Week in Review

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Week in Review

12/30/2023

For the week 12/25-12/29

[Posted 5:00 PM ET, Friday]

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Edition 1,289

2023 Market Returns

Dow Jones… +13.7%
S&P 500… +24.2%
Nasdaq… +43.4%

Stoxx Europe 600… +12.7%
Tokyo Nikkei…  +28.2%

Yes, what a year in the equity markets…and boy did I get it wrong. 

After 2022’s putrid performance, with the S&P 500 losing 19.4% (the fourth-worst year for the S&P since 1945, and worst for the S&P and Nasdaq, -33.1%, since 2008), I called for the Dow and S&P to lose a further 8%, Nasdaq -18%.  Doh!

At least last year at this time I did write: “Granted, rarely does the S&P fall two consecutive years, just four times since 1928*, but I’m saying 2023 is the fifth.”

*The Great Depression, World War II, the 1970s oil crisis and the busting of the dot-com bubble.

On the geopolitical front, I thought North Korea would cross the line and pay a heavy price, which would result in “immensely tense moments between Washington and Beijing” and, as a result, “China will lash out at Taiwan.”

Yup, blew that one royally, as well.  And while I emphasized I wasn’t stating things for shock value, like the demise of Volodymyr Zelensky and Joe Biden, I really thought I’d be right.  It’s amazing Zelensky is still alive, and as for our president, well you see his decline.

I’ll say this about 2024.  The other week Michael Smerconish on his excellent Saturday morning show on CNN, had Frank Fahrenkopf, who is Chairperson of the Commission on Presidential Debates, dates having been set for September and October, including a debate between the vice-presidential nominees, and does anyone really believe Joe Biden and Donald Trump will square off on a stage together, even just once?  I sure don’t.

But rather than make predictions, here are the issues that will immediately hit us in the face in January.

First, Taiwan’s elections on Jan. 13.  If William Lai, the current vice president, wins it, China will quickly ratchet up the pressure.  And then we’ll see if they make a mistake.

Second, how quickly will the issue of Ukraine aid be resolved, both in Washington and Brussels?  If Ukraine doesn’t get the aid, slated to be $110 billion between the U.S. and European Union, Putin will win the war.  Fact.

Third, how will the U.S. respond to Iran and its proxies continuing to pressure the Biden administration?

Fourth, how is Congress going to resolve the budget issue, another potential government shutdown looming Jan. 19 or in February?

Fifth, Biden and the Democrats are losing support weekly over the migrant crisis.  It’s a disaster.  We all feel for the mayors of the border cities in particular being totally overwhelmed, and in many big cities like New York, it’s beyond being out of control and severely impacting budgets, for one.

Six, looking down the road, you can’t help but feel unease with the holding of the Paris Olympics in today’s geopolitical environment, fueled by the Israeli-Hamas War.  I wish Parisian authorities all the best in securing this event.

Lastly, the 2024 election cycle and November 5.

But first, let’s get through New Year’s Eve relatively unscathed.  The pro-Palestinian folks will be attempting to disrupt festivities in multiple locations. 

Walter Russell Mead / Wall Street Journal

“With less than a year before a challenging election, the Biden administration risks getting caught in a political doom loop.  President Biden’s perceived weakness at home undermines his authority in dealing with foreign leaders, while the deteriorating global picture erodes his popularity at home.

“Mr. Biden’s foreign-policy efforts have not exactly been crowned with success.  In Ukraine, Western squabbles and policy misfires have given Vladimir Putin reason to hope that victory might be heading his way.  In the Middle East, as the original wave of Western sympathy for Israel following the Hamas terror attack fades, calls for a cease-fire that would leave Hamas in control of Gaza steadily mount.  More ominously still, Iran’s proxies in Lebanon, Syria, Yemen and Iraq are stepping up their assaults, with the Houthis now attacking peaceful commerce in the vital Red Sea.

“This is not a world that is becoming more stable, and it is not a world in which American interests or values are becoming more secure.  It is not a world in which America’s rivals and enemies are gaining respect for the president.  It is not a world in which America’s waning powers of deterrence can long hold back the rising ride of aggression and war….

“Chinese provocations have only increased since the [Xi-Biden] summit.  Chinese forces are moving against the Philippine presence in the Second Thomas Shoal.  ‘It’s pure aggression,’ Philippine Gen. Romeo Brawner Jr. told the Associated Press.  A wooden-hulled ship he was aboard, posing no threat to Chinese vessels, was blasted by water cannons and bumped by Chinese forces as it brought supplies to a small military force stationed on a long-marooned Philippine navy ship at the shoal….

“Amid escalating Chinese pressure, Philippine officials are trying to rouse Washington and its allies to respond. Calling the South China Sea a flashpoint comparable to the Taiwan Strait, Ambassador [Jose Manuel] Romualdez [the Philippine ambassador to the U.S.] told Nikkei that conflict near the Philippines could be ‘the beginning of another war, world war.’

“When I visited U.S. naval commanders in Pearl Harbor this fall, I heard similar concerns.  As American power globally is perceived to recede, chances of escalation in the South China Sea rise.

“It is the same sad story all over the world.  The doom loop is real.  Unless Mr. Biden restores his credibility and that of the nation he leads, we must expect more conflict, and more cabbage leaves, before an election of which, as Team Biden incessantly repeats, the fate of American democracy depends.”

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Israel and Hamas….

--Hamas said on Saturday it has lost contact with a group responsible for five Israeli hostages being held captive in the Gaza Strip due to Israeli bombardment.  Hamas believes the hostages were killed during the raid, a spokesman for the armed wing, al-Qassam Brigades, was quoted as saying in a statement on the group’s Telegram channel.

--Israeli security cabinet member Israel Katz posted on social media Saturday: “We shall press ahead, for every fallen soldier, too.  Until Hamas is eliminated.  Until the hostages are returned,” as the IDF death toll hit 146.

Hamas claimed to have destroyed five Israeli tanks in the area around the northern town of Jabalia, killing and injuring their crew, after reusing two undetonated missiles launched earlier by Israel.  This could not be verified.  Israel has claimed to have almost complete operational control of northern Gaza.

The IDF released a video it said showed Hamas tunnels in the Issa area in the north.

--Israel has long urged residents to leave northern areas of Gaza, but its forces have also been bombarding targets in central and southern parts of the enclave.  “They ask people to head to (the central Gaza city of) Deir Al-Balah, where they bomb day and night,” Ziad, a medic and father of six, told Reuters.

An Israeli airstrike killed 76 members of an extended family, rescue officials said Saturday, a day after UN Secretary-General Antonio Guterres warned again that nowhere is safe in Gaza and that Israel’s ongoing offensive is creating “massive obstacles” to the distribution of humanitarian aid.

Among the dead in the strike was Issam al-Mughrabi, a veteran employee of UN Development Program, his wife, and their five children.

--An Iranian Revolutionary Guards commander said the Mediterranean Sea could be closed if the United States and its allies continued to commit “crimes” in Gaza, Iranian media reported on Saturday, without explaining how this would happen.

--Monday, the Gaza health ministry said 20,674 people have been killed in Israeli strikes since Oct. 7, with 250 killed in the past 24 hours.

While the figures, I feel obligated to write each week, are impossible to verify, the 250 figure seems highly plausible when overnight into Monday, Gaza endured one of its deadliest nights of the war, with Palestinian health officials saying at least 70 people had been killed by an Israeli airstrike in the central Gaza’s Maghazi refugee camp on Sunday, the death toll then climbing to over 100.

“What is happening at the Maghazi camp is a massacre that is being committed on a crowded residential square,” a health ministry spokesman said.  The Israeli military said it was reviewing the incident.

“Despite the challenges posed by Hamas terrorists operating within civilian areas in Gaza, the IDF is committed to international law including taking feasible steps to minimize harm to civilians,” an Israeli army spokesperson said in a statement.

--Hamas and the allied Islamic Jihad rejected an Egyptian proposal that they relinquish power in the Gaza Strip in return for a permanent ceasefire, two Egyptian security sources told Reuters on Monday.

Both groups, which have been holding separate talks with Egyptian mediators in Cairo, rejected offering any concessions beyond the possible release of more hostages.

Egypt proposed a “vision,” also backed by Qatari mediators, that would involve a ceasefire in exchange for the release of more hostages, and lead to a broader agreement involving a permanent ceasefire along with an overhaul of leadership in Gaza.

A Hamas official told Reuters: “Hamas seeks to end the Israeli aggression against our people, the massacres and genocide, and we discussed with our Egyptian brothers the ways to do that. We also said that the aid for our people must keep going and must increase and it must reach all the population in the north and the south.”

“After the aggression is stopped and the aid increased we are ready to discuss prisoner swaps,” he added. 

--Prime Minister Netanyahu said on Monday that the Gaza war was far from over and dismissed what he cast as false media speculation that his government might call a halt to fighting against Hamas.

“We are not stopping.  We are continuing to fight, and we will be intensifying the fighting in the coming days, and the fighting will take long and it is not close to concluding,” he told lawmakers from his Likud party, according to a statement.

The death toll for the IDF hit 158 on Monday, at least 17 of which were over the weekend.

Israel believes there are still 129 hostages.

Netanyahu earlier said in a video statement, “The war exacts a very heavy price from us, but we have no choice but to continue fighting… We are doing everything to safeguard the lives of our warriors.”

Netanyahu also dismissed reports that the United States had convinced Israel not to expand its military activity during a weekly cabinet meeting on Sunday.  “I have seen false publications claiming that the U.S. prevented and is preventing us from operations in the region,” the prime minister said, without elaborating.  “This is not true.  Israel is a sovereign state.  Our decisions in the war are based on our operational considerations, and I will not elaborate on that.”

The Wall Street Journal on Saturday reported that Netanyahu was persuaded by President Biden not to attack Hezbollah in Lebanon out of concerns it would launch an attack on Israel, similar to Oct. 7.  Netanyahu insisted on Sunday that Israel’s actions are “not dictated by external pressures.”

“The decision on how to use our forces is an independent decision of the IDF and no one else,” the prime minister said.

In a nationally televised speech, Israeli president Isaac Herzog appealed for the country to remain united.  “This moment is a test. We will not break nor blink,” he said.

--An Israeli strike Monday on a neighborhood of the Syrian capital, Damascus, killed Gen. Seyed Razi Mousavi, an adviser for the Iranian paramilitary Revolutionary Guard in Syria.  The strike hit as he was entering a farm reportedly used as an office of the Lebanese Hezbollah group, according to the Syrian Observatory for Human Rights.

Iran ominously warned Israel that it will “pay the price,” according to Tehran’s state media.

“This act is a sign of the Zionist regime’s frustration and weakness in the region for which it will certainly pay the price,” Iranian leader Ebrahim Raisi said.

Tehran described Mousavi as an ally of Qassem Soleimani, the deceased head of the IRGC’s infamous Quds Force.

Soleimani was killed in a U.S. airstrike in Iraq in early 2020 after a spate of clashes between the two nations.

Mousavi’s death marks a major escalation in Iran-Israel tensions, which have already been simmering over the war against Hamas.

Hamas and Islamic Jihad launched a barrage of rockets into Israel late Monday, triggering air raid sirens in the southern city of Ashkelon.  There were no reports of injuries, but it’s an example of Hamas’ resilience after two months of ground combat.

--Israeli forces bombarded Palestinian refugee camps in central Gaza on Tuesday, residents said, in apparent preparation to expand their ground offensive into a third section of the territory.

For weeks, the IDF has been engaged in heavy urban fighting in northern Gaza and in the southern city of Khan Younis, driving Palestinians into smaller and smaller corners of the enclave in search of refuge.

--Israeli Defense Minister Yoav Galant warned of a growing risk of a regional conflict in the Middle East as tensions with Iran increased.

Gallant on Tuesday told a parliamentary committee that Israel was being attacked in a “multi-arena war” from seven areas, which he identified as Gaza, the West Bank, Lebanon, Syria, Iraq, Yemen and Iran.

“We have already responded and acted in six of these arenas and I say here in the most explicit way – anyone who acts against us is a potential target, there is no immunity for anyone,” he said.

Israel’s top general, Lt. Gen. Herzi Halevi, warned that the war with Hamas could go on for “many months.”

“There are no magic solutions, there are no shortcuts in dismantling a terrorist organization, only determined and persistent fighting,” Lt. Gen. Halavi said.

The focus of the fighting at midweek remains Khan Younis in the south – where Israel believes the Hamas leadership is based in tunnels along with hostages – and around three refugee camps in central Gaza.

--Wednesday, the Palestinian health ministry said the death toll exceeded 21,000.

UN Human Rights Office spokesperson Seif Magango said on Tuesday: “Israeli forces must take all measures available to protect civilians.  Warnings and evacuation orders do not absolve them of the full range of their international humanitarian law obligations.”

--Turkish President Tayyip Erdogan said on Wednesday that Prime Minister Netanyahu was no different than Adolf Hitler and likened Israel’s attacks on Gaza to the treatment of Jewish people by the Nazis.

Erdogan said Turkey would welcome academics and scientists facing persecution for their views on the conflict in Gaza, adding Western countries supporting Israel were complicit in what he called war crimes.  “They used to speak ill of Hitler.  What difference do you have from Hitler?  They are going to make us miss Hitler. Is what this Netanyahu is doing any less than what Hitler did?  It is not,” Erdogan said.  “He is richer than Hitler, he gets the support from the West.  All sorts of support comes from the United States. And what did they do with all this support?  They killed more than 20,000 Gazans,” he said.

Turkey does not view Hamas as a terrorist organization.

--Israeli minister Benny Gantz said on Wednesday that the situation on Israel’s northern border must change and the time for diplomacy is running out.  “The stopwatch for a diplomatic solution is running out, if the world and the Lebanese government don’t act in order to prevent the firing on Israel’s northern residents, and to distance Hezbollah from the border, the IDF will do it,” he said.

--The Israel Defense Forces on Thursday released the findings of an investigation into the deaths of three Israeli hostages who were shot in Gaza by IDF soldiers Dec. 15.

The investigation found that the IDF “failed in its mission to rescue the hostages,” and that “the entire chain of command feels responsible” and “regrets this outcome.”

While the soldiers “carried out the right action to the best of their understanding of the event at that moment,” the deaths “could have been prevented,” the IDF said.

--An estimated 150,000 Palestinians are being forced to flee areas of central Gaza, the UN has said, as Israeli forces advance on refugee camps there

--The IDF said Friday that 168 of its soldiers have been killed and hundreds wounded since the ground offensive began in late October.

--The Hamas-run health ministry said on Friday the death toll was over 21,500 Palestinians killed in Israeli strikes on Gaza.

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Benjamin Netanyahu / Wall Street Journal

“Hamas must be destroyed, Gaza must be demilitarized, and Palestinian society must be deradicalized.  These are the three prerequisites for peace between Israel and its Palestinian neighbors in Gaza….

“Hamas’s leaders have vowed to repeat the Oct. 7 massacre ‘again and again.’ That is why their destruction is the only proportional response to prevent the repeat of such horrific atrocities.  Anything less guarantees more war and more bloodshed….

“Unjustly blaming Israel (for civilian) casualties will only encourage Hamas and other terror organizations around the world to use human shields.  To render this cruel and cynical strategy ineffective, the international community must place the blame for these casualties squarely on Hamas. It must recognize that Israel is fighting the bigger battle of the civilized world against barbarism.

“Second, Gaza must be demilitarized.  Israel must ensure that the territory is never again used as a base to attack it.  Among other things, this will require establishing a temporary security zone on the perimeter of Gaza and an inspection mechanism on the border between Gaza and Egypt that meets Israel’s security needs and prevents smuggling of weapons into the territory.

“The expectation that the Palestinian Authority will demilitarize Gaza is a pipe dream. It currently funds and glorifies terrorism in Judea and Samaria and educates Palestinian children to seek the destruction of Israel.  Not surprisingly it has shown neither the capability nor the will to demilitarize Gaza. It failed to do so before Hamas booted it out of the territory in 2007, and it has failed to do so in the territories under its control today. For the foreseeable future Israel will have to retain overriding security responsibility over Gaza.

“Third, Gaza will have to be deradicalized.  Schools must teach children to cherish life rather than death, and imams must cease to preach for the murder of Jews.  Palestinian civil society needs to be transformed so that its people support fighting terrorism rather than funding it.

“That will likely require courageous and moral leadership.  Palestinian Authority leader Mahmoud Abbas can’t even bring himself to condemn the Oct. 7 atrocities. Several of his ministers deny that the murders and rapes happened or accuse Israel of perpetrating these horrific crimes against its own people.  Another threatened that a similar attack would be carried out in Judea and Samaria.

“Successful deradicalization took place in Germany and Japan after the Allied victory in World War II. Today, both nations are great allies of the U.S. and promote peace, stability and prosperity in Europe and Asia.

“More recently, since the 9/11 attacks, visionary Arab leaders in the Gulf have led efforts to deradicalize their societies and transform their countries.  Israel has since forged the historic Abraham Accords and today enjoys peace agreements with six Arab states. Such a cultural transformation will be possible in Gaza only among Palestinians who don’t seek the destruction of Israel.

“Once Hamas is destroyed, Gaza is demilitarized and Palestinian society begins a deradicalization process, Gaza can be rebuilt and the prospects of a broader peace in the Middle East will become a reality.”

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This Week in Ukraine….

--Ukrainian President Volodymyr Zelensky and military officials said last weekend that the country’s forces shot down three Russian SU-34 fighter-bomber aircraft on Friday on the southern front, hailing it as a success in the 22-month-old war.

The Russian military made no mention of the incident, but Russian bloggers acknowledged the loss.  It was suggested U.S.-supplied Patriot missiles had probably been used.

Ukrainian Air force spokesman Yuri Ihnat described it on national television as a “brilliantly planned operation.”

Zelensky in his nightly video address praised the Odesa region anti-aircraft unit for downing the planes.

--Russian attacks on southern Ukraine’s Kherson region killed five civilians on Sunday, Ukrainian officials said, while Russian-installed officials in the eastern town of Horlivka said one person was killed as a result of Kyiv’s shelling, Horlivka in a part of the Donetsk region under Russian control.

Russian forces abandoned the city of Kherson over a year ago but have since subjected many areas there to constant shelling from their positions on the eastern bank of the Dnipro River.

--The Russian Defense Ministry said a naval ship in Crimea was damaged in an airstrike by Ukrainian forces.

The landing ship Novocherkassk was hit at a base in the city of Feodosia by plane-launched guided missiles, the ministry said, adding that two Ukrainian fighter jets were destroyed by anti-aircraft fire during the attack.

Over the past several months, Ukrainian forces have conducted attacks around Crimea, mostly with sea drones.  President Zelensky credits those attacks with allowing Ukraine to restore navigation in the Black Sea and allowing the export of millions of tons of grain.

The Russia-appointed head of Crimea, Sergei Aksyonov, said one person was killed in the attack.

Videos circulating on Ukrainian channels showed a large fire in the port area.  Ukrainian authorities claimed the ship was destroyed and said it was likely carrying an ammunitions shipment, possibly including drones.

--Russian forces gained full control of Marinka, a town in eastern Ukraine, news agencies cited Russian defense minister Sergei Shoigu as saying on Monday.  Most accounts of Marinka, southwest of the Russian-held regional center of Donetsk, describe it as a ghost town after once being home to 10,000 people.

Ukraine denied Russia’s claims that its forces had seized Marinka. “Our forces are within the city,” said a Ukrainian military spokesperson on Ukrainian television.

But then officials acknowledged that they had all but retreated from the eastern city after a monthslong battle to defend it.

--Ukrainian army chief General Valeriy Zaluzhnyi said on Tuesday that he was not satisfied with the work of military draft offices that are responsible for mobilizing troops to keep up the war effort against Russia.

Zaluzhnyi spoke at his first wartime news conference a day after Ukraine’s parliament published the text of a draft law containing reforms to the army draft program, including lowering the age of men who can be mobilized to 25 from 27.  The bill’s publication sparked controversy on social media, which appeared to prompt the “publicity-shy” general to speak to the media.

Last week, President Zelensky said the military had proposed mobilizing an additional 450,000-500,000 people into the army.  Zaluzhnyi acknowledged that figure, but told reporters in Kyiv that he would never have revealed such a number publicly, a remark which led to further speculation of a rift between him and Zelensky.

Zaluzhnyi oversaw the counteroffensive that failed to retake significant quantities of Russian-occupied land.  But he appears to remain popular among the people for beating back Russian forces from the capital in early 2022 and then masterminding two successful counteroffensives that fall, which retook large amounts of territory.

The general and the president have been at odds since Zaluzhnyi was quoted back in November as saying the war was heading towards a stalemate because of the technological state of play on the battlefield, a comment that drew a rebuke from Zelensky’s office.

Zelensky and his allies have always portrayed a less gloomy view of the war.

Zaluzhnyi said the period since he made his comments had vindicated them: “I received lots of criticism for this, but in time people realized that I was absolutely right,” and indeed he was.  It’s a stalemate.

On the battle for Marinka, Zaluzhnyi said at the news conference: “The situation is exactly the same as it was in Bakhmut.  Street by street, block by block, our soldiers were being targeted. And the result is what it is.”

Every inch of Ukrainian land is vital, Zaluzhnyi said, but “the lives of our fighters are more important to us.”

--The New York Times reported that Vladimir Putin is ready to make a deal, “signaling through intermediaries since at least September that he is open to a cease-fire that freezes the fighting along the current lines, far short of his ambitions to dominate Ukraine, two former senior Russian officials close to the Kremlin and American and international officials who have received the message from Mr. Putin’s envoys say,” the Times reported.

Others disagree on this analysis, but the bottom line is Ukraine is showing no signs of wanting such a deal.  The Times does add, “Some American officials say it could be a familiar Kremlin attempt at misdirection and does not reflect genuine willingness by Mr. Putin to compromise.”

President Zelensky has said all along that he would not accept such a deal, because Putin would just use the time to rearm.  It’s kind of obvious.

--A move by Japan to provide Patriot air defense systems in Ukraine will have “grave consequences” for Russia-Japan ties, Russian foreign ministry spokeswoman Maria Zakharova said on Wednesday.

Relations between Moscow and Tokyo, already difficult, have worsened since Putin’s invasion of Ukraine. Japan has joined its Western allies in imposing sweeping economic sanctions on Russia.  And last week it said it would prepare to ship Patriot air defense missiles to the United States after revising its arms export guidelines.  While Japan’s new export controls still prevent it from shipping weapons to countries that are at war, it indirectly benefits Ukraine as it gives the U.S. extra capacity to provide military aid to Kyiv.

Such a scenario, Zakharova told a weekly briefing, would be “interpreted as unambiguously hostile actions against Russia and will lead to grave consequences for Japan in the context of bilateral relations,” she said.

Earlier this month, Japan and South Korea both scrambled jets to monitor joint flights by Chinese and Russian bombers and fighters near their territories.

Russia and Japan never concluded a treaty formally ending World War II due to an old territorial dispute involving a chain of Pacific islands.  Tokyo has complained about increased Russian military deployments on the islands, which Japan calls the Northern Territories and Russia calls the Southern Kuriles.  The Soviet Union seized the islands from Japan at the end of WW II.

--And then as the week closed, Russia launched the biggest aerial barrage of the 22-month war, 122 missiles and 36 drones against Ukrainian targets, killing at least 31t civilians (many others trapped under rubble). 

The Ukrainian air force intercepted 87 of the missiles and 27 of the Shahed-type drones overnight, Thursday/Friday, Gen. Zaluzhnyi said.

The previous biggest assault was in November 2022, when Russia launched 96 missiles against Ukraine.  This year, the biggest was 81 missiles on March 9, air force records show.

President Zelensky said the Kremlin’s forces used a wide variety of weapons, including ballistic and cruise missiles.

“Today, Russia used nearly every type of weapon in its arsenal,” Zelensky said on social media.

A Ukrainian Air Force spokesman said Russia “apparently launched everything they have,” except for submarine-launched Kalibr missiles.

The aerial assault hit six cities, including Kyiv, and other areas from east to west and north to south, according to authorities.  Critical infrastructure and industrial and military facilities were targeted.

President Biden, in a statement today: “It is a stark reminder to the world that, after nearly two years of this devastating war, Putin’s objective remains unchanged.  He seeks to obliterate Ukraine and subjugate its people.  He must be stopped.”

The president urged Congress to approve continued aid.

“Unless Congress takes urgent action in the new year, we will not be able to continue sending the weapons and vital air defense systems Ukraine needs to protect its people.  Congress must step up and act without any further delay.”

Recall, just two weeks ago (WIR 12/16/23), I wrote: “The nightmare is Russia launches a massive drone attack on Kyiv, like 200 drones rather than 20-40, overwhelms air defenses, and then immediately follows up with 20 ballistic missiles.  That could be catastrophic.”

Such a day is still coming.  This week’s massive barrage was just a preview.

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--Jailed Russian opposition leader Alexei Navalny was finally tracked down to a penal colony north of the Arctic Circle, his spokeswoman said on Monday, after supporters lost touch with him for more than two weeks.

Navalny was tracked down to the IK-3 penal colony in Kharp in the Yamal-Nenets region, about 1,900 km (1,200 miles) northeast of Moscow, spokeswoman Kira Yarmysh said.  Navalny’s lawyer managed to see him on Monday, Yarmysh said.  “Alexei is alright,” said Yarmysh. 

Navalny’s new home is known as “the Polar Wolf” colony and is considered to be one of the toughest prisons in Russia.  Most prisoners there have been convicted of grave crimes.  Winters are harsh – and temperatures are due to drop to around minus 28 Celsius (minus 18 F.) there over the next week.  It is about 40 miles north of the Arctic Circle, and was founded in the 1960s as part of what was once the Gulag system of forced Soviet labor camps.

Editorial / Wall Street Journal

“Some residual good news for courage in 2023: Alexei Navalny is alive and has been located in a distant prison colony. His team says the leading opponent of Vladimir Putin’s despotism was moved without announcement to a prison called the Polar Wolf in the remote Arctic region of Yamalo-Nenets.  This is a frozen, isolated area known for some of the most brutal conditions in the Putin-era gulag.

“The context for his isolation is the Russian presidential election scheduled for March 17. There’s no chance Mr. Putin will lose in the rigged political system.  But before Mr. Navalny disappeared, he and his team launched a campaign to expose that Mr. Putin is far less popular than the Kremlin claims.

“In the runup to the elections ‘people are very sensitive to political information,’ so there’s an opportunity ‘to talk to people’ and ‘spread information about [Mr. Putin’s] crimes,’ Kira Yarmysh, Mr. Navalny’s spokesperson, told us recently. ‘The idea is that many Russians are dissatisfied with what is going on, and it’s very important that they see they are not alone.’….

“One of the campaign’s arguments is that Mr. Putin’s war in Ukraine has been a disaster for Russians.  ‘Mobilization [has] taken the lives of our men,’ but ‘Putin and his assistants are indifferent to our fate and how many people die,’ one digital pamphlet argues.  ‘Our children, grandchildren, brothers and husbands can be taken to the front at any time.  Do you want your loved ones to die for Putin and his wealth?’

“Russia has lost about 87% of its prewar force in Ukraine, with some 315,000 soldiers killed or injured, according to a declassified U.S. intelligence assessment.  Even verbal opposition to the war is considered a crime, so Mr. Navalny’s campaign is a rare opportunity for Russians to express their frustration.

“Mr. Navalny barely survived poisoning with the Soviet-era nerve agent Novichok in 2020.  He is a hero of Russian liberty, and he deserves the world’s attention.”

Well, I’ve done my part over the years to keep Navalny’s story alive.  I also told you weeks ago that Putin will receive 84% of the vote…just guessing that is the figure they have already gamed out in the Kremlin.

--Meanwhile, former TV journalist Yekaterina Duntsova was disqualified on Saturday from running against Putin because of alleged flaws in her application to register as a candidate.  Her disqualification was seized on by Putin’s critics as proof that no one with genuine opposition views will be allowed to stand against him.

--Polish farmers suspended a protest at one border crossing with Ukraine on Sunday, but continued blockades at three other crossings over Christmas.

Polish drivers have been blocking crossings with Ukraine since early November, demanding the European Union reinstate a system whereby Ukrainian companies need permits to operate in the bloc, and the same for European truckers seeking to enter Ukraine.

--The Turkish Parliament’s foreign affairs committee gave its consent to Sweden’s bid to join NATO on Tuesday, drawing the previously non-aligned Nordic country a step closer to membership in the military alliance.  Sweden’s accession protocol will now need to be approved in the general assembly for the last stage of the legislative process in Turkey and no date for that has been set.

Turkey has delayed ratifying Sweden’s application for more than a year, accusing the country of being too lenient toward groups that Ankara regards as threats to its security.

Turkish President Erdogan also has openly linked ratification of Sweden’s NATO membership to U.S. congressional approval of a Turkish request to purchase 40 new F-16 fighter jets to modernize Turkey’s existing fleet.

NATO requires the unanimous approval of all existing members to expand, and Turkey and Hungary are the only countries that have been holding out.  Hungary has stalled Sweden’s bid, alleging that Swedish politicians have told “blatant lies” about the condition of Hungary’s democracy.

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Wall Street and the Economy

We had a first look at holiday sales, courtesy of Mastercard SpendingPulse, which measures retail sales, ex-autos, from Nov. 1 through Dec. 24, and they were up just 3.1% over last year.  I got a kick out of those saying this was good.  Hardly.  Its non-inflation adjusted, and vs. up 7.6% in 2022, plus it was below expectations.

Online sales rose a lackluster 6.3% (for this metric), with in-person sales up 2.2%.

Apparel rose 2.4%, jewelry fell 2.0%.  In-person dining was a highlight, up 7.8%. 

The National Retail Federation will release its key figure in the next two weeks, the NRF looking at all of November and December.  Back on Nov. 2, it forecast holiday sales of between 3% and 4% growth.

Just two other economic items of note this week.  The Case-Shiller home price index for October, with the 20-city index rising 0.6% month-over-month, and 4.9% year-over-year, the fastest such pace of 2023.

And the December Chicago PMI, a first major look at the manufacturing sector in the month, came in at 46.9, down from an expected 50, which is the dividing line between growth and contraction.

The Atlanta Fed’s GDPNow barometer for fourth-quarter growth remains at 2.3%, as these good folks took the week off.

Freddie Mac’s 30-year fixed-rate mortgage stands at 6.61% after a ninth straight week of declines from the peak of 7.79%, and vs. 6.42% at year end 2022.

Next week, despite it being a holiday-shortened one, we have the ISM data for both manufacturing and the service sector, as well as the December jobs report and the Fed’s minutes from its last Open Market Committee meeting.

Europe and Asia

Nothing out of the eurozone this week. 

And nothing from China.   

Japan reported industrial production for November fell 1.4% year-over-year, but retail sales rose a solid 5.3%, better than expected.

The November unemployment rate was unchanged at 2.5%.

Next week we receive all the PMI data for both the eurozone and Asia.

Street Bytes

--Stocks rose for a ninth straight week (in terms of the major averages) to close out the year, for the S&P 500 its longest streak since January 2004.  Gains were minimal, however. The Dow Jones rose 0.8% to 37689, the S&P 0.3% and Nasdaq 0.1%.

It’s all about optimism that the Federal Reserve can successfully cool inflation without inducing a major economic slowdown, i.e., a soft landing, with a series of interest rate cuts, but I just think other issues can overwhelm not just our market, but global markets, this coming year.  I jumped the gun last year. I’ll be right in 2024.

Dow Jones and S&P down 9%, Nasdaq unchanged due to the “Magnificent Seven” et al hanging in there on the AI story.

--U.S. Treasury Yields

12/31/22

6-mo. 4.75%  2-yr. 4.43%  10-yr. 3.87%  30-yr. 3.96%

12/31/23

6-mo. 5.25%  2-yr. 4.25%  10-yr. 3.88%  30-yr.  4.03%

What a year, a massive round trip on the key 10-year.  From last year’s 3.87%, down to a weekly close in March of 3.37%, up to 5.02% intraday in October, and back down to 3.88%.

Last year I said the 10-year would finish 2023 at 4.50%, “as I believe core inflation will stabilize at about 4%, which isn’t good enough for the Fed.”

Well, as measured by core PCE, we are at 3.2%, so I wasn’t that far off.

I’ll say next December, the 10-year is at 3.65%, the stunning move from 5.02% to 3.88% largely now discounting much of whatever level of cuts we will receive in 2024.

Across the pond, the German 10-year finished the year at 2.02%, down from 2.56% yearend 2022, while the Italian 10-year fell to 3.68% from 4.68%.

--Oil fell in 2023 for the first annual loss since 2020 amid concerns about increasing supply, such as record U.S. output, and slowing demand growth.  Geopolitical conflicts and OPEC+ production cuts failed to lift prices.

West Texas Intermediate closed the year at $71.40, down from $80.50 a year ago.

--Denmark’s A.P. Moller-Maersk A/S, the world’s second-largest container line, has scheduled several dozen container vessels to travel via the Suez Canal and the Red Sea in the coming days and weeks, the shipping giant said on Wednesday, in a further sign that global shipping firms are returning to the route, despite the threats of drone and missile strikes from the Iran-backed Houthis in Yemen.

The world’s top shipping companies, including Hapag-Lloyd, stopped using Red Sea routes after the Houthis began targeting vessels earlier this month, disrupting global trade.  France’s CMA CGM said on Tuesday it was increasing the number of vessels traveling through the Suez Canal.

The shipping companies have been reassessing whether it is safe to return to the shorter route after the United States announced a multinational maritime security initiative in the Red Sea in response to the attacks.

But many vessels, including some of Maersk’s, are still scheduled to take the journey around Africa via the Cape of Good Hope to avoid attacks, charging customers extra fees and adding weeks to the time it takes to transport goods from Asia to Europe and to the east coast of North America.

The surcharges being levied totaled $700 for a standard 20-foot container traveling from China to Northern Europe.  The extra fuel required for a longer trip can cost up to $1 million on trips between Asia and Northern Europe.

Thursday, however, a Reuters analysis of Maersk’s schedule seemed to show it  sailing almost all container vessels through the Suez canal from here on, diverting only a handful around Africa.

--Southwest Airlines canceled hundreds of flights Sunday and more than 100 on Monday after dense fog snarled operations at Chicago’s Midway International Airport, where Southwest is the major carrier.

While nationwide the number of cancellations wasn’t that high, Southwest again scrubbed more flights over Christmas than rivals, though at a much smaller scale than last year’s holiday debacle, for which the airline was recently fined $140 million.

More than 9,400 U.S. flights were canceled Dec. 23 and 24 last year.  This year, that figure was around 700.

--TSA checkpoint numbers vs. 2019

12/28…110 percent of 2019 levels
12/27…125
12/26…132…yes, numbers all over the place
12/25…81
12/24…76
12/23…105
12/22…107
12/21…103

--Apple scored a victory on Wednesday as a U.S. appeals court paused a government commission’s import ban on some of its popular Apple smartwatches following a patent dispute with medical-technology firm Masimo.

The tech giant had filed an emergency request for the U.S. Court of Appeals for the Federal Circuit to halt the order after appealing the U.S. International Trade Commission’s (ITC) decision that it had infringed Masimo’s patents.

The Biden administration had declined to veto the ban on Dec. 26, allowing it to take effect.

Masimo has accused Apple of hiring away its employees, stealing its pulse oximetry technology and incorporating it into Apple watches.  The ITC barred imports and sales of Apple Watches with technology for reading blood-oxygen levels.

--On the issue of the ‘uproar’ over Japan’s Nippon Steel agreeing to buy U.S. Steel for $14.1 billion, I said last week that the outrage was rather silly (actually, stupid), because Nippon Steel will only strengthen ‘X’.

So I can’t help but quote some of an editorial from the Washington Post that was posted after my comments:

“This bout of Japan-bashing harks back to the panic over Japan’s economic rise in the late 1980s – which was overblown, too.  Japan is a U.S. ally and party to a mutual defense pact. The two countries cooperate on the production of microchips and other sensitive technologies. And Nippon, which has been operating in the United States since 1984, would have no interest in, say, forgoing profits to cut production of steel for American weapons.

“Under the deal, U.S. Steel would retain its brand and Pittsburgh headquarters, as part of a new combined, company that would be the world’s second-largest steel manufacturer – and a free-world rival to China’s state-owned Baowu Group. Consolidation is necessary to compete with China, which manufactures more than half the globe’s steel.

“The United Steelworkers, which represents about 11,000 U.S. Steel employees, called the company’s board ‘greedy’ for accepting the best offer. The union wanted the board to sell to Ohio-based Cleveland-Cliffs, even though that company made an initial offer of $7.3 billion, about half what Nippon countered with.  But there’s no reason the acquisition should harm the workforce, since the Japanese firm promises to honor all existing union contracts.

“The irony of ironies: Much criticism of Nippon Steel’s bid emanates from those who support the industrial policies that made U.S. Steel an attractive takeover target in the first place.  President Donald Trump imposed a 25 percent tariff on steel imports that President Biden largely kept in place.  Mr. Biden’s signature legislative achievements – a bipartisan infrastructure bill, the Chips Act and the Inflation Reduction Act – included inducements, such as tax credits for wind farms built with domestic steel, that incentivized the Japanese company to buy an American steelmaker….

“Yes, it’s natural to lament the slow decline of the iconic U.S. Steel, America’s first billion-dollar corporation, which, in 1901, made Andrew Carnegie the richest man in the world.  Over the past few decades, Nucor overtook U.S. Steel in revenue and profitability by using electric arc furnaces, which also generate less carbon, rather than U.S. Steel’s less efficient blast furnaces. It is no longer 1943, when U.S. Steel’s employment peaked at 340,000, as it helped arm the Allies to defeat the Axis powers, including Imperial Japan.  Now, the firm has fewer than 15,000 workers, and Japan is one of the United States’ best friends, whose companies already employ tens of thousands of U.S. workers at auto plants across the country – and should be welcome in steel, too.”

--The price of stamps is going up again in 2024.  The U.S. Postal Service announced the price increase for a First-Class Mail Forever stamp from 66 to 68 cents, which will take effect Jan. 21.

Package shipping costs are also expected to go up by nearly 6%.

This will be the second stamp price hike since the summer.  The USPS raised stamp prices from 63 to 66 cents in July.

--Comscore estimated that domestic box office totals for the Christmas holiday weekend would be $94.6 million, led by “Aquaman and the Lost Kingdom,” with an estimated $40 million over the four-day weekend.  That would take the year’s total domestic box office to $8.8 billion through last Sunday, which is up 21% compared with this time last year, but 20% less than the $11.0 billion movie theaters raked in before the pandemic, in 2019.

Foreign Affairs, Part II

China: Wang Zaixi, former deputy director of the mainland government’s Taiwan Affairs Office, issued an unusually harsh warning regarding the presidential and parliamentary elections in Taiwan on January 13.  He said cross-strait tensions run the risk of escalating into an armed conflict if the front running candidate, William Lai, from Taiwan’s ruling independence-leaning Democratic Progressive Party wins the election.

The warning came as Beijing has been stepping up military and political pressure ahead of the vote.

“There is a great deal of uncertainty in Taiwan’s elections, but one thing is certain: ‘Taiwan independence’ means war, and insisting on ‘Taiwan independence’ will lead to war sooner or later,” Wang, a retired major general, said at an event in Beijing on Saturday, as reported by the South China Morning Post.

Wang, who is vice-president of the National Society of Taiwan Studies in Beijing, described Lai as “a stubborn, radical ‘Taiwan independence’ activist.”

“If he comes to power, the possibility of a cross-strait military conflict cannot be ruled out, and we need to be fully aware of this,” Wang said at the event hosted by the state-controlled Global Times newspaper.

According to the Global Times, Wang lay the blame for the heightened cross-strait tensions on Taiwanese President Tsai Ing-wen’s alleged “secessionist movement” and lashed out at Washington for provoking a proxy war similar to the Ukraine crisis to contain mainland China.

On Tuesday, President Xi Jinping vowed to resolutely prevent anyone from “splitting Taiwan from China in any way,” the official Xinhua news agency reported.

At a symposium commemorating the 130th anniversary of the birth of former Chinese leader Mao Zedong, who in 1949 defeated the Republic of China government in a civil war which then fled to Taiwan, Xi said “the complete reunification of the motherland is an irresistible trend.”

“The motherland must be reunified, and inevitably will be reunified,” Xinhua cited Xi as telling senior officials from the Communist Party.

China must deepen the integration between the two sides, promote the peaceful development of relations across the Taiwan Strait, and “resolutely prevent anyone from splitting Taiwan from China in any way,” he said.

The report made no mention of using force against Taiwan, though China has never renounced that possibility.  It also did not mention the upcoming election.

Meanwhile, just a week after their top military officials resumed high-level talks, China’s defense ministry lashed out at the United States, criticizing its continued meddling in the Asia Pacific region and saying it maintained a “Cold War” mindset.

A defense ministry spokesperson, Wu Qian, said at the year’s last regular press conference Thursday: “The United States continues to strengthen its Asia-Pacific deployments, this is full of a Cold War mindset.  Its goal is for its own selfish gains and to maintain its hegemony. Its nature is to stoke confrontation.”

U.S. officials had hoped last week’s talks, the first in more than a year, could bring a broader restoration in military talks.

On the issue of Taiwan, Wu accused the government of deliberately “hyping up” a military threat from China for electoral gain. He warned the U.S. against interfering in Taiwan affairs, including selling arms to the island democracy.

“We firmly oppose any country having official and military contact with Taiwan in any form. The U.S. is manipulating the Taiwan question in various forms, which is a very dangerous gamble,” Wu said.  “We urge the U.S. to stop arming Taiwan under any excuses or by any means.”

Taiwan’s defense ministry said this week it hadn’t seen any large-scale Chinese military activity ahead of the elections.

Mr. Wu also blamed the United States for rising tension in the South China Sea, following recent skirmishes between China and the Philippines.

North Korea: Pyongyang appears to be operating a more powerful reactor for producing plutonium at its main nuclear site for the first time, the United Nations atomic agency said late last week, days after the North tested an intercontinental ballistic missile that could reach anywhere in the U.S.

International Atomic Energy Agency Director General Rafael Grossi said that a light water reactor at the Yongbyon nuclear facility was discharging warm water, indicating it was reaching criticality, the point at which its nuclear chain reaction becomes self-sustaining.  The regime has been building the reactor for years.

Plutonium can be separated from the irradiated fuel produced by the reactor for use in a nuclear weapon.

Grossi said in a statement that without inspectors at the site, the agency cannot confirm the reactor’s operational status, but the IAEA uses satellite imagery to follow developments.

North Korea has long been producing plutonium at a smaller nuclear reactor at Yongbyon, but the new facility is able to produce significantly larger amounts.

Nuclear experts say they believe North Korea is producing several nuclear weapons a year and has dozens of bombs at this point.  But does it have the capability to put them on an ICBM?  That’s one of the critical questions.

Thursday, Kim Jong Un ordered his country’s military, munitions industry and nuclear weapons sector to accelerate war preparations to counter what he called unprecedented confrontational moves by the U.S., state media reported.

At a meeting of the country’s ruling party, Kim addressed the policy directions for the new year and said Pyongyang would expand strategic cooperation with “anti-imperialist independent” countries, news agency KCNA reported.

Also Thursday, South Korean President Yoon Suk Yeol visited a frontline military unit in the eastern part of the country to inspect its defense posture and called for an immediate retaliation if there was any provocation from North Korea.

“I urge you to immediately and firmly crush the enemy’s will for a provocation on the spot,” Yoon told the troops.

Iran: Speaking of nuclear programs, Iran has tripled production of nearly weapons-grade uranium in a move likely to deepen its confrontation with the West.

Iran’s decision to triple its production rate marks the collapse of quiet diplomatic efforts between Washington and Tehran.  This also comes amid a proliferation of flashpoints between the U.S. and Iran.

Such as…the U.S. accused Iran of being behind an attack on a tanker in the Indian Ocean as the threat to shipping triggered by Israel’s war with Hamas spread beyond the Red Sea.

Iran fired a one-way drone that struck the Chem Pluto – a Liberian-flagged, Japanese-owned and Netherlands-operated chemical tanker – on Saturday about 200 nautical miles from the coast of India, according to the Pentagon. There were no casualties.

This is beyond outrageous, on top of all of Iran’s other moves, including with the Houthis and attacks on ships in the Red Sea, as well as Iran-backed groups’ attacks on U.S. military targets in Iraq and Syria.

Monday, Iranian-backed militias in Iraq carried out a drone strike on a U.S. base in Irbil in northern Iraq, wounding three American servicemembers, one of them critically, according to U.S. officials.  In response, American warplanes before dawn Tuesday hit three locations in Iraq connected to one of the main militias, Kataib Hezbollah, as announced by Defense Secretary Lloyd Austin in a statement, Austin describing the U.S. action as “precision strikes.”

The Biden administration has been concerned that any overreaction to the attacks on U.S. personnel could inflame a broader regional war.  “While we do not seek to escalate conflict in the region, we are committed and fully prepared to take further necessary measures to protect our people and our facilities,” Austin said.

U.S. Central Command said the airstrikes killed a “number of Kataib Hezbollah militants.”

Back to Iran’s nuclear program, the aforementioned Rafael Gross, in a report to the IAEA, said that agency inspectors had confirmed on Dec. 19 and Dec. 24 an increased production of highly enriched uranium at both of Iran’s main nuclear facilities that the agency said Tehran had started on Nov. 22.

Iran is the only country in the world that isn’t a declared nuclear power currently producing 60% enriched uranium, which can be converted to weapons-grade material within days.  U.S. officials have said it would take less than two weeks to convert enough 60% material into a form that could be used in a nuclear weapon.

Iran is believed to already have enough highly enriched uranium to fuel three weapons.

Somalia: A U.S. drone strike in Somalia killed the alleged mastermind behind a 2020 attack that left three Americans dead at a Kenyan air base, Somali and U.S. officials said over the weekend.

The airstrike killed Maalim Ayman, leader of an al-Shabaab unit operating in Kenya and Somalia, the Pentagon confirmed.

The U.S. considers al-Shabaab to be al Qaeda’s largest and most virulent affiliate.  Earlier this year, the State Department announced a $10 million reward for information leading to Ayman’s arrest or conviction.

The U.S. has several hundred troops stationed in Somalia, training local commandos and coordinating strikes by drones flown out of a base in neighboring Djibouti.

Random Musings

--Presidential approval ratings

Gallup: 37% approve of President Biden’s job performance, 59% disapprove; 27% of independents approve (all-time low) (Nov. 1-21).  We will receive an update next week.

Rasmussen: 46% approve, 53% disapprove (Dec. 29).

--Maine’s secretary of state ruled that Donald Trump cannot run in the state’s Republican primary, citing his efforts to overturn the 2020 election results.

The ruling, which will no doubt face court challenges, means Maine is the second state after Colorado by opponents to keep Trump off the ballot for his actions after losing in 2020.

Shenna Bellows, Maine’s top election official and a Democrat, made her decision after receiving three challenges from voters, and cited Trump’s conduct culminating in the insurrection at the Capitol on Jan. 6, 2021.

“I do not reach this conclusion lightly. Democracy is sacred,” Bellows wrote in her 34-page decision. “I am mindful that no secretary of state has ever deprived a presidential candidate of ballot access based on Section Three of the Fourteenth Amendment. I am also mindful, however, that no presidential candidate has ever before engaged in insurrection.”

Bellows said Trump “used a false narrative of election fraud to inflame his supporters” to “prevent a peaceful transfer of power.”  She accused him of engaging in “incendiary rhetoric” and failing to take timely action to stop the assault on the Capitol.

“The weight of the evidence makes clear that Mr. Trump was aware of the tinder laid by his multi-month effort to delegitimize a democratic election, and then chose to light a match,” she wrote.

Bellows added that Trump could appeal her decision.

The Trump campaign assailed the decision as politically motivated.

“We are witnessing, in real-time, the attempted theft of an election and the disenfranchisement of the American voter,” the campaign said in a statement Thursday night, after Bellows released her ruling.

The U.S. Supreme Court is going to have to act on both Colorado and Maine next week as the state’s have a deadline to print the ballots for their March primaries.

--Donald Trump had a cheery Christmas message on Truth Social.

“Merry Christmas to all, including Crooked Joe Biden’s ONLY HOPE, Deranged Jack Smith… Included also are World Leaders, both good and bad, but none of which are as evil and ‘sick’ as the THUGS we have inside our Country who, with their Open Borders, INFLATION, Afghanistan Surrender, Green New Scam, High Taxes, No Energy Independence, Woke Military, Rusia/Ukraine, Israel/Iran, All Electric Car Lunacy, and so much more, are looking to destroy our once great USA.  MAY THEY ROT IN HELL.  AGAIN, MERRY CHRISTMAS!”

Very sweet. 

Trump also posted a poll on Truth Social highlighting that the single word voters most associate with a potential second term under his command is “revenge.”

--Appearing on ABC’s “This Week” last Sunday, Sen. Lindsey Graham (R-S.C.) warned Trump to not “look back” on the 2020 election if he becomes the Republican presidential nominee, saying that he thinks Trump risks losing in 2024 if he focuses on the past.

“I accept the election results of 2020.  I’m worried about 2024,” Graham said.  “If President Trump puts the vision out, improving security and prosperity for Americans, he will win. If he looks back, I think he will lose.”

“So, at the end of the day, the 2020 election’s over for me.  We need to secure the ballot in the 2024 cycle,” Graham added.

--Nikki Haley had a cringeworthy moment Wednesday in Berlin, NH, when a voter asked her to identify the cause of the Civil War and the former governor/UN ambassador refused to name slavery as the primary cause.

Haley was clearly caught off guard by the question.

“I think the cause of the Civil War was basically how government was going to run,” Haley said. “The freedoms and what people could and couldn’t do.”

“I think it always comes down to the role of government and what the rights of the people are,” Haley went on. “And I will always stand by the fact that I think government was intended to secure the rights and freedoms of the people.”

After Haley went into a lengthier explanation about the role of government, individual freedom and capitalism, the questioner seemed to admonish Haley, saying, “In the year 2023, it’s astonishing to me that you answer that question without mentioning the word slavery.”

“What do you want me to say about slavery?” Haley replied, before abruptly moving on to the next question.

The campaign of Gov. Ron DeSantis recirculated video of the exchange on social media, adding the comment, “Yikes.”

--The FBI assisted local law enforcement in Colorado after threats against the four state Supreme Court justices, who voted to bar former President Trump from the state’s presidential primary ballot.  Various media outlets reported the emergence of violent rhetoric on right-wing online forums from Trump supporters.  Lovely messages such as: “All f***ing robed rats must f***ing hang.”

--Pope Francis on Christmas Eve lamented that Jesus’ message of peace was being drowned out by the “futile logic of war” in the very land where he was born,

“Tonight, our hearts are in Bethlehem, where the Prince of Peace is once more rejected by the futile logic of war, by the clash of arms that even today prevents him from finding room in the world,” Francis said.

At the papal Mass in St. Peter’s Basilica, Francis said the real message of Christmas is peace and love, urging people not to be obsessed with worldly success and the “idolatry of consumerism.”  He spoke of “the all-too-human thread that runs through history: the quest for worldly power and might, fame and glory, which measures everything in terms of success, results, numbers and figures, a world obsessed with achievement.”

Francis said that while many might find it hard to celebrate Christmas in “this world that is so judgmental and unforgiving,” they should try to remember what happened on the first Christmas.  “Tonight, love changes history,” he said.

On Christmas Day, Francis, delivering his “Urbi et Orbi” – or “to the city and to the world” – Christmas blessing, Francis pleaded for peace around the world, naming specific conflicts, including in Armenia, Azerbaijan, Sudan and Ukraine, but it was the conflict in Gaza that was foremost in his message.

“The eyes and the hearts of Christians throughout the world turn to Bethlehem,” Francis said, calling attention to “deep shadows covering the land.”

-- Pakistani authorities this week closed schools and markets, with Lahore’s 11 million residents suffering through excessive pollution levels.  A Swiss technology company IQAir, which tracks more than 7,000 cities around the world, said Lahore regularly tops global air pollution rankings and that the poor quality of the air may be costing the people more than seven years in average life.

Pakistani officials have taken to using cloud-seeding technology.

Toxic smog was also an issue in Bangladesh’s capital of Dhaka on Wednesday as the air quality index plummeted into the “hazardous” category. The World Health Organization said some areas of the city of 20 million had levels of fine particulate matter as much as 20 times in excess of WHO standards.  Similar conditions prevailed in New Delhi, where air and rail travel was disrupted by a dense fog.

Meanwhile, parts of Australia are at high risk of bushfires due to abnormally high December temperatures, such as 113F in the Northern Territory, but much of China suffered through its coldest December on record (after Beijing recorded its hottest ever June day, at just over 104 F).

And here in the U.S., while parts of the Plains received a White Christmas in the form of a localized blizzard, as of Dec. 22, only 13.2% of the contiguous U.S. was snow-covered, according to the National Weather Service, which if that held, it would have been the least snow cover on Christmas Day since accurate records began 20 years ago.

My town of Summit, N.J., had a few “snowstorms” last year that may have hit all of 2 inches, while New York’s Central Park hasn’t had more than an inch of measurable snow in any particular weather event in almost two years!  I’m not a fan of winter, but it would be nice to get one old-fashioned snowstorm.

That said, if it had been cold enough, we’ve had three coastal storms in 17 days that would have resulted in about 50 inches of the white stuff, really.

Nonetheless, there is ample evidence all across the country that the warmest year on record, as the experts will conclude in January, is doing a number on ski areas, with the rainstorms hitting the Northeast’s slopes hard.

And now California’s coast is getting pounded with 20-foot waves, with Northern California bracing for waves up to 40 feet high as a result of storms in the Pacific.

---

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.

---

Gold $2073…up from $1830, 12/31/22
Oil $71.40…down from $80.50, 12/31/22

Bitcoin at 4:00 p.m. ET, Friday, was $42,000, up from roughly $16,600 at year end 2022.

Regular Gas: $3.12; Diesel: $4.01 [$3.15 / $4.67 yr. ago]

Returns for the week 12/25-12/29

Dow Jones  +0.8%  [37689]
S&P 500  +0.3%  [4769]
S&P MidCap  -0.2%
Russell 2000  -0.3%
Nasdaq  +0.1%  [15011]

Returns for 2023

Dow Jones  +13.7%
S&P 500  +24.2%
S&P MidCap  +14.5%
Russell 2000  +15.1%
Nasdaq   +43.4%

Bulls/Bears…no update…56.9 / 18.1 ratio prior

Happy New Year!  Travel safe.

Thank you for your support in 2023.

Brian Trumbore

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