Week in Review

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Week in Review

11/11/2023

For the week 11/6-11/10

[Posted 5:00 PM ET, Friday]

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Edition 1,282

Last week I wrote of how various Middle East countries were recalling their ambassadors to Israel in protest over the bloodshed in Gaza, and last Saturday Turkey joined the list in breaking off contacts, on the eve of Secretary of State Antony Blinken’s visit.

Turkey had been mending torn relations with Israel until the start of the war.  But now Ankara hardened its tone against both Israel and its Western supporters – particularly the United States – as the civilian death toll among Palestinians soared.

Israeli foreign ministry spokesman Lior Haiat called the move “another step by the Turkish president that sides with the Hamas terrorist organization.”

Turkish President Recep Tayyip Erdogan told reporters that he held Israeli Prime Minister Benjamin Netanyahu personally responsible for the civilian death toll in the Gaza Strip.

“Netanyahu is no longer someone we can talk to.   We have written him off,” Turkish media quoted Erdogan as saying.

Israel had earlier withdrawn all diplomats from Turkey and other regional countries as a security precaution.

Israel and Turkey had only last year agreed to reappoint ambassadors after a decade of all but frozen ties.

Two weeks ago, Erdogan led a massive rally in Istanbul in which he accused the Israeli government of behaving like a “war criminal” and trying to “eradicate” Palestinians.

So Secretary of State Blinken stepped up his useless diplomatic effort, trying to build support for planning a post-conflict future for Gaza, and Netanyahu pointedly snubbed Blinken’s warning that Israel risks losing any hope of an eventual peace deal with the Palestinians unless it eases the humanitarian crisis in Gaza. 

Blinken went to Jordan to meet with senior Jordanian and other Arab officials, including Lebanon’s caretaker Prime Minister Najib Mikati, but neither Blinken nor Mikati spoke to reporters after they met in an Amman hotel.  Blinken met with Qatar’s foreign minister in Amman, along with foreign ministers from Egypt, Saudi Arabia and the United Arab Emirates.

He then went to the West Bank, to meet with Palestinian Authority President Mahmoud Abbas, and Turkey, racking up the miles on the State Department’s frequent flyer program, but no one has any ideas on Gaza’s future, such as reviving the Palestinian Authority in Gaza, which hasn’t been a factor in the territory since 2007, because this particular idea was met with zero enthusiasm.  The group has long been seen as out of touch and irrelevant by many Palestinians in both the West Bank and in Gaza.

Bottom line, the U.S. and Israel lost the information/disinformation war early on, and with each day, sympathy for the Palestinian cause is growing, and that spells escalation.  U.S. ambassadors in the Middle East are frantically telling the administration that they are losing a generation of support from the region as a result of the strong backing for Israel.

Back to Turkey and President Erdogan, at least he submitted the bill ratifying Sweden’s membership of the NATO military alliance to parliament on Monday after delaying the step for months.

The bill must be approved by parliament’s foreign affairs committee before a vote by the full general assembly. Erdogan would then sign it into law.

But the committee chair said he will not speed up ratification, though Erdogan said he would try to facilitate it.  This is important and will be telling.

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It is going to be a consequential week ahead, with the strong potential for a government shutdown, November 17, and the Asia-Pacific Economic Cooperation forum in San Francisco, where Chinese President Xi Jinping is now slated to meet with President Biden on Wednesday.  It will be interesting to see if they hold a joint news conference, or, more likely, hold separate ones, Xi possibly even skipping his.  But I’m worried that our president isn’t up to this.

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And West Virginia Democratic Senator Joe Manchin’s announcement Thursday that he will not run for reelection in 2024, while not totally unexpected as Manchin faced a very tough fight in deep-red WVA against Republican Gov. Jim Justice, was a thunderbolt for Democrats who hold just a 51-49 margin in the Senate and with tough battles ahead elsewhere in Montana and  Ohio, and potentially Arizona, where the intentions of independent Kyrsten Sinema aren’t known yet.

But Manchin, who earlier had appeared on CNBC in a joint appearance with Republican Mitt Romney, teased a potential third-party presidential run when he said in a social media video, “what I will be doing is traveling the country and speaking out to see if there is an interest in creating a movement to mobilize the middle and bring America together.”

To be continued…at least for another few months and the No Labels’ national convention next March in Texas.  [Jill Stein also announced she would seek the Green Party nomination, bringing back nightmares for Democrats who remember her significant impact on the 2016 election, even at just 1%.]

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Israel / Gaza War….

--Israeli fighter jets struck 450 Hamas targets in Gaza and troops seized a militant compound over a 24-hour period, the IDF said on Monday, in attacks the Gaza Health Ministry said killed dozens of people.

The bombardment from the air, ground and sea was one of the most intense since Israel launched its offensive in response to a surprise attack by Hamas on southern Israel a month ago.

The Israeli army said its strikes hit “tunnels, terrorists, military compounds, observation posts, and anti-tank missile launch posts.”  Ground troops killed several Hamas fighters while taking a militant compound containing observation posts, training areas and underground tunnels, it said.

Health officials said more than 9,770 Palestinians have been killed in the war since Hamas killed 1,400 people and seized more than 240 hostages on Oct. 7.

Monday, the Health ministry said the death toll had surpassed 10,000.  The ministry does not distinguish between fighters and civilians.

--The UN said no foreigners, dual-nationals or injured Palestinians were able to leave the Gaza Strip over the weekend, owing to the failure of all parties to reach an agreement regarding the safe evacuation from northern Gaza.

--Israel said its forces encircled Gaza city, but it faces mounting pressure to avoid civilian casualties after refusing to countenance a ceasefire until the hostages are released.

Secretary of State Blinken continued his diplomatic blitz, which is intended to reduce the risks of the conflict escalating, meeting with Turkey’s foreign minister in Ankara, hours after hundreds of people at a pro-Palestinian protest stormed an air base that houses U.S. troops in southern Turkey.

--CIA Director William Burns was in Israel on Monday to discuss the war and intelligence with senior officials.  Burns will make stops in other Middle East countries, the New York Times reported.

--Israel called on civilians in north Gaza – the heart of Hamas’ forces – to evacuate to the south for their own safety and gave a specific time window on Nov. 5 to do so.

But the U.N. said less than 2,000 did so, citing fear, heavy damage to roads and lack of information due to limited communications.

--Internet services in Gaza were disconnected Sunday and then gradually restored.  They were then cut again Monday as the IDF began entering Gaza City.

--Curiously, the U.S. Central Command, which covers the Middle East, said on X that an Ohio-class nuclear submarine had arrived in the region – an unusual announcement of a nuclear submarine’s position that was clearly designed to be a message for Iran.  [There were conflicting stories on whether it actually had nuclear missiles on board.]

--Israel appears to be preparing for both an invasion and a military occupation of Hamas-held Gaza, Prime Minister Netanyahu told David Muir of ABC News in an interview that aired Monday evening. Muir had asked Netanyahu essentially what comes after the current siege of Israeli tanks and troops around northern Gaza, which is widely seen as a prelude to a large ground invasion of the Palestinian enclave.

“I think Israel will, for an indefinite period, will have the overall security responsibility (in Gaza) because we’ve seen what happens when we don’t have it,” Netanyahu told Muir. “When we don’t have that security responsibility, what we have is the eruption of Hamas terror on a scale that we couldn’t imagine,” he said.

The Wall Street Journal called it “the first indication of [Netanyahu’s] vision for Gaza after the war.”  And it could propel Israeli troops into a counterterrorism campaign with no clear end date while Netanyahu seeks an end to Hamas once and for all as a terrorist organization.

Secretary of State Blinken said Israel should not reoccupy Gaza, pushing back on Netanyahu’s assertion.  Blinken did leave open the possibility of a “transition period” after the war ends.  “Gaza cannot continue to be run by Hamas,” Blinken told reporters in Tokyo, after a meeting of G7 foreign ministers, while broadening a call for “humanitarian pauses” in the assault on Gaza. “It’s also clear that Israel cannot occupy Gaza.  Now the reality is that there may be a need for some transition period at the end of the conflict, but it is imperative that the Palestinian people be central to the governance of Gaza and the West Bank.”

For their part, Hamas has been signaling it can endure a “prolonged” conflict.  According to the Institute for the Study of War, its fighters are already reportedly “reducing indirect fire attacks to conserve stockpiles.”

Netanyahu left the door open for brief pauses in fighting.  But he again ruled out a general ceasefire, at least until Hamas released the 200-plus hostages it has been holding since Oct. 7.

“The only thing that works on these criminals in Hamas is the military pressure that we’re exerting,” Netanyahu said.  Any general ceasefires, he said, “will hamper the war effort” and “hamper our effort to get our hostages out.”

The Institute for the Study of War said Monday evening: “The IDF opened a secure population evacuation corridor on November 6 to enable residents in the northern Gaza Strip to move south in view of military activity.” The Associated Press reported on location Tuesday that the journey south through the corridor is “terrifying” with “bodies strewn alongside the road” and some evacuees reporting “Israeli soldiers firing at them” as they fled.  [Defense One]

--According to the UN on Wednesday, over 70% of Gaza’s population of 2.3 million has already fled their homes, but the growing numbers making their way south point to an increasingly desperate situation in and around Gaza’s largest city, which has come under heavy Israeli bombardment.

Monday, UN Secretary General Antonio Guterres said 89 employees of the UN agency aiding Palestinian refugees, known as UNRWA, had been killed* in Gaza in the month of war.

That is more “than in any comparable period in the history of our organization,” he told reporters at the UN in New York, adding that many of the employees had been killed with members of their family.

*At week’s end the toll was 100.

On Sunday, the leaders of United Nations agencies and other humanitarian groups issued a joint statement calling for an immediate ceasefire, saying “Enough is enough. This must stop now.”

Wednesday, the World Health Organization warned the Gaza Strip faces an increased risk of disease spreading due to Israeli air bombardments that have disrupted the health system, access to clean water and caused people to crowd in shelters.

The lack of fuel has caused desalination plants to shut down, which increased the risk of bacterial infections like diarrhea spreading.  [The WHO actually said more than 33,500 cases had been reported since mid-October, and the lack of fuel has also disrupted the collection of solid waste, which the WHO said created an “environment conducive to the rapid and widespread proliferation of insects, rodents that can carry and transmit diseases.”]

--White House National Security Council spokesman John Kirby said in an interview Thursday that Israel will begin to implement four-hour pauses of military operations in areas of Northern Gaza each day in order to allow for humanitarian assistance to get into the besieged enclave and allow civilians to flee away from the fighting.

“We’ve been told by the Israelis that there will be no military operations in these areas over the duration of the pause, and that this process is starting today,” Kirby said, calling it “steps in the right direction.”

“We have been urging the Israelis to minimize civilian casualties and to do everything that they can to reduce those numbers,” Kirby said, saying this would provide “breathing space for a few hours” for civilians to move out of harm’s way.

But the war raged on.

Israel said that as of Thursday, 39 of its soldiers have been killed in its ground operation as they advanced into the heart of Gaza City.

Israeli troops had secured a Hamas military stronghold called Compound 17 in Jabalya in northern Gaza after 10 hours of combat with Hamas and Islamic Jihad militants above and below the ground, the Israeli military said on Wednesday.

It said troops killed dozens of militants, seized weapons, exposed tunnel shafts and discovered a Hamas weapons manufacturing site in a residential building.

--Israeli troops continued their advance toward the heart of Gaza City at week’s end, while Israeli officials said 80,000 residents traveled south Thursday, the largest movement so far in the five days since the humanitarian corridor was opened.

The IDF said it was closing in on the “heart of intelligence and operational activities” of Hamas in an area near Al-Shifa hospital.  The zone, the military said, was home to a war room for directing fighting, a large training ground and munitions factories used to make rockets, antitank missiles, drones and other explosives.  Kindergartens and mosques are nearby, the IDF said.

--Prime Minister Netanyahu expanded on his remarks about Gaza, saying his country does not “seek to conquer…occupy… [or] govern Gaza,” but a “credible force” would need to unseat Hamas – days after he suggested Israel would control Gaza indefinitely.

--Israeli air strikes hit three Gaza hospitals and a school on Friday, killing at least 22 people, and a ground battle was under way at another hospital, Palestinian officials said, as Israel’s forces took on Hamas in the heart of the enclave.

Officials said missiles landed in the courtyard of Gaza’s biggest hospital, Al-Shifa, in the early hours.

The Palestinian Health Ministry said over 11,000 Gaza residents had been killed, including over 4,500 children.  Again, these figures cannot be confirmed, and probably never will be.

--Iran’s foreign minister said that an expansion of the conflict has become “inevitable,” given the “intensity of the war” against “Gaza’s civilian residents.”

U.S. Gen. C.Q. Brown Jr., the new chairman of the Joint Chiefs of Staff, said on Wednesday that he was worried each civilian killed in Gaza could generate future members of Hamas.  General Brown did not, though, call for a ceasefire.

Several officials in the Biden administration have been saying the longer the Israeli military campaign continues, the greater the chance that the conflict will spark a wider war.

--Last weekend, an Israeli minister said Hamas should “go to Ireland or the deserts” and that dropping a nuclear bomb on Gaza is an option.

Heritage minister Amichai Eliyahu is quoted by the Times of Israel as saying in an interview that dropping a nuclear bomb on the Gaza Strip “is one of the possibilities,” and that humanitarian aid to the population should be restricted, saying “we wouldn’t hand the Nazis humanitarian aid.  There is no such thing as uninvolved civilians in Gaza.”

The minister, who was not part of the war cabinet, was suspended by Netanyahu. The prime minister said on social media his remarks were “divorced from reality.”

--Peggy Noonan/ Wall Street Journal

“If the Gaza operation continues, it is even more important for Israel to face the fact that Benjamin Netanyahu is the wrong leader for this crucial moment. His own country doesn’t trust his leadership. He sapped the Israeli people’s strength over the past year by forcing on them a deeply damaging dispute over his judicial power grab, sundering what unity they had. His actions smeared Israel in the eyes of the world as increasingly undemocratic.  He has been aggressively deaf on the rights of the Palestinian people.

“Whatever war decisions he makes will be interpreted as not moving out of protectiveness and high strategy but from a desire to salvage his own reputation.

“He has allowed the messianic settlers of the West Bank to expand and dominate, and they may deliver to Israel a new war front.  From the Financial Times on Thursday: ‘Armed settlers have stepped up their assaults on Palestinians, especially those in remote villages.’  The European Union this week called it ‘settler terrorism’ and asked Israel to stop it. Some think only Mr. Netanyahu has the clout to make them stop. But they haven’t stopped. Maybe they too see his weakened position.

“The corruption charges that have dogged him leave him, always, with a reputation for untrustworthiness.  As for his judgment, after Oct. 7 he essentially hid out from his own people and, having decided to come out and speak more, he decided to send out a Trumpesque tweet accusing Israeli’s security and military institutions, not him, of being responsible for Oct. 7.  In the outcry that followed he did something uncharacteristic, which is admit the mistake and delete the tweet.  You have to wonder what those he insulted have on him.

“Sometimes a leader has too much history.

“Everything is being remade now; all the pieces are moving on the board. Israel’s meaning must be made new, as if the young are looking at it and trying to understand it for the first time.  It would be good for them to have a new person the world could look at, freshly weigh his or her words, sift them.  Even if this person isn’t ‘much better,’ an unknown variable might shake this up in a way that benefits civilization.

“The U.S. in its support of Israel is tied to this discredited man in a way that doesn’t help.

“It is a mistake for Israel, for its Knesset, to allow him to continue.”

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This Week in Ukraine…

--The Russian military conceded that a Ukrainian missile strike on a shipyard in annexed Crimea had damaged a Russian ship.

The Russian Defense Ministry said late Saturday that Ukrainian forces fired 15 cruise missiles at the Zaliv shipyard in Kerch, a city in the east of the Crimean Peninsula.  Air defenses shot down 13 missiles, but the others hit the shipyard and damaged a vessel, a statement from the ministry said.

Ukraine’s air force commander, Mykola Oleshchuk, said in a statement that the attack targeted “one of the most modern ships of Russia’s Black Sea fleet…(a) carrier of the Kalibr cruise missiles,” but it wasn’t clear if this was the ship that was hit.

--The Kremlin said Vladimir Putin has decided to run in the March presidential elections, as Putin feels he must steer Russia through the most perilous period in decades, according to various reports.  Putin has already served as president for longer than any other Russian ruler since Stalin.

--President Zelensky ruled out holding elections next year, calling for political unity as his government seeks to retain Western support and public trust after a disappointing counteroffensive.

Zelensky said in a video address late Monday that “now is not the time for elections,” as Ukraine should direct its resources toward defense.

Zelensky took office in 2019, meaning presidential elections should normally have been held early next year, but elections cannot take place while Ukraine is under martial law, which was declared after Russia invaded February 2022.

Some such as Senator Lindsey Graham (R-S.C.) have said holding elections would be a testament to Ukraine’s commitment to democracy.

The challenges to holding elections are many, including six million Ukrainians remain abroad after fleeing the invasion.  Russia holds around one-fifth of the country’s territory.  Ukraine has hundreds of thousands of soldiers under arms along a 600-mile front.

More than 80% of Ukrainians say elections should be held only after the end of the war, according to an October survey by the Kyiv International Institute of Sociology, an independent pollster.

Zelensky would likely win any election as he is by far the country’s most popular politician owing to his wartime leadership, but trust in the president fell to 76% in October from 91% in May, according to KIIS, amid signs of a military deadlock and the emergence of cracks in political unity.

And trust in all institutions other than the army has plummeted, from 74 percent in May to 39 percent in October.

The challenges are gathering, as Ukraine’s counteroffensive has failed to make a significant breakthrough.  And further military and financial aid from the U.S. is in doubt amid the disagreements in Washington, and the new war in the Middle East that is competing for attention from allies.

And then you have the disagreements in recent days following Ukraine’s top military commander Valeriy Zaluzhniy saying the war was at a stalemate, with Zelensky contradicting him while acknowledging difficulties.

“Time has passed, people are tired, regardless of their status, and this is understandable,” Zelensky said at a news conference on Saturday, adding: “But this is not a stalemate, I emphasize this once again.”

It’s a stalemate, Mr. President.

Plus, there was the weekend disaster…the killing of 19 soldiers at an award ceremony, targeted by a Russian missile near the front.  Zelensky said the brigade commander had been suspended while a criminal investigation took place.

The ceremony was held out in the open last Friday near the front line in Zaporizhzhia, where Russian reconnaissance drones could easily spot the crowded gathering and they targeted it.

The carnage sparked a wave of criticism among Ukrainians who questioned on social media the planning of an event so close to the battlefield.  President Zelensky lamented the deaths as “a tragedy that could’ve been avoided.”

--Zelensky admitted the Israel-Gaza war is “taking away the focus” from the conflict in Ukraine.  He said this was “one of the goals” of Russia.

--Ukraine’s military said on Tuesday its troops had repelled Russian assaults in widely separated sectors of the war and braced for a fresh attempt to capture the key frontline eastern town of Avdiivka.

Russia is engaged in a slow-moving campaign in eastern areas of the front line, while Ukraine has registered limited progress in its counteroffensive in the east and south.

Several days of rain had for the moment impeded any new Russian advance on Avdiivka.  Avdiivka’s military administration said, “The terrain is too difficult and equipment cannot move.”

Russia is targeting the city’s vast coking plant with artillery for the past week. The last 16 workers keeping the plant operating had finally been evacuated, Avdiivka officials said, and only two doctors and four nurses remained in what was a city of 32,000 before Russia’s invasion.

At week’s end, Ukrainian military officials said a Russian force of 40,000 was massed on three sides there.

Gen. Oleksandr Tarnavskyi, head of Ukraine’s southern group of forces, said troops around Avdiivka were “stoutly holding their defenses.”

--Russia is sending Ukrainian prisoners of war to fight against their own side, the Russian state news agency RIA Novosti has reported.

Yulia Gorbunova from Human Rights Watch said: “Russian authorities might claim they are recruiting them on a voluntary basis but it’s hard to imagine a scenario where a prisoner of war’s decision could be taken truly voluntarily, given the situation of coercive custody.”

--Ukraine’s military spy agency claimed responsibility for the assassination of a Russian-backed lawmaker with a car bomb in the occupied eastern city of Luhansk, an operation it said it conducted with local resistance forces.

--NATO member countries that signed a Cold War-era security treaty froze their participation in the pact Tuesday after Russia pulled out, raising fresh questions about the future of arms control agreements in Europe.

Many of NATO’s 31 allies are parties to the Treaty of Conventional Armed Forces in Europe, which was aimed at preventing Cold War rivals from massing forces at or near their common borders. The CFE was signed in November 1990 as the Soviet bloc was crumbling but was not fully ratified until two years later.

NATO said that Tuesday’s move by its signatory members to suspend participation was required because “a situation whereby Allied State Parties abide by the Treaty, while Russia does not, would be unsustainable.”

Earlier in the day, Moscow said it had finalized its withdrawal from the treaty.  The long-expected move, which the Kremlin blamed in part on NATO’s continued expansion closer to Russia’s borders, came after lawmakers in Moscow approved a bill proposed by President Vladimir Putin denouncing the CFE.

National Security Advisor Jake Sullivan said suspending the obligations by Washington and its allies would strengthen NATO’s “deterrence and defense capacity by removing restrictions that impact planning, deployment, and exercises – restrictions that no longer bind Russia after Moscow’s withdrawal.”

Russia’s action “further demonstrates Moscow’s continued disregard for arms control,” he added.

Withdrawing from the treaty will give the U.S. more flexibility in Romania and Bulgaria near Ukraine and let Kyiv’s Western allies avoid sharing information with countries close to Russia.

--This coming winter is to say the least highly critical.  The strain on Kyiv’s limited resources and on its troops is growing, raising the question of how long Ukraine can hold out in a protracted attritional war. “We’re exhausted, they’re exhausted,” one Ukrainian officer told Reuters.  “But there are more of them, and they have more equipment.”

--Friday, Russian artillery and drone attacks killed three people and damaged an unspecified infrastructure facility, power lines and a gas pipeline in the Dnipropetrovsk and Kherson regions of Ukraine, local officials said.

--A new Gallup poll had more than six in 10 Americans surveyed in October saying neither Russia nor Ukraine is winning after more than 600 days of Vladimir Putin’s full-scale invasion.  About two out of every five now think the U.S. is doing too much to help Ukraine, and Republican support for Kyiv continues to decline noticeably.

Just four months ago, only 29% of Americans thought the U.S. was doing too much. Now that figure is 41%, and it outweighs the percentage of respondents who think the U.S. is giving Ukraine “the right amount” of support to defend against Russia (33%).  Only a quarter of Americans think the U.S. isn’t doing enough, according to Gallup.

When it comes to choosing between a long war and just giving Putin the parts of Ukraine he’s invaded, a majority of those polled (54%) says they still believe “the U.S. should support Ukraine in reclaiming its former territory, even if this resulted in a prolonged conflict.” That number was 66% in August 2022.

--George F. Will / Washington Post

“In March 2022, three weeks into the war, the Russians dropped two 500-kilogram bombs on a theater in Mariupol, Ukraine, where hundreds of civilians, their homes having been destroyed, were sheltering.  On the pavement on each side of the theater was painted in giant Cyrillic letters the Russian word for ‘children.’  Perhaps 600 people died.  The implausible idea that this was an accident became even more so 23 days later when, after a missile attack on refugees at a railway station, the words ‘for children’ – up to 9 children were among the up to 63 people killed – were found painted on fragments of the missile. Did this mean revenge for children killed, according to Russian propaganda, by Ukrainian military actions in Russian-occupied portions of Ukraine?  Retired Army Gen. David Petraeus and historian Andrew Roberts think not.  In their new book, ‘Conflict: The Evolution of Warfare from 1945 to Ukraine,’ they ascribe the missile attack not to revenge but to ‘a truly depraved psychology.’

“A Russian military consistency has been barbarism: Remember the explosive toys Russians scattered to maim Afghan children who would thereafter be burdens for adults too distracted to fight. This is the Russia that some congressional Republicans would, by ending aid for Ukraine, rescue from the criminal misadventure Vladimir Putin began on Feb. 24, 2022.

“Today, for a second year, Russia is engaged in what is called ‘weaponizing winter.’  The aim, Petraeus and Roberts say, is to freeze ‘the Ukrainian people to death in their homes, barracks and foxholes, by destroying power stations, water treatment plants and electrical grids.’ But neither Napoleon’s bedraggled troops on their 1,500-mile retreat from Moscow to Paris in 1812 nor Hitler’s ill-equipped legions, some of whose frozen eyelids fell off, were as used to extreme cold as Ukrainians are.

“Churchill in 1942: ‘There is a winter, you know, in Russia. …Hitler forgot about this Russian winter. He must have been very loosely educated.’  It is fitting that eight decades after Hitler’s hubristic invaders discovered that they should have been supplied with winter clothing, Putin’s invaders blundered into Ukraine assuming that they would subdue a nation roughly the size of Texas in 72 hours: Soldiers were given only five days’ provisions and were told to pack their dress uniforms for the victory parade scheduled for Kyiv on May 9, which Russia commemorates as the anniversary of Germany’s 1945 surrender.

“Putin’s barbarians have, unsurprisingly, slaked their thirst for destruction by assaulting culture. ‘It is hard to escape the conclusion,’ write Petraeus and Roberts, ‘that by looting some museums and art galleries, and deliberately targeting others for destruction, the Russians were hoping to destroy Ukraine’s sense of cultural and historical identity.’  Never mind that Putin’s war justification is that Ukraine has no distinct identity. And how should we categorize the barbarians’ would-be abettors on Capitol Hill?

“Days into the war, Russians attacked Red Cross evacuation routes.  Later they would use thermobaric weapons, a vacuum bomb with two charges, as Petraeus and Roberts explain: ‘The first disperses fuel into the air and the second ignites it, sucking all the oxygen out of people’s lungs.’  It was a notable barbarity, ‘especially against civilians trapped in enclosed spaces.’

“Russia’s war crimes – targeting civilians, kidnapping children, mass executions, torture, rape – are not incidental to, they are premeditated tactics in, the war that some congressional Republicans seem eager to help Putin win.  He knows the help he needs.  ‘If Western defense supplies are terminated tomorrow,’ Putin said on Oct. 5, ‘Ukraine will have a week left to live as it runs out of ammunition.’

“The blithe acknowledgment that killing Ukraine is his intention came as some congressional Republicans were intensifying their opposition to aiding Ukraine.  Their canine obedience to Donald Trump is congruent with his vow that if reelected he will end the war ‘in 24 hours.’ These Republicans, and the constituents to whom they pander, are not less odious than the congressional and campus progressives ‘contextualizing’ (a progressive synonym for ‘justifying’) Hamas’ sadism.

“In his poem ‘September 1, 1939,’ as the war in Europe began, W.H. Auden wrote: ‘As the clever hopes expire / Of a low dishonest decade.’ Today, during the biggest European war since then, many Americans seem so indifferent to its outcome that they are prepared to decide the outcome by abandoning the bleeding victim with a low, dishonest shrug.”

--Meanwhile, Russia is moving to expand its military presence in eastern Libya, a plan that could lead to a naval base, giving it a significant foothold on Europe’s southern doorstep.

A defense accord is being hammered out between Vladimir Putin and Libya’s eastern military commander Khalifa Haftar following their meeting in Moscow in late September.

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Wall Street and the Economy

No major economic releases this week, but the market was a bit roiled Thursday when a 30-year bond auction went off poorly and then Fed Chair Jerome Powell said in opening remarks prepared for a panel discussion at an International Monetary Fund conference in Washington that the U.S. central bank will continue to move carefully but won’t hesitate to tighten policy further if needed to contain inflation.

“If it becomes appropriate to tighten policy further, we will not hesitate to do so,” Powell said.

“We will continue to move carefully, however, allowing us to address both the risk of being misled by a few good months of data, and the risk of overtightening.”

Powell said policymakers are committed to ensuring interest rates are high enough to return inflation to their 2% target, but added, “we are not confident that we have achieved such a stance.”

So, bond yields rose steeply Thursday, as the tenor of Powell’s comments reinforced that policymakers are not ready to declare an end to their tightening campaign, even though Wall Street and many economists have concluded the Fed is done raising rates.

Again, higher for longer, should be the mantra.

Earlier, Minneapolis Fed President Neel Kashkari gave an indication of which way the Fed may lean. He said it’s better to overtighten than to not do enough to tackle inflation, in an interview with the Wall Street Journal.

Kashkari, a voting member of the FOMC, said it’s too soon to declare victory over inflation, despite positive signs that price pressures are easing.

“Before we declare that ‘we’re absolutely done, we’ve solved the problem,’ let’s get more data and see how the economy evolves,” Kashkari said on Monday in a separate interview.

But next week we do get key inflation data on consumer and producer prices, so all eyes on that, Tuesday and Wednesday.

Lastly, the Atlanta Fed’s GDPNow barometer for fourth-quarter growth is at 2.1%.

Freddie Mac’s 30-year fixed-rate mortgage fell to 7.50% from 7.76% last week, and a peak of 7.79% two weeks ago.

Consumers are getting a break on prices at the gas pump…$3.39 for regular today, nationally, according to AAA, down substantially the last few weeks.  I was wrong when I said I thought the decline to $3.55 was it.  A year ago, regular was $3.80.  [More on crude below.]

Europe and Asia

We had the services PMIs for October in the eurozone this week, courtesy of S&P Global and Hamburg Commercial Bank, the composite at 46.5 in October (after last week’s manufacturing figures), a 35-month low (50 the dividing line between growth and contraction).  Services activity was 47.8, a 32-month low.

Service sector readings for October….

Germany 48.2
France 45.2
Italy 47.7
Spain 51.1
Ireland 52.6

UK 49.5

Dr. Cyrus de la Rubia, Chief Economist at Hamburg Bank:

“It looks like the service sector in the Eurozone is stumbling out of the gates for this final quarter.  October marks the third straight month of business activity taking a hit. With new business diving steeply, it is not painting a rosy picture for what is ahead.  Expectations for the next twelve months, however, have improved a bit, but remain well below the long-term average.

“It is a bit of a head-scratcher – prices are still going up, not walking hand in hand with demand like they normally do. While business activity has moved into recessionary territory, indices for prices remained well above 50. There is a name for it, stagflation. The million-dollar question is how long are we going to be stuck in this odd stagflation zone?  PMI data are signaling a bit of a wait. For the ECB, it means that this is not yet the time to cut interest rates.”

Separately, industrial producer prices in the euro area rose by 0.5% in September over August, according to Eurostat, down 12.4% from a year ago.

September retail trade decreased by 0.3% in the EA20 vs. August, and down 2.9% from September 2022.

Britain: The economy stagnated in the third quarter, compared with a quarterly expansion of 0.2% in the three months to June.  The Bank of England expects no growth in 2024, though it believes the country will avoid recession.

Spain: Acting Prime Minister Pedro Sanchez looked set to clinch another term in office after his Socialist Party on Thursday secured the backing of the Catalan separatist party Junts (sic) to form a government in a deal the country’s opposition condemned as “a humiliation.”

A law granting amnesty to those prosecuted over Catalonia’s attempt to secede from Spain was included in the deal, political leaders said.

Junts, which seeks another independence referendum, said supporting each law would depend on progress in talks involving Catalonia’s political conflict.

Turning to Asia…China released trade data for October and exports fell 6.4% year-over-year vs. a consensus call for a decline of 3.3%.  Imports rose 3% Y/Y, much better than expected.

The export figure marked the sixth consecutive month of declining exports, reflecting persistent weak demand from abroad. Exports to the United States fell 8.2%, Japan -13.0%, South Korea -17.0%, Taiwan -4.4%.  To the EU they were down 12.6%, while rising to Australia (5.9%) and Russia (17%).  Considering the first ten months of the year, exports shrank 5.6% Y/Y, per the General Administration of Customs.

China’s inflation reading for October was not good, -0.2% year-over-year, fanning fears of deflation.  Food prices fell steeply, down 4%, as prices of pork, a main dish on Chinese dinner tables, plunged 30% from a year earlier as oversupply haunts the industry.

Core inflation was 0.6%, slowing from a 0.8% gain in September.  Producer prices fell 2.6% Y/Y.

Separately, China asked exporters to report transactions of strategically important rare earth metals* and oxide products, as economic security remains high on the agenda for policymakers.

Importers of crude oil, iron ore, copper ore concentrates, and potash fertilizer have also been asked to report orders and shipments, the Ministry of Commerce said on Tuesday.

*Rare earths exports rose 19.1% in October year-on-year.

And Chinese authorities have asked Ping An Insurance Group to take a controlling stake in Country Garden, the nation’s biggest private property developer, in an attempt to rescue Country Garden, whose troubles have impacted the entire Chinese property market.

Japan’s October service sector PMI was 51.6 vs. 53.8 in September.

September household spending fell 2.8% year-over-year.

Street Bytes

--The major indices rose for a second week, with the Dow Jones up 0.7% to 34283, while the S&P 500 gained 1.3% and Nasdaq 2.4%.  But small- and mid-cap stocks were hammered, the Russell 2000 losing 3.2%.

Next week, we have earnings from the Big Box retailers like Walmart and Home Depot, so we should learn more about the health of the consumer and prospects for holiday spending.

--U.S. Treasury Yields

6-mo. 5.48%  2-yr. 5.05%  10-yr. 4.62%  30-yr. 4.73%

The yield on the 2-year rose 22 basis points on the week, vs. a 5bp rise in the 10-year.

--On Thursday, traders at Industrial & Commercial Bank of China Ltd.’s U.S. unit were forced to handle trades by traversing Manhattan with a USB stick after the unit, part of the world’s largest bank, was hit by a cyberattack, rendering it unable to clear swathes of U.S. Treasury trades after entities responsible for settling the transactions swiftly disconnected from the stricken systems.  So messengers were forced to carry settlement details using a thumb drive as the bank raced to limit the damage.

It was a ransomware attack, apparently by Lockbit, a prolific criminal gang with ties to Russia that has also been linked to hits on Boeing*, ION Trading UK and the UK’s Royal Mail.

ICBC will probably have to seek help from China’s Ministry of State Security in light of the risks of potential attacks on other units, Bloomberg reported.

The incident shines a spotlight on the financial connections between China and the U.S., which persist despite political tensions and economic rivalry between the two countries.  Chinese institutions hold more than $800 billion of Treasury bonds, even after a yearslong reduction in their holdings, and the country’s biggest banks are active in the U.S. government bond market.

*Friday, we learned internal data from Boeing was published online by Lockbit. The hackers in October said they had obtained “a tremendous amount” of sensitive data from the aerospace giant and would dump it online if Boeing didn’t pay a ransom by Nov. 2.

According to a post on Lockbit’s website, the data from Boeing was published in the early hours of Friday morning.  Remember, Boeing is also one of the world’s largest defense and space contractors.

In a statement, Boeing confirmed some data had been released, but said it “remains confident” the event does not pose a threat to aircraft or flight safety, but declined to comment on whether defense or other sensitive data had been obtained by Lockbit.

--Crude prices continued to collapse to below $76 (before finishing the week at $77.28), the lowest since July, due to anticipated reduced demand and increased supply.  Weaker-than-expected Chinese exports in October added to concerns about global demand.  Furthermore, a report from the Energy Information Administration (EIA) predicts American gasoline demand will hit a 20-year low per capita next year.  The EIA now expects a 300,000bpd decline in total petroleum consumption this year.  On the supply side, U.S. crude inventories surged by nearly 12 million barrels last week, the largest increase since early 2023, while Russian shipments reached a four-month high.

Meanwhile, OPEC expects the global economy to grow and drive fuel demand, despite macro challenges, including high inflation and interest rates, the producer group’s secretary general said on Tuesday.

The United States is doing well, while Europe is struggling, OPEC Secretary General Haitham Al Ghais said at a conference in London.  Even China, which has emerged from lockdown more slowly than expected, forecasts growth at 4.5% to 5%, he said, outstripping Europe.

“When we talk about demand and our outlook, maybe for the short term to medium term, we still see a healthy global economy growing despite all the challenges and pressures,” he said.

Official data on Tuesday showed China’s crude oil imports in October grew year on year and month on month, while its total exports contracted more quickly than expected.

Al Ghais said demand growth in India and in other parts of Asia looked positive, and the aviation sector globally was expected to continue to drive fuel demand.

“In the airline sector, there is still room for improvement, so we are quite positive on demand,” he said.

OPEC’s forecasts for demand growth for 2024 of over 2 million barrels per day diverge from the International Energy Agency (IEA) prediction of growth of 880,000 bpd.

--Saudi Aramco on Tuesday reported a 23% fall in third-quarter net profit on the back of lower oil prices and volumes sold, marginally beating analyst estimates and helping prop up its shares. 

Net profit fell to $32.6 billion for the quarter to Sept. 30, above the $31.8bn expected by analysts.

Chevron and Exxon Mobil last month reported sharp year-on-year falls in third-quarter profit as energy prices cooled.

Saudi Arabia, the world’s top oil exporter and de facto leader of OPEC, said on Sunday it would continue with its voluntary oil output cut of 1 million barrels per day until the end of the year. It said it would review the decision again next month.

Aramco’s revenue fell to $113.09bn in the quarter from $144.99bn a year earlier.

Aramco declared a quarterly $19.5 billion base dividend, which is paid regardless of performance.  A second $9.87 billion distribution of performance-linked dividends will be paid out in the fourth quarter, based on 2022 and the first nine months of 2023.

The Saudi state remains overwhelmingly Aramco’s biggest shareholder, and heavily relies on its generous payouts.  The government directly holds 90.19%, the sovereign Public Investment Fund (PIF) 4% and PIF subsidiary Sanabil another 4%, according to LSEG data.

Golf fans know that it is the PIF that has been engaged with the PGA Tour in a potential alliance, negotiations for which appear to have stalled.

One more…Saudi Arabia last week reported a budget deficit of about $9.5 billion in the third quarter. That compared with a budget surplus of almost $30 billion in the whole of 2022.  Saudi Arabia is midway through an economic transformation plan known as Vision 2030, targeting private sector expansion and non-oil growth.

--Tesla plans to build a 25,000-euro ($26,838) car at its factory near Berlin, according to Reuters, in a long-awaited development for the EV maker which is aiming for mass uptake of its cars.

Whether it’s Berlin or the U.S., the whole industry needs an uptake of its electric vehicles.  Sales are growing in terms of market share, but the growth in sales is slowing rapidly, causing automakers to rethink huge investments in the historic transition from internal combustion to electric powertrains.  Polls show the reasons are cost, as well as limited range and too few charging stations, unlike gas stations that almost always are nearby.

Stellantis, which makes the Ram brand of trucks, is working on a solution to “range anxiety,” specifically the “Ramcharger,” a pickup that can travel 145 miles on electricity, with a 3.6-liter V6 gas-powered engine linked to a generator that can recharge the battery while the truck is moving.

Stellantis is confident in the new powertrain’s appeal and the new tentative contract agreement with the United Auto Workers says Stellantis plans to use the same power system in the Jeep Wrangler small SUV in 2028, and the Jeep Wagoneer and Grand Wagoneer large SUVs in 2025.

The Ramcharger is due in showrooms toward the end of next year.  When the battery is fully charged and the generator’s 27-gallon gas tank is full, it can go up to 690 miles.

The battery also can be charged at home or at a direct-current fast-charging station, where it can take in enough electricity to add 50 miles of range in about 10 minutes, Stellantis says.

But wait…there’s more!  With a two-direction home charging station, the truck can power your home in a storm.

Back to demand for electric vehicles in the U.S., which has been levelling off after a couple of years of huge growth, in August, automakers sold almost 111,000 EVs, equating to 8.3% of the total market.  But in September, sales dropped to just under 106,000, or 7.9% of the market.  [Associated Press]

--GM’s Cruise is recalling 950 driverless cars from the roads across the United States and may withdraw more following an accident involving one of its robotaxis, GM’s self-driving unit and the National Highway Traffic Safety Administration said on Wednesday.  The recall is because the collision detection subsystem of the Cruise Automated Driving Systems (ADS) software may improperly respond after a crash.

Last month, a pedestrian in San Francisco was struck by a hit-and-run driver and thrown into an adjacent lane and was hit a second time by a Cruise robotaxi that was not able to stop in time.

--Speaking of GM, UAW union members at its Flint assembly plant in Michigan narrowly voted against a proposed contract, the local chapter said Friday.  Local 598 said 51.8% of votes cast were against the proposed deal.  GM said it would not comment during the ratification process.  But this vote signals that approval overall is not guaranteed.

--Honda Motor is giving many U.S. factory workers an 11% pay bump, effective in January, and making other improvements for these employees, as it seeks to avoid unionization, no doubt.  The Japanese automaker is also cutting the time it takes to reach the top wage in half to three from six years, a change similar to one won by the UAW in its negotiations with GM, Ford and Stellantis.

--Airbus needs to deliver 161 aircraft in the last two months of the year to reach its full-year delivery target.  In a monthly bulletin, the planemaker confirmed it had delivered 71 aircraft in October, up 18% from the same month last year and bringing the total for the first 10 months to 559 jets.  In the final two months of 2022, Airbus delivered 166 jets.

Airbus has orders so far this year for 1,399 aircraft…1,334 after cancellations.

On Monday, leasing company Air Lease questioned whether Airbus or Boeing would meet their delivery goals – in the case of Airbus, because of concerns that scarce engines would get diverted to help airlines keep existing planes flying.

Wednesday, Airbus reported a third-quarter profit of $1.08 billion, up 21%, as revenues rose 12% to $15.96 billion, below forecasts.

Airbus said it was seeing strong demand in commercial aircraft, including a continued rebound in big jets like the A350, but expected the supply chain to remain “challenging.”

--Ryanair announced it would pay a regular dividend for the first time since going public in 1997.  Europe’s largest airline by passenger numbers has preferred to spend its money on expansion and debts rather than returning it to its shareholders, so this is a significant commitment.

Profits for the six months ended September 30, the first half of the airline’s financial year, rose 59% to $2.33 billion (2.18bn euro).

The firm forecast a record profit of $1.9 billion to $2.1bn for the year ending in March.  Traffic rose by 11% to 105 million passengers between April and September.

The dividend, 400 million euro ($428 million) will be paid in two dividends in February and September 2024. CEO Michael O’Leary owns 3.9 percent, so he’ll receive about 15.6 million euro to spend on pints of Guinness and fish and chips.

--TSA checkpoint numbers vs. 2019

11/9…N/A
11/8…106 percent of 2019 levels
11/7…94
11/6…98
11/5…113
11/4…107
11/3…98
11/2…96

--Warren Buffett’s Berkshire Hathaway ended the third quarter with a record cash pile and reported a deeper net loss due to the sputtering stock market rally.

Berkshire wrapped up the third quarter with $157.2 billion in cash and equivalents, up from $147.4 billion at the end of Q2 and eclipsing the previous record of $149.2bn that was set two years ago.

Most of the cash is in short-term T-bills, so investment income has been rising as rates have risen.

Berkshire did report a loss of nearly $13 billion as the paper value of its investments fell, namely its biggest holding, Apple.  But most of those investment losses are unrealized because Berkshire didn’t actually sell most of its stocks. The value of its investments at the end of the quarter were put at $341.1 billion.  Last quarter, the portfolio was worth $353 billion.

And for this reason, Buffett has long said investors are better served focusing on Berkshire’s operating earnings, which exclude the value of its investments that can vary widely quarter to quarter.  By that measure, Berkshire said its operating profit jumped nearly 41% to $10.8 billion, up from $7.65bn a year ago.

Berkshire’s insurance unit was helped by relatively low losses related to major catastrophes like hurricanes this year and a rebound in GEICO’s profits.

But needless to say, the massive cash pile leaves Berkshire poised to pounce if Buffett and his team find an attractive opportunity to buy a business. 

Partner Charlie Munger did tell the Wall Street Journal in a recent interview that the odds of another big acquisition under the pair were “at least 50/50.”

--Walt Disney said Monday that it has appointed Hugh Johnston as chief financial officer, effective Dec. 4.

Johnston is currently CFO and vice chairman of PepsiCo, which separately said he will leave the company Nov. 30, following a 34-year career.  James Caulfield, currently finance chief of PepsiCo Foods North America, was tabbed to succeed Johnston.

Last month, PepsiCo lifted its full-year earnings outlook after posting higher fiscal third-quarter results that topped Wall Street’s expectations, driven by price increases.

And then after the close on Wednesday, Disney shares rose as the entertainment giant posted quarterly earnings that edged ahead of Wall Street’s estimates.

Disney posted revenue for the quarter of $21.1 billion, up 5% from the year-ago quarter, and a little shy of consensus of $21.4bn.  Profits were 82 cents a share, up from 30 cents a year earlier and above the Street’s 71 cents.

The company said it added nearly seven million core subscribers to Disney+ in the quarter, increasing the total to 112.6 million, and beating expectations by three million subscribers.

The company said it now has 5.2 million subscribers for its ad-supported version of Disney+, with more than half of new domestic subscribers choosing the ad tier.  Disney also said it doesn’t expect to focus on reducing password sharing until 2025.  The company expects streaming to reach profitability in the fourth quarter of fiscal 2024.

Disney posted revenue in its entertainment segment, which includes movies and television, of $9.5 billion, up 2% from a year earlier.

The sports segment, mostly ESPN, had revenue of $3.9 billion, flat with a year ago and in line with estimates. The experiences segment, which includes theme parks, cruises, hotels, and licensed products, had revenue of $8.2 billion, up 13%, and above consensus at $7.8 billion.

“Our results this quarter reflect the significant progress we’ve made over the past year,” CEO Robert Iger said in a statement.  “While we still have work to do, these efforts have allowed us to move beyond this period of fixing and begin building our businesses again.”

Disney sees content spending for fiscal ’24 of $25 billion, down from $27 billion this year. Disney said that sports rights account for more than 40% of the total.

For the full fiscal year, the company posted revenue of $88.9 billion, up 7%.  That includes a 3% in the entertainment segment, to $40.6 billion, a 16% improvement in experiences, to $32.5 billion, with sports down 1% to $17.1 billion.

Iger has been under pressure to make big moves and he has talked of selling non-core assets, such as ABC, while the company needs to figure out what it wants to do with ESPN.

--Warner Bros. Discovery stock dropped 19% on Wednesday, its worst drop in more than two years.  The company reported a wider-than-expected loss and a decline in television revenue amid Hollywood strikes and a difficult advertising market.

Warner Bros. reported a third-quarter loss of 17 cents a share on revenue of $9.98 billion.  Analysts were expecting a loss of 9 cents a share on revenue of $9.97bn.

Content revenue for its networks segment of $215 million represented a 22% decline from the same period last year, due in large part to the WGA and SAG-AFTRA strikes, Warner Bros. said in a statement.

Total advertising revenue for the quarter of $1.8 billion was down 12% from the previous year, as the ad market remained soft, Warner said.

--So then SAG-AFTRA’s negotiating committee on Wednesday approved a tentative deal with the major studios that would end a nearly four-month-long strike that has sidelined thousands of workers and hobbled much of the Los Angeles area’s signature entertainment industry.

The unanimous vote came after a tense week.  Terms of the agreement were not immediately disclosed, but the committee said the three-year contract was “valued at over $1 billion.”

The proposed contract – which still must be ratified by the union’s members – boosts minimum pay for members, increases residual payments for shows streamed online and bolsters contributions to the union’s health and pension plans.  It also establishes new rules for the use of artificial intelligence, a major source of concern for actors. SAG-AFTRA said it won “unprecedented provisions for consent and compensation that will protect members from the threat of AI.”

SAG-AFTRA members walked out July 14, joining striking Writers Guild of America members and launching the industry’s first twin strikes since 1960.  Writers spent nearly five months on picket lines before reaching a new contract in late September with the Alliance of Motion Picture and Television Producers.

The shift to streaming has disrupted the industry’s decades-old economic model.  Netflix and other streaming services typically pay performers upfront, minimizing the residuals that working actors have relied on to sustain themselves between jobs.  Union leaders entered the strike hoping to claw back some relief for working actors as the industry moves away from the 22-episode season that network TV orders in favor of six- to 13-episode seasons, which are more the norm for streamers.

--The unions representing hospitality workers in Las Vegas said on Friday that they have reached a tentative deal with Wynn Resorts for a new contract covering 5,000 employees, ahead of a strike deadline that was set to expire in a few hours. 

The five-year agreement comes after rivals Caesars Entertainment and MGM Resorts International reached their own agreements earlier this week with about 30,000 workers on the Strip.  The tentative deal with Wynn marks the end of long-drawn negotiations between the unions and casino operators, averting threats of possible disruption to some popular events that are expected to draw thousands of tourists to Vegas.  The city will be hosting the Formula 1 Las Vegas Grand Prix this month and the 58th Super Bowl in February.

Casino resort operators in Las Vegas have been earning record profits from a steady post-pandemic recovery in tourism. Visits to the city in September were 4% lower than in the same period in 2019, according to data from the Las Vegas Convention and Visitors Authority.  Room rates, however, have surged more than 47%.

--The Food and Drug Administration on Wednesday approved expanding the use of Eli Lilly’s diabetes drug Mounjaro to include the treatment of obesity.  The FDA’s move furthers the rapid rise of Mounjaro – and similar-acting therapies Ozempic and Wegovy from Novo Nordisk – that have in a matter of months reshaped the treatment of obesity and doctors’ understanding of its roots.

Lilly will sell the drug under the name Zepbound for chronic weight management.

Mounjaro has become popular off-label for weight loss since it was approved as a type 2 diabetes treatment in May 2022, contributing to periodic supply shortages.  Under the FDA’s decision, Lilly can now promote the drug to help people lose weight and keep it off.

The FDA’s green light will probably increase the already strong demand for the drug. It will also add to pressure on commercial health plans to cover the weight-loss use, despite the costs. Plans had been holding out, noting the FDA hadn’t granted approval, though some covered its use in people with diabetes.

Lilly said it expects Zepbound to become available by the end of the year at a list price of $1,060 a month, or about 20% lower than the list price for Wegovy.

--SpaceX is on track to book revenue of about $9 billion this year across its rocket launch and Starlink businesses, according to people familiar with the matter who told Bloomberg, with sales projected to rise to about $15 billion in 2024.

Sales for Starlink, in particular, are expected to outpace and exceed the launch business next year as the product becomes available in more regions around the world.  Starlink will then represent the majority of SpaceX’s revenue.

The Elon Musk-led company is private, but SpaceX, which sells commercial space on its reusable rockets as well as internet access beamed through a constellation of satellites, also has deals with NASA to ferry astronauts to and from the International Space Station and run resupply missions.

A tender offer at SpaceX earlier this year valued the company at about $150 billion, Bloomberg reported.  That compares with a $137-billion valuation reported in January when SpaceX raised $750 million from investors.

The sources told Bloomberg that SpaceX is on track to register 2023 earnings, excluding some items, of more than $3 billion.

But today, Reuters’ Marisa Taylor had an extensive (16-page) report on the huge numbers of injuries at Musk’s SpaceX facility in McGregor, Texas. Through interviews and government records, Reuters documented at least 600 injuries of SpaceX workers since 2014, including one death, which was unreported until now.  More than 100 workers suffered cuts or lacerations, 29 with broken bones, 17 whose hands or fingers were “crushed,” and nine with head injuries, including one skull fracture and one traumatic brain injury.  Eight accidents led to amputations.

“Current and former employees said such injuries reflect a chaotic workplace where often under-trained and overtired staff routinely skipped basic safety procedures as they raced to meet Musk’s aggressive deadlines for space missions….

“Musk himself at times appeared cavalier about safety on visits to SpaceX sites: Four employees said he sometimes played with a novelty flamethrower and discouraged workers from wearing safety yellow because he dislikes bright colors….

“ ‘Elon’s concept that SpaceX is on this mission to go to Mars as fast as possible and save humanity permeates every part of the company,’ said Tom Moline, a former SpaceX senior avionics engineer who was among a group of employees fired after raising workplace complaints.”

--I told you all about the looming WeWork bankruptcy and the impact on the New York office market last week, and so the company did indeed declare Chapter 11, Monday, which enables it to tear up leases for about half its New York City sites, introducing another 1.57 million square feet of available space to the market, a dismal prospect for landlords struggling to fill buildings.

For perspective, Crain’s New York Business says its about the size of 1 Vanderbilt, the new office tower next to Grand Central Terminal.

Manhattan currently has an office vacancy rate of about 18%, and rates are even higher for the older Midtown and Financial District buildings that WeWork liked to rent.

“Landlords need this like they need a hole in the head,” said Ruth Colp-Haber, partner at commercial real estate broker Wharton Property Advisors.

--Under Armour reported fiscal Q2 net income Wednesday of $0.24 cents per share, up from $0.19 a year earlier.  Revenue for the quarter ended Sept. 30 was $1.57 billion, unchanged from a year ago.

For fiscal 2024, the company said it expects earnings of $0.47 to $0.51, in line with expectations, with revenue expected to be down between 2% and 4%, from a prior outlook of “flat to up slightly.”

The shares are floundering around $7, down from about $23 two years ago.

Foreign Affairs, Part II

China:  As we prepare for next week’s Asia Pacific Economic Forum in San Francisco and the just-announced meeting between Presidents Biden and Xi, The Economist had a story on China’s military and its struggle to recruit: “The PLA is struggling to attract enough technologically skilled recruits to operate all its modern weaponry.  Many of those with the requisite skills are choosing higher-paid jobs in industry or, worse, going abroad.  Among those who do join up, the turnover rate is high.”

The one-child policy, The Economist offers, “produced a generation of mostly only-children with overly coddling parents.  Potential recruits, whose world revolves around smartphones and social media, are put off by the PLA’s austerity and increasing focus on political education.”

Iran: Iran-backed Houthi militants shot down a U.S. military drone as it flew off the coast of Yemen this week, U.S. officials said Thursday. Houthis themselves claimed the shootdown earlier in the day, as spotted by Charles Lister of the Washington-based Middle East Institute.

Also, two U.S. F-15 fighter jets attacked a weapons storage facility in eastern Syria on Wednesday in response to “a series of attacks against U.S. personnel in Iraq and Syria by the Iranian Islamic Revolutionary Guard Quds Force, Defense Secretary Lloyd Austin told Defense One and other reporters traveling with him to the Pacific region on Wednesday.

The Wednesday strikes “are not connected to what Israel is doing in its efforts against Hamas,” Austin said.  “So, in terms of deterrence overall, our goal is to make sure that the conflict that’s in Gaza doesn’t expand and become a region-wide conflict.”

Charles Lister noted Wednesday that U.S. forces in Iraq and Syria have been targeted by militant attacks more than 60 times over the past three weeks.  No troops have been injured since October 26, according to defense officials, and all 56 who have been injured since Oct 7 have returned to duty.

Pakistan: The Pakistani military said it had successfully repelled an attack by militants on the Mianwali Training Air Base in central Pakistan on Saturday. But the episode, which came on the heels of another brazen assault on the military, has renewed concerns about the country’s precarious security situation.

Tehreek-d-Jihad Pakistan, an obscure militant group, claimed responsibility for the assault.  The attempt to breach the air base occurred a day after 14 soldiers traveling in a convoy were ambushed and killed in Baluchistan Province, in the southwest.

Random Musings

--Presidential approval ratings….

Gallup: 37% approve of President Biden’s job performance, 59% disapprove; 35% of independents approve (Oct. 2-23).

Rasmussen: 45% approve, 53% disapprove (Nov. 10).

--A new CNN/SSRS national survey of registered voters gave President Biden a 39% approval rating, 61% disapproving, with 34% of independents approving.

The survey also found only 25% believe the president has the stamina and mental sharpness to serve, while 74% say he does not.  Fifth-three percent believe Donald Trump does have the stamina and sharpness, even though he has lost more than a few miles off his fastball.

--In new polls by the New York Times and Siena College of six swing states, Donald Trump leads Joe Biden in five of them.

Nevada: Trump 52%, Biden 41%
Georgia: Trump 49%, Biden 43%
Arizona: Trump 49%, Biden 44%
Michigan: Trump 48%, Biden 43%
Pennsylvania: Trump 48%, Biden 44%
Wisconsin: Biden 47%, Trump 45%

This is a disaster for President Biden, fellow Democrats know this and it’s why Rep. Dean Phillips has launched a bid for the Democratic nomination, not for himself, but I think Phillips was sincere in his original intent to try to encourage other better known figures to join the race because Democratic primary voters deserve a choice.

This is political suicide if Democrats don’t wise up soon, like yesterday!

An overwhelming 71 percent said Biden was “too old” to be an effective president, while only 19 percent of supporters of Trump viewed him as too old, and 39 percent of the electorate overall.

Sixty-two percent said Biden does not have the “mental sharpness” to be effective.

And Trump wins overwhelmingly on the issue of the economy by a 59-37 margin.

--A new ABC News/Ipsos poll found that three-quarters of Americans (76%) believe the country is headed in the wrong direction and the leading Democratic and Republican candidates are viewed broadly unfavorably.  Only 23% of Americans think the country is headed in the right direction.

Republicans are overwhelmingly negative, with 95% thinking things in this country are heading in the wrong direction, followed by 76% of independents and 54% of Democrats, according to the poll.

Among the two candidates most likely to face off again in 2024, one in three (33%) Americans view President Biden favorably, while former President Trump is viewed favorably by only 29%.

Less than half of Black people (49%) and Hispanic people (33%) have a favorable impression of Biden.  Both of these groups voted overwhelmingly for him in the 2020 presidential election.  According to ABC News’ 2020 exit poll, 87% of Black voters supported Biden in 2020 as did 65% of Hispanic voters.

The economy and inflation are currently the top issues for Americans, according to the ABC poll.  Seventy-four percent say the economy is very important to them, while 69% say inflation is very important.

--For the first time in his presidency, a majority of California voters disapprove of President Biden’s job performance, as support for him has dropped sharply among major Democratic-leaning groups, according to the latest UC Berkeley Institute of Governmental Studies poll, co-sponsored by the Los Angeles Times.

Only 44% approve of Biden’s job performance, with 52% disapproving.  It had been a 48-42 split in May.

Women voters and voters younger than 40, two groups that played a major role in Biden’s victory, have gone from majority approval of Biden’s job performance in May to disapproval now.  Latino voters, who were evenly split on Biden in May, now disapprove of his work by 14 points, 55% to 41%.

On the Republican side, among those who say they are likely to vote in the California primary, Donald Trump receives 57%, Ron DeSantis 12% and Nikki Haley 9%. Winning more than 50% would give Trump all the state’s delegates, a rather sizable haul.

[Meanwhile, Gov. Gavin Newsom’s standing among California voters hit an all-time low.  His approval rating was 44% in the UC Berkeley/L.A. Times poll, down 11 points from February, while his 49% disapproval is an all-time low.  Voters don’t like that he has been focusing so much on the national party and issues outside of the state.]

--Iowa Gov. Kim Reynolds, after months of signaling her support for Ron DeSantis, formally endorsed him at a Des Moines rally Monday, a huge win for DeSantis, who hopes’ Reynolds star power among Iowa Republicans can help jumpstart his stagnant campaign and establish himself, not Nikki Haley, as the clear alternative to Donald Trump.

--We had the third Republican debate Wednesday night in Miami, and once again Nikki Haley distinguished herself as someone with gravitas, and sensitivity, to be a strong candidate for the GOP come November 2024.  Of course there is the little issue of Donald Trump being way up in the polls in Iowa, New Hampshire, and South Carolina, but some of us hold out hope that things could change in the next few months.

And I liked that Haley went after a guy I pegged long ago as a charlatan and a fraud…Vivek Ramaswamy.  At one point, after Ramaswamy brought up Haley’s daughter in relation to a debate over TikTok, Haley dismissed Vivek as “scum,” which indeed he is.

I also thought Chris Christie was terrific, as he showed his command of the issues, though it’s almost time for him to drop out, ditto Tim Scott.

Ron DeSantis opened strong and was generally OK.

But it’s Trump’s show.

--Editorial / Wall Street Journal

“The third Republican presidential debate Wednesday night was useful in many ways, and especially in revealing the emerging GOP fault line on foreign policy.  Nikki Haley and Chris Christie stood out for supporting Israel and Ukraine and scoring President Biden for weakness that invited aggression from adversaries.  Vivek Ramaswamy showed himself to be a full-throated isolationist, while Ron DeSantis and Tim Scott were hedgers, especially on aiding Ukraine.

“Front-runner Donald Trump again was a no-show as he tries to persuade everyone that the campaign is over before anyone votes.  His foreign-policy views have turned in a more isolationist direction since 2020, to the extent he’s clear about anything.  His main argument is that no wars began while he was President, so no wars will begin if he’s elected again.

“Oh, and he’d end the war in Ukraine ‘in 24 hours.’  The clear implication is that he’d do that by cutting off Ukraine and giving Vladimir Putin a large chunk of that country.

“Mr. Ramaswamy went further and declared that Ukraine isn’t worth defending. He spun a series of falsehoods, insults and half-truths about Ukraine, including an apparent implication that its President, Volodymyr Zelensky, might be a Nazi.

“Ukraine ‘celebrated a nazi in its ranks – the comedian in cargo pants, a man called Zelensky – doing it in their own ranks,’ Mr. Ramaswamy said in the debate. Press reports later said his campaign said the candidate was referring to someone other than Mr. Zelensky.  But Mr. Ramaswamy surely knows that one of Vladimir Putin’s propaganda points is that Ukraine is run by Nazis….

“We relate Mr. Ramaswamy’s views at this length not because he has a chance to win the nomination. After an initial burst of support as he stuck to domestic issues, he has faded in the polls as he has shown that he is out of his depth in a time of multiplying threats.

“Ms. Haley, on the other hand, benefits from her experience as U.S. Ambassador to the United Nations.  When aid to Israel came up, she rightly said that Iran is behind the militias attacking Israel and U.S. bases in the region.  She also noted that Russia, China and Iran are working together as an ‘unholy alliance’ against our allies and U.S. interests.

“ ‘A strong America doesn’t start wars,’ she said.  ‘A strong America prevents wars.’ Ms. Haley overall had another strong performance….

“Mr. Trump is leading the field by a mile, and thus the press corps tends to dismiss these debates as irrelevant.  But they are helpful in sorting out the views and preparation of the candidates.  That’s especially important on national security as the world’s rogues are on the march and the U.S. is unprepared.”

--Which brings me to Tuesday’s elections, another tough one for Republicans, getting rebuked in three major races/issues.

Ohio voted to enshrine abortion rights in its constitution, 56.6% to 43.4%, giving individuals the right to an abortion, a major victory for pro-choice campaigners in the state.  [Separately, Ohio voted to legalize recreational marijuana for people 21 and older, 57% to 43%.]

Kentucky reelected Democratic Gov. Andy Beshear, 52.5% to 47.5% for state attorney general, and Trump-backed candidate, Daniel Cameron, despite this being a strongly red state, Trump winning it 62-36 in 2020.

And Virginia Republican Gov. Glenn Youngkin was unable to flip the Virginia legislature, Democrats instead flipping the House of Delegates (51-49 seats), while maintaining control of the Senate (21-19).

Youngkin and his super PAC poured political capital and cash into the election, pushing a conservative agenda, including a 15-week ban on abortions – with exceptions – a more restrictive proposal than current law which bars abortions after 26 weeks.  There was speculation that if Youngkin had pulled it off, reversing the legislature, that he could make a late bid for the Republican presidential nomination.  Now, he’s just licking his wounds.

The only Republican win, aside from some state legislative pickups in a few states, was Mississippi Gov. Tate Reeves holding off a stiff challenge from Democrat Brandon Presley, 51.6% to 47.0%.

Bottom line, Republicans still have a big problem on abortion rights.

Editorial / Wall Street Journal

“The sobering message for Republicans is that they’re losing on abortion, and the choices are unpalatable compromises or more nights in the political wilderness.  The results suggest that the GOP’s Nikki Haley, who has said that a federal 15-week limit on abortion is political fantasy, is right if the GOP is going to win among suburbanites and independents.

“Democrats racked up these wins even though President Biden’s approval rating is down near 40%. The immediate effect of Tuesday’s results was to let Mr. Biden off the media hook for those awful poll numbers, as White House spinners say abortion and MAGA are all Mr. Biden needs to win in 2024.  They might be right, though Democrats are still taking an enormous risk given that Mr. Biden must endure another campaign year after he turns 81 on Nov. 20 and is in obvious decline.

“But elections, not polls, are the measure of political success, and Republicans have the bigger problem.  Mr. Trump’s partisans often claim he is realigning the party to include more working-class voters. That’s true, but so far that has been more than offset by the flight of moderates and suburban women from the GOP.

“Republicans lost or did worse than expected in 2018, 2020, 2022 and again in 2023. That won’t change until Republican voters finally get tired of all the losing.”

--From the Washington Post:

“Donald Trump and his allies have begun mapping out specific plans for using the federal government to punish critics and opponents should he win a second term, with the former president naming individuals he wants to investigate or prosecute and his associates drafting plans to potentially invoke the Insurrection Act on his first day in office to allow him to deploy the military against civil demonstrations.

“In private, Trump has told advisers and friends in recent months that he wants the Justice Department to investigate onetime officials and allies who have become critical of his time in office, including his former chief of staff, John Kelly, and former attorney general William Barr, as well as his ex-attorney Ty Cobb and former Joint Chiefs of Staff chairman Gen. Mark Milley, according to people who have talked to him, who, like others, spoke on the condition of anonymity to describe private conversations.  Trump has also talked of prosecuting officials at the FBI and Justice Department, a person familiar with the matter said….

“As president, Kelly said, Trump would often suggest prosecuting his political enemies, or at least having the FBI investigate them.  Kelly said he would not pass along the requests to the Justice Department but would alert the White House Counsel’s Office.  Usually, they would ignore the orders, he said, and wait for Trump to move on.  In a second term, Trump’s aides could respond to such requests differently, he said.

“ ‘The lesson the former president learned from his first term is don’t put guys like me…in those jobs,’ Kelly said.  ‘The lesson he learned was to find sycophants.’”

As for the New York civil fraud trial, that saw Donald Trump testify Monday, and Ivanka on Wednesday, personally, I wish this case had been dropped.  The focus should be on the classified documents, Georgia and Jan. 6 looming trials instead.

The proceedings in New York bore the hell out of me and are only helping the president, not hurting him.

--The pro-Palestinian demonstrations last weekend in Washington, D.C., were vicious in their rhetoric, and it was outrageous that among the chants was “Biden, Biden you can’t hide! We charge you with genocide!”

Others chanted “Allahu akbar” and F--k Joe Biden.”

Equally outrageous was a video put out from Michigan Rep. Rashida Tlaib (D) that as the Washington Post’s Jim Geraghty put it, “is the most incendiary and provocative statement you’ll ever see from a member of Congress.  You don’t often see a House member from the president’s party accusing him of supporting genocide.

“But that’s literally what Tlaib does.”

After showing protests using the chants, “No peace on stolen land” and “From the river to the sea”….

Geraghty: “You can’t chant or endorse the change, ‘no peace on stolen land’ and then insist you’re calling for ‘peaceful coexistence.’….

“Nor is the chant ‘from the river to the sea’ a call for ‘peaceful coexistence.’  The river and sea in question are the Jordan River and the Mediterranean Sea, effectively the eastern and western borders of the state of Israel for the past 75 years.

“In the minds of those chanting the slogan, what happens to all the people currently living ‘from the river to the sea’?  Do they just choose to move away?  Do they get somewhere else as compensatory homeland?  Because we’ve seen how Hamas wants to clear out that area.

Tlaib stares into the camera and says, “Mr. President, the American people are not with you on this one. …We will remember in 2024.”

The Tlaib video closes with an accusation: “Joe Biden supported the genocide of the Palestinian people. The American people won’t forget.” 

Geraghty: “(This) is not a fair characterization of the man who’s been talking about the need to ensure humanitarian relief can get into Gaza from very early on in this conflict.  Biden’s first speech after the massacre declared, ‘Hamas does not stand for the Palestinian people’s right to dignity and self-determination. Its stated purpose is the annihilation of the State of Israel and the murder of Jewish people. They use Palestinian civilians as human shields.’  While in Israel, Biden insisted, ‘The people of Gaza need food, water, medicine, shelter.’  And in his address to the nation upon his return, Biden said, ‘We can’t ignore the humanity of innocent Palestinians who only want to live in peace and have an opportunity.’

“These are not the words of a man who supports genocide of anybody.  It’s a deeply unfair smear to claim otherwise.

“There is, however, real genocide going on right now.  We live in a world where Vladimir Putin is trying to wipe the Ukrainians off the map, Hamas will murder any Israeli of any age it can get its hands on, and the United Nations has found China is committing ‘crimes against humanity’ against the Uyghur people.

“Democratic members of the House should be leading the charge to censure Tlaib. The situation is bad and tense enough without her claiming that the U.S. policy of supporting Israel – unchanged through administrations in both parties – amounts to genocide. The fires of extremism and rage are burning, and Tlaib is grabbing the gasoline.”

So then on Tuesday, Rep. Tlaib – the only Palestinian American in Congress – was censured by the full House, 234-188, for her rhetoric about the Israel-Hamas war, an extraordinary rebuke.  Twenty-two Democrats joined Republicans.

Tlaib, with other Democrats standing by her side, defended her stance, saying she “will not be silenced and I will not let you distort my words.”

--The aforementioned Peggy Noonan, from her perch at the Wall Street Journal, on the depressing state of higher education in the United States.

“If you’re in your 20s now, you’ve been taught throughout high school and college to view the world within a certain framework: white privilege, Western imperialism, the whole woke agenda.  Every time you try to describe that regime you feel like you’re reciting cliches, which is part of its brilliance as an ideology: It makes you feel as if you’re chasing ghosts when you know you’re not.

“While students were being indoctrinated, they weren’t being educated.  Critical thinking can only get you in trouble, so stick with the narrative, don’t read too deep. A professor at an esteemed college mentioned this week that when he likened the airport mob in Dagestan to a ‘pogrom,’ not one of his students knew what the world meant.”

--In an interview with CNN’s Manu Raju last weekend, Rep. George Santos (R-N.Y.) stood by his claims that he is “Jew-ish” – saying that he consulted with a genealogist to prove his grandparents actually did flee the Holocaust. Santos said he has spent the last 10 months evaluating his DNA and working with a genealogist to prove his claims about his heritage.

As to the 23-count indictment for alleged embezzlement and lying to Congress, he professed his innocence.

“Those conversations are yet to be had,” he replied when asked about a plea deal.

Among the accusations against him are allegations that he cooked the books to make his campaign’s finances appear greater than they were in order to qualify for a program to draw GOP resources to him.

“I’ve never, ever submitted or even looked at a single report,” Santos contended.  “As far as all the allegations, remember how a campaign works.  I’m a candidate, candidates do not handle money.”

Prosecutors have alluded to email and text messages they believe shows guilt. They also locked down a guilty plea from Santos’ former campaign Treasurer Nancy Marks last month.

Santos vowed to run for reelection.

--I knew about the big story out of nearby Westfield, N.J., when I went to post last week, but chose not to comment until I saw further details.

But by now many of you have seen or heard the story of Westfield High School, and girls finding out boys were sharing nude photos of them in group chats…fake nudes, AI created.

It’s not just Westfield, it’s an issue all over the country, it seems, and the big problem, there aren’t necessarily laws against it, so “schools and law enforcement are rushing to catch up as AI speeds ahead,” as the Wall Street Journal’s Julie Jargon put it in an extensive piece.

It is sickening that this totally traumatizes the girls.

--Late today, the FBI seized New York City Mayor Eric Adams’ phone and iPad as part of an ongoing investigation into fundraising for his 2021 campaign, including from foreign sources.

--Extreme weather that has hit Italy this year, lashing urban areas and devastating crops across several regions, will cost the country billions.

The largest insurers already face more than $3.2 billion in claims from floods and hurricanes that stormed the regions of Veneto and Emilia Romagna earlier this year, according to an analysis published by Sole 24 Ore on Sunday.

And this is before the deadly rains centered on Tuscany and northern regions in the past week, killing seven people and causing damage already estimated above $320 million, according to the civil protection agency.

Italian officials said the weather event in Tuscany was associated with a trend of “tropicalization.”  The storms followed on the heels of Italy’s hottest October ever.  According to agriculture association Coldiretti, the cost to Italy’s farm sector from floods this year is about $6.5 billion.

--The death toll from Hurricane Otis in Acapulco, Mexico was last reported at 48, another 48 missing, with the Fitch rating agency putting estimated catastrophic losses at $16 billion.  The photos of the devastated high-rise apartments and office buildings are unreal.

--Finally, we note the passing of astronaut Frank Borman, who died Tuesday at the age of 95, according to NASA.

It was December 1968, when Borman commanded Apollo 8’s historic Christmas flight that circled the moon 10 times and paved the way for the lunar landing the next year.

Together with James Lovell and William Anders, they were the first Apollo mission to fly to the moon – and to see Earth as a distant sphere in space.

Apollo 8 slipped into lunar orbit on Christmas Eve, and for those of us alive that day, it was as moving an event as any in human history.  The world was watching…and listening.

On Christmas Eve, the astronauts read from the Book of Genesis in a live telecast from the orbiter: “In the beginning, God created the heaven and the earth. And the earth was without form, and void; and darkness was upon the face of the deep.”

Borman ended the broadcast with, “And from the crew of Apollo 8, we close with good night, good luck, a Merry Christmas, and God bless all of you – all of you on the good Earth.”

---

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

And to our veterans, thank you for your service, as we commemorate Veterans Day.

Pray for Ukraine, Israel and the innocents of Gaza.

God bless America.

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Gold $1939…down $60 on the week…
Oil $77.28

Regular Gas: $3.39; Diesel: $4.38 [$3.80 / $5.36 yr. ago]

Returns for the week 11/6-11/10

Dow Jones  +0.7%  [34283]
S&P 500  +1.3%  [4415]
S&P MidCap  -1.6%
Russell 2000  -3.2%
Nasdaq  +2.4%  [13798]

Returns for the period 1/1/23-11/10/23

Dow Jones  +3.4%
S&P 500  +15.0%
S&P MidCap  +0.4%
Russell 2000  -3.2%
Nasdaq  +31.8%

Bulls 49.3
Bears 23.9

Hang in there.

Brian Trumbore

 

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