Week in Review

---

Week in Review

09/10/2022

For the week 9/5-9/9

[Posted 8:00 PM ET, Friday]

Note: StocksandNews has significant ongoing costs, and your support is greatly appreciated.  Please click on the gofundme link or send a check to PO Box 990, New Providence, NJ 07974.

Edition 1,221

What a week in the UK…a change in leadership, and the death of the beloved longest-running monarch in the nation’s history, Queen Elizabeth II.

Elizabeth II became Queen on the sudden death of her father King George VI on February 6, 1952.  She held her coronation at Westminster Abbey the following year.

Her reign of 70 years was seven years longer than that of Queen Victoria.

The new monarch will be known as King Charles III.

Statement from the Archbishop of Canterbury:

“It is with profound sadness that I join the nation, the Commonwealth and the world in mourning the death of Her Late Majesty The Queen.  My prayers are with The King and the Royal Family.  May God draw near them and comfort them in the days, weeks and months ahead.

“As we grieve together, we know that, in losing our beloved Queen, we have lost the person whose steadfast loyalty, service and humility has helped us make sense of who we are through decades of extraordinary change in our world, nation and society.

“As deep as our grief runs, even deeper is our gratitude for Her Late Majesty’s extraordinary dedication to the United Kingdom, her Realms and the Commonwealth.  Through times of war and hardship, through seasons of upheaval and change, and through moments of joy and celebration, we have been sustained by Her Late Majesty’s faith in what and who we are called to be.

“In the darkest days of the Coronavirus pandemic, The Late Queen spoke powerfully of the light that no darkness can overcome.  As she had done before, she reminded us of a deep truth about ourselves – we are a people of hope who care for one another.  Even as The Late Queen mourned the loss of her beloved husband, Prince Philip, we saw once again evidence of her courage, resilience and instinct for putting the needs of others first – all signs of a deeply rooted Christian faith.

“As we sustain one another in the face of this challenge, our shared grieving will also be a work of shared reimagining.  I pray that we commence this journey with a sense of Her Late Majesty’s faith and confidence in the future.

“As a faithful Christian disciple, and also Supreme Governor of the Church of England, she lived out her faith every day of her life.  Her trust in God and profound love for God was foundational in how she led her life – hour by hour, day by day.

“In The Late Queen’s life, we saw what it means to receive the gift of life we have been given by God and – through patient, humble, selfless service – share it as a gift to others.

“Her Late Majesty found great joy and fulfilment in the service of her people and her God, ‘whose service is perfect freedom’.  For giving her whole life to us, and allowing her life of service to be an instrument of God’s peace among us, we owe her a debt of gratitude beyond measure.

“The Late Queen leaves behind a truly extraordinary legacy; one that is found in almost every corner of our national life, as well as the lives of so many nations around the world, and especially in the Commonwealth.

“It was my great privilege to meet Her Late Majesty on many occasions. Her clarity of thinking, capacity for careful listening, inquiring mind, humor, remarkable memory and extraordinary kindness invariably left me conscious of the blessing that she has been to us all.

“In my prayers at this time I also give thanks for the marriage of The Late Queen and His Late Royal Highness Prince Philip.  Theirs was an inspirational example of Christian marriage – rooted in friendship, nourished by shared faith, and turned outwards in service to others.

“May Her Late Majesty Queen Elizabeth II rest in peace and rise in glory.”

British Prime Minister Liz Truss:

“We are all devastated by the news we have just heard from Balmoral.  The death of Her Majesty the Queen is a huge shock to the nation and to the world.  Queen Elizabeth II was the rock on which modern Britain was built.  Our country has grown and flourished under her reign.

“Britain is the great country it is today because of her.  She ascended the throne just after the Second World War.  She championed the development of the Commonwealth – from a small group of seven countries to a family of 56 nations spanning every continent of the world.   We are now a modern, thriving, dynamic nation. 

“Through thick and thin, Queen Elizabeth II provided us with the stability and the strength that we needed.  She was the very spirit of Great Britain, and that spirit will endure.  She has been our longest-ever reigning monarch.

“It is an extraordinary achievement to have presided with such dignity and grace for 70 years.  Her life of service stretched beyond most of our living memories.  In return, she was loved and admired by the people in the United Kingdom and all around the world.

“She has been a personal inspiration to me and to many Britons. Her devotion to duty is an example to us all.  Earlier this week, at 96, she remained determined to carry out her duties as she appointed me as her 15th prime minister.

“Throughout her life she has visited more than 100 countries and she has touched the lives of millions around the world.

“In the difficult days ahead, we will come together with our friends across the United Kingdom, the Commonwealth and the world to celebrate her extraordinary lifetime of service.

“It is a day of great loss, but Queen Elizabeth II leaves a great legacy.

“Today the Crown passes – as it has done for more than a thousand years – to our new monarch, our new head of state: His Majesty King Charles III.

“With the King’s family, we mourn the loss of his mother.  And as we mourn, we must come together as a people to support him. To help him bear the awesome responsibility that he now carries for us all.

“We offer him our loyalty and devotion just as his mother devoted so much to so many for so long.  And with the passing of the second Elizabethan age, we usher in a new era in the magnificent history of our great country – exactly as Her Majesty would have wished – by saying the words God save the King.”

Charles III, Britain’s new king.

“The death of my beloved Mother, Her Majesty The Queen, is a moment of the greatest sadness for me and all members of my family.

“We mourn profoundly the passing of a cherished Sovereign and a much-loved Mother.  I know her loss will be deeply felt throughout the country, the Realm and the Commonwealth, and by countless people around the world.

“During this period of mourning and change, my family and I will be comforted and sustained by our knowledge of the respect and deep affection in which The Queen was so widely held.”

Queen Elizabeth II, April 5, 2020, after the outbreak of the pandemic:

“While we have faced challenges before, this one is different. This time we join with all nations across the globe in a common endeavor, using the great advances of science and our instinctive compassion to heal. We will succeed – and that success will belong to every one of us.

“We should take comfort that while we may have more still to endure, better days will return: we will be with our friends again; we will be with our families again: we will meet again.”

Queen Elizabeth II, February 6, 2022, to mark the 70th anniversary of her accession to the throne:

“As we mark this anniversary, it gives me pleasure to renew to you the pledge I gave in 1947 that my life will always be devoted to your service.

“And so as I look forward to continuing to serve you with all my heart, I hope this Jubilee will bring families and friends, neighbors and communities, after some difficult times for so many of us, in order to enjoy the celebrations and to reflect on the positive developments in our day-to-day lives that have so happily coincided with my reign.”

Queen Elizabeth continued to serve right up until the day she died, accepting Boris Johnson’s resignation, and appointing Liz Truss as prime minister.  That was Tuesday.  Thursday, she was gone.

Editorial / The Economist

“The queen is dead.  The second Elizabethan era is over.  In the hours and days to come, the royal family will do what it does best, and mask uncertainty and emotion with ritual and pageantry.  There will be flags at half-mast; ceremonies will unspool; bells will toll.  But for now, there is unease….

“Elizabeth II brought a new kind of intimacy. The Victorians believed that to survive, the monarchy must keep its distance: ‘We must not let in daylight upon magic.’  During her reign, not only daylight but flashlights were let in.  It did not always go well. In 1997, when Diana – pursued by paparazzi – died in a Paris tunnel, Elizabeth was in turn pursued by a media who scented less blood than bloodlessness.

“Time and again Elizabeth was stripped to her shift by the media – and for a while neither Crown nor subjects coped.  Royal and remote, with her headscarves and clipped vowels, she seemed like a woman out of time.  Each person is an anachronism in their own era, and monarchs more than most.  Elizabeth’s uncle, the abdicating Edward VIII, wrote that he was ‘a Prince trained in the manners and maxims of the nineteenth century for a life that had all but disappeared by the end of his youth.’  The young Elizabeth went for lessons in a school built in the medieval era (Eton), using a book written in the Victorian one (Bagehot’s ‘English Constitution’), and was instructed by a tutor so used to teaching male students that he addressed the young princess as ‘gentlemen.’

“Small wonder then that Elizabeth’s values – of stoicism and duty, of keeping calm and carrying on, and above all of shutting up – were those of another era.  Under the dazzle of the modern media gaze such old-fashioned values looked dun-colored.  While her children, grandchildren and in-laws emoted in interviews and misbehaved, she buttoned her lip and stepped on planes and trains and boats.  She crisscrossed the country and the Commonwealth, listening, waving, weaving her lands together and asking: ‘Have you come far?’  Few had come further than she. When, at the Cop26 summit last year, she tutted at those who ‘talk, but don’t do’ it seemed a heartfelt comment from a woman who, for a lifetime, had done but not talked.

“As the media age became the social-media age, empathy mellowed harsh judgment.  The mood towards her shifted.  Her silence, which had seemed an unfashionable anachronism, started to seem prescient, even refreshing.  As the currency that bore her profile declined, and as Britain became diminished, her stock stayed high.  Donald Trump longed for a state visit; Michelle Obama put her arm around her.

“And now she has gone….

“Elizabeth II leaves a country, and Commonwealth, very different from those she inherited.  When she acceded to the throne the vestiges of imperial power lingered; the afterglow of victory in the Second World War was still warm.  Now Britain is no more than a regional power in the North Atlantic; secession is threatened on all sides; the Commonwealth, unraveling already, looks likely to unravel still further without her.  With her death a final thread that tethered Britain to an era of greatness has been cut.

“Few feel confident that the monarchy will thrive without her.  Many fear Charles will not be up to the job.  He has said too much, too much of it self-pitying: the Prince of Wails.  But in recent years he too has mellowed.  Some of the topics on which he has thumped the tub longest, notably the environment, now seem less like the obsessions of a crank.  And the Windsors have always had an instinct for survival…

“King Charles’ role is not an easy one.  Waiting in the wings is tough, and the corollary of the world’s longest-reigning monarch is the world’s longest heir-apparent.  Hers was a hard act to follow and people wonder whether he can.  In truth, there is no reason why he should.  She molded the monarchy to her character, and longevity made idiosyncrasy seem like orthodoxy.

“Change is possible.  Indeed, the coinage of the realm virtually demands it.  Ever since the Restoration in the 17th century, it has been customary for each British monarch to face the opposite way to the predecessor, perhaps to symbolize that each will do it their way.  George VI faced to the left; Elizabeth II, to the right; and now Charles to the left again.  Change, and continuity, continuity and change, minted into metal.”

Charles III, in his first address to the people:

“I speak to you today with feelings of profound sorrow.  Throughout her life, Her Majesty The Queen – my beloved Mother – was an inspiration and example to me and to all my family, and we owe her the most heartfelt debt any family can owe to their mother; for her love, affection, guidance, understanding and example.  Queen Elizabeth was a life well lived; a promise with destiny kept and she is mourned most deeply in her passing.  That promise of lifelong service I renew to you all today….

“In 1947, on her twenty-first birthday, she pledged in a broadcast from Cape Town to the Commonwealth to devote her life, whether it be short or long, to the service of her peoples. That was more than a promise: it was a profound personal commitment which defined her whole life.  She made sacrifices for duty.  Her dedication and devotion as Sovereign never wavered, through times of change and progress, through times of joy and celebration, and through times of sadness and loss.  In her life of service we saw that abiding love of tradition, together with that fearless embrace of progress, which make us great as Nations.  The affection, admiration and respect she inspired became the hallmark of her reign.  And, as every member of my family can testify, she combined these qualities with warmth, humor and an unerring ability always to see the best in people….

“When The Queen came to the throne, Britain and the world were still coping with the privations and aftermath of the Second World War, and still living by the conventions of earlier times.  In the course of the last seventy years, we have seen our society become one of many cultures and many faiths.  The institutions of the State have changed in turn. But, through all changes and challenges, our nations and the wider family of Realms – of whose talents, traditions and achievements I am so inexpressibly proud – have prospered and flourished.  Our values have remained, and must remain, constant.

“The role and the duties of Monarchy also remain, as does the Sovereign’s particular relationship and responsibility towards the Church of England – the Church in which my own faith is so deeply rooted.  In that faith, and the values it inspires, I have been brought up to cherish a sense of duty to others, and to hold in the greatest respect the precious traditions, freedoms and responsibilities of our unique history and our system of parliamentary government. As The Queen herself did with such unswerving devotion, I too now solemnly pledge myself, throughout the remaining time God grants me, to uphold the Constitutional principles at the heart of our nation.  And wherever you may live in the United Kingdom, or in the Realms and territories across the world, and whatever may be your background or beliefs, I shall endeavor to serve you with loyalty, respect and love, as I have throughout my life.

“My life will of course change as I take up my new responsibilities.  It will no longer be possible for me to give so much of my time and energies to the charities and issues for which I care so deeply.  But I know this important work will go on in the trusted hands of others.  This is also a time of change for my family. I count on the loving help of my darling wife, Camilla.  In recognition of her own loyal public service since our marriage seventeen years ago, she becomes my Queen Consort.  I know she will bring to the demands of her new role the steadfast devotion to duty on which I have come to rely so much.

“As my heir, William now assumes the Scottish titles which have meant so much to me.  He succeeds me as Duke of Cornwall and takes on the responsibilities for the Duchy of Cornwall which I have undertaken for more than five decades.  Today, I am proud to create him Prince of Wales, the country whose title I have been so greatly privileged to bear during so much of my life and duty.  With Catherine beside him, our new Prince and Princess of Wales will, I know, continue to inspire and lead our national conversations, helping to bring the marginal to the center ground where vital help can be given. I want also to express my love for Harry and Meghan as they continue to build their lives overseas.

“In a little over a week’s time we will come together as a nation, as a Commonwealth and indeed a global community, to lay my beloved mother to rest.  In our sorrow, let us remember and draw strength from the light of her example.  On behalf of all my family, I can only offer the most sincere and heartfelt thanks for your condolences and support.  They mean more to me than I can ever possibly express.

“And to my darling Mama, as you begin your last great journey to join my dear late Papa, I want simply to say this: thank you.  Thank you for your love and devotion to our family and to the family of nations you have served so diligently all these years.  May ‘flights of Angels sing thee to thy rest.’”

It was an emotional, touching speech, hitting all the right notes.  There are problems inside the Commonwealth to be addressed, the history of colonialism perhaps first and foremost.  Like The Queen, Charles III must also understand the limits of the monarchy.  He will. He has to.

Personally, I’ve had a certain affection for the British people since 1968, when as a 10-year-old, my parents took my brother and I to Europe for seven weeks, three of which were spent in England, as my father’s brother was on sabbatical there with his family.  While my cousins went off to school, our beloved Aunt Jean played tour guide every day.  And so at a young age I saw everything Royal.  It being 1968, Aunt Jean got us front-row seats for a minstrel show, and the performers, seeing this little kid, me, in a blazer and tie, called me up on stage.  Oh, how I wish there was a film of that moment.  [Actually, it’s probably best there isn’t for a number of reasons.]

Aunt Jean, knowing my older brother’s love of auto racing, got us tickets to the time trials of the British Grand Prix at Brands Hatch and we had incredible access to the pits.  In my office today is a photo of me standing next to former Formula One champion Denny Hulme of New Zealand.  My brother got a photo with his hero, Dan Gurney.  It was the greatest era for that sport (though so many of the drivers would die).

To my Uncle Conrad, a brilliant scientist like my father (our late Dr. Bortrum) who occasionally reads this column, thank you.  Aunt Jean died many decades ago, but she’s forever in our hearts as well. 

And to the British people, you have my prayers.  This is one tough stretch, with a new prime minister, tremendous economic issues, and a new monarch.

God save the King!

---

Ukrainian President Volodymyr Zelensky said in his Saturday night address: “Russia is preparing a decisive energy blow on all Europeans for this winter.”

NATO Secretary-General Jens Stoltenberg told reporters after meeting with Sec. of State Antony Blinken: “The winter is coming.  It’s going to be hard, and therefore we need both to continue to supply weapons and ammunition but also winter clothing, tents, generators and all the specific equipment which is needed for the winter.”

Stoltenberg also took the opportunity to remind everyone what is at stake in Putin’s invasion, warning: “All of us will pay a much higher price if Russia and other authoritarian regimes see that their aggression is rewarded.  If Russia stops fighting, there will be peace.  If Ukraine stops fighting, it will cease to exist as an independent nation. So we must stay the course, for Ukraine’s sake and for ours.”

And so this week in Ukraine….

--Rafael Grossi, director general of the International Atomic Energy Agency (IAEA), said his team closely witnessed shelling in the vicinity of the Russian-held Zaporizhzhia nuclear plant and confirmed the presence of Russian soldiers and military equipment.

The UN nuclear watchdog’s report also found Ukrainian staff were operating under constant high stress and pressure where there was an increased possibility of human error.

The agency said it was “gravely concerned” about the “unprecedented” situation at the plant, which is controlled by Russian forces but operated by Ukrainian technicians, and urged interim measures to prevent a nuclear disaster.

Areas damaged by shelling included a turbine-lubrication oil tank and the roofs of various buildings such as one housing a spent fuel transporter vehicle.  “We are playing with fire and something very, very catastrophic could take place,” Grossi said.

The UN called for a demilitarized zone around Zaporizhzhia, with Secretary General Antonio Guterres urging Russia withdraw its troops, with Ukrainian forces agreeing not to move in.

Russia’s UN ambassador Vassily Nebenzia then comically told reporters ahead of a UN Security Council meeting, “if we demilitarize then the Ukrainians will immediately step in and ruin the whole thing.”

In his address to the nation Monday, President Volodymyr Zelensky said fresh Russian shelling damaged “the last power transmission line connecting the plant to the energy system of Ukraine.”

“I consider the fact that Russia is doing this right now, right on the eve of the IAEA conclusions, very eloquent,” Zelensky said.  “Shelling the territory of the ZNPP means that the terrorist state does not care what the IAEA says, it does not care what the international community decides.  Russia is interested only in keeping the situation the worst for the longest time possible.”

Zelensky’s advice is for all the world’s leaders to officially recognize Russia as a “terrorist state,” with follow-on sanctions.  “Ukraine has a very clear, transparent, and honest position,” he said.  “While we controlled the plant, there was no threat of a radiation disaster. As soon as Russia came, the worst scenario imaginable immediately became possible.”

--The New York Times first reported Monday that Russia has allegedly been reduced to buying artillery shells and missiles from North Korea, citing U.S. intelligence officials.  And those orders are already in the thousands, though American officials haven’t elaborated on types desired or timing of the deliveries.  But if true, it is yet another violation of UN resolutions against the export of weapons by Pyongyang.

--At an economic forum in Vladivostok, Vladimir Putin said that Russia had not lost anything in a global confrontation with the United States over the war in Ukraine but had actually gained by setting a new sovereign course that would restore its global clout.

Putin increasingly casts the conflict as a turning point in history when Russia finally threw off the humiliations which accompanied the 1991 fall of the Soviet Union (one of the reasons why he didn’t attend Gorbachev’s funeral, I hasten to add).

In an attempt to underscore Russia’s tilt towards Asia, Putin said that the West was failing while Asia was the future.  In his main speech, Putin hardly mentioned Ukraine beyond a reference to grain exports.

When asked by a moderator if anything had been lost from the war, Putin said Russia had gained and would emerge renewed and purged of hindrances.  “We have not lost anything and will not lose anything,” said Russia’s leader since 1999.  “Everything that is unnecessary, harmful and everything that prevents us from moving forward will be rejected.”

“In terms of what we have gained, I can say that the main gain has been the strengthening of our sovereignty, and this is the inevitable result of what is happening now,” said Vlad.  “This will ultimately strengthen our country from within.”  He did concede the conflict unleashed “a certain polarization” in both the world and in Russia.

But he also told the West in July he was just getting started in Ukraine and dared the U.S. to try to defeat Moscow.  It would, he said, fail.

When addressing the sanctions, he said it was akin to a declaration of economic war.

“I am speaking of the West’s sanctions fever, with its brazen, aggressive attempt to impose models of behavior on other countries, to deprive them of their sovereignty and subordinate them to their will,” Putin said.  “In an attempt to resist the course of history, Western countries are undermining the key pillars of the world economic system built over centuries,” he said, adding that confidence in the dollar, euro and sterling was falling.

--Putin warned of a looming global food crisis and said he would discuss amending a landmark grain deal with Ukraine to limit the countries that can receive cargo shipments.

Putin said Russia and the developing world had been “cheated” by the UN, Turkey-brokered Ukrainian grain export deal, vowing to revise the terms.  Vlad said grain was not going to the world’s poorest countries as originally intended.

“What we see is a brazen deception…a deception by the international community of our partners in Africa, and other countries that are in dire need of food.  It’s just a scam,” Vlad said.  He added he would contact Turkey’s President Erdogan to discuss amending the deal to restrict which countries can receive shipments.

“It is obvious that with this approach, the scale of food problems in the world will only increase…which can lead to an unprecedented humanitarian catastrophe,” he said.

Putin didn’t give out any sources, and said only two of 87 ships, carrying 60,000 tons of products, went to poor countries, as he accused the West of acting as colonial states.  Vlad claimed, “Almost all the grain exported from Ukraine is sent not to the poorest developing countries, but to European Union countries.”

The UN says Turkey (not part of the EU) has been the most frequent single destination for shipments from Ukraine, with cargoes going to China, India, Egypt, Yemen, Somalia and Djibouti as well.

Turkish President Erdogan said Friday that he will urge Putin to send goods through the UN-backed Black Sea corridor when the two meet next week, as a way to avert the global food crisis.

“If Russian grain starts to arrive, we will send this grain, other products, all of them, until they reach these poor African countries,” Erdogan was quoted as saying.

--Also Wednesday, Putin said that Russia will stop supplying oil and gas if price caps are imposed, while the European Union faced divisions on how to respond to a deepening energy crisis. 

In his comments in Vladivostok, Putin blasted Europe’s calls for a price cap on Russian gas as “stupid,” and said Russia would walk away from its supply contracts if the West imposed price caps on Russia’s exports.

EU energy ministers are slated to meet on Friday to discuss how to respond to reduced gas supplies from Russia and a surge in prices that threaten to overwhelm businesses and consumers as demand rises in the colder months.

However, a plan to cap prices for Russian gas, one of the main measures being weighed by the EU, was thrown into doubt when a Czech minister said it should be taken off the agenda.  The Czechs hold the EU’s rotating presidency.

“It is not a constructive proposal, according to me.  It is more another way to sanction Russia than an actual solution to the energy crisis in Europe,” Czech Industry Minister Jozef Sikela was quoted as saying.

The energy crisis grows more acute after Russia’s Gazprom fully suspended gas supplied through the Nord Stream 1 pipeline to Germany, Saturday, after it said it found an engine oil leak during maintenance work last week.  Gazprom originally said the pipeline had shut down for three days for maintenance, then extended it.

Eric Mamer, the European Commission’s chief spokesman, wrote on Twitter: “Gazprom’s announcement this afternoon that it is once again shutting down Nord Stream 1 under fallacious pretenses is another confirmation of its unreliability as a supplier.

“It’s also proof of Russia’s cynicism, as it prefers to flare gas instead of honoring contracts.”

Siemens Energy, which manufactures and maintains the turbines that power the pipeline, cast doubt on Russia’s explanation of an oil leak in the main turbine.

“Such leakages do not usually affect the operation of a turbine and can be sealed on site,” the German company said.

Siemens also noted, “We have already pointed out several times that there are enough additional turbines available at the Portovaya compressor station for Nord Stream 1 to operate.”

Putin rejected Western claims that Moscow was using gas as a weapon to break opposition to its invasion of Ukraine. He said German and Western sanctions were to blame for the pipeline not being operational and that Ukraine and Poland decided on their own to switch off other gas routes into Europe. 

The impact on the surge in prices is forcing companies to curtail production and governments to spend billions on support to cushion consumers from the impact.  Europe’s electricity industry body urged governments to provide emergency credit to energy companies facing a liquidity squeeze from soaring collateral needs as power prices rise.

In Germany, a survey showed that more than 90% of medium-sized companies see rising energy and raw materials prices as a major or existential threat, highlighting the growing risks for the “Mittelstand”* which forms the backbone of Europe’s largest economy.

*Generally referred to as Germany’s small- and medium-sized family-owned businesses that historically provided much of the growth, ditto for Austria and Switzerland.

Wednesday, European Commission president Ursula von der Leyen said the EU should “re-channel” the excess profits of energy companies to help vulnerable households and companies and introduce “mandatory” reduction of electricity use at peak times.

“We will propose a cap on the revenues of companies that are producing electricity with low costs,” the commission chief told journalists ahead of a meeting of the 27-member-state energy ministers on Friday to consider a sweeping EU-wide intervention on energy markets.

“We will propose to re-channel these unexpected profits…so that the member states can support the vulnerable households and vulnerable companies.”

Including a price cap on Russian gas, the EU will include a mandatory cut in electricity use, von der Leyen said.

The filling of the EU’s gas storage facilities has now reached 82 percent, von der Leyen said.  “We were able to completely compensate so far the gas imports through other reliable suppliers.”

--A Ukrainian presidential adviser, Aleksiy Arestovych, said on Telegram late Tuesday that Ukraine was pressing a “parallel” counteroffensive in eastern and northeastern Ukraine as well as in the south.  “We are advancing and pressing almost along the entire frontline.”

“In the coming months, we can expect the defeat of the Russian army in the Kherson region on the western bank of the Dnieper and a significant advance of the Armed Forces of Ukraine in the east.”

U.S. officials described Russia’s forces as taking it on the chin when it comes to resupply operations inside occupied Ukraine, particularly in the south.

According to a Monday analysis from the Washington-based Institute for the Study of War: “Precision strikes on manpower and equipment concentrations, command centers, and logistical nodes” are “tangibly degrading Russian logistics and administrative capabilities,” especially along the Dnipro River.

The Wall Street Journal’s Yaroslav Trofimov reported Wednesday that Ukraine’s counteroffensive seemed to be making surprising progress along a roughly 50-kilometer stretch southeast of Kharkiv.  Trofimov, reporting from the scene, is watching the “Balakliya-Izyum front as Russian military bloggers and analysts remain in doomsday mode,” he tweeted.

“Lots of videos of Russian POWs (including a lieutenant-colonel) and abandoned Russian positions” coming from that region, he writes, and notes, “the speed of the Ukrainian advance seems to have stunned everyone.”  Russia also appears to be losing trucks and tanks at a familiar rate, almost akin to its failed sprint to Kyiv nearly six months ago.

British intelligence says Ukraine has three main fronts, “in the north, near Kharkiv; in the east in the Donbas; and in the south in Kherson Oblast.”  And these fronts are causing problems for Russian officers trying to decide where to deploy reserves.

Ukraine says it’s killed dozens of Russian military contractors around Kharkiv.  “Individual units count more than 40 percent seriously wounded and killed,” according to the daily report from Ukraine’s general staff, which noted that, “The bodies of many of the dead have not been identified and are counted as missing.”

But, again, true casualty figures on both sides will be figured out down the road by historians.

President Zelensky proclaimed he has “good news,” claiming the recapture of several settlements from Russia, though he said “now is not the time to name” them.  [Friday, in his nightly address, he said more than 30 settlements had been liberated.]

U.S. officials said Ukraine was making “slow but meaningful progress” against Russian forces.

Speaking in his nightly video address to Ukrainians, Zelensky said, “I think every citizen feels proud of our soldiers,” naming specific military units and applauding their bravery in combat.

Ukraine has tightened its operational security in recent weeks, sharing few details about a widely expected counteroffensive in the east and south.

Some reports suggest Ukrainian forces may be a few dozen kilometers from the city of Izyum, an important link in Russia’s military supply chain.

Secretary of State Antony Blinken visited Kyiv on Thursday to pledge $2 billion in fresh security assistance, including support the administration hopes will bolster the Ukrainian counteroffensive.

Defense Secretary Lloyd Austin said Thursday the U.S. military is now hoping Kyiv’s troops can begin to “reclaim their sovereign territory.”

Appearing with Austin, Joint Chiefs Chairman Army Gen. Mark Milley said, “So far Russian strategic objectives have been defeated,” but cautioned, “The war’s not over… It’s a war; there is give and take, action and reaction, and counteraction.”

“We are seeing real and measurable gains” for Ukraine using U.S.-made weapons, like HIMARS artillery, Milley said.  “The nature of war is often unpredictable,” he said, “but we are committed, along with Ukraine, to maintaining [that] they are a free and sovereign country.”

--A Russian-installed official in Ukraine’s Kherson region said on Monday that plans for a referendum on joining Russia had been “paused” due to the security situation, the Russian state-owned news agency Tass reported.

Russian planners are now targeting November 4 to hold sham referendums to annex occupied Ukrainian territory, officials said Wednesday.  That’s Russian National Unity Day, which first took place more than 400 years ago during the Polish-Russian war.

--Last week I wrote that a former Russian journalist, Ivan Safronov, faced 24 years in prison for treason after prosecutors said he disclosed state secrets, which Safronov vehemently denied.  A Russian court then sentenced him Monday to 22 years.

Safronov’s lawyer Dmitry Katchev said he was almost lost for words at the ruling.

“Safronov was given 22 years for his journalistic activity. I want each of you, who are looking at me now, to think whether it is worth staying in this profession.  If somebody was given 22 years for doing his job.”

Human rights lawyer Pavel Chikov said the sentence was a “savage, demonstratively cruel punishment, corresponding to the current state of Russia.”

Safronov’s arrest in July 2020 sparked outcry from Russian journalists, including at state-run outlets.  The European Union had called on Russia to drop all charges against Safronov and release him unconditionally. 

Understand the sentence is more than Russian courts typically hand down in murder cases.

--The United States on Wednesday accused the Kremlin of overseeing so-called “filtration” operations in Ukraine and providing lists of Ukrainians to be forced to move to areas of Russian control, and it demanded Russia halt the practice.

“The United States has information that (individuals) from Russia’s presidential administration are overseeing and coordinating filtration operations.  We are further aware that the Russian presidential administration officials are providing lists of Ukrainians to be targeted for filtration,” a State Department spokesman said on Wednesday.  “We demand that Russia halt these filtration operations immediately.”

Biden Agenda

--In an attempt to slightly walk back his Philadelphia comments from last week, President Biden dismissed criticisms that he is vilifying Republicans by calling former President Trump’s supporters extremists and threats to democracy.

Republicans and some Democrats accused Biden of fueling divisions for likening Trump’s Make America Great Again movement to “semi-fascism.”

“I want to be very clear upfront.  Not every Republican is a MAGA-Republican.  Not every Republican embraces that extreme ideology.  I know because I’ve been able to work with mainstream Republicans my whole career,” Biden said in a Labor Day speech in Milwaukee.

“But the extreme-minded Republicans in Congress have chosen to go backwards, full of anger, violence, hate and division, but together we can and we must choose a different path.”

Former South Carolina Gov. Nikki Haley, a Republican who served as UN ambassador under Trump, was critical of Biden’s speech in tweets that are emblematic of the disgust many Republicans feel.

“He’s done nothing to unite the nation.  Nothing to bring healing.  Nothing to alleviate the pain millions of Americans feel everyday.  He’s been a divider in chief and come November he must hear from all of us,” she said.

Sen. Maggie Hassan, D-N.H., said after Biden’s semi-fascism comment that while she has concerns about political violence, “I think President Biden’s comments just painted with way too broad a brush.”

Bottom line, Biden’s comments greatly hurt Democrats in tight races, though Hassan, who is up for reelection, apparently won’t face the stern test in November once feared by Democratic leaders.

--Officials within the administration are looking for ways to head off a feared spike in oil prices later this year, including the possibility of an additional release from the nation’s Strategic Petroleum Reserve.

The fear is that a spike could come in December when EU sanctions on Russian supplies take effect, unless other steps are taken. 

No decision has been made but releases from the SPR are to end in October, as currently scheduled, and thus far they have had an impact on gasoline prices.

But at some point, and soon, the U.S. needs to rebuild its reserves and at what price will that be?

---

Wall Street and the Economy

Just one item of note on the economic data front (at least that which I care about), and the ISM non-manufacturing (service sector) reading for August was strong, 56.9 (50 the dividing line between growth and contraction), better than consensus of 55.5 and the prior month’s 56.7.

The Atlanta Fed’s GDPNow barometer for the third quarter is 1.3%, down from last week’s 2.6% reading.  It’s still early in the forecasting period.

But the big story is inflation and next week will be a critical one, with data on consumer and producer prices next Tuesday and Wednesday, ahead of the Federal Reserve’s Open Market Committee gathering the following week, Sept. 20-21.

On Thursday, Fed Chair Jerome Powell suggested that the Fed’s actions do not have to cause a deep recession, saying in an interview with the Cato Institute: “We think we can avoid the very high social costs that Paul Volker and the Fed had to bring into play to get inflation back down (in the early 1980s).”

But Powell reiterated that the Fed is determined to lower inflation, now near a four-decade high of 8.5%, by raising its short-term funds rate, currently in a range of 2.25% to 2.50%.

While Powell didn’t comment on what the Fed may do in two weeks, the feeling is the FOMC will hike rates another 75 basis points, 0.75%, as it works its way to an expected funds rate range of near 4.00% by year end.

Europe and Asia

The European Central Bank raised interest rates by an unprecedented 75 basis points on Thursday to tame runaway inflation, even as a recession is now increasingly likely as the bloc has lost access to vital Russian natural gas.

The ECB lifted its deposit rate to 0.75% from zero and raised the main refinancing rate to 1.25%, their highest level since 2011, as inflation is becoming increasingly broad and was at risk of getting entrenched.

“Over the next several meetings the Governing Council expects to raise interest rates further to dampen demand and guard against the risk of a persistent upward shift in inflation expectations,” the ECB said in a statement.

The large hike comes as the ECB increased its own inflation forecasts and continues to see price growth well above its 2% target throughout its entire projection horizon.

“ECB staff have significantly revised up their inflation projections and inflation is now expected to average 8.1% in 2022, 5.5% in 2023 and 2.3% in 2024,” the ECB added.

Separately, EU governments have already earmarked more than $350 billion to subsidize consumers, industry and utility companies, ahead of the expected brutal winter and Russia’s expected actions on the energy front.

The huge public spending is in addition to a nearly trillion-dollar stimulus package adopted over the past year to deal with the economic fallout from the pandemic, mostly through borrowing.  Normally, such an enormous debt load would cause an uproar in the bloc, where fiscal conservatism has dominated for years, but today, it’s more about keeping the people happy, and preventing social unrest and political chaos.  [Think France and its Yellow Vest movement.]

On the data front, the eurozone service sector reading for August came in at 49.8, a 17-month low.

Germany 47.7, France 51.2, Italy 50.5, Spain 50.6, Ireland 54.7.

UK 50.9.

July retail sales in the EA19 fell 0.3% over June, -0.9% year-over-year.

Britain: As alluded to above, Liz Truss is Britain’s new prime minister, though she won the Conservative Party members-only vote by a smaller margin than forecast, 57% to 43% for her rival, former finance minister Rishi Sunak.  A YouGov poll in August had Truss with a 69-31 margin.

It was the narrowest victory since Conservative members were given a say on who to elect as their party leader in 2001.  Boris Johnson secured 66% of members’ votes in 2019.  In 2005 David Cameron garnered 68%.

In her acceptance speech, Truss ruled out a snap election and promised to deliver a “great victory” for the Conservative Party at the next general election in 2024.

But think about this.  Truss becomes prime minister with just 81,326 votes of party members…an infinitesimal figure given the size of the overall British electorate.  Now she has to govern for all Britons, not just Tory activists.

Truss selected a cabinet where for the first time a white man will not hold one of the country’s three most important ministerial positions.

Truss appointed Kwasi Kwarteng – whose parents came from Ghana in the 1960s – as Britain’s first Black finance minister, while James Cleverly is the first Black foreign minister.  Cleverly’s mother is from Sierra Leone and his father is white.

Suella Braverman, whose parents came to Britain from Kenya and Mauritius six decades ago, is home secretary, or interior minister, where she will be responsible for police and immigration.

Kind of interesting that the Conservatives in the UK have the best track record of political firsts among the main political parties, including appointing the first Jewish prime minister (and still only one) in Benjamin Disraeli in 1868.

Truss then faced her first major test, Prime Minister’s Questions on Wednesday, and by all accounts she nailed it.  Truss also laid out an energy plan to freeze costs on people and businesses, though there are few details, including the obvious…how to pay for it and how do you subsidize potential losses on the part of the energy companies that you want to produce as much as possible to make up for any Russian-related shortfalls.  Truss has said she is not for windfall profit taxes and that it is the “wrong thing to be putting companies off investing in the United Kingdom, just when we need to be growing the economy,” as she said in the Questions session.

Then the Queen died.  A figure of stability for 70 years, on the second day of Truss’ leadership.  Everyone knows, and most loved, the Queen.  Very few know Liz Truss.  Not an enviable position to be in.

According to a snap YouGov poll on Monday, only one in seven Britons say that Truss will be a better prime minister than Boris Johnson, with around a quarter of people feeling she will be worse.

Germany: Sunday, German Chancellor Olaf Scholz said his government had been planning for a total halt in gas deliveries in December, but he promised that his country would make it through the winter.  “Russia is no longer a reliable energy partner,” Scholz said, stating the obvious.

Scholz said the government will spend at least $65 billion on shielding customers and businesses from soaring inflation.  He said gas storage reached 85% of capacity, almost a month ahead of schedule, but who knows what winter will really bring.

Scholz channeled English soccer club Liverpool, in telling the people “You’ll never walk alone,” a song famously adopted by Liverpool fans.

Public buildings in Germany, other than hospitals, are to be heated to a maximum of 19C (66F) and the heating may be turned off completely in entrances, corridors and foyers.

In a bit of a surprise, in a poll from German broadcaster ZDF, 70% of Germans want to continue supporting Ukraine, despite high energy prices.

Turning to Asia…China reported its exports for August and they were far worse than expected, up just 7.1% year-over-year vs. a consensus of 12.8% and July’s 18% rise.  Imports were up only  0.3% Y/Y.

Exports to the U.S. fell 3.8%, with imports down 7.4% Y/Y, according to China Customs data.

The private Caixin reading on the service sector came in at 55.0 vs. 55.5 in July, so solid.

But the big news at week’s end was on inflation, with consumer prices in China rising just 2.5%, and, very importantly, producer, or factory-gate prices, rose only 2.3% year-over-year vs. 4.2% in July and 13.5% in October.  The U.S. Federal Reserve no doubt will take note of this, but it won’t impact its decision in two weeks.

Japan’s final reading on second-quarter GDP came in better than expected, 3.5% annualized vs. a consensus of 2.9%.  In an important early look at the third quarter, July household spending (a big metric here) was 3.4% year-over-year, a bit below forecasts.

Japan’s August services PMI was 49.5. 

Street Bytes

--Stocks ended their three-week losing streak, traders seemingly comfortable with another looming hefty rate hike from the Fed, which is kind of stupid.  The Dow Jones ended up 2.7% on the holiday-shortened week to 32151, while the S&P 500 gained 3.6% and the Nasdaq 4.1%.

--U.S. Treasury Yields

6-mo. 3.53%  2-yr. 3.56%  10-yr. 3.32%  30-yr. 3.45%

The yield on the key 10-year has now risen six straight weeks, and Freddie Mac’s yield on a 30-year fixed-rate mortgage is at 5.89%, the highest since 2008.

--The Bank of Canada delivered another hefty increase to its benchmark interest rate, taking it above 3% for the first time in over 14 years, and said rates need to go higher to tame inflation.

The central bank on Wednesday lifted its overnight target rate by 75 basis points to 3.25%, following a surprise full-point increase in July.

The most recent consumer-price index report in Canada indicated annual inflation slowed in July to 7.6% from a four-decade high of 8.1%.  The deceleration was largely the result of lower gasoline prices.

--Crude oil prices fell a second week, from $92 on Aug. 26 down to $86 today (though before a rally Friday, it was around $82).  It’s all about weakening global demand, confirmed by China and U.S. trade data this week. Spikes in natural gas prices aren’t helping, threatening to send the world economy into recession, further reducing oil demand.

The risk of losing Russian energy supplies is no longer providing enough support to prices, resulting in traders focusing on the demand side drivers of crude.

Oil rose Monday as OPEC announced a small output cut, reducing output by 100,000 barrels a day in October.  Russia, which has closed down a key natural gas pipeline for Europe indefinitely, was opposed to an OPEC output reduction, but gave in.  Saudi Arabia had floated the idea of a cut as prices slipped for a third consecutive month in August.

Russia is concerned that a production cut would signal that global oil supply is greater than demand, weakening its leverage in energy negotiations, the Wall Street Journal reported.

OPEC just lifted its production target by 100,000 barrels a day after President Biden visited Saudi Arabia over the summer.  But oil-pumping countries were struggling to produce enough to meet their quotas even before that.

Also feeding into OPEC’s thinking: a possible increase in supply if Iran is able to agree to a new nuclear deal with the United States and Europe, though nothing is imminent on this front.

Separately, members of OPEC are forecast to earn $842 billion in revenues from oil exports in 2022, nearly 50% higher compared to 2021 and the highest since 2014, the U.S. Energy Information Administration reported Wednesday.

OPEC’s export revenues jumped nearly 70% in 2021 after it had its lowest such revenues in 2020 since 2002.  The revenue increase this year can be attributed to higher production and higher crude prices, the EIA said.

OPEC’s net revenues are expected to fall in 2023 due to lower global crude prices as global oil inventories continue to build during the year, the EIA said.

However, uncertainty remains about how sanctions will affect Russia’s oil production, according to the agency.

--California’s largest utility warned customers to prepare for the possibility of rotating power outages as a brutal heat wave pummeled the state with record-high temperatures in the 100s.

Pacific Gas & Electric Co. said it had notified 525,000 customers to prepare for possible outages, but the California Independent Systems Operators, which manages the state power grid, hadn’t asked utilities to implement rotating outages.

--German airline Lufthansa reached a deal in wage talks with its pilots union, averting a strike.

--A coalition of airlines have warned Hong Kong could be left out of their plans for next year unless the government provides a clear timeline of when Covid-19 quarantine rules will be lifted, noting that 48 carriers no longer fly to the city.

Out of the 110 foreign airlines that flew to Hong Kong before the coronavirus pandemic emerged, about 48 had stopped doing so because of stringent restrictions, including on crews.

--TSA checkpoint travel numbers vs. 2019

9/8…86 percent of 2019 levels
9/7…91
9/6…107
9/5…105
9/4…84
9/3…108
9/2…113
9/1…110

--The Biden administration announced that tech firms which receive federal funding under its new CHIPS Act will not be allowed to build any “advanced technology” facilities, or factories, in China for ten years.  The move was justified on national security grounds, amidst fears of China stealing such technology.  The U.S. also wants to rebuild its own share of the global semiconductor market, now just 10%, down from nearly 40% in 1990.

--California Gov. Gavin Newsom (D) signed a nation-leading measure giving more than half a million fast-food workers in California more power and protections, despite the objections of restaurant owners who warned it would drive up consumers’ costs.

The landmark law creates a 10-member Fast Food Council with equal numbers of workers’ delegates and employers’ representatives, along with two state officials, empowered to set minimum standards for wages, hours and working conditions in California.

“California is committed to ensuring that the men and women who have helped build our world-class economy are able to share in the state’s prosperity,” Newsom said in a statement. “Today’s action gives hardworking fast food workers a stronger voice and seat at the table to set fair wages and critical health and safety standards across the industry.”

The law sets a cap on minimum wages for fast-food workers at chains with more than 100 restaurants at $22 an hour next year, compared with the statewide minimum of $15.50 an hour, with cost-of-living increases thereafter.

Restaurant owners and franchise operators opposed the law, saying the legislation would increase consumers’ costs.

The International Franchise Assn. called it a “fork in the eye” of people who run restaurant franchises and said it could raise consumer prices as much as 20%.

“This bill has been built on a lie, and now small business owners, their employees, and their customers will have to pay the price,” IFA President and Chief Executive Matthew Haller said in a statement.  “Franchises already pay higher wages and offer more opportunity for advancement than their independent counterparts, and this bill unfairly targets one of the greatest models for achieving the American Dream and the millions of people it supports.”

--It has been a tough few years for retailer Bed Bath & Beyond Inc., and it grew worse over the weekend as Gustavo Arnal, who was chief financial officer, committed suicide by jumping from his apartment building in New York City (Tribeca), days after the struggling company announced it was closing stores and laying off workers.

Arnal was among the defendants named in a class-action suit that accused him, Chewy.com founder Ryan Cohen and others of artificially inflating the troubled housewares giant’s share price, a classic “pump-and-dump.”

Cohen, the chairman of GameStop, came under fire last month for making $68.1 million in profits by unloading a stake in BBBY that reportedly included 7.78 million shares and options to purchase another 1.67 million.  The 56% gain came about seven months after he first invested in the shares.

On Aug. 16, the same day Cohen cashed out, Arnal sold 42,513 shares of BBBY worth more than $1 million.  [Some say he sold over 55,000 shares.]

After the disclosure of the stock sales, the shares fell from a record high of $30 to below $9 days later.

--Kroger raised its full-year outlook as people continued to prioritize at-home food consumption amid high inflation, a trend that drove the food retailing company’s fiscal second-quarter results above Wall Street’s estimates.

The company now expects identical sales without fuel to grow between 4% and 4.5%, up from a previously forecast 2.5% to 3.5%.

“Customers continue to adjust their shopping habits in response to ongoing inflation,” CEO W. Rodney McMullen said on a conference call.  “We continue to see more customers cooking from scratch and eating out less often.”

Kroger’s same-store sales, ex-fuel, increased 5.8% in the quarter, more than the Street consensus.

--Ernst & Young has embarked on a plan to split its consulting and auditing businesses, in a radical move that will generate windfalls for the firm’s partners and could upend the business model for accounting firms.

Deloitte, KPMG and PricewaterhouseCoopers have all said they plan to keep the two sides under  one roof.  These other Big Four firms hope to exploit EY’s focus on its restructuring to poach clients and employees.

The firm’s 13,000 partners will vote on splitting up EY.

The far-reaching proposal would separate EY’s accountants who audit companies such as Amazon.com from its faster-growing consulting business, which advises on tax issues, deals and more.

EY is projecting a surge in growth and greater profitability for the consulting business once it is freed from conflict-of-interest rules that limit the services it can sell to audit clients.

The 13,000 partners are expecting multimillion-dollar payouts from the split.  To pay for that, EY is planning to raise about $11 billion in a public sale of a 15% stake in the consulting company, which will also borrow some $18 billion, according to EY’s global chairman and chief executive, Carmine De Sibio.

--The blank-check acquisition firm that agreed to merge with Donald Trump’s social media company failed to secure enough shareholder support for a one-year extension to complete the deal, according to reports on Monday. At stake is a $1.3 billion cash infusion that Trump Media & Technology Group (TMTG), which operates the former president’s Truth Social app, stands to receive from Digital World Acquisition Corp., the special purpose acquisition company (SPAC) that inked a deal last October to take TMTG public.

The transaction has been in ice amid civil and criminal probes into the circumstances around the deal.  Digital World had been hoping the Securities and Exchange Commission, which is reviewing its disclosures on the deal, would have given its blessing by now for the transaction to proceed.

Most of Digital World’s shareholders are individual investors and getting them to vote through their brokers has been challenging.  CEO Patrick Orlando said last week DWAC (the stock symbol) needs 65% of its shareholders to vote in favor of the proposal to extend its life by 12 months for the move to become effective.

So it came down to Thursday, and DWAC came up short of getting enough shareholder votes and will try again in October.

However, the company said in recent days retail investors, energized by an admiration for Trump and the power of social media platforms, have rallied to vote and pushed up the percentage of favorable votes cast dramatically, according to a Reuters report.  By Thursday, roughly 40% had voted in favor of the deal, and CEO Orlando said the vote deadline had now been pushed back to Oct. 10.

As for Donald Trump, he started using Truth Social in April and currently has more than 4 million followers – a fraction of the 89 million he had on Twitter before he was banned over his role in the January 6 riots at the Capitol.

--Amazon.com Inc. said that its pricey “Lord of the Rings” prequel series was watched by more than 25 million viewers around the world on its first day, a record debut for a Prime Video streaming series.

The Pandemic

--I get into it further below, but 65 million Chinese in 33 cities, including seven provincial capitals, are currently under varying levels of lockdown, with the government discouraging domestic travel during the Mid-Autumn Festival on Saturday and the weeklong National Holiday at the start of October.

Outbreaks have been reported in 103 cities, the highest since the early days of the pandemic in early 2020.

Ahead of the Communist Party’s twice-a-decade national congress in mid-October, Beijing is doubling down, asking cities – even those without an outbreak – to conduct regular mass testing. 

--Three Democratic senators, Bob Menendez (NJ), Jon Ossoff (Ga.), and Jackey Rosen (Nev.), tested positive for Covid this week, at least two of whom confirmed they had mild symptoms, with Ossoff isolating in India, where he is part of an economic delegation.

--Face masks are no longer required on mass transit in New York, Gov. Kathy Hochul announced Wednesday, marking an end to the pandemic-era policy enacted in April 2020.

“We haven’t seen any spikes, and also people are getting back to work, back to school,” Hochul said.

Not that I’m about to ride a New York City subway, but I think I’d still wear a mask on that.

--The CDC says Omicron subvariant BA.5 represents 88.6% of total Covid cases in the United States as of last week, but cases and deaths are coming down, thankfully.  Personally, I will get the booster when I find the time.

Covid-19 death tolls, as of early tonight…

World…6,514,043
USA…1,075,314
Brazil…684,866
India…528,121
Russia…385,165
Mexico…329,705
Peru…216,003
UK…189,026
Italy…176,157
Indonesia…157,741
France…154,468

Canada…44,085

[Source: worldometers.info]

U.S. daily death toll…Mon. 79; Tues. 202; Wed. 378; Thurs. 324; Fri. 293.

Foreign Affairs, part II

China: We learned that President Xi is meeting with Vladimir Putin in Uzbekistan next week.  Putin said in Vladivostok that China would pay Gazprom for its gas in national currencies, based on a 50-50 split between the Russian ruble and the Chinese yuan.

And as previously stated, Xi is attending the Group of 20 summit in Bali in November. 

Li Zhanshu, the third-ranking politician in the Communist hierarchy, has also been traveling abroad this week, making him the first Politburo Standing Committee member to do so.

But while diplomatic activity is restarting, analysts say the prospects of any abrupt change in China’s zero-Covid policy, as noted above, is remote.  Instead, restrictions are likely to be relaxed gradually.

As if China didn’t have enough problems with its severe drought, the death toll in this week’s earthquake in western China is at least 74, with dozens still missing.

The 6.8 magnitude quake struck Monday in Sichuan province, shaking buildings in the provincial capital of Chengdu, whose 21 million citizens are under a strict Covid lockdown.

Following the quake, police and health workers refused to allow anxious residents of apartment buildings out, adding to anger over the government’s Covid policy.

There have been protests, not just online, but in the streets, though still small in scope.

China’s deadliest earthquake in recent years, by the way, was a 7.9 magnitude quake in 2008 that killed nearly 90,000 in Sichuan.  Towns and rural communities outside Chengdu were devastated, leading to a years-long rebuilding effort with more resistant materials.

On the Taiwan front, the State Department approved a potential $1.1 billion sale of military equipment to the island, including 60 anti-ship missiles and 100 air-to-air missiles, the Pentagon announced last weekend.

North Korea: I thought I was going to be writing this week how quiet Pyongyang has been the past few weeks, especially given the extensive joint U.S.-South Korean military drills the North normally rails against.

But then on Friday, state media reported North Korea passed a law enshrining the right to use preemptive nuclear strikes to protect itself, a move leader Kim Jong Un said makes its nuclear status “irreversible” and bars any denuclearization talks.

The move comes as observers say the North appears to be preparing to resume nuclear testing for the first time since 2017, after summits with then-President Donald Trump and other world leaders in 2018 failed to persuade Kim to abandon his weapons development.

KCNA reported that Kim said in a speech to parliament: “The utmost significance of legislating nuclear weapons policy is to draw an irretrievable line so that there can be no bargaining over our nuclear weapons.”

North Korea has already declared itself a nuclear weapons state in its constitution, but the new law goes beyond that to outline when nuclear weapons can be used, including to respond to an attack, or stop an invasion.  It also allows for preemptive nuclear strikes if an imminent attack by weapons of mass destruction or against the country’s “strategic targets” is detected.

The Biden administration has offered to talk to Kim any time, at any place, and South Korean President Yoon Suk-yeol has said his country would provide massive amounts of economic aid if Pyongyang began to give up its arsenal.  North Korea has rebuffed those overtures, however, saying the United States and its allies maintain “hostile policies” such as sanctions and military drills that undermine their messages of peace.

“As long as nuclear weapons remain on earth and imperialism remains and maneuvers of the United States and its followers against our republic are not terminated, our work to strengthen nuclear force will not cease,” Kim said.

Iran: The talks to resurrect the 2015 Iran nuclear deal remain stalled, embarrassingly so.  Months after months.  President Biden, through national security spokesman John Kirby on Thursday, said the president wants to ensure that the U.S. has “other available options” to ensure that Iran does not achieve nuclear weapons capability, if efforts to revive the deal fail. 

Kirby said the Biden administration would remain active in pushing for reimplementation of the agreement, but its patience was “not eternal.”

“Even as he has fostered and encouraged and pushed for a diplomatic path, (Biden) has conveyed to the rest of the administration that he wants to make sure that we have other available options to us to potentially achieve that solid outcome of the no nuclear weapons capability for Iran,” he said.

Separately, the U.S. military said Monday that it flew a pair of nuclear-capable B-52 long-distance bombers over the Middle East in a show of force, the latest such mission in the region as tensions remain high between Washington and Tehran.

The bombers took off from Britain’s Royal Air Force base at Fairford, England, and flew over the eastern Mediterranean, the Arabian Peninsula and the Red Sea on Sunday in training missions together with Kuwaiti and Saudi warplanes before departing the region.

Meanwhile, Iran continues to try to steal American unmanned surface vessels, drone boats, in the Red Sea, but each time, U.S. destroyers retook possession of the drones after they were seized.

The “Saildrones” are unarmed and take unclassified photos of the surrounding environment, a statement from the U.S. 5th Fleet said.

It’s unclear why Iranian forces have started attempting to steal unmanned surface vessels in the region.

Iraq: The country’s Supreme Court said on Wednesday it does not have the constitutional authority to dissolve parliament, a key demand by powerful cleric Moqtada al-Sadr, who has threatened further unrest if the court does not do as he says.  The court added in a statement that the parliament must dissolve itself in a case where it is not carrying out its duties.

Israel: Washington will press Israel to review its policies and practices on rules of engagement after the Israel Defense Forces concluded that Al Jazeera journalist Shireen Abu Akleh was likely shot by an Israeli soldier, the State Department said on Tuesday.

“We will continue to press Israel directly and closely at the senior-most levels to review its policies and practices on this to ensure that something like this doesn’t happen again in the future.”

A statement on the investigation into the May 11 shooting published Monday said “there is a high possibility that Ms. Abu Akleh was accidentally hit by IDF gunfire that was fired toward suspects identified as armed Palestinian gunmen.”  It said it was also possible that she was hit by Palestinian gunmen.

Pakistan:  The situation with the massing flooding only gets worse, as the country’s largest freshwater lake was breached by authorities, displacing up to 100,000 from their homes, but saving more densely populated areas from gathering flood water, the government said.

UN Secretary-General Antonio Guterres called for “massive” international support while visiting the country today.  Islamabad put the cost of flood-related damage at $30 billion.

The death toll is about 1,400.  The lives of nearly 33 million people have been disrupted, millions of these in dire need of food.

Brazil: President Jair Bolsonaro marked his country’s Independence Day with political rallies mixed with displays of military might.  His oratory promised a fiery confrontation at the ballot box in October.  Opinion polls show him trailing Luiz Inacio Lula da Silva, a former president, by at least ten points.  But Bolsonaro is dismissing the polling as a “lie,” and called Brazil’s opposition “evil,” as he plans his own Jan. 6th insurrection next month.  Of this there is zero doubt.  It’s going to be explosive.  This is a bad guy.

Random Musings

--Presidential approval ratings….

Gallup: 44% approve of President Biden’s job performance, 53% disapprove; 40% of independents approve (Aug. 1-23).

Rasmussen: 45% approve of Biden’s performance, 53% disapprove (Sept. 9). Unchanged over the week and little changed the past month.

I wanted to mention a Quinnipiac University national poll from Aug. 31, that gave Biden a 40% approval rating (52% disapproval), an improvement from a dreadful 31-60 split in July.  Only 36% of independents approve, 55% disapprove.

This poll received some press because it also found Americans, by a 67 to 29 percent margin, think the nation’s democracy is in danger of collapse; a 9-point increase from a Quinnipiac poll Jan. 12, 2022, when it was 58-37.

Americans by a 62-33 margin do not want Trump to run for president in 2024.  Republicans, 72-25, say they want him to run, up from 69-27 in July.

Americans 67-26 do not want Joe Biden to run in 2024.  Only 47 percent of Democrats want to see Biden run for reelection. 

--Trump World:

A document describing a foreign government’s military defenses, including its nuclear capabilities, was found by FBI agents who searched former president Donald Trump’s Mar-a-Lago residence and private club last month, underscoring concerns among U.S. intelligence officials about classified material stashed at the Florida property, the Washington Post reported on Tuesday.

“Some of the seized documents detail top-secret U.S. operations so closely guarded that many senior national security officials are kept in the dark about them.  Only the president, some members of his Cabinet or a near-Cabinet-level official could authorize other government officials to know details of these special-access programs, according to people familiar with the search, who spoke on the condition of anonymity to describe sensitive details of an ongoing investigation.”

The documents were stored at Mar-a-Lago, with uncertain security, more than 18 months after Trump left the White House.

Trump previously denied reports that there were nuclear secrets found at Mar-a-Lago, calling them a “hoax.”

But the ex-president uncharacteristically avoided mentioning the new nuclear report in a rant on Truth Social about the search.

Instead he complained that they took some of his medical and tax records, which the FBI says were mixed in with highly classified information in boxes in a lightly secured storage room.

“They also improperly took my complete and highly confidential medical file and history, with all the bells and whistles (at least they’ll see that I’m very healthy, an absolutely perfect physical specimen!” Trump wrote.

Trump’s own former attorney general trashed that complaint, noting that the fact Trump kept personal documents alongside highly classified documents is evidence of mishandling.

“If you find very sensitive documents in Trump’s desk along with his passports, that ties Trump to those documents,” Barr said Wednesday on Fox News.

Sunday, Fox News host Eric Shawn wondered aloud whether Trump might have attempted to sell the classified documents he kept at Mar-a-Lago to Russia or Saudi Arabia.

“And more questions are being raised this morning.  Did former President Trump try to sell or share the highly classified material to the Russians or to the Saudis or others?” Shawn asked.  “Or were the documents innocently mishandled and stored because he thought he had a legal right to have them?”

The Washington Post’s Josh Dawsey, who helped break the story on the nuclear document, was asked, ‘Assuming for the sake of argument that the former president did in fact declassify these documents, is there even one innocuous explanation for why he had them at Mar-a-Lago?’

Dawsey: “That has been the $64,000 question.  Former President Trump’s advisers say he simply believed the documents and belongings were his, and not the federal government’s.  And that he has a deep distrust of the agencies that wanted the documents back – and that he is simply stubborn.  My reporting over four years of covering him would suggest he frequently would decline to do what people around him believed he should do.

“But here are the facts: For more than a year, the National Archives and his own lawyers begged him to give them back. He gave some back, but kept others.  Then he was given a subpoena to give documents back and still kept some. Eventually, the FBI raided his house, after the Department of Justice believed his team was not telling the truth – and that he was going to keep highly classified documents.  One of the enduring questions we have been trying to answer is why he repeatedly ignored all these warnings – and potential criminal repercussions.”

Trump was slammed Wednesday after the report claiming he had super top secret documents stashed at his home.

Former Defense Secretary Williams Cohen led the chorus of outrage, calling the new report fresh evidence that Trump poses a “clear and present threat to democracy.”

Ex-federal prosecutor Renato Mariotti called the mere presence of the document at Trump’s home evidence of a grave crime.

“It is among our nation’s most closely held secrets,” Mariotti said on Twitter.  “What possible justification is there for taking and holding this document in a country club?”

We know that of the 184 classified documents retrieved, 25 were marked as top secret, 92 were labeled secret and another 67 were confidential, according to a Department of Justice affidavit.

But, Monday, the entire trove of documents were off limits to the government after U.S. District Judge Aileen Cannon allowed Trump’s request for a third party, an independent arbiter, known as a special master, to review them Monday.

Judge Cannon said she made her decision “to ensure at least the appearance of fairness and integrity under the extraordinary circumstances.”

The DOJ had argued the allowance from the Trump-appointed judge was redundant and would slow the case, saying it was unnecessary since it had already reviewed potentially privileged documents and identified a limited subset of materials that could be covered by attorney-client privilege. 

It also said Trump was not entitled to the return of any of the presidential records that were taken since he is no longer president and the documents therefore do not belong to him. And personal items that were recovered were commingled with classified information, giving them potential value as evidence, the department has said.

The feds and Trump’s team were to agree on a list of special master candidates by Friday.

Cannon did allow for the continuation of a classification review and national security risk assessment, but many experts believe this is outrageous…that there was no need for a third party to come in.

The DOJ is appealing her decision.

--Among Donald Trump’s comments on Truth Social or at his rally in Wilkes-Barre, Pa., last Saturday:

“So much talk, back and forth, including from my many patriotic ‘defenders & supporters,’ about our Federal Government working every seldom (or never used) rule and regulation in order to get and destroy, at any cost, President Donald J. Trump.  Same concepts, anger, and Radical Left maniacs and RINOs who have been working the system of Hoaxes and Scams ever since I came down the ‘golden escalator’ in Trump Tower seven years ago. They also have the same problem, however – I DID NOTHING WRONG!!!”

“Remember, it takes courage and ‘guts’ to fight a totally corrupt Department of ‘Justice’ and the FBI.  They are being pushed to do the wrong things by many sinister and evil outside sources. Until impartiality, wisdom, fairness, and courage are shown by them, our Country can never come back or recover – it will be reduced to being a Third World Nation!”

“The USA is rapidly becoming a Third World Nation.  Crooked Elections, No Borders, a Weaponized Justice Department & FBI, record setting INFLATION, highest ever Energy Prices (and everything else), and all, including our Military, is WOKE, WOKE, WOKE.  Most dangerous time in the history of our Country!!!”

“It was not just my home that was raided…it was the hopes and dreams of every citizen who I’ve been fighting for since the moment I came down the golden escalator in 2015, wanting to represent the people.”

“The MAGA movement is the greatest in the history of our country.  And maybe in the history of the world.

“In any event, we have no choice.  We are trying to save our country because such bad things are happening to our beautiful, beloved America.  We will make America great again.  I will never turn my back on you.

“And you will never turn your back on me because we love our nation. And we will save our nation from people who are trying to destroy it.  It was not just my home that was raided last month.  It was the hopes and dreams of every citizen who I’ve been fighting for since the moment I came down the golden escalator in 2015…”  [Ed. Yes, he loves repeating the same lines.]

“RINO Karl Rove is unwatchable, very negative, and on all the time – Has a big record of losing!  Not an easy place to be as a Republican, especially with all of the ‘pervert’ purchased ads.”

Yoh, Mr. President.  You are the biggest loser! The House, Senate and White House!

Liz Cheney: “Trump is attacking law enforcement and yet again using language he knows will provoke violence.  Only one group of Americans has a chance to diminish this danger – Republicans.

“If my fellow Republicans fail to step up to stop this, they will share the blame for all that follows.”

Adam Kinzinger: “Heaping piles and piles of helplessness into the mouths of his supporters.

“Under the guise of strength he is making the normally golden years of many of his supporters quite dark and dreary. Because it somehow benefits him to feed off the trusting.

“Sloppy Donald.”

--CNN parted ways with veteran White House correspondent John Harwood, which he announced on Twitter just hours after his last report, which I caught, and I was a bit surprised how he didn’t hold back.  Recapping President Biden’s address from Philadelphia the previous night, Harwood said: “The core point [Biden] made in that political speech about the threat to democracy is true.  Now that is something that is not easy for us as journalists to say.  The Republican Party right now is led by a dishonest demagogue.”

Harwood acknowledged on-air that this own statement veered from the conventions of traditional journalism.  “We are brought up to believe there’s two different political parties with different points of view and we don’t take sides in honest disagreements between them,” he said. “But that’s not what we’re talking about.  These are not honest disagreements.”

I thought, wow.  I also agreed.  After his resignation, it all made total sense.  It was his “last salvo,” as one commentator put it.

--Steve Bannon, the longtime ally and onetime top strategist to Donald Trump, has been indicted on money laundering and conspiracy for allegedly deceiving donors to an effort to help Trump build a wall along the U.S.-Mexico border.

The case arose from what prosecutors have described as a private $25 million fundraising drive, known as “We Build the Wall,” for Trump’s signature wall.

According to the indictment, Bannon promised donors that all their money would go toward the wall, but concealed his role in diverting hundreds of thousands of dollars to the drive’s chief executive, who had promised to take no salary.  The chief executive has been identified in court papers as Brian Kolface, an Air Force veteran who pleaded guilty in April to federal wire fraud conspiracy and tax charges, and is awaiting sentencing.

Bannon was said to have diverted $1 million for personal expenses. 

--The names of hundreds of U.S. law enforcement officers, elected officials and military members appear on the leaked membership rolls of the far-right extremist group, Oath Keepers, that’s accused of playing a key role in the Jan. 6, 2021, insurrection, according to a report by the Anti-Defamation League Center on Extremism, which pored over more than 38,000 names on leaked membership lists and identified more than 370 people it believes currently work in law enforcement agencies – including as police chiefs and sheriffs – and more than 100 people who are currently members of the military.

It also identified more than 80 people who were running for or served in public office as of early August.

--Our thoughts and prayers to the Canadian people who suffered through a horrific week, as two brothers went on a stabbing spree that killed 10 and wounded 18 in Saskatchewan.  The first brother was found dead Monday, and then the second died from supposedly self-inflicted injuries after being caught on day four of a manhunt that gripped the nation.

--This summer was the hottest on record in Europe, according to data from EU satellite monitoring.  A series of extreme heatwaves and a long running drought saw June, July and August shatter the previous high mark for temperature.

The Copernicus Climate Change Service said the data showed August in Europe was the warmest on record by “a substantial margin.”

Globally, the researchers say August was the third warmest yet recorded, while the summer was 0.4C warmer than the previous record, only set last year.

August was a whopping 0.8C warmer than the same month in 2018.

In the UK, temperatures reached a new high of 40.3C (104F) on July 19, a significant leap over the previous record of 38.7C set in 2019.  Temps in Portugal hit 47C (116F) in July.

And Europe experienced the worst drought conditions in 500 years.

Around the world, the high temperatures in August persisted widely, with severe drought conditions in China.

This week, California’s capital of Sacramento recorded 117 degrees, an all-time high temp.  The city hadn’t climbed above 109 degrees in any previous September.

The nation’s hot spot, Death Valley, hit 125 degrees Tuesday (nine straight days over 120).

Data from the Southeast Regional Climate Center showed the average temperature nationwide was around 74 degrees, putting it on par with summer 2021 and the 1936 Dust Bowl.

Persistent heat waves made 26 cities across the U.S. – including Newark, N.J., Tampa, Salt Lake City, San Antonio, and Cheyenne, Wyoming – report their all-time warmest summers.

In the above-mentioned Quinnipiac survey, by a 69 to 27 percent margin, Americans think the lives of future generations will be harmed by climate change.  Every listed demographic group agrees except for Republicans, who 57-39 percent do not think the lives of future generations will be harmed by climate change.  As to the ’57,’ oh brother.

--The most powerful typhoon to hit South Korea in years battered its southern region with 3 feet of rain, destroying roads and felling power lines, leavings tens of thousands of homes without power.  Seven people in an underground parking lot drowned.

--Finally, Sunday marks the 21st anniversary of 9/11, and Crain’s New York Business had an item today that the National 9/11 Memorial and Museum at Ground Zero appears to be recovering from low tourism numbers brought on by the pandemic.

The museum remained closed for nearly seven months in 2020, reopening that year on Sept. 11 for families of the victims and then the next day for the public.  It welcomed 185,000 visitors in July and 177,000 in August.  By comparison there were about 320,000 monthly visitors in each of July and August 2019.  So it’s getting there.  It averaged 3 million visitors per year prior to the pandemic, while the outdoor memorial received an average of 6 million visitors annually.

I’m heading out Pittsburgh way on Sunday, meeting my brother and some relatives as we finally bury Mom’s ashes.  She died end of Sept. 2019, but my brother and I thought, we’ll bury them in the spring.  Then Covid hit.  So much for those plans.

And then schedules got in the way, but either heading out or going home, I will probably pass Shanksville, Sunday or Monday.  I’ve been to the memorial there twice and if you haven’t been, do so if you’re in the general area.

So we remember the heroes of Flight 93, as well as all those who died in the Twin Towers and the Pentagon.  Never forget.

---

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

Pray for Ukraine.

God bless America.

---

Gold $1727
Oil $86.10

Regular Gas: $3.73, nationally; Diesel: $5.02 [$3.18 / $3.29 yr. ago]

Returns for the week 9/5-9/9

Dow Jones +2.7%  [32151]
S&P 500  +3.6%  [4067]
S&P MidCap  +4.4%
Russell 2000  +4.0%
Nasdaq  +4.1%  [12112]

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

Dow Jones  -11.5%
S&P 500  -14.7%
S&P MidCap  -12.1%
Russell 2000  -16.1%
Nasdaq  -22.6%

Bulls 29.7
Bears 29.7…a 45.1 / 29.6 split just two weeks ago.

Hang in there.

Brian Trumbore

---