Week in Review

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Week in Review

01/06/2024

For the week 1/1-1/5

[Posted 5:00 PM ET, Friday]

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Edition 1,290

It was a rough week…in the financial markets and geopolitically.  Wall Street’s winning streak is history, bond yields rising anew, while we saw intense warfare between Russia and Ukraine, and escalating tensions in the Middle East, well beyond Israel and Gaza, with Taiwan’s critical election now just eight days away.

On the domestic politics front, the Supreme Court met today to begin formulating a ruling on ballot access issues for Donald Trump, which could come at any time, but most likely it seems next week.

*The Supreme Court just ruled they will take up the Colorado case, with oral arguments Feb. 8.

As for President Biden, he gave a speech on threats to American democracy in Valley Forge, Pennsylvania, this afternoon, but Democrats are facing total disaster come November with Biden at the top of the ticket, best summed up by the following….

Editorial / The Economist

“American politics is paralyzed by a contradiction as big as the Grand Canyon.  Democrats rant  about how re-electing Donald Trump would doom their country’s democracy.  And yet, in deciding who to put up against him in November’s election, the party looks as if it will meekly submit to the candidacy of an 81-year-old with the worst approval rating of any modern president at this stage in his term.  How did it come to this?

“Joe Biden’s net approval rating stands at minus 16 points.  [Ed. minus 20 in Gallup.]  Mr. Trump, leading polls in the swing states where the election will be decided, is a coin-toss away from a second presidential win.  Even if you do not see Mr. Trump as a potential dictator, that is an alarming prospect.  A substantial share of Democrats would rather Mr. Biden did not run.  But instead of either challenging him or knuckling down to support his campaign, they have instead taken to muttering glassy-eyed about the mess they are in.

“There are no secrets about what makes Mr. Biden so unpopular.  Part of it is the sustained burst of inflation that has been laid at his door. Then there is his age.  Most Americans know someone in their 80s who is starting to show their years. They also know that no matter how fine that person’s character, they should not be given a four-year stint in the world’s hardest job.

“Back in 2023 Mr. Biden could – and should – have decided to be a one-term president. He would have been revered as a paragon of public service and a rebuke to Mr. Trump’s boundless ego.  Democratic bigwigs know this.  In fact before their party’s better-than-expected showing in the midterms, plenty of party members thought that Mr. Biden would indeed stand aside. This newspaper first argued that the president should not seek re-election over a year ago.

“Unfortunately, Mr. Biden and his party had several reasons for him fighting one more campaign, none of them good.  His sense of duty was tainted by vanity.  Having first stood for president in 1987 and labored for so long to sit behind the Resolute desk, he has been seduced into believing that his country needs him because he is a proven Trump-beater.

“Likewise, his staff’s desire to serve has surely been tainted by ambition.  It is in the nature of administrations that many of a president’s closest advisers will never again be so close to power.  Of course they do not want to see their man surrender the White House in order to focus on his presidential library.

“Democratic leaders have been cowardly and complacent.  Like many pusillanimous congressional Republicans, who disliked Mr. Trump and considered him dangerous – but could not find it within themselves to impeach or even criticize him – Democratic stalwarts have been unwilling to act on their concerns about Mr. Biden’s folly.  If that was because of the threat to their own careers, their behavior was cowardly.  If it was thinking that Mr. Trump is his own worst enemy, it was complacent.  Mr. Biden’s approval ratings have continued to slide, while the 91 criminal charges Mr. Trump faces have, so far, only made him stronger.”

[And then there is Kamala Harris.]

“Ms. Harris has the advantage of not being old, though it says something about the Democratic Party’s gerontocracy that she will be 60 in October and is considered youthful.

“Unfortunately she has proven to be a poor communicator, a disadvantage in office as well as on the stump.  Ms. Harris is a creature of California’s machine politics and has never successfully appealed to voters outside her state.  Her campaign in 2020 was awful.  Her autocue sometimes seems to have been hacked by a satirist.  Immigration and the southern border – a portfolio she handles for Mr. Biden – is Mr. Trump’s strongest issue and the Democrats’ weakest.  Ms. Harris’s chances of beating Mr. Trump look even worse than her boss’s….

“The president is not a good campaigner and is up against a candidate whose rallies are a cult meeting crossed with a vaudeville show.  He needs someone who can speak to crowds and go on television for him.  That person is not Ms. Harris.

“One way she could serve her party and her country, and help keep Mr. Trump out of the White House, would be to forswear another term as vice-president.  Mr. Biden could present his second term as a different kind of presidency, one in which he would share more responsibility with a vice-president acting more like a CEO.  Either way, Mr. Biden needs the help of an army of enthusiastic Democrats willing to campaign alongside him. At the moment he and his party are sleepwalking towards disaster.”

Biden’s speech, which concluded less than an hour ago, was good.  I have kept my Republican Party registration, and I’m disgusted how many in my party have indeed “abandoned the truth.”

But I sure as hell don’t want Trump or Biden to be my president next January.

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This Week in Ukraine….

--The death toll from last Friday’s massive strike by Russia across virtually the entire country rose to 52 on Monday (other reports I read had the toll at 39), after officials in Kyiv found more bodies in the rubble, raising the number of dead in the capital to 23.  Critical industrial and military infrastructure was attacked, as well as civilian buildings like hospitals and schools.

In response, Ukraine then launched a major attack on the Russian city of Belgorod, just north of Ukraine, on Saturday.  This attack was one of the deadliest to take place on Russian soil since the invasion started 22 months ago.  Russian officials said the death toll stood at 25 as of Monday, including five children, more than 100 others wounded.

[Ukraine also launched air strikes on Donetsk, a Russian-held city in eastern Ukraine, killing four, injuring 14, according to Russia-installed officials.]

Cities across western Russia have regularly come under drone attacks since May, although Ukrainian officials never acknowledge responsibility for strikes on Russian territory or the Crimean Peninsula.

“They want to intimidate us and create uncertainty within our country. We will intensify strikes. Not a single crime against our civilian population will go unpunished,” Vladimir Putin said on Monday, describing the barrage of Belgorod as a “terrorist act.”

But in his formal New Year’s address Monday, in a message that lasted only four minutes, Putin said, “I want to wish every Russian family all the best.  We are one country, one big family.”

Kharkiv was then pummeled with missiles and drones in a brutal assault, with waves of drones and ballistic missiles, killing six, scores injured.  Russia claimed it attacked military facilities, including a hotel housing commanders and “foreign mercenaries.”

The United Nations says that more than 10,000 civilians have been killed in Ukraine and nearly 60 people inside Russia.

Ukraine said Russian drones hit Odessa, Ukraine’s largest port, killing at least one person.

--Russia launched about 90 Shahed-type drones across Ukraine on Monday, during the early hours of the new year.  Speaking during a New Year’s Day visit to a military hospital, Putin said Ukraine could expect more such strikes after the shelling of Belgorod.

--In a long New Year’s speech of his own on Monday, Ukrainian President Volodymyr Zelensky honored his people’s resilience in times of bloodshed.

“The major result of the year, its main achievement: Ukraine has become stronger,” Zelensky said in a televised address interspersed with footage of cities under attack and meetings with leaders of Ukraine’s Western allies.

Mentioning “war” 14 times in his 20-minutes message, Zelensky also vowed, just like a year ago, that a free Ukraine would prevail.

“No matter how many rockets the enemy launches, no matter how many shellings and attacks – vile, merciless, massive – the enemy carries out in an attempt to break Ukrainians, intimidate, knock Ukraine down, drive it underground, we will still rise,” he said.

--Ukraine’s two largest cities came under attack from Russian hypersonic ballistic missiles on Tuesday morning, killing at least five people and injuring nearly 130, officials said, as the Kremlin continued to step up their winter bombardment of urban areas.

President Zelensky said on his Telegram channel that five civilians were killed in Kyiv and in northeastern Kharkiv as hypersonic Kinzhal missiles that can fly at 10 times the speed of sound slammed into city blocks.

Since Sunday, Zelensky said, the Kremlin’s forces have launched about 170 Shahed drones and “dozens of missiles of various types” against Ukrainian targets, most aimed at civilian areas, he said.

[Zelensky later said Russia had used some 300 missiles and 200 drones over five days.]

The kh-47M2 is an air-launched hypersonic ballistic missile.  Russian forces rarely use such expensive missiles against Ukraine due to their limited stocks.

Many people in Kyiv stayed indoors or sought refuge in shelters as powerful explosion shook the city from early morning.

Air raid sirens blared for nearly four hours, and the city’s subway stations – which function as shelters – were crowded with people.

After the Ukrainian air force issued warnings about incoming hypersonic missiles, people wearing pajamas underneath their coats took sleeping bags, mats and their pets to subway stations as loud explosions echoed above the city.

Ukraine claims it shot down all 10 Kinzhal missiles, and that more than 60 other cruise missiles were also downed.

Early Monday morning, Russia unleashed another massive assault, similar to last Friday’s, using 36 Shahed drones and over 120 missiles of different types, including five Kinzhals.  Critical infrastructure and military facilities were targeted across much of the country.

Ukraine says it shot down 27 Shaheds and 88 missiles.  Casualty figures were not available.

--Moscow claimed that Ukraine fired at least eight missies on Belgorod Tuesday, killing one, according to the local governor.

--Wednesday, Russia said it had foiled a Ukrainian attack on Belgorod, downing a dozen missiles before they could reach the city, but regional governor Vyacheslav Gladkov said the situation “continues to remain tense” in the city.

Later, Gladkov said authorities were evacuating residents near potentially unexploded munitions, with sappers called in to evaluate the danger.  Several other villages came under fire Wednesday.

--Defense One had a report Tuesday on how Putin is leaning heavily on his defense industry to outpace Ukraine and its allies when it comes to resupplying his invasion.  Monday, at the trip to visit wounded troops at a military hospital, he gloated, “The Ukrainian army expends 5,000-6,000 155-caliber shells there per day of combat operations, and the United States produces 14,000 per month.  Per month!”

“If you use 5,000 [shells] a day, then the supply depletes quite quickly; it is close to that now,” Putin said, according to an official transcript.  “And we are building up and will continue to, exponentially at that,” he added.  Ukraine was “supplied with more than 400 tanks – 450 or whatever it is.  And in a year we will produce and overhaul 1,600,” the Russian leader said.  “This is not a state secret,” he continued, and promised, “In fact, there will be probably more.  It is like this almost across the board.”

Like Ukraine, said Putin, “We also want to end the conflict, as quickly as possible, but only on our terms.  We have no desire to fight endlessly, but we are not going to cede our positions either.”

--On a related item to the above, Germany’s Der Spiegel reported Tuesday that most of the more than dozen or so Leopard tanks Germany sent to Ukraine are now unusable due to a lack of spare parts.

--Russia and Ukraine on Wednesday exchanged hundreds of prisoners of war in the biggest single release of captives since Russia’s full-scale invasion in February 2022.

Ukrainian authorities said that 20 Ukrainian prisoners of war returned home in the first exchange in almost five months.  Russia’s Defense Ministry said that 248 Russian servicemen have been freed under the deal sponsored by the United Arab Emirates.

The UAE has maintained close business ties to Moscow throughout Russia’s war on Ukraine.

--Thursday, Ukraine said its air force conducted a strike on a Russian command post near the occupied city of Sevastopol, and also hit a military unit in a separate strike on the Crimean Peninsula.

Air Force Commander Mykola Oleshchuk posted a video from social media on Telegram showing smoke rising from an explosion near Sevastopol, a Crimean pot that serves as the main headquarters of Russia’s Black Sea Fleet.  He also published a screenshot of a social media post saying that a Russian military base in the city of Yevpatoria had been hit in a strike.  Mikhail Razvozhayev, the Moscow-installed governor of Sevastopol, described the attack as “the most massive in recent times.”

Russia’s defense ministry said its forces had foiled a Ukrainian attack, destroying 10 incoming missiles over the peninsula.

--The White House on Thursday said North Korea recently provided Russia with ballistic missiles and launchers for use in Ukraine, citing newly declassified intelligence. National security spokesperson John Kirby told reporters the United States will raise the development with the UN Security Council.

Kirby called North Korea’s arms transfer to Russia a “significant and concerning escalation” and said the U.S. would impose additional sanctions against those facilitating these arms deals.

Kirby also said Iran has not delivered close-range ballistic missiles to Russia, but that Washington believes Russia intends to purchase missiles systems from Iran.

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Israel and Hamas….

--Saturday, Prime Minister Benjamin Netanyahu said Israel’s war on Hamas will continue for “many more months,” pushing back against persistent international cease-fire calls after mounting civilian deaths, hunger and displacement of virtually the entire population in the Gaza Strip.

Egypt has proposed a multistage plan that would kick off with a swap of hostages for prisoners, accompanied by a temporary cease-fire – along the lines of an exchange during a weeklong truce in November.

Hamas insists the war must end before it will discuss hostage releases.  A senior Hamas official in Beirut reiterated that position Saturday.

--Israeli Defense Minister Yoav Gallant said troops were reaching Hamas command centers and arms depots.  The Israel Defense Forces said it had destroyed a tunnel complex in the basement of one of the houses of the Hamas leader for Gaza, Yahya Sinwar, in Gaza City.

--In a momentous ruling that could ignite a constitutional crisis, Israel’s Supreme Court on Monday struck down a law passed by Prime Minister Benjamin Netanyahu’s right-wing government that was meant to limit the court’s own powers.  It was an 8-7 decision. 

Its passage in July set off large-scale protests, led by Israeli liberals, over the Netanyahu government.  Many who oppose his administration see the court as the only check on government power.

A day after the landmark ruling, the country’s leaders appeared on Tuesday to want to avoid any immediate constitutional crisis during wartime.  It suggests that Netanyahu’s conservative Likud party and right-wing allies will wait until the war is over to take further steps to rein in the court.

Netanyahu’s governing coalition, the most right-wing and religiously conservative in Israel’s history, has argued that the Supreme Court has overreached its authority and subverted the will of the voters and the function of the elected government.

But in a country that has one house of Parliament, no formal written constitution and a largely ceremonial president, many defenders of Israel’s liberal democracy view the Supreme Court as the only bulwark against government power.

--The deputy head of Hamas and two leaders of its armed wing were assassinated in a drone strike in Lebanon on Tuesday, the group said on its official Telegram channel.

The deputy leader, Saleh al-Arouri, died in an explosion in a suburb of Beirut, according to Hamas.  Lebanese state media reported that the blast occurred amid a meeting between Palestinian factions at a Hamas office. Eleven other people were injured in the attack.

Arouri, one of the founders of Hamas’ military wing, the Al-Qassam Brigades, was elected the deputy chairman of Hamas’ political bureau in October 2017, accelerating what analysts and Israeli officials contended was a closer relationship between Hamas and Hezbollah.

Arouri was responsible for expanding Hamas’ paramilitary infrastructure in Lebanon.

Hamas’ chief Ismail Haniyeh said that assassinating Arouri is a “terrorist act,” a violation of Lebanon’s sovereignty and an expansion of Israel’s hostility against Palestinians. 

Hezbollah said on Tuesday that the assassination is seen as “a serious assault on Lebanon” and “a dangerous development in the course of war between the enemy and the axis of the resistance,” the group posted on Telegram.

The killing of Arouri and other Al-Qassam members “will not go without a response or punishment,” Hezbollah pledged in retaliation, adding that the resistance has “its finger on the trigger.”

Israel said on Tuesday that Israeli forces were in a high state of readiness and prepared for any scenario.

Wednesday, the head of Hezbollah, Sayyed Hassan Nasrallah, said that the killing of Arouri was “a major, dangerous crime about which we cannot be silent.”

In a televised speech, Nasrallah said Hezbollah’s cross-border shelling of Israel starting on Oct. 8 had prevented a broader bombing campaign by Israel, warning Israel that there would be “no ceilings” and “no rules” to his group’s fighting if Israel chose to launch a war on Lebanon.

The killing of Arouri is the first strike in a campaign of assassination overseas promised by Israeli officials for several months.

--Israel said it had begun withdrawing some troops from Gaza, several thousand, at least temporarily, part of a planned pullout of roughly five brigades.  It did not offer details, though the military cited a growing toll on the Israeli economy.

Heavy fighting continued, however, with the IDF saying it had conducted several targeted operations across Gaza in the last few days, killing “dozens” of Hamas fighters.

--Thursday, Israeli shelling killed 14 Palestinians in Khan Younis in a southern coastal area of the Strip packed with people who had fled other parts of the enclave, Gaza health ministry officials said.  The dead included nine children.

--Israeli Defense Minister Gallant, said, “We will not tolerate the threats posed by the Iranian proxy, Hezbollah, and we will ensure the security of our citizens.”

Friday, Gallant said his country would do everything needed to “ensure that Gaza will pose no threat to Israel.”  But he insisted there should be “no Israeli civilian presence” in the enclave when fighting finishes. Gallant sees Gaza being run by a Palestinian body under overall Israeli security control.

Previously, Israel’s leaders have given few details on how they think Gaza should be governed after the war.

Meanwhile, Secretary of State Antony Blinken has launched another tour of the region, including Israel and the West Bank.

--Editorial / The Economist

“There is mayhem in the Middle East. In Gaza 2m war-battered civilians are at risk of famine. Attacks on cargo ships by the Houthis threaten world trade.  Israel’s northern border is tense after the assassination of a Hamas leader in Beirut on January 2nd.  A day later an explosion killed at least 100 people in Iran; the Iranians blamed ‘terrorists.’  War could break out between Israel and Hezbollah, the Iran-backed militia in Lebanon. Two things are clear. The attacks of October 7th are reshaping the Middle East. And under Benjamin Netanyahu’s leadership, Israel is making blunders that undermine its own security….

“(In) Gaza… Israel’s tactics show needless disregard for civilian lives. The Hamas-run authorities there say 22,000 civilians and fighters have died.  Another 7,000 may lie under the rubble.  Israel says it has killed 8,000 terrorists. Far too little water, food and medicine is reaching Gaza and there are no truly safe zones for civilians.  Mr. Netanyahu seems to have no post-war plan, other than anarchy or military occupation.  He has excluded rule by the Palestinian Authority in Gaza.  Extremists in his coalition talk, outrageously, of permanently displacing Palestinians from the enclave.

“What explains this myopia?  It is true that Israeli public opinion shows little sympathy for the Palestinians and that the obliteration of Gaza may help restore Israel’s deterrent power.  Yet the main explanation is Mr. Netanyahu’s weakness.  Desperate to stay in office, he has pandered to extremists in his coalition and the Israeli electorate, while testing America’s patience and horrifying Arab states.  That will backfire in Gaza and hinder Israel from dealing with its own broader security concerns.

“Take the northern front: the threat of a Hezbollah invasion or missile strike means that a strip of northern Israel is now uninhabited.  Yet Israel’s options are grim.  A pre-emptive invasion of Lebanon could lead to a military quagmire, trigger the complete collapse of the Lebanese states and wreck relations with America.  Diplomacy might create a buffer zone between Hezbollah and Israel’s border, but a regional plan is needed to contain and deter Iran. That requires the support of America, other Western allies and, ideally, the Gulf Arab states, all of which Mr. Netanyahu is alienating.

“Mr. Netanyahu’s popularity at home has plummeted.  Israel’s Supreme Court has just struck down his controversial judicial overhaul.  For Israel’s sake, he has to go. Given the trauma of October 7th, his successor will not be soft on security. But a wiser Israeli leader might understand that famine in Gaza, anarchy or open-ended occupation there and the erosion of American backing will not make Israel safer.”

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Wall Street and the Economy

Richmond Fed President Thomas Barkin, a voting member on the Fed’s Open Market Committee this year, said on Wednesday the central bank is “making real progress” towards taming inflation without inflicting major damage on the job market, with a hoped-for soft landing “increasingly conceivable.”

While the best-case outcome of inflation falling without a major rise in the unemployment rate is “in no way inevitable,” and could still be thrown off course, “you can see the case” developing in data that includes continued low joblessness and inflation that on a six-month basis is now below the Fed’s 2% target, Barkin said in prepared remarks for the Raleigh Chamber of Commerce.

Barkin did not provide details about his own policy expectations for the year, or when it might be appropriate for the Fed to begin reducing a policy rate that has been held steady since July in the 5.25%-5.50% range.  But he said risks to a soft landing remain, including that delayed impacts from current high interest rates hit harder than expected, and also that outside shocks or stickier-than-expected inflation makes a full return to the Fed’s target more difficult than anticipated. 

“That’s why the potential for additional rate hikes remains on the table,” Barkin said.  “And the data that come in this year will matter.”

Wednesday, the Fed released the minutes from its last meeting in December, and they revealed policymakers concluded that inflationary pressures were easing and that the job market was cooling. 

Fed officials indicated in their own interest-rate forecasts that a lower benchmark rate “would be appropriate by the end of 2024,” given the steady progress toward taming inflation.

But they “stressed the importance” of remaining vigilant and keeping rates high “until inflation was clearly moving down sustainably” toward their 2% target.  And while Chairman Jerome Powell suggested at a news conference after the meeting that the Fed was likely done raising rates, the minutes show that uncertainty about the economy’s outlook meant that further rate hikes were still possible.

The Fed is meeting Jan. 30-31, and we will have important CPI and PCE data beforehand.

So today we had a key piece of information on the economy, the December jobs report, which came in stronger than expected, 216,000, though October and November were revised downward a combined 71,000.  The unemployment rate remained unchanged at 3.7%.

A negative for the Fed was that average hourly earnings rose 0.4%, and 4.1% for the year, stronger-than-expected and higher than the prior reading of 4.0%.

Separately, we had ISM data for December, with manufacturing remaining weak at 47.4 (50 the dividing line between growth and contraction), while the service sector figure of 50.6 was far weaker than forecast and versus 52.7 prior.

November factory orders beat estimates at 2.6%.

We had another report on the holiday shopping season, with Adobe Analytics saying that online spending rose 4.9% year over year for November and December, a record $222.1 billion on retailers’ websites and apps.  I’m unimpressed.

The Atlanta Fed’s GDPNow barometer for fourth-quarter growth sits at 2.5%.

Freddie Mac’s 30-year fixed-rate mortgage ticked up to 6.62% from 6.61% the prior week, breaking a 9-week streak of falling rates from the peak of 7.79%.  It was 6.48% a year ago.

Europe and Asia

We had the December PMIs in the eurozone this week (via S&P Global and Hamburg Commercial Bank), and the composite was 47.6, unchanged from November.  Manufacturing 44.7, a 7-month high; services 48.8.

Germany: 43.3 mfg., 49.3 services
France: 42.1, 45.7
Italy: 45.3, 49.8
Spain: 46.2, 51.5
Ireland: 48.9, 53.2
Netherlands: 44.8 mfg.
Greece: 51.3 mfg.

UK: 46.2 mfg., 53.4 services

Dr. Cyrus de la Rubia, Chief Economist HCB

“Amid a relentless slump in the manufacturing sector of the Eurozone, the HCOB PMI has shown little improvement compared to November.  This indicates a sustained decline in both activity and demand for manufactured goods. The sluggishness of new orders echoes the gloom, retreating almost as swiftly as the previous month.  Our Nowcast model aligns with this pessimistic trend, strongly suggesting a contraction in GDP for the fourth quarter.  If this holds true, it paints a bleak picture for the Eurozone and would mean that the Eurozone entered a recession in the third quarter.”

On the inflation front, we had a flash estimate for December in the euro area, up to 2.9% from 2.4% in November, according to Eurostat, though ex-food and energy it was 3.9%, down from 4.2%.  [The Euro folks like to use a core of ex-food, energy, alcohol and tobacco which was 3.4% vs. 3.6% prior.]

The data appears to confirm the European Central Bank’s prediction that inflation bottomed out in November and will now flatline in the 2.5% to 3% range through 2024, well above the bank’s 2% target, before slowing again in 2025.

Headline inflation….

Germany 3.8%, France 4.1%, Italy 0.5%, Spain 3.3%, Netherlands 1.0%, Ireland 3.2%.

November producer prices fell by 0.3% in the EA20 over October, and were down 8.8% from a year ago. [Eurostat]

Turning to Asia…China reported its December PMI readings, 49.0 for manufacturing vs. 49.4  prior, with services at 50.4 vs. 50.2, per the National Bureau of Statistics.  The private Caixin readings, which are focused on small- and medium-sized companies, vs. the NBS’ large, state-sponsored focus, had December manufacturing at 50.8 vs. 50.7 in November.  The non-manufacturing figure was a better-than-expected 52.9 vs. 51.5 prior.

GDP is expected to hit the government’s target of 5% for 2023, and China is likely to target the same for 2024.

Japan’s December PMIs were released…47.9 manufacturing, 51.5 services.

South Korea’s manufacturing PMI for the month was 49.9, Taiwan’s 47.1.

Street Bytes

--After ending 2023 on a nine-week winning streak, fueled by bets the Fed would soon start cutting interest rates, traders began questioning just how fast, and how many cuts, we would get from Chair Powell and Co. this year.  Plus valuations are stretched.

So the market took a breather, with the Dow Jones down 0.6% to 37466, the S&P 500 off 1.5% and Nasdaq falling 3.3%.

When the S&P rises in the first month of the year, its average return for the remainder is 9.2%, and its return is positive 78% of the time. When it drops in January, the average return for the rest of the year falls to 2.1%, and the remaining months are positive 58% of the time.

--Apple stock fell 3.6% Tuesday to a seven-week low, 6% on the week, after Barclays downgraded the shares of the world’s most valuable company on concerns that demand for its devices from the iPhone to the Mac will remain weak in 2024. 

The stock accounts for about 7% of the S&P 500’s market weight and was up 48% in 2023, hitting a record-high in mid-December.

[As for the other members of the Magnificent Seven and their 2023 returns…Microsoft +57%, Amazon +81%, Meta +194%, Nvidia +239%, Tesla +101%, Alphabet/Google +58%]*

One more on Apple.  The Justice Department, according to people familiar with the matter, is in the late stages of an investigation into the company and could file a sweeping antitrust case in the first half of the year, focused on how Apple has used its control over its hardware and software to make it more difficult for consumers to ditch the company’s devices, as well as for rivals to compete.

*For other 2023 market data, please go to my Wall Street History link.  If you’re in the financial services industry, you should print it out for future reference.  Good data on oil, gold, and interest rates, as well as equity returns, in a concise format only available here, sports fans.

--U.S. Treasury Yields

6-mo. 5.25%  2-yr. 4.39%  10-yr. 4.04%  30-yr. 4.20%

Treasury yields were all over the place in the holiday-shortened week, the 10-year rising from 3.88% to 4.00%, back down to 3.90%, and then up to 4.09% following Friday morning’s strong jobs report, but then fell some to finish the week at 4.04% after the weak ISM service sector reading.

--The Washington Post had an extensive piece on how U.S. oil production has been hitting records, yet because of the politics of the topic, President Biden and the administration don’t want to talk about it.  I’ve long gotten a kick out of how President Trump and his supporters in Congress talk about “drill, baby, drill,” yet U.S. crude production is at 13.2-13.3 million barrels per day, and it peaked under Trump at 13 million bpd in November 2019.

“The huge boost in U.S. oil production has defied analyst expectations and driven energy prices down around the globe.  White House policy is hardly the key factor, but it has helped. Biden’s vows on the campaign trail to restrict growth of fossil fuels gave way to a more moderate approach after Russia invaded Ukraine and prices soared. The signal he sent to the industry as voters struggled with high gas prices was clear: Pump more.”  [Evan Halper, Toluse Olorunnipa / Washington Post]

Oil rose a bit this week to $73.92 on increased Mideast tensions.

--Denmark’s Maersk suspended shipping through the Red Sea and Suze Canal “until further notice” as it continues to review security following an attack on one of its vessels. 

Maersk paused all Red Sea sailings for 48 hours following attempts by Yemen-based Houthi militants to board the Maersk Hangzhou, before making Tuesday’s announcement.

U.S. military helicopters repelled the assault and sunk three small boats, killing 10 of the attackers, U.S. Central Command posted on X, and the Houthis themselves confirmed.

Maersk had more than 30 container vessels set to sail through Suez via the Red Sea, an advisory on Monday showed, while 17 other voyages were put on hold.

Maersk rival Hapag-Lloyd last Tuesday announced its vessels would continue to divert away from the Red Sea – sailing via southern Africa’s Cape of Good Hope instead – until at least Jan. 9.

Shares in shipping companies have risen since the crisis began on expectations that longer routes will result in higher freight rates.

The Maersk Hangzhou, which was hit by an unknown object during the attack, was able to continue on its way with LSEG shipping data showing the vessel near the Suez Canal on Monday.

The United States and 12 of its allies issued a written warning to the Houthis.

Previously, the U.S. has held back from retaliating against Houthi bases in Yemen, in large part because it does not want to undermine a fragile truce in Yemen’s civil war.

But now Biden officials are signaling their patience is running out.

“Let our message now be clear: We call for the immediate end of these illegal attacks and release of unlawfully detained vessels and crews,” White House officials said in a statement issued on Wednesday.

“The Houthis,” the statement continued, “will bear the responsibility of the consequences should they continue to threaten lives, the global economy, and free flow of commerce in the region’s critical waterways.”

The warning – also signed by Britain, Australia, New Zealand, Bahrain, Belgium, Canada, Germany, Denmark, Italy, Japan, Singapore and the Netherlands – stopped short of threatening military strikes.

In a statement Friday, Maersk said all vessels would be diverted south around the Cape of Good Hope for the foreseeable future.

“The situation is constantly evolving and remains highly volatile, and all available intelligence at hand confirms that the security risk continues to be at a significantly elevated level,” Maersk said.

Maersk warned customers today to prepare for significant disruption.

--Incredibly, all 379 passengers and crew of a Japan Airlines plane escaped a devastating fire that erupted after it collided with a smaller Coast Guard aircraft at Tokyo’s Haneda airport.  However, five out of the six crew of the Coast Guard aircraft died, while the captain escaped, Japan’s transport minister said.

The coast guard aircraft was going to aid in the relief efforts from Japan’s powerful earthquake that struck the west coast on New Year’s Day.  At least 92 people were killed, with 242 missing as of Friday, as rescue workers were struggling to reach isolated areas where buildings had been toppled, roads wrecked and power cut to tens of thousands of homes.

But consider on the JAL plane that the passengers and crew all got off the plane in about 90 seconds before it totally erupted shortly thereafter.  It took six hours to put out the flames. An absolute miracle and a credit to the professionalism of the cabin crew, training, and passengers that knew to stay calm and follow directions.  [Everyone left their carry-ons onboard.]  Seventeen were injured, and four taken to the hospital, but none of the injuries were life-threatening.

Wednesday, Japanese authorities said the JAL plane was given permission to land, but the smaller Coast Guard turboprop was not cleared for take-off, based on control tower transcripts.

--Delta Air Lines plans to hire roughly half as many pilots next year as it did in 2023, the latest sign that a more than two-year-long pilot hiring spree is starting to slow.

Major carriers have been hiring pilots at a record clip as they raced to catch up with the rapid rebound in travel demand that followed the pandemic.  They hired over 13,000 pilots last year and are on track to bring on nearly as many this year, according to FAPA.aero, a pilot career advisory firm.

Delta told pilots in a message this week that it plans to hire about 1,100 pilots next year. It hired more than twice that many in 2022 and again in 2023 through November, according to FAPA.

But in any other year this is still higher than a typical year.

--China said it would promote the certification of its domestically built narrowbody passenger jet in Europe this year, as part of efforts to receive more international recognition for the C919 and compete with Boeing and Airbus.

The Civil Aviation Administration of China (CAAC) told an annual industry conference in Beijing on Thursday that it would increase its efforts to work with the European Union Aviation Safety Agency to allow its “domestic civil aircraft to go abroad,” according to the CAAC.

The C919 has been operating commercially in China since May last year, but it has only been certified by the Chinese regulator.  The plane is designed to compete with Boeing’s 737 and Airbus’ A320.

--According to the Department of Transportation, 2023 saw the lowest number of canceled flights in a decade, a rate of 1.2% for the year. 

Newark Liberty International, however, was at 4%, according to the Federal Aviation Administration statistics.

--TSA checkpoint numbers vs. 2019*

1/4…97 percent of 2019 levels
1/3…109
1/2…109
1/1…108
12/31…99
12/30…106
12/29…120
12/28…110

*Suddenly, 1/1…TSA no longer had 2019 figures available.  It took me a while to find the year’s database, in a different location.  But next week, I’m just going to switch to the TSA’s format, comparing checkpoint #s with 2023 as well, which makes sense at this point, 2023 being a normal year.

--Tesla on Tuesday reported fourth-quarter deliveries that beat analysts’ estimates after a push to deliver more Model 3 electric cars before some variants of the compact sedan lose federal tax credits in the New Year under the Inflation Reduction Act (IRA).

Tesla delivered a record number of vehicles in the fourth quarter, helping the company hit its 2023 target of 1.8 million.

The company turned over 484,507 vehicles in the last three months of the year, compared with estimates of 473,250 units.  Fourth-quarter deliveries were about 11% higher than the third quarter, during which upgrades to assembly lines to make the updated Model 3 mass-market sedan hurt some production.

Tesla delivered 461,538 Model 3 cars and Model Y SUVs, while it handed about 23,000 units of its other models.

The end of the tax incentives on some models were expected to bring sales forward into the fourth quarter, weighing on deliveries this year, analysts had said.  Long-range variants of the Model 3 compact sedan no longer have federal tax credits of $7,500 in 2024 as updated requirements on battery material sourcing kick in, under the IRA.

--Meanwhile, Tesla’s Chinese rival BYD posted its best-ever quarterly sales, edging out Tesla in the fourth quarter, a sign of the Chinese manufacturers’ growing strength in the EV market.  BYD has a broader lineup of less expensive models in China than Tesla, helping boost sales.

BYD delivered about 526,000 full electric vehicles in the fourth quarter, ahead of Tesla’s 484,500, but for the year, Tesla was still ahead of BYD, with 1.8 million deliveries vs. BYD’s 1.6 million.  [Including hybrids, BYD sold more than 3 million vehicles.]

BYD makes battery-powered vehicles and plug-in hybrids, selling its models for below $30,000, on average, though it doesn’t sell in the U.S.  The price of Tesla vehicles, even after several price cuts in 2023, still averages more than $40,000.

--As for overall U.S. new vehicle sales in 2023, they likely rose by a low double-digit percentage in 2023 on sustained demand for crossover SUVs and pickup trucks, but analysts fear a challenging year ahead, with high interest rates eating into demand.

Industry consultant Cox Automotive called 2023 “a surprisingly strong sales year” but added “high vehicle prices and high interest rates remain the industry’s Grinch right now, and that trend will continue into next year.”

Car dealers had to offer generous incentives and discounts in December to clear older inventory.  Full-year sales in 2023 are expected to be up 12% at about 15.5 million units, according to Cox.  Consultants J.D. Power and GlobalData have forecast a 13.2% increase for the period.  Cox sees minimal growth in 2024 to about 15.6 million annual sales.

According to J.D. Power, the average price paid for a new vehicle peaked in December 2022 and fell further last year to about $46,055 last month.

So then we began to get further yearend data from the automakers, with General Motors posting a 14.1% rise in annual U.S. sales, aided by demand for its SUVs and pickup trucks.  Sales rose to about 2.6 million vehicles in 2023, compared with 2.27 million units a year earlier.  Total EV sales grew 93% to 75,883 units, but that’s just 3% of GM’s sales.

Chevrolet reported a 13% gain to 1.72 million vehicles, driven by the Trax and Trailblazer sports utility vehicles.

For the fourth quarter, though, GM’s sales edged just 0.3% higher to 625,176 vehicles, but this had little to do with the United Auto Workers strike, as the Detroit Three had planned ahead and had ample supply in the showrooms.

Toyota Motor North America said U.S. sales on a volume basis rose 6.6% in 2023 to almost 2.25 million vehicles from a year earlier.  In Q4, U.S. sales rose 15% to 619,661 vehicles from a year earlier, the company said.  December sales increased more than 25%.

Honda Motor said its subsidiary American Honda sold 1.3 million units in 2023, an increase of 33% from a year earlier.  Honda’s December sales surged 31.5% from a year ago.

Hyundai’s fourth-quarter U.S. sales were up 15.1%.

Ford reported Thursday that its U.S. sales rose 7.1% year-over-year, boosted by record Q4 sales of electric and hybrid vehicles as well as another solid quarter for its gas-powered cars and trucks.

Overall, Ford sold a total of 1,995,912 vehicles in the U.S. during 2023, good for third behind GM and Toyota.

Ford, however, continued its dominance as the No. 1 truck seller in the U.S., with Q4 sales of its market-leading F-150 Lighting electric pickup truck rising 74% over the year-ago period.

Total EV sales for Ford in the year were 72,608 vehicles, up 18% over 2022 levels.

Stellantis, the parent company of Chrysler, Jeep and Ram, was an outlier, reporting a 1% decline in U.S. sales last year.  [The company announced this afternoon it was not doing Super Bowl ads because of the poor sales picture in order to cut costs.]

Industrywide, EVs comprised 7% of 2023 U.S. auto sales, with internal combustion engine sales at 84% of the total, and hybrids 9%.

--China’s Huawei Technologies Co.’s revenue surged 9% in 2023, capping a dramatic year for the company that has challenged Apple Inc. and U.S. sanctions with a surprise breakthrough in chip technology.

Sales jumped to more than 700 billion yuan ($98.7 billion), their fastest pace of growth in years thanks to a resurgent smartphone business and robust 5G equipment sales.  On a quarterly basis, revenue climbed 27%, according to Bloomberg’s calculations.

Huawei made a splash in 2023 when it introduced a sophisticated made-in-China processor chip for its smartphones, despite U.S. restrictions intended to hobble the country’s tech industry.

--China is setting up a new state-owned company to pool resources from across the country to bring a nuclear fusion reactor – known as an artificial sun – to life, according to China National Nuclear Corporation (CNNC).

The formation of China Fusion Energy Inc was announced on December 29 during its opening ceremony, and unites China’s fusion energy research and development, which has been scattered among research institutes and private firms.

The company will spearhead a collaborative innovation consortium comprising 25 entities.

“Controlled nuclear fusion as an ideal solution to the global energy challenge has become the forefront of scientific and technological competition among major countries, “ CNNC vice-president Cao Shudong said in a statement on the company’s website.  [South China Morning Post]

--France’s biggest food retailer, Carrefour, a global retail giant, took steps to confront runaway food inflation, announcing it would no longer sell PepsiCo products because the prices were “unacceptably” high for consumers, escalating a showdown by French retailers to name and shame brands that aren’t lowering prices as inflation eases. 

Carrefour put up posters throughout its 3,440 supermarkets in France saying, “We are no longer selling this brand due to an unacceptable price increase,” the signs said.

The products include Lay’s potato chips, Pepsi and 7-Up soft drinks, as well as Doritos, Quaker cereals and other PepsiCo products.

A spokesperson for PepsiCo said the company had “been in discussion with Carrefour for many months, and we will continue to engage in good faith in order to try to ensure that our products are available.”

Personally, on the inflation front, everyone has their own barometer and mine is Stouffer’s French Bread Pizza, which pre-pandemic was $3.49 at the three major chain stores I shop.  When there was a sale for two-for-$5.00, sometimes two-for-$4.00, it was load up the freezer time.  [This was always my ‘go to’ dinner after completing this column on Fridays.]

After the pandemic hit, though, it rose to $4.69-$4.99 and has stayed there, with zero special offers.  Then this week I saw a sale at $3.49 for the first time since early 2020.  Prices will break.  Pepsi should be lowering its own prices.

On the other hand, my auto insurance renewal came in, up 17%!  I’m furious. The same company I’ve been dealing with for 40 years.  Not one claim filed in that time.

--Mickey Mouse has entered the public domain, “Steamboat Willie,” a 1928 animated short film, specifically, as its copyright expired at the start of the year.  And now directors and writers are turning Mickey into a horror movie villain.

It seems that Steamboat Willie can only appear similarly to the design from the 1928 short film, with Disney telling the Washington Post in a statement that it will “safeguard against consumer confusion caused by unauthorized uses of Mickey.”

“Ever since Mickey Mouse’s first appearance in the 1928 short film ‘Steamboat Willie,’ people have associated the character with Disney’s stories, experiences and authentic products,” the statement said.  “That will not change when the copyright in the ‘Steamboat Willie’ film expires.”

--“Barbie” took home the North American domestic box office crown for 2023 at $636 million, followed by “The Super Mario Bros. Movie,” which took in $575 million domestically.

--Ticket sales on Broadway dropped 17% for the 2022-23 season vs. 2018-19, the last complete season before Broadway shut down due to the pandemic, according to the Broadway League.

A big reason is the reluctance of New York metro suburbanites, who accounted for 14% of the ticket sales, the lowest number on record in the 23 years the Broadway League has tracked such data.

The real reason?  “Safety concerns,”* though overall tourism to the Big Apple is rebounding.  In a survey by the Situation Group, a whopping 41% of suburbanites said, “I travel to Manhattan for pleasure less often than I did in 2019.”  Count me in that group.

The good news is that the average age of Broadway theatergoers was 40.4 years old, the youngest in the past 20 seasons, according to the Broadway League.

*The NYPD released its 2023 crime statistics Thursday, and murders – which rose for four consecutive years before Mayor Adams took control, fell by 11.9% (386 vs. 438 in 2022).  But assaults were up 6.3%.

Foreign Affairs, Part II

China/Taiwan: Chinese President Xi Jinping, in his annual New Year’s Eve address, reiterated his claim that Taiwan would “surely be reunified” with China.

“The reunification of the motherland is a historical inevitability,” Xi said, though the official English translation of his remarks published by the Xinhua news agency used a more simple phrase: “China will surely be reunified.”

“Compatriots on both sides of the Taiwan Strait should be bound by a common sense of purpose and share in the glory of the rejuvenation of the Chinese nation,” he added.  The official English translation wrote “all Chinese” rather than “compatriots.”

His message comes ahead of the critical Jan. 13 elections in Taiwan that will determine the island’s cross-strait policy for four years.

Xi struck a stronger tone than last year’s message, where he spoke of Taiwan being part of the “same family.”

Xi noted this time that “adhering to mutual respect, peaceful coexistence, and win-win cooperation is the correct way for China and the United States to interact,” according to Reuters, citing Chinese state media.

In a New Year’s message from the head of Beijing’s Taiwan Affairs Office, Song Tao said Taiwanese people should get cross-strait relations back on the “correct path of peaceful development.”

“Taiwan compatriots should observe the overall situation, shoulder great responsibilities, consider the bigger picture and follow the right path,” Song said.

“They should firmly stand on the right side of history, promote the return of cross-strait relations to the correct track of peaceful development, and advance the process of the peaceful reunification of the motherland.”

He said China will guard peace in the region by “firmly and persistently supporting patriotic and reunification forces within the island and opposing Taiwan independence and external interference.”  He did not say who he regarded as patriotic or as separatists.

Meanwhile, Taiwan’s defense ministry reported Tuesday that three Chinese balloons flew across the island and near an air base, the first time the ministry has reported them crossing the island since reporting a spate of such balloons in the Taiwan Strait starting last month.

Taiwan’s relations with China must be decided by the will of the people and peace must be based on “dignity,” President Tsai Ing-wen said on Monday after Xi’s remarks on “reunification.”

Asked about Xi’s comments at a New Year’s press conference at the presidential office in Taipei, Tsai said the most important principle on what course to follow on relations with China was democracy.

“This is taking the joint will of Taiwan’s people to make a decision.  After all, we are a democratic country,” she said.

China should respect the outcome of Taiwan’s election and it is the responsibility of both sides to maintain peace and stability in the strait, Tsai added.

Taiwan’s government has repeatedly warned China is trying to interfere in the election, whether by using fake news or military or trade pressure, and Tsai said she hoped people could be on alert for this.  She added Taiwan’s companies must look globally and diversity.  “This is the correct path, rather than going back to the path of relying on China, especially as in China’s unstable market there is unpredictable risk,” she said.

Tsai isn’t on the ballot because she has served the maximum two terms in office.

China’s government called the frontrunner for president, current vice president William Lai,  “confrontational” and a destroyer of peace after he spoke last weekend at a presidential debate and said the island’s sovereignty and independence belong to its people.  He’s also been called a dangerous separatist.

Editorial / Wall Street Journal

“One big question for the New Year is how does China react if Mr. Lai wins?  Does Mr. Xi tell his military to increase its harassment of Taiwan airspace and waters?  Or, with two hot wars around the world and an election year in the U.S. that is likely to be highly divisive, will he try something more daring?

“The White House thinks its recent parlays with Beijing have put U.S.-China bilateral relations on a more stable course.  Perhaps that’s right.  But it’s worth recalling that, in the Chinese Lunar Calendar, 2024 is the Year of the Dragon, and to prepare accordingly.”

By the way, the proportion of people in Taiwan who identify primarily as Chinese is down to below 3%, which is a big reason why the opposition Kuomintang Party (KMT), that had in the past pursued peaceful political union with Beijing, is now doing everything it can to shed its “pro-Beijing” label.

The polls have been all over the place, though consistently show the DPP’s Lai in front. 

Lastly, today, Friday, Chinese Foreign Minister Wang Yi commented on Sino-U.S. relations, saying cooperation is the “most correct choice for China and the United States to get along.”

In a speech marking the 45th anniversary of the establishment of diplomatic relations between China and the U.S., Wang said:

“It can be said that China-U.S. cooperation is no longer an option for the two countries and even for the world, but an imperative that must be seriously addressed,” Wang said. China hopes that the U.S. will, he said, relax its mindset and “in an attitude of equality and inclusiveness” respect the choices made by the Chinese people and China’s development path, including when defending its national sovereignty and territorial integrity.  “We are willing to commit ourselves to building a stable, healthy and sustainable China-U.S. relationship on the basis of mutual respect,” he said.

Wang added China’s development and revitalization has a “strong endogenous momentum,” which he said meant that China will assume greater responsibility for the world’s peace and development.

“We have no intention of replacing anyone, overriding anyone, and have no intention of seeking hegemony,” he added.  [Liz Lee and Ethan Wang / Reuters]

Total B.S. For starters, when have the ‘Chinese people’ ever had a choice?

North Korea: Kim Jong Un said his military should “thoroughly annihilate” the United States and South Korea if provoked, state media reported Monday, after he vowed to boost national defense to cope with what he called an unprecedented U.S.-led confrontation.

North Korea has increased its warlike rhetoric for months in response to an expansion of U.S.-South Korean military drills.  Experts expect Kim will ramp up his rhetoric and weapons tests because he likely believes he can use heightened tensions to wrest U.S. concessions should Donald Trump win in November.

In a five-day major ruling party meeting last week, Kim said he will launch three more military spy satellites, produce more nuclear materials and develop attack drones this year in what observers say is an attempt to increase his leverage in future diplomacy with the U.S.

In a meeting Sunday with commanding army officers, Kim said it is urgent to sharpen “the treasured sword” to safeguard national security, an apparent reference to the country’s nuclear weapons program.  He cited “the U.S. and other hostile forces’ military confrontation moves,” according to the official Korean Central News Agency.

Kim stressed that “our army should deal a deadly blow to thoroughly annihilate them by mobilizing all the toughest means and potentialities without moment’s hesitation” if they opt for military confrontation and provocations against North Korea, KCNA said.

In South Korea, opposition Democratic Party leader Lee Jae-myung was stabbed in the neck during a visit to the southern port city of Busan on Tuesday.  Lee, who narrowly lost the 2022 presidential election, was listed in critical condition at a local university hospital.

Lee was attacked by an unidentified man, later said to be 66 years old, while touring the site of a proposed airport, Yonhap news agency reported.  The attack left him with a gash of about ½ inch on his neck and he had two hours of surgery on his jugular vein.  The assailant wore a paper crown with Lee’s name on it, news photographs showed.  He approached Lee asking for an autograph, then suddenly lunged forward and attacked him.  The assailant was quickly subdued and arrested at the scene.

President Yoon Suk Yeol condemned the attack, saying it was an unacceptable act, his office said.

Lee is currently on trial for alleged bribery stemming from a development project when he was mayor of Seongnam near Seoul.  Lee has denied any wrongdoing.  He has led the main opposition party since August 2022. 

South Korea’s next parliamentary elections are slated for April.

In his New Year’s Day address Monday, President Yoon said he will strengthen his military’s preemptive strike, missile defense and retaliatory capabilities in response to the North Korean nuclear threat.

Kim Jong Un said his military must use all available means including nuclear weapons to “suppress the whole territory of South Korea” in the event of a conflict.

Estimates of the size of North Korea’s nuclear arsenal vary, ranging from about 20-30 bombs to more than 100.  Most experts still believe the North has some technological hurdles when it comes to producing functioning long-range nuclear-armed ICBMs, but that it certainly has shorter-range nuclear-capable missiles that can reach Japan and South Korea.

So then Friday, the rival Koreas fired artillery rounds into the sea as part of provocative drills along their disputed sea boundary, in violation of the fragile 2018 inter-Korean military agreement.

Needless to say, the firing exercises escalate tensions on the Korean Peninsula.

South Korea’s Joint Chiefs of Staff said North Korea fired 200 rounds in the waters north of their western sea boundary on Friday morning, the North’s first front-line maritime firing exercise in about a year.

South Korea fired artillery rounds south of the sea boundary later Friday.  Ahead of the drills, South Korea asked residents on the five major border islands to seek safe places, but a few hours later lifted the evacuation order.

Separately, South Korea’s spy agency said in its first such assessment that the young daughter of Kim Jong Un, reportedly about 10 years old and named Ju Ae, is seen as his likely heir apparent.

The girl has watched missile tests and toured armaments factories with her father since her first public appearance in November 2022. State media calls her Kim’s “most beloved” or “respected” child.

Iran/Yemen: Iran sent its Alborz warship into the Red Sea, the semi-official Tasnim news agency reported on Monday, at a time of soaring tensions on the key shipping route.

And then Wednesday, two explosions caused by “terrorist attacks” killed nearly 100 people* and wounded at least 200 at a ceremony in Iran to commemorate top commander Qassem Soleimani, who was killed in a 2020 U.S. drone attack, Iranian officials said.

*The government by Friday had revised the toll to at least 89.

Iranian state television reported a first and then a second explosion during an anniversary event at the cemetery where Soleimani is buried in the southeastern city of Kerman.  “The blasts were caused by terrorist attacks,” state media quoted a local official in the province as saying.

Iranian President Ebrahim Raisi condemned the “heinous and inhumane crime,” and Supreme Leader Ayatollah Khamenei vowed revenge for the bloody twin bombings.

“Cruel criminals…must know that they will be strongly dealt with from now on and…undoubtedly there will be a harsh response,” Khamenei said in a statement, according to state media.

Iran has faced similar incidents in the past from various groups, including Islamic State.  While Tehran likes to blame Israel for attacks on individual people or places, there was no indication of any involvement of a foreign state in the cemetery explosions.

Soleimani was the architect of Iran’s regional military activities and is hailed as a national icon among supporters of Iran’s theocracy.  His death has drawn large processions in the past.  At his funeral in 2020, a stampede broke out and at least 56 people were killed as thousands thronged the procession.

So then Thursday, ISIS claimed responsibility for the attack, saying two of its members had detonated explosive belts in the crowd.  U.S. officials said the Sunni Muslim group was probably seizing an opportunity to hit an enemy, a Shiite Islamic government that runs an alliance of Shiite groups across the Middle East.

Friday, Iran’s interior minister said a number of suspects had been arrested over the attacks.

U.S. intelligence believes it was ISIS’ Afghanistan-based branch that was responsible.

Separately, the U.S. military carried out a strike in Baghdad against an Iraqi militia leader it blames for attacks against U.S. forces in the country, killing him and another person.  The strike hit a vehicle in Baghdad.  The man killed appears to be Abu Taqwa al-Saeedi, deputy commander of the Iran-backed Popular Mobilization Forces in Iraq, according to Charles Lister of the Middle East Institute.

Iraqi officials called it “a blatant aggression and violation of Iraq’s sovereignty,” using the social media account of Iraq’s prime minister. 

Iraq could easily boot the U.S. out of its country, and Prime Minister Mohammed Shia al-Sudani’s office announced it was forming a committee to prepare to close down the U.S.-led international coalition’s mission in the country following the strike on the militia leader.

But as Defense One notes: “Iraq’s parliament voted to expel U.S. forces in early 2020, after the U.S. assassinated Soleimani in Baghdad.  That resolution, however, was nonbinding and allowed Iraqi lawmakers to vent their frustration without losing U.S. support.”

Charles Lister wrote Thursday on social media: “At my count, Iran-directed militants have launched 138 attacks on U.S. forces in Iraq and Syria since October 18.  Until now, U.S. retaliatory strikes in both countries have done nothing to enforce deterrence.  Will this? Time will tell.”

Random Musings

--Presidential approval ratings….

Gallup: New numbers…39% approve of President Biden’s job performance, 59% disapprove; 34% of independents approve (up from 27%) (Dec. 1-20).  The 39% approval rating is up 2 ticks from November, but has been below 40% since end of September, which is awful.

Rasmussen: 43% approve, 56% disapprove (Jan. 5).

--Former President Trump asked the U.S. Supreme Court to keep him on the primary ballots in Colorado and Maine this week, appealing explosive rulings from the state Supreme Court in Colorado, and Maine’s secretary of state, that declared him ineligible based on his efforts to overturn the 2020 election.

The Supremes need to act quickly, and as noted above, have started the process to do so.

--New Jersey Democratic Senator Robert Menendez – already accused of using his political influence to benefit Egypt – was newly charged on Tuesday with using his power to help the government of Qatar.

Menendez was charged by federal prosecutors with accepting bribes from Fred Daibes, a prominent New Jersey developer, in exchange for the senator’s help securing financial backing from an investment fund with ties to the Qatari government.

In October, prosecutors accused Menendez and his wife, along with another defendant, of conspiring to have the senator work on behalf of the Egyptian government without registering with the Justice Department.

In the two cases, the alleged payoffs included cash, gold bars, Formula 1 tickets for a relative and an offer of a designer watch.

--Donald Trump’s businesses received at least $7.8 million from 20 foreign governments during his presidency, according to new documents released by House Democrats on Thursday that show how much he received from overseas transactions while he was in the White House, $5.5 million of it from China.

Democrats on the House Oversight Committee have sought to counter Republicans’ impeachment inquiry into President Biden.

The transactions detailed in a 156-page report called “White House For Sale” describes how foreign governments and their controlled entities paid millions to the Trump International Hotel in Washington, D.C.; Trump International Hotel in Las Vegas; Trump Tower on Fifth Avenue in New York; and Trump World Tower at 845 United Nations Plaza in New York.

--Harvard President Claudine Gay resigned from her position on Tuesday, ending a six-month tenure marred by allegations of plagiarism and backlash over her congressional testimony about antisemitism on campus.

Gay had come under pressure to resign from Harvard’s Jewish community and some members of Congress, while also facing several allegations of plagiarism for her academic work in recent months.

In a letter to the Harvard community, Gay said her decision to step down had been “difficult beyond words.”

“After consultation with members of the (Harvard) Corporation, it has become clear that it is in the best interests of Harvard for me to resign so that our community can navigate this moment of extraordinary challenge with a focus on the institution rather than any individual,” she wrote.

Alan Garber, the school’s provost and chief academic officer, is taking over as interim president.

Gay becomes the second university president, after Liz Magill at the University of Pennsylvania, to resign following an appearance in front of Congress to discuss antisemitism on campus.

Editorial / Wall Street Journal

“The prescription should be clear, at Harvard and beyond. What has been happening on college campuses results from the failure of leaders to support traditional liberal values of free inquiry and debate.  Prestigious institutions are racked with ideological protest from a contingent of students and many faculty who seem to care more about activism than learning.  Despite the distraction, or worse, that this poses to good academic work, administrators keep flinching instead of drawing hard lines.”

Ms. Gay will reportedly still earn nearly $900,000 a year despite being forced to resign her position.  Prior to being named president just six months ago, Gay earned $879,079 as a Faculty of Arts and Sciences Dean in 2021. 

--Bill Clinton and Prince Andrew were among the high-profile figures named in U.S. court papers detailing connections of the late sex offender Jeffrey Epstein.  The newly-released records form part of a case against Ghislaine Maxwell, Epstein’s girlfriend, who is in prison for child sex trafficking and other charges.  [Michael Jackson and magician David Copperfield were two new names not previously revealed.]

But there are no real bombshell revelations about Epstein, and nothing as yet on figures like Clinton and Prince Andrew (and Donald Trump) we didn’t already know.  However, more documents were unsealed Thursday adding several hundred pages of information detailing how Epstein leveraged connections to the rich, powerful and famous to recruit his victims and cover up his crimes.

The second round of documents contained the accounts of some of Epstein’s young victims, many of whom were high school students who took payments of $200 to give him illicit massages.

--I’ve talked about the lack of snow in my region, with today, Friday, being the 691st day without at least one inch of snow falling in Central Park.  Understand, the second-longest streak ever recorded was 400 days ending in 1998.

But now we have another coastal storm, fourth in five weeks, hitting the region Saturday, and New York City will be on the rain/snow line, as will my town of Summit, N.J., which is forecast to see a few inches before it turns to rain.  But will Central Park get the inch?

--Britain has been dealing with huge amounts of rain and flooding (you may have seen the issues with the Eurostar train system last weekend, a total disaster), and I saw an interesting bit by Helen Chandler-Wilde, a UK reporter in London for Bloomberg.

Record rains in recent years – July-December 2023 “the rainiest period on record dating back to the 19th century” – have done a number on the housing sector.

“Research from Bayes Business School (formerly Cass) last year showed that one in six homes in England are at risk of flooding, knocking an average of 8.14% off the value.  That rises to 31.3% for the highest risk homes.”

And forecasters say the trend is only going to get worse…winters are becoming wetter.

It seems the country is awful in dealing with weather preparedness, let alone protecting homes.

--I saw a piece in the Washington Post concerning the total solar eclipse vast parts of the United States will experience on April 8.  This is a cool event.

It’s going to be the most populated eclipse in the U.S., with 31.5 million people able to just walk outside of their homes and experience it.

Major cities in the direct path (northern Mexico to Maine and northeastern Canada) include Austin, Dallas, Indianapolis, Cleveland, Rochester, and Montreal, according to the Great American Eclipse website.

But if you want to head to one of these cities, hotel prices will skyrocket during this period.

Afternoon will morph into night for about four minutes in those areas that get it in its totality. “The air will suddenly become colder by around 10 degrees Fahrenheit.  Birds and insects will fall silent in the darkness.  Confused plants will ramp down their food production.  Nocturnal animals, like owls and bats, will begin to stir.” [Kasha Patel / Washington Post]  I’d add Count Dracula will be very confused.  It could be his undoing.

--I saw a rather startling statistic on Bangladesh and lightning strikes from the BBC.   The country suffers an average of 300 deaths by lightning each year, according to the UN, owing to particularly heavy storms.

That’s compared with fewer than 20 annually in the United States, which has almost double the population.  [I forgot Bangladesh has a population of nearly 170 million.]

--And here’s some trivia.  We had a huge fire in nearby Elizabeth, N.J., this morning at a large industrial building, the former Singer Sewing Manufacturing factory that has been converted into space for dozens of businesses.

The building is where Singer Sewing Machine Manufacturing Company purchased 32 acres of land in 1873 and “established its first factory in the United States. At the time, the building was the largest workforce plant in the world for a single establishment.”  [NJ.com]

Cue Paul Harvey…and now you know, the rest of the story…Good day….

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

Pray for Ukraine, Israel and the innocent in Gaza.

God bless America.

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Gold $2051
Oil $73.92

Regular Gas: $3.08; Diesel: $3.97 [$3.28 / $4.68 yr. ago]

Returns for the week 1/1/24-1/5/24

Dow Jones  -0.6%
S&P 500  -1.5%
S&P MidCap  -2.5%
Russell 2000  -3.7%
Nasdaq  -3.3%

Bulls 57.1
Bears 17.2

Hang in there.

Brian Trumbore

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