

Net profit jumped to $60.9 million from $10 million.  Revenue rose 17% to $594.2 million, beating analyst expectations on both the top and bottom lines.

Separately, the Times bought Wordle, the world game that has become an online phenomenon. The company said it paid a price in the low-seven figures. The game will thus move from its current website to the New York Times site and apps, but the company declined to say when that would happen.

Wordle went viral this year, with millions of people playing the puzzle daily. Only 90 people played it on Nov. 1, according to the New York Times.

--CNN president Jeff Zucker resigned Wednesday in a stunning move, citing a “consensual relationship” that he never disclosed.

“As part of the investigation into Chris Cuomo’s tenure at CNN, I was asked about a consensual relationship with my closest colleague, someone I have worked with for more than 20 years,” Zucker, who also serves as the chairman of WarnerMedia news and sports, said in a statement.  “I acknowledged the relationship evolved in recent years. I was required to disclose it when it began but I didn’t.  I was wrong. As a result, I am resigning today.”

Cuomo was fired in December for helping his brother, ex-New York Gov. Andrew Cuomo, as he was facing sexual misconduct allegations.

Zucker did not name the co-worker but she was identified as Allison Gollust, CNN’s executive vice president and chief marketing officer.  Gollust is remaining at the company and CNN employees are pissed, particularly female employees who wonder ‘why is Gollust allowed to keep her job?’  as she totally lied about the relationship.

“Jeff and I have been close friends and professional partners for over 20 years,” she said in a statement. “Recently, our relationship changed during Covid. I regret that we didn’t disclose it at the right time.  I’m incredibly proud of my time at CNN and look forward to continuing the great work we do every day.”

Both Zucker and Gollust are divorced.

But the relationship was far from a secret, with former NBC “Today” host Katie Couric raising questions about their association in her most recent memoir, and it was revealed the two families had apartments in the same building.

So CNN named an interim leadership team made up of three veteran executives until WarnerMedia completes its deal to merge with Discover Inc., a landmark $34 billion merger that is expected to close later this year.

Zucker, 56, who also served as chairman of WarnerMedia’s news and sports divisions, was expected to have a larger role in the combined company before his nine-year run at CNN suddenly ended.

Zucker’s resignation shook up the troops, with Jason Kilar, CEO of WarnerMedia, getting an earful during a meeting at CNN’s Washington bureau hours after the Wednesday announcement that Zucker was gone.

Many expressed fear for the outlet’s future and frustration and anger that Zucker – who over nine years led the network to its most successful business years and gave it a more aggressive personality – was abruptly removed.

The Pandemic

--Omicron cases were spreading ahead of the Winter Olympics in Beijing, and it was beginning to impact the athletes.

--The BA.2 sub-variant of Omicron is spreading rapidly in South Africa and may cause a second surge of infections in the current wave, one of the country’s top scientists said this week.

--But France’s health minister, Olivier Veran, said the “worst is behind us,” adding that the rate of hospitalizations is peaking.

France’s vaccine pass could be phased out before July if the current infection trends continue, he said.

Indeed, there is growing optimism across the pond.  Hans Kluge, WHO regional director for Europe, said the continent could soon enter a “cease-fire” and a “long period of tranquility” because of widespread vaccinations and a lower risk of severe disease from Omicron.

--And here at home, new cases of Covid are falling in 49 of 50 states, even as the nation’s death toll is rising by 2,000 a day and at some point is going to hit 1 million.

But new cases have tanked by almost a half-million since mid-January, with the number of Americans in the hospital with Covid-19 falling 15% over that period.

In New Jersey, hospitalizations have been plummeting, from an Omicron-wave peak of 6,089 on Jan. 11, to 2,409 as of Thursday.

But we did have reported deaths of 115 on Tuesday, 107 on Wednesday, and 111 on Thursday.  That’s a lot.

Covid-19 death tolls, as of early tonight….

World…5,743,098
USA…924,530
Brazil…631,069
India…501,143
Russia…334,039
Mexico…308,141
Peru…206,406
UK…157,984
Italy…148,167
Indonesia…144,453
Colombia…135,282
Iran…132,681
France…132,207
Argentina…122,439
Germany…119,234
Poland…106,306
Ukraine…100,983
South Africa…95,766
Spain…94,235
Turkey…88,312
Romania…60,540
Philippines…54,214
Hungary…41,741
Chile…39,867
Vietnam…38,147
Czechia…37,363
Ecuador…34,572
Canada…34,538
Bulgaria…33,688
Malaysia…32,011
Pakistan…29,420
Belgium…29,185
Bangladesh…28,524
Tunisia…26,548
Iraq…24,476
Greece…23,927
Egypt…22,819
Thailand…22,253
Netherlands…21,313
Bolivia…21,073
Portugal…20,127

[Source: worldometers.info]

U.S. daily death tolls…Mon. N/A; Tues. 3,149; Wed. 2,990; Thurs. 2,376; Fri. 2,619.

Covid Bytes

--U.S. regulators urged drugmaker Pfizer to apply for emergency authorization for a two-dose regimen of its Covid-19 vaccine for children 6 months to 5 years old while awaiting data on a three-dose course, aiming to clear the way for the shots as soon as late February.

Pfizer then submitted its application on Tuesday.

Early Pfizer data has shown the vaccine is safe and produces an immune response.  But last year Pfizer announced the two-dose shot proved to be less effective at preventing Covid-19 in kids ages 2-5, and regulators encouraged the company to add a third dose to the study on the belief that another dose would boost the vaccine’s effectiveness much like booster doses do in adults.

--Moderna announced Monday that the FDA granted full approval to its Covid-19 vaccine, a shot that’s been given to tens of millions of Americans since its emergency authorization over a year ago.

The decision was bolstered by real-world evidence from the more than 200 million doses administered in the U.S. since the FDA cleared the shot in December 2020.  The FDA granted full approval of Pfizer’s vaccine last August.

63% of the U.S. population is now fully vaccinated, more than 211 million Americans, with 86 million having received a booster dose.

In the U.S., Moderna is used only by adults.  The FDA delayed deciding whether to clear the shots for 12- to 17-year-olds as it examined a rare risk of heart inflammation seen mostly in young men and teen boys.

Johnson & Johnson has not yet applied for full approval of its Covid-19 vaccine.

--Suspected reinfections account for around 10% of England’s Covid-19 cases so far this year, according to a Reuters analysis.

--South Korea reported a record daily increase on Friday (27,443), though deaths remain low (24).

--Thousands have been protesting vaccine mandates in Canada’s capital of Ottawa this week, mostly truckers, who call the vaccine dangerous. There had been fears the long-planned protests would turn violent but it started out mostly peaceful...that is until the past day or so, with protesters smashing windows, threatening reporters and health care workers and abusing racial minorities.

Ottawa police now vow to crack down on what they call an “increasingly dangerous” situation that has shut down the center of the city.  Hundreds more truckers plan to enter the city this weekend and it has become a highly volatile situation. 

Donald Trump is making things even worse.  And now the protests are slated to spread in Quebec City and Toronto.

About 90% of Canada’s cross-border truckers and 77% of the population have had two Covid vaccination shots. 

Prime Minister Trudeau had announced a vaccine mandate for federal workers on the eve of the October election, then last month Canada and the United States imposed one for cross-border truckers.

Foreign Affairs

Russia/Ukraine: With Vladimir Putin in Beijing today for talks with Chinese President Xi Jinping, as Xi opens the Winter Olympics, we had some of the following developments.

The two proclaimed a deep strategic alliance to balance what they portrayed as the malign global influence of the United States.

In a joint statement, the two countries affirmed that their new relationship was superior to any political or military alliance of the Cold War era.

“Friendship between the two States has no limits, there are no ‘forbidden’ areas of cooperation,” they declared, announcing plans to work together in a host of areas including space, climate change, artificial intelligence and control of the Internet.  The agreement and its symbolic timing – at a China-hosted Olympics that the United States has subjected to a diplomatic boycott – marked the strongest evidence yet of how the two giant neighbors are cementing their relationship at a time of deep tensions in their relations with Washington.

Each backed the other on key points at the heart of those tensions: Russia voiced its support for China’s stance that Taiwan is an inalienable part of China, and opposition to any form of independence for the island.  Moscow and Beijing also voiced their opposition to the AUKUS alliance between Australia, Britain and the United States, saying it increased the danger of an arms race in the region.

China also joined Russia in calling for an end to NATO enlargement and supported its demand for security guarantees from the West – issues at the heart of Moscow’s confrontation with the U.S. and its allies over Ukraine.

The two countries expressed concern about “the advancement of U.S. plans to develop global missile defense and deploy its elements in various regions of the world, combined with capacity building of high-precision non-nuclear weapons for disarming strikes and other strategic objectives.”

Elsewhere, without naming Washington, they criticized attempts by “certain states” to establish global hegemony, fan confrontation and impose their own standards of democracy.

Dmitri Trenin of the Carnegie Moscow Center, one of my favorite analysts, said the statement marked an important evolution in ties and “takes Sino-Russian entente to the level of a common front to push back against U.S. pressure on Russia and China in Europe, Asia and globally.”

Putin and Xi also agreed to a number of trade issue, including new gas and oil supply deals with Beijing via Russian state energy giants Gazprom and Rosneft; part of Putin’s drive to diversify Russian energy exports away from the West.

Separately, Russia’s Foreign Ministry is still studying the U.S. response to Moscow’s security demands and will brief President Putin once it has done so, Interfax news agency reported today. 

And Russian Foreign Minister Sergei Lavrov dismissed as “nonsense” allegations by the United States that Moscow was preparing a fake video as a pretext for starting a war in Ukraine, Russia’s RIA news agency reported.

U.S. intelligence agencies believe Russia has formed a plan to use a fabricated video showing the graphic aftermath of an explosion targeting Russian people as a pretext for an invasion.

Lithuanian Prime Minister Ingrida Simonyte said Russia’s recent deployment of troops to Belarus is of “great concern” to the neighboring Baltic State.

“Russian troop deployment in Belarus for so-called exercises is a great concern to us, we must be ready to react at the European Union level,” Simonyte told a news conference.  “We must send a message to Russia that the price for further aggression would be very high,” she said.

Earlier in the week, Russia condemned a U.S. decision to send extra troops to Europe to support its NATO allies, calling it a “destructive” step.

The Pentagon said 2,000 troops would be sent from North Carolina (Fort Bragg) to Poland and Germany, and a further 1,000 already in Germany would go to Romania.

Editorial / Wall Street Journal…in support of the decision to send the troops…

“The move has aroused fears of a U.S. war with Russia, but the goal here is deterrence to prevent a war. A show of conventional force – combined with the threat of sanctions – is intended to reassure front-line NATO allies and avoid a broader conflict with Russia.  This is necessary given that Vladimir Putin wants control over far more than Ukraine.

“On this score it’s worth addressing the arguments by Sen. Josh Hawley, who is typical of some on the right who want the U.S. to appease Mr. Putin. In a Feb. 1 letter to Secretary of State Antony Blinken, the Republican calls on the White House to withdraw support for Ukraine’s accession to NATO.  There are reasonable disagreements about the merits of Kyiv joining the alliance – which wouldn’t happen for years anyway – but now would be an especially bad time to rule it out.

“Mr. Putin is demanding that NATO halt expansion and roll back deployments in Central and Eastern Europe, which he believes Russia should dominate.  But the alliance and its aspiring members have always decided who joins, not the Kremlin.  Giving Mr. Putin veto power would show revanchist regimes that the mere threat of war can get the West to bend.

“The Senator rightly calls out Europe for not spending enough on its own defense. We’ve been making that point for years, and Germany is a particular embarrassment. But President Trump made progress in coaxing Europe to do more, and Europe and Canada increased overall defense spending six years in a row through 2020.

“Much of Europe has also taken the current crisis seriously. France has said it will send several hundred soldiers to Romania. Denmark, Spain and the Netherlands announced last month that they would send ships and fighter jets eastward. The U.K. and other NATO members have provided weapons to Ukraine, which Mr. Hawley says he supports.

“But Mr. Hawley writes that deploying more American forces to Europe ‘can only detract from the U.S. military’s ability to ready and modernize forces to deter China in the Indo-Pacific.’ China does pose a greater long-term threat than Russia and will require rebalancing American resources.  But the Russian military remains formidable and its nuclear arsenal more so.  Beijing isn’t ready to invade Taiwan within days as Russia now is with Ukraine.

“Russia and China have been deepening cooperation, as the world saw at the United Nations Security Council on Monday. The idea that Mr. Putin can somehow be coaxed into helping the West contain China is a fantasy.  He would pocket concessions on Ukraine and continue to threaten American interests in Europe while working with China to undermine U.S. interests around the world.  After swallowing Ukraine, Russia would also be that much more powerful and closer to NATO’s eastern front.

“Supporters of Mr. Biden’s retreat from Afghanistan adopted the mantra ‘good strategy, bad execution’ when chaos followed.  In reality, abandoning a modest commitment was bad strategy and an awful precedent that has encouraged bad actors like Mr. Putin.  Doing the same in Europe would be even greater folly.”

Finally, we had this exchange between “Meet the Press” anchor Chuck Todd and Republican Sen. Rob Portman (Ohio) on the importance of Ukraine.

Chuck Todd: I got to play you a clip here from [Fox News host] Tucker Carlson which has been leading more and more Republicans – rank-and-file Republicans to question what we’re doing with Russia and Ukraine.  Here’s what he said.

Tucker Carlson: At this point, NATO exists primarily to torment Vladimir Putin, who whatever his many faults, has no intention of invading Western Europe.  Vladimir Putin does not want Belgium, he just wants to keep his western border secure.

Chuck Todd: Are you worried that there is a movement in the Republican Party that has become pro-Putin?

Sen. Rob Portman: Well, I wouldn’t call it a movement, but I think we’ve got to be sure we’re understanding what’s going on here.  The Ukrainians are not asking for American troops to come to Ukraine, and I’ve gotten a number of phone calls from some of these cable news shows saying, you know, “We’ve got to keep our troops out of there.”  They’re not asking for our troops, nor is anybody talking about that.  We are talking about strengthening the countries around the region who are looking for more help, NATO countries like the Baltics, like Poland.  Second, again, this is about the fight for freedom. And this is a country that has decided that they want to be like us, they want to be a democracy.  They want to respect the rule of law, they want to have a free enterprise system that’s strong and vibrant. This has all happened in the last eight years, and they have turned to the EU, and turned to the United States, and said, “We want to be part of the West.” And by the way, every year, Chuck, it’s become more and more evident that that’s where the people of Ukraine are.  Which is, I think, one reason why Vladimir Putin is moving now because he sees it falling away toward the West.  America always stands for freedom. You know, we are the country that believes that people’s free will ought to be respected, that sovereignty matters, that the dignity of the Ukrainian people matters, and this is what they want.  So their territorial integrity is at risk right now, and it’s appropriate that the free world stand by them.

China: The threat to the West from the Chinese government is “more brazen” and damaging than ever before, FBI Director Christopher Wray said on Monday night in accusing Beijing of stealing American ideas and innovation and launching massive hacking operations.

The speech at the Reagan Presidential Library amounted to a stinging rebuke of the Chinese government just days before it hosts the Olympics.  It made clear that even as American foreign policy remains consumed by Russia-Ukraine tensions, the U.S. continues to regard China as its biggest threat to long-term economic security.

“When we tally up what we see in our investigations, over 2,000 of which are focused on the Chinese government trying to steal our information or technology, there’s just no country that presents a broader threat to our ideas, innovation, and economic security than China,” Wray said.

The FBI is opening new cases to counter Chinese intelligence operations every 12 hours or so, Wray said, with Chinese government hackers pilfering more personal and corporate data than all other countries combined.

“The harm from the Chinese government’s economic espionage isn’t just that its companies pull ahead based on illegally got technology. While they pull ahead, they push our companies and workers behind,” Wray said.

“That harm – company failures, job losses – has been building for a decade to the crush we feel today.  It’s harm felt across the country, by workers in a whole range of industries.”

The United Nations and China have been accused of fabricating a “mutually convenient stalemate” after its top human rights body confirmed it would not publish a report on alleged abuses in the Chinese region of Xinjiang before the Olympics.

The UN’s Office of the High Commissioner for Human Rights said there was still no timeline to release its first ever report on the region, which has been in the works for three years and is believed to have been ready for publication for much of that time.

The two sides have been locked in years of negotiations over an inspection of conditions in Xinjiang by human rights chief Michelle Bachelet.

The United States had pressured the UN to push out the report before the opening ceremony on Friday, which will be attended by Secretary General Guterres.

Bachelet has been negotiating with Beijing since September 2018 for a visit to Xinjiang, where some 1 million Uygurs are alleged to have been held in mass detention camps.

Meanwhile, according to a senior Chinese foreign policy adviser, the risk of an accidental military conflict between China and the United States is high.

Wang Jisi, president of the Institute of International and Strategic Studies at Peking University, said in an interview this week that he was neither optimistic nor pessimistic about U.S.-China relations this year but there was a risk of accidental conflict.

“(There) is a possibility of a misfire, for example, over the South China Sea and Taiwan. The two countries’ militaries, such as their planes and warships, are now very close to each other.  It might break out into a bigger war if there was a mishap.”

North Korea: Pyongyang confirmed Monday it test-launched an intermediate-range ballistic missile capable of reaching the U.S. territory of Guam, the North’s most significant weapon launch in years, as Washington plans steps to show its commitment to its Asian allies.

This isn’t the launch I’ve felt the North will conduct, though maybe not until after the Olympics, of a long-range intercontinental ballistic missile capable of hitting the U.S. mainland.  That certainly seems to be coming.  It will land far short, but the point will have been made.

The Hwasong-12 intermediate-range missile has an estimated range of 2,800 miles, which puts Guam and the far western tip of Alaska’s Aleutian Islands chain within reach.  By comparison, the largest, most powerful missile North Korea has tested to date is the Hwasong-15 ICBM, with an estimated range of 5,300 to 8,000 miles, threatening anywhere in the U.S.  The Hwasong-15 has been tested once, in November 2017.

Iran: The Biden administration expects a restored nuclear deal with Iran would leave them with a capability to amass enough nuclear fuel for a bomb in significantly less than a year, a shorter time frame than the one that underpinned the 2015 agreement, U.S. officials said this week.

The administration has concluded, according to various reports, that Iran’s nuclear program had advanced too far to re-create the roughly 12-month co-called breakout period of the 2015 pact.

But the U.S. is pushing ahead with an agreement, understanding that it needs to be reached soon, to leave the U.S. and its allies with enough time to respond to an Iranian nuclear buildup.

Afghanistan: The United Nations has received “credible allegations” that more than 100 former members of the Afghan government, its security forces and those who worked with international troops have been killed since the Taliban took over the country Aug. 15, Secretary-General Antonio Guterres says.

In a report obtained by the Associated Press, Guterres said “more than two-thirds” of the victims were alleged to result from extrajudicial killings by the Taliban or its affiliates, despite the Taliban’s announcement of ‘general amnesties’ for those affiliated with the former government and U.S.-led coalition forces.

Random Musings

--Presidential approval ratings….

Gallup: 40% approve of President Biden’s job performance, 56% disapprove; 33% of independents approve (Jan. 3-16).

Rasmussen: 43% approve, 55% disapprove (Feb. 4).

--Trump World….

On Saturday, at a rally in Conroe, Texas, Donald Trump unleashed his 2024 campaign strategy, and it was another temper tantrum on a stolen election and how those attempting to prosecute him need to be taken down.

For the first time, Trump dangled pardons before people convicted of crimes in the Jan. 6 insurrection.

“If I run and I win, we will treat those people from Jan. 6 fairly,” adding: “And if it requires pardons, we will give them pardons, because they are being treated so unfairly.”

Trump, facing probes over Jan. 6 in Georgia and possibly from the U.S. Justice Department, is committing a form of obstruction of justice in full view, as the future possibility of a pardon gives an incentive to not testify against him.

And in a sign he is increasingly worried about the overlapping probes, including the Fulton County grand jury investigation into Georgia election tampering, and unrelated cases in New York on the Trump family business, he explicitly called for mob violence if charges are lodged in these cases.

“If these radical, vicious, racist prosecutors do anything wrong or illegal,” Trump said, “I hope we are going to have in this country the biggest protest we have ever had…in Washington, D.C., in New York, in Atlanta and elsewhere because our country and our elections are corrupt.”

In a statement on Tuesday, Trump said the committee investigating his role in sparking the Jan. 6 insurrection should instead probe “why Mike Pence did not send back the votes for recertification or approval.”  In another statement on Sunday, he blasted Pence by falsely claiming that “he could have overturned the Election!”

Pence told Fox News last month that he and Trump hadn’t spoken since last summer.  Then today, Pence fired back.

Editorial / Star-Ledger (N.J.)

“Donald Trump held a rally Saturday to unleash his 2024 campaign strategy, which can be distilled to this: He is unabashedly pro-coup, and he is ready to take another crack at destroying Western democracy.

“His speech in Texas was another noxious stew of white grievance and cultish odium, but for the first time, the former president suggested that he will pardon the Capitol rioters if he returns to ‘the beautiful, beautiful house that happens to be white.’

“It isn’t often that a former U.S. president attempts to undermine a congressional inquiry and a federal investigation by pledging his support for criminals – including 11 charged with sedition – and offers them impunity for advancing his political aims with a violent force that resulted in five dead cops and a democracy teetering.

“But Trump’s 80-minute temper tantrum is also a reminder that ignoring him is no longer an option, and that this smoldering authoritarian crusade – fueled by lies about a stolen election – will go on for as long as it takes for him to be brought to justice.

“That is clearly what worries him most, and as he hears bloodhounds in the distance, Trump is saying all the quiet stuff out loud again: If anyone tries to prosecute him for inciting a coup, he will try to incite a bigger one….

“And this call to arms was different: He called prosecutors investigating his actions ‘racist’ and ‘mentally sick’ and accused them of ‘prosecutorial misconduct at the highest level.’  It just so happens that the three officials leading the major cases against him…happen to be Black. [Ed. four, when you include Rep. Bennie Thompson of Mississippi, chair of the House select committee.]

“It was an appeal to white solidarity, a racially motivated call to attack the rule of law: ‘In reality, they’re not after me, they’re after you,’ Trump said, as he looked out on an audience dotted with Confederate flags.

“And the weekend was still humming when Trump issued a statement in which he admitted that he asked VP Mike Pence to overturn the 2020 election.

“Rep. Liz Cheney, the vice chair of the House January 6th Committee, summarizes the state of Trump: ‘He acknowledges that he was attempting to overthrow the election, he threatens prosecutors, he uses the same language that he knows caused the violence, and I think that it tells us he would clearly do this all over again if he were given the chance,’ she said.

“ ‘It’s very important for the American people to recognize what he says of his intentions, what his intentions were for January 6, and what he would do again if he got anywhere close to power.’

“If Trump’s rhetoric sounds like usual fire-ants-in-the-brain stuff, consider who is listening: A Republican candidate for state senate in Michigan told his followers that they should show up at the polls with their guns, and if he doesn’t win the election, to ‘be prepared to lock and load…make sure justice prevails.’  At the same gathering, a Republican candidate for governor told voters that ‘if you see something you don’t like happening with the machines, unplug it from the wall.’

“That’s the state of the American democracy: It’s under the gun, ready to be unplugged on a whim.  It’s being orchestrated by an increasingly unmoored man with a megaphone and a captive audience, spewing a torrent of lies.  Tempting as it may be, this is not the time to stop paying attention.”

Trump revealed on Monday that his political accounts had banked $122 million – a show of financial force as some polls show his support softening among Republicans.

He will also headline the annual Conservative Political Action Conference due to take place in Orlando later this month.

Other scheduled speakers at CPAC include Florida Gov. Ron DeSantis, Sen. Marco Rubio, former Secretary of State Mike Pompeo and Rep. Jim Jordan.

So it will be interesting to see how the Trump / DeSantis dynamic plays out.  The governor has said he regrets not having “been much louder” in opposition when then-President Trump called for widespread lockdowns in the early days of the pandemic.

--Donald Trump went after Republican Sen. Lindsey Graham, after Graham said he didn’t support the idea of pardoning those who have been convicted of crimes related to the Jan. 6 assault on the Capitol.

“Well, Lindsey Graham is wrong,” Trump said in an interview with Newsmax. “I mean, Lindsey is a nice guy, but he’s a RINO.  Lindsey’s wrong.”

Trump suggested that “many” of the rioters were innocent “and in many cases they’re patriots.”

“What they’ve done to them, compared to what they’ve done to the other side?  You know, you have to have equal justice.  So I would absolutely be prepared – Lindsey Graham doesn’t know what the hell he’s talking about if he said that because you have to have equal justice.  It’s very, very unfair what’s happened to this group of people.”

--The aforementioned Rep. Liz Cheney and fellow Republican Rep. Adam Kinzinger received a censure from the Republican National Committee for serving on the Jan. 6 select committee.

Cheney tweeted in response: “The leaders of the Republican Party have made themselves willing hostages to a man who admits he tried to overturn a presidential election and suggests he would pardon Jan. 6 defendants, some of whom have been charged with seditious conspiracy.”

“I’m a constitutional conservative and I do not recognize those in my party who have abandoned the Constitution to embrace Donald Trump,” she added.  “History will be their judge. I will never stop fighting for our constitutional republic.  No matter what.”

Friday, at its winter meeting in Salt Lake City, the RNC officially declared the Jan. 6 attack on the Capitol and events that led to it “legitimate political discourse.”

Specifically, Cheney and Kinzinger were censured for taking part in the House investigation, the RNC saying they were participating in the “persecution of ordinary citizens engaged in legitimate political discourse.”

This is nuts.  The party passed the resolution without discussion and almost without dissent.

Sen. Mitt Romney (R-Utah), wrote on Twitter, “Shame falls on a party that would censure persons of conscience, who seek truth in the face of vitriol. Honor attaches to Liz Cheney and Adam Kinzinger for seeking truth even when doing so comes at great personal cost.”

Romney didn’t mention that the party chair who presided over the meeting and orchestrated the censure resolution, Ronna McDaniel, is his niece.

--Shockingly, or maybe not shockingly given the network, at a taping of Fox’s “The Masked Singer” last week, Rudy Giuliani was unmasked, sparking judges Ken Jeong and Robin Thicke to walk off the set in protest, according to multiple reports.

The show recently began filming its seventh season, but Giuliani was the first contestant eliminated, Deadline reported.

Fox did not comment.  The episode will reportedly air in March.

--John Podhoretz / New York Post

“Decades ago, when the performer Caryn Johnson decided her name wasn’t interesting enough and dubbed herself Whoopi Goldberg instead, it wasn’t because Goldberg signified ‘whiteness.’

“Through the years, she’s offered many weird and contradictory explanations for her change in moniker, but it might have seemed at the time that a black person sporting the surname Goldberg would be especially eye-catching and noteworthy (especially in conjunction with that wild first name) because it would represent the proud ownership of her outsider status. She wasn’t trying to blend in. She was doubling down – on race.

“Note, please, that Caryn Johnson didn’t become Whoopi Rockefeller.  No. She knew that by becoming Whoopi Goldberg, she would be choosing to flaunt in every way possible the fact that she was a minority person in a majority-white country.  The ‘Goldberg’ was the cherry on top.

“You see, in the early 1980s, when Johnson became Goldberg, it was still commonly understood that Jews were a people apart. We were apart due to facts of history, due to discrimination and hatred based on our very being and – for those who practiced the faith rigorously – due to the way we ate, dressed, celebrated the Sabbath and prayed.

“And we were apart because we were the only people in history to be targeted for mass extermination by one of the most powerful countries in the history of the Earth – something that had happened in the living memory of half the people on the planet at the time.

“Flash forward to 2022, when Whoopi Goldberg says offhandedly on ‘The View’ that the Holocaust was a white-on-white crime.  ‘The Holocaust is not about race,’ she says.  ‘These are two white groups of people.’

“Forget that Hitler called the Germans a ‘master race’ and that according to classic Nazi doctrine, Jews constituted a ‘subhuman Asiatic race.’  You see, Whoopi told Stephen Colbert as she tried to clean up the mess she had made early in the day, ‘I think of race as being something I can see.’

“That’s nice that she thinks about it that way.  But it’s monumentally ignorant, stupid and almost jaw-droppingly offensive.  Six million people literally died because that wasn’t how the people who killed them thought about race.  And as for the ‘something Whoopi can see’ doctrine, let’s remember that Hitler’s goal was the extermination of all Jews on the planet – and then as now, there are millions of Sephardic Jews with skin hues that would not classify them as ‘white.’  Even Whoopi wouldn’t ‘see’ them that way.

“No, what Whoopi clearly meant was that the Jews she knows have light-colored skin, and the Jews she has seen in movies about the Holocaust have light-colored skin.

“Therefore they were ‘white.’  And since racism only involves black and white, they were also ‘white’ to the Nazis, and the genocide was a white-on-white genocide.

“Back when Johnson became Goldberg, Jews weren’t considered ‘white,’ exactly.  And they weren’t not-white either.  The point here is that such a classification system is meaningless when it comes to Jews, no matter the color of their skin.

“Ascribing commonalities between Jews and non-Jews is historically nonsensical, considering that Jews make up an astonishingly homogeneous and tiny tribe of people who survived nearly two millennia on this Earth without a homeland to call their own. That was understood when Johnson became Goldberg.

“But it’s two generations since then.  It’s obvious that a 2022 version of young Caryn Johnson would not choose the name Goldberg to gain that extra frisson of non-white pride.

“In fact, Whoopi Goldberg should just drop the Goldberg now.  There are dozens of survivors of the Holocaust who bear the name – and an untold number who died in the Shoah with it.  Caryn Johnson stains them both.”

ABC News suspended Whoopi for two weeks.

--The number of U.S. traffic deaths surged in the first nine months of 2021 to 31,720, the government reported Tuesday, keeping up a record pace of increased dangerous driving during the pandemic.

The estimated number of people dying in motor vehicle crashes from January to September 2021 was 12% higher than the same period in 2020.

The tally of 31,720 was the highest nine-month figure since 2006.

Traffic deaths rose 8% in 2020, even as Americans drove fewer miles during pandemic.

--Lawyer Michael Avenatti, who rose to fame for taking on then-President Trump before a slew of criminal charges ended his legal career, was convicted on Friday of defrauding a former client, porn star Stormy Daniels.

Avenatti, who faces up to 22 years in prison, had pleaded not guilty to charges he embezzled nearly $300,000 in book proceeds intended for Daniels.  He represented himself in the two-week trial.

--Finally, I was out-of-pocket for much of Tuesday and Wednesday, taking a long drive to Olean, New York, to see a St. Bonaventure University basketball game.  I had told my Bar Chat readers I’d be doing this and thankfully the weather was OK because I’m too old for mountain driving, which much of this trip is.

I also can’t help but note how impressed I was with the St. Bonaventure students, with whom I had numerous interactions in my time on campus.  Just real good kids.  It gives me some hope for the future. 

---

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

God bless America.

---

Gold $1808
Oil $91.93

Returns for the week 1/31-2/4

Dow Jones  +1.0%  [35089]
S&P 500  +1.5%  [4500]
S&P MidCap  +1.7%
Russell 2000  +1.7%
Nasdaq  +2.4%  [14098]

Returns for the period 1/1/22-2/4/22

Dow Jones  -3.4%
S&P 500  -5.6%
S&P MidCap  -7.7%
Russell 2000  -10.8%
Nasdaq  -9.9%

Bulls 35.7
Bears 25.0

Hang in there.

Brian Trumbore

 

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