Week in Review

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Week in Review

08/20/2022

For the week 8/15-8/19

[Posted 7:30 PM ET, Friday]

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Edition 1,218

Next week is a big one for Wall Street as on Friday, Federal Reserve Chair Jerome Powell will be addressing the annual Fed symposium in Jackson Hole, Wyoming, and investors and traders will be looking for Powell’s guidance on interest rate policy beyond the upcoming Sept. 20-21 Open Market Committee Meeting.

Powell will no doubt talk about how the Fed needs to see more data on inflation before its deliberations next month, but he will take the opportunity to remind the Street that his band of merry pranksters is committed to taming inflation, first and foremost.

As to the state of the economy overall, a new survey from consultancy PwC released this month showed 50% of companies are planning to reduce overall headcount.  Additionally, 46% of companies said they are dropping or reducing signing bonuses, while 44% are rescinding offers.

As Yahoo Finance’s Myles Udland put it: “Reducing overall headcount doesn’t mean all of the respondents to PwC’s survey are planning layoffs, but at least indicates plans similar to what we’ve seen in the tech industry, where backfills are paused, or previously allocated heads are cut from a department’s budget.”

As I’ve argued recently, you don’t exactly see a lot of companies looking to expand CapEx, as in outside of a semiconductor manufacturer benefiting from the newly signed Chips Act, and/or a Ford or GM talking of expanding their electric vehicle manufacturing sites, you can’t find it.

And when you look overseas, specifically Europe and China, it’s stagnation at best. 

With HBO’s “Game of Thrones” prequel, “House of the Dragon,” debuting this Sunday, it’s only appropriate to remind everyone, as all Europeans are being reminded daily, if not hourly, ‘winter is coming.’

The European Union is doing a good job in building up its natural gas supplies, with storage sites in the EU almost 75% full, according to Gas Infrastructure Europe, putting the bloc on track to meet its target level of 80% by Nov. 1.  But the awful summer heat has been making that more difficult.  And it’s not just demand for air-conditioning, it’s the drought, with river levels at such low levels that, for example, German coal-power plants are struggling to import fuel via same.  In turn, that means burning more gas to generate electricity.

Or in France, where its nuclear power plants can’t get enough water for cooling.  And hydropower levels virtually all over are low, especially in Norway.

When it comes to Wall Street, I’m also just struck by the complacency on the geopolitical front.  Yes, maybe Iran isn’t about to hold its first nuclear test, as I inferred a few weeks ago, seeing as how the nuclear talks are still alive, barely, but this only delays the inevitable a bit longer.  I think North Korea will indeed blow up a mountain soon, as is its wont.

But it’s still about Russia and Ukraine.  You’ve seen all the stories about the Zaporizhzhia nuclear power plant in southern Ukraine and how a Chernobyl type disaster is a distinct possibility, which would shake the world (and global financial markets) to its core.  Even a Russian expert, Igor Kirillov, head of his country’s radioactive, chemical and biological defense forces, as reported by Reuters Thursday, said that in the event of an accident at the plant, manufactured or otherwise, radioactive material would cover Germany, Poland and Slovakia.

At best, which isn’t the right word, Russia may just shut the facility down, or redirect the electricity, and then you talk about a long winter in the theatre.  But shutting it down is a process fraught with danger.

The war is not going well for Vlad the Impaler, and I just keep thinking of the desperate acts he might take, and none of them are good…for Ukraine, Europe and financial markets. 

Look at Crimea, and the actions taken by Ukraine in the past two weeks.  The Kremlin must be shocked.  They simply weren’t prepared, witness the recklessness in leaving fighter jets sitting out on the runway of a major airbase for Ukrainian target practice.

Sensing Russia’s momentum has stalled out, the United States is rushing another $775 million in advanced military aid, including additional HIMARS rockets, as a Pentagon official told reporters today.

“We have seen Ukraine employing HIMARS masterfully on the battlefield,” the official said, under condition of anonymity.  “This long-range fire capability has really changed the dynamic on the battlefield.  We want to make sure that Ukraine has a steady stream of ammunition to meet its needs.”

Much more below.

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As for the investigation into former president Trump’s handling of classified material, I have basically zero to say because we don’t have a lot of facts.

Federal Magistrate Judge Bruce E. Reinhart said Thursday that he is “inclined” to unseal some of the affidavit central to last week’s FBI search of Mar-a-Lago, instructing the Justice Department to redact the document in a way that would not undermine its ongoing investigation if made public.  But Reinhart won’t make a decision until later next week, when Justice Department officials are expected to submit their proposed redactions.

Reinhart said he had reviewed the affidavit multiple times and believed parts of it could be made public without impeding the probe.

The government had argued its investigation was in the “early stages” and that release of the affidavit could chill potential witnesses, risk the safety of those already interviewed, reveal future investigative steps and disclose significant amounts of grand jury material.

The affidavit would show who the government had interviewed, what they believed was potentially on the premises and why they believed there was probable cause that crimes had been committed.

So, like in the meantime, chill out, sports fans.

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In Ukraine….

--President Volodymyr Zelensky described Russian forces’ actions at the Zaporizhzhia nuclear plant as “nuclear blackmail” that may embolden malign actors worldwide.

“Every Russian soldier who either shoots at the plant, or shoots using the plant as cover, must understand that he becomes a special target for our intelligence agents, for our special services, for our army,” Zelensky said in an evening address Saturday.

Zelensky called for fresh sanctions against Moscow and its nuclear industry in response to the situation.

Presidential adviser Mykhailo Podolyak accused Russia of “hitting the part of the nuclear power plant where the energy that powers the south of Ukraine is generated.”

“The goal is to disconnect us from the (plant) and blame the Ukrainian army for this,” Podolyak wrote on Twitter.

Russian and Ukrainian officials traded more accusations on Monday about renewed shelling of the plant, with each side alleging that the other was responsible for the attacks that have raised fears of a catastrophe.

The Kremlin-backed administration in Enerhodar, the Russian-controlled city where the nuclear plant is located, told the Interfax agency that Ukrainian forces were carrying out “massive shelling” of the facility, as well as Enerhodar’s residential and industrial areas.

According to the statement, the shelling came from nearby Nikopol, a Ukrainian-held city which faces the plant across the Dnieper River.

The mayor of Nikopol later said that Russians were shelling Enerhodar themselves.

Mayor Yevtushenko and other municipal authorities in Nikopol have repeatedly accused Russian troops stationed at the plant of shelling the city, knowing that Ukrainian forces there were unlikely to fire back.

UN Secretary General Antonio Guterres sounded the alarm after a meeting Thursday in Lviv with President Zelensky and Turkish leader Erdogan.

“Any damage to Zaporizhzhia is suicide,” Guterres warned.

Erdogan echoed the UN chief’s concerns, telling reporters that he was worried about the danger of “another Chernobyl” disaster erupting at the plant.

By week’s end, Russia had rejected appeals for a complete demilitarization of the area around Zaporizhzhia.  A Russian official said the move would make the plant more vulnerable.

Ukraine’s defense intelligence agency said it was concerned that Russia had plans to stage an incident at the plant on Friday and had information that staff with Russia’s Rosatom nuclear company had left the site.

[Guterres, Erdogan and Zelensky also met on the plan to ramp up grain exports, with Guterres traveling to the Joint Coordination Center in Istanbul, which is overseeing the Black Sea exports of grain and fertilizer.]

--A military base in Russian-occupied Crimea was hit by a series of explosions, with Russian officials saying a fire triggered the blasts at an arms dump in northern Crimea.  A fire was also visible at an electricity substation.

What caused the blasts was unclear, but it came one week after Russian warplanes were destroyed in an apparent Ukrainian attack on the Crimean coast.

Ukrainian presidential office adviser Mykhailo Podolyak described this week’s incident as “demilitarization in action,” indicating the explosions were not accidental.  A Crimean Tatar leader, Refat Chubarov, also described the explosions as a “hit” that could be heard “far across the steppe.”

Even before the latest explosions, a “record 38,000 cars crossed the Crimea bridge” and headed out of the peninsula on Monday, according to the Wall Street Journal.  There were also “reports of huge queues at Simferopol train station” in Crimea on Tuesday, where “People [are] clearly expecting more instability.”  The Brits call occupied Crimea a “rear base for [Russia’s] occupation.”

There is growing talk among Ukrainian officials suggesting the Crimean bridge could be destroyed soon, because as presidential adviser Podolyak tweeted Wednesday, “this bridge is an illegal object, permission for the construction of which was not given by Ukraine.  It harms the peninsula’s ecology and therefore must be dismantled.  Not important how – voluntary or not.”

--A Russian defense ministry spokesman Igor Konashenkov said on Monday that Russian warplanes have struck Ukrainian army positions in the southern Kherson region and in the Donetsk region.

He added that the Russian air force also hit a facility in the Kharkiv region, killing at least 100 and wounding 50 “mercenaries” from Poland and Germany.  His claims could not be independently verified.

--Kyiv is urging residents of the Russian-occupied Kherson region to leave before a winter exacerbated by shortages sets in and ahead of a promised Ukrainian counteroffensive to retake the strategic area.

“Evacuate.  A harsh winter is coming. We need to help you, to save you from the cold and the enemy,” Deputy Prime Minster Iryna Vereshchuk said Sunday in Zaporizhzhia.

The appeal from Vereshchuk, who said around 50% of the Kherson region’s population had already heeded the call, is the latest official plea to Ukrainians to leave the territory.  Kyiv says Moscow is preparing to annex parts of the region after a series of referendums it says are planned for the coming weeks, bringing extra urgency to the battle for control of the south.

Evacuation from the territory would make it easier for Ukrainian forces to operate there without inflicting civilian casualties.

Yaroslav Yanushevych, the Ukrainian head of the Kherson region, said a successful liberation would be much harder if thousands remained behind.

“People are waiting for de-occupation. That’s precisely why we’re asking people to leave.  There cannot be military operations in places where there are people,” he said.

--Over last weekend, Russia’s military pounded residential areas across Ukraine, claiming gains, while Ukrainian forces pressed a counteroffensive to try to take back an occupied southern region, striking the last working bridge over a river in the Kherson region, Ukrainian authorities said.

A Russian rocket attack on the city of Kramatorsk killed at three people, Kramatorsk being the headquarters for Ukrainian forces in the country’s war-torn east.

--Speaking at the opening of an arms show outside Moscow, Vladimir Putin hailed the military, which he said was “liberating the Donbas step by step.”

Separately, Putin said Russia has vowed to “expand [its] comprehensive and constructive bilateral relations” with North Korea.  Putin sent a letter to Kim Jong Un on Pyongyang’s liberation day.

Kim, in his letter to Putin, said the Russia-North Korea friendship “forged in the anti-Japanese war” had been “consolidated and developed century after century.”

Kim added “strategic and tactical cooperation, support and solidarity” between the two countries “had been put on a new high stage, in the common front for frustrating the hostile forces’ military threat and provocation.”

Hostile forces refers to the U.S. and its allies.

--Ukraine’s military claims to have destroyed more than 10 Russian warehouses with ammunition and military equipment in the past week, as reported by Reuters.

--The British military, in its latest Ukrainian assessment, said surface vessels from Russia’s Black Sea navy have assumed “an extremely defensive posture, with patrols generally limited to waters within sight of the Crimean coast.”

“This contrasts with heightened Russian naval activity in other seas, as is typical for this time of year.  The empire on which the sun never sets.”  In a different time.

But why this matters, according to the Brits: “The Black Fleet’s currently limited effectiveness undermines Russia’s overall invasion strategy, in part because the amphibious threat to Odesa has now been largely neutralized. This means Ukraine can divert resources to press Russian ground forces elsewhere,” such as around Kherson, as various Wall Street Journal and Economist reports have noted.

Wednesday, Russia’s RIA news agency cited sources as saying the commander of its Black Sea fleet, Igor Osipov, had been replaced, which, if true, would mark one of the most prominent sackings of a military official thus far in a war in which Russia has suffered massive losses in men and equipment.

Recall, it was in April that Ukraine sank Russia’s flagship the Moskva, a huge cruiser…becoming the biggest warship to be sunk in combat in 40 years.

--Russia’s proxy forces seem to be losing their enthusiasm for a wider invasion, according to the Institute for the Study of War, flagging a recent alleged protest by troops from the occupied Luhansk People’s Republic in eastern Ukraine.  Other units “have previously recorded similar appeals when operating in Luhansk, Kharkiv, and Kherson Oblasts,” ISW writes, and notes, “This trend is particularly dangerous to Russian forces seeking to recruit still more new soldiers from Luhansk Oblast to make up for recent losses.  Further division within Russian-led forces also threatens to further impeded the efficiency of the Russian war effort.”

--Ukraine’s first ship of humanitarian food is headed to Africa, which could help alleviate what the World Food Program calls a “global food crisis,” particularly in Africa.  This past Tuesday, a Lebanese-flagged carrier and its 23,000 tons of wheat departed Ukraine and is expected to arrive in Djibouti in about nine days.

Just three Ukrainian Black Sea ports are now exporting cargo, mostly grain, according to the terms of the deal struck in July between the United Nations, Russia, Ukraine and Turkey, which hosts an inspection terminal for such vessels.

Reuters reported on Monday that “Ukraine’s grain exports are down 46%” compared to last year, which to me isn’t as bad as I would have thought.  Officials in Kyiv project that, at best, their farmers will be able to harvest “at least 50 million tons of grain this year, compared with a record 86 million tons in 2021, because of the loss of land to Russian forces and lower grain yields.”

--The Washington Post had a story this week that U.S. intelligence officials knew in Oct. 2021 that Russia would invade.  And American spies knew this because they allege they “had penetrated multiple points of Russia’s political leadership, spying apparatus, and military, from senior levels to the front lines,” U.S. officials told the Post.

That autumn 2021 analysis, which included satellite imagery and communications intercepts, as well as human intelligence – was presented to the White House, which then reportedly dispatched CIA Director William Burns to Moscow to confront the Russians and warn consequences would result from an actual invasion.

But at the same time, according to the Post, officials in Germany and France thought the intelligence was bogus, citing the intelligence that lead to the invasion of Iraq two decades ago.  However, the Brits and the Baltics were convinced.  As you should recall, many Ukrainian officials were skeptical, including President Zelensky.

--The head of Britain’s GCHQ intelligence service said Vladimir Putin is losing the information war in Ukraine.

Moscow has failed to gain ground in cyberspace against the country almost six months after its invasion, Jeremy Fleming said.

Fleming said both countries are using their cyber capabilities in the war, writing in an op-ed in The Economist on Friday: “So far, President Putin has comprehensively lost the information war in Ukraine and in the West. Although that’s cause for celebration, we should not underestimate how Russian disinformation is playing out elsewhere in the world.  Just as with its land invasion, Russia’s initial online plans appear to have fallen short.  The country’s use of offensive cyber tools has been irresponsible and indiscriminate,” Fleming said.

--Russia’s GDP declined 4% in the second quarter vs. a year ago, according to preliminary data published by the country’s federal statistics agency last weekend, which was much better than analysts had expected.

The decline followed the 3.5% growth in the preceding three months.

Russian finance officials said last month that while sanctions were weakening the economy, the impact was less than they had initially anticipated and they forecast that the economy was likely to contract between 4% and 6% this year, having forecast in April a decline in output of between 8% and 10%.

--At least 17 people were killed and 42 injured in two separate Russian attacks on Kharkiv, Thursday.

--I have long warned that we need to keep a close eye on the Russian exclave of Kaliningrad and this week, Russia’s Defense Ministry announced that three MiG-31E warplanes equipped with Kinzhal hypersonic missiles have been relocated to the region.  RIA news agency cited the ministry as saying that the MiG jets would be on round-the-clock duty.

Reminder, Kaliningrad is on the Baltic coast, between Poland and Lithuania.

The same day as the announcement, Thursday, Finland said two Russian MiG-31 jets were suspected of violating its airspace near the city of Porvoo, on the Gulf of Finland, 90 miles from Russia.

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Biden Agenda

The president is taking a vacation, so I will as well when it comes to this section.  Biden did sign the Democrats’ landmark climate change and health care bill into law on Tuesday, delivering what he has called the “final piece” of his pared-down domestic agenda, as he aims to boost his party’s standing with voters.

The legislation includes the most substantial federal investment in history to fight climate change – some $375 billion over the decade – and would cap prescription drug costs at $2,000 out-of-pocket annually for Medicare recipients, but this doesn’t take effect for years.

The measure is paid for by new taxes on large corporations and stepped-up IRS enforcement of individuals and entities.

--The Associated Press reported that Sen. Kyrsten Sinema, the Arizona Democrat who single-handedly thwarted her party’s longtime goal of raising taxes on wealthy investors, received nearly $1 million over the past year from private equity professionals, hedge fund managers and venture capitalists whose taxes would have increased under the plan. 

Specifically, Sinema eliminated a proposed “carried interest” tax increase on private equity earnings while securing a $35 billion exemption that will spare much of the industry from a separate tax increase other huge corporations now have to pay.

--Border Patrol agents have made about 1.82 million arrests at the southern border so far in the government’s fiscal year, which runs from October to the end of September, exceeding the record set last fiscal year, which was 1.66 million apprehensions in the year ending Sept. 2021.

Ergo, with two months to go in the fiscal, the number is expected to exceed two million for the first time.

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Wall Street and the Economy

Last week was all about the July inflation data, and this week it was about the housing market, as July housing starts came in far worse than expected, a 1.446 million annualized pace vs. a revised 1.599M prior, down 9.6%. Construction of single-family homes fell a fifth consecutive month.

Then we had existing home sales for July and they fell a sixth straight month, to a seasonally adjusted 4.81 million, the National Association of Realtors announced.  That was down 5.9% from June and the weakest pace of sales since November 2015, excluding the three-month pandemic-related drop in the spring of 2020.  July sales tumbled 20.2% from a year ago.

“We are in a housing recession,” said Lawrence Yun, chief economist for the NAR.  “However, it’s not a recession in home prices.  Inventory remains tight and prices continue to rise nationally with nearly 40% of homes still commanding the full list price.”

The median home price fell to $403,800, down from June’s record high of $413,800, but still up 10.8% from a year ago.

Separately, July retail sales were unchanged for the month, a slight disappointment vs. expectations, while July industrial production was better than forecast, up 0.6%.

The Atlanta Fed’s very early GDPNow forecast for the third quarter is at 1.6%.

The minutes from the July Federal Reserve Open Market Committee were revealed and officials, at least as of late July, felt “there was little evidence to date that inflation pressures were subsiding.”  Though some inflation reduction might come through improving global supply chains or drops in the prices of fuel and other commodities, some of the heavy lifting would also have to come by imposing higher borrowing costs on households and businesses.

“Participants emphasized that a slowing in aggregate demand would play an important role in reducing inflation pressures,” the minutes said.

The pace of future hikes would depend on incoming economic data, of which there will be much before the Sept. 20-21 confab.

San Francisco Fed President Mary Daly on Thursday said that either a half- or 75-basis-point interest rate hike in September would be a “reasonable” way to get short-term borrowing costs to a little over 3% by year end and a little higher than that in 2023.  Once rates are at that “restrictive” level and are slowing growth and inflation, the Fed should hold them there and not quickly cut them, Daly told CNN International.  Daly is viewed as a dove.

A hawk, St. Louis Fed President James Bullard said he is leaning towards favoring a 0.75 basis-point rate rise in September.  Bullard said he sees an about 18-month process of getting price pressures back to the Fed’s 2% target.  “We should continue to move expeditiously to a level of the policy rate that will put significant downward pressure on inflation,” the Journal quoted Bullard as saying.  “I don’t really see why you want to drag out interest rate increases into next year.”

Minneapolis Fed President Neel Kashkari said on Thursday that the central bank needs to get “very very” high inflation down as soon as possible, even at the cost of triggering a recession.  “We need to get inflation down urgently,” Kashkari said at an event in the Twin Cities.  “We need to get demand down” by raising interest rates.  Economic fundamentals are strong, he said, but whether the Fed can lower inflation without sending the economy into a recession, “I don’t know.”

The Fed has lifted its benchmark overnight funds rate by 225 basis points this year to a target range of 2.25% to 2.50%.

Much more inflation data to be digested before the Sept. meeting, but Chair Powell should give us a clue as to direction, particularly beyond September, next week in Jackson Hole.

Europe and Asia

In the EA19, the July inflation rate came in at 8.9%, up from 8.6% in June, per Eurostat, the statistical office of the European Union.

Germany 8.5%, France 6.8%, Italy 8.4%, Spain 10.7%, Netherlands 11.6%, Ireland 9.6%.

A flash reading on GDP for the second quarter in the eurozone increased by 0.6% over the first quarter, as reported by Eurostat, and up 3.9% vs. Q2 of 2021.

GDP Q2 2022 vs. Q2 2021 [Again, flash est.]

Germany 1.5%, France 4.2%, Italy 4.6%, Spain 6.3%, Netherlands 5.3%.

Germany’s GDP was unchanged in Q2 vs. Q1.

Britain: The UK inflation rate hit 10.1% in July, up from 9.4% in June, per the Office for National Statistics and higher than expected.  The last time prices were in double digits was in Feb. 1982.  Earlier, the Bank of England predicted the inflation rate would hit 13% this year.

The cost of living is rising across the board, driven partly by energy costs and the Ukraine war but also factors such as the cost of raw materials.

The big issue here, though, is energy, and it’s predicted one in four people in the UK won’t be able to pay their energy bills in October, based on current forecasts.

The National Health Service Confederation literally warned today about the increase in deaths linked with cold homes.  Surging costs mean many people will have to choose between skipping meals to heat their homes or living in cold and damp conditions this winter.

The average UK household fuel bill has risen more than 50% so far in 2022, and a further increase is coming.

Germany: The energy regulator said the country must cut gas use by 20% to avoid shortages this winter.  The government, meanwhile, said public buildings will turn down thermostats in winter to 19 C (66 F).  Remind me not to go there this coming January.  I like it at 76.

Turning to Asia…China reported on key metrics for July and they were not good.  Industrial production was up 3.8% year-over-year, retail sales 2.7% Y/Y, and fixed asset investment up 5.7% year-to-date (Jan.-July).  All were below expectations.  The July unemployment rate was 5.4%.

And home prices dropped for the 11th straight month in July, reflecting the woes of a property market suffering amid a developer debt crunch, an unexpectedly weak economy, a massive surplus of empty homes and a mortgage boycott by homebuyers fed up waiting for unfinished housing projects.

China’s 70-city index of home prices dropped 0.1% compared with June and 1.7% year-over-year, the National Bureau of Statistics reported. 

Growth forecasts for 2022 continue to be lowered, with Goldman Sachs now estimating 3% and Nomura 2.8%.  The IMF in July lowered its forecast for China to 3.3% from an earlier 4.4% in April.

It was back in March that Premier Li Keqiang, who is nominally in charge of the economy, set an economic target of “around 5.5%,” though he has admitted since that China is falling short.

Fresh coronavirus outbreaks following strict lockdowns in the financial hubs of Shanghai and Shenzhen earlier this year are the key reasons banks have lowered forecasts.

Lastly, China unexpectedly reduced two key interest rates as policy makers try to prop up the economy.

In Japan, the economy grew at a 2.2% annualized rate in the second quarter, 0.5% vs. unchanged in the prior quarter.  After more than two years of the pandemic, Japanese are ready to Par-Tay!

Exports for July were better than forecast, up 19% year-over-year, with exports to China up 12.8% and 13.8% to the U.S.  Imports rose 47.2% (think energy).

Thursday, the government reported that core consumer prices rose 2.4% in July from a year earlier, topping the central bank’s 2% price stability goal for the fourth straight month.  The core CPI in Japan includes oil products but, unlike in the U.S., excludes food.  Stripping away food and energy, consumer prices rose 1.2% from July 2021.

Street Bytes

--Stocks finished down on the week, amid mixed earnings from retailers and hawkish rate talk from St. Louis Fed President James Bullard ahead of Jackson Hole.  It was the first losing week in five for the S&P 500 and Nasdaq.

The Dow Jones lost 0.2% to 33706, the S&P 1.2% and Nasdaq 2.6%.

--U.S. Treasury Yields

6-mo. 3.10%  2-yr. 3.23%  10-yr. 2.97%  30-yr. 3.21%

Thanks to the Fed talk, and awful inflation news in Europe, not only the U.S. bond market tanked (yields rose), but the same action took place, and then some, in the Euro bond pits.

The 10-year German bund saw its yield rise from 0.98% to 1.22%, but the UK’s 10-year went from 2.11% to 2.41%, and Italy’s from 3.03% to 3.48%.

--Saudi Aramco posted the biggest quarterly adjusted profit of any listed company globally driven by high crude prices and production.

Aramco followed big oil rivals in reporting a surge in profits, with net income rising to $48.4 billion in the second quarter, up from $25.5 billion a year earlier.

The company is using the windfall to reduce debt and invest in a huge expansion of its production capacity.  Aramco is betting that demand for its oil and chemicals will remain high even as the world looks to transition away from fossil fuels.

Aramco “expects oil demand to continue to grow for the rest of the decade, despite downward economic pressures on short-term global forecasts,” CEO Amin Nasser said.

Global oil demand continues to be “healthy,” Nasser said.  If aviation fuel demand picks up to pre-pandemic levels “that will put a lot of tightness in the market,” he said.

Aramco is looking to work with partners to invest in carbon capture, renewable energy, and hydrogen production, as part of its goal to reach net zero carbon emissions from operations by 2050, Nasser said in a call with reporters.  That’s even as it looks to boost its maximum oil production capacity to 13 million barrels a day, and gas production by up to 50%.

--Natural-gas prices in Europe closed at a new record Tuesday, with hot summer weather boosting fuel demand and Russia throttling back supplies.  Moscow has cut flows through the Nord Stream pipeline by 80% to punish Germany and others for supporting Ukraine, and fears Vladimir Putin could order a full shutdown are real.

--As an example of the severe energy issues faced in Europe, Uniper, a German utility firm, reported a staggering loss of $12.6 billion for the first half of 2022, pointing to Europe’s worsening energy crisis. The company, which is Germany’s largest importer of Russian gas, attributes over half of its net loss to the reduced gas flows, which have forced it to cover the shortfall in the spot market at higher prices.  It received a $15 billion bailout from the German government last month.

--Walmart reported better-than-expected second quarter results as more Americans looked to cut costs on groceries at the nation’s largest retailer in the face of surging inflation.

Those rising prices, however, meant that customers were cutting back on non-necessary purchases.

Walmart earned $5.15 billion, or $1.88 per share, or $1.77 adjusted, which easily beat the $1.62 that Wall Street was looking for.  It also topped last year’s profit of $4.27 billion.

Sales rose 8.4% to $152.86 billion, topping analyst projections.

Sales at stores open at least a year rose 6.5% as more shoppers turned to Walmart for groceries, which followed a 3% increase in the first quarter.  Online sales rose 12%, following a 1% increase in the previous quarter.

“We’re pleased to see more customers choosing Walmart during this inflationary period, and we’re working hard to support them as they prioritize their spending,” said CEO Doug McMillon.

McMillon, however, noted that strong sales were registered in groceries, which have lower margins, at a time when the company is cutting prices to get rid of excess inventory after a huge shift in how Americans spend money.

Like many big box retailers, Walmart benefited in the early days of the pandemic as shoppers splurged on food and other necessities, particularly online.

But shoppers are spending less on items that did well during the pandemic such as casual clothes and TVs, while surging inflation is presenting challenges for Walmart and other retailers as low income shoppers cut back.

Late last month, Walmart spooked investors when it lowered its profit outlook for the second quarter and the full year, saying rising prices on food and gas are forcing shoppers to cut back on discretionary items, particularly clothing, that carry higher profit margins.

But on Monday, it forecast a smaller profit drop for the fiscal year.

Separately, Walmart is taking its membership offering to the next level by adding a new streaming benefit.  Walmart+ will soon be available for members with an added bonus – a Paramount+ Essential subscription at no extra cost.

Walmart+ members will have access to Paramount+’s content such as original dramas “Star Trek: Strange New Worlds,” to live sports.

Walmart+ will remain $98 a year or $12.95 a month and include the Paramount+ Essential Plan subscription with an added $59 value.

--Target reported solid sales for the fiscal second quarter but its profit plunged nearly 90% after it was forced to slash prices to clear unwanted inventories of clothing, home goods and electronics.

In early June, Target warned that it was canceling orders from suppliers and aggressively cutting prices because of a pronounced spending shift by Americans.  Shares fell on the news.

Retailers were blindsided by the lightning-fast switch from spending on goods for the home, like TVs and small kitchen appliances, to dinners out, movies and travel.  Adding to that shift is surging inflation.  In the first quarter, Target’s profits tumbled 52% compared to the year-ago period.

Target reported second-quarter net income of $183 million, or 39 cents per shares, for the three month period ended July 30, far short of the consensus of 79 cents that the Street expected, and down from the $1.82 billion the company earned last year in the same period.

Revenue rose 3.5% to $26.04 billion, basically in line with analysts’ forecasts.

Same-store comp sales increased 1.3% on top of 8.7% growth last year.  Online sales rose 9% vs. 9.9% last year.

“While these inventory actions put significant pressure on our near-term profitability, we’re confident this was the right long-term decision in support of our guests, our team and our business,” CEO Brian Cornell said.

Target executives told reporters during a media call that if Target weren’t aggressive about marking down the inventory, it would have taken at least several quarters to get rid of the unwanted merchandise. 

Cornell said the company is planning cautiously for the remainder of the year, including the critical holiday season.

The company is sticking to prior guidance for full year revenue growth in the low- to mid-single digit percentage range.  It also expects an operating margin rate in a range around 6% in the back half of the year, a big jump from 1.2% for the latest quarter.

--Home Depot is seeing sustained demand for goods related to home improvement projects despite soaring prices and mortgage rates for homes.

Despite record profit and revenue, the Atlanta-based home improvement chain maintained its guidance for the year.

Revenue for the three months ended July 31 rose 6.5% to $43.79 billion, topping projections of $43.35 billion on Wall Street.

Same-store sales climbed 5.8%, and 5.4% in the U.S.  The number of customer transactions fell 3%, but the amount shoppers spent per transaction rose 9.1%.  [Ergo, inflation heightened the numbers.]

Analysts believe it is easier for Home Depot to pass along price increases to customers because the products on its stores shelves are considered essential to make home improvements.  And contractors can pass along higher prices to clients.

HD earned $5.17 billion, or $5.05 per share, which topped projections for $4.95, and was better than last year’s strong second quarter, when the company posted earnings of $4.81 billion.

Home Depot has continued to lure customers despite what may be a cooling of the housing market. 

--Lowe’s Companies reported mixed fiscal second-quarter results as revenue missed analysts’ estimates, with do-it-yourself, or DIY, sales impacted by a shorter spring season and lower demand in certain discretionary categories.

The home improvement retailer on Wednesday posted profit of $4.67 per share, up from $4.25 a year earlier and ahead of consensus of $4.60. Sales for the quarter ended July 29 ticked down to $27.48 billion from $27.57 billion, below the Street’s view for $28.16 billion.

Comparable sales slipped by 0.3%, compared with the 2.2% consensus gain.

CEO Marvin Ellison said in a statement: “Despite continued macro uncertainty, we remain confident in the long-term strength of the home improvement market and our ability to take share.”

Ellison said the company was able to improve operating margins and “effectively” manage inventory during the quarter.

Lowe’s now expects adjusted EPS to be at the top end of its previously given outlook of $13.10 to $13.60 for fiscal 2022, while sales are anticipated to be at the bottom end of its $97 billion to $99 billion forecast.  The Street is looking for earnings of $13.45 per share on revenue of $97.51 billion.

--Kohl’s reported fiscal adjusted earnings of $1.11, down from $2.48 a year earlier, as total revenue for the quarter ended July 30 was $4.09 billion, down from $4.45 billion a year earlier.

For fiscal 2022, Kohl’s now expects earnings to be in a range of $2.80 to $3.20 per share, while sales are anticipated to decline by between 5% and 6%.  The company previously expected earnings of $6.45 to $6.85 per share and sales to be in the range of between 0% and up 1%.

At the same time, the company said it is expanding its partnership with Sephora to include a Sephora presence at Kohl’s more than 1,100 locations.

The project, launched in 2021, has helped Kohl’s acquire more than 1 million new customers since launching the partnership in August 2021.

But due to the poor financial report, the shares fell 6%, and a further 4% today.

--One of the biggest stories on the week was the share activity in Bed Bath & Beyond, which vaulted to $30, intraday, on Wednesday, and closed the week at $10.40 (at last look in the aftermarket), as RC Ventures, the firm run by pseudo-activist investor Ryan Cohen, announced it had sold its entire stake for $178 million, selling into the meme-fueled rally.

The Chewy founder and GameStop chairman disclosed in a filing with the SEC on Thursday that he no longer owns BBBY stock or call options.  He previously owned 7.78 million shares and call options representing 1.67 million shares.

Last night, after Cohen indicated his plan to sell stock, BBBY told Barron’s: “We are continuing to execute on our priorities to enhance liquidity, make strategic changes and improve operations to win back customers, and drive cost efficiencies… Specifically, we have been working expeditiously over the past several weeks with external financial advisors and lenders on strengthening our balance sheet, and the Company will provide more information in an update at the end of this month.”

Yes, people are questioning Cohen’s actions.  Illegal?  We’ll see.

--What a blankshow at the big three airports in the New York City area last weekend, JFK, LaGuardia and Newark Liberty, as air traffic control staffing issues led to hundreds of flights being canceled, and hundreds more delayed for hours.  And it carried over into Monday, with 850 flights delayed at the three, according to FlightAware.

The staffing issue was related to sick leave, though supposedly not some uniform job action nor Covid-related.

--TSA checkpoint travel numbers vs. 2019

8/18…92 percent of 2019 levels
8/17…89
8/16…89
8/15…87
8/14…91
8/13…94
8/12…89
8/11…89

--Cisco Systems reported strong earnings and provided an upbeat revenue forecast for the October quarter, citing an easing of supply-chain constraints.  The shares rose sharply in response.

The networking and security products company reported fiscal fourth quarter adjusted earnings per share of 83 cents, a penny above consensus, while revenue came in at $13.1 billion against analysts’ expectations of $12.73 billion.

Cisco’s guidance was also solid, forecasting revenue growth for the current quarter of 2% to 4% year-over-year – while analysts had been expecting a slight decline.

For now, Cisco says it isn’t seeing any demand weakness from its customers but admitted it won’t be immune if the macro economy gets significantly worse.

--Shares in Deere & Co. went on a wild ride after the company reported fiscal third-quarter earnings that missed analysts’ estimates as costs widened amid supply chain pressures, prompting the company to lower the top end of its full-year guidance.  At first the shares tanked, then they rallied to finish up 0.45%.

The agriculture and construction equipment manufacturer said it now expects net income for fiscal 2022 to be between $7 billion and $7.2 billion, down slightly from prior guidance.

“We are working closely with our factories and suppliers to meet higher levels of customer demand next year,” CEO John May said in a statement.  “Looking ahead, we believe favorable conditions will continue into 2023 based on the strong response we have experienced to early-order programs.”

Net sales for the three months ended July 31 advanced to $13 billion from $10.41 billion, above the Street’s view.  Total revenue was $14.10 billion, up from $11.53 billion a year earlier.

Total costs and expenses were $11.56 billion, wider than the $9.38 billion incurred last year, according to the company.

--Cattle farmers have been experiencing some of the worst drought conditions ever.

The ground is tough for grazing, and many ranchers have had to cull their herd because it’s more economical than feeding them.

Fewer cows mean fewer calves and ultimately less meat in the years to follow.  The USDA expects beef production next year to drop by 1.9 billion pounds – a 7% decline.

And consumers have noticed their steaks and burgers are a lot more expensive than a year ago.  It’s a domino effect that experts say could get worse in the years to come.

Eight states have reported 50% or more pasture and rangeland as poor to very poor, the bureau said.  Texas came in with 91% rated as poor or very poor, followed by Arkansas at 72%.

--Bridgewater Associates, the hedge fund founded by Ray Dalio, has sold many of its holdings in China, as the economy cools there.  Alibaba Group Holding was among the five companies in which Bridgewater sold all its shares.  [JD.com, NetEase, DiDi Global and Bilibili the others.]

Bridgewater trimmed its stakes in other Chinese stocks, and increased its holding in Baidu, according to regulatory filings.

Dalio, now one of three co-chief investment officers, has been a longtime China bull and in November raised $1.25 billion for Bridgewater’s third China investment fund.

--Turkey cut its base interest rate 100 basis points despite almost 80% inflation.  As in Turkish President Erdogan keeps pressuring the Turkish Central Bank to cut rates with a view to curbing inflation – even as with each chop the Turkish lira plumbs new lows and inflation soars to new highs.  Yes, it’s nuts and makes zero economic sense.

--The six-county Southern California real estate market is definitely slowing.  Data from DQNews reported that the median sales price in SoCal fell 1.3% in July from a month earlier, with the median price – now $740,000 - $20,000, or 2.6%, less than the all-time peak this spring. 

The sales price in July remains 8.8% higher than a year earlier, but in April, the median was up nearly 17% from a year ago.

Jordan Levine, chief economist with the California Assn. of Realtors, said the median’s shrinking year-over-year gains are consistent with a scenario in which the median sales price falls around 7% in 2023 compared with this year.

--Wells Fargo plans to shrink its vast mortgage empire after a series of scandals, which will result in further layoffs. 

--A federal judge in Ohio has ordered the companies owning CVS, Walgreens and Walmart pharmacies to pay $650 million over 15 years to two Ohio counties after a jury found them liable for contributing to the opioid epidemic.

The jury’s verdict last November, delivered after a six-week trial, came in a so-called bellwether case that attorneys elsewhere have watched closely.  It was the first decision reached among lawsuits targeting pharmacy chains for their alleged role in the opioid crisis.

The judge ordered the companies to immediately pay two year’s worth of those payments into a fund, or $86.7 million of the total $650.6 million.

The companies plan to appeal.

--Apple disclosed serious security vulnerabilities for iPhones, iPads and Macs that could potentially allow attackers to take complete control of those devices.

The company said it is “aware of a report that this issue may have been actively exploited.”

Apple released two security reports about the issue on Wednesday, although they didn’t receive wide attention outside of tech publications.

Security experts have advised users to update affected devices.  Apple’s explanation of the vulnerability means a hacker could get “full admin access to the device” so that they can “execute any code as if they are you, the user,” said Rachel Tobac, CEO of SocialProof Security.

--Best Buy Co. said Wednesday it will start offering an expanded sales range of hearing aid devices this fall through online channels in more than 300 of its stores.

The expanded range will include the new U.S. Food and Drug Administration-regulated category of over-the-counter hearing devices, the company said.

Earlier, the FDA said the new category, which will likely take effect by mid-October, is expected to lower the cost of hearing aids.

Consumers will be able to purchase certain hearing aids directly from retailers without a medical exam, prescription, or an audiologist fitting adjustment, the FDA said.

Separately, late last week, Best Buy announced it was cutting store jobs across the U.S. in an attempt to cut costs.  According to reports, hundreds of jobs have been cut in the last few weeks.

--I missed late last Friday that Peloton Interactive said it was cutting nearly 800 jobs as part of a strategic overhaul.  In July, the company had announced it was outsourcing production of the bike and treadmills in a bid to simplify its cost structure.

The company will increase the cost of the Bike+ model by $500 to $2,495, while the Tread will increase by $800 to $3,495, CEO Barry McCarthy said in a note to employees.

Peloton is also reducing its retail showrooms across North America starting in 2023.

I need to get to the next-door Mall at Short Hills, because Peloton was supposed to be taking a ‘bigger’ space there.

--Shares in Foot Locker soared 20% today, even as the company tempered expectations for the full year with high inflation likely to exert greater pressure on back-half comparable sales.

The company now anticipates reporting adjusted per-share earnings of $4.25 to $4.45 in the ongoing year, compared with the prior guidance of reaching the upper end of its $4.25 to $4.60 range.

FL forecasts a revenue decline of 6% to 7%, instead of previous expectations of reaching the upper end of a 4% to 6% drop.  Comp sales will likely fall 8% to 9%.

"The consumer is undoubtedly under pressure, especially at the lower end income range,” CEO Richard Johnson told analysts.

So why did the shares rise?  Because Johnson, who retires Sept. 1 to become executive chairman for a spell, is being replaced by former Ulta Beauty chief Marry Dillon, who is highly respected on the Street.

--Online home furnishings retailer Wayfair is cutting 870 jobs, including 400 in its home city of Boston, as the company reacts to sales declines brought on in part by steep inflation.

No word on the status of spokeswoman Kelly Clarkson.

--Movie theaters are once again in deep trouble.  The box office bounty of “Top Gun: Maverick,” “Minions: The Rise of Gru,” and “Thor: Love and Thunder,” is long in the rearview mirror and outside the mild success of Brad Pitt’s “Bullet Train,” there is nothing on the horizon until, maybe, Oct. 21 and the debut of Warner Bros. “Black Adam,” a DC superhero movie starring Dwayne Johnson.

Regal owner Cineworld, the world’s second largest theater operator, this week said the dimmed outlook had forced it to seek options to relieve its massive debt load… a reported $8.9 billion in net debt, which includes $4 billion in lease liabilities.

The Wall Street Journal reported today that Cineworld could file for bankruptcy in the coming weeks.

--Bitcoin, which hit nearly $25,000 this week, is trading at $21,100 as I go to post.  [Reminder, it never stops trading.]

--Lastly, Americans spent more of their July TV-viewing time streaming content on services such as Netflix, YouTube and HBO Max than they did watching cable television, according to Nielsen data, marking the first month that streaming has overtaken cable.

Streaming services captured 34.8% of total U.S. TV viewing time during the month, while cable TV attracted 34.4%, the ratings company said in a release published Thursday.  People spent 23% more time streaming content than a year earlier and 9% less time watching cable, Nielsen found, a sign of streaming’s continued ascent while more Americans cut the pay-TV cord.

While this sounds good for the companies that have launched direct-to-consumer platforms in recent years and are vying to attract subscribers in a crowded market, many of the streaming services are struggling to hold on to new subscribers long-term.  The rate of customer defections is rising throughout the industry, as more households jump from one service to the other when they are done watching a specific show.

The Pandemic

--The director of the Centers for Disease Control and Prevention, Dr. Rochelle Walensky, announced a shake-up of the organization, intended to make it more nimble.

CDC leaders call it a “reset” – amid ongoing criticism of the agency’s response to Covid-19, monkeypox and other public health threats. 

The agency has long been criticized as too ponderous, focusing on collection and analysis of data but not acting quickly against new health threats.  But public unhappiness with the agency grew dramatically during the Covid pandemic. Experts said the CDC was slow to recognize how much virus was entering the U.S. from Europe, to recommend people wear masks, to say the virus can spread through the air, and to ramp up systematic testing for new variants.

Walensky, who became director in January 2021, has long said the agency has to move faster and communicate better, but stumbles have continued during her tenure.

--Hong Kong reported its highest daily number of new Covid-19 cases in more than four months over the weekend.

--First Lady Jill Biden tested positive for Covid-19 and was experiencing “mild symptoms,” the White House announced Tuesday.  The president continues to test negative after recently recovering from the virus but is wearing a mask indoors.

Jill and Joe have been vacationing on beautiful Kiawah Island, S.C., one of my favorite spots in the country.

--Pfizer CEO Albert Bourla said on Monday he had tested positive and was experiencing very mild symptoms.

Bourla said he had started a course of the company’s oral Covid antiviral treatment, Paxlovid, and was isolating.

--New Jersey Gov. Phil Murphy (Dem.) signed an executive order Monday lifting requirements that teachers and school employees, workers at child care facilities, and state contractors in the state who aren’t vaccinated against Covid undergo regular testing for the virus.

But workers in health care, correctional facilities and other congregant settings such as nursing homes will still be required to be vaccinated and have at least one booster dose.

I have a friend who quit her job at a correctional facility (dietician) because she refused to get vaccinated.  I didn’t comment when she told me.  “Say, look over there….”

Covid-19 death tolls, as of early tonight….

World…6,468,001
USA…1,064,955
Brazil…682,358
India…527,253
Russia…383,427
Mexico…328,947
Peru…215,209
UK…187,018
Italy…174,571
Indonesia…157,343
France…153,501

Canada…43,178

[Source: worldometers.info]

U.S. daily death toll…Mon. 106; Tues. 377; Wed. 527; Thurs. 343; Fri. 326.

Foreign Affairs, part II

China: I forgot to note last time that Xi and Joe Biden are to meet face-to-face in November, as Xi visits Southeast Asia, in what would mark his first international trip in nearly three years and thus his first in-person meeting with Biden since his inauguration.

The meeting would be during the Group of 20 nations summit on the Indonesian island of Bali on Nov. 15-16.  Then Xi is to attend the Asia-Pacific Economic Cooperation summit two days later in Bangkok, so the meeting of Xi and Biden could take place on the sidelines of one of the two.

It is assumed that Xi will have received approval from the Chinese Communist Party Congress for an unprecedented third term earlier in the fall.  But no date has been set as yet for the Congress.

But here’s the bottom line.  Xi’s self-isolation will be over and he will try to demonstrate China’s focus on Southeast Asia, where the U.S. is making a major push of its own to challenge Beijing’s influence.

And then we learned Thursday that Vladimir Putin will also be attending the G-20 summit, Indonesian President Joko Widodo said in an interview.  This is not good, though long expected, as the G-20 is divided over whether to place sanctions on Russia.

As for the lessons learned from China’s ominous display of firepower in the wake of the visit to Taiwan by House Speaker Nancy Pelosi, Lyle J. Goldstein, Director of Asia Engagement, Defense Priorities, had some of the following thoughts in Defense One:

“There appear to be some changes in China’s military posture toward Taiwan that will leave the beleaguered island more vulnerable.  Three aspects of the drills by the People’s Liberation Army, or PLA, are most troubling: First, the exercises involved quite extensive and brazen movements along Taiwan’s relatively sheltered eastern shores, the area through which the U.S. and its allies might hope to resupply and reinforce the island should China invade.

“Additionally, these exercises appear to be the end of any dividing line that had previously limited the deployment of Chinese forces near Taiwan. An informal median line has helped maintain peace in the Strait for decades, but Chinese officials have now made it clear that they no longer accept it.  Indeed, Beijing has stated recently that Taiwan has no territorial seas; this seemingly new doctrine likely applies to the island’s airspace as well.

“A final ominous conclusion from the exercises concerns the types of fires used.  Not only did the PLA launch ballistic missiles over Taiwan in a dramatic display of firepower, but there was also a subtle message with the testing of rocket artillery fire into the Taiwan Strait.  Rocket artillery is much cheaper and easier to launch than ballistic missiles.  Rocket artillery that can reach across the strait would threaten radars, runways, munitions stores, headquarters and other crucial defenses, and could be used to coerce or in preparation for invasion.

“While China has nearly all it needs to conduct a swift conquest of Taiwan, there are still vital pieces missing on the naval side, in particular.  Thus, it is telling that on Aug. 8, Beijing announced that drills around Taiwan would continue and they would focus on anti-submarine warfare, or ASW.  China has made much progress in this field, including deploying corvettes with towed sonar arrays and maritime patrol aircraft.  Still, the Chinese fleet remains quite vulnerable, because its ASW helicopters are few and not very capable.”

Goldstein goes on to show how Beijing looks to change this last weakness and then concludes:

“In the end, Chinese leaders understand that both sides are making intensive military preparations and that the Chinese military will never be 100 percent ready. Given China’s extremely favorable geography for an attack on Taiwan, Beijing understands that victory over Taiwan is nearly certain, but the costs in blood and treasure could be exceedingly high – up to and including the loss of warships of great symbolic importance like its new aircraft carriers.  Unfortunately, Chinese leaders seem to be very willing to pay such immense costs to achieve victory.  This point about costs relates to the rather stark asymmetry of interest and national will that makes the Taiwan scenario so precarious for the U.S. and for the wider world.  After all, most Americans could not find the beleaguered island on a map.

“A realistic U.S. policy for Taiwan should accept the fact that China’s calculus on Taiwan is not strictly rational.  No matter how many Javelins, Stingers, Harpoons, Patriots and HIMARS are packed onto the small island, China is not likely to be deterred.  Indeed, these weapons shipments could have the opposite effect: of lighting the fuse.

“Washington would be wise to draw its red lines for the Asia-Pacific elsewhere and not over Taiwan.  American leaders must act with the utmost caution to avoid a catastrophic superpower war over Taiwan that could quite easily slip over the nuclear threshold.”

Separately, the U.S. announced Wednesday that it and Taiwan will start negotiations for a bilateral trade and investment initiative this fall to deepen ties on a range of issues including technology and agriculture.

This is a follow-up to a June announcement of plans to strengthen U.S.-Taiwan economic ties, at which time a Chinese Embassy spokesman said, “China firmly opposes all forms of official interactions in any name or form between Taiwan and countries having diplomatic ties with China.”

North Korea: Kim Yo Jong, the powerful sister of Kim Jong Un, said on Friday the country will never deal with a South Korean proposal to boost the North economy in exchange for giving up nuclear weapons.  Her comments were the first from a senior North Korean official on an “audacious plan” first proposed by South Korea’s President Yoon Suk-yeol in May.

They came after Yoon repeated on Wednesday at a news conference to mark his first 100 days that he was willing to provide phased economic aid to North Korea if it ended nuclear weapons development and began denuclearization.

“To think that the plan to barter ‘economic cooperation’ for our honor, nukes, is the great dream, hope and plan of Yoon, we came to realize that he is really simple and still childish,” Kim Yo Jong said in a KCNA statement.  “No one barters its destiny for corn cake.”

“Though he may knock at the door with what large plan in the future as his ‘bold plan’ does not work, we make it clear that we will not sit face to face with him,’ she said. 

North Korea test-fired two cruise missiles into the sea on Wednesday, the first such test in two months.

The U.S. and South Korea will begin their biggest combined military training in years next week in the face of an increasingly aggressive North.  The drills will take place between Aug. 22 and Sept. 1, and underscore Washington and Seoul’s commitment to restore large-scale training after they canceled some of their regular drills and downsized others to computer simulations due to Covid concerns.

Iran: There is a glimmer of hope for the revival of the nuclear deal that was signed by Iran and six world powers in 2015, and abandoned by Donald Trump in 2018.  Last week, the European Union circulated a “final text” and demanded Iran reply to it by Monday.  Surprisingly, it did.  An adviser to Iran’s negotiating team said, “The remaining issues are not very difficult to resolve,” Mohammad Marandi tweeted.

But Iran wants the International Atomic Energy Agency, a UN watchdog, to shut down its probe into the country’s past illicit nuclear activity, despite many unanswered questions.  It also wants to be sure that it will feel the benefit of sanctions relief.  Western diplomats worry that Iran is eking out talks while continuing to expand its nuclear program.  Two weeks ago Iran began feeding fresh uranium gas into hundreds of new centrifuges.

This is all coming to a head, for better or worse.

John Bolton / Washington Post…the former national security adviser under Donald Trump who was the target of a recently revealed Iranian assassination plot:

“In recent weeks, the White House has…heedlessly, zealously continued its policy of capitulation, reportedly making further concessions to Tehran. These include whitewashing long-standing Iranian obstruction of International Atomic Energy Agency efforts to pursue necessary investigations, and weakening the scope and effectiveness of U.S. sanctions against the very Islamic Revolutionary Guard Corps that is attempting multiple assassinations.

“How to explain this manic quest for the Holy Grail of reviving the 2015 deal? Analytically, Biden is compartmentalizing Iran’s nuclear program in one silo and its terrorist activities in another, treating them as separable and unrelated.  He is engaging in the classic diplomatic fallacy of ‘mirror-imaging,’ believing his adversaries see the world the same way he does, sealed off into separate compartments.

“The reality in Tehran is precisely the opposite.  The ayatollahs’ malevolence is comprehensive, with nuclear weapons, assassination and terrorism all elements in their full spectrum of capabilities.  By failing to grasp the wider scope of Iran’s menace, and plainly failing to deter it, Biden’s dangerous effort to resurrect the nuclear deal is threatening America’s larger interests.  Substantive arguments against the 2015 agreement and the concessions Biden has made over nearly 19 months in office should already suffice to bury the deal, but the broader threat Iran now raises should be the final nail in the coffin.

“Biden’s bizarre policy of ‘nuclear deal uber alles’ reflects an instinct for the capillary when it comes to Washington-Tehran relations.  Iran’s nuclear program is only a symptom of the real problem: the regime itself.  That is what the United States must focus on ending.”

Afghanistan: Hundreds of Americans were stranded in Afghanistan following last year’s chaotic pullout of U.S. troops – and the Biden administration has no plan to help thousands of Afghans who aided the U.S. during its 20-year war against the Taliban and are still marooned in the collapsing country, the top Republican on the House Foreign Affairs Committee claimed in a damning report released Wednesday.

Rep. Michael McCaul’s (R-Tex.) 115-page report notes that the White House had repeatedly said “about a hundred” Americans were left behind after the last U.S. troops departed Kabul on Aug. 31, 2021.

However, Republicans on the panel added, “the State Department has evacuated more than 800 [U.S. citizens] since that date. In addition, outside veterans’ groups have evacuated several hundred more – meaning more than 1,000 Americans were abandoned in a country controlled by a terrorist organization.”

Meanwhile, warned McCaul, “those Afghans most at-risk of Taliban reprisals remain trapped in Afghanistan” and under threat of deadly retribution from the fundamentalist government.

Those left behind include “tens of thousands” of former elite Afghan military personnel, interpreters and women leaders promised sanctuary by the U.S.

“One year after the last U.S. troops left Afghanistan, the Committee Minority has found the Biden administration still lacks a plan to help these at-risk Afghan allies who fought shoulder to shoulder with U.S. forces, despite the administration admitting these former battlefield allies have been subjected to killings and forced disappearances,” McCaul wrote.

So desperate were those left behind in the face of Taliban repression, the Texas lawmaker noted, that a watchdog report from May of this year found that around 3,000 members of the Afghan security forces fled to neighboring Iran as the Western-backed Kabul government fell.

“It is possible these former Afghan military and other intelligence personnel could be recruited or coerced into working for one of America’s adversaries that maintains a presence in Afghanistan, including Russia, China, or Iran,” warned McCaul, adding: “The recruitment of former Afghan military and intelligence personnel poses a major national security risk due to the fact these Afghan personnel know the U.S. military and intelligence community’s tactics, techniques, and procedures.”

According to the report, just 36 State Department officials were in Kabul to screen 124,000 evacuees, which amounts to “roughly one consular officer for every 3,444 evacuees.”

“Multiple U.S. Marines assigned to [Kabul airport’s] Abbey Gate told Army investigators they rarely saw U.S. State Department personnel on the ground and when they did show up, they did so inconsistently,” the report said.

Making matters worse, the report alleged, the then-acting ambassador to Afghanistan, Ross Wilson, took two weeks of vacation in late June and early July 2021, as the Taliban prepared their final assault.  The report quotes an American military officer as telling Army investigators: “There were no decisions made in the Embassy until he [Wilson] returned in mid-July.”

While the U.S. has continued to surveil Afghanistan from afar and killed al Qaeda leader Ayman al-Zawahiri in a Kabul drone strike on July 31, the report criticized the Biden administration’s “over-the-horizon” counterterror strategy, claiming it has allowed Afghanistan to return to its pre-9/11 status as a terrorist safe haven.

A Tuesday report by the Pentagon’s Office of the Inspector General backed up this claim, noting that the U.S. has had increased difficulty in fighting terrorism in Afghanistan without American troops on the ground.

Karl Rove / Wall Street Journal

“President Biden destroyed the value of America’s word, diminished our global influence, and made the world more dangerous when he surrendered in Afghanistan a year ago this week. The Taliban, a jihadist terror movement and avowed enemy of the U.S., could claim to have defeated the world’s mightiest nation.

“Even if you supported withdrawal in general, it’s impossible to dismiss the scenes of chaos at the Kabul airport, American aircraft taking off with frantic Afghans clinging to landing gear, and 13 flag-draped coffins arriving at Dover Air Force Base, American military killed by an ISIS suicide bomber….

“Contrary to White House claims, (Rep. McCaul’s) report says allies and senior U.S. military commanders ‘supported a continued conditions-based deployment in Afghanistan’ of 2,500 American and 6,000 allied troops to advise and undertake selected counterterrorism missions.

“But insisting, seemingly without evidence, that it would actually require ‘tens of thousands’ of additional U.S. troops, Mr. Biden instead executed an unconditional withdrawal. This decision wasn’t backed by our military or coalition partners, whom Mr. Biden didn’t really consult in advance of his decision.

“The Republicans argue that having decided to retreat regardless of conditions on the ground, the Biden administration then didn’t properly plan or prepare for our ext.  Team Biden ‘repeatedly delayed critical action that was necessary to mitigate the likely consequences.’

“The administration acted as if none of this mattered. Though Afghanistan quickly fell to the Taliban, Mr. Biden called the chaotic retreat an ‘extraordinary success.’  Even today there are more than 100 Americans – and tens of thousands of Afghans eligible to come to the U.S. including many who supported our troops – stranded in Afghanistan because of this administration’s incompetence.

“This week, the White House attacked the report in a three-page response by National Security Council spokeswoman Adrienne Watson, who blamed Donald Trump.  The former president negotiated a ‘flawed deal’ with the Taliban.  He reduced the number of U.S. troops, leaving the Taliban ‘in its strongest military position since 2001.’  He made ‘no preparations…to begin evacuating our Afghan allies.’

“All true, yet this hardly gets Mr. Biden off the hook.  If he disagreed with the Trump deal, why didn’t he reject it?  He jettisoned plenty of other Trump policies.  If there were too few American troops in Afghanistan, why not increase them, even modestly?  If the structures weren’t in place to evacuate Afghan allies, why didn’t the administration build them in its seven months in office before the withdrawal?

“Ms. Watson also made the Orwellian claim that the U.S. surrender ‘strengthened our national security’ and ‘restored our credibility on the world stage.’  That’d be laughable if it weren’t so sad.

“In fact, Mr. Biden’s Afghan fiasco dispirited our allies and encouraged our adversaries. The Chinese can point to the U.S. retreat as evidence to other nations that America is untrustworthy.  Seeing Mr. Biden abandon Afghanistan may well have emboldened Vladimir Putin to invade Ukraine. The greatest tragedy is what has happened to the Afghan people as the Taliban’s return ended their nation’s attempts to protect human rights – especially for women – and ensure a more prosperous future….

“(If) Republicans win the House this fall and Mr. McCaul becomes Foreign Affairs chairman, they’ll be able to give this preventable disaster the attention it deserves.  Meanwhile, the Afghan people are being terrorized and brutalized every day, especially women and girls.

“It didn’t have to happen this way.”

Meanwhile, a huge explosion struck a mosque in Kabul during evening prayers on Wednesday, killing at least 21 and wounding 33, the city’s police said.  No claim of responsibility as yet but it is suspected to be the work of ISIS-K (Khorasan).

Some last facts:

According to the International Rescue Committee, 43% of Afghanistan’s population is living on less than one meal a day.

According to the World Food Program, 92% of households were experiencing insufficient food consumption as of June.

24.4 million people require humanitarian assistance to survive, the UN Office for the Coordination of Humanitarian Affairs has reported.

Monday, Aug. 15, was celebrated by the Taliban as a public holiday, marking the “First Anniversary of the Return to Power,” the day a year ago the Taliban seized the capital of Kabul.

Israel / Palestinians: Palestinian President Mahmoud Abbas triggered an uproar over comments he made at the end of a press conference in Berlin alongside German Chancellor Olaf Scholz.  Abbas accused Israel of carrying out “50 Holocausts” on his people in the last half century.  And to make it worse, Scholz left the remarks unchallenged, issuing a statement condemning the claim hours later, after fury built in Israel.

Abbas was asked by a journalist if he would apologize to the relatives of the 11 Israeli Olympic team members taken hostage and murdered in Munich by Palestinian terrorists 50 years ago next month.  At the time, the “Black September” group behind the attack was linked to Abbas’ Fatah party.

“Since 1947 to the present day, Israel has committed 50 massacres in 50 Palestinian villages…50 massacres, 50 holocausts,” said Abbas, pronouncing the final word in English.  “And until today every day our people are killed by the Israel army.”

Listening to a translation via a headset, Scholz looked surprised at the remark but did not speak as Abbas added: “If we want to continue to dig in the past, please do.”

The press conference then quickly wrapped up and the men shook hands and walked away.

A hail of criticism followed, both from Israel and in Germany, where the online edition of the Bild tabloid noted: “Not a word of dissent in the face of the worst Holocaust relativization that a head of government has ever uttered in the chancellery.”

Scholz said in his statement: “Above all for us any relativizing of the Holocaust is unbearable and unacceptable.”

The 50th anniversary ceremony in Germany for the Munich massacre is Sept. 5th.

Random Musings

--Presidential approval ratings….

Gallup: 38% approve of President Biden’s job performance, 59% disapprove; 32% of independents approve (July 2-26).  Worst #s of the Biden presidency. But will he get a bump with the next release?

Rasmussen: 44% approve of Biden’s performance, 54% disapprove (Aug. 19).

--Tom Nichols / The Atlantic

“Representative Liz Cheney was blown out in her reelection bid last night. [She lost the Wyoming Republican primary to Harriet Hageman, 66-29 percent, which in their deep-red state is tantamount to losing the general election.]  Hageman was once a Cheney ally and a critic of Donald Trump, but she is now a Trump booster and an election denier. Like so many Republicans, Hageman has decided that the humiliation of bending the knee to Trump is a price worth paying in order to live in Washington, D.C.

“Cheney’s defeat was no surprise, but it is an especially bitter pill to swallow for the Never Trump former Republicans who saw Cheney as the last outpost of the party they once knew.  Cheney nodded to the GOP’s free fall in her concession speech. ‘I believe deeply in the principles and the ideals on which my party was founded,’ she told her supporters.  ‘I love its history, and I love what our party has stood for, but I love my country more.’

“Notice the use of the past tense there.

“The remarkable thing about Cheney’s speech is that it was aimed squarely at the voters. It was certainly not aimed at Trump; Cheney, as well as anyone, knows the pointlessness of addressing Trump in anything like an adult conversation.  It wasn’t even really directed at the institutional Republican Party, which is beyond repair at this point.  Instead, Cheney grabbed Republican voters by the lapels and told them to snap out of their Trump-induced trance.

“ ‘To believe Donald Trump’s election lies,’ she said, ‘you must believe that dozens of federal and state courts who ruled against him, including many judges he appointed, were all corrupted and biased; that all manner of crazy conspiracy theories stole our election from us; and that Donald Trump actually remains president today.’….

“The former president, Cheney charged, ‘knows that voicing these conspiracies will provoke violence and threats of violence. This happened on January 6, and it’s now happening again.  It is entirely foreseeable that the violence will escalate further, yet he and others continue purposely to feed the danger… No patriotic American should excuse these threats or be intimidated by them.’

“All of this was said almost as a challenge: Are you really one of the people who can believe this madness?  Are you the kind of person who is going to let Trump goad you into violence because of lies?”

Cheney also noted:

“No American should support election deniers for any position of genuine responsibility, where their refusal to follow the rule of law will corrupt our future.”

And:

“The great and original champion of our party, Abraham Lincoln, was defeated in elections for the Senate and the House before he won the most important election of all.

“Lincoln ultimately prevailed, he saved our union and he defined our obligations as Americans for all of history.”

Cheney talked about the spring of 1864, the Union had suffered more than 17,000 casualties in the Battle of the Wilderness, and Gen. Ulysses S. Grant had a choice, Cheney said: to retreat or to keep fighting.

“As the fires of the battle still smoldered, Grant rode to the head of the column,” she said.  “He rode to the intersection of Brock Road and Orange Plank Road. And there, as the men of his army watched and waited, instead of turning north, back toward Washington and safety, Grant turned his horse south toward Richmond and the heart of Lee’s army.  Refusing to retreat, he pressed on to victory.”

General Grant, President Lincoln “and all who fought in our nation’s tragic Civil War, including my own great-great-grandfathers, saved our union,” Cheney said.  “Their courage saved freedom, and if we listen closely, they are speaking to us down through generations.  We must not idly squander what so many have fought and died for.”

Cheney then described encounters with two voters who, in her telling, had approached her to say exactly what she wanted to say now.

One, she said, was a man from Brazil who told her, “I know how fragile freedom is, and we must not lose it here.”  The other was a woman in Jackson, Wyo., whose grandparents survived Auschwitz and who “was afraid that she had nowhere to go if freedom died here.”

“Ladies and gentlemen, freedom must not, cannot and will not die here,” Cheney said, before urging her supporters to join her in following what she had cast as General Grant’s path.

“As we leave here, let us resolve that we will stand together – Republicans, Democrats and independents – against those who would destroy our republic,” she said.  “They are angry and they are determined, but they have not seen anything like the power of Americans united in defense of our Constitution and committed to the cause of freedom. There is no greater power on this earth, and with God’s help, we will prevail.”

I love how Cheney brought up the Wilderness, and of course thought to myself, ‘I’m guessing 5% of America knows about this particularly deadly phase of the Civil War…the Wilderness Campaign.

The Battle of the Wilderness resulted in over 29,000 casualties on both sides, and with Grant pressing on, the next battle took place at Spotsylvania, and another 31,000 casualties, far more Union than Confederates were killed and wounded, and then at a third battle that June at Cold Harbor.  But Grant had reserves and he knew the Confederates didn’t.  Next up was the siege at Petersburg, Va., and eventually the end of the war the following April, 1865.

I’ve been to the Wilderness, Spotsylvania and Petersburg sites, and also a huge piece of history from the spring of 1863, Chancellorsville, where Confederate Gen. Stonewall Jackson was mortally wounded by friendly fire. 

Jackson’s left arm was amputated at the time and Gen. Lee on learning this said, “He has lost his left arm, but I have lost my right.”

Lee wrote to Jackson after learning of his injuries: “Could I have directed events, I would have chosen for the good of the country to be disabled in your stead.”

Jackson died of his wounds (and complications from pneumonia) on May 10, 1863, eight days after he was shot.

Dr. McGuire, attending to him, wrote an account of Jackson’s final hours and last words.

Jackson was in a delirious state, and in essence barked out orders.  And then he stopped, a smile spread over his face, and he said quietly, “Let us cross over the river, and rest under the shade of the trees.”

Perhaps the greatest final words in history, next to John Adams’ “Thomas Jefferson survives me,” not knowing Jefferson had died hours earlier…both on the 50th anniversary of the adoption of the Declaration of Independence, July 4, 1826….which just leaves you in wonder.

Editorial / Wall Street Journal

“Liz Cheney lost her Republican primary in Wyoming Tuesday because she bravely stood up to the stolen-election falsehoods of Donald Trump. Liz Cheney lost the primary because she alienated too many Republicans by making common cause with Democrats like Rep. Adam Schiff.

“Both statements can be true, and in our view both explain why Ms. Cheney lost decisively in a conservative state that had elected her three times and sent her father to Congress more times than that.

“Mr. Trump targeted Ms. Cheney for defeat as he did the other nine Republicans who voted to impeach him after his disgraceful behavior on Jan. 6, 2021.  He now has his revenge, as eight of them have lost or retired from Congress, but Republicans shouldn’t be so pleased.

“Ms. Cheney is a conservative by any measure and she has the courage of her convictions.  A party that can’t tolerate Ms. Cheney and others for voting their consciences after the ransacking of the Capitol by a Trump-inspired mob is narrowing its political and moral appeal.  She represents a not inconsiderable number of GOP voters who can’t abide Mr. Trump.

“Yet we don’t believe most of the Republicans who voted for Ms. Cheney’s opponent were dismissing the riot as a mere political protest or cheering on Mr. Trump.  They were rejecting the strategy of the Democrats and the media to tar the entire GOP as rioters and fanatics….

“GOP voters can hate what happened on Jan. 6 but also dislike the tactics of a committee that excluded Republicans who might have cross-examined witnesses.  We warned that Speaker Nancy Pelosi would hurt the credibility of the committee by blocking Minority Leader Kevin McCarthy’s appointees, and the public’s view of its work has predictably split along party lines.  One result has been to cost Ms. Cheney her seat in Congress.

“Ms. Cheney’s concession speech suggests her mission in politics now is to prevent Mr. Trump from becoming President again.  One option is running for the White House herself.  She’d have little chance at the GOP nomination.  But her goal may be to prosecute the political case against Mr. Trump in such a way that opens the door to other candidates.

“If Mr. Trump is the GOP nominee, Ms. Cheney could attempt a third-party run, though she says she won’t change parties.  Third parties haven’t won since Lincoln and the GOP in 1860, but Ross Perot arguably cost George H.W. Bush the White House in 1992.

“All of this points to the problem Republicans continue to have as long as Mr. Trump is the dominant party figure.  He is toxic to a majority of voters even as he retains the fervent support of tens of millions.  That voter divide cost him re-election in 2020, as enough Republicans in key states voted GOP for Congress but Joe Biden for President.  That evidence is clear in the county and Congressional district returns.

“This is why Democrats are doing their best to put Mr. Trump front and center in the 2022 campaign – with the Jan. 6 committee extending into the fall, and the continuing civil and criminal investigations in Georgia, New York and Washington, D.C.  Democrats may hate Mr. Trump but they also believe he will help them retain power despite their manifest policy and governance failures.  Liz Cheney lost in Wyoming, but her revenge may be a divided GOP that loses again in 2024.”

Editorial / New York Daily News

“Liz Cheney didn’t survive the Republican primary judgment of 170,000 Wyomingites, who more than two to one backed an election-results-denying lawyer over the GOP elected official who has led the charge to expose and condemn Donald Trump’s attempts to steal the presidency from Joe Biden. But in doing this necessary work, Cheney has earned the thanks of 330 million Americans, including the 28% of adults who identify as Republicans. The only way forward for the party and the nation is biting the wound and extracting the poison of the snake.

“The Jan. 6 select committee, where Cheney serves as vice chair and just one of two Republicans – after GOP leaders cynically rejected efforts to launch a genuinely bipartisan probe – has done immense service for America.  It has done so by exposing not only Trump’s aggressive incitement on that day, as he knowingly unleashed an angry armed mob upon the Capitol and then sat back relishing the mayhem, but his cynical attempts to undermine the will of the people using the Justice Department, goading his vice president to violate his oath, pressuring state officials and more.  This is all now vividly established, with more hearings and findings yet to come.

“But in America in 2022, where allegiance trumps decency, even reams of persuasive evidence may not move minds.  Polls show public opinion is roughly what it was before the hearings began, with narrow majorities – and tiny minorities of Republicans – calling the violence an insurrection for which Trump is responsible.

“Whether or not Cheney embarks on a presidential run, the people who make up the Republican Party have a closing window to declare who they are and what they believe in: a demagogue who plotted to undo the will of the people and who now wants to return to power riding a wave of corrosive, antidemocratic lies, or the values of the country they claim to love.  If the answer is the former, and it may be, Cheney can forever wear her party’s rejection as a badge of honor.”

For his part, Trump posted on Truth Social after Cheney had conceded: “Liz Cheney should be ashamed of herself, the way she acted, and her spiteful, sanctimonious words and actions towards others.  Now she can finally disappear into the depths of political oblivion where, I am sure, she will be much happier than she is right now.”

--Trump World

Allen Weisselberg, a longtime senior executive at Donald Trump’s family business, pleaded guilty on Thursday to helping the company engineer a 15-year tax fraud, in an agreement that will require him to testify about its business practices at an upcoming trial.

Weisselberg, the former chief financial officer at the Trump Organization, entered his plea to all 15 charges he faced in a New York state court in Manhattan.  Weisselberg, who has worked for Trump for about a half-century, is not expected to cooperate with Manhattan prosecutors in a larger probe they are conducting into Trump.  But his plea will likely strengthen their case against the former president’s company, which manages golf clubs, hotels and other real estate around the world.

Weisselberg faces five months at Rikers Island jail, which isn’t exactly Club Fed, though it’s expected he would be freed after about 100 days.  He had faced up to 15 years if convicted at trial.

Trump ruffled feathers in his native New York City late Wednesday by offering head-scratching endorsements of Dan Goldman and Rep. Carolyn Maloney in their respective Democratic congressional races.

Goldman, who’s running for a vacant 10th Congressional District in next Tuesday’s primary and served as the lead Democratic counsel during Trump’s first impeachment, is “honorable, fair, and highly intelligent,” the ex-president wrote in a post on Truth Social.

“While it was my honor to beat him, and beat him badly, Dan Goldman has a wonderful future ahead,” Trump wrote, referencing his first Senate impeachment trial acquittal in 2020.

“He will be a very compassionate and compromising to those within the Republican Party, and will do everything possible to make sure they have a fair chance at winning against the Radical Left Democrats, who he knows are destroying our country. I would like to thank Dan for fighting so hard for America.”

In his Maloney endorsement, Trump was even more effusive.

“A vote for Carolyn Maloney in NY-12 is a vote for the future!  She is a kind and wonderful person, who has always said terrific things about me, and will support me no matter what I do, just as I supported her very early on,” Trump posted.

Early in her congressional career, Maloney did accept thousands in political donations from Trump.

Maloney quickly renounced Trump’s endorsement and suggested he was attempting to damage her campaign.

Goldman’s campaign accused Trump of “trying to meddle in an election.”

But Goldman does indeed face a tough primary challenge from progressives, who label him too moderate…and he is just that, a moderate Democrat.

--Maureen Dowd / New York Times

“The lord of Mar-a-Lago assumes that whether he’s in or out of office, all top-secret papers are his, to tweet, wave around, declassify or deploy as political weapons.  He didn’t think he would appear as a traitor – the word he used to describe Edward Snowden – when he stashed classified material in his Florida Xanadu, with its approximately 58 bedrooms and 33 bathrooms.

“As an autocrat at heart, Trump simply conflates himself with the republic.  That’s why he probably never thought he was committing sedition on Jan. 6 when he egged on the mob to overthrow the government he was running.  Part of that mob was Ricky Shiffer, who was killed by the police on Thursday [Aug. 11] after he attacked an Ohio FBI office after Trump denounced the agency’s raid.

“Trump is also an expert at projection. As Peter Baker wrote in the Times, ‘Throughout his four years in the White House, Mr. Trump tried to turn the nation’s law enforcement apparatus into an instrument of political power to carry out his wishes.’  Now, he is accusing the FBI of being a political weapon for his successor.

“This egomaniac is desecrating our democracy, tearing the country apart for his own benefit. Fund-raising emails ranting about the FBI search of Mar-a-Lago should be headlined: ‘Let’s Ruin America So We Can Make Some Money Off It!’ (Actually, Rupert Murdoch could use that as a chyron.)

“The utterly spoiled Fifth Avenue brat accustomed to living in gilt palaces and cheating his way to success portrays himself as the world’s biggest victim. By degrading law enforcement and undermining government, he perpetuates his dark vision that no one’s legit and everyone’s out to get him, allowing him to lie and cheat with ease.

“One of the more delicious aspects of this is that Merrick Garland, the man Mitch McConnell kept off the Supreme Court, is now the one who could bring Trump to justice.

“Trump is always whining that someone else should be in trouble, not him.  On Friday, he put out a baseless claim, ‘President Barack Hussein Obama kept 33 million pages of documents, much of them classified.  How many of them pertained to nuclear?  Word is, lots!’

“Hussein?? Word is???

“Even after so many years of his poisonous folly, I remain amazed that the Republicans viciously smeared by Trump on his way up, like Marco Rubio, Ted Cruz and Lindsey Graham, now back up his smears.

“I hate to be the one to break it to him.  But, Donald, you are not the republic.  You are the one destroying the republic.  You are bad for America.  Word is, lots!”

--The man accused in the stabbing attack on Salman Rushdie, Hadi Matar, is being held without bail. Rushdie is lucky to have survived, but he faces a long recovery.

Matar pleaded not guilty to second-degree attempted murder and assault charges in upstate New York on Thursday after a grand jury charged him with one count of second-degree attempted murder, which carries a maximum sentence of 25 years in prison, and one count of second-degree assault.

Iran’s foreign ministry said the other day that Salman Rushdie and his supporters were solely to blame for the attack on him.  A spokesman said that “no one has the right to accuse Iran” of responsibility.  In 1989 Iran issued a fatwa calling on Muslims to kill the novelist.

My friend who was up at the Chautauqua Institute for his annual vacation with his wife (the three of us have dinner every year) said the people there are very upset there wasn’t more security. The district attorney in charge of the case said Matar got an advance pass and arrived a day early bearing a fake ID.

--The global drought worsened.  China’s southwestern Sichuan province is experiencing severe drought conditions, which show no signs of abating and are leading to power rationing, and threatening energy supplies elsewhere in the country.

Dazhou, a city of 5.4 million in northeast Sichuan, announced rolling blackouts in its urban areas on Wednesday, affecting power to homes, offices and malls.

Sichuan has been bearing the brunt of the country’s power shortage this year amid severe heatwaves that have depleted the Yangtze River basin.

The province relies on hydroelectric energy from dams for around 80 percent of its electricity needs, but the drought means that water flows into hydropower reservoirs have dropped by between 30 and 50 percent, year on year, local authorities said this week.

And now China is prepared to step up support for coal-fired power plants and miners to ensure stable energy supply, Vice-Premier Han Zheng said today.  Just what the global climate needs.

--The continental United States in July set a record for overnight warmth, providing little relief from the day’s sizzling heat for people, animals, plants and the electric grid, meteorologists said.

The average low temperature for the Lower 48 states in July was 63.6 degrees (17.6 Celsius), which beat the previous record set in 2011 by a few hundredths of a degree.  The mark is not only the hottest nightly average for July, but for any month in 128 years of record keeping, said National Oceanic and Atmospheric Administration climatologist Karin Gleason.  July’s nighttime low was more than 3 degrees (1.7 C) warmer than the 20th century average.

Scientists have long talked about nighttime temperatures – reflected in increasingly hotter minimum readings that usually occur after sunset and before sunrise – being crucial to health.

--In the industrial hub of Monterrey, Mexico – the nation’s third largest city and one of its wealthiest – thousands of residents wake up at dawn to check their taps and fill up containers.  As in water taps have run dry.  So people have to line up with large jugs, bottles and buckets at cisterns around the city, where fights often break out when people try to jump in line.

In this city of 5 million, running water is allowed only six hours a day, with some neighborhoods receiving none.

Two of the three main reservoirs serving the city are practically empty, a problem made even worse by an exceptionally dry spring and summer.

--For the second year in a row, Arizona and Nevada will face cuts in the amount of water they can draw from the Colorado River as the West endures an extreme drought, federal officials announced Tuesday.

The cuts planned for next year will force states to make critical decisions about where to reduce consumption and whether to prioritize growing cities or agricultural areas.  Mexico is also facing cuts.

In addition, the Bureau of Reclamation said that states had missed a deadline to propose at least 15% more cuts needed to keep water levels at the river’s storage reservoirs from dropping even more.

For example, officials have predicted that water levels at Lake Mead, the nation’s largest reservoir, will plummet further.  The lake is currently less than a quarter full.

Many of us have marveled (perhaps not the proper word) at the growth of the big cities in Arizona, wondering where they will get all their water should the mega drought continue.

Bottom line, we need a big snow season in the Sierras and the Rockies, and who wants to bet on that?

And just to throw something out there you won’t find anywhere else, who wants to bet on the upcoming World Cup ski schedule going off without a hitch…the Women starting off end of October in Solden, Austria?

--Lastly, there were a lot of stories over the weekend concerning a new study that warns another crisis is looming in California: “Megafloods.”

According to Daniel Swain, UCLA climate scientist and co-author of the study, when floods hit in a warmer planet, “the storm sequence is bigger in almost every respect.  There’s more rain overall, more intense rainfall on an hourly basis and stronger wind.”

Specifically, in terms of California, Swain said that such massive statewide floods have occurred every century or two over the past millennia, and today’s risk of such events has been substantially underestimated.

For instance, California’s Great Flood of 1862 stretched up to 300 miles long and 60 miles across.  According to the study, a similar flood now would displace 5 million to 10 million people, cut off the state’s major freeways for perhaps weeks or months with massive economic damage, and submerge major Central Valley cities as well as parts of Los Angeles.

The study actually expands on a 2010 “ArkStorm scenario,” which is named after the “atmospheric rivers” of moisture that would fuel the flood – one of biblical proportions.

According to UCLA, a flood like the one that happened in 1862 would be a $1 trillion disaster.

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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 $1760
Oil $89.95

Regular gas: $3.91, nationally; Diesel: $4.99

Returns for the week 8/15-8/19

Dow Jones  -0.2%  [33706]
S&P 500  -1.2%  [4228]
S&P MidCap  -1.4%
Russell 2000  -2.9%
Nasdaq  -2.6%  [12705]

Returns for the period 1/1/22-8/19/22

Dow Jones  -7.2%
S&P 500  -11.3%
S&P MidCap  -9.3%
Russell 2000  -12.8%
Nasdaq  -18.8%

Bulls 45.0
Bears 27.5

Hang in there.

Brian Trumbore

 

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