Week in Review

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Week in Review

01/13/2024

For the week 1/8-1/12

[Posted 5:00 PM ET, Friday]

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Edition 1,291

We’re all going to be talking about the weather this weekend, and then Monday, even if it doesn’t directly impact us.  I just can’t imagine what the turnout will be like for the Iowa Caucuses Monday night, wind chills of -20 to -40.  Tonight, with much of Iowa under a blizzard warning, the National Weather Service is forecasting wind chill readings of as low as -45!  People die in this kind of weather.

And they are supposed to go out and caucus?  You have a ton of snow and ice that won’t be going away for some time to come and if you are elderly, in particular, and you slip on the ice and break your hip…well, you know what that generally means.

So good luck Republican presidential candidates in getting your voters to come out.  I sure as heck wouldn’t. 

Tomorrow, though, is Taiwan’s big election.  How will China respond if current vice president William Lai wins it?  At best, just a lot of hot rhetoric out of Beijing.  Most likely, a massive wave of aircraft skirting the territory in the coming week, at which point mistakes can be made.   

As for the tensions in the Red Sea crippling shipping through this vital waterway, you are already seeing economic consequences and as I discuss below, these will only grow.

Lastly, it was last Thursday, as I wrote in this space, that the Pentagon ordered a drone strike on a militant in Baghdad, killing Abu-Taqwa.  Abu-Taqwa had been actively involved in planning and carrying out attacks against American personnel, according to the Pentagon.

The strike was ‘supposedly’ preauthorized by President Biden and Lloyd Austin before Austin was admitted to a hospital on New Year’s Day, the defense secretary’s health situation only becoming known over the past weekend.

Just how involved was Austin with this particular strike?  It was a big risk.  As I wrote last week, Iraq could boot the U.S.-led international force there out of the country, and there goes the fight against ISIS.  Our bases in Iraq are critical to that effort.

House Armed Services Committee Chairman Rep. Mike Rogers (R-Ala.), not necessarily addressing the Baghdad strike, was emblematic of the outrage on Capitol Hill, sending letters to Austin, his chief of staff, and Deputy Secretary of Defense Kathleen Hicks seeking explanations, relevant documents, and communications on Austin’s disappearance, The Hill reported.

In his letter to Austin, Rogers wrote, “Everything from on-going counterterrorism operations to nuclear command and control relies on a clear understanding of the secretary’s decision-making capacity… The department is a robust institution, and it is designed to function under attack by our enemies, but it is not designed for a Secretary who conceals being incapacitated.”

Much more below on this topic.

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Israel and Hamas….

--Hezbollah struck an air traffic control base in northern Israel, the Israeli military said Sunday, and warned of “another war” with the Iran-backed militant group.  Hezbollah said it fired 62 rockets.

The IDF said Hezbollah hit the sensitive base on Mount Meron on Saturday but air defenses were not affected because backup systems were in place. It said that no soldiers were hurt and all damage will be repaired.

Secretary of State Antony Blinken, in Qatar as part of his latest diplomatic mission, said, “This is a moment of profound tension in the region.  This is a conflict that could easily metastasize, causing even more insecurity and even more suffering.”

Qatar’s prime minister said the killing of a Hamas leader by an Israeli drone strike in Beirut last week has affected Doha’s ability to mediate between the Palestinian group and Israel.  However, the Gulf state will continue its efforts, Sheikh Mohammed bin Abdulrahman al-Thani said in a joint press conference with Blinken.

--Monday, the Israeli military announced it had begun a less intense phase of its invasion, after  weeks of pressure from the United States and other allies to scale back the offensive.

Rear Adm. Daniel Hagari said that the Israeli campaign had already started the transition to a campaign that would involve fewer ground troops and airstrikes.

“The war shifted a stage,” Admiral Hagari told the New York Times in an interview.  “But the transition will be with no ceremony.  It’s not about dramatic announcements.”

It was far from clear, however, that the new phase of Israel’s offensive would be less dangerous for Gazan civilians.  To wit….

--….The World Health Organization voiced concern on Tuesday about the possible collapse of hospital provisions in southern and central Gaza, with hundreds of medical staff and patients having fled facilities for their lives.

Only about a third of Gaza’s hospitals are functioning in any way, and some only partly, following months of Israeli bombardments. The fighting has intensified in central and southern areas, putting extra pressure on over-burdened hospitals that remain open.

The WHO singled out three particular hospitals that “absolutely must be protected.  This is the last line of secondary and tertiary health care that Gaza has – from the north to the south it’s been dropping, hospital after hospital,” said Sean Casey, WHO emergency medical teams coordinator in Gaza.

During a visit to Al Aqsa Hospital (one of the three critical facilities cited) two days earlier, Casey said that he discovered 70% of staff had deserted their posts.  Hundreds of patients well enough to fell followed suit, he said.  Many staff at Nasser Hospital in the city of Khan Younis had also joined hundreds of thousands of other Gazans crowded into shelters in the strip’s southern-most tip, he added.  There was just one doctor for more than 100 burn victims there, Casey said.

--An Israeli strike on south Lebanon on Monday killed a senior commander in Hezbollah’s elite Radwan force.  Wissam al-Tawil was the deputy head of a unit within the Radwan force.  The car he was riding in with another Hezbollah fighter was hit in a strike on the Lebanese vilagae of Majdal Seim.

--Hezbollah then launched explosive drones at an army base in northern Israel on Tuesday, declaring the attack part of its response to recent Israeli assassinations in Lebanon, as there were reports of three Hezbollah fighters killed in an Israeli strike.

The group said its drones had hit the Israeli army headquarters in Safed as part of last week’s retaliation for the killing of Hamas leader Saleh al-Arouri in Beirut, and in response to Monday’s killing of a Hezbollah commander.

Safed is 8 miles from the border.  More than 130 Hezbollah fighters have been killed in Lebanon during the hostilities with Israel, their worst confrontation since they went to war in 2006.  The violence has forced tens of thousands of people to flee homes on both sides of the border, raising concern the conflict could intensify and spread further.

Hezbollah deputy leader Naim Qassem, in a televised speech on Tuesday, said his group did not want to expand the war from Lebanon, “but if Israel expands (it), the response is inevitable to the maximum extent required to deter Israel.”

Hezbollah’s chief, Sayyed Hassan Nasrallah, warned Israel in two televised addressed last week not to launch a full-scale war on Lebanon.  “Whoever thinks of war with us – in one word, he will regret it,” Nasrallah said.

--The Israeli military said on Tuesday nine more soldiers had been killed in Gaza, bringing its total war losses there to 187.  Most of the latest fatalities were from engineering units operating against Hamas tunnels in south and central Gaza, where Israel has shifted the focus of fighting after declaring Hamas to be dismantled in the north on Saturday.  All nine were killed Monday.

--Pope Francis, in his yearly address to diplomats, said that “indiscriminately striking” civilians is a war crime because it violates international humanitarian law.  Francis, 87, made his comments in a 45-minute address to Vatican-accredited envoys from 184 countries that is sometimes called his “state of the world” speech.

He condemned Hamas’ Oct. 7 attack from Gaza into southern Israel as an “atrocious” act of “terrorism and extremism,” and renewed a call for the immediate liberation of those still being held hostage in Gaza.

Francis said modern warfare often does not distinguish between military and civilian objectives. There is no conflict that does not end up in some way “indiscriminately striking” the civilian population, he said.  “The events in Ukraine and Gaza are clear proof of this.  We must not forget that grave violations of international humanitarian law are war crimes, and that it is not sufficient to point them out, but also necessary to prevent them.   There is a need for greater effort on the part of the international community to defend and implement humanitarian law, which seems to be the only way to ensure the defense of human dignity in situations of warfare,” he said.

The pontiff also said a resurgence of antisemitism since the start of the Gaza war was a “scourge” that must be eliminated from society.  [Philip Pullella / Reuters]

--In The Hague, accused of committing genocide against Palestinians, Israel defended its war in Gaza at the United Nations’ highest court Friday, a day after Prime Minister Netanyahu blasted the allegations as hypocrisy that “screams to the heavens.”

Israel, which was founded in the aftermath of the Holocaust, has vehemently denied the accusations brought by South Africa in one of the biggest cases ever to come before an international court.

South African lawyers asked the court Thursday to order an immediate halt to Israeli military operations in Gaza.  A decision on that request will take weeks.  The full case is likely to last years.

“We live at a time when words are cheap in an age of social media and identity politics. The temptation to reach for the most outrageous term to vilify and demonize has become, for many, irresistible,” Israeli legal advisor Tal Becker told a packed audience at the Palace of Peace in The Hague.

He added that South Africa “has regrettably put before the court a profoundly distorted, factual and legal picture. The entirety of its case hinges on a deliberately curated, decontextualized and manipulative description of the reality of current hostilities.”

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This Week in Ukraine….

--The Kharkiv region prosecutor’s office provided further evidence on Saturday that Russia attacked Ukraine with missiles supplied by North Korea, showcasing the fragments.  A senior adviser to President Volodymyr Zelensky said on Friday that Russia hit Ukraine last week with missiles supplied by North Korea for the first time during its invasion.

A spokesperson for the prosecutor’s office said the missile, one of several that hit the city of Kharkiv on Jan. 2, was visually and technically different from Russian models, though he didn’t disclose the missile’s exact model name.

North Korea has been under a UN arms embargo since it first tested a nuclear bomb in 2006.  UN Security Council resolutions – approved with Russian support – ban countries from trading weapons or other military equipment with North Korea.

--A Russian attack over the weekend killed 11 people, including five children, in a missile strike that hit in and around the eastern Ukrainian city of Pokrovsk, the governor of the Ukrainian-controlled part of Donetsk region said.

According to Reuters, Vadym Filashkin told Ukrainian television that Russian forces engaged in “mass shelling” of Pokrovsk. 

In response, President Zelensky wrote on Telegram that “Russia must feel – always feel – that no such strike will go without consequences for the terrorist state.”

Russia also continued to shell the city of Kherson, targeted residential areas and factories.  There were at least five injuries.

Ukraine’s air force said it shot down 21 out of 28 attack drones launched by Russia overnight.

--Ukraine attacked Crimea Saturday, with Kyiv saying it had destroyed a Russian command post at an air base in western Crimea, according to Mykola Oleshchuk, Ukraine’s air force commander, posted on Telegram, thanking Ukrainian soldiers for their “wonderful work.”

Russia’s defense ministry said in a statement that it “intercepted and destroyed” four missiles over the peninsula early Saturday morning, after downing 35 drones a day earlier.

--Early Monday Russia sent dozens of missiles across Ukraine, killing at least four civilians, scores injured, while hitting residential areas and commercial sites in its latest combined air attack, Ukrainian authorities said.

“The mad enemy once again struck civilians,” regional governor Serhiy Lysak wrote on Telegram.  “Directed missiles at people.”

Russia said it hit military-industrial targets in Ukraine from sea and air. 

Ukraine said its air defenses had destroyed 18 out of 51 missiles, a much lower shoot-down rate than normal which Kyiv attributed to the large number of ballistic missiles fired by Russia.  They are more difficult to intercept.  All eight drones launched by Russia were also shot down.

Unlike previous attacks, Kyiv was not targeted on Monday. That might be because the city is well protected by powerful air defense systems, including American Patriot batteries, which are able to shoot down most incoming missiles.

But Ukraine’s overall lack of air defense systems meant it has to juggle resources between the front line and cities far from the fighting.  And thus some cities are not that well defended.

--Ukraine said on Wednesday it had exported 4.8 million metric tons of food via its Black Sea corridor in December, surpassing the maximum monthly volume exported under a previous UN-brokered grain deal. Prior to Russia’s invasion in Feb. 2022, Ukraine exported about 6 million tons of food per month via the Black Sea. It now relies on the corridor along its western Black Sea coast near Romania and Bulgaria, its small ports on the Danube River, and exports over land via eastern Europe.

Ukraine has exported 15 million metric tons of cargo through its Black Sea corridor since creating it in August, including 10 million tons of agricultural goods.

--President Zelensky said on Wednesday Kyiv was under no pressure from allies to stop fighting Russia as he began a tour of Baltic states intended to shore up support for the war effort.  On his trip to Lithuania, Latvia and Estonia, Zelensky hopes to stop war fatigue among Ukraine’s Western allies, secure more financial and military aid, and discuss Kyiv’s bids to NATO and the European Union.

But shortly before Zelensky was starting talks with Lithuanian President Gitanas Nauseda in Vilnius, Italy’s defense minister said in Rome that the time had come for diplomacy to pave the way for peace.  Asked in Vilnius whether Ukraine’s partners were now urging Kyiv to stop fighting, Zelensky said: “There is no pressure from partners to stop our defense.  There is no pressure to freeze the conflict, not yet.”

“There are various voices in the media, I have read them all,” he told a joint press conference with Nauseda. “But I think that our partners are not yet officially ready to give us such signals.  At least I haven’t heard them personally.”

Italian Defense Minister Guido Crosetto told Italy’s parliament the Ukrainian counteroffensive had not produced the desired result, and the military situation had to be viewed with realism.  “From this perspective…it would seem that the time has come for incisive diplomacy, alongside military support, because there are a number of important signals coming from both sides,” Crosetto said.

But Russia has said it is ready for peace talks only if Ukraine takes account of “new realities,” meaning Kyiv acknowledges Russia controls about 18% of Ukrainian territory.  Of course Ukraine will reject that.  And Putin is not ready for talks anyway. 

So then NATO made it clear they will continue to provide Ukraine with major military, economic, and humanitarian aid.  In a statement after a video conference, NATO added that member states had outlined plans to provide “billions of euros of further capabilities” in 2024 to Ukraine. 

“NATO strongly condemns Russian missile and drone attacks on Ukrainian civilians, including with weapons from North Korea and Iran,” NATO Secretary General Jens Stoltenberg said.  “As Moscow intensifies its strikes on Ukrainian cities and civilians, NATO allies are boosting Ukraine’s air defenses.”

Zelensky stressed this week, “We lack modern air defense systems badly,” noting that they are “what we need the most.”

He acknowledged, however, that stockpiles are low in countries that could provide such materiel.  “Warehouses are empty.  And there are many challenges to world defense,” he said.

Thursday, in Tallinn, Estonia, Zelensky told reporters that any pause in the war would risk allowing Russia to re-group and boost its supply of munitions “and we will not risk (that).”

“The pause would not lead to an end of the war, it would not lead to political dialogue with Russia or someone else… And thank God, this is all decided in Ukraine and there will be no pauses to benefit Russia,” he said.

Speaking later in the Latvian capital Riga, he said Russia is preparing to launch an offensive ahead of their presidential election in March.  “They want some small tactical victories before (the elections), and prepare for something global or massive afterwards,” said Zelensky.  “The situation on the front is very complicated; we lack weapons.”

--Russian missiles struck a hotel in Ukraine’s second-largest on Thursday, injuring 11 people, the Kharkiv governor said. 

--Editorial / Wall Street Journal

“While the Biden Administration frets about how Russia and Iran will react to perceived U.S. escalation, the world’s bad actors keep escalating. Russia has now completed its deployment of tactical nuclear weapons to protect Belarus, President Alexander Lukashenko said late last month.

“American officials have been tight-lipped about their intelligence on the transfer, and it’s possible Mr. Lukashenko is bluffing.  But U.S. national security adviser Jake Sullivan said in June that Mr. Putin had begun ‘to take steps to station tactical nuclear weapons in Belarus.’  In July the Defense Intelligence Agency said there was ‘no reason to doubt’ Vladimir Putin’s claims about sending nukes to Belarus, according to CNN.

“Shortly after Russia launched its full invasion of Ukraine, Belarus amended Article 18 of its constitution to eliminate its commitment to remain free of nuclear weapons. Belarus said this year that Russia had trained its soldiers on the use of tactical nukes.  This summer Mr. Lukashenko said the nuclear transfers had begun and Belarusian Sukhoi aircraft had been equipped to carry nuclear weapons….

“Mr. Lukashenko’s announcement comes as Russia steps up its threats against the West.  Mr. Putin recently said ‘there will be problems’ with Finland after NATO ‘dragged’ Helsinki into the alliance.  This follows Russian attempts to weaponize migration at the Finnish border.  In November Russian Security Council deputy chairman Dmitry Medvedev said Poland is an ‘enemy’ that could end up losing its statehood.  Russia keeps conducting attacks in Ukraine that are recklessly close to NATO territory.

“Moscow is now moving ahead on military integration with Minsk.  Russia has stationed S-400 surface-to-air and Iskander short-range missiles there.  Mr. Putin’s provocative nuclear move in Belarus is a reminder of what’s at stake in Ukraine.”

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Wall Street and the Economy

This week it was all about the inflation data, and Thursday December consumer prices came in hotter-than-expected, up 0.3% on both headline and ex-food and energy, a tick higher than forecast on the former, while for the year, prices rose 3.4%, and 3.9% on core, both up versus estimates.  The prior readings were 3.1% and 4.0%, so some are focusing on finally getting below 4% on core, which is good.  But it shows how sticky inflation is, and how hard it will be to get to the Federal Reserve’s target of 2%.

Higher rents and food prices boosted overall prices.

Friday, the release on December producer prices was better than forecast, across the board, with the PPI -0.1%, and unchanged ex-food and energy, while for the 12 months, headline was 1.0%, core 1.8%.

Prior to Thursday and Friday’s inflation data, Federal Reserve Bank of New York President John Williams said Wednesday that it’s still too soon to call for rate cuts.  Williams said “our work is not done.  I expect that we will need to maintain a restrictive stance of policy for some time to fully achieve our goals, and it will only be appropriate to dial back the degree of policy restraint when we are confident that inflation is moving toward 2% on a sustained basis.”

Williams, a permanent voting member on the Fed’s Open Market Committee, last December pushed back at the market view that the most recent rate-setting gathering set the stage for rate cuts by spring.

The markets are looking for a rate cut in March and were thinking that the upcoming January meeting of the FOMC (Jan. 30-31) would be the time Chairman Jerome Powell and Co. would telegraph this.

Williams does see inflation ebbing to 2.25% this year and 2% next year.  “We are clearly moving in the right direction,” he said, but adding, “we still are a ways from our price stability goal.”

Then Thursday, after the CPI release, Fed Bank of Cleveland President Loretta Mester, a voting member on the FOMC this year, said in an interview on Bloomberg TV that it is too soon to consider a decrease in the federal funds rate as early as markets predict, noting that there needs to be more assurance that the pace of inflation is slowing, citing the CPI data.

Meanwhile, the Atlanta Fed’s GDPNow barometer for fourth-quarter growth is down to 2.2%.

Freddie Mac’s 30-year fixed-rate mortgage rose four ticks to 6.66%, having bottomed at 6.61% two weeks ago, it seems (the current cycle), after peaking at 7.79%.

In Washington, Thursday, Democratic Senate Majority Leader Chuck Schumer said he was taking the first procedural step toward passing a stopgap funding bill (CR – continuing resolution) to avert a partial government shutdown starting late next week.  That came as Republican House Speaker Mike Johnson faced opposition from within his own majority to a deal reached with Schumer on a $1.59 trillion top-line spending number for government agencies in the fiscal year that began Oct. 1.

Schumer said the Senate could begin voting on it when it returns Tuesday after the MLK Jr. holiday recess.  But little time remains before funding runs out on Jan. 19 for some agencies, including the Departments of Agriculture and Transportation.  He did not say how long any stopgap spending bill would be in effect.

Johnson had to try to restart his party’s legislative machinery on Thursday, a day after a dozen hardline Republicans shut down the chamber’s legislative business to protest the bipartisan spending deal.

The agreement reached between Schumer and Johnson included $886 billion for defense spending (as agreed upon in December), with $704 billion for non-defense spending, and cuts billions in new funding for the IRS.

The World Bank expects global economic growth to decelerate for the third year in a row to a “sorry record by the end of 2024,” hampered by tight monetary policy, restrictive financial conditions, and “feeble global trade and investment.”

It sees the global economy expanding 2.4% in 2024, slowing from last year’s growth rate of 2.6% - and nearly three-quarters of a percentage point lower than the average pace between 2010 and 2019, the WB said in its latest Global Economic Prospects report, released Tuesday.

One positive is the risk of a global recession has declined “largely because of the strength of the U.S. economy,” the World Bank noted.

But broad risks to economic growth remain, particularly on the geopolitical front, persistent inflation, and climate-related disasters.

In addition, global trade growth this year is expected to be only half the average rate seen in the decade before the pandemic.

Developing economies are projected to grow only 3.9% in 2024, more than one percentage point lower than the previous decade’s average.

Advanced economies are expected to see growth slow to 1.2% this year, from 1.5% in 2023.

The WB sees 2024 growth of 1.6% in the U.S., 0.7% in the euro area, and 4.5% in China.

Europe and Asia

November retail sales in the euro area were down 0.3% compared with October, according to Eurostat, while year-over-year, adjusted sales decreased by 1.1%.

The November unemployment rate in the EA20 was 6.4%, down from 6.5% in October and from 6.7% in November 2022.

Germany 3.1%, France 7.3%, Italy 7.5%, Spain 11.9%, Netherlands 3.5%, Ireland 4.8%.

European Central Bank Vice President Luis de Guindos said Wednesday the eurozone may have been in recession last quarter and prospects remain weak, adding that the recent slowdown in inflation is likely to take a pause now.

Eurozone growth has been hovering on either side of zero for most of 2023 and only a mild pick up is seen this year, helping to cool inflation, which has overshot the ECB’s target for years and forced policymakers to raise interest rates to record highs last year.

“Incoming data indicate that the future remains uncertain, and the prospects tilted to the downside,” de Guindos said in Madrid.

Britain: The UK releases monthly GDP figures and for November, the economy grew 0.2% from a year earlier.  But it has grown just 2.5% since 2019!

France: President Emmanuel Macron, seeking a fresh start for the rest of his term amid growing political pressure from the far right, named the youngest-ever prime minister and first openly gay one, Gabriel Attal, 34.

Attal rose to prominence as the government spokesperson then education minister and had polled as the most popular minister in the outgoing government.

His predecessor, Elisabeth Bourne, resigned Monday following political turmoil over an immigration law that strengthens the government’s ability to deport foreigners.

Poland: There is chaos this week in Warsaw.  Tens of thousands of opposition supporters massed outside Poland’s parliament Thursday to protest against the new government’s changes to state media and the imprisonment of two former ministers convicted of abuse of power.

The march reflects mounting tensions in the country as the new pro-European Union coalition government led by Donald Tusk tries to undo the polices of the previous Nationalist Law and Justice (PiS) party administration. It also came as President Andrzej Duda, a PiS ally, said on Thursday he had started proceedings to pardon the two ministers who were jailed.

I’ve talked about this before, but the new government under Tusk has changed the leadership of state media in what it says is a bid to restore balance to outlets that had become tools of the PiS government, platforms for PiS propaganda.

This is not good, sports fans.

Turning to Asia…China released important inflation and trade data for December on Thursday.  Consumer prices fell 0.3% year-over-year, with producer (factory gate) prices declining 2.7% Y/Y…more deflation.

December exports, though, grew 2.3% year-on-year to a 15-month high of $303.6 billion, following a 0.5% gain in the previous month and beating forecasts, a sign that global trade is starting to recover.

But exports to the U.S. fell 6.9%, and were down 1.9% to the EU.  For the 2023 full year, exports shrank 4.6% to $3.38 trillion, the first decline since 2016, reversing a 7% growth rate in 2022.  Exports to the EU and the U.S. both declined more than 10%.

December imports rose 0.2% Y/Y.

China’s vehicle sales surged 23.5% year-on-year in December to 3.156 million units, according to the China Association of Automobile Manufacturers.

Japan released a report on November household spending, -2.9% Y/Y.

Japan’s key stock market index, the Nikkei 225, passed the 34,000 level for the first time this week since March 1990.  The all-time high is in the 38,900 range, last hit in 1989. It closed the week at 35,577.

Street Bytes

--Stocks largely resumed their winning ways after an ugly first week of 2024, the Dow Jones up 0.3% to 37592, while the S&P 500 gained 1.8%, though it still can’t hit a new record high, and Nasdaq gained 3.1%, Nvidia a big help.

Earnings season really gets into full swing the next two weeks.

--U.S. Treasury Yields

6-mo.  5.18%  2-yr. 4.15%  10-yr. 3.95%  30-yr. 4.19%

Bonds rallied, despite the worse than expected CPI data, as the market continues to believe the Fed is going to begin cutting rates sooner than later.  The yield on the 2-year fell a whopping 24 basis points on the week.

After last week’s seemingly strong jobs report, accompanied by the latest downward revisions for the prior two months, everyone was saying…hold on, here.  This is getting absurd.  As in the jobs data is always revised lower.  How much so?

Well, try 439,000 jobs through November 2023, according to data released by the Bureau of Labor Statistics.  As in the job market is not as healthy as the government suggests.

Or as David Rosenberg, longtime market strategist, tweeted: “Time to stop trading off the payroll data.”

But that won’t happen.  It is, however, an important issue, as the Federal Reserve uses the data in its interest rate decisions, and that impacts consumers’ pocketbooks.  Like, BLS…get your act together.

--Yemen’s Houthi rebels fired their largest-ever barrage of drones and missiles targeting shipping in the Red Sea, forcing the United States and British navies to shoot down the projectiles in a major naval engagement, authorities said Wednesday.  No damage was immediately reported.

British defense minister Grant Shapps said on Wednesday the Royal Navy warship HMS Diamond was potentially targeted in the attack.

“My understanding is that both the ship itself potentially was targeted…but also that there’s a generalized attack on all shipping (in the region).”

The attack by the Iranian-backed Houthis came as the United Nations Security Council voted Wednesday to condemn and demand an immediate halt to the attacks by the rebels, who say their assaults are aimed at stopping Israel’s war on Hamas.

However, their targets increasingly have little to no relationship with Israel and imperil a crucial trade route linking Asia and the Middle East to Europe, through which about 15% of the world’s shipping traffic transits.

While shipping companies such as Maersk have been forced to reroute their vessels, several oil majors, refiners and trading houses have continued to use the Red Sea.

So then Thursday night, the U.S. and British militaries bombed more than a dozen sites used by the Houthis in Yemen, in a massive retaliatory strike using warship- and submarine-launched Tomahawk missiles and fighter jets, U.S. officials said.

The U.S. Air Force’s Mideast command said it struck over 60 targets at 16 sites in Yemen, including “command-and-control nodes, munitions depots, launching systems, production facilities and air defense radar systems.”

President Biden said the strikes were meant to demonstrate that the U.S. and its allies “will not tolerate” the militant group’s ceaseless attacks on the Red Sea.  And he said they only made the move after attempts at diplomatic negotiations and careful deliberation.

“These strikes are in direct response to unprecedented Houthi attacks against international maritime vessels in the Red Sea – including the use of anti-ship missiles for the first time in history,” Biden said in a statement.  He noted the attacks endangered U.S. personnel and civilian mariners and jeopardized trade, and he added, “I will not hesitate to direct further measures to protect our people and the free flow of international commerce as necessary.”

The Houthis, who said the strikes killed five, threatened more attacks on ships heading toward Israel or leaving it.

The Houthi deputy foreign minister, Hussein Al-Ezzi, has warned of a “heavy price” to be paid by the U.S. and the UK, according to Houthi media:

“Our country was subjected to a massive aggressive attack by American and British ships, submarines and warplanes… America and Britain will have to prepare to pay a heavy price and bear all the dire consequences of this blatant aggression,” he said.

Iran’s foreign ministry issued a statement strongly condemning the attacks. “We consider it a clear violation of Yemen’s sovereignty and territorial integrity, and a breach of international laws, regulations, and rights,” a ministry spokesman said.

Hezbollah also condemned the air strikes.

Back to commerce, the Houthi attacks have forced Tesla to temporarily suspend most car production at its factory near Berlin, citing a lack of components due to shifts in transport routes.  Volvo announced similar measures today.

Container shipping rates have soared.  One expert, Peter Sand of freight platform Xeneta, told Reuters: “The longer this crisis goes on, the more disruption it will cause to ocean freight shipping across the globe and costs will continue to rise.  We are looking at months rather than weeks or days before this crisis reaches any kind of resolution.”

--Oil struggled early in the week as Saudi Arabia declared a reduction in the February official selling price.  Analysts also pointed to increasing global supply from both OPEC and non-OPEC countries, especially in the U.S.  Still, escalating geopolitical tensions in the Middle East and recent supply issues in Libya provided some support.

And then the U.S.-UK attacks on Yemen had oil spiking early Friday to above $75, but it fell back to close the week with a loss at $72.89.

Separately, Chesapeake Energy and Southwestern Energy agreed to merge in an all-stock transaction valued at $7.4 billion that would create the largest natural-gas producer in the U.S.

The deal is in large part a bet that booming liquefied -natural-gas exports from the shores of Texas and Louisiana will allow drillers to sell more of their product to Europe, Asia and other global markets craving American fuel.  It also continues the wave of consolidation in the energy sector in recent months.

--Last Friday evening, part of the body (a panel plugging an unused emergency exit) of Alaska Air Flight 1282 flew off the plane 10 minutes after takeoff, creating an exit-door-sized hole in the side of the aircraft.  The plane, a 737 MAX 9, made an emergency landing at Portland International Airport and no one was injured.  But had there been passengers in the two seats next to the opening, they could have been sucked out.

We also quickly learned that had the incident occurred at a cruising altitude of 34-35,000 feet, rather than 16,000, this could easily have been a catastrophe.

Boeing stock fell 8% on Monday, while Spirit Aerosystems, which supplies fuselages to Boeing, fell 11%.

Alaska Air Group and United Airlines are the only two domestic carriers with 737 MAX 9 models in their fleets and they were immediately grounded for inspections, the FAA mandating same.  Hundreds of flights were canceled.

Alaska and United then said they had discovered loose parts on the aircraft they did inspect.  United said Monday it found four instances in which bolts on the door plugs of other airplanes appeared to have installation issues such as needing additional tightening.

Investigators at the National Transportation Safety Board confirmed that the part blew off at about 16,000 feet after coming loose from a set of stops designed to keep a door plug in place. The bolts needed to keep the plug in place were missing, but the NTSB said it doesn’t know what exactly went wrong to cause the part to move out of position (slide up before flying off).

Tuesday, Boeing CEO Dave Calhoun said the company needed to own up to its mistake.  We are gonna approach this – No. 1 – acknowledging our mistake,” read a part of the comments relayed by Boeing in an email.  “We’re gonna approach it with 100% and complete transparency every step of the way.”

Separately, in an interview with the Financial Times on Tuesday, Ryanair CEO Michael O’Leary said Boeing needs to “significantly improve quality control.”  He said Ryanair’s passenger numbers and profits will be hit by Boeing delivery delays.

O’Leary said the problem with Boeing and Airbus is they are striving to make aircraft as fast as they can to meet booming demand amid a global shortage of planes.

“The real challenge for both is they are running behind on their plans to increase monthly production.  A lot of that is supply chain pressures.  I think that both Airbus and Boeing, certainly Boeing, need to significantly improve quality control,” he said.

Ryanair is one of Boeing’s largest customers and has about 400 aircraft on order. It operates and orders different variants of the 737 MAX from the type grounded.

O’Leary said Ryanair has already been hit by delivery delays on its new aircraft, which is likely to affect profits.  “We were supposed to have 27 aircraft delivered prior to Christmas, we finished up getting 11.  We’re supposed to have 57 aircraft delivered to us by the end of April, and we think we’d be lucky to get 50 by the end of June.  So we’re going to be left five, seven, maybe 10 aircraft short for the peak summer season this year.” 

Emirates President Tim Clark didn’t mince words when discussing Boeing’s situation.  “They’ve had quality control problems for a long time now,” he said, “and this is just another manifestation of that.”

Alaska Airlines announced Wednesday it was canceling through Saturday all flights (110 to 150 a day) on MAX 9 planes as it waits for new instructions from Boeing and federal officials on how to inspect the fleet.  [The MAX 9 is 20% of their fleet, much less for United so the impact is relatively minimal for UAL.]

The FAA said Thursday it had opened an investigation into whether Boeing failed to ensure that its MAX 9 plane was safe and manufactured to match the design approved by the agency.

“This incident should have never happened and it cannot happen again,” the FAA said.

Meanwhile, Boeing announced it delivered 67 planes in December, including 44 MAX jets.  For the fourth quarter deliveries came in at 157 jets including 107 MAX aircraft.  Wall Street estimated 154.

For the year, Boeing delivered 528 planes and booked 1,314 net new orders after allowing for cancellations, up from 480 deliveries and 774 net new orders in 2022.  It delivered 396 narrowbody 737 jets last year, meeting its revised goal of at least 375 single-aisle planes but falling short of the initial target of 400 to 450 jets.

Boeing delivered 73 787 Dreamliners in 2023, meeting its goal of 70 to 80 aircraft.

European rival Airbus broke industry records for gross and net orders and beat its delivery target of 720 airplanes in 2023, 735, as announced Thursday, an 11% increase on 2022.

It had gross orders of 2,319 (net 2,094), including 1,835 A320 aircraft and 300 A350.

The 2023 yearend backlog stands at 8,598.  Good lord!

--I mentioned China’s home-grown C919 passenger plane the other day as the state-owned Commercial Aircraft Corporation of China (Comac) seeks to launch the approval process in Europe.

I then saw in the South China Morning Post this week that the C919 has been flown on the country’s busiest route connecting Beijing and economic hub Shanghai, as Comac attempts to make a statement in its long-term efforts to challenge Boeing and Airbus.

The C919 is a narrowbody plane designed to carry 140 to 210 passengers and compete with Boeing’s 737 and Airbus’ A320.

Thus far, China Eastern has regularly operated three models servicing routes from Shanghai to southwestern metropolis Chengdu.

By the end of 2023, the jet had completed 655 commercial flights and carried nearly 82,000 passengers, according to the airline.  This is a huge looming story, though still years off…but maybe five years, rather than ten+ as originally expected. Not for the U.S. market, or much of Europe, but everywhere else…which is a lot of jets currently being delivered by Boeing and Airbus.

There will eventually be major fights in Congress and the European Union over the C919…book it.

--Delta Air Lines shares fell hard Friday after the company scaled down its profit outlook for the current year, citing supply chain issues and macroeconomic uncertainties.  The outlook cut weighed heavily on other airline stocks.

Strong holiday demand, however, helped Delta beat Wall Street estimates for fourth-quarter earnings.  The Atlanta-based carrier now expects an adjusted per-share profit of $6 to $7 this year, compared with its previous target of more than $7 outlined at an investor day in December 2022.  The 2024 estimate compares with analysts’ expectations of $6.50.

The supply chain issue is in the maintenance arena, and CEO Ed Bastian said they wanted to be “prudent” in the outlook.  Supply-chain problems have impacted aircraft deliveries and forced airlines to fly older planes longer than expected, driving up maintenance and repair costs.  Delta’s maintenance costs were up 23% last year from the previous year. 

Bastian did say the company continued to see strong demand in all markets, adding the airline marked record bookings this week.  While demand for transatlantic travel is expected to cool down from a year ago, it will likely remain healthy, he said.  Transatlantic travel accounted for about 19% of Delta’s passenger revenue last year.

The company also announced a deal with Airbus to buy 20 A350-1000 widebody aircraft for deliveries beginning in 2026, with options for an additional 20 jets.

--TSA checkpoint numbers vs. 2023

1/11…104 percent of 2023 levels
1/10…112
1/9…105
1/8…109
1/7…107
1/6…115
1/5…112
1/4…111*

*I adjusted this to reflect the 2023 comparison.  Last week I used 2019.

I also meant to add last week that while the TSA and travel folks talked about having record 3 million traveler days through the airports for the holidays, we never got there.  The closest was Nov. 26, the Sunday after Thanksgiving, at 2,908,785.  The highest during the Christmas/New Year’s holiday stretch was Dec. 22, the Friday before Christmas, at 2,775,193.

These numbers are going to be important going forward as a key gauge for any economic slowdown, plus now we have the Boeing 737 MAX 9 issue and whether or not that gets a few people questioning air travel in general.

--A highly anticipated decision by the Securities and Exchange Commission on whether to approve a spot-Bitcoin exchange-traded fund quickly morphed into a major cybersecurity incident on Tuesday.

The SEC’s X account was hacked and a fake post claiming that the agency had green lit plans for the product fueled a brief surge in the world’s biggest cryptocurrency.  It also has sparked an investigation by U.S. authorities into how a social media account at Wall Street’s main regulator was compromised.

SEC Chair Gary Gensler was forced to disavow the erroneous post, after Bitcoin briefly jumped to $48,000, saying in a separate post on X that the agency “has not approved the listing and trading of spot Bitcoin exchange-traded products.”  The price fell to about $45,800 shortly thereafter.

But then Wednesday afternoon, the SEC approved 11 exchange-traded funds that directly invest in Bitcoin that will broaden access to the cryptocurrency for Wall Street and beyond.

Among the funds approved were offerings from heavyweights BlackRock, Invesco and Fidelity.

The approvals mark a rare capitulation by the SEC following opposition that lasted more than a decade.  BlackRock’s surprise application last June, followed by an appeals court ruling in its favor, triggered a huge rally in Bitcoin amid speculation U.S. regulators would have to give in.

Bitcoin proponents say the new funds could bring in tens of billions of dollars in assets as institutional investors and financial advisors get an easy and cheap way to access the cryptocurrency for the first time.

Bitcoin didn’t trade up sharply when the SEC announcement was made, below $46,000 late Wednesday, up from $17,000 in January 2023.

It finished the week at $43,800. [4 p.m. ET]

Thursday, the first day the ETFs were available, more than $4.6 billion of shares changed hands, according to Dow Jones Market Data.

Back to Chair Gensler, he said in a statement: “While we approved the listing and trading of certain spot bitcoin ETF shares today, we did not approve or endorse bitcoin.  Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto.”

--Three of the nation’s biggest banks said Friday that their profits fell last quarter, as JPMorgan Chase, Bank of America and Citigroup deal with the lingering effects of higher interest rates and the industry costs associated with last year’s banking crisis that caused the collapse of Silicon Valley Bank and Signature Bank.

But the banks still had a mostly strong 2023, given the resilient job market, consumers who continue to spend and not fall behind on their debts despite the impact of inflation, and the higher rates that have boosted revenue across the industry.

JPM said Friday that its profits dropped 15% in the fourth quarter, despite the bank reporting record quarterly revenue.   But, even with the $2.9 billion it was required to pay to the Federal Deposit Insurance Corp. as part of an industry-wide, one-time special assessment by the regulator to cover the government’s costs for covering uninsured depositors caught up in the collapse of Silicon Valley Bank, profit was still $9.31 billion.

JPMorgan had profits of $50 billion for the full year, up from $37.6 billion in 2022.  Revenue in 2023 at the largest bank in the country was nearly $160bn, up 12% for the quarter to $38.57 billion.

“The U.S. economy continues to be resilient, with consumers still spending, and markets currently expect a soft landing,” said Jamie Dimon, JPM’s CEO and chairman, in a statement.  “It is important to note that the economy is being fueled by large amounts of government deficit spending and past stimulus.”

Dimon also warned that inflation could be more persistent than expected and rates could be higher for longer.

Citigroup reported a $1.8 billion loss for the fourth quarter due to the FDIC assessment and other one-off costs, and said it expects to further reduce its headcount.  CEO Jane Fraser described 2024 as a “turning point year” for the lender.

“We made substantial progress simplifying Citi and executing our strategy in 2023,” she said in a statement.  Fraser has rolled out a multi-year effort at the third-largest U.S. lender by assets to cut bureaucracy, increase profits and boost a stock that has lagged its peers.  The bank announced it will reduce its headcount by 20,000 people over the medium term, the first time it estimated the workforce effect of its reorganization plan.

Citi’s revenue fell 3% to $17.4 billion in the quarter from a year earlier.  Revenue from the markets, or trading division, dropped 19% to $3.4 billion from a year ago.  It was hurt by losses from Argentina.  But banking revenue climbed 22% to $949 million, led by higher investment banking fees that offset a slide in corporate lending.

Citi aims to complete its overhaul in the first quarter.

Bank of America reported adjusted Q4 earnings of $0.70 per share, down from $0.85 a year earlier.  Total revenue was $21.96 billion, down from $24.53 billion a year ago, below expectations.

Net income was $3.1 billion vs. $7.1 billion, but BofA, like the others, took a $2.1 billion charge for the FDIC’s insurance fund. 

Meanwhile, Wells Fargo’s profit beat fourth-quarter expectations on cost cuts, but the lender warned that 2024 net interest income could be 7% to 9% lower than a year earlier.  Rising borrowing costs have benefited banks that charged borrowers more on interest, but with market participants expecting rate cuts by the Fed this year, their interest income could start to erode.

Wells has been cutting expenses and expects them to drop by another $3 billion in 2024 from last year.

Revenue in the fourth quarter rose 2% to $20.5 billion.  Ex-items, Wells earned $1.25 per share, beating estimates of $1.17.

But the bank is still operating under an asset cap that prevents it from growing until regulators deem it has fixed problems from the fake accounts scandal.

Wells did raise its loan loss provisions to $1.28 billion to prepare for souring loans.  Office loans have been a cause for concern. The rise in remote and hybrid work has spurred more vacancies, making it harder for building owners to pay back their loans. This issue is coming to a head in 2024.

--BlackRock agreed to buy Global Infrastructure Partners (GIP) for $12.5 billion in a cash and shares deal that will make the world’s largest asset manager one of the biggest players in alternative assets and private markets.  The move will help BlackRock create an infrastructure investing platform with more than $150 billion in combined assets.  GIP manages more than $100 billion in assets, including Britain’s Garwick airport, the Port of Melbourne and offshore wind projects.

“Infrastructure is one of the most exciting long-term investment opportunities, as a number of structural shifts re-shape the global economy,” said BlackRock CEO Larry Fink.

BlackRock also reported it ended the fourth quarter with $10.01 trillion in assets under management, up from $8.59 trillion a year earlier.  On an adjusted basis, the company earned $1.45 billion for the fourth quarter, compared with $1.36bn a year earlier.

--Dow component UnitedHealth Group saw its shares tumble 4% after medical services costs at the healthcare conglomerate came in above Wall Street expectations even as it beat fourth-quarter profit and revenue forecasts.

The results from the industry bellwether will likely fan concerns over rising medical costs for health insurers already grappling with more older Americans catching up on non-urgent surgeries delayed during the pandemic.

The company said costs rose towards the end of the year as older patients sought RSV vaccines and spending related to Covid hospitalizations also increased.

The key metric is medical loss ratio – the percentage of spending on claims compared with premiums collected.  It was 85% in the fourth quarter, compared with 82.8% a year earlier.  Analysts were expecting around 84%.

--Shares of Nvidia, the semiconductor maker that rose 239% in 2023 on the back of artificial intelligence hype, closed at a record on Monday, up 6.4%, and then rose another 4% the rest of the week.  Even with issues involving sales to China, the company announced it was developing lower-powered semiconductors that the U.S. can approve to replace the ones Washington is prohibiting Nvidia from selling the Chinese with new restrictions announced in October.

--Foxconn Technology Group, the world’s largest iPhone assembler, expects revenue to decline in the first quarter of 2024 amid weak global consumer electronics demand, extending a decrease in sales in the past three months.

Taiwan-based Foxconn said the first three months will be compared to a high base in the same period last year, when its factories in mainland China resumed normal operations after disruptive pandemic controls were relaxed by the government, according to a statement from the company.

Total 2023 revenue was US$198.9 billion, down 7 percent from 2022.

The company’s dim first-quarter outlook reflects concerns raised by investors of major client Apple about sluggish iPhone sales, which prompted two ratings downgrades this week.

--Speaking of Apple, its Vision Pro is coming soon.  The company announced Monday that it will begin taking preorders for the headset beginning Jan. 19, and that it will officially hit the company’s online and physical stores in the U.S. on Feb. 2.  This is Apple’s first new product category in nearly 10 years, since 2015’s Apple Watch launch.

Reminder…the average cost on this headset is $3,500.

--Hewlett Packard Enterprise is in talks to buy Juniper Networks in a deal valuing the network gear maker at about $14 billion.  The deal would help bolster the nearly 100-year-old technology company’s artificial intelligence offerings, according to a Wall Street Journal report.

Juniper shares jumped from $30 to $37.50, below the all-cash transaction price of $40 a share.

--Alphabet’s Google is laying off hundreds of staff working on its digital assistant, hardware and engineering teams as it sustains a drive to cut cost.

The affected workers included those working on the voice-based Google Assistant.

The reductions come as Google’s core search business feels the heat from rival artificial intelligence offerings from Microsoft Corp. and ChatGPT-creator OpenAI.  Google executives, on calls with investors, pledged to free up resources to invest in their biggest priorities.

Workers at the search giant have been on edge since January of last year, when parent Alphabet said it would cut about 12,000 jobs, more than 6% of its global workforce.

Earlier, Amazon.com said it was laying off hundreds of staff in its Prime Video and studios business, raising questions about whether another major round of layoffs was underway in Silicon Valley.

--The Wall Street Journal’s Emily Glazer and Kirsten Grind had a rather explosive piece over the weekend concerning Elon Musk and his drug use…like heavy drugs.

“In recent years, some executives and board members at his companies and others close to the billionaire have developed a persistent concern that there is another component driving his behavior: his use of drugs.

“And they fear the Tesla and SpaceX chief executive’s drug use could have major consequences not just for his health, but also the six companies and billions in assets he oversees, according to people familiar with Musk and the companies.

“The world’s wealthiest person has used LSD, cocaine, ecstasy and psychedelic mushrooms, often at private parties around the world, where attendees sign nondisclosure agreements or give up their phones to enter, according to people who have witnessed his drug use and others with knowledge of it.”

The thing is, to cite one potential example….

“Illegal drug use would likely be a violation of federal policies that could jeopardize SpaceX’s billions of dollars in government contracts.”

--I mentioned last week how ticked off I was over my auto insurance renewal going up 17%. And then two days later there is a piece in the Wall Street Journal with the following:

“In December, New Jersey approved auto rate increases for Allstate averaging 17% [Ed. Allstate is not my company], and New York, a 15% hike.  Regulators in California are allowing Allstate to boost auto rates by 30%, but still haven’t decided on its request for a 40% increase in home-insurance rates after the insurer refused to write new policies….

“Insurers are coming off some of their worst years in history.  Catastrophic damage from storms and wildfires is one big reason.  The past decade of global natural catastrophes has been the costliest ever.  Warmer temperatures have made storms worse and contributed to droughts that have elevated wildfire risk….

“As losses mounted, inflation only made matters worse, boosting the cost of repairing or replacing cars or homes.”

--Hertz Global Holdings is selling about 20,000 electric vehicles from its U.S. fleet, representing one-third of the company’s global EV fleet, the car-rental company said in a filing with the SEC.

The company said it expects to reinvest a portion of the proceeds in gas-powered vehicles to fulfill customer demand.

Hertz cited higher expenses related to collision and damage, “primarily associated with EVs, remained high in the quarter, thereby supporting the company’s decision to initiate the material reduction in the EV fleet.”

Hertz said in April 2022 that it would buy up to 65,000 EVs over five years from Swedish EV maker Polestar, months after the company decided to order 100,000 Tesla vehicles by the end of 2022.  The company’s used car website has a variety of more than 700 EVs on sale.

--The National Football League’s ratings this season were the highest since 2015, with an average of 17.9 million watching the games this season, according to Nielsen, a 7% increase from a year earlier.  Those figures include both television and streaming viewership.

Among individual rights holders, Disney’s ESPN saw its “Monday Night Football” average 17.4 million viewers, a nearly 30% jump.

NBC’s “Sunday Night Football” also saw its average audience increase 8% to 21.4 million viewers, including simulcasts on Peacock.

Fox’s average audience for its Sunday afternoon games was down 2% to 19 million viewers.  But that’s mostly because of less compelling regional games at 1 p.m., while its national game average was up 2% to 24.6 million.

CBS saw its average audience increase 5% to 19.3 million viewers.  The network’s coverage of the Thanksgiving match between Dallas and Washington drew 41.8 million viewers, making it the most-watched game of the season.

Amazon’s Thursday Night Football coverage also grew its audience to nearly 12 million viewers, a 24% increase, which is nonetheless significantly lower than when the games were primarily on Fox. [Joe Flint / Wall Street Journal]

--I have to admit, I watched a bit of the Golden Globes last Sunday, and fortunately missed the disastrous opening by comedian Jo Koy.  I am so out of it when it comes to today’s ‘stars,’ though all the leading male figures, say ages 30 to 40, look exactly the same! 

But it was a mini-home run for CBS, drawing 9.4 million viewers, according to Nielsen, a 50% increase over 2023, when it aired on NBC.

This figure, however, is still way down from 2019, when an average of 19 million viewers tuned in, although all award shows have seen their ratings plummet as streaming video is the preferred platform for viewers in recent years.

Foreign Affairs, Part II

China/Taiwan: With the big election in Taiwan on Saturday, China and the U.S. exchanged contrary views over the island at a defense policy meeting that ended on Tuesday in Washington.  At the Defense Policy Coordination Talks, the first meeting of its kind since Beijing suspended such talks in 2022 because of then-House Speaker Nancy Pelosi having visited Taiwan and then meeting with President Tsai Ing-wen, Chinese officials urged the U.S. to stop arming Taiwan and opposed its independence, while Pentagon officials said Washington was committed to its one-China policy, which requires the U.S. government to sell arms to Taipei for its self-defense.

“China will not make any concession or compromise on the Taiwan question and demand the U.S. to abide by the one-China principle,” the Chinese delegation said, according to a statement from China’s defense ministry.

Reminder: Beijing’s one-China principle says there is only one China and that Taiwan is part of it.  Washington does not adopt this interpretation.  Instead, in 1972 it acknowledged – but did not endorse – the position that Chinese people on either side of the Taiwan Strait regard Taiwan as a part of China.  It does not recognize Chinese sovereignty over Taiwan.

Separately, Taiwan issued an islandwide air raid alert after a Chinese satellite flew over its southern airspace early in the week.  Mobile phone users across the island received a message warning them to “be aware for your safety.”

There was no issue as it was indeed a satellite launch, but in today’s jittery times, by issuing an air raid alert, that inferred it was a missile launch.

Taiwan’s defense ministry later apologized for its inaccurate reference.

But Sunday, China did fly three more balloons over the Taiwan Strait, the latest in a spate of such balloons the ministry says it has spotted over the past month.  One of the balloons crossed over the southern tip of Taiwan island, the government said in a statement on Monday.

Editorial / Wall Street Journal

“This is an unusually consequential election because the Taiwan Strait has become one of the world’s geostrategic flash points. The mainland People’s Republic of China has been committed to absorbing Taiwan for decades, and President Xi Jinping has grown more aggressive in pressing Beijing’s claims.  Following Russia’s invasion of Ukraine, Taiwan has come into focus as the other place where a large autocracy could be tempted to overrun a smaller, democratic neighbor.

“Little wonder, then, that cross-Strait issues have swamped concerns such as inflation during Taiwan’s campaign. The front-runner in opinion polls, Lai Ching-te of the Democratic Progressive Party, promises to continue the DPP’s tradition of assertiveness in defense of Taiwan’s democratic autonomy.  Mr. Lai is vice president to term-limited incumbent Tsai Ing-wen, whose policy has been to let relations with Beijing cool somewhat while cultivating closer ties with allies such as the U.S.

“There are important differences between Taiwan’s parties on these issues, but one shouldn’t exaggerate the gaps.  Hou Yu-ih of the Kuomintang (KMT), currently running second, promises a more conciliatory approach toward Beijing.  The KMT’s previous stints in power were marked by warmer trade ties with mainland China and less rhetoric likely to inflame Beijing.

“Yet Mr. Hou insists he and the KMT aren’t pursuing a policy of unification with the mainland.  He’s trying to present himself as the best candidate to maintain Taiwan’s democratic sovereignty while boosting the economy with better trade and investment ties to China.  The same goes for third-party candidate Ko Wen-je, a doctor who says he can achieve better domestic governance and cross-Strait relations with a more technocratic approach and whose fresh presence is attracting younger voters.

“The common theme is the desire of Taiwan’s voters to preserve their democracy even as they debate how.  They understand the stakes after witnessing Hong Kong’s fate.  Beijing has proven with its crackdown on freedom in that territory that ‘one country, two systems’ really means the end of democracy.  The Communist Party will always impose its own system.

“If Mr. Lai wins as expected, Beijing is likely to go into blustering overdrive as it always does when Taiwan voters refuse to cooperate with the Party’s will….

“The affront to the Party isn’t Mr. Lai’s policies, and Taiwan’s voters won’t have stoked tensions with Beijing by electing him. The problem is that Beijing can’t tolerate Taiwan’s example of a thriving Chinese-speaking democracy in which voters settle political differences at the ballot box.  If a conflict breaks out in the Taiwan Strait, this will be why. And Taiwan’s voters know it as they head to the polls.”

Meanwhile, Taiwan has been dealing with a massive disinformation campaign originating in Beijing, designed to drive a wedge between Taiwan and the U.S. – and push the Taiwanese into the welcoming arms of China.

North Korea: Pyongyang will launch a military strike immediately in response to any provocation, Kim Yo Jong, the sister and key ally of Kim Jong Un, said on Sunday, as it fired artillery shells near its border with the South for a third day in a row.

South Korea’s military said the North had fired more than 60 artillery rounds on Saturday near their disputed maritime border, following a similar volley of more than 200 the previous day.  North Korea again fired about 90 rounds on Sunday, the South said.

To me, Kim Yo Jong is the most dangerous person in the world. 

Iraq: The Pentagon said on Monday it was not currently planning to withdraw its roughly 2,500 troops from Iraq, despite Baghdad’s announcement last week it would begin the process of removing the U.S.-led military coalition from the country.

“Right now, I’m not aware of any plans (to plan for withdrawal).  We continue to remain very focused on the defeat ISIS mission,” Air Force Major General Patrick Ryder told a news briefing.  He added that U.S. forces are in Iraq at the invitation of its government.

Prime Minister Mohammed Shia al-Sudani’s office announced last Friday the moves to evict U.S. forces following the above-noted drone strike in Baghdad that was condemned by the government.

Ecuador: I’ve told you how the ‘super’ in my building, Luis from Ecuador, a great friend, has been crying to me about the situation in his country, particularly after the election of a new president, Daniel Noboa, a little rich kid, son of the banana magnate.

And sure enough things are already boiling over, with armed, hooded men attacking an Ecuadorian television station on Tuesday during a live broadcast, forcing terrified staff onto the floor, and the president declared a state of armed conflict.

Police asserted control and detained about 10 of the alleged assailants, some of whom are members of a powerful gang, senior intelligence officials told the Washington Post.

Elsewhere across Ecuador Tuesday there was a series of explosions and kidnappings of police officers.

On Monday, President Naboa had declared a state of emergency after a top gang leader escaped from prison.

In his Tuesday decree, Naboa directed the military to intervene and declared several gangs as terrorists.

The gangs appear to have formed some sort of alliance as the government has planned to transfer top gang leaders to maximum-security prison wards.

We then learned Wednesday that more than 130 prison guards and other staff [later revised to 180] are being held hostage by inmates in at least five prisons around Ecuador.

Ecuador’s issue is it is sandwiched between Colombia and Peru, the world’s two largest producers of cocaine, but since a 2016 peace deal demobilized Colombia’s Farc rebel group, which used to control smuggling routes, transnational crime groups began exploring new ways to transport cocaine to Europe and the U.S.  Ecuador, with its large ports on the Pacific coast and limited experiences in dealing with crime gangs, soon became an attractive transit country.

Random Musings

--Presidential approval ratings….

Gallup: 39% approve of President Biden’s job performance, 59% disapprove; 34% of independents approve (up from 27%) (Dec. 1-20). 

Rasmussen: 44% approve, 55% disapprove (Jan. 12).

--A Fox Business poll of Iowa likely Republican caucus-goers had Donald Trump at 52%, Ron DeSantis 18% and Nikki Haley 16%. 

But a Suffolk University poll of likely caucus-goers had Trump at 54%, followed by Haley with 20% and DeSantis at 13%.  [Ramaswamy 6%]

--In a CNN/UNH poll of likely New Hampshire Republican primary voters, Trump leads Haley by only 39% to 32%, when the gap was 42-20 in November.  Chris Christie is third at 12%, down from 14%. [But see below.]

--The latest Reuters/Ipsos national poll of self-identified Republicans has Donald Trump at 49%, Haley 12%, and DeSantis 11%.

--We had dueling events Thursday in Iowa.  Fox News staged a townhall with Donald Trump, which I flipped on back and forth with the CNN debate with Ron DeSantis and Nikki Haley.

Fox moderators Bret Baier and Martha MacCallum fawned all over Trump, Fox looking to get back in his good graces, while Trump replayed his greatest hits:

“We had the greatest border.  We had the greatest economy in history. We had so much energy! We were ready to start supplying energy to Europe and Asia. We had an incredible four years.  The greatest economy in the history of our country with no inflation – pretty good.”

“We have a situation where I believe the stock market goes up because I am leading. And frankly, I think that if I don’t win the stock market is going to crash.  I don’t want to be Herbert Hoover.  And I won’t be Herbert Hoover.”

When asked a question about a potential running mate, Trump said, “I can’t tell you that really. I mean, I know who it’s going to be.”  He didn’t provide details.

Just hours before the two events, Chris Christie exited from the race, dropping out in New Hampshire.

“I am going to make sure that in no way do I enable Donald Trump to ever be president of the United States again.” 

The former New Jersey governor (a good one), devoted much of his terrific remarks to a plea to Republican voters to reject the former president, who he accused of “putting himself before the people of this country.”

“Donald Trump wants you to be angry every day because he is angry,” he added.

Christie did not endorse anyone as he bowed out.

But as he prepared to make his announcement, he was caught backstage on a hot-mic, apparently dismissing the chances of Nikki Haley.

“She’s gonna get smoked. And you and I both know it.  She’s not up to this.” [I’m in the camp who believes Christie knew he was on.]

Editorial / Wall Street Journal

“Mr. Christie’s most important contribution to the campaign has been to tell Republicans an often unwelcome truth, which is that they would be making a grave mistake to nominate Donald Trump for a second term.  A former federal prosecutor, Mr. Christie has been unsparing about Mr. Trump’s awful efforts to undo his 2020 election loss, as well as the political risk if the GOP signs up for another wild ride.

“But the polling has made clear that GOP voters, whatever they think of Mr. Trump, weren’t rewarding Mr. Christie as the deliverer of that message. That meant the best contribution Mr. Christie would make to stopping Mr. Trump was to drop out himself.  Give him credit for following through, putting his argument about what’s best for the country above the desire that every political competitor feels to run through the finish line….

“Republicans deserve a real nomination fight, not merely the coronation of a former President who couldn’t win re-election.  Mr. Christie’s departure has helped that prospect.”

--Continuing with the opening…Defense Secretary Lloyd Austin remained in the hospital Sunday as details began to emerge on how key decision-makers, including President Biden, were kept in the dark for days as the Pentagon chief was in the intensive care unit at Walter Reed Army Medical Center, following an ‘elective surgery’ procedure.

The Pentagon’s failure to disclose Austin’s hospitalization exploded as an issue over the weekend and reflected a stunning lack of transparency about his illness, how serious it was and when he may be released.  Considering the U.S. is juggling myriad national security crises, such secrecy is outrageous, and runs counter to normal practice with the president and other senior U.S. officials and Cabinet members.

A senior defense official said Deputy Secretary of Defense Kathleen Hicks was not notified until Thursday that Austin had been hospitalized since Jan. 1.  Once notified, Hicks began preparing statements to send to Congress and made plans to return to Washington, the official said. Hicks was in Puerto Rico on leave but had communications equipment with her to remain in contact and had already been tasked with some secretary-level duties on Tuesday.

The Pentagon did not say if Hicks was given an explanation on Tuesday for why she was assuming some of Austin’s duties, but temporary transfers of authority are not unusual and the official said it is not uncommon for authorities to be transferred without a detailed explanation.  Hicks decided not to return after she was informed that Austin would resume full control on Friday.

Biden also was not told of Austin’s hospitalization until he was informed on Thursday by his national security adviser, Jake Sullivan.

In a statement issued Saturday evening, Austin took responsibility for the delays in notification.

“I recognize I could have done a better job ensuring the public was appropriately informed. I commit to doing better,” said Austin, acknowledging the concerns about transparency. “But this is important to say: this was my medical procedure, and I take full responsibility for my decisions about disclosure.”

Austin in his statement said he was on the mend, but provided no other details about his ailment.

Sen. Roger Wicker, the top-ranking Republican on the Senate Armed Services Committee, said: “This episode further erodes trust in the Biden administration, which has repeatedly failed to inform the public in a timely fashion about critical events such as the Chinese spy balloon and the withdrawal from Afghanistan.”  Wicker called on the department to provide lawmakers with a “full accounting of the facts immediately.”

“I am glad to hear Secretary Austin is in improved condition and I wish him a speedy recovery.  However, the fact remains that the Department of Defense deliberately withheld the Secretary of Defense’s medical condition for days. That is unacceptable,” Wicker said in a statement.

Secretary of State Antony Blinken voiced support for Austin at a news conference in Qatar on Sunday.

“He is an extraordinary leader in this country, in uniform and now out of uniform. And it’s been a highlight of my service to be able to serve alongside him,” Blinken said.  “And I’m very much looking forward to see him fully recovered and working side by side in the year ahead.”

The Pentagon Press Association, which represents journalists who cover the Defense Department, sent a letter of protest on Friday evening, calling the delay in alerting the public “an outrage.”

“At a time when there are growing threats to U.S. military service members in the Middle East and the U.S. is playing key national security roles in the wars in Israel and Ukraine, it is particularly critical for the American public to be informed about the health status and decision-making ability of its top defense leader,” the PPA said in its letter.

President Biden was reportedly “exasperated” over the developments once he finally found out, ABC reported Sunday. Still, a U.S. official told the outlet Biden “has full confidence in Secretary Austin” and is “looking forward to him being back at the Pentagon.”  But a perhaps different U.S. official (identity unclear) told ABC “someone could lose their job” over the episode.  According to the Washington Post, DOD press secretary Patrick Ryder said Austin’s chief of staff, Kelly Magsamen, had been ill when the hospitalization occurred, which contributed to the delay in notifying the White House.

“There must be consequences for this shocking breakdown,” Arkansas Republican Sen. Tom Cotton of the Senate Armed Services Committee said in his own statement Saturday. “The Secretary of Defense is the key link in the chain of command between the president and the uniformed military, including the nuclear chain of command, when the weightiest of decisions must be made in minutes,” he emphasized.

Rhode Island Democratic Sen. Jack Reed, who chairs the Armed Services Committee, on Monday said: “[Austin] is taking responsibility for the situation, but this was a serious incident and there needs to be transparency and accountability from the Department.”

Walter Reed officials then announced on Tuesday that Austin had prostate cancer surgery on Dec. 22 and that he returned on Jan. 1 because of complications, including severe abdominal, hip and leg pain after what the hospital characterized as a minor prostate cancer procedure.  He was placed in intensive care.

According to a statement from the two doctors caring for the secretary, “his infection has cleared,” and that his prostate cancer was detected early and his prognosis was “excellent,” they said.

Rich Lowry / New York Post

“Anyone following how weak and passive the United States has been in the face of provocations from our adversaries in the Middle East might conclude that the secretary of defense has gone missing.

“And at least for a few days last week, he literally was.

“In an age when it’s nearly impossible to go off the grid, Secretary of Defense Lloyd Austin managed it.

“He failed to notify the White House and other key players that he was hospitalized in the intensive-care unit.

“This, needless to say, is not an incidental detail about his life – like, say, that he routinely does his grocery shopping on Saturday afternoons….

“If the principal deputy assistant secretary for fair housing and equal opportunity went missing, presumably only her personal assistant would notice and the country would be better for it.

“The secretary of defense, in contrast, is a rather consequential position in the U.S. government. He is in charge of the largest and most important part of the executive branch and second in the chain of command only to the president of the United States.

“He is central to any number of scenarios crucial to U.S. national security, including the decision to launch a nuclear strike.

“If a destroyer gets hit in the Red Sea, you don’t want U.S. commanders and high U.S. officials wondering where the SecDef is.

“Although much remains unanswered, we know that Austin had an elective medical procedure at Walter Reed hospital Dec. 22. Back home, he experienced severe pain and returned to the hospital Jan. 1 and was put in intensive care.

“Somehow even Austin’s deputy secretary…didn’t learn of his whereabouts until four days after his hospitalization.

“Loose lips may sink ships, but spectacularly dysfunctional lack of communication at the top of the U.S. government is its own problem….

“The Pentagon says it couldn’t notify other VIPs like, you know, the president of the United States, because Austin’s chief of staff was also ill….

“In fairness, once someone has presided over the pullout of Afghanistan without getting fired, it’s hard to cashier him for anything short of losing some other country in humiliating fashion.

“This fiasco could simply be Austin’s own unbelievable personal lapse. But it’s hard not to see the controversy in the context of an administration that when it comes to national security cares as much about fashionable ideological fixations – from DEI to the climate – as the essentials involved in maintaining a highly capable war-fighting machine….

“We are told that Joe Biden is robust and energetic when he is increasingly rickety and, seemingly, easily confused.

“We can be sure if the president gets worse, the White House – adopting the Austin policy – will do everything in its power to hide the ball.

“Meanwhile, we’ve conducted a real-time experiment regarding Biden foreign policy. With a war on in Gaza and Iranian proxies attacking U.S. interests throughout the Middle East, the secretary of defense disappeared, and it didn’t matter.”

Bret Stephens / New York Times

“What’s astonishing here isn’t that Austin neglected to inform his staff or the White House. It’s the nonchalance with which the administration is treating the incident.  Austin has described it as a matter of poor communication and promised to do better.  The president says he has no plans to let go of his secretary.  If this were, say, the defense minister of New Zealand, nobody would care. (Sorry, New Zealand.)  But the fallacy of abandoning Pax Americana is that we don’t have the option of transforming ourselves into a larger version of New Zealand: faraway and inoffensive. A world we seek to turn our back on is likelier to stab us in the back than it is to turn its back on us.  That’s why we have to preserve, and police, a global order.

“Joe Biden understands this in his bones. But most progressives in the Democratic Party don’t, nor do the MAGA neo-isolationists who share the progressives’ ‘come home, America’ mentality.  And the president’s cautious execution of foreign policy hasn’t helped.

“The dilatory arming of Ukraine allowed Russia to harden its defenses in the occupied territories.  The refusal to get serious about border security has given isolationist Republicans political capital they don’t deserve.  Pinprick attacks against Iranian proxies aren’t going to deter Tehran from its regional or nuclear ambitions.  Failing to dismiss the secretary of defense sends a signal of unseriousness that Americans may not notice but our adversaries do.

“The challenge of global order is that, hard as it is to preserve, it is harder and usually bloodier to piece together once lost.  It bears repeating that we are much closer to losing it than most realize.”

--Former President Trump is seeking to have the sweeping criminal conspiracy case against him in Georgia thrown out by arguing he is protected from prosecution under presidential immunity.

Trump’s immunity claims in the Georgia case, filed on Monday as part of a motion to dismiss state-level criminal charges against the former president, are similar to those argued by his defense team in the federal election subversion case.

“The indictment in this case charges President Trump for acts that lie at the heart of his official responsibilities as President. The indictment is barred by presidential immunity and should be dismissed with prejudice,” the motion filed by Trump’s lawyer in the Georgia case reads.

Monday’s filing reiterates what Trump’s lawyers have repeatedly asserted – that he was working in his official capacity as president when he allegedly undermined the 2020 election results and therefore has immunity.

On Tuesday, the DC U.S. Circuit Court of Appeals heard arguments by attorneys for Trump and special counsel Jack Smith over the same two claims of immunity, a hearing Trump attended.

The Supreme Court said last Friday it will decide whether Trump can be kept off the ballot because of his efforts to overturn his election loss, inserting the court squarely in the presidential campaign.  Oral arguments slated for early February.

Speaking to reporters after Tuesday’s appeals court hearing, Trump warned that if the charges succeed in damaging his candidacy, the result would be “bedlam.”

“I think they feel this is the way they’re going to try and win, and that’s not the way it goes,” Trump said.  “It’ll be bedlam in the country.  It’s a very bad thing.  It’s a very bad precedent. As we said, it’s the opening of a Pandora’s box.”

Trump walked away when a reporter asked him to rule out violence by his supporters.

The former president was also in court Thursday for his New York fraud trial, with an exasperated state Supreme Court Justic Arthur Engoron admonishing Trump and his attorneys, after Trump went on a rant.

Trump insisted Thursday in the final hours of the trial that the case was politically motivated and brought for publicity, drawing the curtain on proceedings that could bar him from running a business in the state and cost him hundreds of millions of dollars.

--Among the other things Donald Trump said this week, was he couldn’t understand why the Civil War wasn’t negotiated rather than fought.  He seems to have forgot that the issue of slavery was the subject of multiple compromises in the decades leading up to the Civil War.

Plus, Trump argued that Abraham Lincoln, the father of the Republican Party, is only known today because of the war.

“If he negotiated it, you probably wouldn’t even know who Abraham Lincoln was,” Trump said, robbing the first Republican president of credit for the most important presidential act in U.S. history: emancipating the enslaved.

Trump has also doubled down on calling those imprisoned over the Jan. 6 riot at the Capitol “hostages.”

“J-6 hostages…they went there to protest a rigged election!”

House Republican Conference Chairwoman Elise Stefanik, vying to be selected Trump’s running mate, also called those prosecuted for storming the Capitol, “hostages,” in an appearance on NBC’s “Meet the Press.”

“I have concerns about the treatment of January 6 hostages,” she said.  “We have a role in Congress of oversight over our treatment of prisoners.”

Back to the Civil War quip, former GOP Rep. Liz Cheney slammed the former president on social media, asking how Republicans who have endorsed Trump can “possibly defend this?”

“Which part of the Civil War ‘could have been negotiated’? The slavery part? The secession part? Whether Lincoln should have preserved the Union?” Cheney wrote.  “Question for members of the GOP – the party of Lincoln – who have endorsed Donald Trump: How can you possibly defend this?”

Meanwhile, Trump extended his sympathies to Iowans over the recent shooting at Perry High School, before stressing the need to “get over it.”

“I want to send our support and our deepest sympathies to the victims and families touched by the terrible school shooting yesterday in Perry, Iowa,” Trump said last Friday.  “It’s just so horrible, so surprising to see it here. But have to get over it, we have to move forward.”

Barton Swaim, editorial page writer / Wall Street Journal

“Mr. Trump’s campaign speeches are much like they were in 2016. He shifts between teleprompter-dependent lines on policies and accomplishments, and wild, unpredictable riffs on the corruption and stupidity of his opponents.  In ’16 the riffs were at least entertaining – Jeb Bush was a ‘very nice person’ but ‘low energy’; Ted Cruz’s father was in on JFK’s assassination.

“Eight years later, he’s still the showman but less funny. The chief component of Mr. Trump’s speeches in 2023-24 is resentment at other Republicans’ disloyalty….

“Most candidates avoid mentioning important endorsements of their opponents, but Mr. Trump spent another few minutes castigating Iowa Gov. Kim Reynolds for backing Mr. DeSantis.  ‘We love loyalty in life,’ he said.  ‘Don’t you think? Loyalty?’ His claim that Ms. Reynolds is now ‘the least popular governor in the entire nation’ – accompanied by the trademark ‘Did you see that?’ as if referring to an actual report – received feeble applause from his Iowa audience.

“Even Mr. Trump’s ironic nihilism, or maybe the term is nihilist irony, sounds brutal and unfunny in a way it didn’t a few years ago.  At one point he mentioned a favorable poll from the Des Moines Register.  The newspaper has ‘a great pollster, actually, a very powerful pollster, a very good, talented pollster.’  A brief pause, then: ‘Of course if my numbers were bad I wouldn’t be saying that.  I’d say ‘They have a terrible pollster.’’

“An hour into the speech, the loudspeakers suddenly piped in electric keyboard music sounding like something from a documentary about space travel.  The effect was to get the audience to stop bellowing after every line and allow Mr. Trump to get to the end.  ‘We are a nation that in many ways has become a joke,’ the candidate intoned, drawing on the sort of apocalyptic language last heard in his 2017 inaugural address – a speech that convinced Democrats and liberal intellectuals, if they needed convincing, that the Brownshirts had finally come to America. ‘We are a nation that has become hostile to liberty, freedom, faith and even to God. We are a nation whose economy is collapsing into a cesspool of ruin, whose supply chain is broken, whose stores are not stocked, whose deliveries are not coming, and whose educational system is ranked at the very bottom of every single list.’

“After the rally I sat exhausted in the Hyatt’s bar over French fries and a beer watching the happy rallygoers at other tables. I wished they could see what I see, or that I could see what they see. What they see, I guess, is a wiser, savvier President Trump foiling his enemies and setting America on a better course. What I see is a catastrophe in which cultural VIPs in government and the media give themselves license to ruin a duly elected president, and his fans, refusing to take it a second time, responding with incomprehending rage.

“I’m not sure what Mr. Trump sees.  He knows that his enemies’ insane need to defeat him by nonelectoral means tends to fortify his support, and he encourages them to indulge their dumbest instincts.  He may ride their foolishness all the way to the White House.

“As a matter of cosmic justice, the Democrats, particularly Mr. Biden, deserve a Trump victory in 2024. They have done everything possible to ensure his nomination – funding his preferred candidates, no matter how crazy, defaming his sane Republican opponents, hounding him with spurious lawsuits. They assumed he was unelectable. Thanks to them, he isn’t.  He will likely win the nomination.

“And, as a consequence of Mr. Biden’s plenary incompetence and perverse refusal to exit the scene, Mr. Trump may win the presidency. Then the real fun starts.  Happy days are here again.”

--U.S. Customs and Border Protection has released more than 2.3 million migrants into the United States at the southern border under the Biden administration, allowing in the vast majority of migrant families and some adult groups, according to a report from the Department of Homeland Security, which published the figures for the first time.

The mass releases have typically been a measure of last resort when agents don’t have the holding capacity or personnel to process migrants using standard procedures.

The 2.3 million figure is significantly lower than the more than 6 million migrants taken into CBP custody during the same period.

The DHS data released last Friday showed more than 4 million border-crossers have been expelled to Mexico, returned to home countries or otherwise removed from the United States over the past three years.

I learned the other day that neighboring New Providence, NJ, and specifically a train station that I lived next to for 16 years, has received busloads of migrants from Texas!  The Borough said that the migrants are then immediately placed on a train to New York.  New Providence is receiving no advance notice of the buses.

This week, students at a Brooklyn high school were kicked out of the classroom to make room for nearly 2,000 migrants who were evacuated from a controversial tent shelter due to the big storm that was about to hit the region.

Parents and local residents were outraged, as the students were forced back to remote learning, but the school reopened Thursday.

--I haven’t seen any real bombshells in the latest documents being released in the Jeffrey Epstein case, while some media outlets want to play it up…on both sides of the political aisle.  You also simply don’t know where the real truth is. 

One Epstein accuser, Sarah Ransome, makes various claims against famous people, and claimed in a string of emails in 2016 that she had copies of tapes Epstein had made of some of his high-profile friends, allegedly having sex with an unnamed woman.

But I’m not naming names for the purposes of this space regarding some of the more salacious details because they are still just allegations.  And for all we know, they could remain just that,  allegations, forever.  That in no way makes them fact.

--Hunter Biden pleaded not guilty Thursday in Los Angeles to federal charges he failed to pay income taxes.  The plea follows a failed effort in July to reach a deal with prosecutors on tax and gun charges.  Biden has been charged in Delaware with lying about his drug addiction when he bought a gun.  He pleaded not guilty to three federal weapons charges in October.

The court hearing came a day after Hunter Biden made a surprise appearance at a House committee vote to cite him for contempt for defying a subpoena.  His surprise attendance, which Republicans slammed as a political stunt, was part of an aggressive defense that has seen Biden attacking the criminal charges against him and filing lawsuits against critics.

--South Korea’s parliament on Tuesday passed a landmark ban on the production and sale of dog meat, as public calls for a prohibition have grown sharply over concerns about animal rights and the country’s international image.

After a three-year grace period, the bill would make slaughtering, breeding and sales of dog meat for human consumption illegal from 2027 and punishable by 2-3 years in prison.

Dog meat consumption, a centuries-old practice on the Korean Peninsula, is neither explicitly banned nor legalized in South Korea.  Recent surveys show more than half of South Koreans want dog meat banned and a majority no longer eat it.  But one in every three South Koreans still opposes a ban even though they don’t consume it.

The National Assembly passed the bill by a 208-0 vote.

Dog farmers were not happy, South Korea being the only nation with industrial-scale dog farms.

--A robotic lander built by a private company suffered a propulsion system issue on its way to the moon on Monday, upending the first U.S. soft lunar landing attempt in over 50 years as mission managers scrambled to fix its position in space.

Space robotics firm Astrobotic Technology’s Peregrine lunar lander had launched successfully into space at 2:18 a.m. ET from Cape Canaveral, Florida, aboard the first flight of Vulcan, a rocket that had been under development for a decade by the Boeing and Lockheed Martin joint venture United Launch Alliance (ULA).

But hours after separating from Vulcan, Astrobotic said issues with Peregrine’s propulsion system briefly prevented the spacecraft from angling itself toward the sun for power.

The launch of Vulcan, a 200-foot-tall rocket with engines made by Jeff Bezos’ Blue Origin, was a crucial first for ULA, which developed Vulcan to replace its workhorse Atlas V rocket and rival the reusable Falcon 9 from Elon Musk’s SpaceX in the satellite launch market.

The launch was the first of two certification flights required by the U.S. Space Force before Vulcan can fly lucrative missions for the Pentagon, a key customer.

Separately, NASA announced Tuesday that astronauts will have to wait until next year before flying to the moon and another few years before landing on it.

The space agency had planned to send four astronauts around the moon later this year, but pushed the flight to September 2025 because of technical issues. The first human moon landing in more than 50 years also got bumped, from 2025 to 2026.

--As reported by the Wall Street Journal, homicides in big U.S. cities fell in 2023 after skyrocketing during the first two years of the pandemic.

Killings were down about 15% in the 10 largest cities last year when compared with 2022, according to local government data.  That includes a 20% drop in both Philadelphia and Houston and 16% in Los Angeles.

As I wrote last week, New York City’s murder rate declined 12% from 2022.

Murders rose in two of the top 10 cities; Dallas with a 15% increase, while homicides in Austin edged up by 3%.

In 2022, murders in the U.S. dropped 6% after rising 4% in 2021 and spiking by nearly 30% in 2020, according to the FBI.  The agency normally doesn’t release national crime figures for 2023 until later in the year.

But even with declining numbers, a Gallup poll from November found that 63% of U.S. residents saw crime as a serious problem, up from 54% in 2022 and the highest in at least two decades.

--I mentioned a big fire in Elizabeth, N.J., last Friday at the former Singer Sewing Manufacturing factory and I forgot to note no one was injured fighting the blaze (there was a minor related injury…slipping on ice).  Otherwise, I would not have treated the story rather lightly.  There were also no big businesses in the building, mostly warehoused goods.

--Quite a series of storms we’ve had in my area the last six weeks, five coastal storms, but only last weekend’s producing snowfall in large parts of the region, including 15 inches in New York’s Hudson Valley.

But Manhattan’s Central Park notched a paltry 0.2 inches of powder Saturday evening before the snow turned to rain.  So the snow drought continues, nearing 700 days (697 today, Friday).

Next week, however, it gets much colder and the chances for measurable snow will increase for the Big Apple.

--The European Union climate monitor announced Tuesday what we knew was coming…2023 was the warmest year on record, going back a century and a half.

June was the planet’s warmest June on record. Then, July was the warmest July.  And all the way through December.

Averaged across last year, temperatures worldwide were 1.48 degrees Celsius, or 2.66 Fahrenheit, higher than they were in the second half of the 19th century. That is warmer by a sizable margin than 2016, the previous hottest year.

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

Pray for Ukraine, Israel and the innocent in Gaza.

God bless America.

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Gold $2053
Oil $72.89

Regular Gas: $3.07; Diesel: $3.93 [$3.27 / $4.61 yr. ago]

Returns for the week 1/8-1/12

Dow Jones  +0.3%  [37592]
S&P 500  +1.8%  [4783]
S&P MidCap  +0.6%
Russell 2000  -0.01%
Nasdaq  +3.1%  [14972]

Returns for the period 1/1/24-1/12/24

Dow Jones  -0.3%
S&P 500  +0.3%
S&P MidCap  -1.9%
Russell 2000  -3.8%
Nasdaq  -0.3%

Bulls 54.4
Bears 17.7

Hang in there.

Brian Trumbore

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