Week in Review

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Week in Review

12/10/2022

For the week 12/5-12/9

[Posted 6:00 PM ET, Friday]

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Edition 1,234

The upcoming week is likely to be highly volatile.  For starters, the major central banks, the U.S. Federal Reserve, the European Central Bank, and the Bank of England, are all going to be hiking interest rates again…and all by a half-percent (50 basis points), at least that’s the consensus.

But you also have all kinds of uncertainty concerning the global energy picture, as I get into below, largely due to China’s attempted reopening of its economy with reduced Covid restrictions, at the same time Europe and the G7 have imposed a price cap on Russian oil and no one knowing for sure how that will really shake out.

Geopolitically, Vladimir Putin has been rather active lately for someone who is dying of cancer, or so the tabloids would have you believe, and that’s not a good thing.  Lots of loose talk involving nukes, which is always disconcerting.

And there was the curious note out of Belarus that it was maneuvering its troops and materiel around, leading one to believe that Putin may be trying to convince his counterpart, Alexander Lukashenko, to open a new front.

Lastly, today was the greatest quarterfinals day in World Cup history…two absolutely extraordinary matches with scintillating, phenomenal endings.

Croatia defeated tournament favorite Brazil, Argentina beat the Netherlands…both in penalty kicks, spectacular comebacks to get to that point…wow!  [Pope Francis is happy no doubt.]

And tomorrow we have Cinderella Morocco against Portugal, and then a matchup for the ages, France vs. England.

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This week in Ukraine….

Sunday, in his nightly video address, Ukrainian President Volodymyr Zelensky exhorted his fellow citizens to help each other more than ever through what’s certain to be a harsh winter, saying, “To endure this winter is to defend everything.”

U.S. Director of National Intelligence Avril Haines said she expected both sides in the war to slow down and regroup and resupply in preparation for renewed hostilities in the spring.

Looking ahead, Haines said, “honestly we’re seeing a kind of reduced tempo already in the conflict.”

And she believes Ukraine will be in a better position to launch a counteroffensive than the invading forces will be to repel it.

“We actually have a fair amount of skepticism as to whether or not the Russians will be, in fact, prepared to do that,” Haines told NBC News’ Andrea Mitchell in an interview.  “And I think more optimistically for the Ukrainians in that time frame.”

Monday, two military installations deep inside Russia were hit by apparent drones, including an airfield that served as a base for bombers allegedly used in Moscow’s strikes on civilian infrastructure in Ukraine.  Three people were killed when a fuel tanker exploded at the air base in Ryazan, southeast of Moscow, state news agency RIA said.

Russia then launched a new round of missile attacks on Ukraine as the West tried to limit Moscow’s ability to finance its invasion by imposing a price cap on Russian seaborne oil.*  This followed reports of the attacks on the two Russian air bases. Two people were killed in the Zaporizhzhia region.  The power grid and water supply was severely disrupted in the Black Sea port city of Odessa.  Ukraine’s air force claimed it shot down more than 60 of the 70 missiles fired.

Ukraine’s electricity provider, Ukrenergo, lashed out at Russia over “the eighth massive missile attack by a terrorist country.”

*A $60 per barrel price cap on Russian crude came into force on Monday, with the Western measure allowing Russian oil to be shipped to third-party countries using tankers from G7 and EU countries, insurance companies and credit institutions, only if the cargo is bought at or below the $60 per barrel cap.  Moscow has said it will not abide by the measure even if it has to cut production.

President Zelensky said $60 was not low enough to stop Russia’s assault. 

“You can’t call serious a decision on capping Russian prices that is completely comfortable for the budget of the terrorist state,” Zelensky said.  “It’s only a matter of time before it will be necessary to use stronger measures.  It’s a shame that time will be wasted.”

[Today, Friday, Vladimir Putin said Russia could cut oil production and will refuse to sell oil to any country that imposes the West’s “stupid” price cap on Russian oil.]

Tuesday, a drone strike near an airfield in Russia’s Kursk oblast, which borders Ukraine, caused a fire at an oil facility.  It was the third attack on or near a Russian airfield in 24 hours, in the most brazen and far-ranging strikes inside Russia since the invasion of Ukraine in February, and an apparent escalation of the already full-scale drone war between the countries.

Kyiv has not publicly claimed responsibility, but senior Ukrainian officials have basically confirmed all three strikes were carried out by Ukrainian drones, representing a serious security lapse by Russia.  An official, speaking on the condition of anonymity, said that Moscow has “sowed the seeds of anger, and they’ll reap the whirlwind.”

“If something is launched into other countries’ airspace, sooner or later unknown flying objects will return to (their) departure point,” Ukrainian president adviser Mykhailo Podolyak wrote on Twitter on Monday.   “The earth is round.”

In a news conference Tuesday, Secretary of State Antony Blinken said: “We have neither encouraged nor enabled the Ukrainians to strike inside of Russia.” 

The U.S. is providing Ukraine with “defensive supplies” to use “on its sovereign territory, to take on Russian aggressors,” said State Department spokesman Ned Price.  The U.S. is “absolutely not” working to prevent Ukraine from developing its own ability to strike Russia, however, said Defense Secretary Lloyd Austin, who appeared with Blinken.

There was a story that Russia may have run out of Iranian drones.

The Monday drone strikes angered pro-Moscow military bloggers, who criticized officials for not anticipating and preventing the attacks, according to the Institute for the Study of War.  “Several prominent Russian milbloggers claimed that Ukrainian sabotage and reconnaissance groups must have launched the strike against the Engels-2 air base from inside Russian territory,” the Washington-based think tank reported.

Russian President Vladimir Putin “has no genuine interest in negotiations or meaningful diplomacy” to end the war in Ukraine, the United States told the UN Security Council on Tuesday.  Ambassador Lisa Carty said Putin is “trying to break Ukraine’s will to fight by bombing and freezing its civilians into submission.”

Wednesday, Putin said his army could be fighting in Ukraine for a long time, but he saw “no sense” in mobilizing additional soldiers at this point.

“As for the special military operations, well, of course, this can be a long process,” Putin said.

In a televised meeting of his Human Rights Council (really, Human Rights Council) that was dominated by the war, Putin said Russians would “defend ourselves with all the means at our disposal,” asserting that Russia was seen in the West as “a second-class country that has no right to exist at all.” 

He said the risk of nuclear war was growing – the latest in a series of such warnings – but that Russia saw its arsenal as a means to retaliate, not to strike first.

“We haven’t gone mad, we realize what nuclear weapons are,” Putin said.  “We have these means in more advanced and modern form than any other nuclear country… But we aren’t about to run around the world brandishing this weapon like a razor.”

He said there was no reason for a second mobilization at this point, after a call-up of at least 300,000 reservists in September and October.  Putin said 150,000 of these were deployed in Ukraine: 77,000 in combat units and the others in defensive functions.  The remaining 150,000 were still at training centers.

Vlad the Impaler also said Russia had already achieved a “significant result” with the acquisition of “new territories” in Ukraine – a reference to the annexation of four partly occupied regions in September that Kyiv and most members of the United Nations condemned.

Also Wednesday, Belarus said it was moving troops and military hardware to counteract what it called a terrorism threat, amid signs Moscow could be pressuring Minsk to open a new front in the war.

And Kyiv Mayor Vitali Klitschko told Reuters in an interview that he was warning citizens of an “apocalypse” scenario for the capital this winter if Russian air strikes on infrastructure continue and said although there was no need for people to evacuate now, they should be ready to do so.

“Kyiv might lose power, water, and heat supply. The apocalypse might happen, like in Hollywood films, when it’s not possible to live in homes considering the low temperature,” Klitschko said.  “But we are fighting and doing everything we can to make sure that this does not happen.”

According to Klitschko, 152 civilian residents of Kyiv have been killed and 678 buildings destroyed since the beginning of Russia’s invasion on Feb. 24, but the city’s picture is bleak as it faces regular attacks on the power grid.

Kyiv lacks enough heated shelters to take in all 3.6 million residents in the event of complete outages and people should be ready to evacuate if the situation worsens.

Klitschko sketched out one situation in which Kyiv could be left without central heating at a time when temperatures can fall as low as -15 degrees Celsius (5 degrees Fahrenheit). “If electricity supply continues to be absent while outside temperatures remain low, we will unfortunately be forced to drain water from buildings,” he said.  “Otherwise the water can freeze and break the entire water supply network, and buildings will then be totally unfit for further use.”

Thursday, Vladimir Putin presented the strikes on Ukraine’s energy grid as a response to the explosion on Moscow’s bridge that connected Russia to annexed Crimea, as well as other attacks, accusing Kyiv of blowing up power lines near the Kursk nuclear power plant and not supplying water to Donetsk in eastern Ukraine.

Russia is still set on seizing parts of eastern and southern Ukraine that Putin claimed as his own, Kremlin spokesman Dmitry Peskov said.

Russian strikes killed at least 10 people in eastern Ukraine, the deadliest single Russian attack on civilians in weeks.  A barrage of artillery struck the town of Kurakhove on Wednesday, hitting a market, a bus station and several residential buildings, according to Ukraine’s governor of the Donetsk region, where the town is located.

In his late Thursday video address, President Zelensky paid tribute to four policemen killed by landmines in Kherson province.

“This is perhaps even fiercer and more devious than missile terror,” he said.  “For there is no system against mines that could destroy at least part of the threat as our anti-aircraft systems do.”

Today, Britain said Russia is attempting to obtain more weapons from Iran, including hundreds of ballistic missiles, and offering Iran an unprecedented level of military and technical support in return, according to UN Ambassador Barbara Woodward.

And then, speaking with reporters after a summit in Kyrgyzstan, Vlad the Impaler once again brought up the possibility of using nuclear weapons, only this time he said Russia may consider formally adding the possibility of a preventive nuclear first strike to disarm an opponent to its military doctrine, days after warning that the risk of an atomic war is rising.

“We’re thinking about this,” he said. “If we are talking about a disarming strike, perhaps we should think about using the approaches of our American partners,” citing what he called U.S. strategies to use high-accuracy missiles for a preventive strike.

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--The World Bank’s estimate of how much it will cost to rebuild the Ukrainian infrastructure after the war has skyrocketed from $367 billion in June to between $527 billion and $632 billion today.

--French President Emmanuel Macron’s suggestion the West should consider Russia’s need for security guarantees if Moscow agrees to talks to end the war unleashed a storm of criticism in Kyiv and its Baltic allies over the weekend.

In an interview with French TV station TF1, Macron said that Europe needs to prepare its future security architecture and also think “how to give guarantees to Russia the day it returns to the negotiating table.”

President Zelensky’s top adviser Podolyak said that it is the world that needs security guarantees from Russia, not the other way around.  “Civilized world needs ‘security guarantees’ from barbaric intentions of post-Putin Russia,” Podolyak said on Twitter on Sunday.

Oleksiy Danilov, the secretary of Ukraine’s National Security and Defense Council, said a “denuclearized and demilitarized” Russia would be the best guarantee of peace not only for Ukraine, but also for the world.  “Someone wants to provide security guarantees to a terrorist and killer state?” Danilov wrote on Twitter.  “Instead of Nuremberg – to sign an agreement with Russia and shake hands?”

The trials in Nuremberg to prosecute Nazi war criminals after World War II are seen today as the forerunners of tribunals like the International Criminal Court in The Hague.

The United States has said Putin’s insistence on recognition of the declared annexations of four regions in Ukraine indicated he was not serious about peace talks.

--Russia said there are no direct negotiations between Moscow and Kyiv on the issue of a security zone around the Zaporizhzhia nuclear power plant, after Rafael Grossi, head of the International Atomic Energy Agency, said he was nearing an agreement between the two sides to safeguard the facility.  “We are discussing the possible parameters of a declaration on the establishment of a zone of protection,” said Russian Foreign Ministry spokeswoman Maria Zakharova.  But under no circumstances would Russian forces withdraw from the plant, she added.

Ukrainian officials on Thursday claimed Russian forces have installed multiple rocket launchers at the Zaporizhzhia plant, raising fears yet again that it could be used as a base to fire on Ukrainian territory and heightening radiation dangers.

Ukraine’s nuclear company Energoatom said in a statement that Russian forces occupying the plant have placed several Grad multiple rocket launchers near one of the six reactors.

It said the offensive systems are located at new “protective structures” the Russians secretly built, “violating all conditions for nuclear and radiation safety.”

The risk of a nuclear meltdown is greatly reduced because all six reactors have been shut down, but a dangerous release of radiation is still possible.

--According to the Kremlin’s internal polling, only 25% of Russians favor continuing the war in Ukraine and 55% support peace talks, an independent Russian media outlet says.

Meduza says it obtained access to the survey conducted last month by the Russian Federal Protective Service, with the results markedly different from a July survey that showed 57% of Russians favored the war.

Denis Volkov, director of the independent sociological institute Levada Center in Moscow, said the share of Russians favoring peace talks and rejecting the war began growing rapidly with the September “partial mobilization” draft that added 300,000 soldiers.

“This is sheer reluctance to take part in the war personally,” Volkov told Meduza.  “Now the risks are greater, and people want to start the talks.”

The British Defense Ministry said of the results: “With Russia unlikely to achieve major battlefield successes in the next several months, maintaining even tacit approval of the war amongst the population is likely to be increasingly difficult for the Kremlin.”

--One of Russia’s most prominent opposition figures, Ilya Yashin, was jailed for 8 ½ years for spreading “fake news” about the country’s military.

One of the few Kremlin critics to stay in Russia after it invaded Ukraine, Yashin continued to speak out against the war.

He was arrested after he condemned suspected Russian war crimes in the Ukrainian town of Bucha.

Soon after the invasion, Russia made reporting “false information” a crime.

In a post on Telegram, Yashin told supporters there was no reason to be sad: “We told the truth about war crimes and called for an end to the bloodshed.”

Russia’s best-known opposition leader, Alexei Navalny, said the “shameless and lawless verdict by Putin’s court will not silence Ilya,” describing him as probably the best friend he had made in politics.

--Turkey wants Finland to publicly announce an end to its arms embargo on Ankara before it will ratify the Nordic country’s bid for NATO membership, the Turkish foreign minister said Tuesday.

Separately, Finnish Prime Minister Sanna Marin, speaking at a think tank in Sydney, Australia, the other day, said: “We would be in trouble without the United States. I must be brutally honest with you, Europe isn’t strong enough right now.”  While the U.S. has given a lot to Ukraine already, “We have to make sure that we are building those capabilities when it comes to European defense, European defense industry,” Marin said.

--A Ukrainian priest from a church affiliated with Russia was sentenced to 12 years in prison after being found guilty of assisting Russia, the Prosecutor General’s Office said on Wednesday.

The priest, from the eastern Luhansk region, was not named and could not be reached for comment.  He had been collecting information on equipment and weapons held by the Ukrainian military since mid-April, the state prosecutors said.  “The enemy used the information to establish the location and fire on targets,” they wrote on Telegram.

Since the collapse of Soviet rule, competition has been fierce between the Moscow-linked church and an independent Ukrainian church proclaimed soon after independence.  The Moscow-subordinated church has condemned Russia’s invasion of Ukraine but many Ukrainians fear it could be a source of Russian influence.  The Orthodox Church in Russia has backed the invasion.

--Pope Francis broke down and cried on Thursday as he mentioned the suffering of Ukrainians during a traditional prayer in central Rome.  The pope’s voice began to tremble as he mentioned the Ukrainians and he had to stop, unable to speak, for about 30 seconds. When he resumed the prayer, his voice was cracking. 

The crowd including Rome Mayor Roberto Gualtieri who was right next to the pope, applauded when they realized he was unable to talk and saw him crying.

Francis broke down during a traditional prayer to the Madonna at the foot of a statue on the Feast of the Immaculate Conception, a national holiday in Italy.

“Immaculate virgin, today I would have wanted to bring you the thanks of the Ukrainian people,” he said before being overwhelmed by emotion and having to stop. When he was able to, he continued: “Instead, once again I have to bring you the pleas of children, of the elderly, of fathers and mothers, of the young people of that martyred land, which is suffering so much.”

Francis has mentioned Ukraine in nearly all his public appearances and grown increasingly critical of Moscow.  [Philip Pullella / Reuters]

--Thursday, Moscow and the United States agreed to a high-profile prisoner swap – American basketball star Brittney Griner for Russian arms dealer Viktor Bout.

President Biden said in a video address from the White House: “She’s safe; she’s on a plane. She’s on her way home.”

Biden noted at the same time, “We’ve not forgotten about Paul Whelan,” referring to the former Marine who was detained in Moscow almost exactly four years ago on allegations of spying.  “This was not a choice of which American to bring home. We brought home Trevor Reed when we had a chance earlier this year,” Biden said.

“Sadly, for totally illegitimate reasons, Russia is treating Paul’s case differently than Brittney’s,” said the president.  “And while we have not yet succeeded in securing Paul’s release, we are not giving up. We will never give up.”

Under federal sentencing rules, Bout could have been released from prison in five years.  He had been sentenced to 25 years in federal prison in 2012 after he was convicted of selling arms to Colombian rebels, which prosecutors said were intended to kill Americans.

After the sentencing, Attorney General Eric Holder called Bout “one of the world’s most prolific arms dealers,” while the U.S. attorney in Manhattan, Preet Bharara, said he had been “international arms trafficking enemy number one for many years, arming some of the most violent conflicts around the globe.”  Amnesty International says he sold arms to sanctioned human rights abusers in Angola, Liberia, Sierra Leone and the Democratic Republic of Congo.

Bout, a former Soviet military officer, became rather rich as an arms dealer, though he has always maintained his innocence.

Rep. Adam Kinzinger (R-Ill.) tweeted: “What about retired marine who has been unjustly detained for years, Paul Whelan?  Surely, an arms dealer is worth two innocent people?”

--In Moscow, a massive blaze broke out Thursday night at the Mega Khimki shopping center in a Moscow suburb, and the suspected cause is arson, according to authorities.

Mega was home to a large number of Western retail chains before the companies’ departure from Russia in the wake of the Ukraine war, including one of the first IKEA stores in the Moscow area.

--TIME magazine has named President Zelensky and the spirit of Ukraine as its 2022 Person of the Year.

“This year’s choice was the most clear-cut in memory,” writes TIME’s editor-in-chief Edward Felsenthal.  “Whether the battle for Ukraine fills one with hope or with fear, Volodymyr Zelensky galvanized the world in a way we haven’t seen in decades.”

Opinion….

Patrick Tucker / Defense One

“Explosions at the Dyagilevo and Engels airbases deep within Russia suggest that Ukraine can strike the very outskirts of Moscow – and, perhaps, that U.S. officials may need to revisit their rationale for withholding various long-range weapons.

“On Monday evening, the Russian Ministry of Defense said modified versions of the Soviet-era Tupolev Tu-141 Strizh reconnaissance drones had struck air bases at Engels, 372 miles from Ukrainian-controlled territory, and at Dyagilevo, 122 miles southeast of Moscow. It blamed the strikes on ‘the Kyiv regime.’

“The UK Defense Ministry, citing ‘multiple open sources,’ said at least two Russian Tu-95 Bear Russian bombers had been damaged by an exploding fuel tank at Dyagilyevo, a home base for heavy bombers.

“ ‘The causes of the explosions have not been confirmed, the MoD tweeted.  ‘However, if Russia assesses the incidents were deliberate attacks, it will probably consider them as some of the most strategically significant failures of force protection since its invasion of Ukraine.’….

“No matter the weapons, such strikes would represent a colossal failure of Russian air defenses and show the growing vulnerability of the Russian military.

“The breakthrough is significant for a couple of reasons.  The United States has been reluctant to give Ukrainian forces MGM-140 Army Tactical Missile System, or ATACMS, missiles, which would allow strikes more than 300 miles into Russia.  (Ukraine’s northernmost point is less than 300 miles from Moscow).  The United States has even modified the High Mobility Artillery Rocket Systems launchers, or HIMARS, it has sent to Ukraine to disable their ability to fire ATACMS rockets.  In September, Russian officials said sending such long-range missiles to Ukraine would make the United States a direct party to the conflict.

“A big part of the reason the United States is honoring that ‘red line’ is out of concern that Russia would view such weapons as a strategic rather than tactical threat.”

The attacks within Russian territory could trigger a larger response.

Editorial / New York Post

“It is good news that Brittney Griner, a political pawn of Vladimir Putin, is free. Too bad it is because of a terrible deal by Team Biden.

“It’s an outrage that Washington sprung notorious arms-dealer Viktor Bout in exchange, without even also winning the release of as-unjustly ‘convicted’ Paul Whelan, who’s been languishing in Russia since 2018 with a decade-plus left to serve.

“This is fresh ugly proof of how weak the United States has become on the world stage, thanks significantly to the doddering foreign policy emanating from the White House.

“Griner’s arrest, sham trial and subsequent outrageous sentence to nine years’ hard labor earlier this year…were nothing less than Putin making a big bet against the U.S. with a naked act of political targeting.

“Well, with the Bout exchange, he’s won. We folded.”

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Wall Street and the Economy

Equity markets fell this week and it’s all about next Tuesday-Wednesday and the Federal Reserve’s Open Market Committee meeting, where they are expected to hike the benchmark funds rate 50 basis points after four hikes of 75bp.  The issue is the language in the accompanying statement and Chair Jerome Powell’s comments at his press conference after as the markets look for clues on future rate hikes, the inevitable pause, and then try to guess when the Fed would pivot (begin to lower rates).  Tuesday’s report on consumer prices will be a key factor in the Fed’s language.

A huge issue is wage-price pressures, as officials are worried that rising prices could be sustained by continued income growth and strong demand for workers.  Even if corporations expect high inflation to subside, employees could demand and receive bigger raises to keep up.

Fed governor Christopher Waller said recently: “When people start saying, ‘Well, I know you’re going to bring inflation back down to 2%, but right now it’s 7%, and I need a 7% raise just to keep up.  And then the firm says, ‘Well, I can’t eat that. I’ve got to pass that through to my customers,’ you start building this in.  And that’s where things get out of control.”

Labor negotiations, as noted in the case of the airlines below, haven’t been easy. I saw this week that Los Angeles teachers are pressing their demands for a 20% raise over two years, this being the second-largest school district in the nation.

The union head for United Teachers Los Angeles, Cecily Myart-Cruz, said this week: “When you can’t even afford to live where you work, we got a problem y’all.”

Just one example of the issues around the country on the wage front. 

This week, those looking for relief on the inflation front received none when it came to today’s producer price index for November, with all the figures hotter than expectations.  The PPI rose 0.3% for the month, 0.4% ex-food and energy, and for the 12 months, 7.4%, and 6.2% on core.  While these last two were down from October’s 8.0% and 6.7%, they were above the Street consensus of 7.2% and 5.9% (core).

Next Tuesday, as the Fed starts its deliberations, we’ll get critical consumer price data for November.

Meanwhile, the ISM service sector reading for last month was a much stronger than expected 56.5 vs. October’s 54.4 (50 the dividing line between growth and contraction).

October factory orders were also above forecast, 1.0%.

The Atlanta Fed’s GDPNow barometer for the fourth quarter sits at 3.2%.

We did get some very good news this week.  The average cost of gas at the pump nationwide has fallen to $3.31 for regular, which is not only down from the mid-June peak of $5.01, but down from the year ago price of $3.33.  And diesel is down to $4.98 from its peak of $5.81, though still well above last year’s $3.60.

The pump down the street from me has completed a round trip.  From $3.69 (for regular) to $5.45, back to $3.69.

And from Freddie Mac, the average rate on a 30-year fixed-rate mortgage is down to 6.33% from 7.08% Nov. 10, the largest 4-week decline since 2008 (which admittedly wasn’t a great time).

But 6.33% is still way above the 3.10% rate of a year ago.

Lastly, just a piece of an editorial from The Economist this week that I totally concur with:

“Globally, inflation has begun to decline primarily because energy prices have eased since the summer and because supply chains, long gummed up by the pandemic, are operating more smoothly.  Yet inflation remains a very long way from central banks’ 2% targets. There are three reasons to think rate-setters will struggle to hit their goals soon.

“The first is a continued scarcity of workers.  While the news on prices has been good, the latest wage data are worrying….

“The second problem is fiscal policy.  It would help central banks to cool labor markets if governments shrank their budget deficits….

“The final danger is that energy inflation returns in 2023. This year Europe’s economies have benefited from weak competition for scarce supplies of global liquefied natural gas (LNG), in part because China’s economy has been hampered by its zero-Covid policy.  But China has begun to loosen its pandemic controls.  If its economy reopens and rebounds, LNG prices could surge in 2023.  Central bankers’ battle with inflation has reached an inflection point.  But it will not be won for a long time.”

Europe and Asia

GDP grew by 0.3% in the euro area in the third quarter, according to Eurostat. Compared with Q3 2021, seasonally adjusted GDP increased by 2.3%.

Germany 1.3% (Q3 2022 vs. Q3 2021), France 1.0%, Italy 2.6%, Spain 3.8%.

Retail trade in the EA19 for October was down 1.8% over September, and -2.7% from October 2021.

And we had the service sector PMIs for November from S&P Global, 48.5 for the eurozone vs. October’s 48.6.

Germany 46.1, France 49.3 (vs. 51.7 Oct.), Italy 49.5, Spain 51.2, Ireland 50.8.

U.K. 48.8.

Chris Williamson / S&P Global

“A fifth consecutive monthly falling output signaled by the PMI adds to the likelihood that the eurozone is sliding into recession.  However, at present the downturn remains only modest, with an easing in the overall rate of contraction in November that means so far the region looks set to see GDP contract by a mere 0.2%.

“Manufacturers are seeing some benefits of improved supply chains and the service sector, while still in decline amid the cost-of-living squeeze, has so far not suffered to the degree that many were expecting.

“With the surveys also bringing signs of inflation having peaked, the headwind on demand from rising prices should also start to ease in coming months, barring severe weather over the winter, hinting that any recession may be both brief and relatively mild.  That said, energy prices could spike higher amid adverse weather in the coming months, which would not only hit spending power but could threaten production capacity at energy-intensive industries, under which scenario the risks to economic growth would shift clearly to the downside.”

Britain:  I’ve been writing for months about all the labor actions coming down the pike and Prime Minister Rishi Sunak said he would take more action “to protect the lives and livelihoods” of Britons during months of planned strikes by rail, health and postal workers.

Britain, already grappling with industrial action across a range of sectors, now faces strikes by thousands of public-sector nurses in England and ambulance workers in England and Wales, who plan to walk out this month over pay and conditions.  It is a growing crisis.

The government has repeatedly said it could not afford inflation-linked wage increases that would drive prices even higher.

Sunak told lawmakers: “If the union leaders continue to be unreasonable then it is my duty to take action to protect the lives and livelihoods of the British public, and that is why…since I became prime minister, I have been working for new tough laws to protect people from this disruption.”

“My priority is making sure that I keep people safe…and I will do what is required to do that.”

Separately, the U.K. approved its first coal mine in 30 years.  The proposed site, in northwest England, will produce coking coal for use in steelmaking.  The project’s backers say there is domestic demand for the stuff, but the two firms making steel with coal in England have plans to adopt cleaner methods.  Earlier the government’s climate-change adviser called the plan “absolutely indefensible.”

Allegra Stratton / Bloomberg

“Here are two important stories from the world of energy in the past few days. First, from Australia:

“ ‘Glencore abandoned plans for a controversial coal mine in Australia,’ Bloomberg’s reporters said, ‘citing global uncertainty and its plans to phase out emissions.’

“Then this dispatch, sent overnight from New Delhi:

“ ‘India’s top power producer is planning to build a massive nuclear fleet that will aid the nation’s push to shift away from coal and curb emissions.’

“Compare and contrast.  At around that time the UK gave a not-so-green light to the first UK metallurgical coal mine in 30 years, in Whitehaven, Cumbria.  It’s a different kind of coal.  But it’s carbon emissions just the same.”

Lastly, according to an Ipsos poll for a new research project into North-South relations in Ireland, Northern Ireland would vote decisively against a united Ireland if there was a Border poll.

The poll shows almost twice as many voters who expressed a preference want to remain in the United Kingdom.

In the Republic, however, there is a majority of more than four to one in favor of unity.

Half of all respondents (50 percent) in Northern Ireland said they would vote against Irish unity, which included 21 percent of those from a Catholic background.

Just over a quarter (26 percent) in the North said they would vote for unity, while 19 percent said they didn’t know how they would vote and 5 percent said they would not vote.

The strongest opposition to unity was among those of a Protestant background (79 percent). 

In the Republic, almost two-thirds (66 percent) said they would vote for unity, with just 16 percent against.

Turning to Asia…China is all but certain to fall short of its initial 2022 GDP growth target of “around 5.5 percent,” as the headline figure was only 3 percent across the first three quarters.  And this week’s data doesn’t help.

The Caixin service sector reading for November was just 46.7 vs. 48.4 in October.  This figure will be interesting to watch as Covid containment measures ease.

And the November trade data was flat-out awful.  Exports declined 8.7% year-over-year, the steepest fall since Feb. 2020. Imports were down 10.6% Y/Y, both well below expectations.

Exports to the U.S. fell 25.4%, to the EU down 10.6%, and down 5.6% to Japan.

Producer prices for November fell 1.3% Y/Y, same as October.

Auto sales in China dropped by 7.9% year-over-year to 2.33 million units in November, reversing from 6.9% growth a month earlier, data from the China Association of Automobile Manufacturers showed.  It was the first decline in car sales since May, as a hoped-for buyers’ rush before the expiration on various incentives.

Editorial / Wall Street Journal

“Western companies piled into China because of its huge market, low labor costs, and promise of market reform. But those days are over as President Xi Jinping has put the state back in charge of the economy and used regulation and theft to punish foreign investors.  Political risks are rising fast, as the protests against zero-Covid and threats against Taiwan show. This is a shame because a China that played by global rules would be a boon to humanity, but that isn’t Mr. Xi’s Middle Kingdom.

“The dilemma of zero-Covid highlights the growing business risks.  There are some signs that local jurisdictions are easing lockdowns after the protests. But Mr. Xi can’t admit a mistake, and easing up risks further spread of Covid through a population that has less natural immunity and too little hospital space for severe illness.

“Either way the economy will suffer. China’s growth has been sluggish this year and won’t come close to the Communist Party’s 5.5% goal.  Purchasing managers’ survey data for November released last week point to contractions in manufacturing and services.

“The political uncertainty is hurting more than Apple.  [Ed. see below and Zhengzhou].  Nikkei reported last week that Japanese auto makers are struggling to keep their Chinese factories operating.  Disney’s Shanghai resort was ordered to close again on Tuesday owing to zero-Covid rules, only days after it had been allowed to reopen following a month-long shutdown.  That’s only a small sample of the business disruption.

“The greatest risk is Mr. Xi’s determination to swallow Taiwan on his watch – by force if necessary.  In that event, the political pressure on Western companies to abandon China would be overwhelming.  U.S. firms had to abandon multi-billion-dollar investments in Russia after the invasion of Ukraine, and the example should concentrate minds in corporate boards about China risks….

“The fiasco of zero-Covid, growing Communist oppression at home and rising aggression abroad make clear that China isn’t the economic opportunity it was.  This marks a significant loss for China and the world, but it’s a reality that Western companies have to confront.”

Japan’s November services PMI was 50.3 vs. 53.2 prior.  Household spending for October was up 1.2% Y/Y.

A final look at third-quarter GDP was down 0.8% annualized vs. 4.5% in Q2, but this was better than forecast.

Street Bytes

--Stocks fell on a combination of recession fears and, at the same time, better-than-expected economic data, as well as the poor report on producer prices, which could keep the Fed’s rate stance higher for longer.

The Dow Jones declined 2.8% to 33476, while the S&P 500 lost 3.4% and Nasdaq 4.0%.

--U.S. Treasury Yields

6-mo. 4.71%  2-yr. 4.34%  10-yr. 3.59%  30-yr. 3.57%

Earlier in the week, the gap between the 2- and 10-year was the widest since 1981, which isn’t a good sign, though it narrowed a bit at week’s end.

Aside from the Fed, we have a critical reading on consumer prices this Tuesday.

--Oil prices fell to the lowest levels since late 2021, with WTI finishing the week at $71.48.  Recessionary fears were the chief culprit, as well as easing fears that a Western cap on Russian oil prices would significantly curb supply.

But it was a busy weekend, with OPEC+ agreeing to stick to its oil output targets, as the markets struggle to assess the impact of a slowing Chinese economy on demand and the G7 price cap on Russian oil on supply.

--Separately, the two largest U.S. oil companies – Exxon Mobil and Chevron – disclosed plans to increase outlays on energy projects next year amid high oil demand and prices (until recently).  While spending more, it will be less than half the combined $84 billion they spent in 2013, when oil prices often traded above $100 per barrel.

The Biden administration has criticized oil companies for not raising their production to help lower prices to consumers.  Still, next year’s budgets remain within the ranges each set before the war in Ukraine fed a global shortage of energy.

Exxon said it would increase project investments next year to between $23 billion to $25 billion, up from a projected $22 billion this year.

Chevron said it plans to spend $17 billion, up from about $15 billion this year.  Increases include new monies for emissions reduction projects and the impact of inflation.

But the higher spending will not immediately lead to more production. Exxon has said it expects output next year to be flat at about 3.7 million barrels of equivalent oil per day, while Chevron has forecast a greater than 3% compound average annual increase through 2026.

--Foxconn Technology Group’s November revenue dropped 11% from a year earlier after shipments from Zhengzhou, China, the world’s biggest iPhone assembly site, were affected by a Covid-19 outbreak.

Foxconn expects its Zhengzhou plant in China to resume full production around late December to early January, according to reports.  Foxconn assembles around 70% of iPhones, and the Zhengzhou plant produces the majority of Apple’s premium models, including iPhone 14 Pro.

Foxconn employs more than 200,000 workers at the Zhengzhou facility and the site has continued to operate under a system in which workers stay on-site and contact with the outside world is limited to a minimum.

According to the Wall Street Journal, Foxconn founder-director Terry Gou had warned China that the government’s zero-Covid stance would threaten the position of the world’s second-largest economy in the global supply chain.  The appeal, sent by Gou in a letter more than a month ago, played a major role in convincing China’s leadership to quickly reopen the economy and move away from its Covid policies, the Journal said on Thursday, citing people familiar with the matter.

In recent weeks, Apple has told suppliers to more actively plan on increasing production outside China, particularly India and Vietnam, and is looking to reduce dependence on Foxconn and other Taiwanese assemblers.

Speaking of which….

--Taiwan chipmaker TSMC plans to build a second chip plant in Arizona and more than triple its initial investment to $40 billion, estimating on Tuesday annual revenue of $10 billion from the plants when they are up and running. The foreign investment by Taiwan Semiconductor Manufacturing Co., the world’s biggest chip contract manufacturer, is one of the largest in U.S. history.

The first chip fabrication facility, or fab, will be operational by 2024, while the second facility nearby will make the most advanced chips currently in production, called “3 nanometer,” by 2026.

President Biden and others, including CEOs of major TSMC customers, attended an opening ceremony for the new $12 billion facility in an arid and barren part of northern Phoenix.

“When completed with both fabs, we will manufacture over 600,000 wafers a year, representing $10 billion in yearly revenue,” said TSMC Chairman Mark Liu, adding that customers using those chips would have annual sales of over $40 billion.

The wafer is the shiny disc that chips are made on.  Liu said the two plants will create 13,000 high-paying tech jobs, including 4,500 under TSMC and the rest filled by suppliers.  Apple Inc., Nvidia Corp., and Advanced Micro Devices Inc., all major TSMC customers, said they expected their chips to be made in the new Arizona plants.

“We work with TSMC to manufacture the chips that help power our products all over the world.  And we look forward to expanding this work in the years to come as TSMC forms new and deeper roots in America,” said Apple CEO Tim Cook.  The other CEOs offered similar comments.

Nearly 600 engineers hired in Arizona have been sent to Taiwan for training.

For all the hoopla, the production out of these two plants will account for about 4% of TSMC’s annual production.  But this is good. 

Except…these plants need gobs of water.  And there is a housing boom in the Phoenix and Tucson, Arizona areas.  And the developments need water.

And it’s hard to find water!  Maybe even in my remaining lifetime, there will be a major crisis in this state.

Ask developers, who have to convince potential homeowners looking to buy a spiffy new home, that there won’t be a water issue ten years after they’ve moved in (from a different state that didn’t have this potential problem).

For now, regarding TSMC and the two factories, it’s about execution. We’ll see if the company delivers on its first deadline of Dec. 2023.

--Southwest Airlines Co. on Wednesday became the first major U.S. airline to reinstate its quarterly dividend, more than two years after suspending it in the wake of the pandemic.  U.S. airlines have benefited from pent-up demand for leisure trips and a gradual return of lucrative business travel, helping them post strong quarterly earnings despite worries of an economic slowdown.

“Our fourth-quarter 2022 outlook remains strong, and we have a solid plan for 2023,” CEO Bob Jordan said in a statement.  In a regulatory filing, Southwest said it was expecting “strong leisure revenue trends” to continue into the first quarter of next year, while business travel was expected to improve.  The carrier also trimmed its fourth-quarter fuel cost forecast.

Southwest declared a third-quarter dividend of 18 cents per share, the same level at which it was prior to the pandemic.

But the shares fell nearly 5% as the airline also did not disclose a profit or revenue forecast for 2023 ahead of its investor day on Wednesday.

Southwest does have major labor issues, including with the pilots’ union.  The Southwest Airlines Pilots Association President Casey Murray said that “reinstating dividends just illustrates how far Southwest has veered from its path.”

Southwest previously said it is unable to use 40 to 45 of its 700-plus airplanes because it doesn’t have enough pilots to fly them.  The airline is in the process of training more pilots.

--Delta Air Lines Inc. pilots would receive at least 31% in pay hikes over the four-year term of an agreement in principle reached with the carrier.

The tentative accord would also provide a one-time payment to pilots, the Air Line Pilots Association told members in an email last weekend.  The agreement, reached after more than three years of talks, must be approved by union leadership before going to pilots for a vote.

If approved, terms of the agreement are expected to set minimum standards for contracts being negotiated with pilots at American Airlines Group Inc., United Airlines Holdings Inc. and Southwest.  Talks across the industry have been particularly tense as unions seek increases in compensation and more flexible work schedules, and pilots have frequently picketed outside of airports and sites of company investor meetings.

Delta’s agreement provides for an 18% pay increase effective when the final contract is signed, followed by a 5% hike after one year and then 4% after each of the next two years.  The agreement also includes a provision to ensure Delta pay exceeds that in any contract for American or United pilots by at least 1% for its term.

Leaders of American’s union last month rejected a proposed contract that would have raised pay 19% over two years and United pilots overwhelmingly voted down a new labor agreement, saying it fell short of the “industry-leading contract” they deserved.

The Delta deal won’t be put to a vote by union membership until late January, it seems.  Perhaps February. 

--TSA checkpoint numbers vs. 2019

12/8…93 percent of 2019 levels
12/7…93
12/6…89
12/5…96
12/4…98
12/3…102
12/2…93
12/1…90

--Shares in Tesla fell on a report by Bloomberg News that the EV maker was shortening shifts at its Shanghai factory, as it grapples with elevated inventory levels amid slowing demand in China’s auto market, as noted above.

Still, the plant recorded its highest monthly sales of more than 100,000 cars in November.

That said, China’s BYD is passing Tesla by.  Almost 600,000 “new energy vehicles” were sold in China last month, up about 58% year over year.

New energy vehicle sales in China include battery-electric vehicles and plug-in hybrids. Roughly 400,000-plus of the NEV sales in November were all battery-electric models – the kind Tesla makes.

BYD sold about 114,000 battery-electric vehicles in November.  It’s estimated Tesla has 11% of China’s battery-electric share, but BYD’s comparable market share year to date is 23%.

--The Pentagon on Wednesday announced the awardees of the Joint Warfighting Cloud Capability – or JWCC – contract, with Amazon Web Services, Google, Microsoft and Oracle each receiving an award.

Through the contract, which has a $9 billion ceiling, the Pentagon aims to bring enterprisewide cloud computing capabilities to the Defense Department across all domains and classification levels, with the four companies competing for individual task orders.

JWCC was announced in July 2021 following the failure and cancellation of the Joint Enterprise Defense Infrastructure – or JEDI – contract, DOD’s previous effort aimed at providing commercial cloud capabilities to the enterprise.

Conceptualized in 2017, JEDI was designed to be the Pentagon’s war cloud, providing a common and connected global IT fabric at all levels of classification for customer agencies and warfighters.  This was to be a single $10 billion contract, but ultimately, JEDI was delayed for several years over numerous lawsuits that ultimately caused the Pentagon to reconsider its plan, opting for a multi-cloud approach more common in the private sector.

For many years, Amazon Web Services – by virtue of its 2013 contract with the CIA – was the only commercial cloud provider with the security accreditations allowing it to host the DOD’s most sensitive data.  But now, the others, Microsoft, Google and Oracle, have caught up in their accreditation, allowing them to host the department’s most sensitive unclassified data in their cloud offerings.

--Morgan Stanley began cutting about 2% of its global staff on Tuesday, or about 1,600 of its employees.  Chairman and CEO James Gorman said at a recent conference, “We’re making some modest cuts all over the globe.  In most businesses, that’s what you do after many years of growth.”

Morgan Stanley’s $12.99 billion in third-quarter revenue was down from $14.75 billion in last year’s third quarter, and short of expectations.  Investment banking revenue fell 55% from a year ago, to $1.28 billion.

Across Wall Street, banker bonuses are also set to take a hit, with JPMorgan Chase, Bank of America, Citigroup and Goldman Sachs weighing cuts to bonus pools for their investment bankers by as much as 30%.  Investment-banking revenue across the five biggest U.S. banks plummeted 47% - a whopping $18.8 billion decline – in the first nine months.

--PepsiCo announced it would lay off workers at the headquarters of its North American snacks and beverages divisions, a signal that corporate belt-tightening is extending beyond tech and media. According to the Wall Street Journal, hundreds of jobs will be eliminated.  The cuts affect the company’s North America beverage business, which is based in Purchase, N.Y., and its North America snacks and packaged-foods business, which has headquarters in Chicago and Plano, Texas, sources said.

PepsiCo makes Doritos, Lays potato chips and Quaker Oats, along with its namesake cola.

--FTX founder Sam Bankman-Fried is under investigation by federal prosecutors for possible manipulation of the market for two cryptocurrencies this past spring, leading to their collapse and creating a domino effect that eventually caused the implosion of his own cryptocurrency exchange last month.

As reported by the New York Times, U.S. prosecutors in Manhattan are examining the possibility that SBF steered the prices of two interlinked currencies, TerraUSD and Luna, to benefit the entities he controlled, including FTX and Alameda Research, a hedge fund he co-founded and owned, according to those familiar with the investigation.

This is all just part of the broadening inquiry into whether FTX broke the law by transferring its customer funds to Alameda.

SBF said in a statement that he was “not aware of any market manipulation and certainly never intended to engage in market manipulation.”

--The Biden administration on Thursday moved to block Microsoft’s $69 billion bid to buy “Call of Duty” maker Activision Blizzard, throwing a stumbling block in front of the tech giant’s plans to rapidly expand its portfolio of popular games and catch up to bigger rivals.

Microsoft, which owns the Xbox console and game network platform, said in January 2022 that it would buy Activision for $68.7 billion in the biggest gaming industry deal in history.  Without Activision and its variety of games across mobile, consoles and PCs, Microsoft could struggle to attract users to its budding subscription service for accessing games.

Microsoft said it wanted the deal to help it compete with gaming leaders Tencent and PlayStation owner Sony.  But in its complaint, the Federal Trade Commission, which enforces antitrust law, said that Microsoft had a record of hoarding valuable gaming content.  The agency set a hearing before an administrative law judge for August 2023.  Microsoft President Brad Smith said the company would fight the FTC.

--Walt Disney Co. rolled out its new ad-supported Disney+ subscription on Thursday, an attempt to revitalize its flagship streaming service that the company has said lost more than $8 billion over the past three years.

Disney is charging $7.99 a month for the version of Disney+ with ads.  The ad-free version will now cost $10.99 a month, up from $7.99.  More than 100 advertisers have signed up for the new program, according to Disney.

Disney+ added 12.1 million new subscribers in the three months ended Oct. 1, but quarterly losses at the company’s streaming business more than doubled from the previous year.

--Campbell Soup raised its fiscal 2023 outlook as consumers continued to prefer having food at home, a trend that bolstered the food and snack company’s fiscal first-quarter results amid a supply chain recovery.

Revenue growth is pegged at 7% to 9%, versus previous guidance of 4% to 6%.

“Consumers continue to cut back on out-of-home eating and are migrating from more expensive grocery categories as they seek ways to ease the impact of inflation,” CEO Mark Clouse said on an earnings call.  “People, however, continue to turn to Campbell Soup’s brands for preparing meals at home,” he added.

For the three months ended October 30, adjusted earnings rose to $1.02 from $0.89 a year earlier, beating the Street. Revenue advanced 15% to $2.58 trillion, also topping estimates.

The company said, “To mitigate the expected inflation, we are currently implementing selective additional pricing in both divisions, which should become effective in the second half of our fiscal year.”

Meals and beverages reported a 15% revenue gain to $1.46 billion, driven by U.S. retail products including soup and Prego pasta sauces, while snacks jumped 15% to $1.12 billion.

Heck, a can of chunky soup and a slice or two of bread is a solid meal, boys and girls.

--Costco Wholesale shares fell a bit and then recovered after missing earnings and revenue expectations for its fiscal first quarter after a weaker-than-expected November sales report that surprised investors last week.  The results released Thursday just amplified those concerns.

Costco posted earnings of $3.07 a share on $53.44 billion in revenue, vs. consensus of $3.11 and $58.36 billion.

In the last couple of months, sales have started to slip as rising prices continue to exert pressure on household budgets. Same-store sales increased 6.6% in the third quarter, a deceleration from the previous quarter’s 13.7% rise.

--Lululemon Athletica stock plummeted nearly 13% following a softer third-quarter earnings release and a fiscal year outlook that was underwhelming.

Sales for the fiscal third quarter rose 28% year-over-year to $1.9 billion, above forecasts, with comparable-store sales increasing 14%, but this was far less than expected, and a suggestion that consumers pulled back on their shopping more than predicted.  And that could impact margins.

Another alarm bell for investors was Lululemon’s update on inventory levels, up 85% to $1.7 billion in the third quarter compared to the same period last year.

The company guided lower for fourth-quarter sales, ditto earnings, and it lowered its outlook for fiscal 2022.

--Shares in Carvana, the Tempe, Ariz.-based online car retailer traded back on Aug. 9, 2021, at $356 per share.  Wednesday, they closed at $3.85, as an analyst raised fresh doubts about the company’s viability amid a report that its creditors are preparing for a possible restructuring of its debt.

In November, the company announced it was laying off about 1,500 employees, or 8% of its staff, the second round of cuts in just over six months.

Carvana, founded in 2012, achieved breakneck growth during the early pandemic years, but the expansion has faltered as a result of inflation and the end of government stimulus checks that had helped support many car purchases.

--More than 1,000 New York Times staffers staged a one-day work stoppage Thursday, marking the first strike in over 40 years at the organization as contract negotiations between management and members of the NewsGuild, which represents 1,450 Times staffers – including 1,270 newsroom employees – have stalled for nearly two years over pay and benefits.

Foreign Affairs, Part II

China: Curiously, China’s daily new Covid-19 infection figures have been sliding consistently since peaking at about 40,000 two weeks ago to 16,797 on Dec. 8, according to the National Health Commission.  Coincidence?

China’s publicity departments have recently reversed gears on public warnings about Covid-19, and now say that it only results in light symptoms for most of the population and people should not be afraid.  Recent announcements have not mentioned the country’s zero-Covid policy.

As the Wall Street Journal opines below, we are thus entering the period of the great unknown.  Experts warn that because millions of elderly people still need to be vaccinated, it will be mid-2023 or later before restrictions can be lifted completely.

China’s low relative infection rates also mean few people have developed natural immunity, a factor that might set back reopening plans if cases surge and authorities feel compelled to reimpose restrictions.

With this in mind, China’s State Council on Thursday issued new guidelines on how to manage and monitor Covid symptoms in the first concrete sign that the authorities are shifting their strategy to living with the virus.

Under the new “Guidelines on Home Isolation,” people with mild cases or asymptomatic infections are advised to monitor their health at home and contact hospitals for treatment only if they develop more serious symptoms.

“We take these fine-tuned measures, such as home isolation and disease monitoring, not because we’re completely opened up, but to more accurately assist those who need help, conserve medical resources for more serious cases and prevent the disease from further spreading,” Wang Guiqiang, an infectious disease expert from Peking University First Hospital, said at a press conference on Thursday.

He stressed that the public should continue to take precautions even after measures are relaxed, to protect themselves and their families.

The new guidelines came after China on Wednesday announced another major policy shift to relax Covid-19 control measures – a 10-point plan that includes dropping mass testing, health codes and centralized quarantine requirements for most cases.

The latest policies are intended to make control measures less disruptive to the public and the economy. They follow last month’s 20-point guidelines, which have not been consistently implemented.

Local officials must “take strict and detailed measures to protect people’s life, safety and health” but at the same time “minimize the impact of the epidemic on economic and social development,” a statement from the National Health Commission read.

In Thursday’s follow-up guidelines , authorities stressed again that all people with mild or asymptomatic infections with no serious illness are required to isolate at home, preferably in a separate room with a private bathroom.

Patients are required to take their temperature twice a day and contact a hospital if a fever lasts more than three days, or if they have trouble breathing or other serious symptoms. Asymptomatic infections do not require drug treatment, it said.

People who record negative rapid antigen test results over two consecutive days are now allowed to end home quarantine.

But the guide did not elaborate on what symptoms constitute mild cases or what stages of illness patients go through.

Authorities have not provided assessments on how long the current wave of infections could last, but Feng Zijian, a former official from the Chinese Centre for Disease Control and Prevention, told China Youth Daily this week that up to 60 percent of the population could be infected in the first large-scale wave, while as many as 90 percent will be infected ultimately.  [South China Morning Post]

Editorial / Wall Street Journal

“Xi Jinping bowed to the inevitable on Wednesday as Beijing announced a significant easing of its disastrous zero-Covid policies.  President Xi will hope this calms public discontent that had become the greatest threat to Communist Party rule in three decades, but it may only partly solve the country’s Covid problems.

“Communist Party officials won’t admit that zero-Covid was a mistake.  But you can see the policy turn as its propaganda arms suddenly redefine the virus from a perilous threat to a manageable health risk.  On Monday the Xinhua news agency said the ‘most difficult period had passed’ for the pandemic, citing higher vaccinations rates and the weakening capacity of the virus to cause disease.

“The easing appears to be substantial given the heavy-handedness of zero-Covid over the past three years.  Authorities will no longer be able to cast whole city blocks into lockdown limbo at the first hint of a positive Covid test in the neighborhood, and Chinese citizens finally are free of expensive and intrusive frequent testing as they go about their daily lives or travel domestically.

“Yet the new rules merely create a Covid regime equivalent to the regulations that Western countries largely abandoned a year ago.  Those who test positive may still be required to self-isolate at home – an improvement on the hospital quarantines they faced – and international travelers remain subject to quarantine requirements when they enter China.  Many countries have long since abandoned the rules Beijing now is implementing because even the looser regulations proved economically and socially unworkable.

“Meanwhile, China is left with the mechanisms of political and social control the Communist Party developed during the pandemic, such as the use of smartphone apps to monitor and regulate every citizen’s movement.  Don’t imagine for a minute the Communist Party will give up those surveillance tools now that Beijing’s propagandists have declared the pandemic emergency over.

“As for that emergency, China is entering the great unknown.  Omicron and its virus subvariants have proven more transmissible but less severe elsewhere in the world.  But that was among populations with higher vaccination rates than China’s with more effective vaccines and in places where many people already were exposed to earlier virus strains.  Mr. Xi and his citizens – and the rest of the world – have to hope that Omcron will prove similarly mild in a country that stifled natural immunity and refused superior Western mRNA vaccines for nationalist reasons….

“Beijing’s easing of zero-Covid marks a tactical retreat in the face of nationwide protests.  But this is not a sign Mr. Xi has tapped some hitherto unknown liberalizing instinct.  Having abandoned his effort to crush the virus, the continuing China risk concerns what he will do to redouble control over the Chinese people.”

Separately, President Xi paid a glowing tribute to late leader Jiang Zemin on behalf of the Communist Party on Tuesday, praising him for defending the country’s dignity in the face of Western sanctions.

In an hour-long speech at Beijing’s Great Hall of the People, Xi recounted Jiang’s political career and credited him with leading China’s economic reform and opening up, including steering China’s accession to the World Trade Organization.

He also praised the late leader for standing up to foreign pressure, fending off Taiwan separatists, and ensuring the smooth handover of Hong Kong and Macau to China during his 13 years at the helm.

“Some Western countries imposed ‘sanctions’ on China, and socialism in China was met with unprecedented difficulty and pressure,” Xi said, referring to the late 1980s and early 1990s when the West turned its back on China after the 1989 Tiananmen crackdown.

Jiang conducted a “diplomatic struggle” and resolutely defended China’s independence, dignity, security and stability, he said.

The memorial service was the highest-level event of its kind since the state funeral for paramount leader Deng Xiaoping in 1997 and came at a rather sensitive time.

Addressing the funeral, Xi pledged the country would continue to open up to the world and carry out reforms.

“Reform and opening up is the crucial way to determine the future of China. …China’s development cannot be achieved without the world, and the world’s prosperity needs China too,” Xi said.

But he also made a rally call for unity to achieve “national rejuvenation,” a goal he has regularly cited since becoming the party’s leader.

Iran: Last Sunday, protesters in Iran called for a three-day strike, stepping up pressure on authorities after the public prosecutor said the morality police whose detention of a young woman triggered months of protests had been shut down.  But there was no confirmation of the closure from the Interior Ministry which is in charge of the morality police, and Iranian state media said the public prosecutor in question was not responsible for overseeing the force.

Top Iranian officials have repeatedly said Tehran would not change the Islamic Republic’s mandatory hijab policy, which requires women to dress modestly and wear headscarves, despite 11 weeks of protests against strict Islamic regulations.

Tehran said it executed a prisoner convicted of a crime allegedly committed during the demonstrations, the first such death sentence carried out by Iran.

The execution comes as other detainees also face the possibility of capital punishment for their involvement in the protests, which began in mid-September, first as an outcry against Iran’s morality police.  The protests have since expanded into one of the most serious challenges to Iran’s theocracy since the 1979 Islamic Revolution.

Activists say that at least a dozen people so far have received death sentences over their involvement in the demonstrations.

At least 475 people have been killed in the protests following the death of 22-year-old Mahsa Amini, who died after being detained in police custody, according to Human Rights Activists in Iran, a group that’s been monitoring the demonstrations since they began.  More than 18,000 people have been detained.

As part of the protests, a group of 1,200 university students in Iran were struck down by food poisoning the night before a wave of anti-regime demonstrations were set to be held throughout the country.

Students at Kharazmi and Ark universities experienced vomiting, severe body aches and hallucinations, the national student union claimed Thursday.

At least four other universities reported similar outbreaks.  Uninfected students are reportedly boycotting the cafeterias in response.

Officials are citing water-borne bacteria as the cause of the symptoms, but the student union posited that the population was intentionally poisoned.

Israel: Prime Minister-designate Benjamin Netanyahu will have until Dec. 21 to form a new government after getting a 10-day extension on Friday.  Netanyahu was tapped to lead the country following a right-wing victory in a Nov. 1 election. He has secured majority support in parliament but has yet to finalize the coalition agreements.

Coalition talks have dragged on longer than expected, since Netanyahu from the outset had support from right-wing and religious parties that control 64 of the Knesset’s 120 seats.  A main sticking point has been who gets which ministerial post and the distribution of power between them, Israeli media has reported.

President Isaac Herzog, whose job is largely ceremonial, gave Netanyahu the extra 10 days and said in a letter to Bibi: “These are complex days for Israeli society when disputes over fundamental issues threaten to tear apart and ignite violence and hatred.”  Herzog called for the formation of a government that represents the entire country and for a coalition that maintains a respectful dialogue between the branches of government.

Germany: Authorities arrested more than two dozen far-right “terrorists” who’d planned to overthrow the government in Berlin.  Their plan – inspired by Q-Anon-linked conspiracists – involved storming parliament while armed and led by former paratroopers and even current soldiers in Germany’s military.  “The suspects were linked to the so-called Reich Citizens movements, whose adherents reject Germany’s postwar constitution and have called for bringing down the government,” the Associated Press reported.  According to Reuters, members of the group “do not recognize modern-day Germany as a legitimate state,” and some “are adherents of Nazi ideas [while] others believe Germany is under military occupation.”

More than 3,000 police officers helped arrest 25 members of the group at 130 different locations in Germany, Italy and Austria, according to German prosecutors.  “The members of the organization understood that their endeavor could only be realized by using military means and violence against representatives of the state.  This concludes committing murders,” the prosecutor said Wednesday.  Twenty-seven others are still under investigation.

Peru: Embattled President Pedro Castillo said on Wednesday he would dissolve Congress by decree, hours before he was set to face an impeachment trial, throwing the Andean country into a full-on constitutional crisis.

The move didn’t appear in any way to be legal and sparked resignations by key ministers from Castillo’s government and allegations of a “coup” by members of Congress and others.

Lawmakers appeared set to move ahead with the impeachment debate and vote, the third attempt to impeach the leftist former teacher since he came to office last year.

Castillo’s allies abandoned him, with the foreign minister, Cesar Landa, saying the move “violated” Peru’s constitution.  “I strongly condemn this self-coup,” Landa said.  The attorney general, Daniel Soria, said he would file a criminal complaint against Castillo, accusing the president of “flagrantly violating the constitution.”

Well, Castillo was impeached and arrested that evening and Dina Boluarte became the new president, the country’s sixth in six years.  Boluarte ruled out early elections, while vowing to build a unity government and met with the country’s archbishop hours after being sworn in.

Boluarte is Peru’s first female head of state and Castillo’s former vice president. She has the daunting task of brining some stability to a nation that has seen every elected president since 1985 impeached, imprisoned or sought in criminal investigations.

Random Musings

Presidential approval ratings….

Gallup: 40% approve of Biden’s performance, 56% disapprove; 39% of independents approve (Oct. 3-20). Don’t know why there’s been no update.

Rasmussen: 50%! approve of Biden’s performance, 49% disapprove (Dec. 9).  Wow. It was 44-55 last week.

--Democratic incumbent Raphael Warnock defeated Republican Herschel Walker on Tuesday in Georgia’s Senate runoff, securing a 51st seat for the Democrats.

Warnock captured 51.4% of the vote to Walker’s 48.6%, a margin of 95,000.

Walker was classy in his concession speech, with no whiff of election denialism, saying he believed in the Constitution and election officials.

Just hours before his defeat, Donald Trump wrote on Truth Social: “Vote for the WONDERFUL Herschel Walker,” adding later: “He will never let you down!”

The Donald then clearly felt let down by the result, however, responding to the news by writing again on his social media platform: “OUR COUNTRY IS IN BIG TROUBLE.  WHAT A MESS!”

There is a huge difference between a 50-50 Senate, with Vice President Kamala Harris the tiebreaker, and a 51-49 Senate.

Since early 2021, the two parties have been operating under a power-sharing agreement with evenly divided committees, which has prevented Democrats from issuing subpoenas to witnesses without GOP support.  When nominees have tied in a committee vote, Democrats have been forced to hold an extra procedural vote to finalize their nomination.  The Warnock victory will give Democrats a narrow majority on each panel.

“It’ll be easier for Democrats to move forward with some of their nominees, particularly in the judiciary, and that makes it more difficult for us,” said Sen. Mitt Romney (R-Utah).

So I wrote this Thursday.  Then Friday morning, we had the bombshell announcement from Arizona Sen. Kyrsten Sinema that she was switching her political party affiliation to independent, leaving the Democratic Party.

“I have joined the growing numbers of Arizonans who reject party politics by declaring my independence from the broken partisan system in Washington.  I registered as an Arizona independent,” she said in a local op-ed back in her home state.

But in reality, this isn’t that surprising.  She said she will not caucus with the Republican Party, and if that holds, Democrats will still maintain greater governing control in the closely divided chamber.  Sinema has voted along party lines over 90% of the time. 

Two other current Senators – Bernie Sanders and Angus King – are registered independents but generally caucus with Democrats.

Editorial / Wall Street Journal

“Whatever happened to ‘Jim Crow 2.0’?  That was President Biden’s slander against Georgia’s new voting law, yet Democratic Sen. Raphael Warnock won a solid runoff victory Tuesday and a six-year term, with turnout that was hardly muted. Don’t expect any apologies.  Mr Warnock is saying his win only proves Georgians can beat voter suppression, so it’s an unfalsifiable claim.

“Herschel Walker lost by nearly three points, as of the latest data, after trailing on Nov. 8 by only one point.  ‘There’s no excuses in life,’ Mr. Walker manfully conceded.  ‘And I’m not going to make any excuses now, because we put up one heck of a fight.’ Good for him, especially since Donald Trump will probably have enough bad excuses to go around.

“Mr. Trump helped to clear the GOP primary field for Mr. Walker.  ‘Wouldn’t it be fantastic if the legendary Herschel Walker ran for the United States Senate in Georgia?’ Mr. Trump said in March 2021.  ‘He would be unstoppable.’  Mr. Walker had no serious primary opposition, but he was unvetted and inexperienced, and Democrats dug up and unloaded truckloads of unflattering personal history.

“Mr. Trump is now 0-3 in Georgia Senate races, counting the two 2021 runoffs that he sabotaged, plus Mr. Walker’s loss. The former President went ballistic this summer after Mitch McConnell said candidate quality matters, but the GOP Senate leader was obviously right and vindicated on Election Day.

“A 51-49 Senate will make life far easier for Democrats over the next two years. No single Democrat will be able to block a Biden nominee, and Democrats will now have a majority on every committee.  Republicans will have one more seat to overcome as they try to retake the Senate.

“Some Republicans are blaming GOP failures in mail and early voting, and as long as that’s the law the GOP will have to play by those rules.  Early and mail voters in the Georgia runoff were 52% registered Democrats, to 39% Republicans, per a TargetSmart model cited by NBC News.  That’s a huge deficit to make up on Election Day, especially if it rains.

“But mail-voting weaknesses didn’t stop Georgia Gov. Brian Kemp from winning re-election on Nov. 8 by 7.5 percentage points.  And organizing failures shouldn’t obscure that the biggest lesson of the 2022 midterms is that Mr. Trump picks losers.  Republicans clearly could have regained the Senate this year, but Mr. Trump’s endorsed candidates lost in almost every swing state.  J.D. Vance won Ohio, but only with the help of $32 million in media advertising from a Super Pac tied to Mr. McConnell.

“The evidence is overwhelming over the last three election cycles that Mr. Trump and the crazy parts of Trumpism alienate suburban voters and divide the GOP. Denying that is denying reality and will guarantee more needless Republican losses in 2024.”

As CNN senior political commentator Scott Jennings, a Republican, put it, “Losing Georgia in the presidential election, losing the Senate race, this is not a state Republicans ought to be losing.”

John Bolton, national security adviser during Trump’s presidency, was forthright in his tweet urging Republican colleagues to cast him aside.

“The outcome in Georgia is due primarily to Trump, who cast a long shadow over this race.

“His meddling and insistence that the 2020 election was stolen will deliver more losses. Trump remains a huge liability and the Democrats’ best asset. It’s time to disavow him and move on.”

John Thune, a South Dakota Republican and Senate minority whip, also blamed his party’s flop on Trump.

“Was he a factor? I don’t think there’s any question about that, because a lot of the candidates that had problems in these elections were running on the 2020 election being stolen, and I don’t think independent voters were having it.”

Trump World

--A jury found two corporate bodies at the Trump Organization guilty on all 17 counts, including charges of conspiracy and falsifying business records.  The exact amount of any fines will be determined by the judge overseeing the trial in New York State court at a later date, but they are likely to be in the $1.6 million to $1.7 million range.

Trump himself was not on trial, but a stain on his business is ultimately another stain on his record and marks another stumble in his 2024 run for the White House.

The case centered on charges that the company paid personal expenses like free rent and car leases for top executives including former chief financial officer Allen Weisselberg without reporting the income, and paid them bonuses as if they were independent contractors.

The Trump Organization separately faces a fraud lawsuit brought by New York state Attorney General Letitia James.

So what did he say about it on Truth Social?

“THE GREATEST WITCH HUNT OF ALL TIME CONTINUES, OVER & OVER AGAIN, & THE PEOPLE OF THIS COUNTRY AREN’T GOING TO TAKE IT MUCH LONGER. A GIANT POLITICAL SCAM!!!”

Trump himself is being investigated by the Department of Justice over his handling of sensitive government documents after he left office in January 2021 and attempts to overturn the November 2020 election.

The House Committee investigating the Jan. 6 attack on the Capitol will issue criminal referrals to the Justice Department based on its inquiry, chairman Bennie Thompson said on Tuesday.

And then there was Trump’s suggestion the U.S. Constitution could be terminated and he be re-installed as president.

Senate Republican leader Mitch McConnell said anyone who believes that “would have a very hard time being sworn in as president of the United States.”

In a Saturday post on Truth Social, Trump cited a Twitter report on how the social media giant handled news stories about Hunter Biden’s laptop and posed an odd question: “Do you throw the Presidential Election Results of 2020 OUT and declare the RIGHTFUL WINNER, or do you have a NEW ELCTION?”

Trump went on to say the situation “allows for the termination of all rules, regulations, and articles, even those found in the Constitution.”

In a Monday follow-up, Trump denied saying that “I wanted to ‘terminate’ the Constitution,” even though the original post – complete with the word “termination” – remained on his Truth Social account.

In another follow-up, this one in all caps, Trump again said the election “SHOULD GO TO THE RIGHTFUL WINNER OR, AT A MINIMUM, BE REDONE.”

Trump’s comments on the Constitution only added to the rocky rollout of his 2024 presidential campaign when you consider his dinner with Nick Fuentes and Kanye West.

Outgoing Rep. Liz Cheney (R-Wyo.), who was defeated in a Republican primary by a Trump-backed challenger, took aim at House GOP leader Kevin McCarthy.

“Last week you wouldn’t condemn Trump for dining with Fuentes & West,” she tweeted.  “This week Trump said we should terminate all rules, regulations etc ‘even those in the Constitution’ to overturn the election. Are you so utterly without principle that you won’t condemn this either?”

Speaking of Rep. McCarthy, Rep. Andy Biggs (R-Ariz.) tweeted Tuesday he will be running – again – to block the current GOP leader from becoming Speaker of the House.

In a closed-door party vote among Republicans last month, Biggs lost to McCarthy for the top Republican position, but the official tally won’t take place until Jan. 3 during a public vote with all members.

It’s chaos in the Republican caucus.

Editorial / Wall Street Journal

“President Trump would like to issue a clarification.  ‘The Fake News is actually trying to convince the American People that I said I wanted to ‘terminate’ the Constitution,’ he wrote Monday on Truth Social.  What he really said, Mr. Trump insisted, was only that the 2020 election ‘SHOULD GO TO THE RIGHTFUL WINNER OR, AT A MINIMUM, BE REDONE.’

“Is that all?  In reality, there’s little distinction: The Constitution contains no provision for mulligan presidential elections, so what Mr. Trump is talking about is impossible under the parchment written by the Founders.  But if he doesn’t grasp why he’s being called the constitutional Terminator, he should reread what he wrote two days earlier. The stolen 2020 election, Mr. Trump said, ‘allows for the termination of all rules, regulations, and articles, even those found in the Constitution.’

“For years, Mr. Trump’s Twitter feed was the gift that kept on giving – to Democrats. Now his Truth Social account is playing the same role, giving the media a way to turn unfavorable stories back to Mr. Trump’s outburst du jour.  Last week Elon Musk divulged new information about Twitter’s 2020 censorship of the Hunter Biden laptop story in the New York Post.  Republicans should be on offense this week. Instead they are facing hostile questions about Mr. Trump’s Terminator fantasy and whether they will support him in 2024.

“House Republicans are eager next year to take on social-media companies, which has earned some hard questions about their speech policies.  But Mr. Trump undermines the effort when he says it’s proof of ‘OPEN AND BLATANT FRAUD.’  The fact is he lost in 2020.  Last month Mr. Trump’s handpicked ‘stop the steal’ candidates lost in Arizona, Pennsylvania, New Hampshire and beyond. This is a dead end for the GOP.

“Truth in advertising, though.  Mr. Trump is giving Republicans a taste of what they’re in for if they nominate him again in 2024.  His presidential campaign is less than a month old.  Already Mr. Trump has dined with anti-Semites and a white nationalist, while calling for himself to be reinstated as President, even if this requires the ‘termination’ of whatever in the Constitution stands in the way.  What he’ll really terminate is the GOP.”

Marc A. Thiessen / Washington Post

“One of Donald Trump’s greatest achievements in office was his remaking of the American judiciary with the appointment of three outstanding Supreme Court justices and hundreds of lower court judges who defend the Constitution from the federal bench each day.

“But now, with just a few bizarre social media posts, Trump has repudiated that entire legacy.

“After the Supreme Court two weeks ago unanimously rejected his request to stop a congressional committee from obtaining his tax returns, Trump blasted the court, using the language of the left-wing critics who question the legitimacy of his judicial appointments.  ‘The Supreme Court has lost its honor, prestige, and standing, & has become nothing more than a political body, with our Country paying the price. …Shame on them!’  Trump declared on his Truth Social account – oblivious to the fact that these words could just as easily have been uttered by Senate Majority Leader Charles E. Schumer or outgoing House Speaker Nancy Pelosi.  If anything, the court’s actions in this case – and the refusal of any Trump judges or justices to embrace his election denial conspiracy theories – prove precisely the opposite: He appointed jurists whose only loyalty is to our laws and our Constitution.

“But apparently, loyalty to our laws and our Constitution is not the standard Trump seeks to uphold.  Quite the opposite… ‘Our great ‘Founders’ did not want, and would not condone, False & Fraudulent Elections!’….

“It’s time for Trump supporters to acknowledge a sad but undeniable truth: Trump is spinning out of control.  Yes, his presidency was filled with historic accomplishments, and he was treated unfairly by his critics in Congress and the media.  But since the election, something has snapped. He has descended into a spiral of conspiracy theories and personal grievances.  He has surrounded himself with the political dregs. He dines with Ye, formerly known as Kanye West, after the rapper made virulent antisemitic comments and Nick Fuentes, a notorious white supremacist – in a meeting that was apparently arranged by Milo Yiannopoulos, a former Breitbart editor who was purged for defending pedophilia.  Trump blasts the Supreme Court justices he appointed because they will not do his bidding from the bench.  And now, in calling for the termination of the Constitution and his reappointment to the presidency, he’s apparently lost touch with reality.

“Fellow conservatives, it’s time to move on – because Trump is unstable, and because he cannot win….

“Ask yourself; Why was Democrats’ anti-MAGA strategy so effective in the midterm elections?  Because Trump, the supposed branding genius, has irretrievably tarnished his own brand. For swing voters, ‘MAGA’ no longer means all the great Trump policies that a majority of Americans approved of while he was in office. It means election denial, the refusal to graciously concede or preside over a peaceful transition, the incitement of the Jan. 6, 2021 attack on the Capitol – and now his public call to suspend the U.S. Constitution.

“But instead of figuring this out, he is doubling down on his insanity….

“The question is: Can Trump supporters see what Trump can’t?  Democrats have now won three elections running against Trump.  Will the GOP let them do it a fourth time?  Republicans have a plethora of outstanding leaders who could step in and lead the conservative movement to victory in 2024.  Trump is not one of them.

“If Republicans nominate this man, they will lose – and they will deserve to.”

One more…

This week, in a video played during a fundraiser, Trump expressed support for the rioters behind the Jan. 6 attack on the Capitol, saying that “People have been treated unconstitutionally in my opinion and very, very unfairly, and we’re going to get to the bottom of it.”

The Pandemic:

--Covid hospitalizations last week reached their highest level in three months, with more than 35,000 patients being treated, according to Washington Post data tracking.  National hospitalizations had stagnated throughout the fall but started rising in the days leading up to Thanksgiving.  All but a few states reported per capita increases in the past week.

Separately, more than 20,000 Americans were hospitalized with influenza during Thanksgiving week, the most for that week in more than a decade and almost double the previous week’s count.

--Los Angeles County appears in the midst of another full-blown coronavirus surge, with cases rising by 75% over the last week.

The spike – which partially captures but likely does not fully reflect exposures over the Thanksgiving holiday – is prompting increasingly urgent calls for residents to get up to date on their vaccines and consider other preventative steps to stymie viral transmission and severe illness.

L.A. County reported an average of 3,721 coronavirus cases a day over the seven-day period ending Monday, up from 2,128 the prior week.

Overall in the state, the number of Covid-related hospitalizations has doubled in the last three weeks – from 2,094 to 4,321 as of Tuesday – and is nearing last summer’s peak of 4,843.

Statewide, there were an estimated 6,100 Californians hospitalized for either Covid-19 or flu as of Tuesday, a figure expected to reach 10,000 by late December or early January, according to Dr. Mark Ghaly, the California health and human services secretary.

--Here in my home state of New Jersey, today health officials reported the highest single-day fatalities from Covid, 22, since Feb. 18, as the statewide transmission rate soared to 1.44 (meaning the outbreak is expanding).

--The World Health Organization said that 90% of the world now have some resistance to Covid-19, but warned that a new variant causing “significant mortality” could still emerge.

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--The House passed a defense policy bill that authorizes U.S. military leaders to purchase new weapons and increase pay for troops, and lifts a requirement for members of the military to get vaccinated against Covid-19.

In a 350-80 vote, lawmakers approved the annual National Defense Authorization Act to increase America’s total national security budget for fiscal year 2023 to $857.9 billion, about a 10% increase from last years’ $778 billion authorization bill.

The legislation is expected to pass the Senate by the end of next week before President Biden signs off on it.

Included in the bill is $10 billion over five years to finance sales of weaponry and military equipment to Taiwan, and other security assistance to help the island defend itself against a possible invasion by China. 

Other provisions in the bill would designate $800 million for security assistance to the Ukrainian armed forces, and authorize funding for research and development of a new nuclear-capable cruise missile that could be launched from ships or submarines.

The proposal would approve a 4.6% pay raise for military service members and Defense Department civilians and increase the housing allowance for service members by 2%.

--Investigators believe a shooting that damaged power substations in rural Moore County, N.C., was a crime, but a week later, they have yet to name a suspect or a motive.

Whatever the reason, the attack on the grid that left 40,000 without power for days was a reminder of why experts have stressed the need to secure the U.S. power grid.

Authorities have long warned the nation’s electricity infrastructure could be vulnerable targets for domestic terrorists.

Specifically, federal officials have warned that the power grid could be a prime target for extremist groups that embrace “accelerationism,” a fringe philosophy that promotes mass violence to fuel society’s collapse.

Back in January, the Department of Homeland Security warned that domestic extremists have been developing “credible, specific plans” to attack electricity infrastructure since at least 2020.  Members of white supremacist and antigovernment groups have been linked to plots to attack the power grid.

A “60 Minutes” piece last spring noted that there are over 5,000 major substations in the country, and a simultaneous attack on 20 key facilities could take down power nationwide.

--So I’m reading this article on feral pigs and the damage they do to our nation’s farmlands, and eight years into a federal program to control the damage, it is still a huge issue.

The prolific hogs have been wiped out in 11 of the 41 states where they were reported in 2014 and 2015, and there are fewer in parts of the other 30, but an estimated 6 million to 9 million feral swine still ravage the landscape.  They tear up planted fields, wallowing out huge bare depressions, they out-eat turkeys and deer – and also eat turkey eggs and even fawns.  Plus they carry parasites and disease and pollute streams and rivers with their feces.

Total U.S. damages are estimated at a minimum of $2.5 billion a year.

Since 2014, Idaho, New York, New Jersey, Maryland, Maine, Colorado, Iowa, Minnesota, Washington, Wisconsin and Vermont have killed their small populations of feral pigs, though the federal program is still keeping a wary eye out in the last six states.

The worst hit states – California, Oklahoma, Texas and Florida – are at the highest level, with more than 750,000 hogs.  Arkansas, Louisiana, Mississippi, Alabama, Georgia, North Carolina and South Carolina put their populations at 100,000 to 750,000.

Texas has roughly 3 million.

The pigs are so prolific that 70% of those in a given area must be killed each year just to keep numbers stable.

And that’s your feral pig update for Dec. 9, 2022.

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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 $1808
Oil $71.48

Regular Gas: $3.31; Diesel: $4.98 [$3.33-$3.60 yr. ago]

Returns for the week 12/5-12/9

Dow Jones  -2.8%  [33476]
S&P 500  -3.4%  [3934]
S&P MidCap  -4.1%
Russell 2000  -5.1%
Nasdaq  -4.0%  [11004]

Returns for the period 1/1/22-12/9/22

Dow Jones  -7.9%
S&P 500  -17.5%
S&P MidCap  -13.1%
Russell 2000  -20.0%
Nasdaq   -29.7%

Bulls 43.3
Bears 32.4

Hang in there.

Brian Trumbore

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