Week in Review

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Week in Review

11/12/2022

For the week 11/7-11/11

[Posted 7:00 PM ET, Friday]

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Edition 1,230

The red wave turned into a “puddle,” a “ripple,” as every headline and pundit had it.  Even with President Biden at a 39% approval rating in the Reuters/Ipsos poll on Monday, Republicans drastically underperformed vs. expectations, despite a flagging economy and stubborn inflation that a majority of voters cited as their top priority, according to Gallup.

I said right after the attack on the Capitol, Jan. 6, 2021, that I did not understand the ongoing infatuation among a large percentage of Republicans for Donald Trump even though he was the biggest loser.  The House, the Senate, the White House, impeached twice (for good reason), and no doubt soon to be indicted, probably in January.  And a lot of Americans clearly felt the same way and pushed some Democrats across the line that otherwise, without Trump looming in the background, may have voted Republican.

So as I go to post, we have three Senate races up for grabs that will determine control.

Nevada, Arizona and Georgia.

Should Arizona go to Sen. Mark Kelly (D), and Nevada to Republican challenger Adam Laxalt, then it will once again come down to a runoff in Georgia between Sen. Raphael Warnock and Republican Herschel Walker, and should Warnock prevail, we are back at 50-50, Dems in control.

As for the House, at 211-199 for the GOP as of tonight, it is not out of the realm of possibility that the Democrats will retain it.  But for now, it seems we’re headed to a 220-215 margin for the Republicans, far from the hoped for 240-195ish result many were counting on.

And if it’s 220-215, or 219-216, or 222-113, current House minority leader Kevin McCarthy best not order new embossed business cards with Speaker on them just yet.  The knives within the GOP House caucus are out for him.

If I had a vote in some other races, Sen. Mark Kelly, for one, would have gotten my vote over Republican candidate Blake Masters, who was backed not only by Trump, but by his former boss, Peter Thiel, who I’ve called a very dangerous man on more than one occasion.

But I would have voted for Dr. Oz over John Fetterman in Pennsylvania.

In my home district, Republican Tom Kean Jr. finally defeated Democratic incumbent Rep. Tom Malinowski, solely because of redistricting in Kean’s favor, 52-48, after losing by a point in 2020.  I voted for Kean.

[Kean was the only New Jersey congressional candidate to defeat an incumbent.]

I was happy to see Georgia Republican secretary of state Brad Raffensperger handily win reelection after then-President Trump urged him to “find” more votes to help tip the 2020 presidential election, the most obvious instance on which Trump should be indicted.

I was extremely happy to see Republican Gov. Brian Kemp of Georgia beat the highly unlikeable Democratic challenger Stacey Abrams.

And I would have voted for Republican Rep. Lee Zeldin over Democratic incumbent Kathy Hochul; Hochul a pathetic leader, but Zeldin came up short (53-47), though far exceeding expectations of just a month earlier.  Democrats outnumber Republicans in New York State by more than 2 to 1.

Meanwhile, Donald Trump, as always making the midterms about himself, said at a Monday night rally ostensibly for Republican Senate candidate J.D. Vance, “I’m going to be making a very big announcement on Tuesday, Nov. 15 at Mar-a-Lago,” Trump adding, “We want nothing to distract from the importance of tomorrow.”

Vance took the stage for only a small fraction of Trump’s nearly 100-minute rally, where he painted a picture of an American decline that only he could salvage.

Like the true jerk that he is, in an interview before the vote, Trump said, “I think if they (candidates he endorsed) win, I should get all the credit.  If they lose, I should not be blamed at all.”

But election night, Trump didn’t give a triumphant speech from Mar-a-Lago.  Hours later, Palm Beach County issued an evacuation order for an area that included the club with Hurricane Nicole approaching.

Opinion

Editorial / Wall Street Journal

“A polarized but closely divided America elected a closely divided Congress on Tuesday. The voters seem to have put a check on progressive Democrats by handing Republicans the House, albeit narrowly, but control of the Senate hangs on races still to be counted.

“Though the results are split, Republicans are dismayed, and they should be – at themselves.  Some 70% of voters Tuesday said they’re unhappy with the state of the nation. With an unpopular President, 8% inflation, falling real incomes, rising crime, and chaos at the border, the GOP should have coasted at least to a normal midterm victory.

“Instead they failed to win most of the toss-up House races, especially in the many suburban seats they lost in 2018.  Their majority, if they get it, will be so narrow that Democrats could easily take it back in 2024….

“The risk for Democrats, as they celebrate, is that they’ll ignore voter unhappiness with their policies.  Inflation helped Republicans, as did crime and a concern about progressive excess.  In the exit poll, voters had similarly unfavorable views of both parties.

“But progressives will argue that the election results aren’t a broad repudiation of their policies.  They will continue to press Mr. Biden to skew to the left, as he has for two years, if he wants their support to run for re-election with the party behind him.  Two-thirds of voters in exit polls said he shouldn’t run for President again, including many Democrats. That still leaves him in a perilous position.

“If Republicans do take the House in the end, Mr. Biden will have to deal with the reality that the progressive agenda is dead for at least two years.  Doubly so if Mitch McConnell becomes Senate Majority Leader….

“All of this is a recipe for two years of gridlock in Washington, which certainly beats the progressive binge since January 2021.  The country faces enormous challenges in slowing growth, political polarization, and foreign powers on the march.

“A government that showed it can address those challenges would be welcome.  Instead we have a government that defines success as passing out money for green subsidies and welfare entitlements.  As gridlock sets in, the voters will be looking to see if new leaders can offer them a better vision.”

Editorial / New York Post

“Tuesday’s results show Florida’s Gov. Ron DeSantis would make one helluva contender in the 2024 presidential race, though not the only one.

“We say: Run, Ron, run!

“DeSantis’ victory was historic: He beat ex-Gov. Charlie Crist by a whopping 20 points [Ed. 59.4-40.0], the biggest margin in any Florida gubernatorial race in 40 years.  And no Florida gov running for re-election over that time ever improved on his initial vote by more than 3 points; DeSantis’ 20-point spread was up from a mere 0.4 point margin in 2018.

“He also took heavily Hispanic Miami-Dade County, the first GOP gov candidate to do so in 20 years, winning 55% of the vote.  That’s the largest margin in 40 years.  Oh, and 65% of voters in majority-Hispanic precincts backed him, a huge achievement for a Republican.

“DeSantis is right: The results prove he earned voters’ support by making Florida ‘a refuge of sanity when the world went mad,’ particularly during the pandemic.  He took great heat for bucking federal Covid advice, keeping schools and businesses open and opposing mandates. And, yes, by maintaining ‘law and order,’ protecting parents’ rights and respecting taxpayers.

“He’s right, too, to see his policies as a model for the nation as Americans in states and cities run by ‘leftist politicians’ have seen crime ‘skyrocket,’ taxpayers ‘abused,’ ‘authoritarianism imposed’ and ‘American principles discarded.’  Many have ‘voted with their feet,’ fleeing to…Florida.

“He hit another sweet spot in his victory speech Tuesday declaring war on ‘woke ideology’ with a nod to Winston Churchill: ‘We fight the woke in the legislature. We fight the woke in the schools. We fight the woke in the corporations. We will never ever surrender to the woke mob.’

“As for ex-President Donald Trump’s bluster that DeSantis will be ‘hurting himself’ if he goes for the White House: Sounds like fear talking, Don, and the fate of your candidates Tuesday looks terrible for your increasingly poor judgment, which grows parallel to your desperation.

“Even amid another Trump run, the GOP (and nation) is best-served by more competition – a field that might at first include not just DeSantis, but the likes of Sen. Tim Scott (SC), Gov. Glenn Youngkin (Va.), ex-Secretary of State Mike Pompeo and former UN Ambassador Nikki Haley.

“Tuesday’s ‘red puddle’ shows the Republicans still need to get their act together to succeed nationwide.  Some civilized (well, except for Trump) competition is in order to get in shape to beat the Democrats in 2024.”

John Podhoretz / New York Post

“Hey, Lyin’ Ted and Sleepy Joe: Meet Toxic Trump.  You know, if the former president had any self-knowledge or even the slightest ability to be self-deprecating, he might consider giving himself this alliterative nickname.

“After three straight national tallies in which either he or his party or both were hammered by the national electorate, it’s time for even his stans to accept the truth: Toxic Trump is the political equivalent of a can of Raid.

“What Tuesday night’s results suggest is that Trump is perhaps the most profound vote repellant in modern American history.

“The surest way to lose in these midterms was to be a politician endorsed by Trump.

‘This is not hyperbole.

“Except for deep red states where a Republican corpse would have beaten a Democrat, voters choosing in actually competitive races – who everyone expected would behave like midterm voters usually do and lean toward the out party – took one look at Trump’s hand-picked acolytes and gagged.

“Liberal fundraisers actually put money behind Trump-endorsed candidates in GOP primaries all over the place to help them prevail so that Democrats could face them in the general election.  It was transparently cynical and an abuse of our political process. But it worked like gangbusters.

“As Kevin Robillard of the Huffington Post noted on Wednesday afternoon, when a Michigan Democrat named Hillary Scholten was finally declared the winner of her House seat against a raving lunatic named John Gibbs: ‘With this race call, every single Republican who won their primary with help from Democratic meddling has lost in the general election.’

“Gibbs is an example of Trump’s monomania. A former official for Trump’s Department of Housing and Urban Development, Gibbs Tweeted that officials associated with Hillary Clinton participated in Satanic rituals.  But no matter!  Gibbs believed the 2020 election was ‘stolen’ from Trump, the only stance that matters to the former president.

“Trump backed Gibbs in the primary to unseat a sitting Republican, Peter Meijer, because Meijer had the temerity to vote in favor of impeachment after the shame of Jan. 6.

“Trump got his way.  Republicans lost the seat.

“This pattern repeated itself over and over again.

“In almost every place a Trumpster lost, there had been a regular Republican who could and should have been the party’s nominee – a nominee who could have taken advantage of the uniquely horrible facts and fundamentals confronting Democratic candidates in 2022.

“But then Toxic Trump came in to these races, picking the candidates who bowed lowest – or, as in Pennsylvania, went for a snake-oil doctor salesman because, it seems, his wife enjoyed watching Mehmet OZ carny-bark on afternoon TV.

“And the independent voters history tells us would ordinarily have flocked to the GOP said, ‘Oh, man, what is that stink?’

“In the past four midterms, indies chose the party that did not hold the White House by double-digit margins.  In 2018, with Trump as president, the Independent vote was 12 points in the Democrats’ favor.  In 2006, with George W. Bush in the Oval Office, the number was 18 points. When Obama was president in 2020 and 2014, Indies went 16 and 12 points in the Republican direction respectively.

“This week, Independents went 49-48 for the Democrats. One point – in the other direction.

“Independents made the difference then and they made the difference on Tuesday.  They didn’t want to keep hearing about voter fraud that didn’t exist, or about how the world done wrong a multi-billionaire boo-hoo whiner who lost his reelection bid due to his own incompetence.

“Voters have their own problems. This election was about them, not Toxic Trump’s pathological inability to accept his own failure – and his desperate need to elevate cringe-inducing bootlickers while punishing politicians capable of an independent thought.

“The British political figure Oliver Cromwell once said about other British politicians who had overstayed their welcome and were ruining the country, ‘In the name of God, go!’

“Yo, Toxic Trump: Scram.”

Editorial / Washington Post

“As of this writing, control of the next Congress is still up in the air after Republicans underperformed expectations in Tuesday’s midterm elections. But many of the most important races have already been called. The good news: Radical election deniers lost their contests – and decisively.

“In an election that sent a muddled message, voter distaste for extremism shone through.  Pennsylvania Republican gubernatorial nominee Doug Mastriano led the 2020 election -denial movement in his state; he even participated in the Jan. 6, 2021, Trump rally that turned into an assault on the Capitol.  As a candidate, he threatened to decertify voting machines if he won the governor’s mansion.  Mr. Mastriano did not concede on election night, despite the wide margin in his race.

“Meanwhile, in Michigan, Republican secretary of state nominee Kristina Karamo lost her bid to be her state’s top election administrator by 14 points.  Ms. Karamo’s only apparent qualification for the job was her claim to be a 2020 election whistleblower. She had insisted that President Donald Trump won Michigan.  (He lost by 154,000 votes.)  Georgia Secretary of State Brad Raffensperger (R), who stood firm against Mr. Trump’s 2020 efforts to overturn Joe Biden’s narrow victory in his state, won reelection after surviving a GOP primary challenge from a Trump-backed election denier.

“These results mean that leaders who are grounded in reality will run the 2024 presidential elections in key swing states, making it harder for Mr. Trump or another candidate to meddle with the democratic process.  Votes are still being counted in Arizona and Nevada, where deniers are running to become their states’ chief election officers.  But voters have already rejected some of the highest-risk characters in the run-up to 2024.

“Despite well-grounded fears about polling place disruptions, even violence, the election itself went smoothly. Election night was also notable for the decency many losing candidates exhibited.  ‘I have the privilege to concede this race,’ Rep. Tim Ryan (D-Ohio) said, acknowledging his defeat in his bid for a U.S. Senate seat.  ‘When you lose an election, you concede.  You respect the will of the people.’  Rep. Elaine Luria (D-Va.) silenced booing after she mentioned her victorious Republican opponent, state Sen. Jen A. Kiggans.  ‘The success of this district depends on her success,’ Ms. Luria said.  ‘She won the election. …We do need to wish her the best of luck.’

“These hopeful signs do not argue for complacency.  Exit polls suggest that one-third of voters still believe Mr. Biden’s 2020 election was illegitimate.  Before 2024, states should invest more in reliable election systems, voter education, poll-worker training and security.  Congress should send the states more aid to help in their efforts and also rewrite election law to make it more difficult for losing candidates to attempt procedural coups.  But democracy and reasonableness scored some important victories on Tuesday. Americans should be relieved.”

Daniel Henninger / Wall Street Journal

“Within 24 hours of Election Day, former President Donald Trump said, ‘Not to detract from tomorrow’s very important, even critical, election,’ and then added: ‘I’m going to be making a very big announcement on Tuesday, Nov. 15 at Mar-a-Lago in Palm Beach, Florida.’  Well, it looks like something did detract from the election.

“Let’s cut to the chase: If Mr. Trump announces next week that he’s running again, the 2024 presidential election ends that day.  It guarantees a wipeout for Republicans.

“Mr. Trump could defeat Joe Biden, but Mr. Biden won’t be the Democratic nominee. If Mr. Trump runs and the Democrats nominate a competent moderate, such as West Virginia Sen. Joe Manchin, independents and suburbanites will vote overwhelmingly – again – for Mr. Trump’s opponent.

“Connect Tuesday’s dots. Amid all the issues in this midterm election – inflation, abortion, crime, the pandemic, schools, climate – Mr. Trump made getting his endorsement in the GOP primaries contingent on one thing: agreeing with him that the 2020 presidential election was stolen.

“The Republican Senate candidates who played Mr. Trump’s rigged-election card to win their primaries included Don Bolduc in New Hampshire, Blake Masters in Arizona and Mehmet Oz in Pennsylvania.

“Republican gubernatorial candidates who supported Mr. Trump’s version of 2020 included Pennsylvania’s Doug Mastriano, Michigan’s Tudor Dixon, Maryland’s Dan Cox, Wisconsin’s Tim Michels, Arizona’s Kari Lake and New York’s Lee Zeldin.

“There’s little doubt that embracing Mr. Trump’s election view secured the nomination in those states.  But in virtually every instance, these candidates then de-emphasized both the 2020 election and Mr. Trump and ran more traditional, issues-based campaigns.  Why?  Because in a general election, a Trump-base-only campaign can’t win….

“Some of Tuesday’s biggest victory margins were produced by GOP governors – Florida’s Ron DeSantis, Georgia’s Brian Kemp, Texas’ Greg Abbott, Ohio’s Mike DeWine, New Hampshire’s Chris Sununu and let us not forget Iowa’s Kim Reynolds, an impressive first-term governor.

“Each of those Republican governors ran on policy successes that elevated their state’s economies, schools and indeed personal freedom. Abortion didn’t defeat them.

“Also on the Republican presidential bench with solid wins Tuesday were Sens. Tim Scott of South Carolina and Marco Rubio of Florida. The list goes on: Nikki Haley, Mike Pompeo, Mike Pence, Glenn Youngkin, Doug Ducey.  All would be strong candidates.

“The Democratic bench, meanwhile, is thin to empty.  Vice President Kamala Harris won’t get the nomination.  None of the 2020 contenders look like a winner. If I’m reading the (Rep. Jim) Clyburn oracle correctly, their 2024 nominee, in addition to Mr. Manchin, will look more credibly centrist, such as Sens. Chris Coons of Delaware, Mark Warner of Virginia, Arizona’s Kyrsten Sinema or Commerce Secretary Gina Raimondo.  Each would defeat Mr. Trump.

“Eliminate the then octo-or septuagenarian Messrs. Biden and Trump from 2024, and the next-generation names listed here would give the divided and disgruntled American electorate the issues-based presidential campaign they want.”

Editorial / Wall Street Journal, Part II

“What will Democrats do when Donald Trump isn’t around to lose elections? We have to wonder because on Tuesday Democrats succeeded again in making the former President a central campaign issue, and Mr. Trump helped them do it.

“Trump Republican candidates failed at the ballot box in states that were clearly winnable.  This can’t be what Mr. Trump was envisioning ahead of his ‘very big announcement’ next week.  Yet maybe the defeats are what the party needs to hear before 2024.

“Looking at the Senate map, the message could not be clearer.  In New Hampshire, the Trump-endorsed Republican Don Bolduc lost to Sen. Maggie Hassan, 53% to 45%, as of the latest data.  At the same time voters re-elected Republican Gov. Chris Sununu by 16 points.

“ ‘Don Bolduc was a very nice guy, but he lost tonight when he disavowed, after his big primary win, his longstanding stance on Election Fraud,’ Mr. Trump said.  ‘Had he stayed strong and true, he would have won, easily.’  We doubt New Hampshire voters simply wanted Mr. Bolduc to stay kooky.

“In Arizona the Trump-endorsed Republican Blake Masters trails Sen. Mark Kelly, 51% to 47%. This is a state successful Gov. Doug Ducey won by 14 points in 2018.  Mr. Ducey could have won the Senate seat, but Mr. Trump pledged to go to war with him because Mr. Ducey refused to entertain 2020 fraud theories.

“In Pennsylvania, the Trump-endorsed Republican Mehmet  Oz lost to John Fetterman, 51% to 47%.  This is a tough state for the GOP.  But Mr. Fetterman was a weak candidate: He’s a lefty with a record of wanting Medicare for All and a ban on fracking, and he’s recovering from a stroke. David McCormick would have been a better Republican nominee, but he wouldn’t say the 2020 election was stolen, so Mr. Trump endorsed Mr. Oz.

“In Georgia, the Trump-endorse Republican Herschel Walker trails Sen. Raphael Warnock, 49.4% to 48.5%.  This is going to a December runoff, which Mr. Walker could win.  But Gov. Brian Kemp won re-election by eight points.  Mr. Walker’s flaws as a candidate were obvious, but Mr. Trump helped clear the primary field and other candidates opted out….

“Mr. Trump could have stayed quiet in the final weeks of the campaign except to spend money to help his candidates.  But he did little of the latter and instead staged rallies that played into Democratic hands.  His rally in Latrobe last week might have hurt Mr. Oz with suburban voters who cost Mr. Trump the state in 2020.

“Since his unlikely victory in 2016 against the widely disliked Hillary Clinton, Mr. Trump has a perfect record of electoral defeat.  The GOP was pounded in the 2018 midterms owing to his low approval rating.  Mr. Trump himself lost in 2020.  He then sabotaged Georgia’s 2021 runoffs by blaming party leaders for not somehow overturning his defeat.  That gave Democrats control of the Senate, letting President Biden pump up inflation with a $1.9 trillion Covid bill, appoint a liberal Supreme Court Justice, and pass a $700 billion climate spending hash.

“Now Mr. Trump has botched the 2022 elections, and it could hand Democrats the Senate for two more years.  Mr. Trump had policy successes as President, including tax cuts and deregulation, but he has led Republicans into one political fiasco after another.

“ ‘We’re going to win so much,’ Mr. Trump once said, ‘that you’re going to get sick and tired of winning.’  Maybe by now Republicans are sick and tired of losing.”

Well, with all the above in mind, Trump let loose Thursday evening on Truth Social, insisting that Ron DeSantis rule himself out of the 2024 race, describing his potential rival as an “average REPUBLICAN Governor with great Public Relations.”

“Ron DeSanctimonious is playing games!  The Fake News asks him if he’s going to run if President Trump runs, and he says, ‘I’m only focused on the Governor’s race, I’m not looking into the future,” Trump said.  “Well, in terms of loyalty and class, that’s really not the right answer.”

On the front page of Thursday’s New York Post, Trump was lampooned as “Trumpty Dumpty,” which got under his skin.

“NewsCorp, which is Fox, the Wall Street Journal, and the no longer great New York Post, is all in for Governor Ron DeSantimonious,” he said.

And, of course, Trump had to take credit for DeSantis’ rise.

“Governor Ron DeSanctimonious, an average REPUBLICAN Governor with great Public Relations, who didn’t have to close up his State, but did, unlike other Republican Governors, whose overall numbers for a Republican, were just average – middle of the pack – including COVID, and who has the advantage of SUNSHINE, where people from badly run States up North would go no matter who the Governor was, just like I did!”

Trump further alleged that DeSantis “came to me in desperate shape in 2017 – he was politically dead, losing in a landslide” in Florida’s GOP gubernatorial primary.

“Ron had low approval, bad polls, and no money, but he said that if I would Endorse him, he could win…I said, ‘Let’s give it a shot, Ron.’  When I Endorsed him, it was as though, to use a bad term, a nuclear weapon went off.”

Trump went on to claim that he had “stopped” DeSantis’ first election win over Democrat Andrew Gillum from “being stolen” before complaining about the Florida governor’s noncommittal answers about a potential White House run.

So will Trump really announce his candidacy for 2024 this coming Tuesday…or will advisers convince him to wait until after the Warnock-Walker runoff in December?

I’m guessing he announces.

Meanwhile, I told you a long, long time ago exactly when President Biden would be making his announcement on 2024, this coming January, and on Wednesday he said just that…that he intends to run for re-election and would likely make a final decision early in the year, after declaring the midterm elections were good for democracy.

“Our intention is to run again, that’s been our intention,” Biden told reporters at the White House.  But…“This is ultimately a family decision.”

He cannot run.

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This week in Ukraine….start to finish….

President Volodymyr Zelensky said on Sunday that Ukraine was bracing for fresh Russian attacks on its infrastructure.  National energy authorities warned of planned outages.

Zelensky, in his nightly video address, said more than 4.5 million consumers were already without power.

“We also understand that the terrorist state is concentrating forces and means for a possible repetition of mass attacks on our infrastructure,” he said.  “First of all, energy.  In particular, for this, Russia needed Iranian missiles.  We are preparing to respond.”

Iran acknowledged for the first time Saturday that it had supplied Russia with drones Moscow has been using to target power stations and civilian infrastructure but said it did so before the war.

Kyiv’s mayor Vitali Klitschko says that the city is preparing for total power, heating, and water outages.

“If you have extended family…or friends outside Kyiv, where there is autonomous water supply, an oven, heating,” he said in a weekend television interview, “please keep in mind the possibility of staying there for a certain amount of time.”

Officials are preparing for a complete blackout in Kyiv that would require the evacuation of the city’s approximately three million remaining residents.

There have been reports of fierce fighting in the southern Mykolaiv region of Ukraine, with President Zelensky saying Russians face “extraordinary” losses in the eastern region of Donetsk (think Bakhmut).

Russia’s defense ministry took the rare step of denying allegations that a naval infantry unit had suffered disastrous losses of men and equipment in a futile offensive in eastern Ukraine.

Zelensky said his forces would not yield “a single centimeter” in fighting for control of eastern Donetsk after earlier insisting that restoration of Ukrainian territory and compensation from Russia were conditions under which peace talks could take place.

“The activity of the occupiers remains at an extremely high level – dozens of attacks every day,” Zelensky said.  “They are suffering extraordinarily high losses.  But the order remains the same – to advance on the administrative boundary of Donetsk region.  We will not yield a single centimeter of our land.”

The secretary of Ukraine’s National Security and Defense Council, Oleksiy Danilov, said the main condition for the resumption of negotiations with Russia would be the restoration of Ukraine’s national integrity.

A senior presidential adviser, Mykhailo Podolyak, said Ukraine had never refused to negotiate with Russia and was ready for talks with its future leader but not with Vladimir Putin.

His comments followed a Washington Post report that said the Biden administration was privately encouraging Ukrainian leaders to signal an openness to negotiate.  White House national security adviser Jake Sullivan has been engaged in confidential talks with senior Russian officials aimed at lowering the risk of a broader war.

U.S. and European officials have said it is up to Ukraine to define the terms of any acceptable settlement.

Russia believes it can outlast the West and sap Western support for Kyiv, and Western capitals say the Kremlin is escalating the war, rather than seeking openings for talks.

There is no way Putin will be open to any kind of a settlement that involves Russian withdrawal from occupied regions of Ukraine – Kyiv’s key demand.

Kyiv has been steadfast that since Putin in late September said that swaths of Ukraine’s east and south belonged to Russia, it wouldn’t negotiate with him.  And Putin insists that Russia’s territorial demands are nonnegotiable, leaving little scope for talks.

“We’ve always made clear our readiness for such talks,” Russia’s deputy foreign minister, Andrei Rudenko, said Tuesday in comments carried by state news agency RIA. “From our side there are no preliminary conditions whatsoever, except the main condition – for Ukraine to show goodwill.”

Zelensky said in his Monday video address:

“So anyone serious about the climate agenda must also be serious about the need to immediately stop Russian aggression, restore our territorial integrity, and force Russia into genuine peace negotiations.”

Zelensky said about four million people were without power in 14 regions plus the capital, Kyiv, but on a stabilization rather than an emergency basis.

The Ukrainian military accused Russian troops of continuing to loot and destroy infrastructure in Kherson, where a showdown has been looming for weeks in the only regional capital Russia has captured since the invasion.

Russian artillery hit more than 30 settlements in Kherson and Mykolaiv regions, and in Zaporizhzhia region the Russia-installed authorities were forcing residents to accept Russian passports after seizing their Ukrainian documents.

Putin said 50,000 Russian soldiers called up as part of his mobilization drive were now fighting with combat units in Ukraine, the Interfax news agency reported.

Zelensky called on Tuesday for an extension to the Black Sea grain export deal, which expires on November 19th and looked in jeopardy in October when Russia briefly suspended its participation before rejoining.

So Wednesday, Russian Defense Minister Sergei Shoigu ordered troops to withdraw from the west bank of the Dnipro River in the face of Ukrainian attacks near the southern city of Kherson, a significant retreat.  Russian General Sergei Surovkin, in overall command of the war, reported to Shoigu that it was no longer possible to keep Kherson city supplied.

“Having comprehensively assessed the current situation, it is proposed to take up defense along the left (eastern) bank of the Dnipro River,” said Surovkin.

Shoigu responded: “I agree with your conclusions and proposals.  Proceed with the withdrawal of troops and take all measures to transfer forces across the river.”

This is humiliating for Russia.

The main bridge on a road out of Kherson was blown up.  It wasn’t known by whom.

And Russian-installed authorities confirmed the death of Kirill Stremusov, deputy head of administration in Kherson, saying he had been killed in a car crash.

But Kyiv doesn’t expect the Russians to leave Kherson without a fight, and President Zelensky expressed skepticism on the withdrawal.  He said Ukrainian forces would be “moving carefully” in response. 

That said, Ukrainian troops have reclaimed dozens of landmine-littered settlements abandoned by Russian forces in southern Ukraine.

And then today, Friday, in a stunning development, Ukrainian forces entered the center of Kherson city.  Russia said it had withdrawn 30,000 troops across the Dnipro River without losing a single soldier.  But Ukrainians painted a picture of a chaotic retreat, with Russian troops ditching their uniforms, dropping weapons and drowning while trying to flee.

The withdrawal marked the third major Russian retreat of the war and the first to involve yielding such a large, occupied city in the face of a major Ukrainian counteroffensive that has retaken large swaths of the country’s east and south.

The advance unfolded far more rapidly than Ukrainian officials, including President Zelensky, had suggested just hours earlier.

Kremlin spokesman Dmitry Peskov said the region’s annexed status remained unchanged.  The Russian defense ministry said it had adopted “defensive lines and positions” on the eastern bank of the river, which Moscow hopes it will be able to better supply and defend.  Peskov said the decision to retreat was taken by the defense ministry. Asked by reporters if it was humiliating for Putin, Peskov said; “No.”

Meanwhile, U.S. Joint Chiefs Chairman Gen. Mark Milley estimated Russia has suffered more than 100,000 casualties since invading Ukraine.

Addressing an audience at the Economic Club of New York on Wednesday, Milley said the estimate includes killed and wounded Russian troops, and Ukraine may have suffered a similar number among its forces.  Milley suggested around 40,000 civilians have also died from the Russian invasion.

Regarding Kherson, Milley said he thought the Russians were withdrawing “in order to preserve their force to re-establish defensive lines south of the Dnipro river,” adding, “but that remains to be seen.”

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--Britney Griner has been moved to a penal colony in Russia, her legal team said on Wednesday. 

A Russian court had rejected her appeal of a nine-year sentence for drug possession last month.

“Brittney was transferred from the detention center in Iksha on the 4th November.  She is now on her way to a penal colony. We do not have any information on her exact current location or her final destination,” the statement from her legal team said.

The White House said it “continues to work tirelessly to secure her release, (and) the President has directed the Administration to prevail on her Russian captors to improve her treatment and the conditions she may be forced to endure in a penal colony.”

This remains a total outrage.  Stay strong, Brittney…somehow.

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President Biden will be holding a meeting with Chinese President Xi Jinping in Bali, Indonesia on Monday at the G20 summit.

Vladimir Putin will not be attending.  Western leaders had threatened to boycott the event if Putin took part.  But Joko Widodo, the summit’s host as Indonesia’s president, resisted pressure to withdraw an invitation.

This will be Biden’s first in-person encounter with Xi since Biden took office and one that will offer a clarifying opportunity for this important bilateral relationship.

Interestingly, neither side will issue a statement after, and there is very little hope that tensions will be significantly eased.

The goal is to just come up with some guidelines for a functional relationship that doesn’t tip into conflict.

Clearly Taiwan is going to be on the table, and the administration said Biden would raise human rights.  He’ll also raise what the U.S. views as China’s harmful economic practices.

And there are the matters of Russia’s war in Ukraine and North Korea’s ongoing provocations.

Well, you just look at the above and think, these talks will go nowhere.

Wall Street and the Economy

This week we were sitting around waiting for the October consumer price release on Thursday and the markets, both the stock and bond market, got what they wanted, less than expected readings on headline and core, 0.4% and 0.3%, respectively, while the year-over-year figures of 7.7% and 6.3% (ex-food and energy), were also less than expected.

But the headline figure, while down from September’s 8.2% and a peak of 9.1% in June (a 40-year high), is still 7.7%.  And the core figure, the really important one, is down from its peak of 6.6%, which was also the highest since 1982.  6.6% to 6.3%, when the Fed’s target is 2%.

But the markets once again went directly to “pivot,” as in the Fed will not just be stopping its rate-hiking regime sooner than later, but will begin reducing rates.  Coupled with a falling dollar (good for U.S. multinationals and their earnings), this is why the S&P 500 surged 5.5% and Nasdaq a stupendous 7.3%, the biggest one-day rallies since 2020.

No doubt, the inflation news was encouraging, but it’s one month in terms of the core reading.  The Fed has told you over and over again, it is not going to focus on just one number, it needs to see a number of favorable readings in a row before it will “pause.”  Pause also doesn’t mean pivot.

So I have to repeat some of my points from last week after the Fed’s Open Market Committee meeting.  Chair Jerome Powell said at his press conference that when it comes to moving to smaller rate rises from the 75-basis point moves that have defined recent Fed action, “that time is coming and it may come as soon as the December meeting,” but he added “no decision has been made” yet on what to do at the Dec. 13-14 gathering.

This week’s CPI data, however, no doubt allows the Fed to hike 50, not 75, next month.

But Powell also said that inflation was higher than expected, and that the Fed “will stay the course until the job is done.”  He added, it would be “very premature to be talking about pausing” (let alone pivoting), and that officials would most likely raise rates higher than their previous forecast, which showed rates peaking at 4.6 percent next year, the funds rate currently in a 3.75% to 4.00% range.

Powell hasn’t deviated in any significant way from such talk for months now and 7.7 and 6.3 percent, while a start vs. 9.1 and 6.6, is hardly 4 to 5 percent, let alone 2.

So party down if you wish.  The economy is showing signs of weakness in all the layoff announcements, but at the same time, the Atlanta Fed’s GDPNow barometer for the fourth quarter is at 4.0%.  The holiday shopping season numbers will be telling, I imagine.

Next week we have important data on producer prices, retail sales, and housing*. 

*Freddie Mac’s weekly 30-year fixed-rate mortgage was back to 7.08% this week, though will be below 7.00% next time with the steep decline in the 10-year Treasury yield on Thursday.

Meanwhile, diesel remains the main fuel used to transport all sorts of things from food to home goods and to holiday gifts.  As in the prices of same are not going down with diesel still well above $5.00, $5.36 at week’s end.

And U.S. inventories of distillate, including heating oil and diesel, are about 20% below the five-year average, according to the Energy Information Administration.

Europe and Asia

After last week’s flood of data on the eurozone, we just had a release on September retail sales for the EA19, up 0.4% over August, but down 0.6% from September 2021.

Britain: New Prime Minister Rishi Sunak is facing a number of big labor issues, including a looming strike by up to 300,000 nurses, before Christmas, which could coincide with strike action from British workers from several industries including the rail network as pay hikes fail to keep pace with double-digit inflation.

The Royal College of Nursing said last weekend that its members have faced a decade of real-terms pay cuts.  It would be the first national strike in the history of the RCN.

Turning to Asia…China reported out a slew of data, courtesy of the National Bureau of Statistics.  October exports fell 0.3% year-over-year, the first drop since May 2020 and way below expectations, as well as a 5.7% rise in September.  Imports fell 0.7% Y/Y.

Exports to the European Union declined 9% from a year earlier, and were down 12.6% to the U.S.

October inflation came in at 2.1% Y/Y on consumer prices, vs. September’s 2.8% rate.

But the more closely followed factory-gate or producer price gauge for the month was -1.3% year-over-year vs. 0.9% in September.  It was the first decline since Dec. 2020 amid the softening global economy and bulging inventories.

The Chinese Association of Automobile Manufacturers reported October vehicle sales were up just 6.9% Y/Y vs. a prior 25.7%, due to deteriorating demand and the ongoing Covid zero policy, as well as the waning of incentives.

Back to the export figure, the contraction will inevitably weigh on growth, employment and investment, but it may prompt Beijing to reconsider its zero-Covid strategy and property curbs, according to Nomura’s economists.

At the same time, Nomura doesn’t expect any real zero-Covid or changes in the property sector until March 2023.

In Japan, unlike in China, October producer prices rose 9.1% Y/Y vs. 10.2% in September.

September household spending increased 2.3% year-over-year vs. 5.1% prior.

Street Bytes

--Stocks sloughed off the collapse of the second-biggest cryptocurrency and soared on the better-than-expected inflation news…the Dow Jones up 4.2% to 33747, while the S&P 500 surged 5.9% and Nasdaq 8.1%.

Next week we get earnings from the major retailers…Walmart, Home Depot, Lowe’s and Target.

--U.S. Treasury Yields

6-mo. 4.53%  2-yr. 4.33%  10-yr. 3.81%  30-yr. 4.02%

As a sign of the optimism in the bond market with the CPI release, the yield on the 2-year went from 4.75% to 4.33%, while the 10-year fell from 4.10% to 3.81%, staggering one-day declines.  The 10-year is at its lowest weekly close in six weeks.

--Oil fell this week to about $89 on West Texas Intermediate as industry data showed rising inventories in the U.S. and on concerns that a rebound in Covid-19 cases in top importer China would hurt fuel demand, though there was more optimism on this front at week’s end.

Meanwhile, the European Union will ban Russian crude imports by Dec. 5 and Russian oil products by Feb. 5.

--Refiner Phillips 66 said on Wednesday it plans to reduce employee headcount by 1,100 by end-2022 as the refiner seeks to meet its savings target of $500 million.

Phillips is cutting staff at refineries, terminals and offices, as it laid out on an investor call plans to save $1 billion in costs by the end of 2023.  Phillips had 14,000 employees in 2021, with the cuts taking staff to 12,900 at year end.

--Meta Platforms Inc. said on Wednesday it will let go of 13% of its workforce, or more than 11,000 employees, in one of the biggest layoffs this year as the Facebook parent battles soaring costs and a weak advertising market.

The mass layoffs, first in Meta’s 18-year history, follow thousands of job cuts at other major tech companies including Elon Must-owned Twitter and Microsoft Corp. The pandemic-led boom that boosted tech companies and their valuations has turned into a bust this year in the face of decades-high inflation and rapidly rising interest rates.

“Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected,” CEO Mark Zuckerberg said in a message to employees.  “I got this wrong, and I take responsibility for that.”

The company also plans to cut discretionary spending and extend its hiring freeze through the first quarter.

Meta will pay 16 weeks of base pay plus two additional weeks for every year of service, as well as all remaining paid time off, as a part of the severance package, the company said.

Some of Meta’s wounds have been self-inflicted.  A pricey bet on metaverse, a shared virtual world, has seen the company forecast as much as $100 billion in expenses for 2023.  That has drawn skepticism from investors who are losing patience with investments that Zuckerberg himself expects will take a decade to bear fruit.

Zuckerberg had warned employees in late September that Meta intended to slash expenses and restructure teams.

“This is obviously a different mode than we’re used to operating in,” Zuckerberg said in a Q&A session with employees in September.

--Crypto prices crashed after Binance, the world’s largest crypto exchange, withdrew from talks to buy out FTX, the second largest.  Binance said a liquidity crunch at FTX was ‘beyond our control or ability to help’ and abruptly withdrew a tentative purchase offer – which destroyed what confidence its rival had retained.  The Wall Street Journal reported that FTX needed to cover $8 billion in withdrawal requests. The spillover effects are just starting.

“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged U.S. agency investigations, we have decided that we will not pursue the potential acquisition of FTX.com,” Binance chief Changpeng Zhau, known as CZ, wrote on Twitter.

FTX initially declined requests for comment.

Digital asset markets were plunged into turmoil amid fears that a crisis at FTX could cause painful spillover effects if it were to collapse.  Those fears may now be playing out.

Bitcoin on Wednesday fell over 11% in 24 hours, to around $16,200, and was under $16,000 Wednesday night, down from $66,000 a year ago.  Then after the CPI report Thursday, bitcoin soared back over $17,500, with every other asset surging.

I said bitcoin and the whole “blockchain” technology was a bunch of bullshit a long time ago.  Like whoopty-damn-do the technology can do calculations a mega-millisecond quicker.

And for this we were supposed to put astronomical values on ‘tokens.’  The technology, we were also told, was highly secure, yet North Korea is among the hackers stealing $billions out of ‘wallets.’

And this summer I ripped the big banks that were getting into it to take care of their institutional clients.    

FTX suffered the equivalent of a bank run as customers raced to withdraw funds amid speculation that FTX faced trouble from losses at a related trading firm, Alameda, linked to the collapse of an FTX-issued token called FTT.

A lengthy Twitter thread from Bankman-Fried, Wednesday, beginning with the words “I’m sorry,” ultimately did little to shed light on the situation.  The entrepreneur, who has been one of crypto’s most high-profile voices, said “a poor internal labeling of bank-related accounts” led to miscalculations over how much leverage, or borrowed money, was in play.  “FTX Tapped Into Customer Accounts to Fund Risky Bets,” read a headline from the Wall Street Journal.

The venture capital powerhouse Sequoia says that the value of its investment in distressed FTX has been marked down to $0.  That represents a $214 million loss.  Other institutional investors are likely to follow, among them BlackRock, SoftBank, Tiger Global Management, Singaporean state-owned Temasek, and the Ontario Teachers’ Pension Plan.

And so then today, FTX filed for bankruptcy, with CEO Bankman-Fried to step down.  In a statement, the company said that FTX and its affiliated crypto trading fund Alameda Research and approximately 130 other companies have commenced voluntary Chapter 11 bankruptcy proceedings in Delaware.

Just two months ago, Forbes estimated Bankman-Fried’s wealth at around $17 billion.

Aaron Elstein / Crain’s New York Business

“This week’s failure of FTX, the No. 2 digital-asset exchange, is at least the fourth to collapse just this year and raises an important question: Why do fans keep thinking crypto is going to turn out OK?

“FTX vaporized almost instantly when customers decided parking deposits there was too risky and yanked out $6 billion, which was more than the firm could handle. It was a digital version of the bank run in It’s a Wonderful Life, the key differences being Sam Bankman-Fried couldn’t stem the tide like Jimmy Stewart, and this time Mr. Potter (Binance) pulled out of the rescue deal.

“FTX customers have no protection against loss because crypto’s credo holds that government guardrails, such as deposit insurance, are unnecessary.  FTX investors, which include Sequoia Capital and Tom Brady, are bound to recover less from this disaster than Bernie Madoff’s victims.  Should the firm end up in bankruptcy [Ed. Elstein published this article just hours before the Ch. 11 filing], account holders will be unsecured creditors, which confers the right to go on Twitter and yell.

“The weirdest thing about this particular mania is that crypto doesn’t work.  The wildly unstable currencies are terrible stores of value and fail as a means of exchange. Crypto is playtime for ringleaders who persuaded enough people that certain blocks of code are money.  ‘Decentralized finance’ is this era’s Pets.com, which couldn’t make money selling dog food in the mail, although the dot-com bust didn’t mean internet businesses write large, including e-commerce, lacked real potential….

“I doubt institutional investors will be interested again in the space for years, if ever, unless regulators impose some rules of the road.   Squaring that circle would really be something, because the point of crypto is a separate financial ecosystem free of government interference.”

Much more on this story next week, I’m sure, but as I go to post, bitcoin is back down below $17,000…$16,800.

--United Airlines Holdings Inc. is giving pilots a 5% pay raise months ahead of schedule as the airline and its pilots union have struggled to reach agreement on a new contract.

United had promised during the pandemic that it would boost pilots’ pay once it started earning consistent profits again, which it has as travel demand has surged.  The pay increase was to start May 2023 but United said it will implement it in December as a “show of good faith.”

United’s pilots last week voted by a big margin to reject a tentative deal that would have included raises of more than 14.5% over 18 months.

--TSA checkpoint numbers vs. 2019

11/10…92 percent of 2019 levels
11/9…93
11/8…87
11/7…90
11/6…101
11/5…100
11/4…91
11/3…89

--Shares in Walt Disney Co. tumbled 13% to the lowest level since March 2020 on Wednesday, as ballooning costs at the entertainment giant’s fast-growing streaming division cast a shadow on strong subscriber additions.  Disney+ has attracted millions of subscribers and will launch an ad-supported tier next month, but executives’ promise of profitability next year and forecasts for operating results in the next quarter failed to impress.

The company missed analysts’ expectations for fiscal fourth-quarter earnings, after a $1.5 billion loss in its streaming division, more than doubling its loss of $630 million during the same quarter a year earlier.

Armed with shows and movies from the “Star Wars” and Marvel franchises, Disney+ added 12.1 million subscribers during the company’s fiscal fourth quarter, bringing its total to 164.2 million, including cheap subscriptions from India.  Including Hulu and ESPN+, Disney’s streaming operation has surpassed 235 million subscribers.

Disney CEO Bob Chapek said in a statement Tuesday that the company still expects Disney+ to become profitable in fiscal 2024, with losses peaking in the most recent quarter.  Still, he acknowledged that inflation and a feared recession could derail Disney’s timeline for streaming profitability.  During the full fiscal year, direct-to-consumer business lost Disney $4 billion.

Overall, Disney posted a quarterly profit of $162 million, virtually flat with the same period a year earlier.  Earnings and sales fell short of analysts’ expectations, despite a continued rebound at Disney’s massive parks business.

Revenue rose 9% to $20.2 billion, less than the $21.3 billion predicted by analysts.

Disney theme parks posted robust growth despite Covid-19 related travel restrictions in China and Hurricane Ida forcing the temporary closure of Walt Disney World in Florida in September.

Disney’s parks, experiences and products group reported revenue of $7.4 billion in the quarter, beating analysts’ forecasts.  Operating income reached $1.5 billion, more than double a year ago.

Disney estimated a “high single-digit” percentage growth in revenue in this fiscal quarter compared to the last, with the Street expecting 12% growth.

--Tesla shares slid to their lowest level in over 20 months on Wednesday after Elon Musk sold nearly $4 billion worth of shares after buying Twitter Inc. for $44 billion.

Musk sold 19.5 million shares in Tesla Nov. 4-8, according to regulatory disclosures made public Tuesday.

The Tesla CEO has sold more than $19 billion worth of the electric-vehicle maker’s stock this year.  He had said after selling shares in April and in August that he wasn’t planning additional sales.

Musk provided $33.5 billion in equity financing to pay for Twitter, though he lined up co-investors, according to disclosures.  Twitter also took on $13 billion in debt as part of the takeover, in which the company went private.

Musk’s stake in Tesla is down to roughly 14%.

Musk emailed his Twitter workers for the first time late Wednesday to prepare them for “difficult times ahead” and ban remote work unless he personally approved it.

Musk said there was “no way to sugarcoat the message” about the economic outlook and how it will affect an advertising-dependent company like Twitter.  The new rules, which kick in immediately, will expect employees to be in the office for at least 40 hours per week, he added.

After firing nearly half the 7,500 workers, and then frantically trying to bring some of them back prior to the election, Musk upped the price for the Twitter Blue subscription to $8 and attached user verification to it. Musk told workers in the email that he wants to see subscriptions account for half of Twitter’s revenue.

Prior to Musk’s arrival, Twitter had established a permanent work-from-anywhere arrangement for its workers, many of whom had initially been pushed into remote work by the pandemic.

Thursday, Musk, in his first address to Twitter employees, said that bankruptcy was a possibility if it doesn’t start generating more cash.

Confidence in the company has eroded so rapidly that, even before Musk’s bankruptcy comments, some funds were offering to buy the loans for as little as 60 cents on the dollar – a price typically reserved for companies deemed in financial distress.

Lastly, Musk threw his weight behind Republicans ahead of Tuesday’s midterm elections, saying they could use control of Congress to act as a balance against Joe Biden’s Democrats.

His tweet to more than 110 million followers on Monday represented the first time the head of a major social media platform explicitly endorsed a U.S. political party.  Musk has been critical of the Biden administration and Democrats for their proposals to tax billionaires and give more tax incentives to union-made electric vehicles. 

Musk tweeted: “Shared power curbs the worst excesses of both parties, therefore I recommend voting for a Republican Congress, given that the presidency is Democratic.”

--Taiwan’s Foxconn, the world’s largest contract electronics maker, said on Monday it was revising down its outlook for the fourth quarter due to Covid-19 control measures at a major factory in China’s Zhengzhou.

“The company’s visibility for the fourth quarter was originally ‘cautiously optimistic,’ but due to the pandemic affecting some of our operations in Zhengzhou, the company will ‘revise down’ the outlook for the fourth quarter,” it said. 

Foxconn is Apple’s biggest iPhone maker.

Apple Inc. said over the weekend it expects even lower iPhone 14 Pro and iPhone Pro Max shipments than it previously anticipated due to the issues in Zhengzhou.  Customers will experience longer wait times to receive their new products, Apple said in a statement.

The shutdown is the second to affect Apple this year. It lost about $4 billion in sales of iPads and Macs over the spring and summer after factories outside of Shanghai were closed to limit the spread of Covid.  And now Apple expects to produce at least 3 million fewer iPhone 14 handsets than originally anticipated this year.

--Amazon.com Inc. is reviewing unprofitable business units, including the devices division that houses its voice assistant Alexa, to cut costs, the Journal reported on Thursday, sending the e-commerce company’s shares up 12%. Following a months-long review, Amazon has told employees in some unprofitable units to look for jobs elsewhere in the company.

--Software company Salesforce cut hundreds of jobs this week.

“Our sales performance drives accountability,” a Salesforce spokesperson said in a statement. “Unfortunately, that can lead to some leaving the business, and we support them through their transition.”

Online real estate brokerage firm Redfin announced it was cutting 862 employees, 13% of its staff. In June, Redfin laid off 470 workers after a drop in demand.

--Berkshire Hathaway reported a quarterly loss Saturday of $2.7 billion, down from a profit of $10.3 billion a year ago when the stock market was soaring.  The loss is due to a drop in the paper value of Warren Buffet and Co.’s investment portfolio in the third quarter, but most of its operating businesses performed well with the notable exception of GEICO.

Buffett has long said operating earnings are a better measure of the company’s performance because they exclude investment gains and losses, which can vary widely quarter to quarter.  By that measure, Berkshire’s operating earnings jumped 20% to $7.76 billion, up from $6.47 billion.

Berkshire said its revenue grew 9% to $76.9 billion.

Most of Berkshire’s eclectic assortment of more than 90 companies performed well during the quarter, but the key insurance unit of GEICO reported a pre-tax underwriting loss of $759 million as the cost of auto claims soared along with the price of used cars and car parts.

Berkshire said its insurance units recorded after tax losses of $2.7 billion related to Hurricane Ian.

Berkshire is sitting on nearly $109 billion in cash.

--Wendy’s posted third-quarter results that grew from last year but were mixed compared to Wall Street’s expectations as it reiterated its full-year profit outlook while lowering the top end of its system-wide sales outlook.

The fast-food chain operator’s adjusted earnings for the quarter through Oct. 2 rose 26% year over year to $0.24 and revenue grew 13% to $532.6 million.

Same-restaurant sales accelerated 6.9% from 3.3%, topping a 4.9% rise modeled by analysts.  System-wide sales in the U.S. increased 7.7%, while comparable sales added 6.4%.

--Beyond Meat said its revenue fell 22.5% in the third quarter as it cut prices in the face of weaker demand.

The El Segundo, California-based company reported net revenue of $82.5 million for the July-September period.  That was far lower than the $93.6 million Wall Street had forecast.

Beyond Meat shares fell to a 52-week low of $11.56 Wednesday after the results were released.

Beyond Meat President and CEO Ethan Brown said consumers have been switching to cheaper proteins like chicken because of high inflation.  That hurts demand for products like Beyond Burgers, which cost about $2 more per pound than lean beef ones.

I have never purchased a Beyond Meat product.

Brown said he expects some competitors will consolidate or shut down.  Brazilian meatpacker JBS closed Planterra Foods, its U.S. plant-based meat business.

But Brown said Beyond Meat is also focusing on turning around its own business. The company has reduced operating expenses by 23% since the first quarter and has laid off 240 people, or more than 20% of its global workforce, since August.

The company’s net loss nearly doubled to $101.7 million for the quarter, higher than analysts had forecast.

--Speaking of meat, fake or real, John R. Tyson, Tyson Foods Inc.’s chief financial officer and son of the meat giant’s chairman, was arrested over the weekend after authorities said he fell asleep in the wrong house.

Tyson, 32 years old, was found asleep in a woman’s bed at her home in Fayetteville, Ark., on Sunday morning.  He was arrested for criminal trespass and public intoxication.  He was released Sunday evening.

John Tyson apologized for his actions and said he was getting counseling on alcohol usage.

Last month, Beyond Meat’s operating chief was suspended following his arrest for allegedly biting a man’s nose and threatening to kill him.

Both arrests occurred in Arkansas’ Washington County, according to police records.

--Five dozen works from Paul Cezanne, Vincent van Gogh, Claude Monet and others brought in $1.5 billion on Wednesday at an auction of part of the vast collection of paintings and sculptures amassed by late Microsoft co-founder Paul Allen.

The total represented the highest amount collected at a single art auction, according to auction house Christie’s in New York.  Proceeds will be donated to philanthropic causes in accordance with the wishes of Allen, who died in 2018.

Among the priciest works sold was Pointillist pioneer Georges Seurat’s Los Poseuses, Ensemble, an 1888 oil on canvas depicting three nude women.  It fetched $149.2 million, including fees, a record for a Seurat piece.

A Cezanne landscape sold for $137.8 million, another record, and a Gustav Klimt set the high mark for one of his works, selling for $104.6 million.

--Fox News led the election night coverage with 7.4 million viewers from 8 to 11 p.m. Eastern.  MSNBC averaged 3.2 million viewers and CNN 2.6 million, putting it behind broadcast networks ABC (3.3 million) and NBC (3.1 million).  CBS averaged 2.6 million viewers.  CNN’s audience was down 50% from the 2018 midterms, and this week marked the first time it was behind MSNBC on an election night, according to Nielsen data.

Foreign Affairs, Part II

China: The government announced major changes to its strict Covid-19 measures for inbound travelers on Friday, reducing quarantine on arrival from seven days down to five, followed by three days of isolation at home.

The newly released measures include ending the practice of canceling international flights if too many passengers from previous flights test positive on arrival – the major barrier to visiting China – the State Council’s Covid-19 prevention team said.

This will allow more international flights, which should lead to a fall in prices.

But the number of Covid cases in China has been rising, and authorities in the southern Chinese city of Guangzhou launched mandatory mass testing in nine districts and extended a lockdown in one of them until the weekend amid fears of a worsening outbreak in the city, after it reached a new high in infection numbers on Tuesday.

Meanwhile, Joint Chiefs Chair Gen. Mark Milley pledged to support Taiwan militarily while warning Beijing to learn from Russia’s invasion of Ukraine.

“The U.S. is committed through the Taiwan Relations Act, and President Biden has said on many occasions recently that the United States will continue to support Taiwan,” Milley said.

“We will support them militarily… We would try to help train them and equip them.”

Beijing was angered when media reported last year that a U.S. special operations unit and a contingent of Marines had secretly been operating in Taiwan to train military forces there.

Milley said it remained unclear whether China had plans for an imminent invasion, but he urged Beijing to learn from Russia’s invasion of Ukraine.

“A lesson that comes out of Ukraine for China is that war on paper and real war are two different things.  And what they have seen was a tremendous strategic miscalculation,” he said.  “I think President Xi is taking a step back and…he’s evaluating the situation.”

Reminder: The 1979 Taiwan Relations Act requires the United States to ensure the self-ruled island has the resources for self-defense and to prevent any unilateral change of status by Beijing.  But it does not require the U.S. to defend the island militarily.

Editorial / Wall Street Journal

“Russia’s invasion of Ukraine revealed the fading power of America’s military deterrent, a fact that too few of our leaders seem willing to admit in public.  So, it is encouraging to hear a senior flag officer acknowledge the danger in a way that we hope is the start of a campaign to educate the American public.

“ ‘This Ukraine crisis that we’re in right now, this is just the warmup,’ Navy Admiral Charles Richard, commander of U.S. Strategic Command, said this week at a conference.  ‘The big one is coming. And it isn’t going to be very long before we’re going to get tested in ways that we haven’t been tested’ for ‘a long time.’

“How bad is it? Well, the admiral said, ‘As I assess our level of deterrence against China, the ship is slowly sinking.  It is sinking slowly, but it is sinking, as fundamentally they are putting capability in the field faster than we are.’  Sinking slowly is hardly a consolation.  As ‘those curves keep going,’ it won’t matter ‘how good our commanders are, or how good our horses are – we’re not going to have enough of them.  And that is a very near-term problem.’

“Note that modifier ‘near-term.’  This is a more urgent vulnerability than most of the political class cares to recognize….

“The news last year that China tested a hypersonic missile that flew around the world and landed at home should have raised more alarms than it did.  It means China can put any U.S. city or facility at risk and perhaps without being detected.  The fact that the test took the U.S. by surprise and that it surpassed America’s hypersonic capabilities makes it worse.  How we lost the hypersonic race to China and Russia deserves hearings in Congress.

“ ‘We used to know how to move fast, and we have lost the art of that,’ the admiral added.  The military talks ‘about how we are going to mitigate our assumed eventual failure’ to field new ballistic submarines, bombers or long-range weapons, instead of flipping the question to ask: ‘What’s it going to take? Is it money?  Is it people?  Do you need authorities?’  That’s ‘how we got to the Moon by 1969.’

“Educating the public about the U.S. military weaknesses runs the risk of encouraging adversaries to exploit them. But the greater risk today is slouching ahead in blind complacency until China invades Taiwan or takes some other action that damages U.S. interests or allies because Beijing thinks the U.S. can do nothing about it.”

North Korea: We are still waiting for North Korea to test a nuclear bomb, which would be the first such test since 2017, the site long prepared for it, according to the experts.

In the meantime, Pyongyang continued with its missile tests, firing a short-range ballistic missile toward its eastern sea on Wednesday, extending a recent barrage of weapons demonstrations including what it described as simulated attacks on South Korean and U.S. targets last week.

The latest missile flew about 155 to 180 miles at a maximum altitude of 18 to 30 miles, according to the South Korean and Japanese militaries.

Last Saturday, North Korea launched four short-range ballistic missiles into the sea.

Iran: Iran’s intelligence minister told its arch regional rival Saudi Arabia on Wednesday that there is no guarantee of Tehran continuing its “strategy of patience,” according to semi-official Fars news agency.

“Until now, Iran has adopted a strategy of patience with firm rationality, but it does not give any guarantee for the continuation of this in case of hostilities,” Fars quoted Esmail Khatib as saying.

Last week, Iran denied that it posed a threat to Saudi Arabia after the Wall Street Journal reported that Riyadh had shared intelligence with the United States warning of an imminent attack from Iran on targets in the kingdom.

Separately, Iran said Thursday it has built a hypersonic missile capable of penetrating any air-defense system, as the UN’s International Atomic Energy Agency reported that Tehran continues to stonewall its investigation into Iranian nuclear activities. 

The Islamic Revolutionary Guard Corp’s Gen. Amir Ali Hajizadeh said the new missile could maneuver both inside and outside the atmosphere, according to state media.  He provided no evidence to support the claims.

While Iran has an extensive missile development program, it remains unclear if it has the capability to build hypersonic weapons.

Meanwhile, the IAEA reported that Iran’s stockpile of 60% enriched uranium grew by 6.7 kilograms to 62.3 kg in the three months to Oct. 22, far above the amount needed to produce enough nuclear fuel for a weapon.  The 60% nuclear fuel can be swiftly converted into 90% enriched weapons grade fuel.

As for the ongoing protests in the country, at least 328 people have been killed and 14,825 others arrested, according to Human Rights Activists in Iran, a group that’s been monitoring the protests over their 55 days.

Pakistan: Prime Minister Shehbaz Sharif offered to resign if there was any evidence implicating him or his interior minister in the shooting which injured his immediate predecessor Imran Khan.

Sharif said in a press conference last weekend that he would lose the right to continue as the nation’s prime minister if any evidence against him is uncovered.  Khan had blamed Sharif, Pakistan’s interior minister, and prominent generals for the shooting that left him with an injured leg on Nov. 3, while leading a march toward the capital Islamabad to demand an early national election that isn’t due until later next year.

Khan said he welcomed the government’s offer to launch a judicial commission to investigate the attack.

France: The far-right National Rally (RN) has confirmed 27-year-old Jordan Bardella as the replacement as party leader for Marine Le Pen.

Le Pen will focus instead on leading the party’s group in parliament, after it took 89 seats in the National Assembly earlier this year.

It marks the first time in its 50-year history that the main far-right party has not been led by a Le Pen.

But the move does not mark a major change in direction for the party, as Bardella and Le Pen get along swimmingly.

Random Musings

--Presidential approval ratings….

Gallup:  40% approve of President Biden’s job performance, 56% disapprove; 39% of independents approve (Oct. 3-20).

Rasmussen:  45% approve of Biden’s performance, 54% disapprove (Nov. 11).

--The World Cup kicks off Nov. 20 in Qatar and more than 50,000 people have been trained to provide security, the interior ministry said, with foreign forces helping out under Qatari command.

Turkey is providing 3,000 riot police and has said they will operate under Turkish command.

Qatar, with a population of 3 million, faces a shortage of personnel as it gears up for the month-long FIFA tournament.

Qatar’s legal code criminalizes homosexuality and extramarital sex and rights groups warn that women can be prosecuted if they report rape or if unmarried women become pregnant.

But according to an interior ministry spokesperson, “Health care practitioners will only ask medical questions.”

Locals in Qatar, though, are wondering whether the estimated $300 billion price tag is worth it.    The stadiums are ready, but some of the hotels may not be.

As a recent editorial in The Economist noted:

“Qatar’s promise to stage a uniquely compact World Cup has been kept: football fans should have no trouble watching more than one match a day.

“Its efforts look less impressive if you turn down a narrow road soon after al-Bayt stadium.  At the end sits the al-Khor ‘fan village,’ which promises hundreds of guests an ‘enjoyable and lavish stay’ with swimming pool and restaurant.  Rooms start at 1,512 rials ($415) a night.

“On a visit in late October, the site looked neither enjoyable nor lavish – nor finished. Bulldozers worked the earth.  Giant spools of cable sat along the perimeter.  Perched amid an expanse of sun-baked dirt, it looked less like a deluxe resort than the sort of desert encampment where Arab regimes like to stick dissidents….

“Fans will be able to buy beer outside stadiums, but just the non-alcoholic sort inside.  This is not unusual (many European countries have similar rules).  Away from the stadiums, they will be able to tipple at better hotels and at ‘designated areas’; organizers are cagey about where these are.

“Finding a spot to eat could require patience.  At restaurants in souk Waqif, a popular tourist market, almost every table was full on a recent Thursday night.  The same was true at the bars of West Bay, an area full of high-end hotels, and the greasy spoons in an older part of Doha.  One kebab joint had a 30-minute wait.

“All of this worries fans – and locals.  Some Qataris are excited about the tournament. Others fear the traffic will be intolerable, the restaurants overflowing and the streets thronged with drunk hooligans.  Schools will close for the month; parents wonder how they will entertain their kids.  Some plan to spend the month abroad.”

--High rates of hospitalization with RSV are hitting the youngest children especially hard, part of an unseasonably early surge in respiratory infections.

According to the CDC, babies under six months old have the highest RSV-related hospitalization rate, at 145 hospitalizations per 100,000 infants.

RSV is a common virus that most children encounter by their second birthday.  Reinfections can occur at any age.  Most people experience mild, cold-like symptoms and recover in a week or two.  But RSV can be serious for some infants and older adults, causing bronchitis and pneumonia.

--Conspiracy theorist Alex Jones must pay $473 million in punitive damages for his defamatory claims about the 2012 Sandy Hook mass shooting, a Connecticut judge ruled on Thursday. 

The ruling came a month after a jury in Waterbury, Connecticut, found Jones and the parent company of his Infowars website must pay more than a dozen relatives of Sandy Hook victims nearly $1 billion in compensatory damages for falsely claiming they were actors who staged the shooting as part of a government plot to seize Americans’ guns.

In a separate order, the judge, Barbara Bellis, temporarily blocked Jones from moving any personal assets out of the country.

--A record-breaking Powerball run with a jackpot of $2.04 billion ended up with a single victor in California, purchased at Joe’s Service Center, a gas station in the northeastern Los Angeles suburb of Altadena.

--Hurricane Nicole, now a tropical depression, was just the fourth November hurricane to hit the United States.  It did a big number on the Daytona Beach area, undermining a large number of apartment, condominium and hotel towers, many of which are already being condemned by local building authorities.

--Divers from a documentary crew looking for the wreckage of a World War II aircraft off the coast of Florida found a 20-foot section of the space shuttle Challenger, which exploded and broke apart shortly after its launch in 1986, NASA said on Thursday.

The divers contacted NASA after spotting a large, clearly modern object mostly covered in sand at the bottom of the ocean and bearing the shuttle’s distinctive tiles, the space agency said in a written statement.

NASA administrator Bill Nelson said the agency was trying to determine whether to recover the wreckage and “what additional actions it may take regarding the artifact that will properly honor the legacy of Challenger’s fallen astronauts and the families who loved them.”

The Challenger erupted into a ball of flame 73 seconds after lifting off from Kennedy Space Center on Jan. 28, 1986.  All seven crew members were killed, including school teacher Christa McAuliffe.  Subsequent investigations blamed the disaster on compromised O-Ring seals on an external fuel tank, worsened by unusually cold temperatures.

--Lastly, in 1919, President Woodrow Wilson proclaimed Nov. 11 as the first commemoration of Armistice Day to celebrate and observe the end of hostilities with parades, public meetings and a “brief suspension of business beginning.”

“To us in America, the reflections of Armistice Day will be filled with solemn pride in the heroism of those who died in the country’s service and with gratitude for the victory,” Wilson declared.

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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 $1773…strong week
Oil $88.91

Regular Gas: $3.79; Diesel: $5.36 [$3.41-$3.64 yr. ago]

Returns for the week 11/7-11/11

Dow Jones  +4.2%  [33747]
S&P 500  +5.9%  [3992]
S&P MidCap  +5.2%
Russell 2000  +4.6%
Nasdaq  +8.1%  [11323]

Returns for the period 1/1/22-11/11/22

Dow Jones  -7.1%
S&P 500  -16.2%
S&P MidCap  -10.9%
Russell 2000  -16.1%
Nasdaq  -27.6%

Bulls 35.2
Bears 36.6

Hang in there.

Brian Trumbore

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