Week in Review

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Week in Review

01/18/2025

For the week 1/13-1/17

[Posted 4:30 PM ET, Friday]

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Edition 1,343

Sports fans, this week’s review is chock full of important material.  To wit....

Israel-Gaza....

We learned Wednesday afternoon, Eastern Time, that Israel and Hamas had agreed “in principle” to a ceasefire.

Israeli security and policy chiefs arrived in Qatar on Sunday for high-level talks, as Biden administration officials have been pressing for a deal that would become part of the departing president’s legacy, and Donald Trump had warned that “all hell will break out in the Middle East” if Hamas does not release the hostages before he is inaugurated on Jan. 20.

President Biden in announcing the deal said his administration has been “speaking as one team” with the incoming Trump administration, though Biden emphasized the agreement followed “the precise contours” of a plan he first introduced in May 24.

So both the Biden administration and President-elect Trump both claimed credit, the deal mediated by the U.S., Egypt and Qatar, and it is slated to begin the day before Trump takes office.  Trump’s special envoy to the Middle East, Steve Witkoff, met recently with key parties, including Israeli Prime Minister Benjamin Netanyahu over the weekend, but was not a direct participant in negotiations.  But both Biden’s envoy Brett McGurk and Witkoff were in Doha as the talks reached the finish line.

What we do know, however, is that Trump has had discussions himself with Netanyahu and the prime minister gets the big picture. Trump will be able to take the oath of office without immediately having to face the challenge of ongoing warfare in the Middle East, at least initially.

Trump said on Truth Social that the “epic” agreement was only possible because he won the election.

“It signaled to the entire World that my Administration would seek Peace and negotiate deals to ensure the safety of all Americans, and our Allies,” he wrote.

Netanyahu then accused Hamas of reneging on parts of a ceasefire agreement.

The new demands by the militants are an effort to “extort last-minute concessions,” Netanyahu’s office said on Thursday.  The Israeli cabinet was not convening to approve the deal until the mediators confirm Hamas has accepted all elements of the agreement, his office said.

Hamas is asking to specify the names of Palestinian prisoners to be released in exchange for the hostages.  But in a statement reported by Reuters and Palestinian media, Izzat al-Rishq from the organization’s political bureau said: “Hamas is committed to the ceasefire agreement announced by the mediators.”

The deal would go into effect Sunday if implemented, bringing relief to the battered and hungry population in Gaza as well as to the captives taken from Israel and held cruelly more than 15 months.  The deal awaited approval from Israel’s cabinet and members of Netanyahu’s coalition government.

The agreement is expected to start with a 42-day ceasefire in which the Israeli military would withdraw from some populated areas of Gaza, accompanied by a surge of aid into the Gaza Strip, and an exchange of Israeli hostages held by Hamas for Palestinians held in Israeli prisons.

The first six weeks of the deal are expected to involve the release of 33 hostages including Americans Keith Siegel and Sagui Dekel-Chen, said a senior Biden administration official.

Of the seven Americans held captive in the enclave, three are believed to still be alive.  Four others have been declared dead.

The next phase, which is still being negotiated, would bring the release of all hostages, a full Israeli withdrawal from Gaza and a permanent ceasefire, according to President Biden.

Phase Three would be about a reconstruction plan for Gaza, with humanitarian aid increasing further and displaced Palestinians able to return to neighborhoods in all areas of Gaza, though what they face is utter destruction, including of the infrastructure.

In phase three, final remains of hostages would also be returned to their families.

If negotiations take longer than six weeks, the ceasefire will continue, Biden adds.

In Gaza, celebrations were tempered by continuing Israeli airstrikes ahead of the deal’s commencement, with at least 70 reportedly killed, including women and children.

According to the Gaza Health Ministry, at least 46,700 people have been killed in Gaza and over 110,000 injured during the war.  The ministry does not distinguish between civilians and combatants but says the majority of the dead are women and children.

[A new analysis published by The Lancet concludes deaths from bombs and other traumatic injuries during the first nine months of the war in Gaza may have been underestimated by more than 40 percent. The peer-reviewed statistical analysis, led by epidemiologists at the London School of Hygiene and Tropical Medicine, used modeling in an effort to provide an objective third-party estimate of casualties.  From October 2023 to the end of June 2024, the study says the death toll from Israel’s aerial bombardment and military ground operation in Gaza was about 64,300, rather than the 37,900 reported by the Palestinian Ministry of Health.  The study also found that 59 percent of the dead were women, children and people over the age of 65.  It did not share what percentage of the reported dead were combatants.]

Israeli officials say they believe 98 hostages remain in Gaza and that about 60 are still alive.

[The BBC’s Verify research says 94 hostages are still being held, 60 assumed to be alive.  Of the original 251, 109 were released through negotiations, either on humanitarian grounds or during the temporary ceasefire from Nov. 24-30, 2023; eight hostages were rescued by the Israel Defense Forces; and the remains of 40 hostages have been recovered from Gaza by the IDF, which includes three hostages accidentally killed by the IDF on Dec. 15, 2023.]

Israel estimates that about 1,200 people were killed in Hamas’ Oct.7, 2023, attack, including more than 300 soldiers.  It says 405 soldiers have been killed in its military operation in Gaza.

Israel says it has killed about 17,000 Palestinian gunmen in Gaza, equating to more than half of Hamas’ pre-war fighter numbers of about 35,000.  Yet this week Secretary of State Antony Blinken said Hamas has recruited almost as many militants as it’s lost since the start of the conflict, comments that underscored U.S. skepticism about the prospects of Israel’s effort to demolish the group.

Back to Trump, he could enjoy a political boost from Middle East peace.  But he will also inherit the obligations and risks that go along with implementing a complicated multi-part agreement.

At week’s end, Prime Minister Netanyahu said an agreement had been finalized, and then the security cabinet approved the truce today, Friday.  The full cabinet was to sign off later in the day, despite fierce resistance from Netanyahu’s far-right coalition partners, which could destabilize his government, particularly after the first phase of the ceasefire. 

Lastly, for now, if the deal is finalized, “The Houthis will be expected to halt disruptive maritime activities in the Red Sea, something that the U.S., UK and allies will be watching closely,” said Burcu Ozcelik of the London-based Royal United Services Institute.

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L.A. Fires....

Los Angeles residents and officials saw significant progress in fighting the fires this week, though the region is still far from being out of the woods.  At least many of the evacuation warnings were rescinded.

The official death toll is at 25, with many still missing, and I discuss various side issues below.  The housing affordability crisis is going to be a huge one...and already is for the tens of thousands who lost their homes.  Additionally, where are you going to find all the building material and labor to rebuild.

But first you have to clean up the debris. 

As for the cost, estimating the economic loss is not an easy task.  The weather company AccuWeather, using a methodology it says is “proprietary,” has offered a figure of $250 billion to $275 billion, which Goldman Sachs says it found high, but AccuWeather is taking into account many factors including long-run health impacts as well as short-term losses in the value of public companies exposed to the disaster.

Andrew J. Campa / Los Angeles Times

“When catastrophic fires occur, experts often blame the so-called wildland-urban interface, the vulnerable region on the perimeter of cities and suburbs where an abundance of vegetation in rugged terrain is susceptible to burning.

“ ‘The assumption is continually made that it’s the big flames’ that cause widespread community destruction, (wildfire expert Jack) Cohen said, ‘and yet the wildfire actually only initiates community ignitions largely with lofted burning embers.’

“Experts attribute widespread devastation to wind-driven embers igniting spot fires two to three miles ahead of the established fire.  Maps of the Eaton fire show seemingly random ignitions across Altadena.

“ ‘When you study the destruction in Pacific Palisades and Altadena, note what didn’t burn – unconsumed tree canopies adjacent to totally destroyed homes,’ he said.  ‘The sequence of destruction is commonly assumed to occur in some kind of organized spreading flame front – a tsunami of super-heated gases – but it doesn’t happen that way.’

“This fundamental misunderstanding has likewise led to a misunderstanding of prevention.  No longer is it a matter of preventing wildfires but instead preventing points of ignition within communities by employing ‘home-hardening’ strategies – proper landscaping, fire-resistant siding – and enjoining neighbors in collective efforts such as brush clearing.”

Fire historian Stephen Pyne said, “We don’t necessarily need a trillion-dollar program and a fire czar to get control of the fire problem.  What we need are a thousand things that tweak the environment in favorable ways such that we can prevent these eruptions.”

For example, municipal and fire prevention agencies must give property owners advance – and continual – warnings to clear dead vegetation and to wet dry bush within 10 feet of the house with periodic, prolonged sprinklings.

And then there is the issue of lack of manpower.  Not just Mayor Karen Bass’ budget cuts, but a systemic failure to ensure the Los Angeles Fire Department has the requisite number of firefighters!  And for years, various folks, including chiefs of department, have spoken of the need and that’s where leadership at the top (or lack thereof), in this case, Gov. Gavin Newsom, must be acknowledged.

Remember, it’s the fire department’s duty to levy warnings and fines on residents who don’t abide by the rules to make their property more fire-resistant which includes clearing it of grass and shrubs...removing fuel.  In California, people living in risky areas are required to maintain a buffer around their homes – a five-foot perimeter free of vegetation known as “defensible space.”

There is also the issue of an old fire sparking a new one.  Los Angeles Times reporters Richard Winton, Noah Goldberg and Hannah Fry noted in their coverage.

“The massive Oakland Hills fire of 1991 – which destroyed more than 2,500 structures – exploded after firefighters thought they had contained it,” they wrote.  “That fire was originally six acres and was declared contained, but not out.  Firefighters left equipment at the scene but did not monitor it at all times.  Winds picked up and then flames quickly consumed homes.”

You have various theories being put forward as to the origins of the two biggest fires, the Pacific Palisades and Eaton fires.  The California Department of Forestry and Fire Protection (Cal Fire) is leading the investigation into the Eaton fire and confirmed the area around some Southern Cal Edison electrical towers is being studied.

Attorneys for homeowners in Altadena aren’t waiting for investigators to name a culprit, filing at least four lawsuits, each blaming the utility for starting the Eaton fire.

Back in 2019, Pacific Gas & Electric agreed to a $13.5 billion settlement for several deadly Northern California wildfires, including 2018’s Camp Fire.

But the Palisades Fire seems to have “human origins,” according to various reports.

Officials noted a popular trail with hikers (Skull Rock Trailhead) is often used as a hangout by local teens and the fire may have started New Year’s Eve.  There was indeed a small fire there, apparently started by fireworks, which was put out hours after.  So the location’s popularity meant it was possible another fire started in the area Tuesday, Jan. 7, and/or that the New Year’s Eve fire reignited.

The Washington Post reported that a Los Angeles County firefighter said, “The foot of the fire started real close to where the last fire was on New Year’s Eve,” according to a review of archived radio transmissions.

“It looks like it’s going to make a good run,” one chimed into the dispatch.

Residents also told The Post and investigators on scene that firefighters’ response on Tuesday was much slower than on New Year’s Eve – a view confirmed by radio transmissions.

Fire officials, arson investigators, Alcohol, Tobacco, Firearms and Explosives agents, together with the FBI, converged on the neighborhood, knocking on the doors of homes still standing, asking residents about what they saw, and in one conversation, a resident told a Post reporter and an ATF officer that the disaster was “started by idiots” on New Year’s Eve.  It happens every year, said the resident, who spoke on condition of anonymity.  People go up at night and party when they’re not supposed to.  His family heard fireworks popping off and noticed a fire had started around 12:20 a.m., he said.

As The Post reported:

“ ‘You got to know better,’ he said, his voice muffled through a mask.  ‘It’s dry.  There’s no precipitation. I don’t know if you’ve ever been camping, but when you go camping and put a fire out, that doesn’t mean that it’s not hot below.  Then the Santa Anas came on Monday [Jan. 6], and that’s what started, that’s what reignited the fire.’”

Despite ideal conditions New Year’s Eve, it took the Los Angeles Fire Department four hours to knock down a 3- to 4-acre fire.

But it’s not definitively known if this particular fire reignited and won’t be for some time to come.

As for the reservoir that was out of use and closed for repairs, leaving a 117-million-gallon water storage complex empty in the heart of the Palisades, had it been operable, it would have helped with extending water pressure into the Palisades on Tuesday night, but only for a time.  It wouldn’t have saved the day, officials said, but small solace for those whose homes no doubt would have been saved on a particular block.

Lastly, when the flames are finally extinguished, the region faces the costly, time-consuming and heart-wrenching task of hauling away tons of toxic rubble.  This will become one of the most complex debris removal efforts ever.

Inside each home destroyed, you have a toxic cocktail of asbestos, gasoline and lead.  Bryan Schenone, the director of the emergency services office in Siskiyou County, Calif., a rural area that has seen a series of devastating fires, including the Mill fire in 2022, said common household items become an environmental threat when they burn.  Propane tanks or loose ammunition can explode and present a safety risk.

“Imagine what’s in your garage: all the paint, all the chemicals underneath your sink,” Schenone said.  “That leeches into the ground, and that all has to be cleaned up and becomes a toxic footprint.”

And then you have the issue of securing landowner permission, parcel by parcel, for workers to enter the property and begin the cleanup.  There can be delays as officials line up work crews and dump sites, or even when nesting season for birds requires work to be paused on certain properties.  Residents want to return to search for mementos but it’s dangerous to do so.  [Mitch Smith / Los Angeles Times]

Plus, you have the complications resulting from burnt-out electric and hybrid vehicles and home-battery storage systems.

Lithium batteries from Tesla, along with those from other carmakers, have added to the mix of toxic materials requiring specialized removal.

There were over 431,000 Teslas in operation in the Los Angeles area as of October 2024, according to data from S&P Global Mobility.   The Tesla Model Y was the biggest-selling vehicle in the state through September, according to the California New Car Dealers Association.

The head of FEMA said it will take six months to clear up the destruction before rebuilding begins.  That seems like a miraculous timetable.

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Editorial / Wall Street Journal

“President Biden continues to tout his record as he prepares to leave town, and we’d let him boast if he weren’t so out of touch with reality.  On Monday he offered a foreign-policy valedictory declaring that ‘my administration is leaving the next administration with a very strong hand to play.’

“The President cites an expanded NATO, aid to Ukraine, and subsidies for domestic semiconductor manufacturing, among other things.  But Finland and Sweden joined NATO because Russia invaded Ukraine after U.S. deterrence failed.  Mr. Biden’s aid for Ukraine has been too slow and too limited to put Kyiv in a position where it could win.  Mr. Biden has handed Mr. Trump a weak hand in Ukraine.

“As for the Chips Act, you can buy a lot of fabs with enough money. But Intel’s struggles don’t inspire confidence that this exercise in industrial policy will turn out well at the cost.

“Mr. Biden’s greatest failure has been the collapse of U.S. deterrence against adversaries who have been on the march.  Mr. Biden’s chaotic flight from Afghanistan sent a message of weakness that Vladimir Putin, China and the mullahs in Iran saw as a moment to move.  Israel has re-established some deterrence against Iran, but little thanks to Mr. Biden, who opposed nearly every military decision by Israel.

“The President might have regained some credibility had he asked Congress to begin rebuilding U.S. defenses. Instead he proposed a cut in defense after inflation in every one of his budgets.  He leaves Mr. Trump having to rebuild the military amid a budget deficit in the range of $2 trillion a year thanks to his blowout domestic spending.  If this is a ‘strong hand,’ what would a weak one look like?”

In his farewell address Wednesday from the Oval Office, Biden warned Americans of a “dangerous concentration of power” in the hands of a “very few ultra-wealthy people” and the impact he feared it would have on the country’s democracy.

“Today an oligarchy is taking shape in America – of extreme wealth, power and influence that literally threatens our entire democracy, our basic rights and freedoms, a fair shot for everyone to get ahead,” said Biden.

The president said he worried of the consequences if wealthy Americans used their influence to win tax breaks, roll back efforts to combat climate change, and decrease accountability.  Biden drew a parallel to former President Dwight Eisenhower’s farewell address, which warned of a “military industrial complex,” saying the nation now faced a threat from a “tech industrial complex.”

“Americans are being buried under an avalanche of misinformation and disinformation, enabling the use of power,” Biden said.

“Powerful forces want to wield their unchecked influence to eliminate the steps we’ve taken to tackle the climate crisis, to serve their own interest for power and profit.  We must not be bullied into sacrificing the future,” Biden said.

Biden listed his accomplishments from winning billions of dollars of subsidies for the semiconductor industry to a sweeping infrastructure package, while also conceding that many Americans would not feel the impact of those programs for years.

“It will take time to feel the full impact of all we have done together, but the seeds are planted, and they’ll grow and they’ll bloom for decades to come,” he said.

And the president appealed to Americans to be vigilant and defend their democratic institutions as he prepared to hand over the White House to his Republican successor.

“Believing in the idea of America means respecting the institutions that govern a free society – the presidency, the Congress, the courts, a free and independent press,” Biden said.

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Russia-Ukraine

--Ukraine announced on Saturday that it had taken its first North Korean prisoners of war from Russia’s Kursk region, providing further proof of Pyongyang’s involvement.

President Volodymyr Zelensky said that the captured men were receiving medical assistance, adding that “the world needs to know the truth about what is happening.”

Zelensky said he is willing to hand over two captured North Korean soldiers to Pyongyang in exchange for Ukrainian prisoners of war in Russia.  He added, “there should be no doubt left that the Russian army is dependent on military assistance from North Korea.”

About 300 North Korean soldiers have been killed fighting alongside Russia, and another 2,700 are believed to have been wounded, South Korean intelligence officials said on Monday.

According to Lee Seong-kweun, a lawmaker on the South Korean parliament’s intelligence committee, citing the National Intelligence Service, North Korean authorities appear to have called for their troops to commit suicide by blowing themselves up to evade capture.

The information was found in memos carried by those killed.

--Ukraine carried out “massive” drone strikes on several regions of Russia overnight Tuesday, local officials said, in what appeared to be one of the largest recent assaults in Kyiv’s campaign to cripple Russia’s war machine on its home turf.

The attacks, mostly in southwestern Russia, were the latest in a series demonstrating Ukraine’s ability to strike deep inside the country, even as Kyiv’s forces face setbacks on their own territory.

Blasts were reported in the border region of Bryansk, and drones targeted regions well beyond it like Saratov and Tula in western Russia, officials in those areas said.

Russia’s Defense Ministry said on Tuesday that Ukraine had launched more than 140 drones, along with U.S.-made long-range missiles known as ATACMS and Storm Shadow missiles provided by Britain.  The ministry said it had shot down 31 drones, six ATACMS and six Storm Shadow missiles targeting Bryansk.

“These actions of the Kyiv regime, supported by Western curators, will not go unanswered,” the ministry said in a statement.

The Ukrainian military’s General Staff said it attacked three regions of Russia and the republic of Tatarstan, including strikes nearly 700 miles into Russia.  [Think about that...700 miles is the distance between New York and Indianapolis.]  The targets included an oil storage base, as well as military production facilities, the General Staff said in a statement.

Moscow then launched a retaliatory attack, with Ukraine’s Air Force saying on Tuesday morning that nearly 80 drones were involved but that it had managed to shoot down 60.  There were no reported casualties.

Russia then launched what President Zelensky described as another “massive” missile attack on the country’s infrastructure Wednesday, forcing emergency power cuts to relieve pressure on the country’s battered grid.  “It’s the middle of winter, and the target for the Russians remains unchanged: our energy infrastructure,” Zelensky said in a statement.

Zelensky said air defenses had shot down at least 30 of the more than 40 missiles that Russia launched in a barrage targeting gas and energy facilities.

Two critical infrastructure facilities were hit in western Ukraine’s Lviv region, according to the head of the regional military administration.

--Russian forces have been pushing up from the south through Ukraine’s Dnipro region, bypassing an anticipated heavy urban battle in the eastern Donetsk area for the city of Pokrovsk, a key logistics and transport hub for the remaining Ukrainian-controlled parts of the Donetsk region.  Ukraine has been preparing for battle in Pokrovsk since the summer.

But according to Andriy Cherniak, a senior Ukrainian military intelligence official, “(The Russians) understand that they will lose a lot of their forces trying to take Pokrovsk so they have decided to pursue a different strategy and approach from the south and go around it.  They will try to cut off all the supplies to Pokrovsk so that our forces leave there,” Cherniak told the Financial Times.

--On Tuesday, Germany’s defense minister, Boris Pistorius, made an unannounced visit to Kyiv to meet with President Zelensky in a show of solidarity.

“I am grateful to Germany for its unwavering support, which has not only strengthened Ukraine’s defense, but also played a crucial role in enhancing Europe’s security as a whole,” Zelensky said in a statement.

Thursday, British Prime Minister Keir Starmer went to Kyiv and pledged to put Ukraine in the “strongest possible position” as he signed a “landmark” 100-year pact with the country.

Starmer’s visit was at one point marked by loud blasts and air raid sirens after a reported Russian drone attack was intercepted by Ukraine’s defense systems.

Acknowledging the “hello” from Russia, President Zelensky said Ukraine would send its own “hello back.”

Starmer said the apparent air raid that greeted him in Kyiv was a “reminder of the daily attacks and the resolve of the Ukrainian people.”

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From Scott Pelley’s interview of FBI Director Christopher Wray on last Sunday’s “60 Minutes.”

PELLEY: What is the greatest threat facing the incoming Trump administration?

WRAY: Well, the greatest long-term threat facing our country, in my view, is represented by the People’s Republic of China, the Chinese government, which I consider to be the defining threat of our generation.

PELLEY: What has the FBI found about Chinese penetration of U.S. cyber and infrastructure?

WRAY: China’s cyber program is by far and way the world’s largest – bigger than that of every major nation combined and has stolen more of Americans’ personal and corporate data than that of every nation, big or small, combined.  But even beyond the cyber theft.  There’s another part of the Chinese cyber threat that I think has not gotten the attention publicly that it I think desperately deserves.  And that is Chinese government’s pre-positioning on American civilian critical infrastructure. To lie in wait on those networks to be in a position to wreak havoc and can inflict real-world harm at a time and place of their choosing.

PELLEY: The Chinese have insinuated malware into critical American infrastructure?

WRAY: That’s correct.

PELLEY: Like what?

WRAY: Things like water treatment plants. We’re talking about transportation systems. We’re talking about targeting of our energy sector, the electrical grid, natural gas pipelines. And recently we’ve seen targeting of our telecommunications systems.

[Telecommunications, including intercepts at high levels.]

PELLEY: They have been listening to the telephone calls of people in the United States government?

WARY: Some people...we believe that they have collected their content, the actual communications of those people. 

[Pelley: Wray wouldn’t say it, but we have confirmed China gathered communications of U.S. national security officials, the Kamala Harris campaign and Donald Trump himself.  It’s part of a world of trouble, including the chaos in the Middle East – spawning new threats of terror.]

We then learned Treasury Secretary Janet Yellen’s computer was infiltrated and unclassified files were accessed as part of a broader breach of the agency by Chinese state-sponsored hackers.  The attackers also hacked the computers of two of her lieutenants.

The attackers appeared to focus on Treasury’s role in sanctions, intelligence and international affairs, but didn’t penetrate the department’s email or classified systems, according to Bloomberg.

So on a related matter...as it developed this week....

Chinese officials, facing a looming U.S. TikTok ban, have internally discussed options including the possibility of allowing a trusted non-Chinese party such as Elon Musk to invest in or take control of TikTok’s U.S. operations, according to a report in Bloomberg.

China has protested a U.S. law that would ban TikTok in the U.S. unless its Beijing-based parent, ByteDance, divests itself of the operation. The Supreme Court last week seemed inclined to let the law stand.  It goes into effect on Sunday unless the court issues a stay.

But many TikTok users were opening up new apps already, including China’s Xiaohongshu (“RedNote”) and Lemon8.

TikTok CEO Shou Chew is planning to attend Trump’s inauguration.  Rep. Mike Waltz, the incoming national security adviser, said Wednesday that Trump is weighing a deal to save TikTok if the Supreme Court upholds the law requiring a sale or ban of the app.

By week’s end, both President Biden and President-elect Trump were working on ways to extend the Sunday deadline, with Trump considering issuing an executive order that would suspend the measure for 60 to 90 days.

And many of the congressional leaders that previously voted to ban TikTok, on a bipartisan basis, are backtracking.  Can’t piss off the young people and lose their votes.

But, this morning, the Supreme Court unanimously upheld the federal law banning TikTok beginning Sunday unless it’s sold by its China-based parent company, holding that the risk to national security posed by its ties to China overcomes concerns about limiting speech by the app or its 170 million users in the U.S.

“Congress has determined that divestiture is necessary to address its well-supported national security concerns regarding TikTok’s data collection practices and relationship with a foreign adversary,” the court said in an unsigned opinion, adding that the law “does not violate petitioners’ First Amendment rights.”

And so we await the next move, which will come from President-elect Trump, who held a phone call with Chinese President Xi Jinping this week, and this was among the topics of discussion, according to Trump (but not confirmed by the Chinese).

It’s unclear how much flexibility Trump really has with the Sunday deadline, and what he can do his first day in office, Monday.

Some in Congress agree with the Court’s decision, like Sen. Tom Cotton (R-Ark.), who wrote on X:

“ByteDance and its Chinese Communist masters had nine months to sell TikTok before the Sunday deadline.  The very fact that Communist China refuses to permit its sale reveals exactly what TikTok is: a communist spy app.  The Supreme Court correctly rejected TikTok’s lies and propaganda masquerading as legal arguments.”

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Wall Street and the Economy

We had key inflation data this week, closely watched by the Federal Reserve, and the December producer price index was first, an expected 0.2%, but unchanged ex-food and energy, which was better than forecast.  The year-over-year figure of 3.3% on headline was in line, but the core figure was 3.5%, a tick higher than consensus.

The next day, Wednesday, we then had the critical consumer price data for last month and to set the scene, a minute before the release the yield on the 2-year Treasury was 4.35% and the 10-year 4.76%.

The headline figure was then a tick higher than expected, 0.4%, while the core rate, 0.2%, was in line.  Year-over-year, headline was 2.9%, spot on with consensus, but the core Y/Y was 3.2%, a tick lower than expected.

This last figure is the money number and the Street celebrated, ridiculously so, judging that the Federal Reserve might cut its benchmark funds rate not just once more this year, but maybe twice, after all the doom and gloom thinking from just a days earlier.

The yields on the 2- and 10-year plummeted, to 4.22% and 4.57%, respectively, by Friday morning.

This was absurd.  The core CPI is still at 3.2%, way above the Fed’s 2.00% target (or 2.50% if you believe, internally, Chair Jerome Powell and his board members are setting a new range of 2.00% to 2.50%, even if not stating so publicly).

But, as Tony Soprano would have said, ‘Whaddya gonna do...’  The market is what it is.  And bank earnings were indeed terrific this week so the rally in equities was probably warranted.

In other economic data, December retail sales were up a solid 0.4%, December industrial production surged 0.9%, well above expectations, and housing starts last month came in at a 1.499m annualized pace, also far stronger than forecast, though this was due to a spike in multifamily developments, not single-family homes.

Looking back at the holiday shopping season, the National Retail Federation released its final 2024 sales figures for the period Nov. 1 to Dec. 31, up 4.0%, and 3.6% for the full year to a record $5.28 trillion.

The NRF had forecast that 2024 holiday sales would increase between 2.5% and 3.5%.

NRF’s calculation of retail sales is based on Census Bureau data but excludes automobile dealers, gas stations and restaurants to focus on core retail.

The NRF said online and other non-store sales rose 8.6%, in line with a prior forecast of 8% to 9%.

Adobe reported that U.S. consumers spent a record $241.4 billion online from Nov. 1 to Dec. 31, 8.7% more than last year.  Half of that spending came in three categories: electronics, apparel, and furniture and home goods.  One reason: big discounts.  Electronics markdowns peaked at 30.1%, noted Adobe, and apparel at 23.2%.

The Atlanta Fed’s GDPNow barometer for fourth-quarter growth is at 3.0%.

Freddie Mac’s 30-year fixed-rate mortgage climbed to 7.04%, the first time over 7.00% since May 2024.  BUT...with the big decline in the 10-year this week, this will come down.

Europe and Asia

Eurostat released the inflation data for December in the euro area, 2.4%, up from 2.2% in November.  A year earlier the rate was 2.9%.  Ex-food and energy, the figure is 2.7%, unchanged since September.

Headline inflation:

Germany 2.8% (up from 1.8% in Sept.), France 1.8%, Italy 1.4%, Spain 2.8%, Netherlands 3.9%, Ireland 1.0%.

The inflation rate in the UK was 2.5%, with services inflation coming down, encouraging for the Bank of England.

Industrial production in November for the eurozone was up 0.2% over October, but down 1.9% year-over-year.

Germany: The economy shrank for a second consecutive year in 2024 and is unlikely to grow much in 2025, laying bare the challenge for the country’s new government once snap elections are held in February.

GDP fell by 0.2% after dropping 0.3% in 2023, the statistics office said Wednesday.  It’s only the second time since 1950 that output has contracted for two years in a row.

The Bundesbank predicts growth of just 0.2% this year and warns that another contraction is possible if President-elect Trump follows through on his tariff threats.

Turning to Asia...we had critical data out of China, with the National Bureau of Statistics reporting that fourth-quarter GDP expanded by 5.4% year-over-year, accelerating from 4.6% in Q3 and surpassing market estimates of 5%.  It was the strongest annual growth rate in 1 ½ years, boosted by a series of stimulus measures launched since September to boost recovery and regain confidence.  Surging exports were also critical in attaining the number.

For the full year, GDP grew by 5.0%, aligning with Beijing’s 2024 target of around 5% but falling short of a 5.2% rise in 2023.

December industrial production rose 6.2% year-over-year, with retail sales in the month up 3.7% Y/Y, both better than expected.  Fixed asset investment for 2024 rose 3.2%.

As alluded to above, exports have been strong and in December rose 10.7% year-over-year, with imports up 1%.  The 10.7% figure easily surpassed market forecasts of 7.3% and accelerated from a 6.7% rise in the previous month, exporters seeking to avoid any Trump tariffs.

Exports grew to the U.S. 15.6% and 8.8% to the EU.

For the full year, sales climbed 5.9% to USD 3.58 trillion, boosted by agricultural products, plastic products, textiles, aluminum, rare earth mineral, integrated circuits and cars.  Over 2024, exports to the U.S. fell 0.1% and were down 4.4% to the EU.  [General Administration of Customs]

China vehicle sales grew by 10.5% year-on-year in December to 3.489 million units, according to data from the China Association of Automobile Manufacturers.   New energy vehicles (NEV....both hybrid and fully electric) soared by 34% in December to a new record high of 1.596 million units.

For the full year of 2024, total vehicle sales rose by 4.5% to 31.436 million units, slowing sharply from a 12% jump in 2023.  Domestic NEV sales surged by 39.7% in 2024, with total NEV sales rising 35.5% to 12.866 million units, contributing 40.9% of total sales.

Lastly, China’s population fell last year for the third straight year, the government said Friday, pointing to further demographic challenges for the world’s second most populous nation, which is now facing both an aging population and an emerging shortage of working age people.

China’s population stood at 1.408 billion at the end of 2024, a decline of 1.39 million from the previous year.

Others in East Asia, such as South Korea and Japan, have seen their birth rates plummet.  China actually saw more births in 2024 than 2023, but the fertility rate of 1.09 compares with the ‘replacement rate’ of 2.1, the minimum needed for a country’s population to remain constant.

Japan’s December producer price index rose 0.3%, 3.8% from a year ago, the same as November.

Street Bytes

--After a couple lousy weeks in the equity markets, stocks rallied bigly on the PPI/CPI numbers and strong bank earnings, with the Dow Jones surging 3.7% to 43487, the S&P 500 up 2.9%, and Nasdaq 2.4%.

The market is closed Monday for Martin Luther King Jr. Day...not the inauguration.  More earnings next week, including from Netflix.

--U.S. Treasury Yields

6-mo. 4.30%  2-yr. 4.27%  10-yr. 4.61%  30-yr. 4.84%

The yield on the 2-year ended up falling 12 basis points this week, the 10-year 17 bps on the favorable inflation data, at least as the market determined it.

--The Energy Information Administration, in its first forecast of 2026 supply and demand, said oil prices could fall by more than 17% from today’s levels next year, but natural-gas prices could average $4 per million British thermal units in 2026, almost double their 2024 levels.

The EIA said that oil demand is likely to rise at a slower rate in 2025 and 2026 than it did in the years before the pandemic, leading to a supply glut that could pull prices lower.

The EIA thinks that U.S. production could average 13.5 million barrels a day in 2025, 300,000 barrels above its 2024 level of 13.2 million, which was a record.  But production could slow in 2026, as producers pull back in the face of an expected price dip.

Total global supply should rise by about 1.8 million barrels a day in 2025, and 1.5 million in 2026. The would be ahead of consumption at 1.3 million and 1.1 million barrels, respectively, the EIA predicts.  Oil demand growth is on the downswing, as electric vehicles take hold in China and elsewhere.

In the here and now, oil rose early in the week to its highest level in four months, as new U.S. sanctions on Russia’s energy sector raised concerns about supply disruptions.  China and India, key buyers of Russian crude, were scrambling for alternatives.

--BP will cut over 5% of its global workforce, it said on Thursday, as part of CEO Murray Auchincloss’ efforts to reduce costs and rebuild investor confidence in the energy giant.

Around 4,700 employees and 3,000 contractor positions will be cut this year.  BP has a workforce of around 90,000.

--We had our first round of bank earnings reports on Wednesday, and three of the four jumped 6% (WFC, GS, C), while JPM’s rise was closer to 2%.

JPMorgan Chase churned out more profits than it ever has before as the nation’s largest bank earned $14 billion in the fourth quarter.  Full-year profits rose to $58 billion, an all-time record and the most ever in the history of American banking.  Its Q4 profits were up 50% from the year earlier.

Earnings per share came in at $4.81 from $3.04.  Total managed revenue hit $43.7 billion, up 10%, from $39.9 billion a year ago, and handily beating the Street’s forecast of $4.09 per share on revenue of $41.9 billion.

With a comeback in dealmaking across the industry, that buoyed JPMorgan’s results following a 2-year-long drought.  Investment banking revenue was up 46%.

“The U.S. economy has been resilient,” CEO Jamie Dimon said in a press release, citing low unemployment and healthy consumer spending.

“Businesses are more optimistic about the economy, and they are encouraged by expectations for a more pro-growth agenda and improved collaboration between government and business,” he added.

The risks cited were inflation and geopolitics.

In an interview on CBS News’ Sunday Morning program, Dimon said he wasn’t surprised that Donald Trump won the election because voters were angry about ineffective government.  They “wanted more pro-growth and pro-business policies,” and “didn’t want to be lectured to on social policies continuously,” he said.

In the interview, he repeated warnings he’s made in his annual shareholder letters and elsewhere that this is the most precarious geopolitical situation since World War II. He said he has spoken with some of Trump’s staff, offering help because “politics aside, policy’s got to be right.”

He was then asked if he knew who his successor at JPM will be and he said he doesn’t.

So the interview aired Sunday, and on Tuesday, the bank announced that Jennifer Piepszak had been promoted to chief operating officer as part of a new management reshuffling, with former COO and President Daniel Pinto stepping down from his roles in the coming months.

But, Piepszak doesn’t want to succeed Dimon as CEO.

“Jennifer has made clear her preference for this senior operating role, working closely with Jamie and in support of the top leadership team,” a JPM spokesman said, but “going forward, she has said she does not want to be considered for the CEO position at this time.”

The shake-up adds new uncertainty to the race to succeed the 68-year-old Dimon, the longest-serving big bank CEO and the only one left who called the shots during the 2008 financial crisis.

Wednesday, Dimon agreed with an analyst’s assessment that his “base case” for stepping down is a few years from now.

--Goldman Sachs’ profit more than doubled in the fourth quarter, driven by bankers who brought in more fees from dealmaking, debt sales and strength in trading.

Profit rose to $4.1 billion, or $11.95 per share, compared with $2.01 billion, or $5.48 per share, a year ago, and well above expectations.

“We are very pleased with our strong results for the quarter and the year,” CEO David Solomon said in a statement.  “I’m encouraged that we have met or exceeded almost all of the targets we set in our strategy to grow the firm five years ago.”

Goldman’s investment banking fees rose 24% to $2.05 billion in the fourth quarter, powered by debt underwriting that benefited from strong leveraged finance and corporate bond sales.

Revenue at Goldman’s global banking and markets division increased by 33% to $8.48 billion in the fourth quarter.

Equity trading revenue surged 32% to $3.45 billion.  Fixed income, currency and commodities trading also shined with a 35% jump in revenue.

--Wells Fargo’s profit climbed in the fourth quarter, buoyed by stronger investment banking earnings, it said on Wednesday.

Wall Street was bolstered by a rebound in activity last year.  Increasing confidence spurred companies to issue equity and debt.  Corporations also struck deals, lifting volumes from a decade low in 2023.

Bankers expect 2025 to be a much busier year for deals, buoyed by hopes of lower corporate taxes, easing regulations and a broadly pro-business stance under President-elect Trump.

Wells Fargo’s investment banking fees jumped 59% to $725 million in the quarter compared with a year earlier.

The fourth-largest U.S. lender’s net income rose to $5.08 billion, or $1.43 per share, compared with $3.45 billion, or 86 cents per share, a year earlier.  Revenue came in at $20.4 billion, a touch lower than expectations.

Under CEO Charlie Scharf’s leadership, the bank has undergone a multi-year effort to fix compliance problems from a fake accounts scandal that erupted in 2016.

The Federal Reserve imposed a $1.95 trillion asset cap in 2018 that prevents WFC from growing until regulators deem it has fixed failings in its governance and risk management.

It is hoped the cap will be lifted in the first half of 2025.

--Citigroup Inc. lowered a crucial profitability target central to CEO Jane Fraser’s plan to turn around the bank, but offered investors a sweetener in the form of share buybacks.

In a sign that it’s struggling to contain costs, the lender now expects return on tangible common equity to be between 10% and 11% by the end of next year, according to a statement.  It had previously forecast the metric would be between 11% and 12% by that time.

The bank said that for 2025, costs will be only slightly lower than the $53.8 billion it spent in 2024 as it makes continued investments in its businesses.

But Fraser announced a share buyback plan of $20 billion in the coming years, a key ask from shareholders.

Back in early 2022, the CEO told investors that she would need five years to execute her turnaround of Citigroup.

For the fourth quarter, Citi did hit revenue and expense guidance for 2024 that it laid out a year ago and it said it now expects revenue for 2025 to rise $83.5 billion to $84.5 billion.

Revenue rose across all five of its main business lines in the quarter.  Net income was $2.9 billion, or $1.34 a share, beating the Street’s $1.22 average estimate.

Revenue from fixed income trading soared 37% to $3.5 billion, trouncing the $2.94bn consensus. Equities trading revenue also climbed 34% to $1.1 billion.

--BlackRock Inc. hauled in an annual record of $641 billion in client cash, underlining the firm’s global reach across stocks and bonds, index and active funds and increasingly the fast-growing – and lucrative – market for private assets.

The tally included $390 billion flowing into its ETF business overall last year, $226bn into equity funds and $164bn into fixed-income, BlackRock said in a statement Wednesday.

The yearly sum exceeds the entire assets of some smaller money managers, built over decades, and demonstrates BlackRock’s ability to continue to attract clients during volatile markets and intense industry competition and change.

BlackRock’s total assets stood at almost $11.6 trillion on Dec. 31 and are set to grow this year.

“This is just the beginning,” CEO Larry Fink said in a statement.  “BlackRock enters 2025 with more growth and upside potential than ever.”

--Thursday, after a strong gain on the heels of Wednesday’s bank earnings, Bank of America’s shares fell a bit but it reported higher profit as its investment bankers capitalized on a resurgence in dealmaking in the fourth quarter while predicting it would earn more interest income in 2025, mirroring its rivals.

“Every source of revenue increased, and we saw better than industry growth in deposits and loans,” CEO Brian Moynihan said.  “This broad momentum sets up 2025 very well.”

BofA’s investment banking fees jumped 44% to $1.7 billion in Q4, compared with a year earlier.

Across the industry, global investment banking revenue jumped 26% to $86.80 billion, led by a 33% surge in North America, according to data from Dealogic.

BofA’s sales and trading revenue rose 10% in the quarter.

The second-largest U.S. lender’s net income rose to $6.7 billion, or 82 cents per share, compared with $3.1bn, or 35 cents a year earlier.

--Morgan Stanley earned $3.7 billion in the final quarter of last year, up 145%.  Its full-year profit of $13.4 billion jumped 47% from 2023, and the bank’s revenue hit a record of $61.8 billion.

CEO Ted Pick called it “an excellent fourth quarter” that capped “off one of the strongest years in the firm’s history.”

“We are executing against four pillars – strategy, culture, financial strength and growth – that support our integrated firm, creating long-term value for our shareholders,” he said, citing growth in investment banking and wealth management.

Morgan Stanley’s quarterly investment banking revenue rose 25% to $1.64 billion.  Revenue from wealth management rose 13% to $7.5 billion, helped by record revenue in asset management.

Total client assets in the quarter were $7.9 trillion, the bank having a long-term target of $10 trillion.

--Boeing shares slid after the aircraft manufacturer reported its December delivery numbers, just 30 jets in the month and 17 737 MAX jets.

Investors want to see more than 17 MAX aircraft as Boeing is allowed to make 38 a month under an FAA-imposed cap put in place an emergency door plug blew out of a 737 MAX 9 jet on Jan. 5, 2024.

Boeing delivered 267 MAX jets in 2024, or about 22 a month.  The number isn’t the production rate but approximates production.  The number was also impacted by a roughly seven-week labor strike, and Boeing’s own efforts to slow down production to train workers and improve quality.

But regardless, 22 a month doesn’t cut it for investors.

--The flight recorder of the Jeju Air passenger jet that crashed last month, killing 179 people, stopped recording for its last four minutes, South Korean officials said on Saturday, a significant setback for investigators.

Data extracted from the so-called black box, consisting of the cockpit voice recorder and the flight data recorder, is generally crucial in investigations of aviation accidents. Officials in South Korea, who have been working with the U.S.’ National Transportation Safety Board, have said that the flight data recorder for the plane’s last four minutes would be especially important in this crash.

South Korea’s transport ministry said they are investigating why the data was not recorded.

But investigators did announce Friday that they found bird feathers and blood in both engines of the aircraft.

--TSA checkpoint numbers vs. 2024

1/16...127 percent of 2024 levels
1/15...83
1/14...78
1/13...108
1/12...100
1/11...81
1/10...103
1/9...114

--The battle for U.S. Steel took a bizarre turn on Monday as jilted partner Cleveland-Cliffs held a press conference in Pennsylvania, and CEO Lourenco Goncalves held court for about an hour and 40 minutes, trying to convince everyone that Cliffs would prevail in a deal for U.S. Steel, even though its initial bid was turned down in August 2023, U.S. Steel’s board opting to take a $55 all-cash bid from Nippon Steel in December 2023.

U.S. Steel selected Nippon because it was expected a U.S. Steel-Cleveland Cliffs tie-up would receive antitrust scrutiny.  Cleveland Cliffs and U.S. Steel are the second- and third-largest American steel makers, with Nucor No. 1.  A combination of the two would create a steel maker with 30% to 40% of the domestic market.

But then both Presidents Biden and President-elect Trump said they were against the U.S. Steel and Nippon merger, and both companies have filed lawsuits.

Goncalves, who is aligned with Trump, said in his talk Monday that “Japan is evil” and charged that Japanese steel makers helped build the Chinese steel industry and that they taught Chinese steel makers how to dump steel into foreign markets.  Goncalves echoed Trump in his speech, making a commitment to “make American steel great again.”

I am not a fan of Goncalves.

An actual formal bid by Cleveland-Cliffs (possibly including Nucor in some fashion) is still a ways off because the companies are waiting to see how the situation with Nippon and related litigation pans out.

--UnitedHealth’s high medical costs and lower-than-expected revenue in the fourth quarter underscored persistent challenges at its insurance unit, sending the healthcare conglomerate’s shares down 5% on Thursday.

The earnings report was the company’s first since the assassination of Brian Thompson, the CEO of UNH’s insurance unit, that ignited conversations about denied health insurance claims and high premiums.

UnitedHealth’s quarterly medical cost ratio – the percentage of premiums spent on medical care – stood at 87.6%, compared with estimates of 85.95%.  Companies typically aim for a ratio close to around 80%

Analysts said the results did not provide clarity about how confident the company is about cost pressures being appropriately included in the 2025 forecast.

The company kept its 2025 adjusted profit forecast of $29.50 to $30.00 per share unchanged.  It expects the medical cost ratio to be in the range of 86% to 87% this year.

Overall fourth-quarter revenue came in at $100.81 billion, slightly below consensus, hurt by lower-than-expected premiums.

Adjusted earnings of $6.81 per share in the quarter were above the Street’s $6.72.

--Global electric vehicle and plug-in hybrid electric vehicle (PHEV) sales hit a record in 2024 as booming growth in China and other parts of the world made up for weakness in Europe.

EV and battery research firm Rho Motion reported that global electrified vehicle sales jumped 25% to 17.1 million units sold.  China led the way, with 40% growth and 11 million units sold.

Incentives such as government trade-in programs and the product prowess of BYD, which had over 40 models on sale, helped boost China sales, Rho Motion said.  China growth came from PHEVs too, which had 81% growth last year compared to BEV (battery electric vehicle) growth of 19%.  BYD primarily makes PHEV vehicles.

The U.S. and Canada saw record EV sales of 1.8 million units, resulting in 9% growth year over year.

Europe saw sales drop 3% in 2024, though Rho said the UK saw growth with 400,000 units sold, while Germany reversed lower, having ended subsidies.

--Apple shares continued to slide, as Thursday a research report from Canalys showed that the smartphone maker was dethroned as China’s biggest seller in 2024, with local rivals Vivo and Huawei overtaking Apple after its annual shipments in the country declined 17%.

It was Apple’s largest-ever annual sales decline in China and involved contraction in all four quarters, including a 25% drop in the final quarter, according to the data.

For the full year, budget smartphone maker Vivo captured a 17% market share in China, followed by premium rival Huawei with 16% and Apple with 15%, demonstrating the growing sales pressure it faces from domestic manufacturers in one of its biggest global markets.

Canalys analyst Toby Zhu said: “Apple’s premium market position faces multiple challenges: Huawei’s continuous flagship releases, the proliferation of domestic foldable phones in high-price segments, and Android brands like Xiaomi and Vivo building consumer loyalty through technological innovations.”

Separately, last week I wrote of how Apple’s new AI feature was drawing criticism and complaints for making repeated mistakes in its summaries of news headlines.

This week, Apple suspended the feature.

“We are working on improvements and will make them available in a future software update,” an Apple spokesperson said.

--Nvidia shares fell Monday after the Information reported that the AI chip leader’s top customers are delaying orders of the ‘Blackwell’ racks due to overheating issues.  The U.S. government also said earlier in the day it would further restrict AI chip and technology exports, potentially hurting Nvidia’s sales.

The first shipments of racks with Blackwell chips have been overheating and exhibiting glitches in the way chips connect to one another, the Information reported.

A rack, used in data centers, is a structure that houses chips, cables and other essential equipment.

Major customers Microsoft, Amazon.com, Alphabet’s Google, and Meta have cut some orders of Nvidia’s Blackwell GB200 racks, according to the report.

--Meta said it is preparing to cut about 5% of its global workforce, as the company looks to drop “low performers faster.”

In a memo to staff, CEO Mark Zuckerberg said he had made the decision to speed up the firm’s regular performance-based cuts in anticipation of an “intense year.”

The company, which employs about 72,000 people globally, did not say how the cuts would be distributed around the world.

Workers in the U.S. who are affected will know by February 10, according to Zuckerberg’s memo.

“This is going to be an intense year, and I want to make sure we have the best people on our teams,” he wrote.  “I’ve decided to raise the bar on performance management and move out low performers faster.”

Separately, Zuckerberg appeared on a nearly three-hour podcast with Joe Rogan and lamented the rise of “culturally neutered” companies that have sought to distance themselves from “masculine energy,” adding that it’s good if a culture “celebrates the aggression a bit more.”

As he sucks up to Donald Trump, having just loosened Meta’s content moderation policies for Instagram and Facebook, Zuckerberg told Rogan:

“Masculine energy I think is good, and obviously society has plenty of that, but I think that corporate culture was really trying to get away from it.  It’s like you want feminine energy, you want masculine energy.  I think that that’s all good. But I do think the corporate culture sort of had swung toward being this somewhat more neutered thing,” he added.

Reminder...Zuckerberg launched his career by rating the attractiveness of women at Harvard.

--Taiwan Semiconductor Manufacturing Co. projected quarterly sales and capital expenditure ahead of analysts’ estimates, fueling hopes that spending on AI hardware should remain resilient in 2025.

The main chipmaker to Apple and Nvidia foresees spending $38 billion to $42 billion on technology and capacity this year, or up to 19% more than analysts anticipated.  It predicted revenue of $25 billion to $25.8 billion in the March quarter, as much as 6% above projections.

TSMC’s strong performance buoyed optimism around an unprecedented AI spending cycle that drove the likes of Nvidia to new heights.  There has been a frenzy in datacenter build-out over the past two years, benefiting a host of companies that provide the piping and brains of the AI boom.

But the lack of a big profit-generating AI application has stoked concerns about a potential bubble.  And TSMC also has to deal with uncertainties stemming from a U.S.-China tech conflict that threatens to disrupt supply chains and stem the flow of chips around the world.

Away from AI, TSMC remains heavily reliant on consumer electronics and smartphones, given Apple remains its largest customer.  CEO C.C. Wei warned that smartphone unit growth will remain in the low-single digits in 2025.

--Eli Lilly shares traded down more than 6% Tuesday after the company reported revenue guidance for the fourth quarter of 2024 that missed Wall Street expectations.

Lilly revised its revenue guidance down 5%, to $13.5 billion, missing consensus of $14 billion by $500 million.  But the guidance still represents a 45% increase from the same quarter in 2023.  Lilly previously provided a range of $13.9 billion to $14.5 billion.  The company also provided full-year 2024 guidance of $45 billion, or 32% more than 2023.

It’s all about its two weight-loss drugs, Mounjaro and Zepbound, with the drugmaker for a second time saying the two obesity and Type 3 diabetes drugs will report sales missing Street expectations.

Lilly said Tuesday that sales of Mounjaro, which is sold to treat Type 2 diabetes, were $3.5 billion in the fourth quarter, far below consensus of $4.4 billion.  Fourth-quarter sales of Zepbound, the same drug sold to treat obesity, were $1.9 billion, below the $2.1 billion Street forecast.

“While the U.S. incretin [hormones that help regulate blood sugar levels after eating] market grew 45% compared to the same quarter last year, our previous guidance had anticipated even faster acceleration of growth for the quarter. That, in addition to lower-than-expected channel inventory at year-end, contributed to our Q4 results,” said Lilly CEO David Ricks in a statement.

--Moderna shares cratered 17% Monday after the pharmaceutical company lowered its sales forecast amid weak demand for Covid and RSV vaccines.

The company expects $1.5 billion to $2.5 billion in annual revenue, mostly in the second half, which is lower than a prior forecast of $2.5 billion to $3.5 billion and below market expectation of $2.95 billion.

CEO Stephane Bancel said the vaccine maker aims to reduce 2025 cash costs by $1 billion with a plan for an additional $500 million in 2026.

--Elon Musk’s SpaceX suffered a little blow on Thursday when its newly upgraded Starship rocket, carrying its first test payload of mock satellites but no crew, exploded eight minutes after liftoff from its South Texas rocket facilities.

Starship is the massive rocket designed to eventually take man back to the Moon, and then Mars.  The super heavy booster did successfully return to the launchpad, spectacularly so.

The failure came a day after Blue Origin, Jeff Bezos’ space company, successfully launched its giant New Glenn rocket into orbit for the first time.  New Glenn is supposed to be a competitor in the satellite launch race...and beyond.

--Signet Jewelers stock cratered a whopping 21% after the company lowered its sales forecast for the last quarter of its fiscal year, saying that customers were looking for more affordable jewelry than it had anticipated during the year-end holidays and that it didn’t have the stock it needed to meet that demand.

Signet, the world’s largest retailer of diamond jewelry (Zales and Kay brands), updated its outlook for its fiscal fourth quarter, ending Feb. 1.  It lowered its forecast for sales to a range of $2.32 billion to $2.35bn, from $2.38 billion to $2.46 billion it told investors to expect in December.

Same-store sales are expected to decline by 2% to 2.5%, Signet said on Tuesday.  The prior expectation was for growth of 0% to 3%.

--MicroStrategy, the enterprise software company that transformed itself into a leveraged Bitcoin proxy, now owns over 2% of all the Bitcoin that will ever exist as co-founder and Chairman Michael Saylor ramps up purchases as part of a buy and hold strategy he began in 2020.  MSTR owns around $41 billion of the original cryptocurrency.  Saylor has been purchasing large amounts of Bitcoin for at least 10 consecutive weeks.

Just wanted to get this down for the record.  The shares are not for the faint of heart, but if you got in early and held, you’re doing rather well...the stock hit a high of $543 on November 21, 2024 (intraday), and was trading at $396 on Friday, as Bitcoin surged back over $100,000 after trading at $90,300 Monday morning.  More Trump optimism in the crypto currency space.

--Hindenburg Research founder Nate Anderson cited job stress as he shut down the Street’s pre-eminent short seller.

Hindenburg wiped billions of dollars off the market values of companies including Nikola and Icahn Enterprises, among others.  Anderson cited the toll the work took on his well-being.

“I’ve spent most of the last eight years either in a fight or preparing for the next one,” he said in an interview with the Wall Street Journal.

--New York Mets owner Steve Cohen is best known in some circles for his Point72 Asset Management company, a rather large hedge fund, and Point72 generated a return in 2024 of about 19% in its flagship fund, outperforming most of his peers.

Which left Point72 with a good problem: having too much investor cash to deploy, so the firm has told clients it would hand back to them between about $3 billion to $5 billion in profits in early 2025. It managed $35 billion in assets in mid-2024.

--The Food and Drug Administration is banning the use of Red No. 3, an artificial dye linked to cancer in animals, from food and ingested drugs.

The move will impact thousands of food products on the market in the U.S., including Betty Crocker’s loaded mashed potatoes and MorningStar Farms plant-based bacon strips.  It’s even in candy corn.  Why I thought candy corn was all-natural!

--If you have to use the bathroom suddenly, don’t think about going into Starbucks, unless you are going to purchase something.  The company is scrapping a policy that had let anyone hang out at its cafes or use the restrooms without making a purchase. The new rules are part of a larger effort to improve Starbucks’ café experience and deter homeless people and non-paying customers who have come to use Starbucks solely for shelter and bathroom access.

The new code of conduct, announced to stores Monday, is part of CEO Brian Niccol’s strategy to lure back customers, boost sagging sales and improve worker relations.  It applies to all locations in North America and will be displayed on store doors.

Foreign Affairs, Part II

South Korea: Wednesday, South Korean authorities investigating impeached President Yoon Suk-yeol gathered at his official residence to execute an arrest warrant over insurrection accusations related to his December 3 martial law declaration.

The Corruption Investigation Office for High Officials (CIO), which is spearheading the investigation into Yoon’s failed martial law decree, announced plans to deploy approximately 1,000 officers to secure the area and potentially storm the residence.

About 70 presidential bodyguards, some wearing helmets, were seen forming human chains behind buses strategically parked to block the driveway leading to the presidential compound.

The driveway’s iron gate had been reinforced with razor wire.

Dozens of lawmakers from Yoon’s ruling conservative party, along with their aides, formed human barricades outside the gate in a show of defiance.

Nearly 6,500 of Yoon’s supporters gathered.  It was tense.  Back on Jan. 3, Yoon’s security guards successfully blocked investigators from detaining him when they made their first attempt to serve a court-issued detention warrant, but they had only 100 agents and police officers vs. Yoon’s 200 bodyguards and soldiers.

But this time Yoon was detained for questioning, striking a deal with law enforcement officials and ending a weekslong standoff.

In a video message released shortly after his detention, Yoon said he agreed to subject himself to the questioning in order to prevent a “bloody” clash between his bodyguards and the police.  But he called the investigation and the warrant to detain him “illegal.”

Yoon faced questioning from officials for the allowed 48 hours, and then investigators could apply for a separate court warrant to formally arrest him.

As of Friday, he remained in detention and was refusing to talk to investigators.

But here’s the thing.  After Yoon’s martial law declaration, support for his conservative People’s Power Party collapsed.

In the turmoil since, however, the PPP’s support has sharply rebounded.  Friday, a Gallup Korea poll found the PPP has edged ahead of the opposition Democratic Party, 39% to 36%, for the first time since August.

The poll did show that 57% still support Yoon’s removal from office, but he is counting on the rising support to keep him in office.

China: Both incoming national security adviser Rep. Mike Waltz and secretary of state nominee Sen. Marco Rubio in their Senate confirmation hearings on Wednesday pledged to be tough on China, with Waltz saying the new administration will reinforce Washington’s Indo-Pacific strategy – including arms sales to Taiwan – to deter Beijing’s ambitions in the area.

Waltz pledged to leverage Indo-Pacific partnerships, including the trilateral security alliance with Australia and Britain on technology supply chains, to counter Chinese influence.

Rubio said a second Trump administration will stay committed to core allies such as Israel and Taiwan, pursue a more aggressive strategy to counter China, and take a more “realistic” approach to dealing with Ukraine.

China is “the most potent and dangerous near-peer adversary this nation has ever confronted,” Rubio said, making clear that countering Beijing will be a key focus for the incoming administration – echoing a belief expressed by the Biden administration.

China dominates critical supply chains. It is a competitor in science and technology, in global markets, and in political and military influence, Rubio said. It is wholly unlike the Soviet Union and other adversaries the United States has faced.

Separately, former Vice President Mike Pence, speaking in Hong Kong at a UBS Wealth Insights summit, called for the release of the newspaperman Jimmy Lai, whose current trial on national-security charges I have written extensively of.

“There is probably no more compelling gesture in the short term to send a message of good will to the people of the United States, or the free world, than if China were to take steps to free Jimmy Lai,” Pence said.

Good for Pence.  Marco Rubio, in his confirmation hearings, said Beijing has broken all the guarantees it made to Hong Kong.

As the Wall Street Journal editorialized:

“Donald Trump will be sworn in Monday as U.S. President, he’s pledged to free Jimmy Lai, and a bipartisan U.S. consensus is forming against China and Hong Kong.  Mr. Pence’s remarks are a warning about what’s to come if they don’t fix the mess they created.”

Venezuela: The United States announced an increased $25 million reward for information leading to the arrest of Venezuelan President Nicolas Maduro on the day he was sworn in for a third six-year term in office.

The inauguration ceremony was overshadowed by recrimination from the international community and Venezuelan opposition leaders.

Rewards have also been offered for information leading to the arrest and or conviction of Interior Minister Diosdado Cabello.  A new reward of up to $15 million for Defense Minister Vladimir Padrino has also been offered.

The UK has issued sanctions on 15 top Venezuelan officials, including judges, members of the security forces and military officials.

Foreign Secretary David Lammy described Maduro’s regime as “fraudulent.”

The EU said it was extending “restrictive measures” against Venezuela because of “the lack of progress...leading to the restoration of democracy and the rule of law.”  Canada has acted in similar ways.

The reward from the U.S. goes back to 2020, when the U.S. charged Maduro and other senior officials in the country with “narco-terrorism.”

It accused them of flooding the U.S. with cocaine and using drugs as a weapon to undermine the health of Americans.

Maduro has rejected the accusations.  In his fiery inaugural address, he compared himself to a biblical David fighting Goliath and said his enemies’ failure to block his inauguration to a third term was “a great victory” for Venezuela’s peace and national security.

“I come from the people, I am of the people, and my power emanates from history and from the people.  And to the people, I owe my whole life, body and soul.”

You stole an election, you bastard.

Bret Stephens / New York Times

“Donald Trump has set some grandiose foreign-policy goals for his second term, from buying Greenland to ending the war in Ukraine ‘in a day.’  Here’s one goal that is overdue, morally right and in our national security interest: deposing the regime of Nicolas Maduro in Venezuela, through coercive diplomacy if possible or force if necessary.

“Last week, Maduro was sworn in for a third six-year term after a fraudulent election last July that independent surveys show he lost by about 35 percentage points.  His opponent, Edmundo Gonzalez, is in exile; the head of the opposition movement, Maria Corina Machado, had to spend months in hiding [Ed. and is now in custody].  As many as 10 Americans are languishing in Venezuelan jails on dubious charges. The regime has treated past American prisoners as political hostages.

“That’s not even the worst of it. As of November, the regime held an estimated 1,800 political prisoners. Since Maduro came to power, close to eight million Venezuelans have fled the country, amounting to a quarter of the population; at least 600,000 are now in the United States.  Malnutrition affects millions; the crime rate was among the highest in the world in 2024.  This is a country that was once among the wealthiest in Latin America.

“And Maduro continues to court our enemies, starting with Iran, which has reportedly established a ‘drone development base’ at a Venezuelan air base....

“(The) only thing that will dislodge Maduro and his cronies is the combination of a powerful incentive and a credible threat.

“The incentive is an offer that he and his henchmen go into permanent exile, probably to Cuba or Russia, along with a guarantee of amnesty for all Venezuelan military and intelligence officials who stay behind and pledge loyalty to a government led by the legitimate president.  The threat is U.S. military intervention of the sort that in 1990 swiftly ended the regime of the Panamanian strongman Manuel Noriega.  That could be followed by extradition and prosecution in U.S. courts: In Noriega’s case, it led to 27 years of imprisonment. American troops withdrew swiftly, and Panama has been a democracy ever since.

“If this sounds bellicose, it’s by design: Maduro and his cronies will relinquish power peacefully only if they are convinced the alternative is worse.  The point of a powerful threat is that it reduces the chances of having to carry through with it....

“It shouldn’t be a hard sell for liberals, either.  The moral basis for deposing Maduro is clear: He stole the election, terrorizes his opponents and brutalizes his people.  He shows no sign of letting up, much less letting go.  Every other option for political change has been attempted.  How much more suffering are Venezuelans supposed to endure, and how much worse does this hemispheric crisis have to get, before the nightmare finally ends?

“The president-elect inspires a lot of nervousness, loathing and fear.  Like it or, probably not, that’s the man Americans elected. His choice for secretary of state, Marco Rubio, understands better than most Americans the real nature of these tropical despotisms.  Ending Maduro’s long reign of terror is a good way to start their administration – and send a signal to tyrants elsewhere that American patience with disorder and danger eventually runs out.”

Random Musings

--Presidential approval ratings....

Gallup: 39% approve of President Biden’s job performance, 56% disapprove; 37% of independents approve (Dec. 2-18).  Next week, we’ll start with Trump.

Rasmussen: 42% approve, 56% disapprove (Jan. 17).

A CNN/SSRS poll of 1,205 adults found that 46% view Donald Trump favorably, 48% unfavorably – his best numbers since just after the 2016 presidential election, when 47% viewed him favorably and 50% unfavorably.

Trump receives majority approval (55%) for his handling of the transition, with most Americans (56%) expecting him to do a good job in his second term, the survey finds.  Ahead of his first term, only 40% of Americans approved of his handling of the presidential transition at this point in 2017, while 48% expected him to do a good job as president.

--President-elect Trump would have been convicted of illegally trying to overturn the result of the 2020 presidential election – which he lost – if he had not successfully been re-elected in 2024, according to the man who led U.S. government investigations into him.

The evidence against Trump was “sufficient to obtain and sustain a conviction at trial,” Special Counsel Jack Smith wrote in a partially released report.

Trump hit back, saying Smith was “deranged” and his findings were “fake,” writing on Truth Social:

“Deranged Jack Smith was unable to successfully prosecute the Political Opponent of his ‘boss,’ Crooked Joe Biden, so he ends up writing yet another ‘Report’ based on information that the Unselect Committee of Political Hacks and Thugs ILLEGALLY DESTROYED AND DELETED, because it showed how totally innocent I was, and how completely guilty Nancy Pelosi, and others, were.  Jack is a lamebrain prosecutor who was unable to get his case tried before the Election, which I won in a landslide.  THE VOTERS HAVE SPOKEN!!!”

Trump was accused of pressuring officials to reverse the 2020 result, knowingly spreading lies about election fraud and seeking to exploit the riot at the Capitol on January 6, 2021.  He denied any wrongdoing.

But after his success in the 2024 election, the various legal issues he had been battling essentially evaporated.  And the interference case has now been dismissed.

While some of the material in Smith’s report was already known thanks to a public filing in October, which gave details of Trump’s alleged efforts to overturn his defeat, the report released by the Department of Justice to Congress on Monday gives further detail on why Smith pursued the case, and ultimately closed it.

It justifies the case against Trump by accusing him of “unprecedented efforts to unlawfully retain power” through a variety of methods, including “threats and encouragement of violence against his perceived opponents.”

The report continues: “The throughline of all of Mr. Trump’s criminal efforts was deceit – knowingly false claims of election fraud.”

The report details “significant challenges” faced by investigators, including Trump’s “ability and willingness to use his influence and following on social media to target witnesses, courts, and [DOJ] employees.”

Addressing why the case was closed, the report acknowledges that the U.S. Constitution forbids the prosecution of a sitting president.

The document goes on to explain: “But for Mr. Trump’s election [in 2024] and imminent return to the presidency, the office assessed that the admissible evidence was sufficient to obtain and sustain a conviction at trial.”

In a letter accompanying the release sent to the attorney general, Smith denies any suggestion the case was politically motivated: “The claim from Mr. Trump that my decisions as a prosecutor were influenced or directed by the Biden administration or other political actors is, in a word, laughable.”

Smith further reflected in the accompanying letter: “While we were not able to bring the cases we charged to trial, I believe the fact that our team stood up for the rule of law matters.”

--Republican Florida Attorney General Ashley Moody will fill the Senate seat being vacated by Sen. Marco Rubio, Florida Gov. Ron DeSantis announced Thursday.  Moody will join the upper chamber next week and serve for at least two years.

--Pete Hegseth, Donald Trump’s pick for defense secretary, appeared before the Senate Armed Services Committee for a contentious four-hour confirmation hearing, with Democratic senators repeatedly calling him unfit to lead the Pentagon, while Republicans – who alone can confirm Hegseth – offered nothing but support.

Senator Joni Ernst of Iowa, a Republican whose support was seen as crucial for Hegseth’s confirmation, appeared satisfied and told a Des Moines radio station later in the day she would vote for confirmation.

Editorial / Wall Street Journal

“Americans didn’t learn much about Pentagon nominee Pete Hegseth at his Senate confirmation hearing on Tuesday, but they did learn more about the world’s greatest nondeliberative body. Democrats mostly played into Mr. Hegseth’s hands with questions he easily parried, while Republicans asked little of substance.

“The most effective Democratic questioning came from Virginia’s Tim Kaine, who wanted to know why Mr. Hegseth didn’t disclose to the Trump team a settlement he paid to a woman who accused him of sexual assault.  Mr. Hegseth kept saying he was ‘falsely charged’ but never answered the question....

“Republicans didn’t do much scrutinizing.  Markwayne Mullin (R., Okla.) noted that Senators sometimes showed up drunk for votes at night and cheat on their wives, but they aren’t in the chain of command of U.S. military forces.  Tim Sheehy (R., Mont.), after opening his remarks by asking how many genders there are, did ask about Navy shipbuilding, to which Mr. Hegseth basically said Donald Trump wants to build ships.  No details.

“Ted Budd (R., N.C.) asked what the U.S. should do about its shortage of fighter aircraft, and Mr. Hegseth said he looked forward to ‘looking under the hood’ once confirmed. He gave the same answer to Sen. Deb Fischer (R., Neb.) when she inquired whether the nominee supports a ‘nuclear-armed sea-launched cruise missile system’ to counter Russian and Chinese nuclear capabilities.

“Mr. Hegseth made noises about restoring U.S. military deterrence, and that’s something.  But it appears we’re on track to have a secretary on Defense whose real views are a mystery.  Let’s hope he rises to the occasion.”

Tom Nichols / The Atlantic

“What America and the world saw today was not a serious examination of a serious man. Instead, Republicans on the committee showed that they would rather elevate an unqualified and unfit nominee to a position of immense responsibility than cross Donald Trump, Elon Musk, or the most ardent Republican voters in their home states.  America’s allies should be deeply concerned; America’s enemies, meanwhile, are almost certainly laughing in amazement at their unexpected good fortune....

“Throughout this all, I tried to imagine the reaction in Moscow or Beijing, where senior defense-ministry officials were almost certainly watching Hegseth stumble his way through this hearing. They learned today that their incoming opponent apparently has few thoughts about foreign enemies, but plenty of concerns about the people Trump calls ‘the enemy from within.’ The MAGA Republicans, for their part, seem eager only for Hegseth to get in there and tear up the Pentagon.

“After today, I suspect America’s enemies are happily awaiting the same thing.”

All of Trump’s picks for his cabinet that have testified to date will be confirmed, including Hegseth.

--Following a deadly knife attack in the northern English town of Southport last July, Andrew McIntyre set up a Telegram channel called “Southport Wake Up.”  Amid posts riddled with anti-Islamic antisemitic and anti-immigrant abuse, he urged people to take to the streets, directing them to a mosque and calling for “war.”

McIntyre, 39, was sentenced to seven years in prison a week ago after taking part in two of several riots that rattled Britain last summer. He pleaded guilty to encouraging violent disorder and criminal damage, and to possession of a knife.

Enter Elon Musk, who a day after his conviction bemoaned McIntyre’s sentencing in a post on X, declaring: “Over 7 years prison for social media posts... Whoever gave that sentence deserves prison themselves.”

The post was viewed 34 million times, one of many comments he has made about Britain in recent weeks, including attacks on the governing Labour Party, which have also echoed far-right talking points coupled with disinformation.

Meanwhile, former Trump chief strategist Steve Bannon is ramping up public attacks on Musk amid an intensifying debate on the right about Musk’s influence in the incoming administration.

In an interview with the Italian newspaper Corriere della Sera this past week, Bannon said Musk “should go back to South Africa,” where he was born, and be denied privileged access to the West Wing.  Bannon has also criticized Musk’s support for a skilled-worker visa program that led to a bitter rift last month between far-right activists and Trump’s tech executive supporters, who see the program as a crucial lifeline for Silicon Valley.

Bannon told the newspaper: “Why do we have South Africans, the most racist people on earth, White South Africans...making any comments at all on what goes on in the United States?”

Bannon added he would “do anything” to keep Musk out of the White House.

--Donald Trump announced that he will create an External Revenue Service to collect tariffs.  Such collection currently falls under the authority of U.S. Customs and Border Protection (CBP), which is part of the Department of Homeland Security.

The creation of a separate ERS department in theory would need congressional support, though Trump could try to establish the department within a different existing agency.

Bryan Riley of the National Taxpayers Union pointed out that the “federal government collects duties from U.S. importers,” raising questions about how the proposed agency would even work.

“It does not collect duty revenue from foreign sources, so it is not clear what the point of a new External Revenue Service would be,” Riley told the New York Post.  “A better priority would be to improve the operation of the Internal Revenue Service to better serve U.S. taxpayers.”

--House Speaker Mike Johnson (Ohio) removed Rep. Mike Turner as chair of the House Permanent Select Committee on Intelligence, Johnson confirmed Wednesday.

The change in leadership to the closely watched and powerful committee reflects the latest evidence of a shift in how Republicans will approach the Russia-Ukraine war during Trump’s second term.

Turner – an advocate for Ukraine funding – has at times been criticized by Republican skeptics of Ukraine in the House, and he reportedly told CBS News that the speaker cited “concerns from Mar-a-Lago” as the justification for his removal as chair.

This sucks.  Turner is one of the good ones. A serious sort, unlike the clowns Johnson is peopling the committee with.  There are many House Republicans furious with the Speaker.

Referring to all the legislative and political headaches that are piling up, Rep. Dan Crenshaw (R-Texas) said, “It’s all happened under Johnson’s leadership...too much disruption.”

--The Wall Street Journal’s Barton Swaim, in an op-ed, referenced a book by the Italian economic historian Carlo M. Cipolla (1922-2000) titled “The Basic Laws of Human Stupidity.”

“Cipolla divides people into four categories: helpless, bandit, intelligent and stupid.  In any normal interaction between two people, he contends, the helpless person suffers a loss while the other gains. The bandit exacts a benefit while levying a loss on the other. The intelligent person gains while enabling the other person also to gain.  The defining trait of the stupid person is that he gains nothing while obliging the other to take a loss....

“For four years, (Joe Biden) has made decisions and pursued policies that made his supporters, party, country and foreign allies worse off, and in almost every case he has gained nothing and very often suffered commensurate political losses.  You could make a cogent argument that Mr. Biden belongs in the category of helpless, so often do his decisions benefit his political adversaries, chiefly Mr. Trump, and not himself.  But those blunders – principal among them his insistence that he was capable of running for re-election – have exacted massive costs on the rest of the country.

“For three years Mr. Biden made it policy to do nothing on the country’s southern border apart from revoking Mr. Trump’s executive orders. What did he gain from this dereliction?  The answer isn’t obvious.  Mr. Biden overrode his military advisers and insisted on a total and immediate withdrawal from Afghanistan, with no clear plan to extract Afghan allies, U.S. citizens or American military hardware.  A loss for the U.S, for sure.  But where was the benefit to Mr. Biden or his administration?...

“Mr. Biden openly defied the Supreme Court’s ruling on his student-debt cancellation plan (the justices ‘tried to block me, but they didn’t stop me’).  He thus managed to sow resentment among Americans whose debts he didn’t forgive, encourage a generation to indulge in foolish borrowing, and make himself look like the lawless strongman he accused Mr. Trump of being.

“In each of these instances – and there are many others – Mr. Biden not only created ruin, discord and embarrassment for those who wished him well; he did so without gaining any advantage for himself....

“The pardon of Mr. Biden’s son Hunter comes close to a bandit move, benefiting as it does the president while disgracing the presidency.  A few months ago, he made the foolish mistake of promising not to pardon Hunter, and so any gain must be weighed against the reputational loss of having told one of the more brazen falsehoods in presidential history.

“On Jan. 3, the president blocked a Japanese company from buying U.S. Steel on ‘national security’ grounds – one day after approving the sale of surface-to-air missiles to Japan. On one point I can agree with Bertrand Russell*.  Although the cocksure aren’t always stupid, the stupid are definitely cocksure.”

*Russell’s full quote is: “The trouble is that in the modern world the stupid are cocksure while the intelligent are full of doubt.”

--About a million Americans a year are expected to develop dementia by 2060, roughly double today’s toll, researchers reported Monday.

That estimate is based on a new study that found a higher lifetime risk than previously thought: After age 55, people have up to a 4 in 10 chance of eventually developing dementia – if they live long enough.

There are steps people can take to reduce that risk such as controlling high blood pressure and other bad-for-the-brain health problems.

Alzheimer’s is the most common form, and silent brain changes that eventually lead to it can begin two decades before symptoms appear. 

Otherwise, aside from controlling your blood pressure, exercise, avoid obesity, and watch your cholesterol. Also stay socially and cognitively active, experts recommend.  Read this column, adds moi.

--Scientists say 2025 is expected to be the third hottest year on record, behind 2024 and 2023. The Pacific Ocean is cooling slightly from the weather pattern known as La Nina, which is expected to last until April.

"There’s pretty much a nothing-burger going on out there in the equatorial Pacific right now,” said Kris Karnauskas, a professor of atmospheric and oceanic sciences at the University of Colorado, Boulder.  “It’s very close to a perfect neutral condition.  We’re not in a La Nina or an El Nino by any stretch right now.”

--Back to the Los Angeles fires, the air quality is awful.  The fires in dense neighborhoods burned homes, furniture, cars, electronics and materials like paint and plastic, making the smoke very toxic, and dangerous.

The L.A. Times also reported: “Downtown L.A. has received just 0.16 of an inch of rain since Oct. 1 – 3% of the average at this point in the (rainy) season, which is 5.56 inches.  In San Diego, just 0.14 of an inch of rain has fallen between Oct. 1 and Jan. 14.  That’s the driest start to the water year in 174 years of record keeping.”

Separately, nearly 1,000 prisoners are being deployed to help in the battle and some are saying they aren’t paid enough.  It turns out inmates earn between $5.80 and $10.24 per day, with an extra $1 per day during emergencies.

Some activists are urging the prisoners be paid more. I would argue, not enough is being budgeted to hire more firefighters so that you don’t need prisoners to do the work.

Separately, to the firefighters from Mexico and Canada helping out in Los Angeles, you have America’s gratitude.

--Lastly, I was going to comment how I was thankful the incoming Trump administration had not invited me to the Inauguration, seeing as it is going to be the coldest Inauguration Day since Ronald Reagan’s in 1985, windchills around 10 degrees.  Attendees would be freezing their butts off, with many catching colds, and worse, ditto those standing on The Mall. 

But then President-elect Trump opted to hold it indoors.  No drama.  Drat.

---

Pray for the victims and their families in L.A., and the First Responders.

God bless America.

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Gold $2740
Oil $78.04

Bitcoin: $104,663 [4:00 PM ET, Friday] ...up $10,000 on the week

Regular Gas: $3.11; Diesel: $3.61 [$3.08 - $3.93 yr. ago]

Returns for the week 1/13-1/17

Dow Jones  +3.7%  [43487]
S&P 500  +2.9%  [5996]
S&P MidCap  +4.5%
Russell 2000  +4.0%
Nasdaq  +2.4%  [19630]

Returns for the period 1/1/25-1/17/25

Dow Jones  +2.2%
S&P 500  +2.0%
S&P MidCap  +3.8%
Russell 2000  +2.1%
Nasdaq  +1.6%

Bulls 42.2
Bears 32.2...historic drop in bulls, rise in bears...a screaming ‘buy’ signal.*

*Reminder, the bull/bear reading is a contrarian indicator and it hasn’t worked as well as it did years ago.  I have been keeping track of it, weekly, since 1990!

So I just went back to the readings before the pandemic hit.  Understand, what you see above is really the opinions of newsletter types and investment professionals advising clients from the week before.  The data is then released Wednesdays by Ed Yardeni’s research group.

The bull/bear ratio 2/21/20, as rumblings of something amiss in China were beginning to surface, with the Dow Jones peaking on a weekly basis at 29398, was 54.7 / 18.9.

By 3/27/20, weeks into the panic and global shutdown, the Dow was 19173 (again, the weekly close from the week before), with the bull/bear at 30.1/41.7.  That proved to be the low in the market.

And now you know...the rest of the story.

Hang in there. Stay warm.

Brian Trumbore

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