Week in Review

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Week in Review

01/20/2024

For the week 1/15-1/19

[Posted 5:00 PM ET, Friday]

*See my bit below on next week’s review.

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Special thanks to longtime supporter Jim D.

Edition 1,292

I get into Congress approving its third consecutive stopgap funding bill needed to avoid a partial government shutdown down below, but it’s important to note up top that Defense Department funding at the previously agreed to $886 billion level, as stipulated in last year’s debt ceiling agreement, is at risk if we just continue down the one-year CR (continuing resolution) road, which would require a cut in funding for all federal agencies, including the Pentagon, by 1% from fiscal 2023 levels.

Another issue is foreign aid to Ukraine, which has yet to be approved.  European Union leaders are working to gather approval for at least $50 billion in new arms, but it’s the Biden administration that is struggling to win approval for about $60 billion in new aid.  The last drawdown of approved aid was recently issued.

“By continuing to move from one stopgap bill to another, we are shooting ourselves in the foot,” Sen. John Cornyn (R-Tex.) said Wednesday on the Senate floor.  “We’re weakening our own defense as China’s military strength continues to grow, and as we see more and more aggression on the part of Iran in the Middle East through various proxies like Hamas.”

As The Military Times pointed out, “The cascading effect of short-term funding bills hampers Pentagon contracting on programs ranging from shipbuilding to the beleaguered munitions industrial base.”

EU leaders meet Feb. 1 to attempt to wrap up their package and overcome the objections of Hungarian Prime Minister Viktor Orban, Putin’s butt-boy.

The UK (not part of the EU) last weekend announced a new package of $3.2 billion in aid for Ukraine during Prime Minister Rishi Sunak’s visit to Kyiv.

“I am here today with one message: The UK will not falter,” Sunak said. “We will stand with Ukraine, in their darkest hours and in the better times to come.”

But will the United States?

Russia has a population about 3.5 times the size of Ukraine’s, and its military base is operating at full tilt.  As Michael Kofman, a senior fellow in the Russia and Eurasia program at the Carnegie Endowment for International Peace recently said after a visit to Ukraine:

“The Russian advantage at this stage is not decisive, but the war is not a stalemate.  Depending on what happens this year, particularly with western support for Ukraine, 2024 will likely take one of two trajectories.  Ukraine could retake the advantage by 2025, or it could start losing the war without sufficient aid.”

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David Ignatius / Washington Post…on global supply chain issues, highlighted by the Houthi attacks in the Red Sea and Gulf of Aden….

“Paradoxically, the more dominant the United States has become economically, the more vulnerable it is to supply-chain attack. An early demonstration of the dependence was the 1974 Arab oil embargo, whose destabilizing effects persisted for much of the next decade. Today’s most precious resource is information, and the United States keeps leaping forward with new digital tools.  But as cyber technology advances, so do the weapons of cyberwar.

“A disturbing example of a U.S. strength that could become a weakness is our dominance of cloud computing – and growing reliance on it. A study to be published Wednesday by the Carnegie Endowment for International Peace focuses on the risk that the theoretically invulnerable cloud could be disrupted by natural disasters, technology failure, human error or other unanticipated factors.

“The study cites an estimate by two giant reinsurance companies that potential losses in a cloud-dependent world could be 100 times those before cloud adoption.

“The Carnegie study, outlined for me this week by Ariel Levite, one of its three authors, proposes that cloud providers and their clients should agree on ‘a framework to enhance resilience and trust.’  Like giant financial institutions, cloud providers should face regular ‘stress tests’ to see how they would cope with unexpected disasters, Levite explained.

“The Biden administration, which took office amid the Covid-19 pandemic, recognized the need to protect global supply chains.  And the administration’s actions have reduced the United States’ vulnerability to outside disruptions.

“But the bizarre little war off the coast of Yemen – and its big potential effect on global commerce – is a reminder of how fragile the logistical network remains.  The grandees of the world economy who are gathering this week in Davos, Switzerland, for their annual celebration of globalization should keep an eye on the distant bottleneck at the Bab el-Mandeb*, where the system seems very weak indeed.”

*The narrow strip of water connecting the Red Sea to the Gulf of Aden, Yemen with coastlines on both.

Maersk and other large shipping lines have instructed hundreds of commercial vessels to stay clear of the Red Sea, sending them on a longer route around Africa or pausing until the safety of vessels can be assured.

“It’s one of the most critical arteries of global trade and global supply chains and it’s clogged up right now,” Maersk CEO Vincent Clerc told Reuters Global Markets Forum in Davos, adding that disruption would probably last at least a few months.

Freight rates have more than doubled since early December, according to maritime consultancy Drewry’s world container index, while insurance companies say war risk premiums for shipments through the Red Sea are also rising.

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This coming Tuesday is the New Hampshire primary, the last chance for Nikki Haley to loosen the spikes on the tracks carrying the Trump Train to the Republican nomination.  More below.

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Israel-Hamas…

--The war in Gaza hit day 100 on Sunday and there were fierce gun battles in some areas. Communications and internet services were down a third day, complicating the work of emergency and ambulance crews trying to help people in areas hit by fighting.

The battles were concentrated in the southern city of Khan Younis, as well as in central Gaza.

--Hamas’ armed wing has been told by “several parties in the resistance fronts that they will expand their strikes on the Israeli enemy in the coming days,” a spokesman for Abu Ubaida said. [Reuters]

--Israel said an elderly Israeli woman and her son were killed in a Hezbollah missile attack from Lebanon that hit the town of Kfar Yuval on Israel’s northern border over the weekend.

The Israeli military (IDF) said it killed four gunmen trying to cross from Lebanon into Israel.  The IDF was striking Hezbollah targets in Lebanon in retaliation.

Hezbollah leader Hassan Nasrallah said the group’s aim in firing on Israel was to stop the war in Gaza.

He also said the Houthis would continue attacking shipping in the Red Sea and that U.S. and UK attacks on the group had been a mistake.

The U.S. should understand “that the security of the Red Sea and calm on Lebanon’s front, the situation in Iraq, and all developments in the region is tied to one thing: to stop the aggression against Gaza,” Nasrallah said.

--Israel’s war in Gaza has brought famine with “such incredible speed,” the UN’s emergency relief chief told CNN’s Christianne Amanpour on Monday, warning that hundreds of thousands of Palestinians are starving in the besieged enclave.

The “great majority” of 400,000 Gazans characterized by UN agencies as at risk of starving “are actually in famine, not just at risk of famine,” Martin Griffiths said.

“It’s been an extraordinary and wholly unwelcome aspect of the Gazan war,” he said.  ‘It has brought famine with such incredible speed to the front of the lines.”

What aid is trickling in is a fraction of the amount needed.  Israel has accused the UN’s Palestinian refugee agency of not doing enough and “stalling” the progress of getting more shipments in.

--Israel’s military said on Monday there was serious concern regarding the fate of the hostages who were purported to be dead in a video released by Hamas, but that contrary to the group’s claim, one of them was not killed by Israeli fire.

Military spokesperson Rear Admiral Daniel Hagari identified hostage Itai Svirsky as one of the men in the latest Hamas video.  “Itai was not shot by our forces. That is a Hamas lie. The building in which they were held was not a target and it was not attacked by our forces.  We don’t attack a place if we know there may be hostages inside,” he said, adding areas nearby had been targeted.

As of Friday, Israel says 132 hostages remain in Gaza and that 27 have died in captivity.

--The IDF said on Thursday that Israeli forces had killed around 60 Palestinian fighters in the Gaza Strip over the previous 24 hours.  Around 40 of the 60 were killed in Khan Younis and several others in northern Gaza, including at a compound used by Islamic Jihad.

There were fears Nasser hospital in Khan Younis, the largest hospital still partly functioning in Gaza, may be forced to close due to Israeli strikes.

--Prime Minister Netanyahu said Thursday that Israel had destroyed around two thirds of Hamas’ fighting regiments in Gaza, vowing to press on with the war until “complete victory.”

“There are two stages to the fighting; the first is destroying the Hamas regiments, those that are organized combat frameworks,” Netanyahu said at a news conference.  ‘Up until now sixteen or seventeen out of twenty four have been destroyed. After that there is the (stage) of clearing the territory (of militants).  The first action is usually shorter, the second usually takes longer.”

“Victory will take many more months but we are determined to achieve it,” the prime minister said.

Netanyahu also said that he opposed the establishment of a Palestinian state once the conflict in Gaza comes to an end.

--Some top Israeli officials are growing disillusioned with Netanyahu’s war plans, the Associated Press reported Friday after former army chief Gadi Eisenkot spoke to Israel’s Channel 12 television station late Thursday.  After three months of fighting in Gaza that’s displaced 80-90 percent of the enclave’s 2.3 million people, Eisenkot said, “We did not bring down Hamas” and “haven’t yet reached a strategic achievement.”

Eisenkot is one of just four members of the prime minister’s war cabinet. But he told Channel 12 he’s not sure how much longer he’ll stay.

--Iran’s foreign minister, Hossein Amirabdollahian, said on Monday that the United States cannot call for restraint while supporting Israel’s war in Gaza.  In a televised joint press conference with his Indian counterpart in Tehran, Amirabdollahian called on U.S. officials “not to tie the security and national interests of the U.S. to the fate of Israel’s prime minister who is falling.” 

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This Week in Ukraine

--Monday, Ukraine’s military said it destroyed a Russian Beriev A-50 surveillance plane and an Ilyushin Il-22 airborne command post in the Sea of Azov area in an operation designed to delay some future Russian missile strikes.  Kyiv did not disclose how the sophisticated aircraft were struck.  The Sea of Azov is 60 miles from areas Kyiv holds.

A Russian military blog posted an image of the shrapnel-riddled tail section of an Il-22 standing on a tarmac and lauded the crew as “real heroes.”  Ukraine’s air force reposted the picture and said the plane had been on fire and was beyond repair.  Sounds like the crew were indeed heroes, in their own way.

Some Russian military bloggers said the downing of the A-50 would be a huge loss for Russia’s air force, since there were a limited number of the planes in service.

The Ukrainian defense ministry valued the A-50 at $330 million.  Ukrainian military spy chief Kyrlo Budanov told the Financial Times that Russia had eight A-50s left.  The aircraft can apparently detect more than 300 targets simultaneously, according to London-based think tank IISS in a 2021 report, which then put the number of A-50s at nine.  [Reuters]

--Ukraine’s deputy head of the spy agency, Vadym Skibitsky, said in December, Russia had used about 770-780 drones in its attacks on infrastructure, including energy facilities and military facilities.

--Two Russian missiles struck a residential area in the center of Kharkiv on Tuesday, injuring 20 people, and badly damaging homes, local officials said.  Rescue teams were sifting through piles of rubble.

--Vladimir Putin on Tuesday said it was “impossible” to take away from Russia the military gains it had made in Ukraine.  Talking about possible peace talks, Putin also said in televised comments that ideas put forward by Ukraine were “prohibitive formulas for the peace process.”

--The UN’s Human Rights Monitoring Mission in Ukraine’s report on civilian casualties, published Tuesday, said there was a 26.5 percent increase in civilian casualties last month – from 468 in November to 592 in December.

Danielle Bell, who heads the UN’s mission, said they are verifying reports from the missile and drone attacks that began hitting populated areas across Ukraine on December 29 and continued into early January, killing 86 civilians and injuring 416 others.

“These attacks sow death and destruction on Ukraine’s civilians who have endured profound losses from Russia’s full-scale invasion for almost two years now,” Bell said.

The confirmed number of civilians killed since Russian invaded on Feb. 24, 2022, is more than 10,200, including 575 children, and the number of injured is more than 19,300.

--Wednesday, Ukrainian officials said they shot down 19 of the 20 Shahed drones launched by Russia in an overnight attack that damaged residential buildings, but no fatalities, in the Black Sea port of Odesa.

--Russian missiles on Wednesday struck a town outside Kharkiv, killing one and damaging an educational institution, the regional governor and the military said.

Russia’s Defense Ministry said its forces a day earlier had carried out a precision strike on a building which housed “foreign fighters,” most of them French, in Kharkiv, killing 60, but the ministry provided zero evidence.

--NATO will launch its biggest military exercises in decades next week, with around 90,000 personnel set to take part in months of drills aimed at showing that the alliance can defend all of its territory up to its border with Russia.

Expect Vladimir Putin to respond with a particularly heinous attack on Ukraine, something as evil as anything else he has done there to date.

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Wall Street and the Economy

The National Retail Federation said holiday sales during November and December rose a solid 3.8%, not adjusting for inflation, the NRF forecasting earlier that the sales pace would be between 3% and 4%.  The 3.8% matches the pace of 2019, pre-pandemic.

The NRF was able to finalize its key sales report because of this week’s release of December retail sales, up a stronger than expected 0.6%, ex-autos up 0.4%.  This came against prior figures of 0.3%, and 0.2% ex-autos.  The bond market took it on the chin after this release, further ammunition for the Federal Reserve to delay cutting its funds rate. 

Various Fed governors enunciated just that in remarks this week…that the market should not assume there will be a cut in March.  All together now…it’s all about the data.

December industrial production was a stronger than forecast 0.1% when a decline was anticipated.

On the housing front, December housing starts came in at a 1.46 million annualized pace, a little better than expected but -4.3% month-over-month.

The key December existing home sales report showed the annualized pace was 3.78 million, down 1.0% from November, and down 6.2% from a year ago.

For 2023, existing home sales totaled 4.09 million, down from 5.03 million in 2022 and 6.12 million in 2021, and the lowest annual total since 1995.

The median home price fell to $382,600 from $387,700 in November but up 4.4% from one year ago.  The median sales price for 2023 was a record-high $389,800.

Freddie Mac’s 30-year fixed-rate mortgage is at a cycle low of 6.60%, down from the Oct. 26 peak of 7.79%.  But this will go back up some next week as the yield on the key 10-year Treasury has risen sharply.

The Atlanta Fed’s GDPNow barometer for growth in the fourth quarter of 2023 is at 2.4%.

*Next week, Friday, we have the critical personal consumption expenditures index, PCE, that is the Fed’s foremost inflation barometer, the Federal Open Market Committee then meeting the following week, Jan. 30-31.

Finally, as noted above, the House of Representatives on Thursday approved a stopgap spending bill (continuing resolution, CR) to fund the government through early March and avert a partial government shutdown, sending it to President Biden for approval.  The measure passed 314-108, with 106 Republicans and two Democrats in opposition.

Earlier, the Senate easily passed the legislation, 77-18, ahead of the weekend deadline.

It is pathetic that Congress hasn’t passed a bill for the full fiscal year that commenced last Oct. 1.  Meanwhile, the national debt is $34.4 trillion and rapidly escalating in part because of the heavy interest payments now being borne by the Treasury Department.

But the CR doesn’t contain the deal on tightening border security, or aid for Ukraine, two critical items still being worked on by Senate negotiators.  President Biden hosted lawmakers at the White House on Wednesday, floating the idea of a possible vote on a combined border-Ukraine bill in the Senate next week.  But House Republicans have remained skeptical of any deal that falls short of the border bill they passed last year with zero Democratic support.

Senate Republicans are reminding their House colleagues that they don’t freakin’ hold the Senate, or the White House, let alone barely holding the House, and that they must compromise.

Enter Donald Trump, who has stirred things up on social media, saying that Republicans should not do a border deal “at all” unless they could get “everything needed to shut down” migration at the border.

Many Republicans, of course, want to campaign on the border issue, and don’t want to hand what can easily be perceived as a ‘win’ to the president and Democrats.  It’s a (mess).

Europe and Asia

The Euro area annual inflation rate in December was 2.9%, up from 2.4% in November.  It was 9.2% a year earlier.  The good news was that ex-food and energy, inflation came down from 4.2% to 3.9%.  But the European Central Bank will hardly be in a rush to lower its benchmark rate, and on this news, the euro bond market tanked…the yield on the German 10-year rising from 2.18% to 2.34%.  Portugal’s 10-year rose from 2.73% to 3.14%.

Headline inflation….

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

Industrial production in the EA20 for November was down 0.3% vs. October and -6.8% from a year ago.  Not good, as has been reflected in the PMI data.

Turning to Asia…China’s economy grew 5.2% in the fourth quarter from a year earlier, official data from the National Bureau of Statistics (NBS) showed on Wednesday, slightly missing expectations but still making it possible for Beijing to meet its annual growth target (5%) despite a shaky start to the year. The third quarter’s pace was 4.9%.

The economy struggled to mount a strong and sustainable post-Covid bounce last year, burdened by a property crisis, weak consumer and business confidence, as well as mounting debts, and sluggish global growth.

Separately, December industrial production rose 6.8% year-over-year, December retail sales were up 7.4%, and fixed asset investment for 2023 increased 3%, all three far from great vs. historic figures.

Property investment fell by 9.6% in 2023.

The December unemployment rate was 5.1%, though no one believes this number.  A new method by the government for calculating youth unemployment, ages 16-24, came in at 14.9%, compared to a record peak of 21.3% in June.  No one believes this one either.

But with all the data released, perhaps the biggest news item was that China’s population fell for a second consecutive year in 2023, as a plunging birth rate and a wave of Covid-19 deaths when strict lockdowns ended accelerated a downturn that will have profound long-term effects on China’s economy and its ability to grow.

The NBS said the total number of people in China dropped by 2.75 million to 1.409 billion in 2023, a faster decline than in 2022, which was the first time the population dropped since 1961 during the Great Famine of the Mao era.

The country’s birth rate has been plummeting for decades as a result of the one-child policy implemented from 1980 to 2015 and its rapid urbanization during that period.

India surpassed China as the world’s most populous nation last year, according to estimates by the United Nations.

China’s retirement-age population, aged 60 and over, is expected to increase to more than 400 million by 2035 – more than the entire population of the U.S.  The state-run Chinese Academy of Sciences sees the pension system running out of money by 2035.

Japan’s December inflation rate was 2.6% vs. 2.8% prior, 3.7% vs. 3.8% ex-food and energy.  December producer prices were unchanged from a year ago.

November industrial production declined 1.4% year-over-year.

Street Bytes

--The S&P 500 finally hit a new record closing high today, 4839, breaking the record of 4796 set back on Jan. 3, 2022 (Russia weeks away from invading Ukraine).  For the week the S&P was up 1.2%, while the Dow Jones rose 0.7% to 37863, a new high for it as well, and Nasdaq advanced 2.3%, the latter helped big time by Taiwan Semiconductor’s outlook (see below).

The next two weeks are the biggies for earnings, all the major tech names.

--U.S. Treasury Yields

6-mo. 5.23%  2-yr. 4.40%  10-yr. 4.14%  30-yr. 4.35%

Good news on the economy, such as in the case of retail sales and a strong consumer sentiment reading today from the University of Michigan, was bad news for the bond market, as the yield on the 10-year rose from 3.95% to 4.14% on the week (4.18% intraday Friday), while the 2-yr. went from 4.15% to 4.40%, another huge move for this one.

--The International Energy Agency (IEA) on Thursday made a further upward revision to its 2024 oil demand growth forecast, though its projection remains dramatically lower than producer group OPEC’s expectations.

The Paris-based agency’s forecast, its third consecutive upward revision in as many months, predicts that global oil consumption will rise by 1.24 million barrels per day in 2024, compared with OPEC’s 2.25 million bpd projection.

Rising geopolitical tensions in the Middle East, which the IEA says accounts for a third of the world’s seaborne oil trade, has upset markets.  But barring significant disruption to oil flows, the IEA said “the market looks reasonably well supplied in 2024,” even though OPEC and the wider OPEC+ alliance have implemented a series of output cuts since late 2022 to support the market.

While these cuts may tip the market into a small deficit at the start of the year, the IEA predicted that strong growth from producers outside the OPEC+ group – including the United States, Brazil and Guyana – could lead to a substantial surplus if the extra voluntary cuts are unwound in the second quarter.

OPEC, in its own monthly report, expects global oil demand to slow next year, even as it raised its economic forecast as easing inflation spurs global growth.  The cartel sees oil-demand growth at 1.8 million barrels a day in 2025, supported by a solid Chinese economy.  The estimate is below this year’s demand growth forecast, which the group left unchanged at the above-noted 2.25 million bpd.

Crude, as measured by West Texas Intermediate, closed the week at $73.74. [I use the 4:00 PM ET price.]

--Back to China, demand for iPhones there has become a real issue for Apple, as it offered rare discounts early in the week, causing the share price to plummet anew.  Apple is slashing the price of some of its latest iPhones by $70 amid worries that Chinese consumers have cooled on the brand.  It has also knocked $112 off the price of some MacBook Air laptops.

Apple shares have struggled this year, and it didn’t help Wednesday when Apple was once again banned from selling current versions of the Apple Watch in the U.S., in connection with the patent-infringement case filed against the company by the medical device maker Masimo.

In October, the U.S. International Trade Commission found that Apple Watch Series 9 and Apple Watch Ultra 2 infringed two Masimo patents.  It ordered a ban on importing the devices.

Apple appealed the ITC decision to a federal court, which issued an interim stay in December, but on Wednesday, the court lifted the stay, effective at 5 p.m. eastern time on Thursday.

Then Thursday, Apple got a big upgrade to ‘buy’ from Bank of America and the shares surged.  Coupled with the bullish comments out of Taiwan Semiconductor (see below), Apple stock climbed back to over $190, closing the week at $191.60, after bottoming at $180.30 on Wednesday.

[In the battle for the title “World’s Most Valuable Company,” Microsoft closed the week with a market cap of $2.963 trillion, Apple $2.962 trillion.]

--Tesla has felt the impact of a long-running electric-vehicle price war in China, Beijing coming to the aid of domestic rivals like BYD.  EV sales are going strong in the country but there are too many auto makers fighting for market share, so Tesla cut prices again in the country.

Model Y and Model 3 prices came down between 3% and 6%.  The base version of the Model Y crossover vehicle now starts at about $36,000, down from $37,000.  The base Model 3 starts at about $34,500, down from $36,500.

Tesla cut prices aggressively around the world in 2023 amid higher interest rates and more EV competition.

Tesla and BYD have the leading market shares in China.  Tesla’s wholesale volumes in the country amounted to almost one million units, for a market share of 11%.  BYD’s wholesale volumes amounted to about three million units, or about 35%.

Tesla only makes battery electric vehicles.  BYD makes BEVs and plug-in hybrids.  BYD sold about 1.6 million BEVs in 2023.

--A federal judge on Tuesday blocked JetBlue Airways’ effort to merge with low-cost rival Spirit Airlines, which was viewed as a significant victory for the Biden administration in its effort to preserve competition in a key industry that critics say has grown too concentrated.

U.S. District Court Judge William G. Young wrote that while a combined JetBlue-Spirit could put pressure on the four big airlines that dominate the industry, it would hurt consumers that rely on Spirit’s low fares.  He noted that when Spirit enters a market, rival airlines reduce their prices by 7 percent to 11 percent on average.

“If JetBlue were permitted to gobble up Spirit – at least as proposed – it would eliminate one of the airline industry’s few primary competitors that provides unique innovation and price discipline,” Young wrote.  “…Worse yet, the merger would likely incentivize JetBlue further to abandon its roots as a maverick, low-cost carrier.”

Attorney General Merrick Garland said Young’s ruling would benefit consumers across the country.

“Today’s ruling is a victory for tens of millions of travelers who would have faced higher fares and fewer choices had the proposed merger between JetBlue and Spirit been allowed to move forward,” he said in a statement.

JetBlue and Spirit said in a joint statement that they disagreed with the ruling and were considering their next steps.

“We continue to believe that our combination is the best opportunity to increase much needed competition and choice by bringing low fares and great service to more customers in more markets while enhancing our ability to compete with the dominant U.S. carriers,” the airlines said.

Still pending, Alaska Airlines’ proposed merger with Hawaiian Airlines.

To me, the JetBlue-Spirit combination made eminent sense, a deal between the nation’s sixth- and seventh-largest carriers, creating the fifth largest.  It was an incredibly stupid decision.

Now, look for both to go bankrupt in the next industry downturn, if not sooner. 

Spirit shares traded down to $4 on Thursday.  They were $53 in 2019.  But the stock rallied Friday on the company’s talk it could refinance its debt and make other moves to shore up its balance sheet.  Additionally, both Spirit and JetBlue said they will appeal the court’s ruling.

--Boeing shares fell 8% on Tuesday*, extending last week’s losses as the U.S. grounding of some 737 MAX 9 jets neared two weeks, while the company’s promise of further quality checks raised the specter of added costs.

*After bottoming at $199.50 on Tuesday, BA stock rallied to $215 at week’s end.

Following the incident on an Alaska Airlines MAX 9 jet where a cabin panel blew out earlier this month, the Federal Aviation Administration temporarily grounded 171 aircraft for safety checks, personally conducting inspections on 40 of them, results of which are not in.

Boeing contractor Spirit Aerosystems, which manufactures the fuselages for Boeing (and installed the door plug at issue) was added to the FAA’s probe of Boeing’s manufacturing practices and production lines.

Boeing named a retired Navy admiral as a special adviser on matters including quality of work done at suppliers. Before retiring from the military, Donald was the director of the Navy’s nuclear-propulsion program for eight years. He is chairman of shipbuilder Huntington Ingalls Industries.

But Boeing has another potential major problem.  China Southern Airlines, which had been readying to receive Boeing’s planes as early as January.  But now the airline is planning to conduct additional safety inspections on those aircraft following the incident, even though the jets to be delivered aren’t the same variant as Alaska’s MAX 9.

Boeing 737 MAX deliveries to China have been frozen by Beijing for years since two fatal crashes of the 737 MAX 8.

The plane maker has said it expects the China market to account for a fifth of the world’s airplane deliveries in the next two decades.

--The Martin Luther King Jr. Day holiday weekend proved to be a mess for air travel due to the weather across vast swaths of the country, as you saw exhibited in both Iowa and Buffalo, to name two prominent spots…severe cold and mega-snowfall.

A combined 2,800 flights were canceled Saturday and Sunday within, into, or out of the U.S., after over 2,000 last Friday, and then 3,300 Monday, and nearly 2,500 Tuesday, according to FlightAware.

Southwest Airlines cancelled 786 flights on Monday, or 19% of its daily schedule.

--TSA checkpoint numbers vs. 2023

1/18…105 percent of 2023 levels
1/17…110
1/16…103
1/15…98
1/14…103
1/13…106
1/12…100
1/11…104

--In his acceptance speech on Saturday, Taiwan’s president-elect William Lai vowed to spare no efforts to further develop the island’s critical chip and semiconductor industry.

“As president, I will continue to assist the development of the semiconductor industry, from materials, equipment, research and development, integrated circuit design, manufacturing to wafer fabrication and testing for the industry to build a comprehensive cluster and further its development in Taiwan.  This will of course benefit the global economy as well,” Lai said in Taipei.

Taiwan produces about 60 percent of the world’s semiconductor chips, and most of the bleeding-edge circuits that power the latest smartphones and supercomputers.  Along with its strong original equipment manufacturer (OEM) edge in producing wafers – the building blocks of chips – and key role in the industrial supply chain, this creates what is touted as a “silicon shield” for the island.

More on Lai and the election below.

So then Taiwan Semiconductor Manufacturing Co. said it expects a return to solid growth this quarter and gave itself room to raise capital spending in 2024, suggesting the world’s most valuable chipmaker anticipates a recovery in smartphone and computing demand.

The main chipmaker to Apple and Nvidia Corp. is budgeting capital expenditure of $28 billion to $32 billion – versus about $30 billion in 2023 – and expecting revenue growth to bounce back to at least 20% for the year.  It’s moving ahead with plans for chipmaking plants in Japan, Arizona and Germany – the first of which will begin mass production at the end of 2024 in a big boost to TSMC’s global footprint.

The Taiwanese company’s outlook wasn’t spectacular, but it comes after a years-long slump in tech demand, and TSMC executives spent a lot of time talking about the potential catalysts from the boom in AI development worldwide, which requires the powerful chips that the company excels in fabricating.

--Goldman Sachs’ fourth quarter profit beat estimates on Tuesday as its equity traders capitalized on a market recovery and revenue from asset and wealth management rose, offsetting weaker investment banking.

Goldman’s equity trading revenue jumped 26% in the quarter.  Stock markets have rallied as economists and investors grow more confident the U.S. will avoid recession, and the Fed will be cutting interest rates.

“This was a year of execution for Goldman Sachs,” CEO David Solomon said in a statement.  “With everything we achieved in 2023 coupled with our clear and simplified strategy, we have a much stronger platform for 2024.”

Solomon added: “The U.S. economy proved to be more resilient than expected despite a number of headwinds to growth, including a significant tightening of financial conditions, regional bank failures and an escalation of geopolitical tensions.”  While the picture for 2024 is improving, “we’re going to continue to take a cautious view,” he said.

Goldman’s revenue from asset and wealth management rose 23% to $4.39 billion.  Revenue from fixed income, currencies and commodities (FICC) trading sank 24% as weakness in interest rate products and currencies dragged down gains from mortgage products.

Profit was $2.01 billion, or $5.48 per share, for the quarter, compared with $1.33 billion, or $3.32 per share, a year earlier, well above expectations.

Goldman had 45,300 employees, nearly 7% lower than in the year-earlier period.

--Morgan Stanley’s new CEO Ted Pick told analysts on a conference call, “Our base case for the coming year is constructive,” while citing two major downside risks: intensifying geopolitical conflicts and uncertainty over the path of the U.S. economy.

MS beat fourth-quarter expectations on Tuesday, as debt underwriting powered a rebound in investment banking, but its profit took a hit due to $535 million in charges ($286 million of which was a special assessment to the FDIC for the regional bank crisis).

Net revenue came in at $12.9 billion, net income fell to $1.5 billion, compared with $2.2 billion a year ago.

Investment banking revenue rose 5% in the fourth quarter from a year ago, while fixed income underwriting revenue jumped 25% on higher investment grade issuance.

Former CEO James Gorman, who became executive chairman at the start of the year, had turned the bank into a wealth management powerhouse that was less dependent on volatile markets.  He set an ambitious target of reaching $10 trillion in assets under management. The unit has been central to Morgan Stanley’s growth, but analysts have now begun to flag worries about a slowdown in new client assets, clouding the outlook for the business, as assets are stuck at $6.6 trillion. Net revenue in wealth management was flat at $6.65 billion compared to last year.  For the full year, net revenue came in at $54.1 billion compared with $53.7 billion a year ago.

--Ford Motor said on Friday it would reduce production of its F-150 Lightning pickup truck, as demand for EVs slows.  The automaker sees continued growth in global EV sales in 2024, though expects it to be “less than anticipated.”

On the other hand, Ford is increasing production of Bronco SUVs and Ranger pickups.

I got a kick out of an NBC “Nightly News” story this week on the bitter cold in Chicago, that noted electric car batteries were dying, while interviewing one driver who said, total exasperation in his voice, “It takes two hours to charge a car.”

Now while it’s long been known electric car batteries and severe cold don’t mix (ditto high humidity climes), to have this be a focus of a national newscast certainly wouldn’t have a potential buyer watching at home who is on the fence when it comes to purchasing an EV, going, “Mabel, the decision is made.  Let’s get that EV!”

--Macy’s announced it will cut 3.5% of its workforce, while closing five stores as the retailer looks to trim costs. The layoffs will impact 2,350 people.

--Digital home goods retailer Wayfair said today it will eliminate 1,650 jobs as part of an organizational redesign that is expected to deliver annualized cost savings of more than $280 million.

The layoffs represent 13% of the workforce and 19% of its corporate team as of the end of 2023, according to the company.

CEO Niraj Shah said it was clear “that we had gone overboard with corporate hiring during Covid,” this latest round of cuts the third restructuring round since 2022.

The shares surged 10% on the news.

--Argentina’s annual inflation soared to 211.4% in 2023, the highest rate in 32 years, according to figures released by the government Thursday.

The data reflect the strong impact of a series of shock measures, including a 50% devaluation of the nation’s currency, implemented by new President Javier Milei in hopes of eventually bringing the country’s roaring inflation under control.

--Bitcoin hit a two-year high above $49,000 after almost a dozen ETFs began trading on Jan. 11.  Friday afternoon (4:00 PM ET) it was at $41,500.

Foreign Affairs, Part II

China/Taiwan: Saturday was an historic day in Taiwan, as Lai Ching-te, aka William Lai, won the presidential election, the former vice president giving the ruling Democratic Progressive Party (DPP) a third term after term-limited Tsai Ing-wen served the first two.

Both opposition party candidates, Hou Yu-ih of the Kuomintang (KMT) and former Taipei Mayor Ko Wen-je of the small Taiwan People’s Party, conceded defeat quickly.

In the run-up to the election, China repeatedly denounced Lai as a dangerous separatist and rebuffed his repeated calls for talks.  Lai says he is committed to preserving peace across the Taiwan Strait while boosting the island’s defenses.

Turnout was strong, nearly 70 percent. 

But Lai won the race with 40%, not the clear majority Tsai won in 2020.  The DPP lost its majority in the legislature, finishing with one seat fewer than the KMT.  Neither holds a majority, giving the Taiwan People’s Party – which won eight of the 113 seats – a possible swing vote on legislation.

China’s Foreign Ministry said in a statement that “the Taiwan question is China’s internal affair. Whatever changes take place in Taiwan, the basic fact that there is only one China in the world and Taiwan is part of China will not change.”

Taiwan’s Foreign Ministry countered in its own statement that China’s post “is completely inconsistent with international understanding and the current cross-strait situation. It goes against the expectation of global democratic communities and goes against the will of the people of Taiwan to uphold democratic values.  Such cliches are not worth refuting.”

Taiwan’s defense ministry said on Saturday morning it had again spotted Chinese balloons crossing the sensitive strait, one of which flew over Taiwan itself.

We then had a few days of relative quiet, but on Wednesday, Taiwan’s defense ministry said it detected 18 Chinese air force planes operating around Taiwan and carrying out “joint combat readiness patrols” with Chinese warships on Wednesday, the first large-scale military activity since the election.

Meanwhile, China summoned the ambassador from the Philippines on Tuesday and warned the country “not to play with fire” after President Ferdinand Marcos Jr. congratulated William Lai on his election victory.

China was “strongly dissatisfied with and resolutely opposes these remarks,” its foreign ministry spokesperson said, referring to Marcos congratulating Lai on Monday.

“The relevant remarks of President Marcos constitute a serious violation of the One China principle and…a serious breach of the political commitments made by the Philippines to the Chinese side, and a gross interference in China’s internal affairs,” spokesperson Mao Ning told a regular briefing.

“China has lodged a strong protest with the Philippines at the earliest opportunity,” and summoned its ambassador “to give China a responsible explanation,” Mao said.

“We suggest that President Marcos read more books to properly understand the ins and outs of the Taiwan issue, so as to draw the right conclusions.”

Isn’t that special.

The Philippines’ foreign ministry in a statement earlier on Tuesday reaffirmed the country’s “One China policy” and said the message of Marcos intended to recognize the Philippines and Taiwan’s “mutual interest,” including 200,000 overseas Filipino workers in the democratically governed island.

China warned countries against supporting Taiwan’s DPP and condemned all foreign governments that congratulated William Lai.

The Chinese embassy in Britain on Saturday condemned what it called the “incorrect actions” of British Foreign Secretary David Cameron after he said, in a statement congratulating Lai and his party, that the elections were a “testament to Taiwan’s vibrant democracy.”

“We urge the United Kingdom to acknowledge the position that Taiwan is a province of China, cautiously handle Taiwan-related matters in accordance with the one-China principle, and stop any remarks that interfere in China’s internal affairs,” the embassy said in a statement.

Ziao Qian, Chinese ambassador to Australia, published an article in The Australian on Friday where he warned his host country of unspecified dangers if it were to support “Taiwan independence forces” like the DPP.

“If Australia is tied to the chariot of Taiwan separatist forces, the Australian people would be pushed over the edge of an abyss,” he wrote.

But then Thursday, China and the Philippines agreed to improve maritime communication and to properly manage conflicts and differences through friendly talks, according to a statement from the Chinese foreign ministry.

Don’t believe this.

North Korea: Kim Jong Un said his country would no longer pursue reconciliation with South Korea and called for rewriting the North’s constitution to eliminate the idea of shared statehood between the war-divided countries, state media reported Tuesday.

The historic step to discard a decades-long pursuit of a peaceful unification, which was based on a sense of national homogeneity shared by both Koreas, comes amid heightened tensions as the pace of Kim’s weapons development and the South’s military exercises with the U.S. (and recently Japan) have intensified tit-for-tat escalation.

Meanwhile, North Korea on Monday said it flight-tested a new solid-fuel intermediate-range missile tipped with a hypersonic warhead as it pursues more powerful, harder-to-detect weapons designed to strike remote U.S. targets in the region.

The report came a day after the South Korean and Japanese militaries detected the launch from a site near Pyongyang, in what was the North’s first ballistic missile test of 2024.

South Korea’s Joint Chiefs of Staff said the missile flew about 1,000 km (620 miles) before landing in the waters between the Korean Peninsula and Japan.  The North’s existing intermediate-range ballistic missiles, including the Hwasong-12 that may be able to reach the U.S. hub of Guam, are powered by liquid-fuel engines, which are fueled up before launch and cannot stay fueled for long.

Missiles with built-in solid propellants can be made ready to launch faster and are easier to move and conceal.

Thursday, the White House’s senior director for arms control, Pranay Vaddi, said the nature of the security threat posed by North Korea could change “drastically” in the coming decade as a result of its unprecedented cooperation with Russia.

“What we’re seeing between Russia and North Korea is an unprecedented level of cooperation in the military sphere,” Vaddi told Washington’s Center for Strategic and International Studies think tank.  “And I say unprecedented very deliberately – we have never seen this before.”

Vaddi said it was necessary to pay close attention not just to nuclear-armed North Korea’s help for Russia’s war in Ukraine, primarily in the form of missile systems, but “what could be going in the other direction as well.”

“How could that improve North Korea’s capabilities?  And what does that mean for our own extended deterrence posture in the region with both Korea and Japan?”

Russia said on Wednesday it was developing its relations with North Korea in all areas, including “sensitive” ones after the North Korean foreign minister held rare talks in the Kremlin with Vladimir Putin.

Friday, North Korea said it had tested a purported underwater nuclear attack drone in response to a combined naval exercise between South Korea, the U.S. and Japan.

Iran/Houthis: Iran’s Revolutionary Guard Corps targeted construction and private security magnate Peshraw Dizayee, killing him and three members of his family, in a missile strike that decimated several buildings, including one rocket that crashed into Dizayee’s home near the U.S. consulate in Kurdistan’s capital of Erbil.

The IRGC said they attacked the “spy headquarters” of Israel in semi-autonomous Kurdistan, state media reported, while the elite force said it had also struck in Syria against Islamic State.

Iran had vowed revenge for the killings of three members of the Guards in Syria last month, including a senior Guards commander, who had served as military advisers there.

[Turkey’s military also carried out airstrikes this weekend inside Iraq and Syria,” following an assault from Kurdish forces last Friday on a Turkish bae inside Iraq that killed nine Turkish troops.]

Middle East analyst Charles Lister said in a social media post: “Anyone arguing a regional war isn’t already underway in the Middle East is kidding themselves,” warning, the situation across the region “could get a lot worse.”

Iran then launched a missile and drone attack Tuesday in Pakistan targeting what it described as bases for the military group Jaish al-Adl, state media reported, potentially further raising tensions in the region.

This made no sense.  Any attack inside of nuclear-armed Pakistan by Iran threatens relations between the two, which have been generally cordial, though each eyes the other with suspicion.

Iran is lashing out following the dual suicide bombing this month claimed by ISIS that killed over 90 people.  Like ISIS, Jaish al-Adl, or the “Army of Justice,” is a Sunni militant group founded in 2012 which largely operates across the border in Pakistan.  Iran has fought in border areas against the militants, but a missile-and-drone strike on Pakistan would be unprecedented for Iran.

Pakistan claimed two “innocent children” were killed in the strike, three others wounded, the government calling the attack an “unprovoked violation” of the country’s airspace.

Islamabad then recalled its ambassador from Iran on Wednesday after the “blatant breach” of its sovereignty, a Pakistani foreign ministry spokeswoman said.

Pakistan has not confirmed the location of the strikes.  Iran’s foreign minister said at Davos, Switzerland, only “terrorists” were hit.

Baghdad recalled its ambassador from Tehran after Iran’s strike in Kurdistan.

Pakistan, on Thursday, then launched retaliatory airstrikes in Iran allegedly targeting militant hideouts, an attack that killed at least nine people.

Pakistan’s Foreign Ministry described their attack Thursday as “a series of highly coordinated and specifically targeted precision military strikes.”

Islamabad’s diplomatic office did say, however, that “Iran is a brotherly country and the people of Pakistan have great respect and affection for the Iranian people.  We have always emphasized dialogue and cooperation in confronting common challenges including the menace of terrorism.”

The military echoed that message in its statement, which concluded, “Going forward, dialogue and cooperation is deemed prudent in resolving bilateral issues between the two neighboring brotherly countries.”

Tehran condemned the Thursday attacks, and summoned Pakistan’s ambassador for an explanation.

--U.S. forces on Tuesday launched a new round of strikes on the Houthis, targeting what officials said was four missiles apparently being readied for attacks on commercial shipping vessels.

It was at least the third time in the last week that military action has been taken against the group, signaling a probable enduring campaign.  The number of attacks the militants have launched in the region since November is about 30, as they continue to link their actions to the war in Gaza and Western support for Israel.

U.S. Central Command, which oversees operations across the region, said the Houthi missiles “presented an imminent threat to both merchant and U.S. Navy ships.”

The U.S. strikes followed a Houthi missile attack that struck the M/V Gibraltar Eagle, a U.S. owned and operated ship, just off the coast of Yemen in the Gulf of Aden.  There were no injuries or significant damage, according to CENTCOM and the ship was continuing its journey.

Later Tuesday, the Houthis launched an anti-ship ballistic missile into the Red Sea, Central Command said.  The crew of the commercial, Maltese-flagged ship, reported it had been struck but was still seaworthy and would continue on its voyage.

Despite the first round of strikes last week on Houthi target by U.S. and British forces, the Houthis seem intent on continuing their attacks on commercial shipping in an unpredictable way.

A week ago, Thursday, Navy SEALs boarded a small ship in the Arabian Sea, finding Iranian-made ballistic missile and cruise missile components.  Two SEALs were lost at sea in the operation.  The future of the ship’s 14 crewmembers was being determined in an unspecified manner, but “in accordance with international law,” according to CENTCOM.

John Kirby, spokesman for the White House National Security Council, said Tuesday that while the militants have not had a “catastrophically successful” attack on shipping yet, it “doesn’t mean that we can just turn a blind eye and sit back and do nothing.”

Kirby said the U.S. was not seeking a war with the Houthis, but that they have “to stop these reckless attacks.”

Last Saturday, the Houthis tried to attack the USS Laboon with an anti-ship missile, but a U.S. fighter aircraft shot the missile down far from the intended target.

The Houthis vowed to widen their attacks in the Red Sea.  “The ship doesn’t necessarily have to be heading to Israel for us to target it; it is enough for it to be American,” Houthi spokesman Nasruldeen Amer reportedly told Al-Jazeera.  “The United States is on the verge of losing its maritime security,” he said Monday.

The chief negotiator for the Houthis told Reuters on Monday: “Our position comes from religious, moral and humanitarian principles…as well as in response to the calls of the people of Palestine…to support the oppressed in the Gaza Strip,” Mohammed Abdulsalam said.

Wednesday, the United States returned the Houthis to a list of terrorist groups, while business leaders warned that disruption to shipping in the Red Sea caused by their attacks could affect supply chains for months, as well as reignite inflation.

The move by the U.S. to return the Houthis to the list was aimed at cutting off funding and weapons to the group.

Late Wednesday, the United States conducted another round of strikes against Houthi targets in Yemen.  Earlier, the U.S. military said a drone launched from areas controlled by the Houthis in Yemen had struck another U.S.-owned vessel in the Gulf of Aden.  There were no injuries but some damage reported in the attack, CENTOM said. 

Thursday, the U.S. launched its fifth-round of strikes against Houthi anti-ship missiles aimed at the Red Sea.

The Houthis then launched another missile attack on a U.S.-owned vessel, the MV Chem Ranger.  No damage or injuries was reported.

Speaking after the U.S. strikes, Thursday, President Biden was asked by reporters if the attacks on Houthi targets were working.

“Well, when you say working are they stopping the Houthis?  No,” he said.  “Are they gonna continue?  Yes.”

Iraq: Prime Minister Mohammed al-Sudani told the Wall Street Journal in an interview that the U.S.-led military coalition that has been helping Iraq fight ISIS is no longer needed, though he still wants strong ties with Washington.

Sudani didn’t set a deadline for the departure of the coalition, nor did he close the door to a role for U.S. troops under a new bilateral relationship that he said should follow.

While Sudani condemned the frequent attacks by Iranian-backed militias on American forces in his country, he also assailed a recent U.S. drone strike n Baghdad against a militia leader as a “clear violation of Iraq’s sovereignty.”

Random Musings

--Presidential approval ratings….

Gallup: 39% approve of President Biden’s job performance, 59% disapprove; 34% of independents approve (Dec. 1-20).

Rasmussen: 45% approve, 54% disapprove (Jan. 19).

--A new Gallup poll has political independents continuing to represent the largest political bloc in the U.S., with an average of 43% of U.S. adults identifying this way in 2023, tying the record high from 2014.  Independent identification has been 40% or higher each year since 2011, except for the 2016 (39%) and 2020 (39%) presidential election years.  Equal 27% shares of U.S. adults identify as Republicans and Democrats, with the Democratic figure marking a new low for that party in Gallup’s survey.

--Donald Trump won the Iowa caucuses with 51% of the vote, Ron DeSantis finishing second at 21.2%, Nikki Haley third at 19.1%.

Turnout was way down, no doubt largely because of the weather, as around 110,000 Iowans took part, compared with nearly 187,000 in 2016, when Trump finished second to Sen. Ted Cruz.

DeSantis then went to South Carolina, not New Hampshire, as he seeks to make a last stand in the south, while Haley has a shot, according to the polls, of giving Trump a scare in the Granite State.

Vivek Ramaswamy, who polled 7.7% in Iowa, then dropped out, endorsing Trump, hoping for a cabinet position, if not the No. 2 spot on the ticket.

Former Arkansas Gov. Asa Hutchinson dropped out Tuesday after he finished sixth in Iowa.

“I congratulate Donald J. Trump for his win last night in Iowa and to the other candidates who competed and garnered delegate support,” Hutchinson said in a statement.  “Today, I am suspending my campaign for President and driving back to Arkansas.  My message of being a principled Republican with experience and telling the truth about the current front runner did not sell in Iowa.”

Editorial / Wall Street Journal

“Donald Trump romped to victory in the Iowa caucuses on Monday night, launching the former President on his quest for a third GOP nomination.  The vote nonetheless revealed weaknesses that could pose problems in a general election, so Republicans in New Hampshire should think hard if they want to gamble on another Trump run.

Mr. Trump’s victory was the widest in Iowa caucus history for a non-incumbent race, with close to 51% of the vote at this writing… The result is a show of organizational strength that Mr. Trump didn’t have in 2016 when he lost the state to Ted Cruz.

“It’s also a sign that he is running almost as a quasi-incumbent in the eyes of his supporters.  Voters recall the economy was better under Mr. Trump with little inflation, and America’s enemies weren’t on the march.

“President Biden and Democrats claim to loathe Mr. Trump, but they have also helped make another Trump nomination possible.  Mr. Biden’s failing Presidency and unpopularity have diminished the argument that Mr. Trump can’t win again, despite the GOP’s multiple election defeats since he came to dominate the Republican Party.

“The four Democratic indictments and attempts to strike him from the ballot have also rallied many Republicans behind Mr. Trump to put a thumb in the eye of the Democratic left. The polls show that support for Mr. Trump popped after his initial indictment last March, and it has climbed in the wake of the others.

“Mr. Trump plays a martyr-for-the-cause note at every rally.  Iowa’s caucuses, Mr. Trump said on the weekend, ‘are your personal chance to score the ultimate victory over all of the liars, cheaters, thugs, perverts, frauds, crooks, creeps – and other quite nice people.’

“All of this has made it far more difficult for opponents to break through. Mr. DeSantis seemed the likeliest candidate to do so after his 2022 victory and stellar governing record in fast-growing Florida.  But his Iowa result is disappointing after he invested so much time and money in the state….

“Mr. DeSantis faces no clear path to the nomination.  He’s well behind Ms. Haley in New Hampshire and South Carolina. If he believes, as he says, that Mr. Trump can’t win in November, he should leave the race and give Ms. Haley a chance to take on Mr. Trump one on one.

“Ms. Haley has pursued a strategy of appealing to Republicans who either don’t like Mr. Trump or are open to someone else, and that helped her finish a close third in Iowa.  The entrance poll says she won among voters who decided in the last two weeks, and she did well among the suburban voters who will determine who wins in November.  She has a chance to make a race of it in New Hampshire on Jan. 23, which is why Mr. Trump is attacking her so aggressively on TV.

“Ms. Haley’s relative strength in the Granite State speaks to Mr. Trump’s weakness in the general election.  Independents can vote in either party primary in the swing state, and Ms. Haley is attracting these voters who will be crucial in the half dozen states that will be decisive in November.  It’s also one reason most polls show she defeats Mr. Biden easily while Mr. Trump is barely ahead despite the President’s historically low approval rating of 40%.

“Mr. Trump wants to shut down the GOP race early, but Republican voters deserve a debate over his first-term record, the peril from his indictments, and his agenda for a second term.  Second terms typically fail, and Mr. Trump can only serve one more….

“It is hard to believe, but both political parties are on a path to nominate candidates most voters say they don’t want.  Mr. Biden may be the only nominee Mr. Trump can beat, and vice versa. Republicans have a chance to think twice about their choice, and the Iowa result means there isn’t much time to do it.”

For the record, the last Des Moines Register/NBC News/Mediacom Iowa Poll over the weekend had Trump at 48%, Haley 20% and DeSantis at 16%.

I noted in my last WIR that Fox Business’ poll of Iowa likely Republican caucus-goers had Trump at 52%, DeSantis 18%, and Haley 16%.

A Suffolk University poll had Trump at 54%, Haley 20% and DeSantis 13%.

Because of the weather and the reduced turnout, it’s difficult to criticize any of these, but all three did a good job in predicting Trump’s support, ditto Haley’s.

[Iowa Republican Sen. Chuck Grassley, the oldest member of the Senate at age 90, was hospitalized with an infection.  He missed a vote this week on a short-term spending bill.  Before missing a vote in 2020 after testing positive for Covid, Grassley boasted 27 years of perfect attendance.]

--For Tuesday’s New Hampshire primary, a Boston Globe/Suffolk University poll of likely Republican primary voters had Donald Trump at 50% and Nikki Haley 36%.  She needs to finish much closer than this, as she already trails badly in South Carolina.

South Carolina Sen. Tim Scott is endorsing Donald Trump tonight at a rally in the Granite State, thus putting Scott back in the forefront of possible Veep picks.  I’m personally disappointed in the senator for doing this, I’ve always liked the guy, but obviously not surprised.  At least a Vice President Scott would act as a brake on Trump’s worst impulses…one would think.

This of course does not help Ms. Haley.

Meanwhile, President Biden’s name is not on the Democratic party ballot in New Hampshire, because the primary is not sanctioned by the Democratic National Committee, following the DNC/Biden’s decision to hold the first official Democratic primary of 2024 in South Carolina, Feb. 3.

So if you want to vote for Biden, you have to write in his name, which gives Rep. Dean Phillips an opportunity to score some major publicity if Biden is taken down.

--Writer E. Jean Carroll, in her second civil lawsuit against Donald Trump, told jurors on Wednesday that the former president destroyed her reputation and should pay damages for denying in 2019 that he had raped her decades ago.

“I am here because Donald Trump assaulted me, and when I wrote about it, he said it never happened… He lied, and it shattered my reputation.”

Last May, a different jury ordered Trump to pay Carroll $5 million, finding he had sexually abused the former Elle magazine advice columnist in a Bergdorf Goodman department store dressing room, and defamed her in 2022 by denying that anything happened.

In Wednesday’s trial, U.S. District Judge Lewis Kaplan, who oversees the case, has already ruled that Trump sexually abused Carroll, and defamed her for two statements he made in 2019 as president.

During Carroll’s testimony, Trump often spoke with his lawyers, prompting one of Carroll’s attorneys to complain that jurors could hear him.

“He said: ‘It is a witch hunt, it really is a con job,’” Caroll’s lawyer said outside the jury’s presence.  Kaplan warned Trump to control himself during the trial.

Trump wants to testify in his own defense and may be able to do so next week.

--In a 2:00 a.m. post Thursday morning, Donald Trump took his presidential immunity case to Truth Social, arguing that a president “must have full immunity, without which it would be impossible for him/her to properly function.”

“A PRESIDENT OF THE UNITED STATES MUST HAVE FULL IMMUNITY, WITHOUT WHICH IT WOULD BE IMPOSSIBLE FOR HIM/HER TO PROPERLY FUNCTION.  ANY MISTAKE, EVEN IF WELL INTENDED, WOULD BE MET WITH ALMOST CERTAIN INDICTMENT BY THE OPPOSING PARTY AT TERM END,” Trump wrote, in all caps.

“EVEN EVENTS THAT ‘CROSS THE LINE’ MUST FALL UNDER TOTAL IMMUNITY, OR IT WILL BE YEARS OF TRAUMA TRYING TO DETERMINE GOOD FROM BAD. THERE MUST BE CERTAINTY. EXAMPLE: YOU CAN’T STOP POLICE FROM DOING THE JOB OF STRONG & EFFECTIVE CRIME PREVENTION BECAUSE YOU WANT TO GUARD AGAINST THE OCCASIONAL ‘ROGUE COP’ OR ‘BAD APPLE.’ SOMETIMES YOU JUST HAVE TO LIVE WITH ‘GREAT BUT SLIGHTLY IMPERFECT.’  ALL PRESIDENTS MUST HAVE COMPLETE & TOTAL PRESIDENTIAL IMMUNITY, OR THE AUTHORITY & DECISIVENESS OF A PRESIDENT OF THE UNITED STATES WILL BE STRIPPED & GONE FOREVER. HOPEFULLY THIS WILL BE AN EASY DECISION. GOD BLESS THE SUPREME COURT.”

The Supreme Court is where he expects his immunity case to go, after a probable rejection by the District of Columbia Circuit Court of Appeals on a motion from Trump’s team to toss his election interference federal charges.

--Speaking of The Supremes, Trump separately urged the High Court to clear him to run for president in the Colorado ballot access case, arguing the Colorado Supreme Court’s move to bar him from the ballot was illegal. 

In a 59-page filing with the Supreme Court Thursday, Trump (and his attorneys) said in part:

“The Court should put a swift and decisive end to these ballot-disqualification efforts, which threaten to disenfranchise tens of millions of Americans and which promise to unleash chaos and bedlam [emphasis mine] if other state courts and state officials follow Colorado’s lead.”

Oral arguments are set for Feb. 8, as the High Court will play a pivotal role in Trump’s bid to reclaim the White House.

It seems exceedingly clear to me what the Supreme Court should do.  They should rule in Trump’s favor in the ballot-access case, and against him on the issue of immunity, particularly as defined by Trump. 

--Defense Secretary Lloyd Austin was released from Walter Reed National Military Medical Center on Monday, the Pentagon said, ending a two-week hospitalization kept secret for days.

But Austin wasn’t returning to the office and said he would “continue to recuperate and perform my duties from home.”

We also learned of the 911 call on New Year’s Day, when Austin’s aide asked for the ambulance picking up the defense secretary to keep its lights and sirens off.

“Can the ambulance not show up with lights and sirens?  We’re trying to remain a little subtle,” the aide, whose name was redacted from the audio, told the 911 dispatcher.

Then Austin’s trip to Walter Reed was kept secret for days, including from the president.

The secretary needs to be fired. This is absolutely outrageous behavior.

--A Justice Department report on the 2022 school shooting at Robb Elementary in Uvalde, Texas, that left 21 people dead – 19 of them children – was found to be a near-total breakdown in police protocols which hindered the response.

The department blamed “cascading failures of leadership, decision-making, tactics, policy and training” for the delayed and passive law enforcement response that allowed an 18-year-old gunman to remain inside a pair of classrooms for 77 minutes before he was confronted and killed.

“Lives would have been saved, and people would have survived,” if officers had acted quickly to confront the gunman, Attorney General Merrick Garland said, speaking to reporters in Uvalde.

So pathetic, and so very sad.  And yet still no one has been prosecuted.

[Breaking: A grand jury has apparently been empaneled.]

--Icelanders did not have a good week, as a volcano erupted in the southwest of the country for the second time in less than a month.  Despite efforts to build defensive barriers to protect the fishing town of Grindavik, population 4,000, and 25 miles southwest of the capital Reykjavik, after the first eruption last month, molten lava flows did reach the outskirts on Sunday, setting at least three houses on fire before the lava slowed.

Grindavik had been evacuated in December, but 100 residents had returned when the situation then improved.  But the area experienced hundreds of earthquakes leading up to the second eruption on Saturday.  Now the government is scrambling to find housing for the 4,000.

--New York City’s (Central Park’s) snow drought ended Tuesday…a whopping 1.4 inches, ending a 701-day streak of not having a one-inch snowfall.

--The New York Knicks have long played on Martin Luther King Jr. Day, a game I enjoy watching when, except this past Monday with the NFL games, there is nothing else on in the afternoon.

And each year, Knicks legend, and broadcaster, Walt “Clyde” Frazier, has a comment or two on the impact of Dr. King.  I like what he said this year.

“Jackie Robinson put us on the field.  Dr. King put us in the office.”

---

Pray for the men and women of our armed forces…and all the fallen, including the two U.S. Navy SEALs referenced above. 

Pray for Ukraine, Israel and the innocent in Gaza.

God bless America.

---

Gold $2030
Oil $73.74

Regular Gas: $3.08; Diesel: $3.92 [$3.37 / $4.61 yr. ago]

Returns for the week 1/15-1/19

Dow Jones  +0.7%  [37863]
S&P 500  +1.2%  [4839]
S&P MidCap  +0.5%
Russell 2000  -0.3%
Nasdaq  +2.3%  [15310]

Returns for the period 1/1/24-1/19/24

Dow Jones  +0.5%
S&P 500  +1.5%
S&P MidCap  -1.5%
Russell 2000  -4.1%
Nasdaq  +2.0%

Bulls 48.5
Bears 19.1

Hang in there.

*Next week could be a nightmare for me as I have jury duty Wednesday and Thursday.  I’m hoping I get off. If not, the timing is awful.

Brian Trumbore

 

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