Week in Review

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Week in Review

12/17/2022

For the week 12/12-12/16

[Posted 6:00 PM ET, Friday]

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Edition 1,235

Last weekend the head of NATO, Secretary-General Jens Stoltenberg, gave an interview to Norwegian broadcaster NRK, expressing worries that the fighting in Ukraine could spin out of control and become a war between Russia and NATO.

“If things go wrong, they can go horribly wrong,” Stoltenberg said. “It is a terrible war in Ukraine. It is also a war that can become a full-fledged war that spreads into a major war between NATO and Russia.  We are working on that every day to avoid that.”

Stoltenberg was formerly prime minister of Norway.  In the interview he said that “there is no doubt that a full-fledged war is a possibility,” adding that it was important to avoid a conflict “that involves more countries in Europe and becomes a full-fledged war in Europe.”

The Kremlin has repeatedly accused NATO allies of effectively becoming a party to the conflict by providing Ukraine with weapons, training its troops and feeding military intelligence to attack Russian forces.

And last week we heard Vladimir Putin suggest Moscow might think about using what he described as the U.S. concept of a preemptive strike.

Tuesday, a Russian commander in the east of Ukraine, Alexander Khodakovsky, said on state television that Russia can’t “defeat the NATO bloc” without using nuclear weapons.

Commander Khodakovsky said on Russia-1 that Moscow’s resources are limited.

He also claimed that Russia is now fighting the entire Western world, which is why the next escalation of the Ukraine war can “only be one: nuclear.”

“We don’t have the resources to defeat the NATO bloc with conventional means.  But we have nuclear weapons for that,” Khodakovsky said.  The Kremlin had no comment.

The situation in Ukraine is growing darker by the day.

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I go into China’s Covid reopening below, but as best as we can ascertain, Beijing’s “fever clinics” reported 22,000 visits last Sunday, 16 times greater than the previous week, state broadcaster CCTV reported.  These aren’t necessarily all Covid cases, but the public is very confused by the mixed messaging of the past few weeks and now paranoid over any cold-like symptoms.

And with the unexpected about-face injecting more uncertainty into an already fragile growth outlook, it’s harder than ever to figure out where China’s economy is going and that has big implications for the commodity sector, for one, especially most visibly the price of oil.

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Brittney Griner was released from the Brooke Army Medical Center at Fort Sam Houston, Texas, on Friday, and I have an opinion piece down below on her release.

But it’s more than a bit disconcerting that we’ve learned, through the reporting of the Washington Post, that once again, a la Afghanistan and defense officials, President Biden ignored the advice of the Justice Department, which as the Post notes, “viewed (last) Thursday’s one-for-one prisoner swap involving Griner and the notorious arms dealer Viktor Bout as a mistake given the discrepancy of offenses by the two prisoners, officials familiar with the matter said.”

“Within the Justice Department, many officials resisted the idea of trading Bout before his scheduled release in 2029, according to current and former officials.  ‘If she were my relative, I would want to do the swap,’ said one.  ‘But trading a notorious international arms dealer for a basketball player is madness.’”

Biden, who longtime reporters and biographers say has an immensely lofty opinion of his own intelligence (this is my statement going back to what was said during the 2020 campaign), has been wrong a zillion times in his political career. 

Yes, Americans should be glad Griner is back…I am.  The Russians were total bastards for holding her as they did.

But if the president runs for reelection, as now seems very likely, and as his mental faculties diminish further, having a man who refuses to listen to advice and only keeps his own counsel because he is convinced he is the smartest guy in the room is immensely dangerous…and also rather Trump-like.

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This week in Ukraine….

--On Saturday, the Ukrainian army said it shot down 10 drones, with another five hitting key energy facilities in the port city of Odesa – leaving 1.5 million without power.

“The situation in the Odesa region is very difficult,” President Volodymyr Zelensky said in his nightly address.  “Unfortunately the hits were critical, so it takes more than just time to restore electricity.  It doesn’t take hours, but a few days.”

The drones were Iranian made, according to Ukrainian officials.

--In a call between Zelensky and President Biden on Sunday, Biden highlighted how the U.S. is prioritizing efforts to boost Ukraine’s air defense system, and later in the week there was talk the U.S. is sending Patriot Missile batteries to Kyiv.

--Ukraine’s military chief publicly signaled a relative freeze in ground operations until the winter’s coldest months, closer to February.  This was Ukrainian Defense Minister Oleksii Reznikov’s message Sunday from Odesa.

“We have watched rain and very difficult conditions for offensives from any side,” Reznikov said according to a translation provided by Ukrainian newspaper Pravda. “Therefore, using the moment, when the ground is firmer, I am convinced that we will resume our counter offensives and the campaign on liberating our land.”

Ukraine has liberated just 54% of the land Russian forces seized since late February.  That’s according to the British military, which on Monday assessed that “Russia’s current minimum political objectives of the war remain unchanged.”  That is, “Russia is likely still aiming to extend control over all of Donetsk, Luhansk, Zaporizhzhia, and Kherson Oblasts,” and the Russians will probably try “advancing deeper into Donetsk Oblast” in the days ahead, the Brits predict.

From London’s point of view, the Russians are “unlikely to make operationally significant advances within the next several months” because of well-known personnel shortages and some lesser-known tactical decisions around Donetsk.

The top Moscow-installed official in the occupied parts of Donetsk, Denis Pushilin, said on Tuesday that more than 50% of the region’s territory is under Russian control.

Fierce fighting continues in the region, with a reported 30 Ukrainian military personnel killed on Monday as part of Russia’s offensive.  Russia’s sustained shelling of the frontline in Donetsk has completely destroyed the city of Bakhmut and heavily damaged the city of Avdiivka, which lies in the region’s center, President Zelensky said over the weekend.

--The Institute for the Study of War wrote over the weekend that “Russia and Ukraine are extremely far apart” when it comes to any potential for a ceasefire.  And presently, “it is almost impossible to imagine a ceasefire being agreed to, let alone implemented, for some months, which would deprive Russia of the opportunity to pause Ukrainian winter counter-offensives and reset before spring,” they write.

--Russia is launching missiles manufactured in Ukraine back in the 1970s at Ukrainians in 2022, Kyiv’s deputy intelligence chief told the New York Times over the weekend.  Some of them have no warheads and, according to the theory, are used to absorb Ukrainian air defense interceptors to clear the way for subsequent attacks with missiles that contain live warheads.

Ukraine’s Gen. Vadym Skibitsky posits, “According to our calculations, they have missiles for another three to five waves of attacks,” with a single wave deploying between 80 and 90 missiles.  He also said he believes Russia’s defense industry is currently making around 40 precision-guided and cruise missiles per month.

In the same vein, a senior military official said Monday that Russia is turning to decades-old ammunition with high failure rates as it burns through its stockpiles.

“They have drawn from (Russia’s) aging ammunition stockpile, which does indicate that they are willing to use that older ammunition, some of which was originally produced more than 40 years ago,” the officials said, speaking on condition of anonymity.

The United States accuses Iran and North Korea of helping supply Russia with firepower as it exhausts its regular supplies of ammunition.  The senior official estimated Russia would burn through its fully serviceable stocks of ammunition by early 2023 if it did not resort to foreign suppliers and older stocks.

Moscow is attempting to obtain hundreds of ballistic missiles from Iran and offering Tehran an unprecedented level of military and technical support in return, as I noted last time, which comes from both British and U.S. officials.

--Putin canceled his traditional televised year-end news conference this month, the Kremlin said on Thursday.  The event is a staple of Putin’s calendar, giving him the chance to showcase his command of issues and his stamina as he sits alone on a stage in a large auditorium for a question-and-answer session with reporters that can last more than four hours.

But with the war not going well, the feeling is Putin didn’t want to have to handle tough questions.  Others say it’s his health and that he wouldn’t be able to last multiple hours, but he’s been giving extensive press briefings recently.

Kremlin spokesman Dmitry Peskov was asked in a call with reporters whether a date had been set for this year’s “big news conference,” and replied: “No, there won’t be one before the new year.”

Last year the press conference occurred on Dec. 23, almost exactly two months before the invasion of Ukraine and Putin used the occasion to say Russia wanted to avoid conflict with Ukraine and the West, but needed an “immediate” response from the United States and its allies to its demands for security guarantees.

--Ukrainian forces attacked a key bridge in occupied Melitopol that the Russian military frequently used to move elements to and from Ukraine’s eastern front.  As reported by the Wall Street Journal, “The attack (was) the second in the city of Melitopol in recent days after Ukraine’s military used U.S.-supplied long-range artillery to demolish a hotel housing Russian military personnel.”

Occupied by Russia since March, Melitopol has been described as key to the defense of the south by Oleksiy Arestovych, an advisor to President Zelensky

“All logistics linking the Russian forces on the eastern part of the Kherson region and all the way to the Russian border near Mariupol is carried out through it,” Arestovych said in an interview.

“If Melitopol falls, the entire defense line all the way to Kherson collapses.  Ukrainian forces gain a direct route to Crimea.”

For months, Ukrainian forces have been striking deep behind Russian lines in eastern Ukraine to break up concentrations of Russian troops and cut Russian supply lines.  Such attacks, including those by American-made Himars artillery, have been at the heart of the offensives in the northeast and southeast.

Along these lines, Ukrainian forces struck what they called a headquarters of Russia’s Wagner mercenary group, according to the exiled governor of Luhansk in the east.

Serhit Haidai said a hotel where the group met in Kadiivka, Luhansk, was hit with major losses.

The private military company set up by Yevgeny Prigozhin, a former restaurateur and close associate of Vladimir Putin, has repeatedly been accused of war crimes and human rights abuses.

In the Kadiivka strike, Haidai said Russia had suffered “significant losses” and he expected “at least 50%” of the surviving forces to die due to a lack of medical treatment.

Separately, Ukraine is claiming it has killed 93,000 Russian soldiers since the war began.

--Thursday, President Zelensky said that for the first time in the war, his troops in Kyiv were able to shoot down all elements of an attempted aerial attack from Moscow’s forces.  Allegedly, 13 Iranian-made drones fired “from the direction of the eastern coast of the Sea of Azov,” according to Ukraine’s military.  “More than 10” of those drones were “detected by radar means” in two different waves before they were destroyed.  ‘Wreckage from the intercepted drones damaged an administrative building and four residential buildings,” the Associated Press reported.  There were no fatalities.

--Ukrainian Army Brig. Gen. Oleksiy Gromov told reporters at a briefing Thursday, Putin’s long war is already here, and that Russia’s military appears to be fully intent on “turning the conflict into a long-term armed confrontation aimed at exhausting Ukraine and our partners.”

“In the near term, the enemy’s main efforts will be focused on the strategic task of establishing full control over the Donetsk and Luhansk regions of Ukraine,” Gromov said.  That had been known previously, but you see evidence that Russia is actively digging in across occupied territories in an effort to stop any ground offensives like the ones that won back regions surrounding Kharkiv and Kherson, to the east and south.

The Institute for the Study of War wrote Wednesday evening: “Russian troops appear to be moving heavy equipment from rear areas in Luhansk Oblast to areas near the current frontline along the Kharkiv-Luhansk Oblast border and have reshaped and reconsolidated their force grouping along this line.”  What’s more, “A recent drop in temperatures in this area to consistently below-freezing has allowed the ground to solidify, likely setting conditions for increasing the pace of offensive operations.”

Gen. Gromov also said of Belarus, “(President) Lukashenko’s regime is probably preparing for war, but at the moment all the necessary components are missing.”

Minsk is reluctant to join Putin’s invasion, though Russian aircraft could use Belarusian airbases near the Ukraine border to carry out more airstrikes.

--The U.S. military announced on Thursday it will expand wartime training in Germany of Ukrainian military personnel fighting Russia’s invasion with a focus on joint maneuver and combined arms operations.  The Pentagon announced 500 Ukrainians a month will be trained, starting in January, building on more than 15,000 Ukrainian forces trained by the United States and its allies since April.

--Russian forces launched a massive attack across Ukraine on Friday, with explosions reported in at least four cities.  A number of civilians were killed, while electricity and water services were again interrupted in the two largest cities, Kyiv and Kharkiv.  Emergency power cuts were introduced across the entire country as well.  The mayor of Kharkiv reported “colossal” damage, leaving many people without heating in freezing winter temperatures. 

Russia fired a reported 76 missiles, with Ukraine’s military saying 72 were cruise missiles and four guided air-to-surface missiles.  Kyiv says it shot down 60 of the projectiles with anti-aircraft and air defense weapons, but 16 got through.  The attack took place during the morning rush hour as Russia tried to distract Ukrainian air defenses by flying warplanes near Ukraine, while the missiles headed to their targets.

A missile strike on President Zelensky’s hometown of Kryvyi Rih, killed two and wounded at least eight, including three small children.

Kyiv’s metro system stopped working.

“The goal of the Russia Federation is for Ukrainians to be constantly under pressure, to go down into bomb shelters almost every day, to feel discomfort due to power outages or water interruptions,” Economy Minister Yulia Svyrydenko wrote on Facebook.  “But Ukraine’s position is unchanged: We will endure. We will win. We will rebuild.”

Ukraine said it thinks Russia will launch a new and wide-ranging offensive sometime around February, since that’s when some 150,000 newly mobilized troops are expected to become available for service.

“I have no doubt they will have another go at Kyiv,” said General Valery Zaluzhny.  That may come later, though, he predicted.  Other large-scale offensives – possibly in the south, maybe from the east – are expected “in February, at best in March and at worst at the end of January,” Zaluzhny told the Economist.

“The enemy shouldn’t be discounted. They are not weak,” said Kyiv’s ground forces commander, Colonel-General Oleksandr Syrsky.  “They have very great potential in terms of manpower,” he added.

John Kirby, National Security Council Coordinator for Strategic Communications, said in a call Friday with reporters: “We have seen nothing that tells us Putin has moved off his maximalist goals with respect to Ukraine.”  However, he stressed, “We aren’t seeing any indication that there is an imminent move on Kyiv, but we’re watching it closely.

“On every single front, you see a guy who is determined to continue to prosecute this war against Ukraine; and more specifically these days, against the Ukrainian civilian population,” Kirby added.

Russia has ruled out a Christmas ceasefire.  “There will be a total ceasefire only when not a single occupier remains on our land,” said Gen. Gromov.

Anyway, Russian Orthodox Church Christmas is Jan. 7.

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--The head of the Norwegian Refugee Council expects another wave of hundreds of thousands of refugees from Ukraine in Europe over the winter because of “unlivable” conditions, he said on Monday.

“Nobody knowns how many, but there will be hundreds of thousands more (leaving Ukraine) as the horrific and unlawful bombing of civilian infrastructure makes life unlivable in too many places,” Jan Egeland said in an interview with Reuters after returning from a trip to Ukraine.

“So I fear that the crisis in Europe will deepen and that will overshadow equally crises in other places of the world,” he said. Around 18 million people or 40% of Ukraine’s population is dependent on aid, the United Nations says.  Another 7.8 million have left the country for other parts of Europe.

Polish President Andrzej Duda said on Monday that Poland and Germany should ask the European Union for more help in dealing with an expected increase in Ukrainian refugees.  Egeland said that some Ukrainian refugees who had returned to their country this summer were now “giving up” and heading the other way.

--Eight ships loaded with grain left ports in Ukraine’s Odesa region on Tuesday after a pause caused by power cuts following Russian missile strikes.  The Black Sea port was unable to operate on Sunday.

Under a deal reached by Moscow and Kyiv despite the invasion, Ukraine’s infrastructure ministry said 550 vessels with food have left Ukrainian ports thus far, exporting 13.8 million tons of Ukrainian agricultural products to Asia, Europe and Africa.

--Suspected Russian sources are “targeting right-wing U.S. audiences with divisive political narratives to a greater extent than previously known” on social media platforms like Gab, Gettr, Parler, and Truth Social, according to the online forensics researchers at Graphika and Stanford University, who detailed their findings in a new report published Tuesday.

Messaging included “allegations of voter fraud in the 2020 U.S. presidential election and 2022 midterms, as well as attempts to undermine public support for Ukraine in the context of the Russia-Ukraine war.”

The forensics teams flagged these 35 accounts because, they say, “Due to an apparent lack of enforcement, the actors have established a degree of persistence unavailable on most mainstream platforms and are able to conduct their operations with relative ease.”

--President Zelensky said on Wednesday that the environmental harm from Russia’s war will affect millions of people for years and urged New Zealand to take leadership in diplomacy to address the damage.  Speaking to the New Zealand parliament – just the second foreign leader to do so – Zelensky said by video link that Russian attacks have contaminated the country’s oceans and 7.4 million acres of forest.

“Dozens of rivers are polluted, hundreds of coal mines are flooded, dozens of the most dangerous enterprises, including chemical ones have been destroyed by Russian strikes,” he said. “All this…will have a direct impact on millions of people,” Zelensky added, referring to leaks of hazardous chemicals and contamination from mines and munitions.  “You cannot rebuild the destroyed nature, just as you cannot restore the destroyed lives.”

Zelensky urged New Zealand, a staunch supporter of Kyiv, to lead efforts at the United Nations and elsewhere to restore Ukraine’s environmental security and clear mines.

Since the war began, New Zealand, a small nation of five million people, has sanctioned over 1,200 Russian individuals and entities and provided nearly $40 million in assistance.

Prime Minister Jacinda Ardern said: “Our support for Ukraine is not determined by geography. It is not determined by history or diplomatic ties or relationships.  Our judgement was a simple one: We asked ourselves the question – what if it was us?”

Opinion….

--George F. Will / Washington Post

“The first major war on European soil of the 21st century has raged since Feb. 24 without drawing Americans into combat, and the likelihood of American bloodshed remains vanishingly small.  It is, however, still possible for the United States to go AWOL – absent without leave – from this century-shaping conflict.

“Some members of Congress from both parties seem inclined to pick ‘now’ and ‘Ukraine’ as the time and place to practice parsimony.  Some are saying that the United States cannot afford to continue supplying Ukraine with the means of national survival and of further diminishing Russia.  Rep. Kevin McCarthy, perhaps the next House speaker, has spoken sternly of not providing Ukraine a ‘blank check’ – a tendentious phrase that establishes McCarthy as (in a phrase William F. Buckley employed) ‘a pyromaniac in a field of straw men.’

“U.S. aid for Ukraine – military, humanitarian and economic – has totaled about $68 billion, a bit more than the $60.4 billion Americans spent on video games in 2021.  The Biden administration’s Nov. 15 request would bring the U.S. total to $105.5 billion.  This is about one-eighteenth of what Congress voted to scatter in 2021 in just one bill for relief from a receding pandemic and to stimulate an economy careening into inflation.

“While some in Congress contemplate penny-wise-and-pound-foolish economizing at Ukraine’s expense, Ukrainians are dying, freezing, starving, enduring torture and the targeting of civilians, and seeing their children kidnapped to Russia.  Ukraine has served U.S. interests by revealing Russia to be a Potemkin nation, a disheveled exterior hiding a threadbare interior.  The desire to slink away from assisting Ukraine’s fight for freedom might be found among those who call themselves the House Freedom Caucus and who talk about making America great again.

“What many Americans usually want in the way of foreign policy is as little of it as possible.  Of course many voters, when asked, look askance at anything resembling foreign aid for anyone for any reason.  But when voters are not prompted by being asked, they probably never think about a sum that resembles a rounding error on a $5.8 trillion federal budget.

“Certainly some Americans think of the struggle between Ukraine and Russia as ‘a quarrel in a faraway country between people of whom we know nothing.’ That was the description of the German-Czechoslovakia crisis, three days before the Munich capitulation, by British Prime Minister Neville Chamberlain, who soon afterward learned a lot about those people.

“In Henry Kissinger’s latest book, ‘Leadership: Six Studies in World Strategy’ – at age 99 and publishing his 19th book, he is a reproach to everyone less industrious, meaning: everyone – he says: ‘If Ukraine were to join NATO, the security line between Russia and Europe would be placed within 300 miles of Moscow – in effect eliminating the historic buffer which saved Russia when France and Germany sought to occupy it in successive centuries.’  But speaking to the Wall Street Journal, Kissinger has said that, given Russia’s criminal savagery since February, ‘one way or the other, formally or not, Ukraine has to be treated in the aftermath of this as a member of NATO.’

“So, whatever Congress now does regarding Ukraine, members will be doing it to what someday will be, geographically, the largest nation in the European Union and a nation indistinguishable, as a practical matter, from a NATO member.

“Rob Johnson, of Oxford University, writing in Parameters, the quarterly journal of the U.S. Army War College, reports that Russian President Vladimir Putin’s army has branded Ukrainians with swastikas, has run over injured civilians, has thrown grenades into basements where civilians were sheltering and has raped girls as young as 10.  He says Putin’s failure to quickly (he planned on two days) decapitate Ukraine’s government, as the Soviet Union did in Czechoslovakia in 1968 and Afghanistan in 1979, have driven him to tactics he employed in Syria – indiscriminate urban destruction.

“Antulio J. Echevarria II, editor in chief of the U.S. Army War College Press, also writing in Parameters, notes that Putin’s war against Ukraine is partially explained by two things that are supposed to account for the declining frequency of major wars: the growth of multilateral institutions and the spread of democratic values.  Putin sees one such institution, NATO, and Ukraine’s democratic values as threats.  A third factor that supposedly inhibits would-be aggressors – one that encompasses international law and the law of armed conflicts and norms against barbarism – has had no effect on Putin.

“So, Congress should understand that Ukraine’s success in this major war could be crucial to resuming the decline in the incidence of such wars.  Certainly Beijing, salivating for Taiwan, is watching for signs of U.S. wobbliness regarding Ukraine.”

--Convicted arms dealer Viktor Bout received a heroes welcome on Monday and joined an ultranationalist party known for its call to reassemble the former Soviet Union.

The move signals that Bout, who was returned to Russia last week in an exchange for Brittney Griner, will likely be a political posterchild for the Kremlin.

His new party, Liberal Democratic Party of Russia, has supported Putin’s agenda in Parliament.

Bout was the subject of a fawning interview over the weekend with the Kremlin-run RT network, where he declared his support for Putin and the invasion of Ukraine.

Bout did say he got along well with inmates in the U.S. federal prison system and harbored no ill will toward Americans, but echoed Kremlin assertions that the U.S. is being led astray by elites who promote an agenda hostile to families, religion and Russia.

Max Boot / Washington Post

“I am very glad that basketball star Brittney Griner is back in the United States after having been imprisoned in Russia on trumped-up charges. But I am very uneasy about the method of her release. In return for her freedom, President Biden agreed to set free Viktor Bout, a notorious Russian arms dealer who was serving a 25-year prison sentence on charges of conspiring to sell weapons to kill Americans….

“There is legitimate cause for concern that such deals make us more vulnerable, as Republican critics now charge, but they didn’t start with Biden.  President Reagan traded arms for hostages with Iran. President Barack Obama set free five senior Taliban leaders from Guantanamo Bay to return U.S. Army Sgt. Bowe Bergdahl from Afghanistan. (Obama, however, refused to pay a ransom to the Islamic State to win the release of four U.S. hostages, ordering instead a rescue mission that failed. The hostages were subsequently killed, while many European hostages were ransomed out.)

“Now, Biden has chosen to pay a disturbingly high price for Griner’s freedom.  It’s not entirely clear why Russian dictator Vladimir Putin wanted Bout back so badly, but he is closely linked to Russia’s military intelligence agency, the GRU.  Although it’s been 12 years since Bout was arrested in Thailand and extradited to the United States, he might still have smuggling networks that could be of use to Putin in waging the war in Ukraine.

“Besides setting free a dangerous international criminal known as ‘the merchant of death,’ the deal sent a message to the entire world that the United States remains in the business of paying off hostage-takers.  That can only encourage more unlawful detentions of Americans.

“We need a serious reconsideration of the right policy on hostages.  But that’s exactly what we’re not getting.  Instead of engaging on the merits of Biden’s difficult decision, MAGA Republicans are displaying breathtaking (if entirely unsurprising) bigotry, cynicism and political opportunism in their desperate desire to deny a Democratic president credit for any achievement.

“Fox ‘News’ host Tucker Carlson suggested that Griner was set free, and former Marine Paul Whelan was not, because she ‘is not White and she’s a lesbian.’  This is nonsense. It’s a tragedy that Whelan remains in a Russian prison, but if it was so easy to release him, why didn’t Donald Trump get it done while he was in the Oval Office?  Whelan has been in prison since 2018….

“As president, Trump took hostage deals to a whole new level – making them, for the first time, a pillar of U.S. foreign policy rather than a disreputable necessity.  He boasted that he was ‘the greatest hostage negotiator…in the history of the United States,’ crassly featured six freed prisoners at the 2020 Republican National Convention, and elevated his chief hostage negotiator (Robert C. O’Brien) to the role of national security adviser.

“Trump now has the gall to attack the Griner deal as ‘one-sided’ and a ‘stupid’ and “unpatriotic embarrassment,’ but he paid a substantial price for many of his own prisoner releases, which involved deals with such unsavory partners as the Taliban, the Iranians and the Houthis in Yemen.

“The wheeling and dealing continues under Biden.  In addition to Bout, he released a Russian cocaine smuggler in exchange for Trevor Reed, another former Marine held in Russia; an Afghan drug lord in return for Navy veteran Mark Frerichs, who was held by the Taliban; and two relatives of Venezuelan dictator Nicolas Maduro who were convicted of drug trafficking for seven Americans held in Venezuela.

“All of these deals, however well-intentioned, are, unfortunately, creating inducements to seize more Americans in the future.  It’s a vicious cycle that is nearly impossible to break.  But we need to try. Biden, while continuing to negotiate for the release of Whelan and others who are currently imprisoned, could announce that in the future all Americans who go to Russia, Iran, Syria, North Korea, Afghanistan and other countries on the State Department’s ‘do not travel’ list are on their own.  If they are seized, we aren’t going to give up anything to get them back.

“That might sound harsh and hardhearted – and may be politically impossible – but it could actually protect Americans abroad.  Perhaps that’s not the right approach. But some course correction is needed if the U.S. government is to stop inadvertently offering aid and encouragement to hostage-takers.”

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Wall Street and the Economy

In terms of the economic data this week, Tuesday, we had a critical reading on November consumer prices as the Fed’s Open Market Committee gathered for its two-day meeting, and the CPI came in better than expected, 0.1%, and 0.2% ex-food and energy, with the vital 12-month reading at 7.1%, 6.0% on core, which was down from October’s 7.7% and 6.3%, respectively.  [The peak in the CPI was 9.1% in June, so a fifth straight slowdown from there.]

The markets took off prior to the opening, with the Dow futures up 950 points (there clearly having been some inside buying on leaked information), and then equities wised up, and stocks fell back to earth.

The inflation news was no doubt better, but as I seem to write each week, 7.1%, or 6.0%, is not 2%.  Food is still up 10.6% over the past year, 12% at the grocery store, while the used cars and trucks category has fallen every month since July.  And the energy index has helped, as you’ve seen firsthand at the pump the last few months.

As expected, the Federal Reserve’s Open Market Committee raised interest rates again, this time 50-basis points, bringing the policy rate to a 4.25%-4.5% range, with the Fed’s latest quarterly summary of economic projections showing the policy rate at 5.1% by the end of next year, according to the median estimate of all 19 Fed policymakers.

In September, they thought 2023 would end with the benchmark funds rate at 4.6%.  The rate is then seen dropping to 4.1% in 2024.

The Fed’s preferred inflation measure – the personal consumption expenditures price index, currently running at 6% - is expected to cool to 3.1% in the final quarter of next year.  But core PCE, the real key, will decline to 3.5%, end of 2023, from its current 5.0%. 

The unemployment rate is now projected to rise from the current 3.7% to 4.6% in the final quarter of 2023, and stay there through 2024, which would hardly be disastrous.

The Fed’s projections have the economy growing just 0.5% next year, vs. September’s projection of 1.2%.

The Fed’s statement repeated that the FOMC will continue to take into account the cumulative impact of the rate increases to this point and the lagged effects of monetary policy.  There were no major changes to the statement.

In his news conference after the FOMC’s actions, Chair Jerome Powell acknowledged that the actions he believes the Fed will need to take will create challenges for the economy, saying, “I wish there were a completely painless way to restore price stability.  There isn’t, and this is the best we can do.”

Powell talked of inflation being made up of three buckets…Goods, Housing/Services, and Non-housing related services…with the last category significantly making up 55% of the core PCE, and the Chair sees a strong labor market, strong wages, and it will take a substantial period of time for core PCE to come down.

It’s wage growth that is the ultimate key these days.

And so…the question is how long will the Fed remain restrictive, after the ‘pause’?  And once again, Chair Powell, being totally consistent, said the Fed will be restrictive for some time to come, there will be no rate ‘cuts’ in the foreseeable future, “and we have a long ways to go to get to price stability.”

That’s been the message for months that the markets keep wanting to turn into a bullish case.  It ain’t, boys and girls.

Editorial / Wall Street Journal

“Investors on Tuesday cheered the relatively good inflation news for November, lifting equities and bonds.  The market hope is that the Federal Reserve will end its interest-rate increases sooner than expected, but that would be a mistake as the report shows the anti-inflation fight is still far from over….

“The 12-month inflation rate fell to 7.1% in November, which is down from 7.7% in October and is the fifth annual rate drop in a row since inflation peaked at 9.1% in June. The Fed’s monetary tightening is making a difference.

“Yet a 7.1% increase in prices is still a long way from victory, and inflation continues to be sticky across much of the economy.  Food rose 0.5%.  Much of the decrease came in energy prices, which are volatile, and fell by 1.6%.  But service prices excluding energy services rose 0.4% and are up 6.8% in the past year.  The core CPI less energy and food rose 0.2% in the month and is still high at an annual rate of 6%.

“Wage increases will also give the Fed pause, as a separate Labor Department report Tuesday showed a 0.5% increase in real wages for the month.  That’s welcome news for workers… But it also signals that workers and employers are playing catch-up, and there are still 10 million unfilled jobs….

“Chairman Jay Powell has been forceful in saying he won’t blink in his anti-inflation fight.  But more dovish noises are coming from others at the FOMC, notably Vice Chair Lael Brainard, and they are likely to increase going into 2023 as the next presidential election approaches.

“There are signs of late that the U.S. economy is slowing, and recession risks are inevitable as the price of correcting an historic inflation blunder. Europe may already be in a downturn.  The Fed’s temptation will be to think that slower growth can do the heavy anti-inflation lifting.  But the challenge for the Fed isn’t getting inflation down merely to 4% or 5% as a new baseline for the next interest-rate cutting cycle.  Then inflation will rise again.

“The better policy is to break inflation now and return sooner to the Fed’s target of 2%. That’s a stronger foundation for growth and a rising standard of living for workers whose budgets have been savaged by inflation.”

Friday, New York Federal Reserve President John Williams said it remains possible the central bank raises rates more than it currently expects next year, adding that he’s not expecting the economy to fall into recession.

“We’re going to have to do what’s necessary” to get inflation back to the Fed’s 2% target, Williams said in an interview with Bloomberg.  He said monetary policy will need to become restrictive and the peak funds rate next year “could be higher than what we’ve written down,” i.e., higher than 5.1%. 

Williams noted that “inflation has been stubbornly high…and we’ve seen the economy remain very resilient to higher interest rates.”  Williams is vice chair of the FOMC.

In other economic news…the markets were hit hard following releases Thursday for November retail sales, down 0.6%, and -0.2% ex-autos, with November industrial production falling 0.2%, all worse than expected and signs the Fed’s actions are truly slowing the economy.

But gasoline prices continue to fall…$3.17 for regular nationwide, with even diesel dropping to $4.80.  A year ago the two were at $3.31 and $3.59.  So if you’re at a Christmas or New Year’s party and you see some guy bitching about gas prices, tell him he’s an idiot.  [But ‘read the room’ first before doing so.]

Freddie Mac’s 30-year fixed-rate mortgage barometer fell to 6.31% from last week’s 6.33%, and the peak of 7.08%, though it was 3.12% a year ago.

The Atlanta Fed’s GDPNow barometer for fourth-quarter growth is at 2.8%.

A Wall Street Journal poll released Friday has a majority of voters believing the economy will be in worse shape in 2023 than it is now and roughly two-thirds say the nation’s economic trajectory is headed in the wrong direction.

Economic pessimism is strongest among Republicans, with 83% expecting the economy to worsen.  Slightly more than half of independents feel that way, while 22% of Democrats do.  Put me in the ‘worsen’ camp.

Europe and Asia

The European Central Bank eased the pace of its interest rate hikes on Thursday, a la the Federal Reserve, but stressed significant tightening remained ahead and laid out plans to drain cash from the financial system as part of its fight against runaway inflation.

The ECB raised rates 50 basis points to 2%, moving further away from a decade of ultra-easy policy.  The central bank had hiked rates 75bps each of the last two meetings.

The ECB stressed significant tightening remained ahead and laid out plans to drain cash from the financial system as part of its fight against runaway inflation.

“We judge that interest rates will still have to rise significantly and at a steady pace,” ECB President Christine Lagarde told a news conference, saying further 50-basis-point rises should be expected for “a considerable amount of time.”

We then had November inflation data Friday for the EA19, and the annual rate was 10.1%, down from the peak of 10.6% in October, and up from 4.9% a year ago. [Eurostat]

Germany 11.3%, France 7.1%, Italy 12.6%, Spain 6.7%, Ireland 9.0%, Netherlands 11.3% (down from 17.1% in Sept.).

Meanwhile, we had flash PMI readings for December for the eurozone, with the composite index at 48.8 (50 the dividing line between growth and contraction).  Manufacturing output, 47.9; services 49.1…all 4- to 6-month highs. [S&P Global]

Germany: mfg. 48.7, services 49.0
France: mfg. 47.7, services 48.1 (22-mo. low)

UK: mfg. 43.0, services 50.0

The Bank of England announced a 50-basis point increase, taking its benchmark rate to 3.5%, but unlike Christine Lagarde, policy makers signaled caution about raising rates much higher.

The bank said it believes the UK economy is already in a recession that will last for a prolonged period.  Two of its nine rate setters voted to leave the key rate unchanged, arguing that previous moves were more than sufficient to bring inflation back to the central bank’s target of 2%.

Chris Williamson / S&P Global

“While the further fall in business activity in December signals a strong possibility of recession, the survey also hints that any downturn will be milder than thought likely a few months ago.  The data for the fourth quarter are consistent with GDP contracting at a quarterly rate of just less than 0.2%, and forward-looking indicators are currently boding well for the rate of decline to ease further in the first quarter.

“The manufacturing downturn has moderated especially markedly in December, led by Germany and linked to a combination of improving supply conditions and reduced fears of energy constraints.  The service sector malaise has also calmed, in part driven by signs of reduced fears over the cost of living squeeze and, in the financial service sector, reduced concerns over the tightening of financial conditions.

"The outlook for inflation is especially encouraging, with supply chains now improving for the first time since the pandemic began and firms’ costs growing at a sharply reduced rate, feeding through to lower rates of increase for prices charged for both goods and services.

“The downside is that this improving inflation outlook is primarily a symptom of falling demand, which has removed pricing power from many companies and their suppliers… Thus, while the downturn is looking likely to be less steep this winter than previously anticipated by many, there remain few signs of any meaningful return to growth evident as 2022 comes to an end.”

Separately, October industrial production fell 0.2% in the euro area, but up 3.4% compared to a year ago.

Turning to Asia…China released key data for November, and all the numbers, pre-Covid-reopening in December, were below expectations and rather sickly.

Industrial production was up 2.2% year-over-year; retail sales down 5.9% Y/Y; and fixed asset investment rose just 5.3% year-to-date.

But again, November was a zero-Covid month.

And speaking of sickly, China delayed a closely watched economic policy meeting due to start this week after Covid infections surged in Beijing.  No timetable was set for when the Central Economic Work Conference, usually attended by Xi Jinping, will be rescheduled.  Besides Xi, the meeting is attended by members of the Politburo, provincial governors and heads of government agencies and financial institutions.

[Key economic targets are endorsed at the conference but are not publicly announced until March at the annual parliament meeting.]

The National Bureau of Statistics also cancelled a news conference scheduled for Thursday on the above economic data, and instead released the data online.

Japan reported flash PMI readings for December…mfg. 46.4, services 51.7.

Producer prices for November were 9.3% year-over-year vs. 9.4% prior.  October industrial production rose 3.0% Y/Y.

November exports rose 20.0% vs. 25.3% prior; imports 30.3% vs. 53.5% in October.

Exports to the U.S. rose 32.5%, and 32.0% to the EU, led by motor vehicles and machinery.

Street Bytes

--Stocks fell a second straight week on recession fears and the realization the Fed isn’t about to help…probably for quite a while.  The Dow Jones declined 1.7% to 32920, the S&P 500 2.1%, and Nasdaq 2.7%.  The S&P is down 5.6% in December and 19% for the year.

Next week we get a critical PCE reading on Friday.

The Stoxx Europe 600 is also suffering, down 3.3% this week and 12.9% for the year.

--U.S. Treasury Yields

6-mo. 4.63%  2-yr. 4.18%  10-yr. 3.48%  30-yr. 3.54%

Bond yields continue to fall even as the Fed raises rates.

But across the pond, euro bond yields rose sharply after the ECB’s more hawkish than expected tone.  The yield on the German 10-year surged from 1.92% last Friday to 2.14% today.  The Italian 10-year yield soared from 3.82% to 4.28%.

The German 2-year yield, which rose as high as 2.50% on Friday, is at its highest level since 2008.

--Crude prices recovered somewhat this week, closing at $74.40, up $3, with the weeklong shutdown of the Keystone oil pipeline due to a large spill in Kansas impacting Gulf Coast refiners, who have to replace hundreds of thousands of barrels no longer flowing through the system.

The spill, estimated at 14,000 barrels of crude oil, is one of the largest in the U.S. in more than a decade and the operator, TC Energy Corp., hasn’t disclosed what caused it or said when the pipeline would be fully operational.  Everything south of Illinois on the pipeline remains shut (the pipeline originating in Alberta).

Keystone is a crucial conduit for Canadian oil to the U.S., some 662,000 barrels a day flowing through the system.  [The U.S. imports about 3.4 million barrels a day of Canadian crude in a normal week through four major pipelines, including Keystone, according to the EIA.]

So the shutdown is impacting the level of reserves at the main U.S. storage hub in Cushing, Okla., which is pushing prices higher.  [Cushing is the pricing hub for West Texas Intermediate.]  There is oil flowing from a pipeline originating in Cushing, but at half of the normal rate.

As for the impact of the European Union, G7 price cap on Russian crude and the level of Russian exports, it’s unknown as 12 EU countries argue for a lower cap than the originally agreed to $60 per barrel.  As in, beats the hell out of me what’s really going on.

--Goldman Sachs Group Inc. is planning to cut about 4,000 employees in January, or around 8% of its staff, according to multiple reports today.  The layoffs are the latest sign that cuts are accelerating across Wall Street as dealmaking dries up.

Investment banking revenues have plunged this year amid a slowdown in mergers and share offerings, marking a stark reversal from a blockbuster 2021.

Goldman is weighing a sharp cut to the annual bonus pool this year.

--United Airlines ordered 100 Boeing 787 Dreamliners with options to purchase 100 more, the company announced on Tuesday, plus 100 737 MAX aircraft, bringing its total of 737 MAX aircraft on order to 443.

The ‘list’ price on the 100 Dreamliners and 100 MAX planes is $43 billion but will be lower with discounts and such.

This is the largest widebody order by a U.S. carrier in commercial aviation history, the company said. 

United now expects to take delivery of about 700 new narrowbody and widebody aircraft by the end of 2032, including an average of more than two every week in 2023 and more than three every week in 2024.

--Delta Air Lines raised its fourth-quarter guidance for earnings to a range of $1.35 to $1.40, up from its previous guidance of $1 to $1.25.

The airline now expects revenue to increase by 7% to 8% for the December quarter, from prior guidance of 5% to 9%, compared with Q4 2019.

For 2023, Delta anticipates adjusted EPS to be in a range of $5 to $6 on revenue growth of 15% to 20% year over year.

Shares rose nominally on the news which came on Fed Wednesday.

--TSA checkpoint numbers vs. 2019

12/15…92 percent of 2019 levels
12/14…89
12/13…90
12/12…96
12/11…97
12/10…99
12/9…96
12/8…93

--A Bahamian judge denied FTX founder Sam Bankman-Fried bail on Tuesday, hours after U.S. prosecutors accused the 30-year-old POS of misappropriating billions of dollars and violating campaign laws in what has been described as one of America’s biggest financial frauds.

SBF lowered his head and hugged his equally corrupt parents after the judge said his risk of flight was too “great” and ordered that he be sent to a really crappy Bahamas correctional facility until Feb. 8.  Bankman-Fried put in for an order of vegan food and was denied. 

Prosecutors accused SBF of using the stolen money to make “tens of millions of dollars in campaign contributions.”  U.S. Attorney Damian Williams in New York said that the investigation was “ongoing” and “moving quickly.”

“While this is our first public announcement, it will not be our last,” he said, Williams describing the collapse as one of the “biggest financial frauds in American history.”

“The FTX group’s collapse appears to stem from absolute concentration of control in the hands of a small group of grossly inexperienced, non-sophisticated individuals,” said John Ray, who was named CEO of FTX after Bankman-Fried stepped down and the company filed for bankruptcy on Nov. 11.

Ray told the House of Representatives Financial Services Committee, “I’ve just never seen an utter lack of record keeping – absolutely no internal controls whatsoever.”  It will take weeks, perhaps months, to secure all the group’s assets, Ray said.

SBF had been scheduled to appear before the House committee, but he was arrested instead. I have no problem with this.

Editorial / Wall Street Journal

“If the rise of Sam Bankman-Fried was a modern tale about cryptocurrency tokens and ‘effective altruism,’ his fall seems to be as old as original sin.  ‘This is really old-fashioned embezzlement,’ John Ray, the caretaker CEO of the failed crypto exchange FTX, told the House on Tuesday.  ‘This is just taking money from customers and using it for your own purpose, not sophisticated at all.’….

“SBF…has been on a media tour since FTX’s failure, and he portrays himself as a well-intentioned doofus savant who got in way over his head and – whoops – lost billions of dollars. The sloppiness of bookkeeping is true enough: Mr. Ray said invoices and expenses were communicated via Slack chats, and ‘they used QuickBooks.’

“But Mr. Ray’s darker story is backed by allegations in the federal indictment, along with a civil complaint from the Securities and Exchange Commission.  Prosecutors say Mr. Bankman-Fried ‘engaged in a scheme to defraud customers of FTX.com by misappropriating those customers’ deposits.’  The money was diverted to Alameda Research, SBF’s crypto hedge fund.  The indictment alleges he defrauded lenders as well, and prosecutors also threw in a campaign-finance violation for excessive political donations made ‘in the names of other persons.’

“The SEC complaint is more voluble.  ‘From the inception of FTX, Bankman-Fried diverted FTX customer funds to Alameda,’ it says, to the point that ‘there was no meaningful distinction.’  Then SBF ‘used Alameda as his personal piggy bank to buy luxury condominiums, support political campaigns, and make private investments.’  He took enormous loans, ‘including two instances in which Bankman-Fried was both the borrower in his individual capacity and the lender in his capacity as CEO of Alameda.’

“Mr. Bankman-Fried claimed Alameda had no special privileges on the FTX platform. Yet the SEC says his hedge fund was granted a ‘virtually unlimited’ credit line and was exempt from the ‘automated risk mitigation protocols’ that SBF trumpeted as ensuring FTX’s stability.  The mixing of funds was obfuscated in internal accounts. The beginning of the end arrived when crypto prices fell and ‘many of Alameda’s lenders demanded repayment of loans.’

“If the authorities are correct, this is a story as old as time that reoccurs every time there is a financial mania. The thoroughly modern twist in the SBF allegation was to convince investors to place money into a digital box, except with a hole in the bottom leading directly to a proprietary hedge fund.  In such a case, the remedy is also old and familiar: Enforce the fraud laws already on the books….

“Mr. Bankman-Fried’s case will be fascinating to watch.

“His defense might be that he lacked fraudulent intent and was hoping that his crypto bets would save FTX in the end.  Maybe so, but a jury will want to know why so much money went to personal loans and real estate. He will also have to defend why he didn’t tell investors about his co-mingling of their money with other assets to fund his ventures. Fraud is a crime, in real or crypto currency.”

--Shares in Moderna Inc. soared 20% on Tuesday, and another 5% Wednesday, after the company’s experimental melanoma vaccine in combination with Merck & Co.’s blockbuster drug Keytruda in a study reduced the risk of recurrence of the skin cancer or death.

--U.S. government regulators charged eight social media influencers Wednesday in a $100 million fraud scheme in which they’re accused of promoting exchange-traded stocks, then selling their shares when prices rose.

The SEC said that since at least early 2020, seven of the influencers promoted themselves as successful traders on Twitter and in Discord chat rooms and encouraged hundreds of thousands of their followers to buy certain stocks. When prices or volumes of the promoted stocks would rise, the influencers regularly sold their shares without ever having disclosed their plans to dump the securities while they were promoting them, the SEC said.

An eighth person co-hosted a podcast promoting the defendants as experts and traded in concert with them.

The SEC is increasingly cracking down on social media influencers and celebrities who promote financial products, including cryptocurrency.

In October, the SEC barred Kim Kardashian from promoting cryptocurrencies for three years and fined her $1 million to settle federal charges.

We’ll see what happens with the likes of Tom Brady, Steph Curry and Larry David in regards to the FTX fiasco.

--Tesla shares were $352 last Dec. 31.  They finished the week at $158.  Shareholders are miffed Elon Musk is spending so much time on his ill-advised Twitter purchase, and endless Tweets, and Tesla is suffering as a result.

We learned late Wednesday that Musk had also sold more than $3.5 billion worth of Tesla stock this week in his second round of sales since buying Twitter.

Musk sold nearly 22 million Tesla shares over a three-day period ending Dec. 14, according to a regulatory disclosure made public Wednesday.

This week’s sales mean that Musk has sold more than $39 billion in Tesla shares since the company’s stock peaked in November 2021.  Tesla’s market cap has fallen $700 billion since the all-time high of $407 (closing) on Nov. 1, 2021.  The share price was also $361 (3/28/22) and $303 (9/12/22).

--Speaking of electric vehicles, Ford Motor’s F-150 Lightning was named Motortrend’s 2023 truck of the year, calling it the “first electric pickup to appeal directly to the existing truck market.”

Ford plans to ramp up production of the F-150 to about 150,000 vehicles a year.  Hitting that goal in 2023 would mean that electric pickup trucks could be as much as 20% of all F-150 series.

--But back to Twitter, Musk dissolved its Truth and Safety Council, the advisory group of around 100 independent civil, human rights and other organizations that the company formed in 2016 to address hate speech, child exploitation, suicide, self-harm and other problems on the platform.

Musk, last week, began releasing the company’s decisions in 2020 on how the platform handled coverage of Hunter Biden, which has added fuel to the fire for House Republicans eager to investigate the company when they take the majority in January.

Musk has been working with journalists to distribute internal documents that dealt with the platform’s decision to temporarily curb sharing of New York Post articles about Hunter Biden, shortly before the 2020 election, as well as Twitter’s decision to remove then-President Trump from the platform after the Jan. 6, 2021, Capitol attack.

The “Twitter Files” allege Twitter’s previous management aided Democrats by temporarily suppressing Oct. 2020 articles from the Post concerning the laptop of Hunter Biden, abandoned at a Delaware computer repair shop.  Former members of the intelligence community (51 of them) signed a letter in Oct. 2020 asserting the information relating to Biden had “all the classic earmarks of a Russian information operation.”

Twitter partially backtracked two days later, allowing articles to be linked in tweets, but froze the Post’s Twitter account for two weeks.  Twitter executives have said the initial decisions were wrong.

[Thursday night, several journalists who covered Musk were suspended from Twitter, days after an account tracking the whereabouts of Musk’s private jet was also banned from the platform.]

For Republicans, the Twitter files bolster a view that conservatives have been treated unfairly by large social networks, like Twitter.  House Minority Leader Kevin McCarthy has vowed investigations when the GOP takes over the House in January.  Specifically, many of the 51 intelligence officials will be hauled before various committees, for certain.

And there’s the issue of whether Hunter’s business relationships have impacted U.S. policy while his father was vice president or president. 

Natalie Andrews / Wall Street Journal:

“The Wall Street Journal hasn’t found evidence that President Biden was directly involved in his son’s business activities.  A former business partner of Hunter Biden, Tony Bobulinski, alleged shortly before the 2020 election that the senior Mr. Biden was part of discussions to form an investment venture with a Chinese oil company.  The Biden campaign denied Joe Biden had any involvement in the venture or stood to gain by it.”

Ohio GOP Rep. Jim Jordan, set to chair the Judiciary Committee next year, told the Journal: “It (the release of the Twitter files) is vindicating, but I think the biggest takeaway is that it was worse than we thought and it shows just how serious this collusion between big government, big tech and big media.  It shows how real that was and how real that continues to be.”

Lots of investigations to come at the start of 2023, and over time, I guarantee, it will be debilitating at a certain level for the equity markets because it is going to get ugly in Washington.

--Oracle Corp. shares moved higher late Monday after the company posted better-than-expected financial results for its latest quarter.  The enterprise software giant continued to see success in shifting more of its business to the cloud during the period.

“Simply put, we had an outstanding quarter,” Oracle CEO Safra Catz said on a call with analysts.  “More and more customers are recognizing our second-generation infrastructure cloud as being better architected for higher performance, better security and unmatched reliability” than other cloud providers.

Well, that’s the commercial.  For the fiscal second quarter ended Nov. 30, Oracle posted revenue of $12.28 billion, up 18% from a year ago, or 25% adjusted for currency.  The company had projected growth in the 15% to 17% range as reported, 21% to 23% adjusted.  Growth excluding the company’s acquisition of the healthcare software company Cerner was 9% adjusted for currency, accelerating slightly from the fiscal first quarter.

The company said its infrastructure cloud business grew 53%, while cloud-based applications grew 40%. Overall cloud revenue in the November quarter reached $3.8 billion, up 43%.  [All non-adjusted for currency.]

As I noted last week, Oracle got a major win when it was selected as one of four companies included in the Pentagon’s $9 billion cloud computing project, called the Joint Warfighting Cloud Capability, along with Amazon, Microsoft and Alphabet.

Oracle saw better-than-expected results in all business operations, including 11% growth in hardware, and 74% growth in services.

Catz is looking for fiscal 2023 cloud growth of more than 30% adjusted for currency.

--Last weekend was one of the quietest of the year in the movie theaters, with “Black Panther: Wakanda Forever” topping the North American box office for the fifth straight weekend.

With the release of “Avatar: The Way of Water” looming, studios opted not to open any new films in wide release, and “Black Panther” grossed only $11.1 million, bringing its domestic total to $409.8 million and its worldwide haul to $767.8 million.

“Avatar: The Way of Water,” the long-awaited sequel to the $2.9 billion-grossing 2009 original, launched Thursday with expectations of at least a $150-million debut domestically.

Overall, the fall has been a disaster for the movie studios.  The only thing that is succeeding is superheroes and sequels.  Forget films for grown-ups, that the studios look to come Oscar time. 

For example, “She Said,” which looked compelling in its advertising, cost Universal $55 million to make and took in $5.3 million.  “Devotion” cost well over $100 million and has generated $14 million in ticket sales.

By the way, Hollywood considers anyone over 35 to be “old,” and this is who typically comes to see dramas.  Yours truly is nearing “double-old,” which is depressing to think of.

Actually, with Christmas and New Year’s being on weekends this year, the theaters are going up against both the NFL and the College Football Playoffs (New Year’s Eve in this case).

Foreign Affairs, Part II

China: Since the outbreak of the Covid-19 pandemic, China has always put the people and their lives first, the government would say, effectively responding to more than 100 regional outbreaks at home and five global resurgences.

Over the past three years, Beijing has always been committed to the people-centered approach and according to data from Johns Hopkins University, the Covid infection rate in China is 2,883 per million people, while in the United States, it’s 299,595 per million.  The fatality rate is 11 per million people in China and 3,267 per million in the U.S.

This is what the government wants you to believe and it’s hard to know where the truth lies.  No one in the West believes China’s death toll, for example.

And then China suddenly reopened and now it is racing to vaccinate its most vulnerable people in anticipation of waves of Covid infections, with some analysts expecting the death toll to soar with the strict controls having been eased.  [China has reported just 5,235 Covid-related deaths so far, extremely low by global standards.]

The World Health Organization said Covid-19 infections in China were exploding well before the government’s decision to abandon its zero-Covid policy, quashing suggestions that the sudden reversal caused a spike in cases.

The comments by the WHO’s emergencies director Mike Ryan came as he warned of the need to ramp up vaccinations in the world’s No. 2 economy.  Speaking at a briefing with media, he said the virus was spreading “intensively” in the nation long before the lifting of restrictions, because, Ryan said, “the control measures in themselves were not stopping the disease.  And I believe China decided strategically that was not the best option anymore.”

The sudden loosening of restrictions has sparked long queues outside ‘fever’ clinics in a worrying sign that a wave of infections is building, even though official tallies of new cases have trended lower literally since the government first announced the lifting of some restrictions, that were then expanded.

The WHO said China reported increasing hospitalizations for weeks now.  “So the challenge that China and other countries still have is: are the people that need to be vaccinated, adequately vaccinated, with the right vaccines and the right number of doses and when was the last time those people had the vaccines,” said Ryan.

The elation that met the changes in policy allowing people to live with the virus has quickly faded amid mounting concerns about surging infections because the population lacks “herd immunity” and has low vaccination rates among the elderly.

On Wednesday, China Meheco Group Co. said it would import and distribute Pfizer’s oral Covid treatment Paxlovid.

The nightly figures (Eastern Time) that China releases now detail just ‘new symptomatic’ infections, and not overall infections, and the reported figure is down almost every day, despite the stories to the contrary.

With mass-PCR testing no longer obligatory and people with mild symptoms allowed to recuperate at home rather than in one of the field hospitals that became notorious for overcrowding and poor hygiene, it has grown difficult to gauge the true number of cases.  Pharmacies are running out of cold and flu medications.

One Beijing resident, Zhu, told the Associated Press: “Beijing is really confused right now.  They made a complete 180-degree turn without even going through a transitionary period.”

Chinese doctors and nurses are being told to keep working even when infected with Covid, staff and residents are reporting, as the virus rips through the population.  Some hospitals in Beijing have up to 80 percent of their staff infected, but many of them are forced to work because of staff shortages, a doctor told Reuters, adding he had spoken to his peers in other hospitals.  I’ve seen the same story on BBC and other outlets.

One issue coming up…the Lunar New Year holiday, which runs from Jan. 21 to Jan. 27, but usually lasts about 40 days as people take off before and after the official break.  Hundreds of millions of Chinese migrate to their home provinces for family reunifications during New Year.

Hong Kong has opened up as well, but it will take a while for tourism to come back.

But speaking of Hong Kong, Jimmy Lai, the HK newspaper tycoon and prominent critic of China, was sentenced to five years and nine months in prison for fraud.  Lai, a true hero for freedom-loving folks, is already locked up on other charges.  The latest conviction is for violating a lease contract for the headquarters of Apple Daily, an influential pro-democracy newspaper he ran that was forced to shut down in 2021 following a police raid as China crushed Hong Kong’s democracy movement.

North Korea: The regime has tested a “high-thrust solid-fuel motor,” state media reported on Friday, as Pyongyang seeks to develop a new strategic weapon and speeds up its nuclear and missile programs. The test, overseen by Kim Jong Un, proved the motor’s reliability and stability, providing a “guarantee for the development of another new-type strategic weapon system,” KCNA added.

North Korea has been working to build more solid-fuel missiles, which are more stable and can be launched with almost no warning or preparation time.

Japan: The government approved a major defense policy overhaul on Friday, including a significant spending hike, as it warned China poses the “greatest strategic challenge ever” to the country’s security.

In its largest defense shake-up in decades, Japan vowed to up security spending to two percent of GDP in 2027, reshape its military command, and acquire new missiles that can strike far-flung enemy launch sites.

“Fundamentally strengthening our defense capabilities is the most urgent challenge in this severe security environment,” Prime Minister Fumio Kushida said last week.

Polls suggest Japan’s public largely backs the shift, worried by growing Chinese military power and geopolitical developments like the war in Ukraine.

The changes are still controversial as Japan’s post-World War II constitution does not officially recognize the military and limits it to nominally self-defense capabilities.

Iran: An Iranian soccer player will be hanged as punishment for protesting against the death of Mahsa Amini.

Amir Nasr-Azadani, 26, was arrested in November in connection to the murders of a police colonel and two volunteer militia members, according to Iran Wire.

Nasr-Azadani has also been accused of “waging war against God.”

The International Federation of Professional Footballer said they were “shocked and sickened” by the punishment.

Nasr-Azadani will be the 28th person sentenced to death amid the protests – Iran conducted its first execution a week ago, Thursday.

Monday, Iran carried out the second execution of a prisoner convicted over crimes committed during the demonstrations, publicly hanging him from a construction crane as a gruesome warning to others.

The execution of Majidreza Rahnavard came less than a month after he allegedly fatally stabbed two members of a paramilitary force after becoming angry about security forces killing of protesters.

Human Rights Activists in Iran, a group monitoring the protests, puts the death toll at 488, as of a number of days ago.

Reuel Marc Gerecht and Ray Takeyh / Wall Street Journal

“Reports of the demise of Iran’s morality police were greatly exaggerated. There’s no evidence that the Interior Ministry has dissolved this force.  It may have even been temporarily repurposed into riot control.  This disappointing deflation of last week’s reporting reinforces the Central Intelligence Agency’s view that the current wave of unrest in Iran poses no threat to the regime.

“But that view – colored by the disappointing results of the Arab Spring and of Western military interventions in Afghanistan and Iraq – is too pessimistic.  The Islamic Republic’s rulers are uncertain, fearful and increasingly incoherent in their public statements.  They surely know that these demonstrations aim to foment revolution, not reform.  And they have reason to worry that the demonstrators will be successful.

“Iranians, unlike anyone else in the Middle East, have lived under two very different dictatorships – the Westernizing Pahlavi shahs from 1925-79 and an Islamic theocracy since 1979 – and they’ve rejected both.  Iran is the only Middle Eastern state to have had two revolutions in the 20th century.  Belief in the value of a constitution and representative government is more than an imported, debased Western idea to Iranians. Iran embraced a written code of laws as a means of checking foreign influence in the Constitutional Revolution of 1905-11.  Iranians have a 120-year history of using street demonstrations to check abusive power.  Unlike past protests in other Middle Eastern countries, today’s popular rebellion in Iran could usher in a lasting pluralistic order.

“In no Arab state – not even Egypt, where the intellectual and political classes were profoundly Westernized under British occupation – have we seen the kind of political ferment and critiques of authoritarianism, both secular and religious, that we have seen in Iran since the Constitutional Revolution… Forty years of clerical rule has weakened Iranians’ religiosity but not their yearning for self-rule.  Iran has become a country of empty mosques and a distinctly secular national pride….

“Today, Iran has nearly six million university students, almost 60% of whom are women.  In a reversal of the 1970s, higher education has become an engine of dissent against the Islamic revolution.  Mismanagement and corruption in state-owned enterprises have done far more than U.S. sanctions to limit job creation.  Iran is a land of highly educated poor people whose thirst for democracy has been whetted but never quenched.  And Supreme Leader Ali Khamenei’s decision last year to asphyxiate this managed democracy by stage-managing the election of his ruthless protégé Ebrahim Raisi to the presidency triggered the existential crisis that has demolished the regime’s legitimacy.

“After more than a century of societal involvement in politics, Iranians are more than aware of the serious nature of self-government.  They are unlikely to fall victim again to the allure of a secular strongman or militant mullah, having seen the damage such leaders cause….

“Most telling, Iranian women, who have tenaciously pressed for reform since Mr. Khatami’s election to the presidency in 1997, are no longer fazed by accusations of being gharbzadeh – Western-struck.  They appear eager to make Western ideas about natural rights, especially individual liberty, their own.  This is an essential step toward making democracy work in non-Western lands.

“Iran is a diverse country.  Its Arabs, Kurds and Baluch have a history of insurrection against Persian authority. Ethnic diversity has caused strife in the past.  But the nationwide demonstrations that started after the death of Mahsa Amini, a young Kurdish woman, have been remarkably unifying.  Iranians today want the extinction of the Islamist regime.

“Many Americans and Europeans were deeply uncomfortable with the empowerment of religious parties in Egypt and Tunisia during the Arab Spring.  A post-Islamic Iran is likely to have a far bigger Western fan club than did the elected Islamists of North Africa.  Good thing: As Samuel Huntington noted, foreign – usually American – support to nascent democracies increases the chance of their survival.”

Turkey: Thousands of people rallied to oppose the conviction and political ban of Istanbul Mayor Ekrem Imamoglu, chanting slogans criticizing President Erdogan and his ruling AK Party before elections next year.

A Turkish court Wednesday sentenced Imamoglu, a popular rival to Erdogan, to two years and seven months in prison, which like the ban must be confirmed by an appeals court.  The verdict drew wide criticism at home and abroad as an abuse of democracy.

Interestingly, the crowd waved Turkish flags in front of Istanbul’s municipality building, from which was draped a huge portrait of Mustafa Kemal Attaturk, my guy, and Turkey’s founder whose secular principles Erdogan’s opponents say are under threat.

Next year’s presidential and parliamentary elections, due to be held in June, could prove to be one of the biggest challenges to Erdogan’s two decades in power.

Afghanistan: ISIS attacked a Chinese-run hotel in Kabul on Monday that has raised safety concerns for China’s growing business community in Afghanistan.  The Kabul Longan Hotel was known as the “go-to” hotel for Chinese visitors to the Afghan capital.  Three gunmen were killed and two guests wounded.

Chinese businessmen are blaming the Taliban for not keeping them safe.

Israel: Prime Minister-designate Benjamin Netanyahu pledged to the leaders of the ultra-Orthodox parties on Thursday that the next government under his leadership will follow a policy according to which “no one will go to prison for learning Torah.”

Netanyahu’s pledge was made during talks with representatives of UTJ and Shas during discussions on the exemption of yeshiva students from military service in the IDF; all part of the coalition negotiations.

According to reports, the new government will advance a basic law on Torah study, designating studying in a yeshiva as a core legal value, proving it difficult for the High Court of Justice to invalidate the arrangement that exempts Torah students from serving in the IDF.

This is outrageous, and a topic I’ve commented on over the years.

Lebanon: One Irish peacekeeper was killed, and another seriously injured after being attacked by armed locals angry at the United Nations presence in their village.

The peacekeepers’ armored vehicle came under attack late on Wednesday night as it was carrying out a routine journey from the Unifil area of operations to Beirut airport when it became separated from its accompanying vehicle and left the approved route.

The vehicle entered a coastal village, where it encountered a group of locals who had been watching the World Cup match between France and Morocco.  The villagers became angry at the presence of the UN vehicle.  They formed a blockade around it and started to attack it.

Libya: A Libyan man accused of making the bomb that killed 270 people (259 on board, 11 on the ground) after it blew up Pan Am flight 103 over Lockerbie in Scotland in 1988 is in custody in the United States, as first announced Sunday by U.S. and Scottish law enforcement officials.

Abu Agila Mohammad Mas’ud Kheir Al-Marimi was taken into custody about two years after former U.S. Attorney General Bill Barr first announced the United States filed charges against him.

Court documents described Mas’ud as an expert bombmaker who joined Libya’s External Security Organization intelligence service in the 1970s and took part in a number of operations outside Libya, reaching the rank of colonel.

The handover of Mas’ud for trial in the West prompted infighting among Libyan politicians, who are split between a parliament based in the east of the country and a Government of National Unity in Tripoli.  Prime Minister Abdulhamd al-Dbeibah has been accused by eastern lawmakers of doing Washington’s bidding despite the lack of an extradition treaty.

Peru: New President Dina Boluarte said on Monday she would submit a bill to Congress to bring general elections forward two years to April 2024 (maybe December 2023 vs. the currently scheduled 2026), after the ouster of her predecessor Pedro Castillo sparked protests that have left at least 20 people dead, seen roads blockaded and a regional airport invaded.  [And tourists at Machu Pichu stranded.]

Boluarte was sworn in last week after Castillo was impeached by Congress and arrested for trying to dissolve the legislature and prevent an impeachment vote.  Wednesday, she declared a “state of emergency” in the areas of “high conflict,” a measure that would allow the armed forces to take more control if necessary.

The situation then deteriorated further and today, Friday, two cabinet ministers resigned, and the Congress rejected the proposed constitutional reform that would have brought elections forward, one of the key demands of the protesters.

The cabinet departures now raise questions about the longevity of the Boluarte government.

Peru is the world’s No. 2 copper producing nation and stability here is key to the global economy for one.

As for Castillo, prosecutors are seeking 18 months of preventive detention, which a Supreme Court panel ordered while he is investigated over charges of “rebellion and conspiracy.”

Random Musings

--Presidential approval ratings….

Gallup: Finally…new numbers…and it’s more of the same.  40% approve of Biden’s job performance, 55% disapprove; 37% of independents approve (Nov. 9-Dec. 2).  The split was 40-55, 37 for Oct. 3-20.

Biden’s approval rating peaked in the Gallup survey at 57% early in his presidency and fell precipitously following the disastrous withdrawal from Afghanistan in Aug. 2021 to 43%.  It has not been above that level since then.

Rasmussen: 47% approve of Biden’s performance, 51% disapprove (Dec. 16).

Biden Agenda

--Marc A. Thiessen / Washington Post

“Last year, President Biden presided over a record crisis at the U.S. border with Mexico. This year, by every conceivable metric, that crisis got far worse.

“In the 2021 fiscal year [Ed. which ends Sept. 30], we had more than 1.7 million encounters at the Southern border.  That was a record…until this fiscal year, when it rose to almost 2.4 million.  And the 2023 fiscal year, which began in October, has already seen more than 500,000 encounters – putting us on track to exceed this year’s record.

“That’s not all.  In 2021, there were nearly 390,000 known ‘gotaways’ – migrants we know evaded U.S. Customs and Border Protection and slipped into the country; this year, the number of gotaways grew to more than 600,000.  In 2021, there were 15 terrorism watch list arrests at the border; this year, that grew to 98 (and who knows how many violent criminals were among the gotaways).  In 2021, more than 557 migrants are known to have died crossing the border illegally; this year, that rose to more than 800 migrants. That figure does not include a 22-year-old National Guard soldier, Sgt. Bishop E. Evans, who gave his life trying to save two drowning migrants crossing the Rio Grande near Eagle Pass, Tex., and other agents killed in the line of duty.

“As bad as that is, things are about to get worse when Title 42 – the Trump-era public health order that has allowed border officials to turn away hundreds of thousands of illegal migrants to prevent the spread of Covid-19 – expires on Dec. 21. When migrants can no longer be expelled under this order, even more will try illegal crossings – and the floodgates will truly open.  Yet the Biden administration is pushing for a cut in funding the detention beds in the omnibus spending bill from the current level of 34,000 to 25,000 just as the need for these beds will dramatically increase….

“Biden has done everything in his power to remove deterrents to mass migration. On taking office, he moved to get rid of the ‘Remain in Mexico’ policy, which had required asylum seekers to wait in Mexico while their claims were considered.  He terminated the ‘safe third country’ agreements Donald Trump negotiated with El Salvador, Guatemala and Honduras, which required migrants to apply for asylum in the first foreign country they crossed into. Biden’s administration also pushed for an end to Title 42 without a plan to deal with the influx of illegal migrants it will unleash. And on his watch, deportations have dropped to the lowest levels in Immigration and Customs Enforcement history as fentanyl continues to make its way across the border, killing record numbers of Americans.

“Yet, despite these disasters, when asked why he was not visiting the border during a trip to Arizona, Biden said he had ‘more important things going on.’  More important things? The message could not be clearer: The calamity unfolding on the Southern border is fine by him. Securing the border is not a priority for the commander in chief.

“Biden says he wants Congress to pass immigration reform, including a path to citizenship for the ‘dreamers’ – migrants who overstayed visas or were brought here as children.  Sens. Thom Tillis (R-N.C.) and Kyrsten Sinema (I-Ariz.) have put forward a deeply flawed proposal that could, under different circumstances, be the starting point for bipartisan discussions.  Polls show that large, bipartisan majorities want to increase the number of border agents, secure the border, bring dreamers out of the shadows, increase skilled immigration and overhaul our immigration system to make sure we are bringing in the right people with the talents and abilities we need for our economy.

“But that will never happen so long as we have a president who seems not just uninterested in securing our border, but intent on opening that border up to any and all comers.”

I agree with 100% of the above, except for Mr. Thiessen’s usage of the term “right people.”  Your local ‘service sector’ would be obliterated without immigrants these days, whether we like it or not.

Meanwhile, a federal judge on Thursday temporarily blocked the administration from ending the Trump-era policy requiring asylum seekers to wait in Mexico for hearings in U.S. immigration court.

U.S. District Judge Matthew Kacsmaryk in Texas stayed the termination until legal challenges by Texas and Missouri are settled but didn’t order the policy reinstated.  The impact on the program wasn’t immediately clear.

“It’s a common sense policy to prevent people from entering our country illegally,” Texas Gov. Greg Abbott tweeted after the ruling.  “Texas wins again, for now.”

--President Biden signed legislation Tuesday protecting same-sex marriages nationally, marking a milestone in the fight for gay rights that follows a big change in the nation’s attitudes.

The Respect for Marriage Act, making it the law that all states recognize same-sex and interracial marriages, will protect same-sex marriages if the Supreme Court were to overturn the landmark Obergefell v. Hodges decision, which in 2015 legalized same-sex marriages in the U.S.

The push to codify gay and interracial marriage rights in Congress came after Associate Justice Clarence Thomas called on the Supreme Court to “reconsider” other rights established by the Supreme Court in the wake of its June ruling that Americans no longer have a right to abortion.

--According to a Redfield & Wilton Strategies poll, done for Newsweek and released Tuesday, nearly 60% of voters say that President Biden should not run for reelection in 2024, with most citing his age as the reason for their views.

Only 30% of eligible voters polled said that Biden should run again in 2024.

Biden has reportedly “vented to allies” about how much his age is discussed in the media as he weighs a 2024 run, Politico reported Tuesday.

“You think I don’t know how f---ing old I am?” an exasperated Biden ranted to one of his acquaintances earlier this year, according to the outlet.

But Biden himself has acknowledged that his age is a “legitimate” issue.

“I think it’s a legitimate thing to be concerned about anyone’s age, including mine,” Biden said during an October interview with MSNBC.  “And I think the best way to make the judgment is to watch me.  Am I showing up?  Do I have the same pace?”

Trump World

--A new Wall Street Journal poll shows Republican primary voters have high interest in Florida Gov. Ron DeSantis for 2024.  In a hypothetical contest between the governor and Donald Trump, DeSantis beats Trump, 52% to 38%, among likely GOP primary voters.

The poll found that DeSantis is both well-known and well-liked among Republicans who say they are likely to vote in a party primary or nominating contest, with 86% viewing him favorably, compared with 74% who hold a favorable view of Trump.  Only one in 10 likely GOP primary voters said they didn’t know enough about DeSantis to venture an opinion of him.

Among all registered voters, DeSantis is viewed favorably by 43%, compared with 36% for the former president.  Favorable views of Trump were the lowest recorded in Journal polling dating to November 2021 and have been pulled down by a decline in positive feelings among Republicans, the above-noted 74% down from 85% since March.

--A USA TODAY / Suffolk University Political Research Center survey has DeSantis leading Trump by 23 points in a poll regarding potential Republican nominees for president in 2024, 56% to 33%.

But other polls have Trump leading DeSantis.

USA TODAY said its poll of 1,000 registered voters showed that among Republican and Republican-leaning voters, enthusiasm for another Trump run is receding.

“In July, 60% of Republicans wanted Trump to run again. In October, that number had dipped to 56%.  Now it has fallen to 47%, an almost-even split with the 45% who don’t want him to run for a third time.”

The new poll put Joe Biden up 47 percent to 40 percent in a notional rematch with Trump.  DeSantis, though, was up on Biden in a hypothetical match-up, 47 percent to 43 percent.

--A federal judge who sided with former President Trump officially withdrew from the Mar-a-Lago document case on Monday, clearing the way for prosecutors to proceed with the explosive probe.

“This case is DISMISSED FOR LACK OF JURISDICTION,” U.S. District Court Judge Aileen Cannon wrote in a brief order.  “Any scheduled hearings are CANCELED, any pending motions are DENIED AS MOOT, and all deadlines are TERMINATED.”

Cannon’s order ends the involvement of Brooklyn U.S. Judge Raymond Dearie as the special master in the case, a role that involved vetting the documents seized from Trump for possible attorney-client and executive privilege concerns.

Cannon’s original order delayed prosecutors in that it blocked them from using all the documents seized in the Aug. 8 search of the Florida resort properly in their probe.

The unusual order from Cannon, who was appointed by Trump, was overturned by a panel of the 11th Circuit Court of Appeals. Trump declined to appeal the ruling to the Supreme Court.

Special Counsel Jack Smith, an ex-Brooklyn federal prosecutor who was appointed by Attorney General Merrick Garland, is overseeing the documents case as well as Trump’s effort to overturn the results of the 2020 election.

Trump WILL be indicted over the documents case sometime in January.

--Last weekend, at the New York Young Republican Club gala, Rep. Marjorie Taylor Greene took the stage and said, “I want to tell you something, if Steve Bannon and I had organized that” – the January 6 insurrection – “we would have won.  Not to mention, it would’ve been armed.”

Monday, Greene said she was only joking and said critics should “learn how sarcasm works” after she was hit with a torrent of criticism.

I’m biting my tongue….

--Pathetically, Kari Lake, the Republican defeated in Arizona’s governor’s race, filed a lawsuit challenging her defeat to Democrat Katie Hobbs, asking a court to throw out certified election results from the state’s most populous county and either declare her the winner or rerun the governor’s election in that county.

The Trump-endorsed Lake has refused to acknowledge that she lost to Hobbs (a poor candidate who was easily beatable) by more than 17,000 votes.

--Peggy Noonan / Wall Street Journal

“(It is still) a matter of belief among Mr. Trump’s followers that he was a transformational figure in the Reagan mold.  Of the differences between them – fidelity to the Constitution, seriousness about and knowledge of the issues, and personal dignity among them – the most obvious is this: Reagan transformed the party without splitting it.  He changed its nature while uniting it.  He took a party that had grown vague and formless and, to put it in broadest terms, split between New England Yankees and Southern California right-wingers and blended them together.

“He made what endured for two generations: a united conservative party. He didn’t kill the liberal New Englanders; he blended them in.  He didn’t kill the Birchers; he allowed them to blend in as if they had no recourse but to join him.  He did this in part through temperamental moderation – he was a person you could cut deals with, who’d understand your starting principles.  But he did it primarily through electoral force – two historic landslides, including a 49-state sweep.  Every politician realized: You better jump aboard the Reagan Express because your own voters already have.

“Mr. Trump had no interest in unifying, never saw its purpose – never won a landslide or attracted broad public support.  He broke the party with an adolescent glee.  See what I destroyed!  But he never built anything that would last in its place.

“The next two years is about rebuilding.”

Ed: We hope…but it’s going to be about more dismantling.

--Trump launched a collection of digital trading cards on Thursday depicting him in various guises including a superhero, astronaut and NASCAR driver.

Trump said: “These limited edition cards feature amazing ART of my Life & Career!”

Earlier in the week, he triggered speculation after saying he would make a “major announcement.”

Some thought he might announce a running mate for his presidential campaign.

Instead, he posted a promotional video on Truth Social, the clip featuring an animated version of the former president in front of Trump Tower in New York, who rips open his shirt to reveal a superhero costume emblazoned with the letter T as lasers shoot from his eyes.

Trump added the cards, costing $99 each, “would make a great Christmas gift.”

This is beyond embarrassing.

But, of course, it’s reported they sold out, with speculators now asking for far more than the cost.

Hey, blockchain technology is being used!  Which means the North Koreans will end up stealing them all.

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--World Health Organization chief Tedros Adhanom Ghebreyesus said he was “hopeful” that the pandemic will no longer be considered a global emergency sometime next year.

But Covid-related hospitalizations are up 30% in the United States over the past few weeks, with older patients accounting for most of the cases, according to the CDC.

The crisis coincides with fewer than 50% of Americans living in nursing homes being caught up on their coronavirus vaccines, while fewer than 25% of staffers are up to date, according to the CDC’s latest data released in late November.

Hospitalizations for both Covid and the flu are up in New York City, prompting health officials to stress the importance of wearing masks and getting tested before gathering for Christmas and New Year’s.

*You can order free Covid tests once again…as I just did…Covidtests.gov.

--Sen. Dianne Feinstein (D-Calif.) said she has every intention of serving the remainder of her Senate term and is still deliberating whether to retire in 2024.

At 89, Feinstein is the oldest sitting senator, and in recent years concerns have grown that she may no longer have the stamina and mental sharpness for the job.

Pressure has grown over the past year for her to step down and allow Gov. Gavin Newsom to appoint a temporary replacement.

She will be replaced by next summer, is my prediction.

--You all saw the massive amounts of snow that fell in the Sierra Nevada last weekend and soaked much of California with rain…all very encouraging after three years of record drought. 4+ feet of snow fell in many parts of the Sierra and at the UC Berkeley’s Central Sierra Snow Laboratory.

But as Andrew Schwartz, lead scientist for the lab, noted: “This is a great start to the winter, but it’s unlikely that it will impact the drought.  If we get to March or April and we’re above average, then we can start to talk about impacts to the drought.”

Last December, a record-breaking 17 feet and 10 inches of snow fell at the snow lab, but then the snow stopped, and the next three months were extremely dry (record-breaking dry).

California’s rainy season is, technically, November thru March, though scientists have noted it is starting nearly a month later these days.

So, fingers crossed, but experts are not confident we’ll see abundant rain and snow after the new year.

As in, California faces the prospect of a fourth consecutive dry year, so officials with the Metropolitan Water District of Southern California have declared a regional drought emergency and called on water agencies to immediately reduce their use of all imported supplies.

Seven million people are dependent on supplies from the State Water Project, a vast network of reservoirs, canals and dams that convey water from Northern California.  Residents reliant on California’s other major supply – the Colorado River – had not been included in an original emergency declaration eight months ago.

But now… “Conditions on the Colorado River* are growing increasingly dire,” MWD Chairwoman Gloria Gray said in a statement.  “We simply cannot continue turning to that source to make up the difference in our limited stage supplies.  In addition, three years of California drought are drawing down our local storage.”

*The river is in a severe shortage after 23 years of extreme drought.

Officials said the call for conservation in Colorado River-dependent areas could become mandatory if drought conditions persist in the coming months.

The MWD will consider its new allocations to all of its 26 member agencies come April, so once again, the January through March period is critical.

MWD member agencies include the Los Angeles Department of Water and Power, the Municipal Water District of Orange County and the Inland Empire Utilities Agency.

--Ireland had its coldest day in 12 years on Monday, -7 Celsius (19 degrees Fahrenheit).  Sunday night was the coldest in almost a year in the UK.

--The U.S. Department of Energy and DOE’s National Nuclear Security Administration (NNSA) announced on Tuesday the achievement of fusion ignition at Lawrence Livermore National Laboratory – a major scientific breakthrough decades in the making that will pave the way for advancements in national defense and the future of clean power.

On December 5, a team at LLNL’s National Ignition Facility conducted the first controlled fusion experiment in history to reach this milestone, also known as scientific energy breakeven, meaning it produced more energy from fusion than the laser energy used to drive it.

This is exciting as nuclear fusion has long been heralded for its potential as a source of clean, essentially limitless energy.

From the Wall Street Journal:

“(LLNL’s lab) uses nearly 200 lasers to heat hydrogen atoms to temperatures of more than 180 million degrees F. and pressures more than 100 billion times Earth’s atmosphere.  The extreme conditions create a state of matter known as plasma, in which hydrogen atoms fuse and then release vast amounts of energy.  The same process powers the sun and other stars.

“Nuclear fusion is of great interest to investors and dozens of firms globally because of its promise as a source of energy that is more environmentally sustainable than sources based on fossil fuels or on nuclear fission, in which atoms are split rather than combined to release energy.

“Current nuclear power plants create energy through nuclear fission, which produces about 10% of the world’s electricity and is carbon free but generates radioactive waste that can last thousands of years.

“Fusion produces neither that long-lived waste nor the carbon dioxide and other greenhouse gases that are generated by the burning of fossil fuels.”

As in nuclear fusion is the big enchilada.

BUT…BUT…almost all are in agreement that it is decades away from commercial viability.  So I’ll be dead by that time.

But you young’uns may benefit…if we can keep the likes of Putin, Xi, and Lil’ Kim…and their successors…from blowing the planet up beforehand.

I do have to add that our late Dr. Bortrum wrote a ton on this topic over the years as he knew some of the figures involved, including the charlatans promoting “cold fusion” (see 1989 and Fleischmann and Pons).

--Meanwhile, NASA’s Orion capsule barreled through Earth’s atmosphere last Sunday and splashed down in the Pacific after making an uncrewed voyage around the moon, winding up the inaugural mission of NASA’s Artemis lunar program 50 years to the day after Apollo’s final moon landing.

The gumdrop-shaped Orion capsule, carrying a simulated crew of three mannequins (Harry, Meghan and Oprah….just kidding, sports fans!) wired with sensors, plunked down in the ocean off Mexico’s Baja California peninsula, executing a key demonstration of how future lunar astronauts would safely return to Earth.

The 25-day mission was capped off by a 20-minute plunge at 24,500 miles per hour into Earth’s atmosphere when it shed its service module, exposing a heatshield that reached peak temperature of nearly 5,000 degrees Fahrenheit.  Good lord!

The Artemis program is aimed at returning astronauts to the lunar surface this decade and establish a sustainable base (complete with Disney+ and HBO Max, so I’m told) as a stepping-stone to future human exploration of Mars.

It’s going to take a while to deem Artemis I a success, but if so, a crewed Artemis II flight around the moon and back could come as early as 2024 followed within a few more years by the program’s first lunar landing of astronauts, one of them a woman (“The Bachelorette”) with Artemis III.

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

Pray for Ukraine.

God bless America.

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Gold $1803
Oil $74.40

Regular Gas: $3.17; Diesel: $4.80 [$3.31-$3.59 yr. ago]

Returns for the week 12/12-12/16

Dow Jones  -1.7%  [32920]
S&P 500  -2.1%  [3852]
S&P MidCap  -2.1%
Russell 2000  -1.8%
Nasdaq  -2.7%  [10705]

Returns for the period 1/1/22-12/16/22

Dow Jones  -9.4%
S&P 500  -19.2%
S&P MidCap  -15.0%
Russell 2000  -21.5%
Nasdaq  -31.4%

Bulls 42.9
Bears 31.4

Hang in there.

Brian Trumbore

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