Week in Review

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Week in Review

11/16/2024

For the week 11/11-11/15

[Posted 4:30 PM ET, Friday]

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Special thanks to longtime supporters Jim D. and Tim L.

Edition 1,334

As the final mail-in ballots are counted, and with some still extremely close House races, for the record, as I go to post....

Former President Trump, now President-elect, defeated Kamala Harris 312-226 in the Electoral College.

Trump picked up 76,083,129 votes, nationwide, 50.1%, to Harris’ 73,150,498, 48.2%.*

The Senate ends up 53-47, Republicans.  [In Pennsylvania, Democratic incumbent Bob Casey has yet to concede, but he’s 23,000+ votes behind Republican challenger Dave McCormick.  It will be 53-47.]

Republicans won the House, 218-209, as I go to post, hitting the magic number of 218 for a majority, and it should end up 222-213, give or take a seat.  But, three GOP House members are heading into the Trump administration (one of them resigning) so at least early on, Republicans will have a super narrow majority.

President Biden met Trump in the Oval Office on Thursday in a triumphant return to the White House for the former president.

“Welcome back,” Biden said.  It was a classy move...back to normality, at least for a brief spell.

It ended up being a two-hour meeting, both Biden and Trump, along with their respective chiefs of staff, reviewing the transition, and it was an opportunity for the two leaders to discuss the current geopolitical situation.  All good.  [The fact they met for this long, not the world outlook.]

Republicans in the House nominated Mike Johnson for House Speaker.  He must be confirmed by the entire chamber in January. 

And I was pleased to see Republican senators elect John Thune, an ally of the outgoing Mitch McConnell, for Majority Leader.  I’ve always liked Thune, and I’ve written in the past how I thought he was central casting for Vice President, in the days when establishment politicians had a shot.

Thune emerged victorious in the secret ballot by a vote of 29 to 24 over Sen. John Cornyn of Texas, another member of the establishment.  Sen. Rick Scott of Florida, who pitched himself as the Trump candidate in the race, was forced out of the contest in an earlier round of voting after drawing just 13 supporters.  The senators exhibited their independence, at least for a day.

As for Trump’s cabinet selections, the President-elect, for good reason, is trying to get the Senate to agree to ‘recess appointments,’ and four selections in particular, Pete Hegseth, Tulsi Gabbard, Matt Gaetz and Robert F. Kennedy Jr., deserve full confirmation hearings.  I comment much more on the four, and the other cabinet nominees, below.

[Wall Street is still awaiting key choices for Treasury and Commerce.]

Editorial / Wall Street Journal

“Republicans regained the U.S. Senate last week with a decent majority, 53 seats, so it was strange the other day when President-elect Trump issued a pre-emptive demand that his own party let him make recess appointments, ‘without which we will not be able to get people confirmed in a timely manner.’  It’s easier to make sense of this brainstorm now that Mr. Trump says his nominee for Attorney General is the regrettable Rep. Matt Gaetz.

“The Constitution restrains the President’s appointments by giving the Senate the power to confirm, or not, his nominees.  Hamilton in Federalist No. 76 writes that this provides ‘an excellent check upon a spirit of favoritism in the President, and would tend greatly to prevent the appointment of unfit characters.’  If Mr. Gaetz is nominated, Republican Senators would think hard about voting no.  Hence, Mr. Trump’s interest in bypassing them.

“Because the Founders had to travel to and from the national capital by horse, they also granted the President the power ‘to fill up all Vacancies that may happen during the Recess of the Senate.’  Such appointments are temporary but can last about two years.  The point was to prevent the President from being left short-handed....

“Mr. Trump seems to be asking Republicans to help him exploit this exception by making it into the rule for presidential nominees. ‘We need positions filled IMMEDIATELY!’ he posted on Truth Social.  The prospect is that Mr. Trump might try to bully the Senate to go into a recess, so he can unilaterally make Mr. Gaetz the Attorney General, maybe until the end of 2026.  He could fill other vacancies across the federal government in the same way, with no need for confirmation hearings or votes.

“The idea is anti-constitutional, and it would eliminate one of the basic checks on power that the Founders built into the American system of government....

“Lately the Senate’s custom has been to gavel in pro forma sessions every few days during its breaks, even if most people are out of town, to deny the President any opening for recess appointments... Mr. Trump next year might have other ideas.  ‘Any Republican Senator seeking the coveted LEADERSHIP position in the United States Senate,’ he insisted, ‘must agree to Recess Appointments.’

“He means South Dakota Sen. John Thune, who won the votes of his GOP colleagues this week to be the next Majority Leader.  Recess appointments are Mr. Thune’s first test. He has said they aren’t off the table, and he wants to approve Mr. Trump’s nominees fast.

“But his comments Wednesday suggest he also sees the gravity of what Mr. Trump proposes. ‘I’m willing to grind through it and do it the old-fashioned way,’ Mr. Thune said.  Good for him, and we hope other Republicans back him up.”

*Going back to the popular vote, I was watching President-elect Trump during his victory celebration in Mar-a-Lago Thursday night, and he said he had been informed that his margin “was the largest since 1928.”

Ah, not quite, Mr. Trump.  Your margin is about 3 million.  Let’s just turn to 1984, when Ronald Reagan won 49 states and in the popular vote, defeated Walter Mondale by nearly 17 million!

54,455,472 to 37,577,352.

Nothing pisses me off more than a politician, in this case a rather important one, just spouting off total bullshit...and then the depressing thing is knowing that tens of millions believe it.  This column is about the truth and facts...cold hard facts.

By the way, in 1972, Richard Nixon also won 49 states in his contest with George McGovern, and Nixon’s margin was 18 million!

47,168,710 to 29,173,222.

Now those were mandates.  [I conveniently avoided mentioning the 7 million margin in 2020, since I had better examples, he typed with a smile.]

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Israel-Iran-Hezbollah

--The IDF struck a house in northern Gaza where displaced families were sheltering on Sunday, killing at least 34 people, according to the Palestinian Civil Defense.  Fourteen children were reportedly among the dead after the strike in the city of Jabaliya Sunday morning.  More victims were buried in the rubble.

In response to questions about the strike, the IDF said that it had hit “a terrorist infrastructure site” where militants posed a threat to troops that had been operating there and that it had taken “numerous steps to mitigate the risk of harming civilians.” The military, which said that the details of the episode were under review, did not provide evidence for its assertions.  It seldom does.

Other Israeli airstrikes killed at least 46 people in the Gaza Strip Monday and Tuesday, including 11 at a makeshift cafeteria in an Israeli-declared humanitarian zone, medics said.

--Israel said headway was being made in U.S.-mediated efforts to achieve a cease-fire in Lebanon, but that it still needed guarantees on resuming military operations there if there are any infractions by Hezbollah.

“There is a certain progress.  We are working with the Americans on the issue,” Israeli Foreign Minister Gideon Sa’ar told reporters on Monday. Russia could help with the enforcement of such a deal, he added.

A senior Israeli official, Strategic Affairs Minister Ron Dermer, made a rare visit to Russia last week to sound out Moscow on a possible role in preventing arms smuggling from Syria to Hezbollah, Israel’s Army Radio reported (which means it cleared Israeli censors).

--Saturday, Qatar said it has paused its efforts to mediate a cease-fire in the Gaza Strip, citing a failure by Israel and Hamas to make progress in the talks.

Earlier, Qatar also had asked Hamas’ political leaders to leave the country, where they maintain an office, after more than a year of trying to leverage their presence to broker a deal that would halt the war in Gaza and free the hostages held by the group.

The move was coordinated with the U.S. and was communicated about 10 days ago, officials said.

A spokesperson for Qatar’s foreign ministry said in a statement that reports about the Hamas office in Doha were inaccurate but that Qatar’s efforts to mediate between the parties are currently stalled.

The conflicting messages reflect the balancing act hydrocarbon-rich Qatar must strike as it triangulates between its relationships with the West and its ties in the region.

Qatar hosts a major U.S. air base that can accommodate thousands of American troops.  But it has hosted extremist groups in an effort to promote itself as a diplomatic powerbroker.

Bottom line in all the above is that the decision to pause talks is a bad sign for the Biden administration’s efforts to broker a cease-fire in Gaza, having worked closely with both Egypt and Qatar to communicate with Hamas.

--Lebanon’s Health Ministry said an Israeli airstrike on Sunday killed at least 20 people in a village north of Beirut and far from the areas in the south and east where Hezbollah has a major presence.

Tuesday, large explosions shook Beirut’s southern suburbs – an area known as Dahiyeh, where Hezbollah has a large presence – and a number were killed, about 12.  A strike on an apartment building east of Beirut killed at least six.

And an Israeli airstrike on a residential building in central Lebanon killed 15, including eight women and four children, according to the health ministry.  Some strikes came with a warning, others didn’t.

Also Tuesday, a rocket exploded in a storage building in the northern Israeli town of Nahariya on Tuesday, killing two people.  A Hezbollah drone smashed into a nursery school near the northern Israeli city of Haifa, but the children were inside a bomb shelter and there were no injuries.

Thursday, at least 12 emergency rescue workers were killed in a strike on a civil defense center in the northeastern city of Baalbek, the regional governor said.  The city’s civil defense chief, Bilal Raad, was among those found dead amid the rubble.

Lebanon’s civil defense agency, which performs emergency and medical services is an arm of the Lebanese state and is not controlled by or affiliated with Hezbollah.

Also Thursday, Israeli fighter jets bombed sites in the Syrian capital, Damascus, that the military said were affiliated with Palestinian Islamic Jihad, killing at least 15 people and wounding 16 others, according to Syrian state media.

In a statement, the IDF said the attack had “inflicted significant damage” to a command center belonging to Islamic Jihad, a militia backed by Iran.  The military blamed the Syrian government for allowing the militia to operate from its territory.

“We are conducting deep strikes and striking frequently in Syria and along the Syria-Lebanon border to prevent weapons transfers to Hezbollah,” Herzi Halevi, the Israeli military chief of staff, said Thursday.

*I checked in with my friend in Beirut, Michael Young, after not wanting to bother him for weeks.  He’s a preeminent expert on his country, and the region, and among his thoughts Thursday night were: “I don’t see this war ending anytime soon, though Israeli losses may change my assumptions.  At the same time, the Iranians are willing to fight to the last Lebanese to maintain their position in the region.  Very depressing how our communities love to act as proxies for outside powers.”

--David Ignatius / Washington Post...on Israel’s effort to get aid into Gaza....

“For the Biden team, getting Israeli cooperation has been like ‘pulling teeth,’ as one official put it.  In the first days of the war, (Sec. of State) Blinken spent hours pleading with Netanyahu to begin aiding civilians. A trickle of aid started to flow, but in January, Israeli protesters blocked relief shipments through the Kerem Shalom crossing and police did nothing.  At Blinken’s request, Israeli Defense Minister Yoav Gallant intervened and the trucks began moving again.  But last week Netanyahu fired Gallant, who had been the administration’s most reliable Israeli contact.

“Watching each horror has added to the administration’s anguish – and its sense of powerlessness.  For Blinken, an especially agonizing moment was viewing the March 1 aerial video of desperate Palestinians swarming a food convoy and then being crushed under the trucks or shot by Israelis.  Another shock was the killing of seven World Central Kitchen workers in Gaza in April.

“Biden has demanded Israeli action and set a timetable for Netanyahu to deliver. Words don’t matter anymore.  It’s a last test for the outgoing president.  If Israel doesn’t take immediate measures to protect civilians in Gaza, the United States is legally bound to stop supplying weapons for a war that should have ended months ago.”

I totally concur with Mr. Ignatius.  I have supported Israel’s conduct of the war but the last two months in particular it is just not right not to get aid into the hellhole...and it’s outrageous that when deals could have been cut for at least the women and elderly hostages remaining, that nothing happened.  It wasn’t just intransigence on the part of Hamas, as Qatar noted the other day.

This week, however, the U.S. said it would not reduce its military support for Israel after a deadline passed for allowing more humanitarian aid into Gaza.  The State Department cited some progress, while international aid groups said Israel had failed to meet the U.S. demands.

--Lastly, on the topic of the attack on Jewish football fans in Amsterdam last week, which I commented on in Friday’s WIR, but limited the coverage due to time constraints, and my ‘wait 24 hours’ principle, officials banned demonstrations for three days from last Friday after the overnight attacks on Israeli soccer supporters by what the mayor called “antisemitic hit-and-run squads,” and Israel sent planes to the Netherlands to fly fans home.

Editorial / Wall Street Journal

“Anyone who thinks the rise of antisemitism in the West is overstated should pay attention to [last] Thursday’s ugly mob assault on Israeli soccer fans in Amsterdam.  Dutch authorities say rioters ‘actively sought out Israeli supporters to attack and assault them.’

“Israel’s embassy in the U.S. said ‘hundreds of fans’ of Maccabi Tel Aviv soccer team ‘were ambushed and attacked’ after a match against the Dutch Ajax club.  Amsterdam Mayor Femke Halsema said men on scooters hunted for Israelis for ‘hit-and-run’ attacks.

“Adi Reuben, a 24-year-old Israeli, described to a BBC reporter how about 10 men ‘shouted ‘Jewish, Jewish, IDF, IDF,’ jumped him, then kicked him when he fell to the ground.  ‘My nose was broken and it is very painful. I also couldn’t see well for about 30 minutes after it happened,’ he said....

“Israeli Prime Minister Benjamin Netanyahu called in rescue flights, and efforts to evacuate Israeli tourists were underway Friday.  Jews are again fleeing the city where Anne Frank hid from the Nazis.

“How did a supposedly civilized nation in Europe come to witness this Jew-hatred again?  Some of the attackers appear to have been Muslim and Arab migrants, having brought their ethnic enmity with them from North Africa and the Middle East.  The demonization of Israel since Oct. 7, 2023, also plays a role.  As it happens, the International Criminal Court that may soon indict Israeli leaders for their self-defense campaign in Gaza is based in The Hague, only an hour’s drive from the site of the mob attacks.

“Mayor Halsema called the assaults a cause for ‘shame’ and described emergency measures including some restrictions on demonstrations and a ban on face coverings.  Better late than never, but Amsterdam’s Jewish residents and visitors are justified in asking why more wasn’t done to prevent this modern example of humanity’s ancient hatred.”

The above was in the Journal’s Saturday print edition.  The attacks and violence then continued, protesters torching a tram Monday evening.

Amsterdam is a wonderful and beautiful place, with terrific museums, food and drink, and a good train system to take you out to some of the charming villages.  Last time I was there, I availed myself of all the city had to offer, so much of it within walking distance.

But as city officials knew immediately, Amsterdam’s image took a severe hit, and this will impact the economy.

At week’s end, there were major concerns the violence would spread to France and elsewhere.

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Russia-Ukraine

--As the Wall Street Journal reported: “For months, Russian forces have been pushing back Ukraine’s military in the east and devastating its energy grid with aerial bombardments, Kyiv has struggled to field enough troops or weapons to stop them.

“Now, Ukrainian soldiers see a new potential threat: U.S. President-elect Donald Trump’s looming peace push.

“Whatever shape Trump’s attempt to end the war takes, Ukrainians say laying down their weapons now would store up trouble for years to come against an enemy determined to regain control of its former vassal.

“ ‘Freezing this conflict or giving concessions is to bestow the war on our children,’ said a battalion commander in a bunker beneath a shattered town on Ukraine’s southern front.”

Most Ukrainian want the war to end only if Ukraine regains control over the 20% of its territory currently occupied by Russia, and that’s just not happening.  Vladimir Putin has zero incentive to agree to any peace deal that falls short of his desire for control over Ukraine.

--Ukrainian President Volodymyr Zelensky has said his military’s ongoing incursion into Russia’s Kursk region is now holding down 50,000 Russian troops.

In his daily address to the nation, Zelensky said the operation was reducing Moscow’s ability to attack inside Ukraine itself. The president has long cited this as the goal of the offensive, despite skepticism from some Western allies.

According to the Institute for the Study of War, Russia had 11,000 troops in Kursk when Ukraine began its shock incursion in early August.

But a New York Times report suggested Moscow has achieved its troop build-up in Kursk without any need to pull its soldiers out of Ukraine.

North Korean troops are being deployed in Kursk as part of an imminent counter-offensive.

--Fighting continues to rage in Donetsk, where Russian troops have been slowly advancing in the region for months towards the key city of Pokrovsk – a major supply hub for Ukrainian forces.

The UK’s chief of defense staff told the BBC on Saturday that October was the worst month for Russian casualties, which occurred at a rate of 1,500 a day for a monthly tally of 46,500. The U.S. said earlier this month that Russian recruiting was down slightly from previous months to about 25,000 to 30,000 soldiers a month.

--Last Saturday night, Ukraine’s air force said Russia launched 145 drones towards every part of the country, with most shot down.

At the same time, Ukraine carried out its largest drone attack on Russia, with Russia’s defense ministry saying it intercepted 84 drones over six regions, including some approaching Moscow, which forced flights to be diverted from three of the capital’s major airports.

In an area southwest of Moscow, five people were injured and four houses caught fire due to falling debris, the Russian Ministry of Defense said.

Ukraine’s injuries were limited.

But then a further attack on Monday saw five people killed in Mykolaiv, southern Ukraine, as an air attack left residential buildings on fire, according to the regional governor.

--Russia struck Kyiv with a sophisticated missile and drone attack for the first time in 73 days on Wednesday morning, though damage was limited and no one killed.  Ukrainian defense forces destroyed several cruise and ballistic missiles and up to a dozen drones.  Debris from the attack caused a fire at a warehouse, Kyiv officials said.

But daytime electricity supply restrictions for businesses and industry due to Russian shelling and deficit in power generation were put in place.

--The Washington Post reported in an ‘exclusive’ that President-elect Trump spoke with Vladimir Putin a week ago Thursday, according to several people familiar with the matter.

During the call, “he advised the Russian president not to escalate the war in Ukraine and reminded him of Washington’s sizable military presence in Europe, said a person familiar with the call, who, like others interviewed for this story, spoke on the condition of anonymity to discuss a sensitive matter.

“The two men discussed the goal of peace on the European continent and Trump expressed an interest in follow-up conversations to discuss ‘the resolution of Ukraine’s war soon,’ several of the people said.” [WP]

But the Kremlin denied that Putin held a phone talk with Donald Trump.

“This is completely untrue, it is pure fiction,” spokesman Dmitry Peskov told reporters on Monday.  “There was no conversation.”

In an interview with the New York Times, Adm. Rob Bauer, the Dutch chairman of NATO’s Military Committee, suggested that any peace deal negotiated by Trump that allowed Putin to claim victory in Ukraine would undermine the interests of the United States.

“If you allow a nation like Russia to win, to come out of this as the victor, then what does it mean for other autocratic states in the world where the U.S. also has interests?”

He added: “It’s important enough to talk about Ukraine on its own, but there is more at stake than just Ukraine.” [Lara Jakes / NYT]

--Editorial / Wall Street Journal

“President Biden hosts Donald Trump at the White House on Wednesday, and word is that he’ll urge the former President to keep supporting Ukraine.  The implication of the White House leaks is that Mr. Trump might abandon Mr. Biden’s stalwart policy, but the truth is that the President is leaving Ukraine and Mr. Trump in a bad place.

“Ukraine isn’t losing the war, but thanks in part to Mr. Biden’s limits on its defenses Kyiv isn’t winning either.  The war has devolved into a bloody stalemate with horrific casualties on both sides.  Russia is making slow territorial gains in Ukraine’s east at high cost.  Ukraine has held its salient in Russia’s Kursk region, but the Kremlin is massing for an assault to repel the Ukrainians with the help of some 10,000 North Korean troops.

“Mr. Biden’s Ukraine policy isn’t the triumph that he and the press advertise.  [Ed. not me!]  At every stage of the war he has limited the military aid the U.S. would provide and how it was used.  Artillery, Patriot air defense, tanks, F-16s and long-range missiles: the Pentagon has delayed providing advanced weapons for fear that Vladimir Putin might escalate the conflict.

“The limits have hurt Ukraine’s ability to go on offense against Kremlin forces, including key nodes of supply, communications and weapons stores inside Russia.  Mr. Putin’s forces have until recently had a sanctuary inside Russia to attack Ukraine without fear of being hit.  Even now the U.S. restricts Ukraine from long-range missile strikes on Russian territory.  The U.S. learned the hard way in Vietnam and Afghanistan that you can’t win a war when your enemy has a safe haven....

“Mr. Biden and Western leaders have also failed to stanch Mr. Putin’s income from oil and gas sales.  Europe still imports Russian natural gas, incredibly enough, and the G-7 oil price cap has largely failed.  China helps Russia with economic aid and dual-use technology, and the U.S. hasn’t been able to stop Iran from supplying Russia with missiles and drones.

“This is the Ukraine war that Mr. Trump will inherit, and it isn’t a counsel of defeat.  Mr. Putin faces pressure of his own as his casualties mount.  But Mr. Biden shouldn’t be able to get away with claiming success.  In any case the mess will soon be Mr. Trump’s.”

Lastly, as a report in the New York Times noted, security guarantees are likely to be a thorny issue in any peace negotiations.  Officials in Kyiv have been seeking NATO membership to prevent renewed attacks from Russia.  The Kremlin has signaled that such a move would be a deal breaker for any cease-fire agreement.  Western officials have signaled that they want Ukraine to join NATO, but not on any kind of accelerated timetable.

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Wall Street and the Economy

Wednesday’s key consumer price index report for October came in exactly as expected, up 0.2% and 2.6% year-over-year on headline, and 0.3%, 3.3% ex-food and energy.

But while all four numbers were in line, nonetheless the 2.6% figure was up 0.2% from the prior reading, and it’s not the Fed’s targeted 2%; let alone the core reading of 3.3%, same as September, and far from 2.0%.

The index for shelter rose 0.4% in October, accounting for over half of the monthly all items increase.  The food component also increased, up 0.2%. At least the rate of increase for car insurance is coming down.

Thursday’s producer price data for last month was basically in line as well...up 0.2%, 2.4% year-over-year, and 0.3% and 3.1%, ex-food and energy.  The two Y/Y numbers were a tick higher than forecast.

But then Thursday afternoon, addressing a forum in Dallas, Fed Chair Jerome Powell said the central bank does not need to be “in a hurry” to lower interest rates due to the economy’s strength, and that the Fed would be “watching carefully” to make sure certain inflation measures stay within an acceptance range.

“The economy is not sending any signals that we need to be in a hurry to lower rates,” Powell said in prepared remarks.

“The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”

Powell conceded inflation isn’t at the Fed’s 2% target yet. 

“We expect that these rates will continue to fluctuate in their recent ranges,” he said.  “We are watching carefully to be sure that they do.”

The path to the Fed’s goal of 2%, he added, will be “sometimes bumpy.”

While the comments bummed out the bond market, with the yield on the 10-year back over 4.40%, most economists and traders see the Fed still cutting rates a further 25 basis points in December. The Fed gets to see one more CPI report for November before its next meeting, and also a key PCE report, and particularly with the former, the CPI data is expected to be more favorable.

But the lack of recent progress getting to 2% certainly puts future rate cuts beyond December in doubt, at least at the start of 2025, with the new administration’s policies beginning to take shape.

And then on Friday, we had a strong retails sales report for October, 0.4%, a tick better than consensus, but September’s figure was revised sharply higher to 0.8% from 0.4%, and that helped spook the bond market further.

Next week is relatively quiet on the data front.

The Atlanta Fed’s GDPNow barometer for fourth-quarter growth is at 2.5%.

Freddie Mac’s 30-year fixed-rate mortgage is 6.78%, down a tick from the prior week.

Europe and Asia

In a flash estimate of third-quarter GDP for the euro area increased by 0.4% vs. Q2, and compared with the same quarter a year earlier, GDP rose 0.9%, per Eurostat.

Q32024 vs. Q32023

Germany -0.2%, France 1.3%, Italy 0.4%, Spain 3.4%, Netherlands 1.7%

One other item in the EA20, also via Eurostat...September industrial production fell 2.0% compared with August, not a great sign, and was down 2.8% from a year ago.

Germany: Chancellor Olaf Scholz and his ruling Social Democrats reached agreement with the main opposition party, the Christian Democratic Union, to hold an early election on February 23rd after days of quarrelling.  Scholz had originally proposed a date in March; the CDU wanted it earlier to avoid uncertainty.  Germany’s coalition government collapsed last week after Scholz fired his finance minister.

Now, there are growing calls for Scholz to step aside and let his Defense Minister Boris Pistorius lead the center-left party into the election.

Separately, Scholz’s independent panel of experts said this week that the German economy will hardly grow next year as underlying problems add to cyclical weakness.

GDP is set to increase by just 0.4% in 2025, the Council of Economic Experts predicted in a twice-yearly report published Wednesday in Berlin, joining other forecasters in scaling back earlier growth projections.  For 2024, the council sees a contraction of 0.1%. 

Bundesbank President Joachim Nagel warned earlier Wednesday that Donald Trump’s threatened trade levies risk derailing the economy.  Surveys point to poor consumer sentiment.

Spain: Southern Spain continued to suffer from extreme rain and flooding, this week with thousands of people evacuated from their homes in the Costa del Sol region, with both Malaga and the northeastern Catalonia region on the highest alert for strong rain expected to last until Friday.

Up to seven inches of rain fell in some areas in just 12 hours.  Schools and supermarkets have been closed in Malaga.

But I placed this story here rather than down below, because as I noted when the storms first ravaged the Valencia region last month that this was going to be a problem for the government, and more than 100,000 protesters took to the streets last weekend as there are calls for the resignations of rightwing local government leaders, who ignored warnings and blocked measures to address the growing risks posed by climate change.

Protesters have called for the resignation of Prime Minister Pedro Sanchez, as well as the Valencia region’s conservative leader, Carlos Mazon, accusing them of negligence and murder because public alerts came too late.

I told you earlier that a big cause of these torrential rains is the rapidly rising temperature of the Mediterranean Sea.

Turning to Asia...lots of important data from China’s National Bureau of Statistics this week.

October industrial production was up 5.3% year-over-year; while retail sales rose a stronger-than-expected 4.8%, vs. 3.2% prior, so a good sign the consumer is beginning to spend.  Year-to-date fixed asset investment rose 3.4%.  [Recall the old days, when this figure was consistently in the double digits, back when China was building all its railroads, highways, and airports.]

October inflation data had prices rising just 0.3% from a year ago, vs. 0.4% in September.  Producer prices fell 2.9% Y/Y vs. -2.8% prior.

The October unemployment rate was 5%.

China’s vehicle sales surged by 7% year-on-year to 3.05 million units in October, rebounding sharply from a 1.7% drop in the previous month, according to data from the China Association of Automobile Manufacturers.  Sales of new energy vehicles soared by 49.6% to a new record high of 1.43 million units.  For the first ten months of the year, total vehicle sales rose by 2.7% to 24.6 million units.

Lastly, President Xi Jinping launched a week-long diplomatic blitz of South America by inaugurating a massive deep-water port in Peru, a $1.3 billion investment by Beijing as it seeks to expand trade and influence on the continent, at the expense of the U.S.

Japan reported out third-quarter GDP, a preliminary reading pegging it at 0.9% annualized vs. 2.2% in the prior quarter.

October producer prices rose 3.4% year-over-year.  September industrial production fell 2.6% Y/Y.

Meanwhile, Japanese lawmakers voted on Monday for Prime Minister Shigeru Ishiba to stay on as leader, after his scandal-tarnished coalition lost its parliamentary majority in a lower house election last month.

Ishiba, who garnered 221 votes, well clear of his nearest challenger, but still short of a majority in the 465-seat lower house, must now run a fragile minority government as protectionist Donald Trump returns to office.

Ishiba’s cabinet approval rating has plummeted from 51% to 32% over the past month, according to Kyodo, a newswire.

Street Bytes

--Warren Buffett likes to say, “be fearful when others are greedy,” and he’s been building up his cash position, selling his stakes in companies like Apple and Bank of America (though he still owns a ton of Apple)*, but he is in a distinct minority these days.  It’s about the incoming Trump administration, more tax cuts and deregulation.  Wall Street likes that.  And more than a few voices are also talking about deal-making being back.

The banking sector has been surging since the election.  JPMorgan Chaes CEO Jamie Dimon explained, “A lot of bankers have been dancing in the streets” after Trump’s win because regulation under President Biden crimped lending, he said.

Stocks did correct some this week, however, after last week’s prodigious post-election gains.  The Dow Jones, S&P 500 and Nasdaq all hit further record highs Monday, and then fell the rest of the week on the strong economic numbers, still sticky inflation data, and fears the Fed could pause with its rate cuts.

The Dow Jones finished the week down 1.2% to 43444, while the S&P lost 2.1% and Nasdaq 3.1%.

*Berkshire Hathaway did disclose today it had taken stakes in Domino’s Pizza and Pool Corp., both stocks rising in response, though DPZ fell later in the session amidst the general market swoon.

Next week it’s all about Nvidia’s earnings report, as well as Walmart’s.

--U.S. Treasury Yields

6-mo. 4.47%  2-yr. 4.30%  10-yr. 4.43%  30-yr. 4.60%

Early in the week, the yield on the 10-year rose to 4.43% on worry that Wednesday’s CPI report would offer up a negative surprise.  But it didn’t, at least initially.

The PPI, though, was stubbornly high and retail sales were strong, and so Fed doubts prevailed, as the 10-year rose to 4.49%, but then finished the week at 4.43%, up 12 basis points from last Friday.

--Crude oil prices fell sharply on Monday after China’s stimulus measures fell short of expectations, heightening concerns about demand in the world’s second-largest consumer.  Market sentiment was further strained by Trump’s election win and his pro-drilling stance.

And then U.S. crude inventories last week rose more than expected, while the International Energy Agency (IEA) projected an oil surplus for next year, citing slowing demand growth in China and increased global production.  The agency also highlighted that the surplus could be exacerbated if OPEC+ proceeds with plans to restore previously curtailed production.

West Texas Intermediate ended the week at $67.00.

--Exxon Mobil CEO Darren Woods says President-elect Trump shouldn’t pull the U.S. from the Paris agreement to mitigate climate change, putting the oil giant at odds with the incoming administration.

In an interview, Woods said a second U.S exit from the 2015 accord – as Trump has proposed – would create uncertainty and could confuse global efforts to stop the worst effects of climate change.  Exxon has publicly supported the goals of the accord since 2015.

Woods was in Baku, Azerbaijan this week, rubbing elbows with world leaders at the annual UN climate conference, known as COP29.

Exxon has recently expanded its outreach to government officials touting its carbon-cutting investments and is advising them to pursue global carbon accounting measures.  It also has engaged more frequently with some officials critical of the oil industry’s contributions to the world’s greenhouse-gas emissions, including in the Biden administration.

I’ve always said regarding the Paris accords that it is better to have a seat at the table.  You don’t have to meet any financial targets set (that’s called politics), but better to make the U.S. look even somewhat cooperative than the opposite.

--Home Depot forecast a smaller drop in annual same-store sales on Tuesday, benefiting from resilient demand from professional contractors, as well as a lift from hurricane-related spending.

Shares of the home improvement chain rose a bit as it also posted better-than-expected quarterly results, signaling a rebound in demand amid expectations of a drop in mortgage rates.

“As weather normalized, we saw better engagement across seasonal goods and certain outdoor projects as well as incremental sales related to hurricane demand,” CEO Ted Decker said in a statement, referring to the destruction of Hurricanes Helene and Milton.

Home Depot has battled choppy demand over the past two years, as sticky inflation and higher borrowing costs prompted customers to pause large-scale home remodels and focus on repair and maintenance activities around their existing homes.

HD posted a 1.3% decline in comparable sales, its eighth straight quarter of declines, compared with analysts’ average estimate of a 3.25% drop.  The company earned $3.67 per share, beating estimates of $3.64.

Comp sales are expected to fall 2.5% for fiscal 2024, compared with a prior range of a 3% to 4% drop.

--Cisco Systems raised its annual revenue forecast on Wednesday, a sign of improving demand as the computer networking equipment maker shifts its focus to cybersecurity, cloud systems and AI-driven products.

Companies have ramped up investments in AI technologies which require heavy computing power, creating a spike in demand for data centers, which use Cisco’s products such as ethernet switches and routers.

“Our customers are investing in critical infrastructure to prepare for AI, and with the breadth of our portfolio,” CEO Chuck Robbins said in a statement.

The company has announced two rounds of layoffs this year in a bid to cut costs and focus investments in areas such as cybersecurity.

CSCO now expects annual revenue to be between $55.3 billion and $56.3 billion, compared with its earlier forecast of between $55.0 billion to $56.2 billion.

Its revenue fell 6% to $13.84 billion for the first quarter ended Oct. 26, compared with estimates of $13.77 billion. Adjusted profit per share of 91 cents, compared with consensus of 87 cents.

The stock did zero in response.

--Foxconn Technology Group reported better-than-expected profit for the third quarter, thanks to continued high demand for AI-related hardware, the latest sign that its recent focus is paying off.

The Taiwanese company has been taking steps in recent years to diversity its line of business, which now include servers and electric vehicles.  Known for assembling iPhones for Apple, among other things, Foxconn is playing an increasingly important role in building AI servers for U.S. tech giants such as Amazon and Nvidia.

The world’s largest contract electronics maker on Thursday said its third-quarter net profit rose 14% to 49.325 billion New Taiwan dollars, equivalent to $1.52 billion, beating consensus. Revenue was up 20%.

AI server sales grew over 200% in the first nine months of the year and are expected to be the biggest driver of Foxconn’s business in 2025, Chairman Young Liu said during the earnings call.

--Spirit Airlines Inc. is closing in on a deal with creditors that would restructure its crushing debt load in bankruptcy court after discussions for a tie-up with rival Frontier Group Holdings Inc. fell apart.

An agreement with creditors is “expected to lead to the cancellation of the Company’s existing equity,” Spirit said in the filing.

Representatives for Spirit and Frontier declined to comment. Spirit had been in talks with Frontier about filing for bankruptcy as a way to facilitate a takeover by the rival discount carrier.

The ultradiscount airline has been struggling to find a way forward after its proposed takeover by JetBlue Airways was blocked on antitrust grounds earlier this year.

Well, I said when the government blocked the proposed merger that it would result in Spirit’s bankruptcy, and JetBlue isn’t out of danger itself, though its shares have been rallying on the Spirit news.

Separately, a Spirit Airlines plane diverted to the Dominican Republic, and one crewmember was injured when it was apparently struck by gunfire while attempting to land at Toussaint Louverture International Airport in Port-au-Prince, Haiti, on Monday.

The flight was on its way from Fort Lauderdale to Port-au-Prince when the incident happened.

A JetBlue flight was also apparently hit by gunfire while departing Haiti on Monday, but it continued safely to New York.

The FAA has now banned all flights to Haiti for 30 days.

--Boeing shares struggled anew as the airline began issuing layoff notices in its quest to trim 10% of its workforce.  The company also said it handed over just 14 commercial planes in October, marking a sharp decline from the 34 aircraft it delivered during the same month last year as a seven-week strike by its biggest union crippled much of its production.

Boeing said it booked 63 gross orders in October and had zero cancellations.  The company’s official backlog went from 5,410 as of Sept. 30 to 5,462 a/o Oct. 31.

With the strike settled, it will nonetheless take several weeks before factories can fully restart airplane production, as there are multiple steps involved in the process, Boeing said on Tuesday.

--TSA checkpoint numbers vs. 2023

11/14...100 percent of 2023 levels
11/13...94
11/12...102
11/11...106
11/10...99
11/9...104
11/8...103
11/7...98

--Elon Musk added almost $60 billion to his net worth last week on the back of Tesla stock’s massive 29% gain.  Musk was worth roughly $330 billion. [He still is...the stock was virtually unchanged this week.]

Investors clearly believe a second Trump presidency will benefit Tesla somehow – either in the form of reduced regulations for self-driving cars or reduced support for other EV makers.

Musk also owns more than 40% of SpaceX, according to Bloomberg, and it stands to benefit from a second Trump presidency, too.

SpaceX doesn’t get any material grants directly from the Feds, but it wins contracts, deservedly so, such as for taking astronauts to and from the International Space Station and resupplying ISS.

SpaceX isn’t publicly traded but it has an estimated value of $210 billion.

--Shares in Disney surged 10% Thursday after the company reported fiscal fourth-quarter adjusted profit that beat the Street’s expectations, bolstered by strong results from its streaming service and box office success with “Inside Out 2” and “Deadpool & Wolverine.”

Disney earned $460 million, or 25 cents per share, for the period ended Sept. 28.  A year earlier the company earned $264 million, or 14 cents per share.  Adjusted earnings of $1.14 topped consensus for $1.09.

Revenue climbed 6% to $22.57 billion; a bit shy of estimates.

Operating income for the entertainment segment, which includes its movie studio and parts of its television wing, more than quadrupled to $1.07 billion, again helped by the strong performance of the above two noted films.

The Street loved that the direct-to-consumer business, which includes Disney+ and Hulu, reported quarterly operating income of $253 million compared with an operating loss of $420 million a year earlier.  Revenue rose 15% to $5.78 billion.

The combined streaming businesses, which includes Disney+, Hulu and ESPN+, achieved profitability for the first time in the third quarter.

Disney added 4.4 million new core Disney+ subscribers, far more than the 900,000 new customers that Wall Street analysts expected, bringing the total number to more than 120 million.

The Experiences division, which includes six global theme parks, its cruise line, merchandise and videogame licensing, reported operating income dropped 6% to $1.7 billion.

Disney previously forecast that its fourth-quarter Experiences operating income would fall by mid-single digits compared with the prior-year period due to domestic parks moderation as well as cyclical softening in China and less people at Disneyland Paris due to the impact the Olympics had on normal consumer travel.

Looking ahead, Disney anticipates high-single digit adjusted earnings per share growth for fiscal 2025.  The company predicts double-digit EPS growth for fiscal 2026 and 2027, and the Street liked this guidance.

--Netflix shares hit a new record Tuesday, after the company announced that its advertisement-supported subscription tier has hit 70 million global monthly active users.

Netflix said on Tuesday that “over 50% of new Netflix sign-ups are for the ads plan in ad-supported countries.”

“We continue to see positive momentum and growth across all areas of the business,” Netflix said in a news release.

The shares are up about 70% this year.

The company also said it has sold out of all available in-game ad inventory for the two live NFL games it will broadcast on Christmas Day.

--Automaker stocks fell Thursday after Reuters reported Donald Trump is planning to propose Congress kill a $7,500 consumer tax credit for electric cars (this despite his new right-hand man being Tesla co-founder Elon Musk) as part of a promised attack on efforts to cut fossil fuel use.  Rivian shares slid 11% and Ford and GM pared earlier gains.  Tesla fell nearly 5%, though Musk doesn’t care because killing the credit will damage his rivals.

The credit was a signature element of President Biden’s Inflation Reduction Act, which poured billions of dollars into supporting the green transition and on-shoring EV manufacturing. Auto makers have been paring back plans around EVs this year on consumer demand for hybrids instead.

--The National Highway Traffic Safety Administration hit Ford Motor with a hefty $165 million civil fine for delaying the recall of more than 600,000 vehicles with defective rearview cameras.  NHTSA said the penalty is the second-largest in its history and is part of a consent order that will also require Ford to review all recalls it has issued over the past three years to ensure they have been adequate.

The consent order is the latest setback for Ford, which has been trying to turn around its subpar quality record and reduce the number of vehicles it has had to recall in recent years.

--Tyson Foods beat Wall Street expectations for fiscal fourth-quarter results on Tuesday, as lower costs and strong demand for its pork and beef products helped offset a slowdown in the chicken segment, sending its shares higher.

More people are cooking at home rather than dining out due to higher food prices, which is helping Tyson Foods, which has been enjoying a rebound in demand for pork products after a decline in their prices compared to last year.

Tyson’s pork segment reported a 3.2% rise in fourth-quarter volumes, while prices fell 6.9%.  Volumes in the beef segment rose 3.7%, hinting to strong demand at a time when U.S. meat packers including Tyson Foods are facing short supply of beef, as producers remain unwilling to start rebuilding herds.

Sales in the chicken segment rose 2.3% in the fourth quarter, while prices were up 0.2%.  Volume in the segment dropped 0.7%.

The U.S. saw its herd shrink to its smallest level in seven decades, following a standstill in herd expansion as dryness in weather and years of drought burned up pastures and forced farmers to send more cows to slaughter.

Adjusted earnings came in at 92 cents per share, above consensus of 69 cents.  Net sales rose 1.6% to $13.57 billion, above expectations of $13.39bn.

The company expects fiscal 2025 revenue to be between flat and down 1%.  Analysts were at a rise of 1.8% to $54.09bn.

--Wall Street is looking at a joyful holiday season, in terms of bonuses.  A Wall Steet compensation consulting firm Johnson Associates projects that bond underwriters will have the biggest year-end bonus jump, 25% to 35% over last year.  It’s the first time since 2021 that year-end bonuses will increase industrywide.

Stock underwriting bankers could see a 15% to 25% jump, and equity sales and trading desks 15% to 20%.  In investment banking, the advisory groups will see a lower bump of 5% to 10%, while hedge fund bonuses are expected to increase by 5% to 15%.  [Barron’s]

--Bitcoin hit $88,000 Monday evening, and other cryptocurrencies were racking up gains, as investors bet Donald Trump’s second term will boost digital assets.  Bitcoin just passed $80,000 for the first time on Sunday.  Bitcoin then hit $90,000, and finished at $91,500 as of 4:00 PM Friday.

Trump promised over the summer that he’d make the U.S. “the crypto capital of the world” and replace SEC Chair Gary Gensler, who’s seen as a digital-asset hawk.

--The U.S. Postal Service said on Thursday it must continue to cut costs and boost revenue or risks requiring a government bailout to help the organization avoid financial collapse.

USPS reported on Thursday a net loss of $9.5 billion for its fiscal year ending Sept. 30, a $3-billion bigger loss than last year, largely due to a year-over-year increase in non-cash workers’ compensation expense.  Total operating revenue was $79.5 billion, up 1.7%.

“If we do nothing more, we remain on the path to either a government bailout or the end of this great organization as we know it,” the Postal Service said in its revised restructuring plan.

USPS has lost more than $100 billion since 2007.

First-class mail volume continues to fall, dropping 3.6% year-over-year to 44.3 billion pieces.  First-class mail use is down 80% since 1997 and is at its lowest level since 1968

--Public-health officials in Canada said over the weekend that a teenager had been hospitalized with H5 avian influenza, or bird flu, the latest in a series of potentially worrying developments tied to the virus.

Details about the case were scant. It isn’t clear whether the virus that infected the teenager is closely related to the virus that has infected dozens of U.S. farmworkers this year.

If the teenager was hospitalized due to severe symptoms, that would represent a new and distinctly troubling development in the trajectory of a virus that has caused increasing worry among public-health experts this year.

Virtually all of the nearly 50 cases of H5 avian influenza confirmed in the U.S. this year by the CDC have been mild.

--“Today” announced that Craig Melvin will take up the helm as Hoda Kotb’s replacement.

Kotb said she would mark her farewell from the NBC show that your editor always watches the first 20 minutes of on Jan. 10.

Foreign Affairs, Part II

China: Security was stepped up in the southern Chinese province of Guangdong after 35 people were killed in a car attack outside a stadium in Zhuhai on Monday.

This was so heinous.  The car plowed into crowds exercising on the grounds of an outdoor sports center on Monday evening.  Another 40 people were injured and hospitalized.

The SUV crashed into multiple fitness walking groups hitting dozens of participants, as reported by Chinese media outlet Caixin. 

“(The vehicle) struck all around, injuring people in various sections of the sports field’s circular track,” a witness told Caixin.

The man alleged to be the driver is a 62-year-old man who was allegedly unhappy with the outcome of a divorce settlement, according to police.  He was apprehended while he was trying to flee the scene.

Authorities are looking for officials to hold accountable for the attack, according to one Guangdong official. They said security had been tightened, especially in crowded areas.

While China generally has low violent crime rates, it has seen a spate of attacks targeting random members of the public, including school children, in recent months.

China’s biggest air show has been taking place this week – showcasing the military’s latest warplanes and drones – and that is underway in Zhuhai, so changes were made to the media briefings.

President Xi Jinping on Tuesday described the attack as “extremely vicious” and urged local governments to “strengthen the prevention and control of risks and promptly resolve conflicts and disputes.”

“This is a top priority now, given the horrible incident in Zhuhai,” the Guangdong official said.  “The attacker in Zhuhai is said to have relationship difficulties, so our task now is to identify other residents experiencing similar difficulties and to offer then assistance.  We hope to make sure there are no copycats.”

But after a flurry of initial stories on the incident, the government shut off further reporting.

Meanwhile, Taiwan is reacting cautiously to the election of Donald Trump, as leaders there prepare for a more delicate, possibly testy, relationship upon his return to the Whitei House.  Trump had suggested on the campaign trail that Taiwan should pay the United States for helping defend the island from China and complained that Taiwan had stolen America’s business in semiconductors.

Back in 2016, Taiwan’s president called Trump to congratulate him after he won the election. Trump took the call, becoming the first American president or president-elect to speak to a Taiwanese leader in decades.

But this time, the current leader, Lai Ching-te, issued a congratulatory statement instead.  A call with Trump could prompt a forceful reaction from China.

As for the view from the mainland, China’s ambassador to Washington told a forum in Hong Kong today that Taiwan is the “biggest flashpoint” between China and the U.S., and any attempt to use the island as leverage with Beijing will only backfire.

Speaking via videolink to the U.S.-China Hong Kong Forum, Xie Feng said:

“The Taiwan question is at the very core of China’s core interests, and it is the bedrock of the political foundation of China-U.S. relations. If mishandled, it could be the biggest flashpoint that may trigger conflict and confrontation,” Xie said.  “Any forces trying to play Taiwan as a card would be playing with fire.”

North Korea: Pyongyang ratified a defense treaty with Russia which commits each country to “immediately provide military and other assistance” if the other is at war.  The countries’ leaders, Kim Jong Un and Vladimir Putin, agreed to the deal at a summit in June.  And then you saw what North Korea did, send a reported 11,000 troops to Russia for use in Ukraine.

Separately, South Korea accused Pyongyang of blocking its GPS signals last Friday and Saturday, which disrupted shipping vessels and civilian aircraft, the South said.

Iran: Foreign Minister Abbas Araqchi denied U.S. charges that Tehran was linked to an alleged plot to kill Donald Trump and called on Saturday for confidence-building between the two hostile countries.

“Now...a new scenario is fabricated...as a killer does not exist in reality, scriptwriters are brought in to manufacture a third-rate comedy,” Araqchi said in a post on X.

As to the election, Araqchi said: “The American people have made their decision. And Iran respects their right to elect the President of their choice.  The path forward is also a choice.  It begins with respect.

“Iran is NOT after nuclear weapons, period. This is a policy based on Islamic teachings and our security calculations. Confidence-building is needed from both sides. It is not a one-way street,” he added.

Or so Tehran would have you believe.

Sudan: At the UN Security Council meeting this week, the disaster in Sudan was at the top of the list.  During the 18-month-long civil war about 150,000 people have been killed and 11m displaced.  Britain, which holds the Security Council presidency for November, will introduce a resolution to better protect civilians and speed up aid deliveries. Both are needed urgently.

Atrocities in the western region of Darfur continue.  The Rapid Support Forces, a paramilitary group, is accused of slaughtering 124 civilians in a village in the state of Gezira on Oct. 25th.  The fear of widespread famine grows, particularly as an agreement between the UN and the Sudanese authorities to use the Adre border crossing with Chad to bring in supplies is due to expire in mid-November. And after malnutrition comes disease.  Last week the UN reported 28,000 cases of cholera from July to October, with 836 deaths.  Instances of dengue fever have also surged.  Whatever happens at the UN, the country’s suffering continues.

Random Musings

--Presidential approval ratings....

Gallup: 41% approve of President Biden’s job performance, 56% disapprove; 38% of independents approve (Oct. 14-27).

Rasmussen: 43% approve, 55% disapprove (Nov. 15).

--Among President-elect Trump’s early personnel moves...

Rep. Elise Stefanik was selected to serve as Ambassador to the UN.

“Elise is an incredibly strong, tough, and smart America First fighter,” Trump said in a statement announcing his pick.

Stefanik, 40, serves as House Republican Conference Chair and has long been one of Trump’s most loyal allies in the House.

In 2014, at 30, she became the youngest woman ever elected to Congress, representing upstate New York.

For “border czar,” Trump picked former immigration chief Tom Homan, who Trump said in a Truth Social post will be “in charge of our nation’s borders (‘The Border Czar’), including, but not limited to, the Southern Border, the Northern Border, all Maritime, and Aviation Security,” Trump said.

Trump added that Homan will be in charge of the deportation of illegal immigrants.

Stephen Miller was chosen to serve as White House deputy chief of staff for policy.  Miller, who I’ll put it gently I am not a fan of, served as a senior adviser to Trump during his first administration and has been a leading advocate for a more restrictive immigration policy.  He’ll take on an expanded role in the second term.

Monday, Trump asked Rep. Michael Waltz (R-Fla.), a retired Army National Guard officer and Green Beret/war veteran, to be his national security adviser, and Florida Republican Sen. Marco Rubio for secretary of state, both China hardliners, for one, while questioning the current administration’s policies on Ukraine.

Trump also picked South Dakota Governor Kristi Noem to serve as the next secretary of the Department of Homeland Security.  The department is responsible for everything from border protection and immigration to disaster response and the U.S. Secret Service.

Former New York Republican Rep. Lee Zeldin was tapped to lead the Environmental Protection Agency, with Zeldin saying he will seek to roll back regulations that Trump says hamstring the oil and gas industry and other businesses.

Tulsi Gabbard, a former Democratic member of Congress and presidential candidate, was chosen to serve as director of national intelligence, as he continues to stock his Cabinet with loyal personalities complimentary to his own, rather than long-term professionals in their requisite fields.

Trump then said he is nominating Fox News host and Army veteran Pete Hegseth to serve as his defense secretary.

Hegseth deployed to Iraq and Afghanistan and unsuccessfully ran for Senate in Minnesota in 2012 before joining Fox News.

“With Pete at the helm, America’s enemies are on notice – Our Military will be Great Again, and America will Never Back Down,” Trump said in a statement.  “Nobody fights harder for the Troops, and Pete will be a courageous and patriotic champion for our ‘Peace through Strength’ policy.”

Hegseth is no fan of NATO and has railed against “woke” generals.

Trump’s transition team is considering creating an advisory board “with the power to review three- and four-star officers and to recommend removals of any deemed unfit for leadership,” the Wall Street Journal reported Tuesday. The idea has been formulated in a draft executive order that aligns with a campaign promise to fire “failed” and “woke generals” in the U.S. military.

“The potential for this to go wrong is infinite,” one former senior Pentagon official told the Journal.

One expert told Defense News: “If you are looking to fire officers who might say no because of the law or their ethics, you set up a system with completely arbitrary standards,” one former Army lawyer warned.

[More below on the topic.]

Former Director of National Intelligence John Ratcliffe was tabbed to lead the Central Intelligence Agency.

Former Arkansas Gov. Mike Huckabee was chosen to be the next ambassador to Israel, with Steven Witkoff to be a special envoy to the Middle East.  Aside from Huckabee’s staunch pro-Israel stance, he has said some rather incendiary things about Palestinians, such as “there’s really no such thing as a Palestinian” and argued that all of the West Bank belonged to Israel.

And then President-elect Trump tapped Rep. Matt Gaetz to be the next Attorney General.  Gaetz resigned from his seat late Wednesday, as the House Ethics Committee, which has been investigating allegations that he had engaged in sexual misconduct and illicit drug use, was prepared to release a highly critical report about Gaetz on Friday.  But Gaetz’ resignation effectively ends the investigation that has hung over his head for years.

The question is whether the Senate, as part of its confirmation process, would have access to the House report’s findings.

--Editorial / Wall Street Journal

“President-elect Trump’s cabinet is shaping up to include many good people who will reassure the public that it didn’t blunder by betting on a second term. But Mr. Trump might undo it all if he follows through with what he said Wednesday afternoon.

“ ‘It is my Great Honor,’ he wrote, ‘to announce that Congressman Matt Gaetz, of Florida, is hereby nominated to be The Attorney General of the United States.’....

“This is a bad choice for AG that would undermine confidence in the law.  Mr. Trump lauded Mr. Gaetz’s law degree from William and Mary, but it might as well be a doctorate in outrage theater.  He’s a performer and provocateur, and his view is that the more explosions he can cause, the more attention he can get.  ‘It’s impossible to get canceled if you’re on every channel,’ he once said.  ‘If you aren’t making news, you aren’t governing.’

“Mr. Gaetz has no interest in governing. When Republicans took control of the House in 2022, it was with a small margin.  Rather than work to get things done, Mr. Gaetz sabotaged Speaker Kevin McCarthy before finally leading a rebellion to oust him.  Eight Republican malcontents plunged the GOP into weeks of embarrassing paralysis, since Mr. Gaetz had no alternative that could command a majority.  Finally Speaker Mike Johnson emerged.

“Mr. McCarthy has intimated at times that he thinks Mr. Gaetz is primarily motivated by personal grudges related to an investigation into his conduct [Ed. as noted above] ....

“The larger objections to Mr. Gaetz concern judgement and credibility. The U.S. Attorney General has to make calls on countless difficult questions of whom to investigate and indict.  Mr. Gaetz’s decisions simply wouldn’t be trusted.  He’s a nominee for those who want the law used for political revenge, and it won’t end well.”

--Back to the nomination of Pete Hegseth at Defense....

Editorial / Wall Street Journal

“The choice of Mr. Hegseth has shocked many in Washington, and that by itself might be a recommendation.  He could hardly do worse than the so-called adults in the room of recent years.  The armed services can’t make their recruiting quotas, America’s military industrial base has been exposed as inadequate with little protest from Pentagon leaders, and no one in the civilian or military ranks was held accountable for the Afghanistan debacle....

“Yet (Hegseth) has never run a big institution, much less one of the largest and most hidebound on the planet. He has no experience in government outside the military, and no small risk is that the bureaucracy will eat him alive.

“Another concern is why Mr. Trump seems to have chosen Mr. Hegseth. The nominee’s focus in recent years has been attacking the Pentagon for its woke policies on transgender and racial equity. He has made a cause of opposing women in combat, though women have shown they can perform well in many roles.  Mr. Trump seems to want Mr. Hegseth to wage a culture war against the military brass.

“The Biden-era woke excesses need to be cleaned up, not least for recruiting from military families who have long prized the service for its devotion to excellence.... But in the context of America’s security challenges, wokeness is a small concern.

“The military isn’t Mr. Trump’s enemy, and a purge mentality will court political trouble and demoralize the ranks....

“The Senate will (want) to know what Mr. Hegseth really thinks about today’s main security issues. He was a longtime hawk and supported the use of force abroad.  But in recent years he has blown with the MAGA wind against the U.S. commitments, notably in Ukraine.  The risk is that he will tell Mr. Trump what he wants to hear rather than advising him to the contrary to avoid mistakes.”

--Richard Kohn, a professor and military historian at the University of North Carolina at Chapel Hill: “The greatest danger the military faces” under a second Trump presidency is a “rapid erosion of its professionalism, which would undermine its status and respect from the American people.  Mr. Trump does not have a real understanding of civil-military relations, or the importance of a nonpartisan, nonpolitical military.” [Defense One]

--Trump tapped Gov. Doug Burgum of North Dakota to run the Interior Department, leading the new administration’s plans to open federal lands and waters to oil and gas drilling. Burgum has longstanding ties to fossil fuel companies.

But earlier Thursday, Trump said he would nominate Robert F. Kennedy Jr. to lead the Health and Human Services Department, following through on his promise to let RFK Jr. “go wild on health.”

Kennedy’s resistance to public health measures, embrace of alternative medicine and natural foods and dissemination of false information about vaccines – including those that cause autism – makes this an incredibly poor, and dangerous selection on the part of Donald Trump.

RFK Jr. has no medical or public health degree, so along with the Gaetz, Hegseth and Gabbard nominations, Trump is just fulfilling his desire to shatter Washington norms.

Editorial / New York Post

“The overriding rule of medicine is: First, do no harm.

“We’re certain installing Robert F. Kennedy Jr. to head Health and Human Services breaks this rule.

“Maybe he’s sworn to focus narrowly on areas where he clearly can help – inspiring Americans to embrace healthier diets and more exercise, etc.

“But...

“We sat down with RFK Jr. back in May 2023, when he was still challenging President Biden for the Democratic nomination.

“As we noted then, he’s an independent thinker who sees through a lot of bull, an incisive critic of some of Biden’s worst policies, who saw that ‘the Democratic Party lost its way most acutely in reaction to’ Donald Trump’s first election.

“But the insights we were impressed with had nothing to do with health.

“When it came to that topic his views were a head-scratching spaghetti of what we can only call warped conspiracy theories, and not just on vaccines.

“ ‘Neocons’ are responsible for America’s policy ills.  ‘Pesticides, cellphones, ultrasound’ could be driving an upswing in Tourette syndrome and peanut allergies.

“He told us with full conviction that all America’s chronic health problems began in one year in the 1980s when a dozen bad things happened.

“Convincing to the gullible conspiracy-hungry crowd on Twitter, but not to the rest of us.

“In fact, we came out thinking he’s nuts on a lot of fronts.

“And even when he makes fair points as a critic, it’s hard to see how he’s the guy to lead HHS and its staff of 83,000 to practical solutions....

“Look: The HHS chief oversees over 100 programs across 11 operating divisions; keeping the trains running is a major job in its own right.

“A radical, prolonged and confused transition ordered by a guy like RFK Jr., who will use his high office to spout his controversial beliefs, leaves a lot of room for things to go wrong – and for people to wind up harmed or even dead....

“Donald Trump won on promises to fix the economy, the border and soaring global disorder; his team needs to focus on delivering change on those fronts – not spend energy either having to defend crackpot theories or trying to control RFK Jr.’s mouth.

“We fear the worm that he claims ate some of his brain some years ago is contagious and there’s been an outbreak at Mar-a-Lago.”

--President-elect Donald Trump is turning to Elon Musk and Vivek Ramaswamy to lead what he called the Department of Government Efficiency.  Trump said it will be “the Manhattan Project” of this era, driving “drastic change” throughout the government with major cuts and new efficiencies in bloated agencies in the federal bureaucracy by July 4, 2026.

“A smaller Government, with more efficiency and less bureaucracy will be the perfect gift to America on the 250th Anniversary of The Declaration of Independence,” Trump wrote in a statement.  “I am confident they will succeed!”

But the president didn’t address the fact no such department exists, how it would be staffed, and what it can really achieve without congressional approval.

--Matt Peterson / Barron’s...on how Trump should be wary of Elon Musk.

“Elon Musk has worked wonders at Tesla and SpaceX, and no doubt will have some good advice on streamlining the government.  But his suggestion that he could cut $2 trillion in federal spending isn’t credible; that would require brutal cuts to Social Security and Medicare, which you’ve said you want to protect.  Musk is embroiled in disputes with the Securities and Exchange Commission and other agencies, while his business relies on government contracts.  It will be important to filter his advice for any signs that he is putting self-interest above the nation’s.  As the nation’s dealmaker-in-chief, you know well that few people are willing to spend $118 million without expecting something in return.”

Some members of Trump’s inner circle are reportedly already growing leery of Elon Musk’s influence.  He has been seen at Mar-a-Lago nearly every day since the Election, weighing in on staffing decisions.

Tech journalist Kara Swisher said that some people have told her that it’s “odd” that Musk is still there, but she reiterated that Musk won’t leave until he’s kicked out.

“And so, he’s going to have some influence.  He definitely inserts himself all the time, and that’s his style. That’s why he’s just suddenly shown up there like the guest that wouldn’t leave,” Swisher said.  “But he’s not going anywhere until Trump throws him out, which could happen because they’re both really strong personalities who like to be at the center of attention,” she said, adding “they’re both narcissists.”

--Curiously, on Sunday, Donald Trump issued a statement saying that neither Nikki Haley nor former Secretary of State Mike Pompeo would be serving in his cabinet.  I totally get why he wouldn’t want Haley, his former UN Ambassador turned rival, but the Pompeo move was a bit surprising seeing as he seemed to be at the top of the list for Defense secretary, at least for 24 hours.

Then again, it all makes perfect sense as the Wall Street Journal opined:

“The votes aren’t all counted from last week’s election, but the 2028 contest for President is already underway. That’s one way to read Donald Trump’s weekend message that Mike Pompeo and Nikki Haley won’t be part of his second Administration....

“The announcement was hardly necessary.  Presidents-elect pass over people for cabinet posts all the time without public declarations.  Why rule them out in this way and so soon, in what seems like a pre-emptive attempt to embarrass them?

“The slap at Ms. Haley is no doubt in part revenge for having run against Mr. Trump in the GOP primaries.  She supported him in the general election and volunteered to campaign for him, but the campaign spurned her.  Mr. Trump remains sore about her challenge, and with his victory isn’t in a forgiving mood.

“The ban against Mr. Pompeo is stranger on the surface.  He served Mr. Trump as a CIA director and then Secretary of State through all four years, a rare adviser with a national-security portfolio who lasted the term.  Mr. Pompeo considered a run for President this year but decided against it and backed Mr. Trump.

“The Pompeo ban makes more sense in light of the changing hierarchy behind the scenes in Trump world.  Mr. Trump’s son, Don Jr., is wielding greater influence, as is the media provocateur Tucker Carlson and their coterie.  They lobbied hard to make JD Vance Mr. Trump’s running mate, and they’re already pulling strings to make him heir apparent.  They’d like to block anyone who might challenge Mr. Vance from gaining stature by holding a cabinet position in the second Trump term.

“There is also a foreign-policy calculation at work.  Mr. Pompeo and Ms. Haley believe in robust U.S. leadership in the world, including support for Ukraine, NATO, and alliances in the Pacific. The Don Jr. crowd and Mr. Vance want to pull back from sone of those commitments.

“One online MAGA acolyte tweeted Sunday that ‘The ‘stop Pompeo’ movement is great but it’s not enough.  Right now we need maximum pressure to keep all neocons and warhawks out of the Trump administration.’  Don Jr. retweeted his assent: ‘Agreed 100% 100% 100%!!! I’m on it.’

“We told you before the election that Don Jr. was emerging as an inside power player, but we wonder if his father likes this boasting that the kid is telling Dad what to do.”

--Editorial / Wall Street Journal

“Donald Trump won a second term in the White House by pledging to secure the U.S.-Mexico border, and that includes sending a clear deterrent message to migrants before he’s sworn in again on Jan. 20. Last week a caravan of about 3,000 people set out toward the U.S. from near the Guatemala border, according to Reuters, but many of them dispersed after Mr. Trump’s victory.

“Mr. Trump announced late Sunday that Tom Homan, his former acting head of Immigration and Customs Enforcement, has agreed to be his new border czar.  Mr. Homan will be ‘in charge of our Nation’s Borders,’ plus ‘all Deportation of Illegal Aliens back to their Country of Origin,’ Mr. Trump wrote on Truth Social....

“In short order, Mr. Trump will move to reinstate the border policies of his first term, such as Remain in Mexico, which seemed to work.  Under that deal, migrants claiming asylum in the U.S. were sent back to Mexico while their cases were pending, which might take months or more.  The idea was to break the incentives to game the system.  Given the backlog of asylum cases, letting migrants into the U.S. while they wait is an enticement to come.

“The political rub may be Mr. Trump’s campaign promise to conduct ‘the largest deportation operation in the history of our country.’  How it goes depends on what Mr. Trump means.  Speaking Monday on Fox News, Mr. Homan said the priority will be ‘public-safety threats and national-security threats,’ as well as migrants who ‘had due process’ and ‘their federal judge said ‘you must go home,’ and they didn’t.’

“Good to hear, and add what Mr. Homan told ’60 Minutes’ last month.  ‘It’s not going to be a mass sweep of neighborhoods,’ he said.  ‘It’s not going to be building concentration camps.  I’ve read it all.  It’s ridiculous.’

“Instead, he said Mr. Trump’s plan would involve ‘targeted arrests,’ and eventually ‘worksite enforcement operations.’  If officers making an arrest also find an undocumented grandma in the house, will they detain her?  ‘It depends,’ Mr. Homan said.  ‘Let the judge decide.’....

“The public backs (Donald Trump) on securing the border and reducing the burden that migrants have put on cities across the country.  But as Mr. Trump appears to realize, support will ebb if the public sees crying children as their parents are deported, or reads stories of long-settled families broken up and ‘dreamers’ brought here illegally as children deported to countries that they no longer remember.

“Even as Mr. Biden’s failures turned the public against immigration, Gallup this summer said 81% of Americans want a path to citizenship for those ‘brought to the U.S. illegally as children.’  That included 64% of Republicans.

“Mr. Trump can do much on immigration by executive action, but a durable solution needs legislation.  Maybe Democrats, after the electoral haymaker they got last week, will be willing to compromise more than they have in the past.  Mr. Trump missed a chance for a bipartisan deal in 2018 to permanently change the border incentives on asylum and more.  He’ll have a narrow window again next year, if he’s willing and has the heart.”

--Jon Favreau, a one-time speechwriter for former President Obama, commented that the White House’s own internal polls showed Donald Trump was on track to win 400 electoral votes in a head-to-head race against President Biden.

“Then we find out when the Biden campaign becomes the Harris campaign, that the Biden campaign’s own internal polling at the time when they were telling us he was the strongest candidate, showed that Donald Trump was going to win 400 electoral votes,” Favreau said.

“Joe Biden’s decision to run for president again was a catastrophic mistake,” Favreau added.  “They refused to acknowledge until very late, that anyone could be upset about inflation. And they just kept telling us that his presidency was historic and it was the greatest economy ever.”

Favreau accused Team Biden of “shivving” Vice President Harris and telling reporters quietly that she could not win.

“I’m done being generous,” Favreau said, echoing a long line of Obama alum who have always disdained Biden and his inner circle.

Former Obama campaign guru David Axelrod has routinely been one of Biden’s harshest critics on cable news and raised issues about his age long before the disastrous debate.

Nancy Pelosi then said over the weekend that Biden should have gotten out of the race earlier.  [New York Post]

--Bill Maher slammed the Democratic party as “losers” and urged them to “look in the mirror” following Kamala Harris’ loss to Donald Trump.

Maher, who once predicted that Harris would win the election, revealed that he “did not vote for the winner,” but accepted the election results – unlike his late-night counterparts earlier in the week.

“We had an election,” Maher said during his “Real Time” monologue on HBO Friday night. “I did not vote for the winner, we’ll see what the winners do now.  They won, now they have reality they have to deal with. We’ll see what they do.”

But addressing Harris and the Democrats, Maher said they must reevaluate their party and platform after their loss.

“My message to the losers: losers, look in the mirror,” Maher said as the audience sat in stunned silence. “No? Well, maybe you should.  Well, that’s my feeling.  Losers look in the mirror.”

--A New York court suspended all the current deadlines in President-elect Donald Trump’s New York hush money case, including a scheduled Nov. 26 sentencing on his 34 felony convictions.

Judge Juan Merchan was scheduled to issue a decision Tuesday on whether the Supreme Court’s broad presidential immunity ruling means Trump’s 34 felony convictions must be tossed out.  But the pause on the case until Nov. 19, which was made public Tuesday, means that ruling didn’t come this week.  It’s unclear whether Tuesday’s decision means Trump will ever be sentenced.  Merchan ordered prosecutors to provide an update on their view of how to proceed in the case, in light of Trump’s election victory.

--Special counsel Jack Smith asked a federal appellate court on Wednesday to halt his appeal in President-elect Trump’s classified documents case, citing the results of the 2024 election.

“As a result of the election held on November 5, 2024, one of the defendants in this case, Donald J. Trump, is expected to be certified as President-elect on January 6, 2025, and inaugurated on January 20, 2025,” Smith wrote to the 11th Circuit Court of Appeals.

--The World Health Organization and the U.S. Centers for Disease Control and Prevention said Thursday that an estimated 10.3 million cases of measles occurred worldwide last year, up 20 percent from 2022, primarily because of inadequate immunization coverage.

The disease resulted in 107,500 deaths last year, mostly killing children younger than 5, the two agencies said.

Ninety-five percent of the community or more must receive the full two doses of the measles vaccine to reduce the chance of outbreaks.  Last year, 74 percent of children globally received two doses, while 83 percent received their first.  More than 22 million children, however, were not vaccinated against measles. [Note to RFK Jr.]

--Last weekend we had quite a bit of snow in the Plains of Colorado and portions of New Mexico.  Near San Isabel, Colo., a snowfall total of 54.9 inches was recorded.  With 20 inches, Denver recorded its third-biggest November snowstorm on record, the biggest since 1983.

--And as you’ve seen on the national news, New Jersey is suffering through its worst drought ever.  For September through mid-November, 11 weeks, most parts of the start have received less than an inch of rain, total.  New Jersey officials estimate it would take 10 inches of rain to meaningfully improve conditions in the state and forecasts certainly aren’t calling for that.

There have been more wildfires than in our history (ditto for New York City and its surrounding area), and one of them turned fatal when an 18-year-old working for New York state’s park service was killed by a falling tree while fighting a fire.

--Lastly, Tropical Storm Sara is pummeling parts of Central America and the Yucatan Peninsula this weekend with 20-30 inches of rain and there are signs it could enter the Gulf of Mexico, and potentially develop into a hurricane with a path to Florida.

But it could largely wither away due to a cold front entering the Gulf region next week.  Let’s pray for that.

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Gold $2566...down from intraday all-time recent high of $2801
Silver $30.32...added for one week for Trader George, a great supporter of S&N, who also loves silver...ditto Burl Ives...
Oil $67.00

Bitcoin: $91,536 [4:00 PM ET, Friday] ...up nearly $15,000 on the week

Regular Gas: $3.08; Diesel: $3.55 [$3.34 - $4.33 yr. ago]

Returns for the week 11/11-11/15

Dow Jones  -1.2%  [43444]
S&P 500  -2.1%  [5870]
S&P MidCap  -2.7%
Russell 2000  -4.0%
Nasdaq  -3.1%  [18680]

Returns for the period 1/1/24-11/15/24

Dow Jones  +15.3%
S&P 500  +23.1%
S&P MidCap  +15.3%
Russell 2000  +13.7%
Nasdaq  +24.4%

Bulls 60.3
Bears 20.7

Hang in there.

Brian Trumbore

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