Week in Review

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Week in Review

11/25/2023

For the week 11/20-11/24

[Posted 3:00 PM ET, Friday]

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Edition 1,284

There are some in Israel, and elsewhere, who have a lot to be thankful for today, with the first phase of the hostage/prisoner release deal between the Israeli government and Hamas completed this evening, local time.  It’s impossible to comprehend the pain the families in Israel, and we’re learning, Thailand, have been going through and we pray the next few days, for starters, go smoothly.

But this is also a classic case of ‘wait 24 hours,’ take it one day at a time.

We also know that the hostage deal cannot undo the damage already done, including to the United States.  I urge you to read below the blistering comments of Jordan’s foreign minister, who says in part, don’t look for the Arab World to pick up the pieces in Gaza whenever the war is over.

Recently, the entire front page of a Lebanese newspaper displayed President Biden’s face superimposed over pictures of dead Palestinian children, under a headline declaring “Western genocide.”

In Egypt, Starbucks and McDonald’s outlets lie empty thanks to a boycott of U.S. brands.

Many in the region have adopted the view this is America’s war…Israel just happens to be doing the fighting, after 1,200 of its citizens were slaughtered on Oct. 7.

Just a fact.  Look at the tension across America.  A recent NBC News poll found 70 percent of voters ages 18 to 34 disapprove of President Biden’s handling of the war.

The United States must stand strong, not just in its support for Israel, but critically for Ukraine.

Ukraine’s President Zelensky is rightfully concerned with the growing opposition in Congress for more aid to his nation, while a 50 billion euro package from the European Union has not yet been approved and is so far opposed by Hungary.

These are critical months for the U.S. and Europe, as well as Israel.  How will the West respond? 

In the meantime, pray for the children of Israel and Gaza, who never deserved the horror delivered to them.

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Israel / Gaza War…day by day….

--An estimated 30,000 people marched on the streets of Jerusalem last Saturday to demand the government do more to address the hostage crisis – as Prime Minister Benjamin Netanyahu said all members of the terror group are “dead men walking.”

Opposition leader Yair Lapid was spotted joining the protest.  He has been critical of Netanyahu’s approach to the conflict, and even called on him to step down “immediately.”

There was talk Hamas was prepared to release 70 hostages in exchange for a five-day truce.

--Israel warned residents of Gaza’s largest refugee camp, Jabalia, and a nearby coastal camp to evacuate, while the military said on Sunday it was “expanding its operational activities in additional neighborhoods” of Gaza.

A Hamas health official said more than 80 people were killed in twin strikes on Jabalia on Saturday, including on a UN school sheltering displaced people.

--On Sunday, Qatari prime minister Sheikh Mohammed Bin Abdulrahman al-Thani told a press conference in Doha that the main obstacles to a deal were now “very minor,” with mainly “practical and logistical” issues remaining.

A White House official said the “very complicated, very sensitive” negotiations were making progress.

--Jordan’s King Abdullah said on Sunday the international community should push for an immediate ceasefire in Gaza to stop a humanitarian catastrophe caused by what he termed Israel’s “ugly war against civilians.”

Abdullah said Israel was not acting in self-defense, as it maintains, by “indiscriminate strikes” that killed thousands of civilians risking a wider conflict that would fuel radicalism for years to come.

Jordan’s Foreign Minister Ayman Safadi offered blistering criticism Saturday of Israel’s war on Hamas, describing it as “blatant aggression” against Palestinian civilians that threatens to engulf the wider Middle East.

Safadi alleged Israel was committing “war crimes” by besieging the Gaza Strip and cutting off food, medicine and fuel shipments.  His comments, and that of King Abdullah, show how strained relations between Israel and Jordan – which reached a peace deal in 1994 – have become.

“All of us have to speak loud and clear about the catastrophe that the Israel war is bringing, not just on Gaza, but on the region in general,” Safadi said at a summit in Bahrain.  “This is not a time for mincing words. This is a time to state facts as they are.”

He added: “This is not self-defense. This is blatant aggression, the victims of which are innocent Palestinians.”

At the summit, the European Union’s top diplomat, Josep Borrell, said: “It’s quite understandable that without the freedom of the hostages, nothing can be solved.”

Safadi then said: “Israel is taking 2.3 million Palestinians hostage.”

After the war, Safadi said Arab countries also would not “come and clean the mess after Israel.”

“Let me be very clear.  I know speaking on behalf of Jordan but having discussed this issue with many, with almost all our brethren, there’ll be no Arab troops going to Gaza.  None. We’re not going to be seen as the enemy,” he said.  “How could anybody talk about the future of Gaza when we do not know what kind of Gaza will be left once this aggression ends?”

--Heavy fighting erupted around a hospital in northern Gaza where thousands of patients and displaced people have been sheltering for weeks, as Israeli forces focus on medical facilities that they say Hamas militants are using for cover.

A shell struck the second floor of the Indonesian Hospital, killing at least 12 people, according to the Hamas-run health ministry.  An estimated 700 were there.

Israel’s northern advance came a day after the World Health Organization evacuated 31 premature babies from the Al-Shifa Hospital.  At least 28 were then transported to Egypt on Monday.

--Israel released evidence it claims proves “Hamas is waging terror from hospitals,” showing apparent tunnels under Al-Shifa.  In a statement on Sunday, the IDF said it found a 55-meter-long (180-foot), 10-meter deep (32-foot) tunnel under Gaza’s largest medical facility.

The arched concrete passage ends in what appears to be a “blast-proof door and a firing hole.”

--The Palestinian health ministry upped the death toll to 13,300 civilians killed and over 30,000 injured in Gaza since the conflict with Israel started on Oct. 7.  The ministry claims at least 5,600 of the dead are children and 3,500 are women.  Another 6,500 have been reported as missing, most lost in the rubble, according to the Hamas-run institution.

--So then early Wednesday morning local time, Israel’s cabinet, after a marathon session, approved a ceasefire deal with Hamas that would bring a temporary halt to the war.

Hamas will release 50 hostages held in Gaza in exchange for a four-day pause in fighting.

The agreement should also see 150 Palestinian women and children held in Israeli jails released and an increase in humanitarian aid allowed into Gaza.

The first phase would reportedly see 30 children, eight mothers and 12 other women released over four days.

The deal was to go into effect 10:00 a.m. Thursday, local time.

But then this was changed to no sooner than Friday.

Israel will allow additional deliveries of aid including fuel, into Gaza via the border crossing with Egypt.

The Israeli government vowed to complete its war to eliminate Hamas and return the rest of the more than 200 hostages who Hamas gunmen kidnapped Oct. 7.

A statement from Prime Minister Netanyahu’s office announced that 50 women and children would be released over four days, during which time “a pause in the fighting will be held.”

It also offered Hamas an incentive to release more, saying: “The release of every additional 10 hostages will result in one additional day in the pause.”

That clause is important for the hostages’ families, some of whom have said that they did not want to see a partial deal.

A statement from Qatar’s foreign ministry described the talks that produced the agreement as a mediation by Egypt, the U.S. and Qatar for a “humanitarian pause.”

Before Wednesday morning’s cabinet vote, Netanyahu said Israel would resume its offensive against Hamas after the ceasefire expires.

Thursday, a spokesman for Qatar’s foreign ministry told reporters that the pause in fighting would begin at 7:00 a.m. Gaza time on Friday.  A first group of 13 hostages would be released starting at 4:00 p.m. along with an undisclosed number of Palestinian prisoners, he said, calling it “the first glimmer of light at the end of the tunnel.”

Each day of the pause Israel and Hamas will receive daily lists of the hostages and prisoners to be released, with Qatar passing them between the two parties.  Majed al-Ansari said everyone set to be freed was alive, adding that hostages from the same family “will be released together.”

--The IDF said Wednesday a fighter jet successfully shot down an incoming cruise missile over the Red Sea, close to the southernmost city of Eilat.  The missile is believed to have been fired by the Iran-backed Houthis in Yemen.

The Houthis have fired several ballistic missiles and drones at Eilat since the beginning of the war, all of which were intercepted or missed their targets.

Thursday morning, a U.S. warship cruising the Red Sea shot down drones fired from Houthi-held territory in Yemen, according to the U.S. Central Command.

--Hezbollah and Hamas militants in southern Lebanon have used rockets, mortars and drones to attack northern Israel.  Israel has responded with airstrikes and artillery fire.  On Monday, Hezbollah said it fired four more-powerful missiles at an Israeli base and an Israeli news outlet showed extensive damage from the apparent attack, which the Israeli military didn’t discuss.

More than 70 Hezbollah fighters and 10 Lebanese civilians have been killed and 10 people, including seven Israeli soldiers, have been killed along the border in the past month, the deadliest surge in violence here since 2006.

If the Israeli invasion of Gaza has taken a high civilian toll, Israeli officials say a war with Hezbollah could be worse. In 2006, Israeli airstrikes killed more than 1,100 people, most of them civilians, according to human-rights groups.  Israeli missiles flattened large sections of Hezbollah-controlled neighborhoods in Beirut, a city with a population greater than the entire Gaza Strip.

An Israeli strike on the village of Beit Yahoun in south Lebanon Wednesday evening killed five Hezbollah fighters, including the son of a senior Hezbollah member, according to Hezbollah and other sources, as reported by Reuters.

That brought the total of Hezbollah fighters to 85.  The conflict on the Israel-Lebanon border is more than just simmering this week.

--Despite talk of a ceasefire, the spokesman for Hamas’ armed-wing called on Thursday for the escalation of the confrontation with Israel on all resistance fronts.

“We call for escalation of the confrontation with the occupation throughout the West Bank and all resistance fronts,” the spokesman said in a video aired by Al Jazeera TV.

--Qatari foreign ministry spokesman Majed Al-Ansari told the Independent newspaper, “We are facing a humanitarian situation that is unparalleled.  Dogs are eating the corpses of dead people on the streets.”

The Hamas-run government now claims 14,500 people have been killed across the Gaza Strip.

Hundreds of aid trucks have begun crossing into Gaza.

--Friday evening, local time, the first 13 Israeli hostages were released, 10 Thais, and a Filipino citizen…24 in all.  Israel released 33 Palestinians from a West Bank prison.  End of phase one.

--President Joe Biden / Op-ed Washington Post

“Today, the world faces an inflection point, where the choices we make – including in the crises in Europe and the Middle East – will determine the direction of our future for generations to come.

“What will our world look like on the other side of these conflicts?

“Will we deny Hamas the ability to carry out pure, unadulterated evil? Will Israelis and Palestinians one day live side by side in peace, with two states for two peoples?

“Will we hold Vladimir Putin accountable for his aggression, so the people of Ukraine can live free and Europe remains an anchor for global peace and security?

“And the overarching question: Will we relentlessly pursue our positive vision for the future, or will we allow those who do not share our values to drag the world to a more dangerous and divided place?

“Both Putin and Hamas are fighting to wipe a neighboring democracy off the map.  And both Putin and Hamas hope to collapse broader regional stability and integration and take advantage of the ensuing disorder. America cannot, and will not, let that happen.  For our own national security interests – and for the good of the entire world.

“The United States is the essential nation. We rally allies and partners to stand up to aggressors and make progress toward a brighter, more peaceful future. The world looks to us to solve the problems of our time. That is the duty of leadership, and America will lead. For if we walk away from the challenges of today, the risk of conflict could spread, and the costs to address them will only rise. We will not let that happen.

“That conviction is at the root of my approach to supporting the people of Ukraine as they continue to defend their freedom against Putin’s brutal war.

“We know from two world wars in the past century that when aggression in Europe goes unanswered, the crisis does not burn itself out.  It draws America in directly.  That’s why our commitment to Ukraine today is an investment in our own security.  It prevents a broader conflict tomorrow….

“We have also seen throughout history how conflicts in the Middle East can unleash consequences around the globe.

“We stand firmly with the Israeli people as they defend themselves against the murderous nihilism of Hamas.  On Oct. 7, Hamas slaughtered 1,200 people, including 35 American citizens, in the worst atrocity committed against the Jewish people in a single day since the Holocaust… And for over a month, the families of more than 200 hostages taken by Hamas, including babies and Americans, have been living in hell, anxiously waiting to discover whether their loved ones are alive or dead….

“And while Israelis are still in shock and suffering the trauma of this attack, Hamas has promised that it will relentlessly try to repeat Oct. 7. It has said very clearly that it will not stop.

“The Palestinian people deserve a state of their own and a future free from Hamas. I, too, am heartbroken by the images out of Gaza and the deaths of many thousands of civilians, including children.  Palestinian children are crying for lost parents.  Parents are writing their child’s name on their hand or leg so they can be identified if the worst happens.  Palestinian nurses and doctors are trying desperately to save every precious life they possibly can, with little to no resources.  Every innocent Palestinian life lost is a tragedy that rips apart families and communities.

“Our goal should not be simply to stop the war for today – it should be to end the war forever, break the cycle of unceasing violence, and build something stronger in Gaza and across the Middle East so that history does not keep repeating itself….

“This much is clear: A two-state solution is the only way to ensure the long-term security of both the Israeli and Palestinian people.  Though right now it may seem like that future has never been further away, this crisis has made it more imperative than ever.

“A two-state solution – two peoples living side by side with equal measures of freedom, opportunity and dignity – is where the road to peace must lead.  Reaching it will take commitments from Israelis and Palestinians, as well as from the United States and our allies and partners. That work must start now….

“As we strive for peace, Gaza and the West Bank should be reunited under a single governance structure, ultimately under a revitalized Palestinian Authority, as we all work toward a two-state solution.  I have been emphatic with Israel’s leaders that extremist violence against Palestinians in the West Bank must stop and that those committing the violence must be held accountable.  The United States is prepared to take our own steps, including issuing visa bans against extremists attacking civilians in the West Bank.

“The international community must commit resources to support the people of Gaza in the immediate aftermath of this crisis, including interim security measures, and establish a reconstruction mechanism to sustainably meet Gaza’s long-term needs. And it is imperative that no terrorist threats ever again emanate from Gaza or the West Bank.

“If we can agree on these first steps, and take them together, we can begin to imagine a different future.  In the months ahead, the United States will redouble our efforts to establish a more peaceful, integrated and prosperous Middle East – a region where a day like Oct. 7 is unthinkable.”

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This Week in Ukraine….

--Russia resumed drone attacks on Kyiv over the weekend, early in the morning Saturday and again on Sunday.  The drones came “in waves, from different directions, at the same time constantly changing the vectors of movement along the route,” a military official in Kyiv wrote on Telegram.

The Ukrainian military claims to have shot down 15 out of 20 Shaheds on Sunday, and 29 of 38 on Saturday.  Several infrastructure facilities were hit outside of Kyiv, but there were no known casualties, Reuters reported.

“I thank all the soldiers of mobile fire groups, the aviation of our air force, and the anti-aircraft missile troops,” President Volodymyr Zelensky said in his nightly address Sunday.  “As winter approaches, there will be more Russian attempts to make the strikes more powerful,” he warned.

--Zelensky also warned Russia may be planning to ignite a war in the Balkans to distract from its ongoing fight with Ukraine.

“Pay attention to the Balkans. Believe me, we are receiving information: Russia has a long plan,” Zelensky told reporters the other day.

“If the countries of the world do nothing now, there will be such an explosion,” he added, explaining additional conflicts would undermine the amount of aid allies could provide his own country.

Zelensky didn’t offer any evidence for his ominous prediction, which comes almost two months after an incident along the border between longtime Balkan foes Kosovo and Serbia which left four people dead.

After the deadly shooting, Serbia briefly began massing troops along its border with Kosovo although there was no further escalation between the two nations.

--Zelensky dismissed the commander of Ukraine’s medical forces and demanded swift changes to his country’s military operations.  Zelensky said soldiers needed a “fundamentally new level” of medical support after paramedics accused their boss of not securing enough first-aid kits.

--Ukrainian forces were engaged in containing increasing Russian attacks on Monday around the shattered eastern town of Bakhmut, military officials said.

The officials said Ukraine’s troops had also achieved some success after crossing to the east bank of the Dnipro River in southern Kherson region.

Russian accounts said Moscow’s forces had beaten back more than 30 Ukrainian attacks in and around Bakhmut in the past week.

In another one of the heavy-conflict areas, the war-ravaged town of Avdiivka in southeastern Ukraine, Russia has suffered “heavy casualties,” British military officials noted, with some estimating a loss of at least 4,000 troops already.

--Russia said on Tuesday that marines, aviation and artillery had scuppered more Ukrainian attempts to gain a foothold on the eastern bank of the Dnipro and on islands at the mouth of the river in southern Ukraine.

[Saturday, Russia claimed to have bombed Ukrainian forces near the river, killing as many as 75 soldiers and destroying four vehicles, the Guardian reported.]

So another case of trying to discern if the truth lies somewhere in between both accounts.

Russia said Ukrainian forces were suffering heavy casualties and losing equipment in unsuccessful attempts to land on islands in the Dnipro.  Crossing the Dnipro leaves Ukrainian units exposed between river and marshland on one side and heavily fortified Russian lines on the other.

--German Defense Minister Boris Pistorius vowed Tuesday to keep supporting Ukraine’s efforts to win the war, pledging further military aid worth $1.4 billion.

The new support is to include additional Iris-T SLM antiaircraft missile systems as well as antitank mines and 155-millimeter artillery shells, the German news agency DPA reported.

“We are talking about 20,000 additional shells,” Pistorius said in a joint news conference with his Ukrainian counterpart, Rustem Umerov, in Kyiv.

--The U.S. fears Iran is preparing to provide Russia with advanced short-range ballistic missiles for its military campaign in Ukraine, U.S. officials said Tuesday.

Iran has already provided Russia with armed drones, guided aerial bombs and artillery shells.

But U.S. concern that the military cooperation between the nations may further expand grew when Iran showed its Ababil and Fateh-110 missiles to Russian Defense Minister Sergei Shoigu when he visited Tehran in September.

“We are therefore concerned that Iran is considering providing Russia with ballistic missiles for use in Ukraine,” a spokesman for the National Security Council said.

The Kremlin declined to comment on the reports Wednesday.

Meanwhile, North Korea is providing artillery shells to Moscow.

--President Zelensky, in an interview with NewsCorp Chair Lachlan Murdoch, Fox News reporter Benjamin Hall, who was wounded in Ukraine, and Sun reporter Jerome Starkey in Kyiv, said Vladimir Putin has launched at least “five or six” plots to kill him, foiled by Ukraine’s intelligence services.

Zelensky insisted morale was strong and “there is no stalemate.”

He admitted his people were tired of “permanent air raids,” tired of being shelled, tired of having their homes destroyed and their loved ones killed.  But he added: “If you ask them are you willing to give up to Russia, our lands? Are you ready to talk to Russians on how to end all this? Are you ready for compromise, personally, with Putin and are you tired of this?

“They will tell you we are not tired. We are ready to stand further.”

Zelensky said Russian special forces parachuted into Kyiv to kill him on the first day of Putin’s invasion.  His bodyguards sealed off his office with makeshift barricades and bits of plywood.  Zelensky and his closest aides were issued rifles and body armor.

But when British and U.S. officials offered to spirit the president out of the capital – amid fears it could fall within hours – he replied with the legendary line: “I need ammo, not a ride.”

Later, as battles raged outside Kyiv, Zelensky walked outside the compound to film a defiant selfie video that rallied Ukraine’s resistance by proving he was still in the capital.

--The death toll in a Russian strike on a hospital in Ukraine’s southern town of Selydove rose to three as rescuers finished clearing rubble a day after the attack on Tuesday.  The attack on the hospital and a coal mine came a week after a missile hit an apartment block in the town.

--Ukraine said on Thursday it wanted its export routes via Poland to be unblocked before it holds talks with Warsaw and the European Commission aimed at ending protests by Polish truckers which are reducing Ukrainian exports.

Two Ukrainian drivers have died and thousands of trucks have been stuck for days in the winter cold as the truckers blocked the roads to three crossings on the Polish-Ukrainian border, a key route for Ukraine’s trade during Russia’s invasion.

The Polish truckers say they are losing out to Ukrainian companies who offer cheaper prices for their services and who are now transporting goods within the European Union, and not just back and forth to Ukraine.

Ukraine has a similar problem with Slovakia.

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Wall Street and the Economy

It was a quiet holiday-shortened week in terms of economic data.  October existing home sales came in less than expected, the lowest annualized rate since 2010, 3.79 million, down 4.1% from the prior month and off 15% year-over-year.

“Prospective home buyers experienced another difficult month due to the persistent lack of housing inventory and the highest mortgage rates in a generation,” said National Association of Realtors Chief Economist Lawrence Yun.  “Multiple offers, however, are still occurring, especially on starter and mid-priced homes, even as price concessions are happening in the upper end of the market.”

The median existing-home sales price increased 3.4% year over year to $391,800, a new all-time high for the month.

October durable goods were worse than expected, down 5.4%, unchanged ex-transportation.

And the October leading economic indicators revealed a 0.8% decline, marking the 18th straight month of negative readings, when normally about six in a row augured recession.  As in this barometer isn’t quite working out, yet.

We also had the minutes from the latest Federal Open Market Committee meeting, Oct. 30-Nov. 1, released Tuesday, which reflected unanimity among members that monetary policy must remain restrictive “for some time” until inflation is clearly moving toward the Fed’s 2% goal.

Officials noted that it was important to balance the risk of tightening policy too much against the danger of doing too little.  With inflation still double the 2% target and the labor market still tight, “most participants” saw the risk of failing to tame inflation as the bigger issue.

Fed officials were noting the impact of the rise in longer term Treasury yields, but this was when the 10-year was in the 4.80% to 5.00% range.  After the meeting, yields began to plummet, 4.57% a few days later and now down to 4.48% at week’s end.

Next week we have more housing data, manufacturing figures for November, and the Fed’s key personal consumption expenditures (PCE) index.

The Atlanta Fed’s GDPNow barometer for fourth-quarter growth is at 2.1%.

Freddie Mac’s 30-year fixed-rate mortgage is down to 7.29% from October’s 7.79% peak, so this is good.

As are gas prices at the pump…now $3.26 for regular, nationwide, down from $3.58 a year ago.

Europe and Asia

We had flash November PMI readings for the eurozone, courtesy of S&P Global and Hamburg Commercial Bank, a composite of 47.1 (50 the dividing line between growth and contraction), with manufacturing output at 44.3, and the service sector 48.2.  More crapola…further contraction.

Germany: mfg. 44.0, services 48.7
France: mfg. 41.0, services 45.3

UK: mfg. 47.9, services 50.5

Dr. Cyrus de la Rubia / Chief Economist at Hamburg Bank:

“The Eurozone economy is stuck in the mud.  Over the last four to five months, the manufacturing and services sectors have both been experiencing a relatively constant contraction pace.  Considering the flash PMI numbers for November in our nowcast model indicates the potential for a second consecutive quarter of shrinking GDP.  This would align with the commonly accepted criterion for a technical recession.

“This is certainly not what the ECB likes to see. Despite the prevailing economic weakness, service providers continue to forge ahead with faster price increases in November, propelled by the astonishingly rapid and even accelerating increase in input costs.  The latter can be mostly attributed to above average increases in wages, which play a major role in the services sector.”

Britain: Chancellor of the Exchequer Jeremy Hunt didn’t rule out holding his Spring Budget earlier than usual next year, adding to speculation that Prime Minister Rishi Sunak could call a general election in May.

Hunt gave his Autumn (mini-budget) Statement to parliament Wednesday, claiming the UK economy was “back on track” and that his package of tax cuts would boost growth without imperiling the fight against inflation, which is still more than double the 2 percent target.

Recent moves by Sunak’s Conservatives (Tories) have fueled speculation about a spring election, including Hunt’s decision Wednesday to announce a fast-tracked payroll tax cut to take effect in January.  An earlier-than-usual budget would bolster that theory, especially if the government uses it to announce further tax cuts.

The Tories are trailing the opposition Labour Party by 20 points in the opinion polls and have to call an election no later than January 2025.

Germany:  The government of Chancellor Olaf Scholz was thrown into crisis when the constitutional court blocked the transfer of unused pandemic funds ($65 billion) towards green investments and industry support.  So Scholz’s coalition indefinitely postponed talks on next year’s budget.

The court’s move has sparked warnings that growth in Germany’s already struggling economy could get dragged down next year and that projects and subsidies to keep its industry competitive were now at risk.

So picture, the three parties in the coalition, which includes the Greens, have to find a way to keep as many spending pledges as possibly – and make them legally compliant.

The government had also planned to double military aid to Ukraine next year, so the pledge you saw above from Germany’s defense minister on his visit to Kyiv may not be possible.

The court’s ruling also now impacts the EU budget, which is the topic of an upcoming European Council meeting.  This threatens the bloc’s commitment to fund Ukraine.

Turning to Asia…nothing of major economic import from China on the data front.  But Beijing is ramping up pressure on banks to support struggling real estate developers, signaling President Xi’s tolerance for property sector pain is nearing its limit.

Developer stocks and bonds rallied in China this week on bets that authorities may introduce some of the most sweeping measures yet, creating a draft list of firms eligible for bank support while weighing a plan that would allow banks to offer them unsecured loans for the first time.

A big concern of the government is making sure developers have enough cash to finish the millions of homes under construction, even if it means added risks for the banks.

Japan released its October inflation data, up 3.3%, while the core rate (by Japan’s definition) rose 2.9% year on year, up from 2.8% in September.  The rise fueled speculation that the Bank of Japan might soon tighten its ultra-loose monetary policy.  By our definition of ‘core,’ ex-food and energy, inflation is running at a 4.0% pace (vs. 4.2% prior).

Inflation has exceeded the central bank’s 2% target for 19 consecutive months.

Japan’s November flash PMI readings were released as well…48.1 manufacturing, 51.7 on services.

Meanwhile, Japanese Prime Minister Fumio Kishida has seen his approval ratings slump to what Yomiuri newspaper called “dangerously low” levels, 24 percent, the lowest since the ruling Liberal Democratic Party (LDP) was elected in 2012.  Two other surveys have him at 21%. 

The LDP elects a new head next autumn, and Kishida missed his opportunity to call a snap general election when he might have bolstered his reign.

Street Bytes

--Stocks rose a fourth straight week, the Dow Jones up 1.3% to 35390, the S&P 500 1.0%, and Nasdaq 0.9%. 

--U.S. Treasury Yields…[1:00 PM ET, Fri.]

6-mo. 5.46%  2-yr. 4.95%  10-yr. 4.48%  30-yr. 4.61% 

Yields ticked up across the curve.  The 10-year hit 4.37% Wednesday before rising some today.

Oil continued to plunge to about $73 per barrel early Wednesday following the postponement of the OPEC+ meeting, scheduled for Sunday, to November 30.  The delay was prompted by Saudi Arabia’s dissatisfaction with other member countries’ oil production levels.  Earlier, oil prices had risen on speculation about potential supply reductions at the initially scheduled meeting.

Meanwhile, industry data showed a significant increase of approximately 9 million barrels in U.S. crude inventories last week, surpassing expectations of a 1.5 million build, which in this game is a huge miss.

But by the end of Wednesday, crude had recovered all the way to $77, though then finished today at $75.95, up just fractionally on the week.  We’ll see what happens next week with the big OPEC+ confab.

--As I noted in last week’s review, late Friday we had a huge event…ChatGPT and OpenAI co-founder and CEO Sam Altman being ousted by the OpenAI board.  The board, which also stripped another co-founder, Greg Brockman, of his chairman title and then quit, fired Altman for not being “consistently candid.” Altman reportedly clashed with the board about how quickly to commercialize new technologies.

Some board members, like Ilya Sutskever, another co-founder and the company’s chief scientist, disagreed with Altman.  Sutskever, like Elon Musk and the A.I. pioneer Geoffrey Hinton, is deeply worried that A.I. could threaten humanity, and may now push the company to move much more slowly.

Satya Nadella, Microsoft’s chief executive, then announced that Altman will “lead a new advanced AI research team” at the company, along with Brockman.  Speculation had swirled all weekend that, under pressure from investors and staff, OpenAI would reinstate Altman. Instead, Nadella also welcomed Emmett Shear, former head of Twitch, a video-streaming service, as OpenAI’s interim leader.  Microsoft is OpenAI’s biggest investor, in exchange for special access to its technology, but doesn’t have a board seat.

Microsoft is racing to protect its A.I. edge.  The company has invested billions in OpenAI.  While Nadella said he remained “committed” to the organization, he made clear that he would provide Altman and Brockman “with the resources needed for their success.”

So, Monday, the future of OpenAI was very much in limbo as hundreds of company employees signed a letter calling on the board to step down after it was unable to reach an agreement to bring back Altman.

“Your actions have made it obvious that you are incapable of overseeing OpenAI,” the letter reads.  “We are unable to work for or with people that lack competence, judgement and care for our mission and employees.  We, the undersigned, may choose to resign from OpenAI and join the newly announced Microsoft subsidiary run by Sam Altman and Greg Brockman.”

As of late Monday morning, more than 700 names appeared on the letter, though the names couldn’t all be verified.  OpenAI currently has 770 employees.

Well, late Tuesday, it was announced Altman is back as OpenAI CEO, back at the helm with a new board. 

The new board replaces the one that fired Altman. It will be led by former Salesforce co-CEO Bret Taylor, who chaired Twitter’s board before Elon Musk took over. The other members will be former Treasury Secretary Larry Summers and Quora CEO Adam D’Angelo.

The board will be expanded, including perhaps representation for Microsoft and other investors, which will elevate the push for rapid innovation and commercialization.  The outgoing board had been worried about OpenAI moving too fast to advance A.I., without regard for potentially disastrous consequences for humanity.

The outgoing board, which included D’Angelo, had also refused to give specific reasons for why it fired Altman. 

Microsoft supported the moves.  Nadella said on X that he was “encouraged by the changes to the OpenAI board,” calling it a “first essential step on a path to more stable, well-informed, and effective governance.”

An investigation of Altman’s leadership of OpenAI was among the concessions made to seal the deal to bring him back.

But this story is just getting started.  After all, according to reports, Altman had been working on raising $100 billion, with a ‘B,’ for a new chip venture to rival Nvidia, which meant all his time wasn’t exactly being spent on OpenAI, which I’m sure was part of the ‘old board’s’ complaint.

For now, the employees were ecstatic over Altman’s return.

Much more to come, including how the IRS and California, where the organization is based, will look at this ‘nonprofit.’*

*OpenAI has a unique governing structure, which it adopted in 2019.  It created a for-profit subsidiary that allowed investors a return on the money they invested into OpenAI, but capped how much they could get back, with the rest flowing back into the company’s nonprofit.

--The other big issue on Wall Street this week was chip designer Nvidia’s earnings after the close on Tuesday, and the company once again blew away the Street’s expectations.

Nvidia forecast current-quarter revenue of $20 billion, plus or minus 2%.  Consensus was at $17.86 billion.  Adjusted third-quarter revenue tripled to $18.12 billion, up 206% from a year ago and ahead of analysts’ estimates of $16.18 billion.

The key data center metric saw revenue soar 279% year-over-year to $14.51 billion, while gaming revenue rose 15% to $2.86 billion.  Adjusted earnings came in at $4.02 per share, beating estimates of $3.37.

“Nations and regional (cloud service providers) are investing in (artificial intelligence) clouds to serve local demand, enterprise software companies are adding AI copilots and assistants to their platforms, and enterprises are creating custom AI to automate the world’s largest industries,” CEO Jensen Huang said in a statement late Tuesday.  “The era of generative AI is taking off.”

Nvidia forecast adjusted gross margins of 75.5% for the fourth quarter, above analyst estimates of 72.64%, according to LSEG data.  But the company’s China troubles could make those margins hard to maintain.

Speaking of which, the company did say it expects a steep drop in fourth-quarter sales in China – a key revenue generator – in the wake of new U.S. rules, but forecast overall revenue above Wall Street targets as supply-chain issues ease.

Nvidia, whose graphics processing units dominate the market for AI, is set to take a hit from the vastly expanded U.S. export controls on what the company can sell to China. Sales of the affected chips made up nearly a quarter of Nvidia’s datacenter sales in the past few quarters.

“Export controls will have a negative effect on our China business, and we do not have good visibility into the magnitude of that impact even over the long term,” CFO Colette Kress said during a conference call with analysts.  Kress also confirmed reports that the chip giant is developing newly compliant chips for China but those won’t materially contribute to fourth-quarter revenue.  [They say ‘compliant,’ but they could be banned as well later on.]

Nvidia stock, which had climbed more than 240% this year, slipped to $477.50 by week’s end, as the company told customers in China it is delaying the launch of the new chips until the first quarter of next year.

--U.S. air-safety regulators cleared Boeing to begin key flight tests of its 737 MAX 10 jet, a milestone toward preparing the plane for commercial service.

The 737-10 is Boeing’s biggest offering in the MAX family of single-aisle airplanes.  United, Ryanair, Air India and SunExpress are among the airlines that have placed larger orders for the jets.

Boeing in recent years has faced a series of delays and setbacks in getting new planes in service and in restarting deliveries of its 737 MAX airplanes after the pair of fatal crashes grounded the planes in 2019.

--TSA checkpoint numbers vs. 2019

11/23…97 percent of 2019 levels
11/22…104
11/21…108
11/20…109
11/19…112
11/18…108
11/17…106
11/16…105

--More from key retailers this week…Lowe’s, the nation’s second-largest home improvement chain behind Home Depot, reported drops in both sales and profits. It cut its annual sales outlook as it reported a big customer pullback in do-it-yourself (DIY) projects.

Lowe’s saw same-store sales decline 7.4%, with an 11.7% drop in revenue year-over-year to $20.74bn, both outpaced by Home Depot.  Retreating DIY spending has been a consistent headwind for LOW throughout the year, but until now decent profitability and outperforming its primary rival helped investors look past this blemish.

Adjusted earnings fell 6.4% yr/yr to $3.06, barely edging past analyst predictions.

Lowe’s now expects sales to total $86 billion for the fiscal year, down from prior guidance of $87bn to $89bn, and comps of -5%, below its negative 2-4% prediction.  The company reduced its FY24 adjusted EPS projection to $13.00, down $0.40 from the midpoint of its previous $13.20 to $13.60 forecast.

--Best Buy Co. posted stronger than expected profits for the fiscal third quarter but continues to struggle with sales declines as shoppers pulled back on a broad range of items from appliances to computers and phones in an uncertain economy.

The nation’s largest consumer electronics chain also cut its annual sales outlook.

Best Buy joins a string of other major retailers reporting earnings results this week and last that have shown a further softening in consumer spending as shoppers come under more pressure from dwindling savings, higher interest rates and still stubborn inflation.

It’s costing more to take out loans for appliances, cars and houses, or to use a credit card.  As a result, consumers have become reluctant to spend unless there is a sale.

That scenario marks a big difference from Best Buy’s sales during the depths of the pandemic, which were fueled by oversized spending from shoppers who splurged on gadgets to help them work from home or help their children with virtual learning.  Government stimulus checks fueled a lot of that spending as well.

Best Buy shares fell sharply at the open, Tuesday, but then recovered for marginal losses on the day.

“In the more recent macro environment, consumer demand has been even more uneven and difficult to predict,” said Best Buy’s CEO Corie Barry in a statement.

The Richfield, Minnesota-based company reported fiscal third-quarter net income of $263 million, or $1.21 per share, for the three-month period that ended Oct. 28, compared to $277 million, or $1.22 per share, in the year-ago period.  Adjusted earnings of $1.29 beat the Street’s estimate of $1.19.

Revenue came in at $9.76 billion in the period, falling short of expectations of $9.88bn.  In the year-ago period, sales were $10.59 billion.

Comp-store sales fell 6.9% in the quarter.

Best Buy expects full-year earnings in the range of $6 to $6.30 per share, with revenue in the range of $43.1 billion to $43.7 billion, which compares to prior revenue guidance of $43.8bn to $44.5bn.

It also expects a comparable sales decline of 6% to 7.5% for the year, deeper than the previous guidance of a decline of 4.5% to 6%.

--Dick’s Sporting Goods’ fiscal third-quarter results unexpectedly increased from last year as the athletic goods retailer benefited from a strong back-to-school season, helping it lift its full-year earnings guidance. The stock rose 4%, though was up much more immediately following the earnings release on Tuesday.

Adjusted per-share earnings rose to $2.85 during the three months ending Oct. 28 from $2.60 a year earlier, well above expectations of $2.46.  Net sales increased to $3.04 billion from $2.96 billion, versus forecasts for $2.95bn.

Comp-store sales grew 1.7%, down from last year’s 6.5% gain but defying expectations for a 1.3% drop in the third quarter.

Dick’s now expects full-year adjusted EPS of $12 to $12.60, up from previous guidance of $11.50 to $12.30.  Current Street consensus is $11.93. The company expects its comparable sales to grow between 0.5% and 2%, compared with consensus for a 0.4% rise.

CEO Lauren Hobart said in a statement: “We’re excited for the upcoming holiday season and the product, service and experience we are providing to our athletes.”

I must say this is one of my favorite retailers.

--Kohl’s posted a bigger than expected decline in quarterly sales, as customers spent less at its department stores, and the shares tanked a whopping 10%.

Kohl’s reported third-quarter earnings of $59 million, $0.53 per share, down from $0.82 a year earlier, but ahead of expectations.

But net sales of $3.84 billion were down from $4.05bn a year earlier, with analysts expecting $3.95 billion.

The company raised guidance for full year 2023 earnings to between $2.30 and $2.70 per share, from $2.10 to $2.70.  Consensus is currently at $2.46.

The company expects net sales for the full year will contract between 2.8% and 4%, from the previous forecast of a contraction between 2% to 4%.

Comp-store sales declined 5.5%.

--Shares in Deere & Co. fell sharply Wednesday after the farm-equipment manufacturer forecast a drop in profit and sales of its tractors, crop harvesters and other machinery.

The outlook for the current fiscal year came after Deere posted better than expected results for its fourth quarter.

High prices for crops and livestock have boosted American farmers’ incomes for much of the past year. Operators have used their bolstered earnings to invest in new equipment from Deere, powering results for the manufacturer this year.  But now Deere expects that growth to slow.

The company forecast fiscal 2024 earnings of $7.75 billion to $8.25 billion, down from $10.17bn in the 12 months ended Oct. 29 and below the $9.31 billion that Wall Street analysts expected.

Deere forecast sales declines of at least roughly 10% across its three businesses, which span construction equipment, combines and more.

Earnings rose to $2.37 billion in the fiscal fourth quarter, or $8.26 a share, roughly 11% above consensus.  Overall sales fell 1% to $15.41 billion, with net sales at $13.8 billion, which beat the Street’s forecast of $13.63bn.

For the year, the company reported profit of $10.17 billion, or $34.63 per share. Revenue was reported as $55.57bn.

But it was about the tepid guidance and the shares fell 6%.

--Changpeng Zhao, the boss of Binance, a crypto firm, and a man considered the most powerful figure in the industry, pleaded guilty to federal money-laundering charges filed in Seattle.  CZ, as he is known, will step down as the company’s chief executive and pay a $50 million fine.  The firm, now the world’s largest crypto exchange, also pleaded guilty and will pay a $4.3 billion penalty.

CZ also was found to have violated U.S. sanctions, including allowing transactions with Hamas and other terrorist groups. The sweeping deal worked out with the Justice Department was designed to keep the company operating.

Binance is paying a fine of $1.8 billion and forfeiting $2.5bn, according to the court filing.

“Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed,” Attorney General Merrick Garland said.  “Now it’s paying one of the largest corporate penalties in U.S. history.”

--Huawei’s Chinese rival Xiaomi, which reported third-quarter results Monday, is making a renewed push in the premium segment – Apple’s bread and butter.

Global smartphone shipments are at their lowest level in a decade after dropping 11% in 2022, according to industry tracker IDC.  The market may post another decline for 2023 as a whole – but things have begun looking up in recent months. 

Xiaomi posted its first revenue gain in almost two years, a welcome boost for a smartphone maker that’s begun aggressively attacking its Chinese rivals with higher-end models at home and abroad, significant since 80% of Xiaomi’s shipments are outside China but now it’s focusing more at home.  It posted sales of $9.9 billion for the September quarter. 

As the Wall Street Journal noted separately, just another reason for Apple to watch its back.

--Elon Musk blasted “bogus media stories” alleging he is antisemitic after he endorsed a disparaging tweet about Jews last week.

The statement of defense followed a turbulent week in which several major companies pulled ads from X in condemnation of antisemitism they say he allowed to spread on the social media platform.

“This past week, there were hundreds of bogus media stories claiming that I am antisemitic,” Musk posted Sunday.  “Nothing could be further from the truth,” he declared.

“I wish only the best for humanity and a prosperous and exciting future for all,” he added in the post.

Musk found himself in hot wat after he tweeted that a user was speaking “the actual truth” in response to a post that claimed, “Jewish communities have been pushing the exact kind of dialectical hatred against whites that they claim to want people to stop using against them.”

Apple, Disney, IBM and other major advertisers suspended advertising on X following the episode, opening a serious new risk for the company.

Musk then sued media watchdog Media Matters over the group’s assertion that the company placed ads next to antisemitic content.

X CEO Linda Yaccarino said in a statement that the X account used by Media Matters was the sole account that saw some of the ads next to the anti-Semitic posts from the report.

“If you know me, you know I’m committed to truth and fairness.  Here’s the truth.  Not a single authentic user on X saw IBM’s, Comcast’s, or Oracle’s ads next to the content in Media Matters’ article,” she said in a post on X.

Media Matters said it stands by its reporting.

--Meanwhile, Musk’s SpaceX venture saw its Starship Mars rocket and spacecraft launched for the second time early Saturday morning, making it through liftoff and a planned separation of the uncrewed ship and rocket booster before both ended up exploding, though this was progress over the first launch.  The booster and ship did successfully separate, but the booster broke apart shortly afterward. The Starship craft continued to ascend, but about nine minutes after liftoff, the company said it lost data from the craft, and it seems the automated flight termination system on the ship was triggered “very late in the burn” as it headed over the Gulf of Mexico.

The automated flight termination system is a safety mechanism embedded in the rocket’s software that destroys the vehicle if it senses that its course or performance is awry or unsafe.

--International visitors to the Empire State Building observatory remain around half that of pre-pandemic levels, according to an analyst report and Crain’s New York Business, a signal that tourism still hasn’t fully recovered even though the streets are once again filled with out-of-towners walking four abreast.

The observatory is rated the No. 1 tourist attraction in the nation on TripAdvisor and this year 1.3 million overseas visitors are expected to visit, according to Evercore ISIS.  Prior to the pandemic the figure was 2.5 million.

Although fewer are buying tickets to the top, the cost of an adult ticket is $79, twice the price from four years ago, when the highest observatory was closed for renovation.  The observatory is expected to generate just under $100 million in earnings for 2023, almost the same as in pre-pandemic years.

Overall, tourism in New York has snapped back strongly, with hotel rates averaging nearly $400 a night or 27% above 2019 levels, according to CoStar.  But a full comeback is held back by the lack of Chinese visitors.

Chinese tourists were among the biggest spenders in New York, shelling out an average of $3,000 per person in 2019, more than twice that of Europeans, according to the state comptroller’s office.

NYC & Co. has forecast the city will get 63.3 million visitors in 2023 and exceed 2019’s 66.6 million next year.

--New Jersey Democratic Governor Phil Murphy is pressing ahead with plans to ban gas powered cars and trucks in New Jersey by 2035.  Ahead of that deadline, the clean cars initiative sets some bold benchmarks, including at least 51% of all new car sales must be EVs by 2027 (2028 model year).

However, there are serious issues concerning the state’s electric infrastructure, critics pointing to an already fragile grid and the lack of charging stations.

Can the legislation be stopped.  Yes.  It is an administrative rule, which can be filed and implemented by the governor without approval of the legislature.

However, they can also be undone by future governors.  Look for this to become a big issue for the Republican candidate next election, which is November 2025. Murphy is term-limited.

--A bottle of the world’s “most sought-after Scotch whisky” – The Macallan 1926 – sold for more than $2.7 million at an auction at Sotheby’s in London on Saturday, the auction house said in a news release.  The transaction set a new auction record for any bottle of spirit or wine sold, selling for almost three times the pre-sale low estimate of $934,274 - $1.4 million.

Only 40 bottles of The Macallan 1926 were produced in 1986, after being aged in sherry casks for six decades, said Sotheby’s, making it the oldest Macallan whiskey ever produced at that time.

None of The Macallan bottles were made available for purchase, said Sotheby’s in the product’s description on their website.  Instead, some were offered to the distillery’s top clients, adding to their appeal and value.

At least three other bottles from the collection were auctioned in 2018 and 2019, one of which fetched $1.9 million at Sotheby’s in 2019.  Only 10 now remain in existence, according to the auction house.

Foreign Affairs, Part II

China/Taiwan:  With a critical Jan. 13 presidential election rapidly coming up, Taiwan cannot afford chaos or “experiments” when it comes to being president, the front-runner to be the island’s next leader said on Wednesday as the opposition remained mired in a bitter dispute on mounting a joint presidential challenge.

The election will shape Chinese-claimed Taiwan’s relations with Beijing at a time China has stepped up military pressure to assert its sovereignty claims.

Vice President William Lai (aka Lai Ching-te) of the ruling Democratic Progressive Party (DPP), who China views as a separatist, leads opinion polls.  And talks between the two main opposition parties to team up and take him on have floundered and are in deadlock.  Last week I wrote the main opposition party, the Kuomintang (KMT), which traditionally favors close ties with Beijing, had agreed with the much smaller Taiwan People’s Party (TPP) to offer a joint ticket to take on Lai.

But neither party can agree how to interpret opinion polls on which of their candidates should stand for president and which for vice president.

Thursday, talks collapsed between the two after a dramatic showdown broadcast live on television in which party leaders bickered and revealed sensitive private conversations.

Friday was the deadline to register.

Another presidential candidate is Terry Gou, the billionaire founder of Foxconn, who is standing as an independent but has also yet to formally register and has trailed in the polls.  This week he has been trying to bring the KMT and TPP together.

Friday, the deal between the KMT and TPP officially blew up, as the two registered their own tickets. Terry Gou withdrew.

So a big victory for William Lai, and a major concern for Beijing.

Young voters in particular increasingly consider themselves distinctly Taiwanese.  Unlike their parents, this “born independent” generation have little emotional connection to China, let alone any interest in being part of the People’s Republic.  According to a survey this week, only 9 percent of Taiwan’s young people consider China trustworthy, down from 14 percent in 2021.

Separately, Australia accused China’s navy of using sonar pulses in an incident in international waters that resulted in Australian divers suffering injuries.

The Australian defense minister said a Chinese warship had resorted to “unsafe and unprofessional” actions during the encounter off Japan earlier last week.

The warship approached an Australian frigate as divers were clearing fishing nets from its propellers, he said.

The Chinese ship then emitted dangerous sonar pulses, the minister added.

This had posed “a risk to the safety of the Australian divers, who were forced to exit the water,” Defense Minister Richard Marles said in a statement on Saturday.

The divers suffered minor injuries that were likely caused by the sonar,” Marles said.

“Australia expects all countries, including China, to operate their militaries in a professional and safe manner,” he said.

The Chinese later denied they used sonar.

Earlier this month, Australian Prime Minister Anthony Albanese made a breakthrough trip to China and hailed “significant progress” in relations between the Pacific powers.

However, tensions remain, notably over security.  Australia has expressed concern over China’s growing assertiveness in the Asia-Pacific region.

Thursday, China’s military accused the Philippines of enlisting “foreign forces” to patrol the South China Sea and stir up trouble, referring to joint patrols this week by Philippine and U.S. forces.

The Chinese military will maintain high vigilance, resolutely defend sovereignty and maritime rights and interests, and resolutely safeguard peace and stability in the South China Sea, China’s military said.

Philippine officials have said their military and the U.S. launched joint patrols on Tuesday in waters near Taiwan, raising the possibility of further tensions with China.

A Chinese foreign ministry spokesperson said on Wednesday China had warned the U.S. and the Philippines in connection with their patrols.

Yup, those talks between Biden and Xi were essentially worthless. 

North Korea: Pyongyang claimed Wednesday to have successfully placed a spy satellite into orbit with its third launch attempt this year, demonstrating the nation’s determination to build a space-based surveillance system during protracted tensions with the United States.

The launch met strong condemnation from the U.S. and its partners because the UN bans North Korea from conducting satellite launches, calling them covers for tests of missile technology.

South Korea and Japan announced that they detected the North Korean launch.

“Even if North Korea calls it a satellite, the firing that uses ballistic missile technology is a clear violation to related United Nations Security Council resolutions,” Japanese Prime Minister Fumio Kishida said.  “It is also a serious threat that affects the safety of the people.”

A spy satellite is among the key military assets coveted by Kim Jong Un, who wants to modernize his weapons systems to cope with what he calls escalating U.S. threats.  North Korea attempted to launch a spy satellite twice earlier this year, but both launches ended in failure due to technical issues.

State media later reported the satellite received the first images of American military bases.

Back in September, Kim traveled to Russia’s Far East to meet President Putin and visit key military sites, touching off speculation of a weapons deal between the two.

The north would supply conventional arms to refill Russia’s ammunition stock drained in its war with Ukraine.  In return, foreign governments and experts say that North Korea seeks Russian help in enhancing its nuclear and other military programs.

During Kim’s Russia visit, Putin told state media that his country would help North Korea build satellites, saying Kim “shows keen interest in rocket technology.”

South Korea said this week that the North had sent about 3,000 containers of military equipment and munitions to Russia.

Heo Tae-Keun, South Korea’s deputy minister of national defense policy, told a televised briefing that the North’s latest satellite launch was not only a clear violation of UN resolutions but also “a grave provocation that threatens our national security.”

Seoul later said it believed the satellite entered orbit, but it would take time to assess whether it was operating smoothly.

Heo said South Korea will respond by partially suspending the 2018 inter-Korean tension-reduction agreement later Wednesday to resume aerial surveillance activities at the border.

He added that based on the solid military alliance with the U.S., South Korea will “promptly and strongly punish” North Korea if it uses the South Korean step as a pretext to launch another provocation.

The 2018 agreement, struck during a short-lived era of reconciliation between the rival Koreas, created buffer and no-fly zones along the countries’ heavily fortified border.  Under the deal, the Koreas were required to halt frontline aerial reconnaissance of each other and live-firing exercises and removed some of their guard posts and landmines at the border area.

The deal invited withering conservative criticism in South Korea with critics saying it significantly restricted the operation of the country’s aerial surveillance assets, which are much more superior to North Korea’s.

Pyongyang responded Thursday by announcing it would deploy stronger armed forces and new weapons on its border with the South.

Iran: Iranian-backed Houthi rebels seized a cargo ship, the ‘Galaxy Leader,’ in the Red Sea, taking 25 crew members hostage.  The rebels, who are based in Yemen, said they hijacked the vessel because of its links to Israel; last week the group warned that it considered all Israeli ships targets.  Israel’s government insisted the vessel is British-owned and Japanese-operated.  The ship’s owner is a firm registered in Britain but reportedly owned by an Israeli billionaire, Abraham Ungar.

We then learned the Houthis used a helicopter to board and hijack the cargo ship, and that the 25 crew members are from the Philippines, Bulgaria, Romania, Ukraine and Mexico. They are now hostages.

Iraq: The U.S. military carried out more airstrikes on alleged militant facilities in Iraq Wednesday morning after a new attack on “U.S. and Coalition forces by Iran and Iran-backed groups” on Tuesday.  That attack featured “close-range ballistic missiles,” according to CENTCOM, which did not elaborate on possible coalition injuries.

The Iran-backed Kataeb Hezbollah militia was the target of the Wednesday strikes, which hit “a command-and-control node near Al Anbar and Jurf al Saqr, south of Baghdad,” defense officials told local media.

Argentina: Javier Milei, a self-proclaimed “anarcho-capitalist,” right-wing libertarian was elected president.  Milei defeated Sergio Massa, the economy minister, in a run-off.  With counting nearly complete, Milei had secured almost 56% of the vote.

Inflation was a top concern for voters – the annual rate stood above 140% in October.  Milei campaigned on a radical economic platform that included scrapping the central bank, dollarizing the economy and slashing public spending by 15% of GDP.

Milei said he wants to pull back from relations with Russia, China and Brazil, citing disagreement with their governments’ policies.  He also expressed support for Ukraine and has said he sees the United States and Israel as Argentina’s main partners.

Kremlin spokesman Dmitry Peskov said in a call with reporters: “We noted a number of statements that Mr. Milei made during the election campaign, but we will focus on and judge him mainly by the statements that he makes after the inauguration.”

Argentina’s outgoing center-left government had maintained close ties with Russia, importing Russia’s Sputnik V vaccine against Covid and pushing to join the Moscow-backed BRICS group of nations.

So on Thursday, Milei began to tone down his rhetoric toward Argentina’s largest trading partners.

After calling the Chinese government an “assassin” during an August interview with Bloomberg and saying he wouldn’t keep relations with Brazil or countries led by “communists” if elected, he sounded a lot more cordial in comments at week’s end.

Milei also said Brazil’s Luiz Inacio Lula da Silva would “be welcome” to attend his Dec. 10 inauguration.

Nonetheless, Argentina is thrust into the unknown regarding just how extreme Milei’s policies will be, following a campaign that saw him revving a chainsaw to symbolically cut the state down to size.  He furiously denounced the “political caste” on television programs.

Once in office, he has said he will slash government spending, dollarize the economy and eliminate the Central Bank as well as key ministries, including those of health and education.  He has walked some of his more unpopular proposals, such as loosening gun controls and sweeping, indiscriminate privatization.

Benjamin Gedan, director of the Latin America Program at the Washington-based Wilson Center, told the Associated Press, “Hang on to your hat…it’s going to be a wild ride, given his combative style, inexperience and the few allies he has in Congress.”

But Gedan said days later that Milei appears to be following the advice of his more pragmatic advisers when it comes to foreign policy.

Netherlands: Veteran anti-Islam populist leader Geert Wilders won a dramatic victory in the Dutch general election. 

After 25 years in parliament, his Freedom party (PVV) is set to win 37 seats, well ahead of his nearest rival, a left-wing alliance.

“The PVV can no longer be ignored,” he said.  “We will govern.”

His win has shaken Dutch politics and sent a shockwave across Europe, where far-right ideology is on the rise.

But to fulfill his pledge to be “prime minister for everyone,” he has to cobble together a coalition, needing 76 seats in the 150-seat parliament.  If he does, he becomes the first far-right leader of the Netherlands.

Wilders, 60, harnessed widespread frustration about migration promising “borders close,” and he put on hold his promise to ban the Koran.

Before the vote, the three other big parties ruled out taking part in a Wilders-led government because of his far-right policies.  But that could change because of the scale of his victory.

The left-wing alliance under ex-EU commissioner Frans Timmermans came in a distant second with 25 seats.

He made clear he will have nothing to do with a Wilders-led government, promising to defend Dutch democracy and rule of law.

Despite his harsh rhetoric, Wilders can’t govern without courting other right and center parties and he vowed in his victory speech that whatever policies he pushes will be “within the law and constitution.”

But he has called for a referendum on the Netherlands leaving the European Union, a total halt to accepting asylum-seekers and migrant pushbacks at Dutch borders.

Wilders’ program also advocates the “de-Islamization” of the Netherlands. He says he wants no mosques or Islamic schools in the country, although he has been milder about Islam during his election campaign than in the past.

Instead, his victory seems based on his campaign to rein-in migration and tackle issues such as the cost-of-living crisis and housing shortages.

This will be a long arduous process to form a new government.

Finland: European Border and Coast Guard Agency Fontex said on Thursday it will send more officers to Finland next week as the nation seeks to limit the number of asylum seekers coming via Russia.

Helsinki has accused Moscow of funneling some 700 migrants to the border in the last two weeks from nations such as Yemen, Afghanistan, Kenya, Morocco, Pakistan, Somalia and Syria, a charge the Kremlin has denied.

Finland on Wednesday said it will close all but the northernmost crossing point on its 1,340 km (830 miles) border with Russia, leaving open only a remote Arctic route from Friday morning onwards. 

The measures will initially be in place for one month.

India: The Financial Times reported Wednesday that U.S. authorities thwarted a plot to kill a Sikh separatist in the United States and issued a warning to India over concerns the government in New Delhi was involved.

There was no immediate response from India’s foreign ministry to requests for comment on the report.  A spokesperson for the U.S. embassy said that it does not comment on discussions with its partners on diplomatic, law enforcement or intelligence issues.

The FT didn’t say if the protest to India resulted in the plot being abandoned by the plotters or if it was foiled by the FBI.

The report comes two months after Canada said there were “credible” allegations linking Indian agents to the June murder of a Sikh separatist leader in a Vancouver suburb.  India rejected Canada’s accusations.

Random Musing

--Presidential approval ratings…

Gallup:  37% approve of President Biden’s job performance, 59% disapprove; 35% of independents approve (Oct. 2-23).  Update next week.

Rasmussen: 44% approve, 55% disapprove (Nov. 22).

--In a new NBC News poll, President Biden’s approval rating declined to the lowest level of his presidency for this survey – 40%, with 57% disapproving.  His approval rating in September was at 41%.

The erosion in support for Biden is most pronounced among Democrats, a majority of whom believe Israel has gone too far in its military action in Gaza, and among voters ages 18 to 34, with a whopping 70% of them disapproving of Biden’s handling of the war.

As for Biden’s approval rating among the 18- to 34-year-olds, in September, 46% of these voters said they approved of his job performance.  Now?  Just 31% do.  That’s a staggering slide in two months.

In another low for the president, just 33% of all voters approve of his handling of foreign policy, down 8 points from September.  Sixty-two percent of voters, including 30% of Democrats, disapprove.

The poll was conducted Nov. 10-14.

As for Donald Trump, among voters aged 18 to 34, he receives support from 46%, with Biden getting 42%, in a hypothetical matchup.

CNN’s recent national poll had Trump ahead of Biden by one point among voters ages 18 to 34.

--A new Wall Street Journal/NORC survey has only 36% of voters saying the American dream still holds true, substantially fewer than the 53% who said so in 2012 and 48% in 2016 in similar surveys of adults by another pollster.  When a Wall Street Journal poll last year asked whether people who work hard were likely to get ahead in this country, some 68% said yes – nearly twice the share as in the new poll.

The survey shows that Americans across the political spectrum are feeling economically fragile and uncertain that the ladder to higher living standards remains sturdy, even with signs of economic and social progress.

Half of the voters in the new poll said that life in America is worse than it was 50 years ago, compared with 30% who said it had gotten better.

However, despite the pessimism, there was a little good news for the White House.  Some 35% of voters said they rated the economy as excellent or good, an improvement from the 20% who said so in March and 17% in May of last year.  The share rating the economy as “not so good” or poor fell to 65%, compared with 80% or more in the prior two surveys.

Bad news for the White House…some 68% of Black respondents said the nation’s economic and political systems were rigged against them, compared with about half of Latino and white voters.

--A Monmouth University/Washington Post poll of Republican primary voters in New Hampshire has Trump at 46%, Nikki Haley 18%, and Chris Christie 11%.

Christie has spent virtually all his time here, and as a Christie supporter (I like Haley first these days), he hasn’t been able to break through.  He needs a better finish than 11%.  It’s because he hasn’t broadened the message beyond the ‘anti-Trump’ candidate, while the others, like Haley and Ron DeSantis, largely let Christie go after Trump, while they stand back some.

Meanwhile, Trump wins the enthusiasm gap by a wide margin over Haley.

And when it comes to support for Ukraine military aid, among New Hampshire Republicans, only 24% support it, while 65% of other voters do.

I’m biting my tongue…only because I’m writing this on Thanksgiving Day.

--A federal court on Monday issued a decision that could severely curtail enforcement of the Voting Rights Act, which could affect voters of color nationwide and will probably be appealed to the Supreme Court.

In its 2-1 decision, the U.S. Court of Appeals for the 8th Circuit upheld a lower court’s ruling that private citizens and groups like the NAACP cannot bring lawsuits under a provision that forbids discrimination in state and local election laws.

The appellate court found that the key section of the act can only be enforced by the U.S. attorney general.  That upheld a decision by U.S. District Judge Lee Rudofsky, who in 2022 dismissed a lawsuit challenging Arkansas’ new district map because he said that the Justice Department had to join the plaintiffs.

At the time voting rights groups argued in their lawsuit that a new map of congressional districts weakened Black voters’ electoral power in the state.

--The nation’s largest Spanish-language media company, Univision, has faced growing backlash for its handling of a recent interview with Donald Trump.

The Nov. 7 interview with Trump at Mar-a-Lago was arranged with the help of Jared Kushner and attended by a trio of senior executives at Univision’s parent company.  The interview was notable for its gracious tone, lack of follow-up questions and Trump’s assertion in the first minutes about the owners of the network.

“They like me,” Trump said.

Joaquin Blaya, a former president of Univision who created the signature news show in the late 1980s, told the Washington Post in an interview this week that the network had moved away from its founding mission.

“This was Mexican-style news coverage, a repudiation of the concept of separation of business and news,” Blaya said of the interview. “What I saw there was batting practice, someone dropping balls for him to hit out of the park. I think it was an embarrassment.”

Editorial / Wall Street Journal

“What really alarms Democrats is the fear that they may lose a Spanish-speaking press that operates under a univision of progressive assumptions.  For years Mr. Biden’s party has taken Hispanic voters for granted, but their loyalty is being stretched as the left abandons traditional cultural values and Bidenomics hurts the middle class.  In a recent poll of expected 2024 swing states, Mr. Biden’s lead among Hispanics is in single digits.

“If such numbers are correct, then more balanced news coverage might be the order of the day for Univision’s new owners, as a business and journalistic proposition. Thus the panic among professional Hispanic Democrats. The network holds a sizable share of the U.S. Spanish-speaking audience.

“Democrats have worked hard to help Mr. Trump win the GOP’s presidential nod with indictments and overwrought attention, but now they’re beginning to fear he might not be so easy to filter and defeat after all.  Have they considered beating him with a better message and a younger candidate.”

I just have to add, Trump’s comments in the interview were often totally unhinged.

--Maureen Dowd / New York Times

“David Axelrod is not a prick.

“Truly.

“I’ve known him since 2007 and if I had to pick a noun to describe him, it would be mensch.

“So when President Biden privately employs that epithet for Axelrod, according to Politico’s Jonathan Martin, it’s bad for a few reasons.

“The ordinarily gracious president is punching down at the strategist who helped elevate him onto the ticket with Barack Obama in 2008 and who thinks he was ‘a great vice president’ and has done a lot of wonderful things as president.

“When some in the Obama camp chattered in 2011 about switching Biden out for Hillary Clinton, Axelrod said, he protested: ‘That would be an incredible act of disloyalty to a guy who has done a great job for us.’

“Surely, Mr. Biden does not want to lower himself to the vulgarity of the growling, brawling, thieving Republicans in the Hieronymus Bosch hellscape of our Congress.

“(As Seth Meyers noted, George Santos – who spent campaign money on Hermes, Ferragamo, Botox, Sephora and OnlyFans – had ‘the shopping list of a 98-year-old oil tycoon’s 20-year-old wife.’)

“Axelrod drew Biden’s ire because he urged the president to consider stopping at one term, throwing open the race to younger Democrats while there’s still time, and leaving as a hero. He said that, despite Biden’s insult, he got a slew of messages agreeing with him.

“ ‘I don’t care about them thinking I’m a prick – that’s fine,’ the strategist told me.  ‘I hope they don’t think the polls are wrong because they’re not.’….

“The president turns 81 on Monday; the Oval hollows out its occupants quickly, and Biden is dealing with two world-shattering wars, chaos at the border, a riven party and a roiling country.

“ ‘I think he has a 50-50 shot here, but no better than that, maybe a little worse,’ Axelrod said.  ‘He thinks he can cheat nature here and it’s really risky. They’ve got a real problem if they’re counting on Trump to win it for them.  I remember Hillary doing that, too.’

“The president’s flash of anger indicates that he may be in denial, surrounded by enablers who are sugarcoating a grim political forecast….

“No doubt the president is having a hard time wrapping his mind around the idea that the 77-year-old Mar-a-Lago Dracula has risen from his gilded coffin even though he’s albatrossed with legal woes and seems more deranged than ever, referring to Democrats with the fascist-favored term ‘vermin’ and plotting a second-term revengefest. Trump’s campaign slogan should be, ‘There will be blood.’….

“But (Biden) should not indulge the Irish chip on his shoulder.  He needs to gather the sharpest minds in his party and hear what they have to say, not engage in petty feuds.”

--Editorial / Wall Street Journal…on Biden turning 81….

“Given Mr. Biden’s age and obvious decline, running for re-election is an act of profound selfishness. He has wanted the big desk since at least 1987, when he first ran. Aging people, even if they’re not surrounded by yes men, can be the last to notice time’s toll, as many can attest after trying to take away dad’s car keys.

“Mr. Biden wants to run another Wilmington basement campaign, albeit this time from the White House. But the polls are screaming that his weakness could put Donald Trump back into office.  Even if Mr. Biden wins, there’s a strong chance the country would get President Kamala Harris before his term ends.

“The White House has tried to laugh away such worries.  As press secretary Karine Jean-Pierre once memorably put it: ‘Eighty is the new 40. Didn’t you hear?’

“This won’t work, especially when Mr. Biden’s aides are whispering to the press that they don’t trust him on the campaign trail.  His staff and family should put the country before the perks of office.  If the reality is that the boss is too old for another term, and if he refuses to hear it, the honorable move is to resign and quit covering for him.”

Meanwhile, we wait to see what happens on the Hunter Biden front with the California grand jury.

--The world is on track for a 3-degree temperature rise this century as global warming and greenhouse gas emissions continue to break records, the UN Environment Program has warned.

Many folks believe that the extent of human-induced warming above pre-industrial levels would have catastrophic implications for billions of people and ecosystems on the planet.

The UNEP’s latest “emissions gap” report issued on Monday concludes current pledges by countries under the Paris Agreement are insufficient as the world is setting “alarming emissions and temperature records which intensify extreme weather events and other climate impacts across the globe.”

The report was released ahead of the Cop28 climate summit in Dubai.  Essentially, the UNEP finds “global low-carbon transformations” are needed to deliver cuts to predicted 2030 emissions of 28 percent to get on a “least cost pathway” for the 2-degree goal, and 42 percent for a 1.5-degree pathway. 

“There is no person or economy left on the planet untouched by climate change, so we need to stop setting unwanted records on greenhouse gas emissions, global temperature highs and extreme weather,” said the UNEP.

But as we all know, sports fans, it’s about China, India (look at all I’ve written about New Delhi’s air quality recently), the Amazon, and Siberia’s (and the Arctic’s) melting permafrost.

Don’t look for China or India to do anything about it, and it starts there.

--We wish our friends in Iceland good luck with the looming volcano near the little town of Grindavik.  While Iceland, which I’ve been to twice, is used to volcanoes, this one is potentially very different, not least because an eruption would be very close to Keflavik Airport, where all the international flights come into, and the capital Reykjavik, where 2/3s of the country’s population resides, including the surrounding region.

My friend Pete M. spent a month in the area earlier this year and thankfully Grindavik has already been evacuated because as he put it, there aren’t a lot of easy ways to get out of the place.

But it’s the proximity to Reykjavik that is so concerning, just some 25 miles away.

As Reykjavik native Alda Sigmundsdottir wrote in the Washington Post:

“We’d long known that an eruption might come closer to home, yet it always felt the stuff of some far-off future – say 1,000 years away. It was something we envisioned as catastrophic, like the eruption in Laki in 1783 that killed about a quarter of Icelanders and more than half of the livestock.”

There was a smaller eruption on the peninsula that happened in 2021, but this one is different, a “major event,” as scientists are predicting.

--Mary Jordan / Washington Post

“As Rosalynn Carter’s health steadily faded Saturday night, her husband, Jimmy Carter, sat beside her bed in his wheelchair.

“At 96, she had an infection that had not improved with antibiotics. The day before, she had entered hospice in her home and her caregivers shifted from trying to prolong life to making her last days more comfortable.

“ ‘My Dad told her he loved her and thanked her for all the wonderful things she had done,’ said James E. ‘Chip’ Carter III, who was in his parents’ bedroom with other family members.  ‘Then he asked us to leave so he could be alone with her.’

“The 99-year-old former president sat holding the hand of the former first lady, his wife of 77 years, for about half an hour.  ‘I’m sure he was praying,’ Chip Carter said.

“Then, late Saturday, aides helped Jimmy into his own hospital bed. It had been placed feet-to-feet with his wife’s hospital bed, so the Carters could be propped up and face each other and talk.

“But when the sun rose, Rosalynn was no longer able to speak. At 2:10 p.m. Sunday, with Jimmy looking at her from his bed, Rosalynn’s journey from the tiny farming town of Plains, Ga., to the White House and national fame ended where it began.

“ ‘Tears were coming out of his eyes,’ Chip Carter said.”

--And lastly, Peggy Noonan / Wall Street Journal

“Right about now Time magazine would be choosing its Person of the Year, a designation I’ve followed from childhood because their choices tend to vary from sound to interesting.  Also I almost always know who they’ll choose and enjoy finding out if I’m right.  Here I tell you who it will be and must be or I will be displeased.

“Miss Taylor Swift is the Person of the Year. She is the best thing that has happened in America in all of 2023. This fact makes her a suitably international choice because when something good happens in America, boy is it worldwide news.

“I have been following her famous Eras tour since it began in March. Everyone says she’s huge, she’s fabulous, but really it’s bigger than that. What she did this year is some kind of epic American story.

“Here are the reasons she should be Person of the Year:

“Her tour has broken attendance and income records across the country. She has transformed the economy of every city she visits.  The U.S. Travel Association reported this fall that what her concertgoers spend in and around each venue ‘is on par with the Super Bowl, but this time it happened on 53 different nights in 20 different locations over the course of five months.’…

“When Ms. Swift played Los Angeles for six sold-out nights in August she brought a reported $320 million local windfall with her, including 3,300 jobs and a $160 million increase in local earnings.  From Straits Research this month: Ms. Swift’s tour is ‘an economic phenomenon that is totally altering the rules of entertainment economics.’

“When the tour became a bona fide record-breaker Ms. Swift gave everyone in her crew – everyone, the dressers, the guys who move the sets, the sound techs and backup dancers – a combined $55 million in bonuses.  The truck drivers received a reported $100,000 each.

“Bloomberg Economics reports U.S. gross domestic product went up an estimated $4.3 billion as a result of her first 53 concerts.

“The tour made her a billionaire, according to Forbes the first musician ever to make that rank solely based on her songs and performances.

“When Ms. Swift made a film of the ongoing tour she reinvented how such things are financed and marketed, upending previous models, and when the film opened, on Oct. 13, it became the most successful concert film in history….

“All of this is phenomenal, groundbreaking, but it’s just economics.  Ms. Swift brings joy….

“People meaning to compliment her ask if she’s Elvis or the Beatles, but it is the wrong question. Taylor Swift is her own category….

“Onward to further greatness, Taylor Swift.  Onward Travis Kelce.  Win the Super Bowl this year, make an impossible catch, jump a man’s height to snatch the ball from the air with 10 seconds to go, score the winning the touchdown, hold the ball up to your girl in the stands as the stadium roars and the confetti rains down.

“Leave a 100 billion memories. Remind everyone: It’s good to be alive.

“Because it is.

“And Happy Thanksgiving weekend to the great and fabled nation that is still, this day, the hope of the world.”

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

Pray for Ukraine, Israel and the innocent in Gaza.

God bless America.

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Gold $2001
Oil $75.95

Regular Gas: $3.26; Diesel: $4.25 [$3.58 / $5.25 yr. ago]

Returns for the week 11/20-11/24

Dow Jones  +1.3%  [35390]
S&P 500  +1.0%  [4559]
S&P MidCap N/A
Russell 2000  N/A
Nasdaq  +0.9%  [14250]

Returns for the period 1/1/23-11/24/23

Dow Jones  +6.8%
S&P 500  +18.7%
S&P MidCap  +5.3%
Russell 2000  +2.6%
Nasdaq  +36.2%

Bulls 52.2
Bears 22.4…week before, the split was 50.7 / 23.2

Hang in there.  Safe travels home…if you’ve been on the road over the holiday.

Brian Trumbore

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